Exhibit 10.2
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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
among
CAPITAL TRUST, INC.,
CT RE CDO 2004-1 SUB, LLC and
CT RE CDO 2005-1 SUB, LLC
as Sellers
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...........................................................16
Section 3. Transactions, Note and Prepayments............................................................16
3.01. Transactions..................................................................................16
3.02. Confirmations.................................................................................16
3.03. Procedures for Transactions...................................................................17
3.04. Margin Maintenance............................................................................22
Section 4. Payments; Computations; Etc...................................................................23
4.01. Repurchase of Transaction Assets; Periodic Advance Repurchase Payments........................23
4.02. Payments......................................................................................24
4.03. Computations..................................................................................25
4.04. [Intentionally Omitted.]......................................................................25
4.05. Booking of Transactions.......................................................................25
4.06. Buyer's Funding of Eurodollar Rate Transactions...............................................25
4.07. Income Payments...............................................................................25
4.08. Compensation for Increased Costs..............................................................25
4.09. Limitation on Types of Transactions; Illegality...............................................26
Section 5. Precautionary Collateral Security.............................................................27
5.01. Transaction Assets; Precautionary Security Interest...........................................27
5.02. Further Assurances............................................................................28
5.03. Changes in Locations, Name, etc...............................................................28
5.04. Buyer's Appointment as Attorney-in-Fact.......................................................28
5.05. Performance by Buyer of Seller's Obligations..................................................29
5.06. Proceeds......................................................................................30
5.07. Remedies......................................................................................30
5.08. Limitation on Duties Regarding Preservation of Transaction Asset Items........................31
5.09. Powers Coupled with an Interest...............................................................31
5.10. Release of Security Interest..................................................................31
5.11. Release of Transaction Assets.................................................................31
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TABLE OF CONTENTS
(continued)
Page
5.12. Substitution of Eligible Transaction Assets...................................................31
Section 6. Conditions Precedent..........................................................................32
6.01. Initial Transaction...........................................................................32
6.02. Initial and Subsequent Transactions...........................................................32
6.03. Additional Requirements.......................................................................34
Section 7. Representations and Warranties................................................................35
7.01. Existence.....................................................................................35
7.02. Action........................................................................................35
7.03. Litigation....................................................................................35
7.04. No Breach.....................................................................................35
7.05. Approvals.....................................................................................35
7.06. Use of Proceeds; Margin Regulations...........................................................36
7.07. Taxes.........................................................................................36
7.08. Investment Company Act........................................................................36
7.09. Transaction Assets; Transfer of Ownership and Precautionary Collateral Security...............36
7.10. Chief Executive Office........................................................................37
7.11. Location of Books and Records.................................................................37
7.12. True and Complete Disclosure..................................................................37
7.13. ERISA.........................................................................................38
Section 8. Covenants of Sellers..........................................................................38
8.01. Financial Statements, Reports, etc............................................................38
8.02. Litigation....................................................................................39
8.03. Existence, etc................................................................................39
8.04. Prohibition of Fundamental Changes............................................................40
8.05. Aggregate Margin Maintenance Asset Value Deficiency...........................................40
8.06. Notices.......................................................................................40
8.07. Reports.......................................................................................40
8.08. Transactions with Affiliates..................................................................41
8.09. Foreclosure or Other Remediation by Seller....................................................41
8.10. Limitation on Liens...........................................................................41
8.11. Limitation on Distributions...................................................................41
8.12. Maintenance of Ratio of Earnings Before Interest, Taxes, Depreciation and Amortization
to Interest and Preferred Dividends...........................................................41
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TABLE OF CONTENTS
(continued)
Page
8.13. Maintenance of Ratio of Total Indebtedness to Tangible Net Worth..............................41
8.14. Servicer; Servicing Tape......................................................................41
8.15. Remittance of Prepayments.....................................................................42
Section 9. Events of Default.............................................................................42
Section 10. Remedies Upon Default.........................................................................44
Section 11. No Duty of Buyer..............................................................................44
Section 12. Miscellaneous.................................................................................44
12.01. Waiver........................................................................................44
12.02. Notices.......................................................................................44
12.03. Indemnification and Expenses..................................................................45
12.04. Amendments....................................................................................45
12.05. Successors and Assigns........................................................................46
12.06. Survival......................................................................................46
12.07. Captions......................................................................................46
12.08. Counterparts..................................................................................46
12.09. Agreement Constitutes Security Agreement; Governing Law.......................................46
12.10. Submission to Jurisdiction; Waivers...........................................................46
12.11. Waiver of Jury Trial..........................................................................47
12.12. Acknowledgments...............................................................................47
12.13. Hypothecation or Pledge of Transactions.......................................................47
12.14. Servicing.....................................................................................47
12.15. Periodic Due Diligence Review.................................................................48
12.16. Intent........................................................................................49
12.17. Change of any Seller's State of Formation.....................................................49
12.18. Set-Off.......................................................................................49
12.19. Joint and Several Liability...................................................................50
12.20. Reimbursement of Structuring Fee..............................................................50
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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, among CAPITAL TRUST, INC., a Maryland corporation ("CT"), CT RE CDO 2004-1
SUB, LLC, a Delaware limited liability company, and CT RE CDO 2005-1 SUB, LLC, a
Delaware limited liability company (each a "Seller" and, collectively,
"Sellers"), and MORGAN STANLEY BANK, a Utah industrial bank ("Buyer").
