Exhibit 10.1
Master Repurchase Agreement
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September 1996 Version
Dated as of APRIL 17, 2001
Between: CRIIMI MAE Inc.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, acting through its agent
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
1. Applicability
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities or
other assets ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a date
certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.
2. Definitions
(a) "Act of Insolvency", with respect to any party, (i) the commencement by
such party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, moratorium, dissolution, delinquency or similar
law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of creditors
for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of 1970, which (A) is
consented to or not timely contested by such party, (B) results in the entry of
an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party's inability to pay such party's debts as they become
due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Buyer's Margin Percentage to the
Repurchase Price for such Transaction as of such date;
(d) "Buyer's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Seller's Margin Percentage) agreed
to by Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the
relevant Confirmation, Annex I hereto or otherwise as the deadline for giving
notice requiring same-day satisfaction of margin maintenance obligations as
provided in Paragraph 4 hereof (or, in the absence of any such agreement, the
deadline for such purposes established in accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
(k) "Price Differential", with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Purchase Price for such Transaction on a 360 day per year
basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
(l) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in
The Wall Street Journal (or, if more than one such rate is published, the
average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
except where Buyer and Seller agree otherwise, such price increased by the
amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b)
hereof and decreased by the amount of any cash transferred by Seller to Buyer
pursuant to Paragraph 4(a) hereof or applied to reduce Seller's obligations
under clause (ii) of Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect
to any Transaction at any time also shall include Additional Purchased
Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude
Securities returned pursuant to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by application of
the provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin Percentage to
the Repurchase Price for such Transaction as of such date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Buyer's Margin Percentage) agreed
to by Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase Date for
the Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other party a
written confirmation of each Transaction (a "Confirmation"). The Confirmation
shall describe the Purchased Securities (including CUSIP number, if any),
identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase
Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction,
and (v) any additional terms or conditions of the Transaction not inconsistent
with this Agreement. The Confirmation, together with this Agreement, shall
constitute conclusive evidence of the terms agreed between Buyer and Seller with
respect to the Transaction to which the Confirmation relates, unless with
respect to the Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such Confirmation and
this Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date specified
in such demand, or on the date fixed for termination in the case of Transactions
having a fixed term, termination of the Transaction will be effected by transfer
to Seller or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against
the transfer of the Repurchase Price to an account of Buyer.
4. Margin Maintenance
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Buyer is less than the aggregate Buyer's Margin Amount for all such Transactions
(a "Margin Deficit"), then Buyer may by notice to Seller require Seller in such
Transactions, at Seller's option, to transfer to Buyer cash or additional
Securities reasonably acceptable to Buyer ("Additional Purchased Securities"),
so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which such Buyer
is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at
such time (a "Margin Excess"), then Seller may by notice to Buyer require Buyer
in such Transactions, at Buyer's option, to transfer cash or Purchased
Securities to Seller, so that the aggregate Market Value of the Purchased
Securities, after deduction of any such cash or any Purchased Securities so
transferred, will thereupon not
exceed such aggregate Seller's Margin Amount (increased by the amount of
any Margin Excess as of such date arising from any Transactions in which such
Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or (b)
of this Paragraph at or before the Margin Notice Deadline on any business day,
the party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such day. If any such notice is given after the Margin
Notice Deadline, the party receiving such notice shall transfer such cash or
Securities no later than the close of business in the relevant market on the
next business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin
Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount
or a specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit or
a Margin Excess, as the case may be, may be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
Agreement).
5. Income Payments
Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise received by
Seller, to the full extent it would be so entitled if the Securities had not
been sold to Buyer. Buyer shall, as the parties may agree with respect to any
Transaction (or, in the absence of any such agreement, as Buyer shall reasonably
determine in its discretion), on the date such Income is paid or distributed
either (i) transfer to or credit to the account of Seller such Income with
respect to any Purchased Securities subject to such Transaction or (ii) with
respect to Income paid in cash, apply the Income payment or payments to reduce
the amount, if any, to be transferred to Buyer by Seller upon termination of
such Transaction. Buyer shall not be obligated to take any action pursuant to
the preceding sentence (A) to the extent that such action would result in the
creation of a Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities sufficient to
eliminate such Margin Deficit, or (B) if an Event of
Default with respect to Seller has occurred and is then continuing at the
time such Income is paid or distributed.
6. Security Interest
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all Income thereon and
other proceeds thereof.
7. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party hereto
to the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer.
8. Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its possession
and shall be identified as subject to this Agreement. Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial or securities intermediary or a clearing
corporation. All of Seller's interest in the Purchased Securities shall pass to
Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller,
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise selling, transferring,
pledging or hypothecating the Purchased Securities, but no such transaction
shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation to
credit or pay Income to, or apply Income to the obligations of, Seller pursuant
to Paragraph 5 hereof.
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Required Disclosure for Transactions in Which the Seller Retains Custody of the
Purchased Securities
Seller is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer's securities segregated at all times,
unless in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that Buyer's
securities will likely be commingled with Seller's own securities during the
trading day. Buyer is advised that, during any trading day that Buyer's
securities are commingled with Seller's securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and
may be used by Seller for deliveries on other securities transactions. Whenever
the securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy [the
clearing]* [any]** lien or to obtain substitute securities.
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* Language to be used under 17 C.F.R.(beta)403.4(e) if Seller is a government
securities broker or dealer other than a financial institution.
** Language to be used under 17 C.F.R.(beta)403.5(d) if Seller is a financial
institution.
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9. Substitution
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to Buyer of such other Securities and transfer to
Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for purposes
of subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased Securities;
provided, however, that such other Securities shall have a Market Value at least
equal to the Market Value of the Purchased Securities for which they are
substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance of
any Transaction by the other party hereto, as agent for a disclosed principal),
(iii) the person signing this Agreement on its behalf is duly authorized to do
so on its behalf (or on behalf of any such disclosed principal), (iv) it has
obtained all authorizations of any governmental body required in connection with
this Agreement and the Transactions hereunder and such authorizations are in
full force and effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not
violate any law, ordinance, charter, by-law or rule applicable to it or any
agreement by which it is bound or by which any of its assets are affected. On
the Purchase Date for any Transaction Buyer and Seller shall each be deemed to
repeat all the foregoing representations made by it.
11. Events of Default
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to
repurchase or Buyer fails to transfer Purchased Securities upon the applicable
Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof,
(iv) Buyer fails, after one business day's notice, to comply with Paragraph 5
hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer; (vi)
any representation made by Seller or Buyer shall have been incorrect or untrue
in any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):
(a) The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an Act of
Insolvency), declare an Event of Default to have occurred hereunder and, upon
the exercise or deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred, be deemed
immediately to occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise or deemed
exercise, such Transaction shall be deemed immediately canceled). The
nondefaulting party shall (except upon the occurrence of an Act of Insolvency)
give notice to the defaulting party of the exercise of such option as promptly
as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, (i) the defaulting party's
obligations in such Transactions to repurchase all Purchased Securities, at the
Repurchase Price therefor on the Repurchase Date determined in accordance with
subparagraph (a) of this Paragraph, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the nondefaulting
party any Purchased Securities subject to such Transactions then in the
defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate Repurchase
Prices for all such Transactions, all right, title and interest in and
entitlement to all Purchased Securities subject to such Transactions shall be
deemed transferred to the nondefaulting party, and the defaulting party shall
deliver all such Purchased Securities to the nondefaulting party.
(d) If the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, the nondefaulting
party, without prior notice to the defaulting party, may:
(i) as to Transactions in which the defaulting party is acting as Seller,
(A) immediately sell, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase
Prices and any other amounts owing by the defaulting party hereunder or (B) in
its sole discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give the defaulting party credit for such Purchased Securities in
an amount equal to the price therefor on such date, obtained from a generally
recognized source or the most recent closing bid quotation from such a source,
against the aggregate unpaid Repurchase Prices and any other amounts owing by
the defaulting party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as Buyer,
(A) immediately purchase, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not delivered by the
defaulting party to the nondefaulting party as required hereunder or (B) in its
sole discretion elect, in lieu of purchasing Replacement Securities, to be
deemed to have purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most recent closing
offer quotation from such a source.
Unless otherwise provided in Annex I, the parties acknowledge and agree
that (1) the Securities subject to any Transaction hereunder are instruments
traded in a recognized market, (2) in the absence of a generally recognized
source for prices or bid or offer quotations for any Security the nondefaulting
party may establish the source therefor in its sole discretion and (3) all
prices, bids and offers shall be determined together with accrued Income (except
to the extent contrary to market practice with respect to the relevant
Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party for any excess
of the price paid (or deemed paid) by the nondefaulting party for Replacement
Securities over the Repurchase Price for the Purchased Securities replaced
thereby and for any amounts payable by the defaulting party under Paragraph 5
hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of the option referred to in subparagraph (a) of this
Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for (i)
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a result of an Event of Default,
(ii) damages in an amount equal to the cost (including all fees, expenses and
commissions) of entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result of an Event of
Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a
Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall
be liable to the non-defaulting party for interest on any amounts owing by the
defaulting party hereunder, from the date the defaulting party becomes liable
for such amounts hereunder until such amounts are (i) paid in full by the
defaulting party or (ii) satisfied in full by the exercise of the nondefaulting
party's rights hereunder. Interest on any sum payable by the defaulting party to
the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
13. Notices and Other Communications
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by mail, facsimile, telegraph, messenger or
otherwise to the address specified in Annex II hereto, or so sent to such party
at any other place specified in a notice of change of address hereafter received
by the other. All notices, demands and requests hereunder may be made orally, to
be confirmed promptly in writing, or by other communication as specified in the
preceding sentence.
14. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.
15. Non-assignability; Termination
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without the prior
written consent of the other party, and any such assignment without the prior
written consent of the other party shall be null and void. Subject to the
foregoing, this Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
This Agreement may be terminated by either party upon giving written notice to
the other, except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its interest in
any sum payable to it under Paragraph 11 hereof.
16. Governing Law
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.
18. Use of Employee Plan Assets
(a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan Party") in a Transaction, the Plan Party
shall so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not constitute
a prohibited transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required so to
proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph, any
such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available audited statement of its financial condition and
its most recent subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller shall
be deemed (i) to represent to Buyer that since the date of Seller's latest such
financial statements, there has been no material adverse change in Seller's
financial condition which Seller has not disclosed to Buyer, and (ii) to agree
to provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long as it is a Seller in any outstanding
Transaction involving a Plan Party.
19. Intent
(a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Securities subject to such Transaction or
the term of such Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets subject to
such Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a "financial institution" as that term is defined in
FDICIA).
20. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC") under
Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other
party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the SEC
under Section 15C of the 1934 Act, SIPA will not provide protection to the other
party with respect to any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable.
CRIIMI MAE INC. ▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL,
ACTING THROUGH ITS AGENT, ▇▇▇▇▇▇▇ LYNCH, PIERCE,
▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------- -----------------------------
Title: Executive Vice President Title: Vice President
Date: April 17, 2001 Date: April 17, 2001
Exhibit 10.1
ANNEX I to
MASTER REPURCHASE AGREEMENT
Supplemental Terms and Conditions
This Annex I forms a part of the Master Repurchase Agreement, dated as of
April 17, 2001, between CRIIMI MAE INC., as seller, and ▇▇▇▇▇▇▇ ▇▇▇▇▇
INTERNATIONAL, ACTING THROUGH ITS AGENT ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED, as buyer (as amended, supplemented or otherwise modified from time
to time, the "Master Repurchase Agreement"). Capitalized terms used in this
Annex I without definition shall have the respective meanings assigned to such
terms in the Master Repurchase Agreement. This Annex I is intended to supplement
the Master Repurchase Agreement and shall, wherever possible, be interpreted so
as to be consistent with the Master Repurchase Agreement; however, in the event
of any conflict or inconsistency between the provisions of this Annex I, on the
one hand, and the provisions of the Master Repurchase Agreement, on the other,
the provisions of this Annex I shall govern and control. All references in the
Master Repurchase Agreement to "this Agreement", and all references in this
Annex I to "the Agreement", shall be deemed to mean and refer to the Master
Repurchase Agreement, as supplemented and modified by this Annex I and by Annex
II to the Master Repurchase Agreement, as each may be amended, supplemented or
otherwise modified from time to time.
1. OTHER APPLICABLE ANNEXES
In addition to this Annex I, the following Annex and any Schedules thereto
shall form a part of the Master Repurchase Agreement and shall be applicable
thereunder:
Annex II - Names and Addresses for Communications Between Parties.
2. ADDITIONAL, SUBSTITUTE AND DELETED DEFINITIONS
(a) In addition to, or (in the case of terms already defined in the Master
Repurchase Agreement) in lieu of, the terms defined in the Master Repurchase
Agreement, the following terms shall have the respective meanings set forth
below:
"Accelerated Repurchase Date" shall have the meaning specified in Section
14(a)(i).
"Affiliate" shall mean, when used with respect to any specified Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with, such Person. "Control" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and "controlling" and "controlled" shall have meanings
correlative thereto.
"Agreement" shall have the meaning specified in the introductory paragraph
of this Annex I.
"AIM Funds" shall mean, collectively, (i) American Insured Mortgage
Investors Partnership, (ii) American Insured Mortgage Investors L.P. - Series
85, (iii) American Insured Mortgage Investors L.P. - Series 86, and (iv)
American Insured Mortgage Investors L.P. - Series 88.
"Amended Plan" shall mean that certain Debtors' Third Amended Joint Plan of
Reorganization, dated July 21, 2000, filed by Seller and two of its Affiliates,
as confirmed by an order entered by the Clerk of the United States Bankruptcy
Court for the District of Maryland on November 22, 2000.
"Applicable TDA" shall mean, at any time of determination on any date prior
to the Required Repurchase Price Downpayment having been paid in full, the
Target Downpayment Amount for the most recent Phase I Remittance Date occurring
on or before such date.
"Approved Operating Budget" shall mean, with respect to any fiscal year of
Seller, an operating budget for Seller and its Consolidated Subsidiaries for
such fiscal year that is delivered by Seller to Buyer pursuant to Section
12(h)(vi) and approved by Buyer in the manner provided in Section 12(h)(vi), as
such operating budget may be modified from time to time in the manner provided
in Section 12(h)(vi).