RECITALS
WHEREAS, Sellers have requested that Buyer from time to time
purchase Transaction Assets (as defined below) owned by any of the Sellers, 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 a Seller agrees to transfer to Buyer
certain Eligible Transaction Assets (as defined below) owned by such Seller
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to such Seller such Eligible Transaction Assets at a date certain or
on demand, against the transfer of funds by such 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 2.01
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 each Seller, any affiliate of such 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 Buyer or the applicable Seller 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.
1
"Asset File" shall mean, as to each Transaction Asset, those
documents set forth in a schedule to be delivered by the relevant 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 Transactions 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 Sellers 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 Eligible 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 the relevant
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, the relevant 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 such 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 a
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 the
relevant 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.
2
"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 the relevant 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 Note" shall mean any of the Class F Notes, Class G Notes
or Class H Notes or any other note issued by a collateralized debt obligation
transaction managed or sponsored by Capital Trust, Inc. or any of its
Affiliates.
"Class F Note" shall mean a Class F Note issued by Capital
Trust RE CDO 2004-1 Ltd. or Capital Trust RE CDO 2005-1 Ltd.
"Class G Note" shall mean a Class G Note issued by Capital
Trust RE CDO 2004-1 Ltd. or Capital Trust RE CDO 2005-1 Ltd.
"Class H Note" shall mean a Class H Note issued by Capital
Trust RE CDO 2004-1 Ltd. or Capital Trust RE CDO 2005-1 Ltd.
"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.
3
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of the date hereof, among Sellers, 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 the relevant 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, CDO Notes and Other Approved
Assets as to which the representations and warranties in Section 7.09 are
correct.
"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 a 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 a 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 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.
4
"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
------------------------------------
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:
5
Eurodollar Rate Spread
(expressed as percentage points
Transaction Asset Type Purchase Rate per annum and as basis points)
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Whole Loans [****] [****] [****]
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B Notes, Preferred Equity Interests and Mezzanine [****] [****] [****]
Loans and participation interests in any of the
foregoing*
----------------------------------------------------
(50% - 55% LTV maximum) [****] [****] [****]
----------------------------------------------------
(56% - 60% LTV maximum) [****] [****] [****]
----------------------------------------------------
(61% - 70% LTV maximum) [****] [****] [****]
----------------------------------------------------
(71% - 75% LTV maximum) [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
(76% - 80% LTV maximum) [****] [****] [****]
----------------------------------------------------
(81% - 85% LTV maximum) [****] [****] [****]
----------------------------------------------------
(86% - 90% LTV maximum) [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
CMBS [****] [****] [****]
Rating: [****] [****] [****]
----------------------------------------------------
BBB [****] [****] [****]
----------------------------------------------------
BBB- [****] [****] [****]
----------------- ----------------- ----------------
BB+ [****] [****] [****]
----------------------------------------------------
BB [****] [****] [****]
----------------------------------------------------
BB- [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
B+ [****] [****] [****]
----------------------------------------------------
B [****] [****] [****]
----------------------------------------------------
B- [****] [****] [****]
----------------------------------------------------
Unrated [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
Class F Notes [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
Class G Notes [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
Class H Notes [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
Other CDO Notes [****] [****] [****]
- -----------------------------------------------------------------------------------------------------------
* 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.
____________________________
****Material omitted pursuant to a request for confidential treatment under Rule
24b-2. Material filed separately with the Securities Exchange Commission.
6
"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, the relevant Seller, any of its Subsidiaries
or any of their properties.
"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 the
relevant 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.
7
"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.
"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 a
Seller taken as a whole, (b) the ability of a 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 Sellers elect 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 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.
8
"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.
"Monthly Statement" shall mean, for each calendar month during
which this Agreement shall be in effect, each 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 each 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 any of the Sellers.
"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 a 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).
9
"Plan" shall mean an employee benefit or other plan
established or maintained by a Seller or any ERISA Affiliate during the
five-year period ended immediately before the date of this Agreement or to which
a 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.
"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 the relevant 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) such 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,
10
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;
(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 the
relevant 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 the relevant 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 the relevant 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 the relevant 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.
11
"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.
"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 the relevant 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 the relevant 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" and "Sellers" 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.
"Structuring Fee" shall mean fee in an amount equal to [****]
____________________________
**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2. Material filed separately with the Securities Exchange Commission.
12
"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 the relevant 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 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 CT shall only include a direct
wholly-owned Subsidiary of CT.
"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 a
Seller and its consolidated Subsidiaries on a balance sheet of a Seller
and its consolidated Subsidiaries at such date, determined in
accordance with GAAP, less
(b) intangible assets of such 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 the relevant 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.
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"Transaction" shall have the meaning provided in Section 1
hereof.
"Transaction Asset" shall mean any Eligible Transaction Asset
which has been sold by the relevant Seller to Buyer in a Transaction hereunder,
but which has not been repurchased by such 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.
"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, CDO Note 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 the relevant 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 the relevant
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 the relevant Seller intends to request a Transaction, all
information that has come to such Seller's attention, based on the making of
reasonable inquiries and the exercise of reasonable care and diligence under the
14
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.
"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 the relevant
Seller's request, on a committed basis and on the terms and conditions of this
Agreement, into Transactions with such 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.
Sellers hereby acknowledge 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, the relevant 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), the relevant
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 the relevant Seller
with respect to the Transaction to which the Confirmation relates, and Buyer's
payment of the Purchase Price and such 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
15
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 the relevant 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 such
Seller to make a payment when due of any amount owing hereunder in respect of
the Transactions. Sellers agree 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 each Seller a monthly statement of Transactions, payments, and other
transactions pursuant to this Agreement. Failure by Buyer to provide such
monthly statement shall not affect the obligations of Sellers 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 the relevant Seller
absent manifest error.
3.03. Procedures for Transactions.
(a) Preliminary Approval of Proposed Transaction Asset.
(i) Each 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 such 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 the relevant 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, the relevant Seller's request for a Transaction.
Buyer's failure to respond to a 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 such Seller's request for a
Transaction, unless Buyer and such 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 Sellers under this Agreement.
(b) Final Approval of Proposed Transaction Asset. Upon Buyer's
notification to a Seller of the Maximum Purchase Rate and the Asset Value for
any proposed Transaction Asset, such Seller shall, if such 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:
16
(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 the relevant 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
Documents. Such certificates or other evidence shall indicate that the
relevant 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 a 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, the relevant 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, the relevant 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 such 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, CDO Note or Other Approved
Asset, the relevant 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,
17
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. The relevant 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.
(viii) Opinions of Counsel. Buyer shall have received
from counsel to the relevant 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, the relevant 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 the relevant Seller from the Transaction Asset Obligor
relating to any Transaction Asset at the origination of the underlying
loan or equity interest relating thereto, such 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 and CDO Notes. In the case of CMBS and CDO
Notes, 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
or CDO Notes, as the case may be; (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 or CDO Notes, as the case
may be, are certificated, an original of the relevant certificate duly
endorsed in blank to Buyer; (e) to the extent that the CMBS or CDO
Notes, as the case may be, are not certificated, all documents
requested by Buyer to confirm that the CMBS or CDO Notes, as the case
may be, are 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
18
specified above relating to, directly or indirectly, the subject
Transaction Asset, to the extent obtained by the originating lender and
available to the relevant Seller; and (g) a copy of any other agreement
or instrument evidencing or otherwise governing the CMBS or CDO Notes,
as the case may be.