"Approved Servicer" shall mean, as of any date of determination, any Person
that is on the list of "approved special servicers" maintained by each of
Standard & Poor's Ratings Group and Fitch, Inc. as of such date.
"Available Transfer Amount" shall mean, as of any date on which funds in
the Cash Management Account are required under Section 5(e)(i) or 5(f)(i) to be
transferred to the Collection Account by reason of a Collection Account
Shortfall, the amount of funds in the Cash Management Account and/or the New
Note Collection Account which, absent any limitations then imposed by the
provisions of Sections 5(h)(iv), (v) and (vi), Seller would then be permitted to
use to make Permitted Cash Payments consisting of Restricted Payments in respect
of Common or Preferred Stock.
"Beneficial Purchaser" shall mean each Person, other than Buyer (solely in
its capacity as agent for the Beneficial Purchasers under the Transaction
Documents), that is party to the Co-Purchaser Agreement.
"Bloomberg" shall mean Bloomberg Financial Markets, Ltd.
"Business Day" shall mean a day other than (i) a Saturday or Sunday, or
(ii) a day on which the New York Stock Exchange or banks in the State of New
York and/or the State of Maryland and/or the city of London, England are
authorized or obligated by law or executive order to be closed.
"Buyer" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, acting through its agent,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, and its successors and
permitted assigns.
"Carryover Repurchase Price Installment" shall mean, with respect to any
Phase II Remittance Date, any portion of the Revised Repurchase Price
Installment in respect of any previous Phase II Remittance Date that shall not
have been paid in full on or before the first day of the Pricing Rate Period
ending on the applicable Phase II Remittance Date.
"Cash" shall mean money, currency or a credit balance in a deposit or other
account.
"Cash and Trading Assets" shall mean, collectively, (i) all Cash held by
Seller and its Subsidiaries on the Purchase Date (other than (a) Cash held by
CMSLP, (b) Cash held by the AIM Funds, (c) up to $23 million in Cash deposited
into escrow in connection with Disputed Claims (as defined in the Amended Plan),
and (d) Cash deposited into the Cash Management Account pursuant to Section
5(d)) after making all payments required to be made by Seller on the Purchase
Date pursuant to the Amended Plan, (ii) all Investment Securities owned by
Seller or any of its Subsidiaries (other than the AIM Funds) as of the Purchase
Date, and (iii) all Investment Securities or other assets purchased by Seller or
any of its Subsidiaries with, or with any Proceeds of, the Cash and Trading
Assets described in the foregoing clauses (i) and (ii) or any Investment
Securities or other assets so purchased.
"Cash Flow Shortfall Amount" shall have the meaning specified in the
definition of "Minimum Working Capital Balance".
"Cash Management Account" shall mean a segregated deposit account, in the
name of Seller, established at the CMA Bank.
"CBO REIT" shall mean CBO REIT, Inc. a Maryland corporation.
"CBO-1/Nomura Securities" shall mean, collectively, the commercial
mortgage-backed securities identified in Schedule I-B attached to this Annex I.
"CBO-2 Securities" shall mean, collectively, the commercial mortgage-backed
securities identified in Schedule I-A attached to this Annex I.
"CBO-2 Visible Losses" shall mean, as of any date of determination, the sum
of (i) CBO2VL plus (ii) the greater of (a) zero and (b) an amount equal to (1)
NOMVL minus (2) NOMEQ plus (iii) the greater of (a) zero and (b) an amount equal
to (1) CBO1VL minus (2) CBO1EQ.
For purposes of this definition only:
"CBO-1 Securities" shall mean, collectively, all classes of CRIIMI MAE
Commercial Mortgage Pass-Through Certificates Series 1996-C1 commercial
mortgage-backed securities;
"Nomura Securities" shall mean, collectively, all classes of Nomura Asset
Securities Corporation Commercial Mortgage Pass-Through Certificates Series
1998-D6 commercial mortgage-backed securities;
"Appraisal Reduction", with respect to any mortgage loan underlying any of
the CBO-2 Securities, the CBO-1 Securities or the Nomura Securities, as the case
may be, shall have the meaning specified for such term (or any comparable term)
in the Securitization Document for the securitization transaction relating to
such underlying mortgage loan; provided, however, that if such term (or a
comparable term) shall not be defined in such Securitization Document,
"Appraisal Reduction" shall have the meaning specified for the term "Appraisal
Reduction Amount" in the Securitization Document for the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors Inc. Mortgage Pass-Through Certificates, Series 1997-C2.
"Realized Loss", with respect to any mortgage loan underlying any of the
CBO-2 Securities, the CBO-1 Securities or the Nomura Securities, as the case may
be, shall have the meaning specified for such term (or any comparable term) in
the Securitization Document for the securitization transaction relating to such
underlying mortgage loan; provided, however, that if such term (or a comparable
term) shall not be defined in such Securitization Document, "Realized Loss"
shall have the meaning specified for the term "Realized Losses" in the
Securitization Document for the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Inc. Mortgage
Pass-Through Certificates, Series 1997-C2.
"Visible Loss" shall mean, as of any date of determination with respect to
the mortgage loans underlying the CBO-2 Securities, the CBO-1 Securities or the
Nomura Securities, as the case may be, the sum of (i) the cumulative aggregate
amount of all Realized Losses that have occurred with respect to such underlying
mortgage loans plus (ii) the product of (a) the cumulative aggregate amount of
all Appraisal Reductions that have occurred with respect to such underlying
mortgage loans multiplied by (b) 1.5;
"CBO2VL" shall mean the Visible Loss, or (if less) the portion thereof
allocable to securities owned by CRIIMI MAE Commercial Mortgage Trust 1998-C1 or
any of its Affiliates, with respect to the mortgage loans underlying the CBO-2
Securities (excluding any portion of such Visible Loss attributable to any such
mortgage loans which are also underlying the CBO-1 Securities or the Nomura
Securities);
"NOMVL" shall mean the Visible Loss, or (if less) the portion thereof
allocable to (i) securities owned by CRIIMI MAE Commercial Mortgage Trust
1998-C1 or any of its Affiliates or (ii) the B-7 class of the Nomura Securities,
with respect to the mortgage loans underlying the Nomura Securities;
"NOMEQ" shall mean the original principal balance of the B-7 class of the
Nomura Securities, which is $46,532,578;
"CBO1VL" shall mean the Visible Loss, or (if less) the portion thereof
allocable to securities owned by CRIIMI MAE Commercial Mortgage Trust 1996-C1 or
any of its Affiliates, with respect to the mortgage loans underlying the CBO-1
Securities; and
"CBO1EQ" shall mean the aggregate original principal balance of the F and
Issuer Equity classes of the CBO-1 Securities, which is $112,069,949
"Change of Control" shall mean the consummation of any transaction
(including, without limitation, any merger or consolidation) that results in any
"person" (as defined in Section 13(d)(3) of the Exchange Act) becoming the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition), directly or indirectly, of more than 35% of the
Voting Stock of Seller (measured by voting power rather than number of shares).
"CMA Bank" shall mean SunTrust Bank or any successor CMA Bank appointed by
Seller with the written consent of Buyer and the New Note Trustees (which
consent shall not be unreasonably withheld).
"CMA Shortfall" shall mean, as of any Remittance Date, the amount by which
the funds in the Cash Management Account and the New Note Collection Account as
of such Remittance Date are insufficient (i) to enable Seller to make the
Permitted Cash Payments then permitted or required to be made by Seller from the
Cash Management Account and/or (ii) in the case of any Phase I Remittance Date,
to maintain the Minimum Working Capital Balance in the Cash Management Account;
provided, however, that, for purposes of Section 5(b)(ii), if Buyer shall not
have received, on or before such Remittance Date (and after application of the
amount remitted to Buyer pursuant to Section 5(b)(i) on such Remittance Date),
an aggregate amount of Repurchase Price Downpayments at least equal to the
Applicable TDA (the amount by which the Applicable TDA exceeds the aggregate
amount of Repurchase Price Downpayments so received by Buyer being the "TDA
Shortfall" for such Remittance Date), then the amount of the CMA Shortfall for
such Remittance Date shall be reduced to the extent (but only to the extent)
necessary to cause the amount that will be remitted to Buyer pursuant to Section
5(b)(iii) on such Remittance Date to be sufficient to make the maximum possible
reduction in the TDA Shortfall for such Remittance Date; provided, however, that
the immediately preceding proviso shall not reduce the CMA Shortfall for such
Remittance Date to an amount less than the lesser of (a) the balance remaining
in the Collection Account after the remittance to Buyer pursuant to Section
5(b)(i) on such Remittance Date and (b) the sum of (1) any Permitted Note
Payments that are permitted or required to be made by Seller from the Cash
Management Account on such Remittance Date plus (2) the amount, if any, by which
the sum of (A) the Permitted Note Payments to be made by Seller during the
period from such Remittance Date to the next succeeding Remittance Date plus (B)
without duplication of any amounts included in clause (2)(A), the aggregate
of all amounts necessary (on an "accrual" basis) to make the Permitted Note
Payments next coming due, will exceed (C) the amount jointly determined by Buyer
and Seller in the exercise of their good faith business judgment to be the
aggregate amount of all Eligible Cash Receipts that will be deposited in the New
Note Collection Account and the Cash Management Account over the period
described in clause (2)(A).
"CMBS Corp" shall mean CRIIMI MAE CMBS Corp., a Delaware corporation.