(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 the relevant 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 such Seller that Buyer has
not approved the proposed Transaction Asset as Transaction Asset or (ii) notify
such 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 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 a 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 such 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, the relevant 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 the relevant Seller as required by Section 6.02(b)
hereof. Contemporaneously with the delivery of the Confirmation, the relevant
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.
(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,
the relevant 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
19
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 the relevant 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, the relevant Seller shall cause the Bailee to deliver to
the Custodian the Asset File.
(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, the relevant 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 the relevant 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.
20
(g) If the relevant 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 the relevant 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 the relevant 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 the relevant Seller. Buyer may consider on a case-by-case basis in
its sole, absolute discretion alternative funding arrangements requested by such
Seller.
(i) From time to time, the relevant 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 the relevant Seller in time to permit their delivery hereunder at
the time required, in lieu of delivering such original documents, such 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. The relevant 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 Maintenance Asset Value (an
"Aggregate Margin Maintenance Asset Value Deficiency"), as determined by Buyer
in its sole discretion and notified to a Seller on any Business Day, or (ii) a
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), a 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
21
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 the
relevant Seller of such occurrence and may require by giving notice to such
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, the relevant 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 the relevant Seller set forth in Section 7.12 was
true to such Seller's actual knowledge.
Section 4. Payments; Computations; Etc.
4.01. Repurchase of Transaction Assets; Periodic Advance
Repurchase Payments.
(a) Sellers hereby promise 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, Sellers promise 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
a 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 such 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 Period. Any Repurchase Price payments made by a 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, Sellers 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 Sellers' request, Buyer shall notify Sellers whether such
request has been approved. Buyer's failure to so notify Sellers shall be deemed
to constitute Buyer's denial of such request.
(b) Notwithstanding that Buyer and Sellers intend all
Transactions hereunder to be sales of the related Transaction Assets to Buyer,
each 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
22
"Pricing Rate") equal to the Eurodollar Rate plus the applicable Eurodollar Rate
Spread. Notwithstanding the foregoing, each 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 each 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 the relevant Seller to Buyer in writing.
(e) With respect to any Transaction Asset, the relevant 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, such Seller or
any underlying obligor in respect of such Transaction Asset to the extent that
such Seller is not required under the underlying loan documents with such
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.
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 Sellers 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). Sellers acknowledge that they have no rights of withdrawal from
the foregoing account. Buyer shall endeavor to send the relevant 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 such Seller to receive, such bill shall in no way affect such 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
23
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. Sellers
hereby expressly acknowledge and agree 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.
(a) Subject to Section 5.06 hereof, the relevant 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 such
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 the relevant 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, each Seller
shall retain the right to take all actions under the Transaction Documents and
to retain all contact with the relevant 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
24
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, Sellers 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 Sellers 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
(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 Sellers prompt notice thereof and, so
long as such condition remains in effect, Buyer shall be under no obligation to
enter into additional Transactions, and each Seller shall either repurchase all
relevant 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.
25
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, each 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 relevant 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 the relevant Seller of
its obligations under the Transaction Documents and the Transactions entered
into under this Agreement, including, without limitation, such 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"). Each
Seller agrees to mark its computer records to evidence the interests granted to
Buyer hereunder.
(b) All of the relevant 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 such 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, CDO Notes 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;
(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
26
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) Each 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 the relevant 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, each 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 the relevant Seller, such 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. Each Seller also hereby authorizes Buyer to
file any such financing or continuation statement without the signature of any
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. None of the Sellers
shall (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.
5.04. Buyer's Appointment as Attorney-in-Fact.
(a) Each 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 each Seller and in the name of each 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, each Seller hereby gives Buyer the power and
right, on behalf of the relevant Seller, without assent by, but with notice to,
such Seller, if an Event of Default shall have occurred and be continuing, to do
the following:
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(i) in the name of each 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 any 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 the relevant
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
the relevant Seller might do.