"CMBS Corp Pledged Stock" shall have the meaning ascribed to that term in
the Security Agreement.
"CMSLP" shall mean CRIIMI MAE Services Limited Partnership, a Maryland
limited partnership.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning specified in Section 6
"Collateral Agent" shall mean ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated or any successor Collateral Agent appointed by Buyer pursuant to
the Intercreditor Agreement to act as custodian of the Purchased Securities and
to act as Collateral Agent on behalf of Buyer and the New Note Trustees under
the Security Agreement.
"Collection Account" shall mean a segregated deposit account established at
the Depository in the name of Seller but under the sole dominion and control of
the Collateral Agent for the benefit of Buyer and the New Note Trustees, as
their respective interests in such account may appear.
"Collection Account Shortfall" shall mean, as of any Remittance Date, the
amount by which (x) the Minimum Repurchase Price Installment due and payable on
such Remittance Date exceeds (y) the amount of funds in the Collection Account
available to pay such Minimum Repurchase Price Installment on such Remittance
Date.
"Common Stock" shall mean, as of any date, all shares of Seller's common
stock issued and outstanding as of such date.
"Confirmation" shall have the meaning specified in Section 3(b) .
"Consolidated Subsidiaries" shall mean, collectively, all Subsidiaries of
Seller other than CMSLP and the AIM Funds.
"Contractual Obligation", as applied to any Person, shall mean any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Co-Purchaser Agreement" shall mean that certain Co-Purchaser and Agency
Agreement, dated as of the date hereof, by and among Buyer (in its capacity as
agent for the Beneficial Purchasers under the Transaction Documents), the
initial Beneficial Purchasers party thereto and any other Beneficial Purchasers
that may from time to time become parties thereto in accordance with the terms
thereof, as such Co-Purchaser Agreement may be amended from time to time.
"Core MWCB" shall mean, as of any Phase I Remittance Date, $7.5 million;
provided, however, that if Seller makes any Permitted Cash Payments other than
Permitted Note Payments out of the Cash Management Account at any time when
Buyer shall not have received the Applicable TDA, then the Core MWCB shall be
reduced by the amount of such Permitted Cash Payments until such time as Buyer
shall have received the Applicable TDA on three consecutive Phase I Remittance
Dates occurring subsequent to the date on which such Permitted Cash Payments
were made.
"DB Co-Purchaser" shall mean Deutsche Bank AG, New York Branch.
"Default" shall mean any event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default.
"Depository" shall mean SunTrust Bank or any successor Depository appointed
by Buyer with the consent of Seller (which consent shall not be unreasonably
withheld or delayed).
"Designated Seller Affiliates" shall mean, collectively, CBO REIT, CMBS
Corp and QRS-1.
"Dividend Preferred Stock" shall mean any series of Preferred Stock issued
by Seller to holders of its Common Stock, in lieu of a cash dividend, to satisfy
the requirement that Seller distribute not less than a specified percentage of
its real estate investment trust taxable income each year in order to maintain
its status as a "real estate investment trust" for federal income tax purposes.
"Early Repurchase Date" shall have the meaning specified in Section 3(d).
"Eligible Cash Receipts" shall mean all payments, distributions and other
amounts received by Seller or any of its Subsidiaries from and after the date
hereof (a) relating to the CBO-1/Nomura Securities or the QRS-1 Pledged Stock,
(b) relating to the Purchased Securities, (c) consisting of dividends, interest,
rent, royalties or similar payments in respect of the Cash and Trading Assets,
(d) consisting of dividends, interest, rent, royalties or similar payments in
respect of any Investment Securities not constituting part of the Cash and
Trading Assets, or (e) relating to any other assets owned by Seller on the date
hereof and any assets subsequently purchased with any Proceeds of such other
assets or with any Proceeds of any assets so purchased; provided, however, that
in no event shall Eligible Cash Receipts include (i) any Excluded Cash Receipts
(including without limitation any payments relating to the Purchased Securities
to the extent such
payments are required to be deposited into the Collection Account pursuant
to Section 5(a)), (ii) any dividends, interest, rent, royalties or similar
payments in respect of any Investment Securities purchased with the proceeds of
any Equity Investment, or with the Proceeds of any Investment Securities so
purchased, or (iii) any proceeds from the sale of any Investment Securities.
"Equity Investment" shall mean an equity investment in Seller made
subsequent to the date hereof by a New Equity Investor .
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
References herein to ERISA, or to specific provisions thereof, are to ERISA as
in effect at the date of the Agreement and, as of the relevant date, any
subsequent provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or 414(o) of the Code of which Seller is a
member.
"Excluded Cash Receipts" shall mean, without duplication, (a) all revenue
and receipts of CMSLP and the AIM Funds, (b) all payments relating to the
Miscellaneous Assets, (c) all payments relating to the CBO-2 Securities or the
CMBS Corp Pledged Stock, (d) all payments relating to the Purchased Securities
to the extent such payments are required to be deposited into the Collection
Account pursuant to Section 5(a), and (e) any payments described in clause (c)
or (d) of the definition of "Eligible Cash Receipts" to the extent the same are
used to pay interest expense on any indebtedness incurred by Seller or any of
its Consolidated Subsidiaries for the purpose of purchasing or carrying any
Investment Securities.
"Extension Fee" shall have the meaning specified in Section 3(e)(i).
"Extrinsic Funds" shall mean funds of Seller (a) that are obtained from an
Equity Investment or from the sale of any asset acquired with proceeds of an
Equity Investment, (b) that constitute (i) all or any portion of the Cash and
Trading Assets or (ii) Proceeds of all or any portion of the Cash and Trading
Assets other than payments described in clause (c) of the definition of
"Eligible Cash Receipts", or (c) that Seller would otherwise be entitled under
the Transaction Documents to pay to its equity securityholders as a dividend.
Neither any Proceeds of the Purchased Securities, the CBO-2 Securities or the
CMBS Corp Pledged Stock, nor any Eligible Cash Receipts, shall constitute
Extrinsic Funds, in each case except to the extent that Seller would otherwise
be entitled under the Transaction Documents to use such Proceeds or such
Eligible Cash Receipts, as the case may be, to pay dividends to equity
securityholders of Seller.
"GAAP" shall mean United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"Governmental Authority" shall mean any national or federal government
(whether domestic or foreign), any state, regional, local or other political
subdivision thereof with jurisdiction, and any Person with jurisdiction
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hedging Strategy" shall have the meaning specified in Schedule I-C
attached to this Annex I.
"Hedging Transactions" shall mean, with respect to any or all of the CBO-2
Securities, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangement
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller in connection with the Hedging Strategy.
"Indebtedness Ratio" shall mean the ratio of (a) the Purchase Price to (b)
the aggregate outstanding principal balance of the New Notes as of the date
hereof.
"Indemnified Amounts" and "Indemnified Parties" shall have the respective
meanings specified in Section 19.
"Intercreditor Agreement" shall mean that certain Intercreditor and
Collateral Agency Agreement, dated as of the date hereof, by and among Buyer,
the New Note Trustees and the Collateral Agent, as it may be amended,
supplemented or otherwise modified from time to time.
"Investment Securities" shall mean all "investment property" (as defined in
the UCC) that is owned or acquired by Seller or any of its Subsidiaries for
investment purposes; provided, however, that Investment Securities shall not
include the Purchased Securities, the CBO-2 Securities, the CBO-1/Nomura
Securities or any of the Miscellaneous Assets.
"Late Payment Charge" shall have the meaning specified in Section 3(o).
"LIBOR" shall mean the rate per annum calculated as set forth below:
(i) On each Pricing Rate Determination Date, LIBOR for the next Pricing
Rate Period will be the rate for deposits in United States dollars for a
one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London
time, on such date; or
(ii) On any Pricing Rate Determination Date on which no such rate appears
on Telerate Page 3750 as described above, LIBOR for the next Pricing Rate Period
will be the rate for deposits in United States dollars for a one-month period
which appears on Page MMR16 of Bloomberg as of 11:00 a.m., London time, on such
date; or
(iii) On any Pricing Rate Determination Date on which no such rate appears
on Telerate Page 3750 or Page MMR16 of Bloomberg as described above, LIBOR for
the next Pricing Rate Period will be the rate at which deposits in United States
dollars are offered by Deutsche Bank A.G. at approximately 11:00 a.m., London
time, on such date to prime banks in the London interbank market for a one-month
period.
All percentages resulting from any calculations or determinations referred
to in this definition will be rounded upwards, if necessary, to the nearest
multiple of 1/100 of 1% and all U.S. dollar amounts used in or resulting from
such calculations will be rounded to the nearest cent (with one-half cent or
more being rounded upwards).
"LIBO Rate" shall mean, with respect to any Pricing Rate Period, a rate per
annum determined for such Pricing Rate Period in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):
LIBOR
---------------------------------
1.00 - Reserve Requirement
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loss Threshold Amount" shall mean, as of any date of determination, the
applicable amount for the period in which such date occurs, as set forth on
Schedule I-D attached to this Annex I.
"Master Repurchase Agreement" shall have the meaning specified in the
introductory paragraph of this Annex I.
"Material Adverse Effect" shall mean a material adverse effect upon (a) the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Seller and its Subsidiaries, taken as a whole, (b) the value of the
Purchased Securities, the CBO-2 Securities, the CBO-1/Nomura Securities, the
CMBS Corp Pledged Stock or the QRS-1 Pledged Stock, or (c) the ability of Seller
to perform, or of Buyer to enforce, the obligations of Seller under any of the
Transaction Documents.