Each 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) Each 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 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 any 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 a
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 the
relevant Seller to Buyer on demand and shall constitute Repurchase Obligations.
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5.06. Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of any Transaction Asset received by any Seller
consisting of cash, checks and other near-cash items shall be held by the
relevant Seller in trust for Buyer, segregated from other funds of such Seller,
and, within two (2) Business Days of receipt by such Seller, shall be turned
over to Buyer in the exact form received by such Seller (duly endorsed by such
Seller to Buyer, if required, in order to be negotiated by Buyer) and (b) any
and all such proceeds received by Buyer (whether from a 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 the relevant 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
the relevant Seller, which right or equity is hereby waived or released. Each
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 the relevant 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 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 the relevant
Seller. To the extent permitted by applicable law, each 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
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proper if given at least ten (10) days before such sale or other disposition.
Each 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 a
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) the relevant 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 such Seller for the
release of such Transaction Asset, Buyer shall as soon as practicable release
(and Buyer shall reasonably cooperate with such 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 such Seller or, to the extent necessary to facilitate future
savings of mortgage tax in states that impose mortgage taxes, assign such liens
as such 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, a Seller may substitute one or more of the
relevant Transaction Assets with one or more substitute Eligible Transaction
Assets having an aggregate Margin 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, the relevant
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.
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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, together with the Structuring
Fee; and
(iii) The Custodial Agreement, duly executed and
delivered by each Seller and Custodian. In addition, each 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 each Seller and
certificates evidencing all requisite authority for each Seller with respect to
the execution, delivery and performance of the Transaction Documents and each
other document to be delivered by any 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 the relevant Seller to the
contrary);
(c) Legal Opinion. A legal opinion of counsel to each 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 a Seller (including the initial Transaction) on any
Business Day is subject to the delivery of all Transaction 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 the relevant Seller, and
such 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 the relevant Seller in
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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 the
relevant Seller certifying as to the truth and accuracy of the above, which
certificate shall also include a representation that (i) such Seller is in
compliance with all governmental licenses and authorizations, (ii) such 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 such 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 such 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 the relevant 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) 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
32
(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. The relevant 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 such 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 the relevant 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 the relevant Seller hereunder shall
constitute a certification by such 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) Each Seller and Buyer recognize and agree that the
categories of Transaction Assets defined herein as categories of assets which
may be submitted by each 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
relevant Seller for underwriting and due diligence review by Buyer and (ii)
submittals by the relevant 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, Sellers and Buyer agree that, as a further
condition precedent to funding a Transaction in respect of any Transaction Asset
hereunder, the relevant 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), the relevant 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 Buyer to be Eligible Transaction Assets hereunder, including
without limitation (i) all instruments evidencing indebtedness payable to such
Seller or pledged to such Seller as precautionary security for a Transaction,
(ii) all instruments granting or perfecting a security interest for the benefit
of such Seller or pledged to such 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 such 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 such
Seller, or pledged to such 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.
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Section 7. Representations and Warranties.
Each Seller represents and warrants to Buyer that throughout
the term of this Agreement:
7.01. Existence. Each 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.
The organizational structure chart of the Sellers attached as Schedule 5 hereto
is true, accurate and complete as of the Effective Date.
7.02. Action. Each 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 each
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 the relevant Seller and constitutes a legal,
valid and binding obligation of such Seller, enforceable against such 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 any
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 any
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 any 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) upon any Property
of any 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
each 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.
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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, the relevant
Seller, any applicable Affiliate or Subsidiary of such 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. Each 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 each
Seller and its consolidated Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the relevant Seller, adequate.
7.08. Investment Company Act. The relevant 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) The relevant 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, such 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 the relevant 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 the relevant 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 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 such
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 the relevant Seller, (y) the delivery of a duly executed
pledge to such 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
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such 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 such 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 the relevant 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 such 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 the relevant 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 the relevant 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 such Seller in, to and under such Transaction
Asset which can be perfected by filing under the Uniform Commercial Code.
7.10. Chief Executive Office. Each 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 each
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 each 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 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 each 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 each 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
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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 any Seller or its Subsidiaries
make direct contributions, and, to the knowledge of the relevant 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 any
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 Sellers. Each 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. Each 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 the relevant 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 such 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
such 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 such Seller, which certificate shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of such 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 the relevant Seller, the consolidated
balance sheets of the relevant 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 such 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 such 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;
(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 the relevant Seller in form and substance reasonably
satisfactory to Buyer that such 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
37
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 the relevant Seller and any Plan and
Multiemployer Plan as may be requested by Buyer, including all business plans
prepared by or for such Seller; provided, however, that with respect to
information not previously known to, or in the possession of, such Seller
relating to any Multiemployer Plan, such 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 the relevant Seller shall receive from any underlying obligor with
respect to a Transaction Asset within fifteen (15) days after such Seller's
receipt thereof; and
(g) such other reports as Buyer shall reasonably require.
8.02. Litigation. Each 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 the relevant
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. Each 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 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.
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8.04. Prohibition of Fundamental Changes. None of the Sellers
shall 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 a
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 the relevant Seller's duties
and obligations under this Agreement and the Transaction Documents; and (c) such
entity shall be at least as creditworthy as such 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,
each Seller shall cure same in accordance with Section 3.04 hereof.
8.06. Notices. Each 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 the relevant Seller or any Affiliate of such
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.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the relevant Seller setting forth details
of the occurrence referred to therein and stating what action such Seller has
taken or proposes to take with respect thereto.
8.07. Reports. Each Seller shall provide Buyer with a
quarterly report, which report shall include, among other items, a summary of
the relevant Seller's delinquency and loss experience with respect to any
Transaction Asset serviced by such Seller, any Servicer or any designee of
either, plus any
39
such additional reports as Buyer may reasonably request with respect to such
Seller's or any Servicer's servicing portfolio or pending originations of
Transaction Assets. 8.08. Transactions with Affiliates. None of the Sellers
shall, 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 the relevant Seller's business and (c)
upon fair and reasonable terms no less favorable to such 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. Any 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 the relevant Seller relating to any Transaction
Asset hereunder.
8.10. Limitation on Liens. Each 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 each 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. Each 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, none of the Sellers shall 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 the relevant 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 such
Seller; provided that such Seller shall make such distributions which shall be
sufficient to maintain REIT rule compliance, if applicable.
8.12. Maintenance of Ratio of Earnings Before Interest, Taxes,
Depreciation and Amortization to Interest and Preferred Dividends. CT shall not
permit the ratio of (a) earnings before interest, taxes, depreciation and
amortization (excluding dividends) of CT and its consolidated Subsidiaries to
(b) the sum of (i) interest expense and (ii) preferred dividends of CT and its
consolidated Subsidiaries, to be less than 1.20:1.
8.13. Maintenance of Ratio of Total Indebtedness to Tangible
Net Worth. CT 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 a Seller;
however, Buyer shall be under no obligation to do so.
8.14. Servicer; Servicing Tape. Each 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, CDO
Notes and Other Approved Assets serviced hereunder by the
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relevant Seller or any Servicer. None of the Sellers shall 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. Each 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
relevant 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) any 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) any 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) any 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 any 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 the relevant Seller shall have made any such
representations and warranties with knowledge that they were materially false or
misleading at the time made); or
(e) any 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 any 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 any 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 any 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 (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 the relevant 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
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(g) any Seller shall admit in writing its inability to pay its
debts as such debts become due; or
(h) any 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 the relevant 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 such Seller or any such
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of such 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
such 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 any Seller; or
(k) any 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) any 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 any 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 the
relevant Seller's ability to perform its obligations under this Agreement or any
other Transaction Document;
(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 any 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
42
(o) the matters set forth in the certificate delivered by each
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 the relevant 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 such Seller or any third party
acting for such Seller and such Seller shall deliver to Buyer such assignments
as Buyer shall request. Buyer shall be entitled to specific performance of all
agreements of the relevant 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 the relevant Seller against any and all of the Indebtedness of
such 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 any 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 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
43
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) Each 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, each 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, each 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 any 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 any Seller. Each
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, each Seller
hereby acknowledges that, notwithstanding the fact that the obligations of the
relevant Seller are secured by such Transaction Asset, all obligations of such
Seller hereunder are recourse obligations of such Seller.
(b) Each 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.
Each 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.
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 each Seller and Buyer and any
provision of this Agreement may be waived by Buyer.
44
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 each 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 any 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. EACH 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 UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED; AND
45
(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 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. Each 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 the relevant
Seller; and
(c) no joint venture exists between Buyer and the relevant
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 any 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 any 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 any Seller.
12.14. Servicing.
(a) Each 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 the relevant
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 the relevant 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 a Seller, (i) the relevant Seller agrees that Buyer is the owner and
precautionary collateral assignee of all servicing records, including but 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,
46
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) such 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 such Seller or its designee to service in conformity
with this Section and any other obligation of such Seller to Buyer. The relevant
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) Each Seller shall provide to Buyer a letter from the
relevant Seller (if such 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 Sellers 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, no Seller shall have the right to modify or alter the terms of any of
the documents pertaining to such Transaction Asset and the relevant 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, such 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 a Seller or its Affiliate is servicing any
Transaction Asset, the relevant Seller shall permit Buyer to inspect such
Seller's or its Affiliate's servicing facilities, as the case may be, for the
purpose of satisfying Buyer that such Seller or its Affiliate, as the case may
be, has the ability to service such Transaction Asset as provided in this
Agreement.
(g) Each Seller shall cause the Servicer to provide a copy of
each report and notice sent to the relevant Seller to be sent to Buyer
concurrently therewith.
12.15. Periodic Due Diligence Review. Each 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 each 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 the relevant Seller, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and 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 such Seller and/or
47
Custodian. Each 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. Each 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 the relevant Seller. Each
Seller further agrees that the relevant 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 any Seller's State of Formation. If any
Seller shall change the State under whose laws the relevant Seller shall be
organized, such 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 such
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 a Seller, any such notice being expressly waived by each Seller
to the extent permitted by applicable law, upon any amount becoming due and
payable by the relevant 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 such Seller. Buyer agrees
promptly to notify the relevant Seller after any such set-off and application
48
made by Buyer; provided that the failure to give such notice shall not affect
the validity of such set-off and application.
12.19. Joint and Several Liability. The obligations of the
Sellers under this Agreement and the Transaction Documents shall be joint and
several.
12.20. Reimbursement of Structuring Fee. In the event (a) (i)
MS & Co.'s corporate bond rating as calculated by S&P or Moody's shall have been
lowered or downgraded to a rating below A- as indicated by S&P or below A3 as
indicated by Moody's and (ii) each Seller shall have repurchased all of the
Transaction Assets and shall have repaid all amounts owing to Buyer under this
Agreement within one-hundred eighty (180) days following such downgrade or (b)
any of the events described in Sections 4.09(a), 4.09(b), 4.09(c) or
6.02(g)(iii) shall occur and each Seller elects to repurchase all of the
relevant Transaction Assets and has repaid to Buyer all amounts due to Buyer
under this Agreement, Buyer shall refund to Sellers a portion of the Structuring
Fee paid to Buyer hereunder, in an amount equal to the product of (1) the amount
of such Structuring Fee multiplied by (2) the quotient of (x) the number of days
remaining from the date of such repayment in full to, and including, the
Termination Date divided by (y) the number of days from and after the date
hereof to, and including, the Termination Date.
[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 a Seller
By: /s/ Geoffrey G. Jervis
Name: Geoffrey G. Jervis
Title: Chief Financial Officer
CT RE CDO 2004-1 SUB, LLC,
as a Seller
By: /s/ Geoffrey G. Jervis
Name: Geoffrey G. Jervis
Title: Chief Financial Officer
CT RE CDO 2005-1 SUB, LLC,
as a 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
[SIGNATURE PAGE TO MASTER REPURCHASE AGREEMENT]
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
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 AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT]
SCHEDULE 1
FILING JURISDICTIONS AND OFFICES
Delaware Secretary of State
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 [relevant 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:
[Relevant Seller]
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 [relevant Seller]
("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
[relevant Seller].
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"), among Capital Trust, Inc., CT RE
CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC (collectively,
"Sellers", and for the purposes of the letter hereof,
[relevant Seller] "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,
[Relevant Seller]
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 [RELEVANT SELLER] ("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
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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,
[RELEVANT SELLER]
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 [RELEVANT SELLER] ("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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