"Minimum Repurchase Price Installment" shall mean, with respect to any
Remittance Date, a payment on account of the Repurchase Price calculated in
accordance with the Minimum Repurchase Price Installment Formula.
"Minimum Repurchase Price Installment Formula" shall mean the formula set
forth below for calculating the Minimum Repurchase Price Installment payable on
any Remittance Date:
(PR) x (1 + PR)n
MRPI = UPP x ---------------------
[(1 + PR)n - 1]
For purposes of this definition only:
"MRPI" shall mean the Minimum Repurchase Price Installment for the
applicable Remittance Date;
"UPP" shall mean the Unamortized Purchase Price as of the first day (for
purposes of this definition, the "Calculation Date") of the Pricing Rate Period
(for purposes of this definition, the "Current Pricing Rate Period") ending on
the applicable Remittance Date, in each case after giving effect to any
Repurchase Price Downpayments made on the Calculation Date;
"PR" shall mean (a) the Pricing Rate in effect for the Current Pricing Rate
Period divided by (b) 12; and
"n" shall mean the number of months from the Calculation Date to the last
day of the calendar month ending closest to the fifteenth (15th) anniversary of
the Purchase Date.
Seller and Buyer acknowledge and agree that the Minimum Repurchase Price
Installment Formula is designed to calculate, as of the Calculation Date, the
amount that would be required to be paid on the applicable Remittance Date
pursuant to a monthly payment schedule providing for a fixed aggregate amount to
be paid each month in respect of the Unamortized Purchase Price and the Price
Differential over the period (for purposes of this definition, the "Nominal
Amortization Period") commencing on the Calculation Date and ending on the last
day of the calendar month ending closest to the fifteenth (15th) anniversary of
the Purchase Date, which aggregate amount would be sufficient (i) to reduce the
Price Differential to zero on the applicable Remittance Date and on each
subsequent Remittance Date during the Nominal Amortization Period, assuming that
the Pricing Rate in effect for the Current Pricing Rate Period will remain in
effect for the remainder of the Nominal Amortization Period, and (ii) to reduce
the Unamortized Purchase Price as of the Calculation Date (after giving effect
to all Repurchase Price Downpayments made on the Calculation Date) to zero on
the last day of the Nominal Amortization Period.
"Minimum Working Capital Balance" shall mean, as of any Phase I Remittance
Date, the sum of (a) the Core MWCB as of such Phase I Remittance Date plus (b)
the amount (the "Cash Flow Shortfall Amount" in respect of such Phase I
Remittance Date) determined in the manner described below to be the amount by
which (i) the sum of (A) the Permitted Cash Payments to be made by Seller during
the period from such Phase I Remittance Date to the next succeeding Remittance
Date plus (B) without duplication of any amounts included in the immediately
preceding clause (A), the aggregate of all amounts necessary (on an "accrual"
basis) to make the Permitted Note Payments next coming due will exceed (ii) the
aggregate amount of all Eligible Cash Receipts that will be deposited in the New
Note Collection Account and the Cash Management Account over the period
described in clause (i)(A). The Cash Flow Shortfall Amount, if any, in respect
of any Phase I Remittance Date shall be determined as follows: (1) no later than
two (2) Business Days prior to such Phase I Remittance Date, Seller shall
deliver to Buyer a written statement setting forth in reasonable detail Seller's
good faith calculation of the amount of such Cash Flow Shortfall Amount, (2) on
or before such Phase I Remittance Date, Buyer shall accept or reject Seller's
calculation of such Cash Flow Shortfall Amount, in the exercise of Buyer's good
faith business judgment, by giving written notice to Seller of such acceptance
or rejection (it being understood that, if Seller's calculation shall have been
timely delivered to Buyer in accordance with clause (1) above and Buyer fails to
provide such a written notice of acceptance or rejection to Seller before 5:00
p.m. (Eastern Standard Time) on the day prior to such Phase I Remittance Date,
Buyer shall be deemed to have accepted Seller's calculation of such Cash Flow
Shortfall Amount), and (3) if Buyer rejects Seller's calculation of such Cash
Flow Shortfall Amount, the Cash Flow Shortfall Amount in respect of such Phase I
Remittance Date shall be the Cash Flow Shortfall Amount, if any, jointly
determined by Buyer and Seller in the reasonable exercise of their good faith
business judgment; provided, however, that Buyer shall not be entitled to reject
Seller's calculation of such Cash Flow Shortfall Amount to the extent the amount
thereof is less than or equal to the amount of the Cash Flow Shortfall Amount,
if any, set forth in the Approved Operating Budget with respect to such Phase I
Remittance Date.
"Miscellaneous Assets" shall mean, collectively, the assets identified in
Schedule I-E attached to this Annex I.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been, or were required to
have been, made by Seller or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Net Cash Flow" shall mean, as of any Remittance Date, the excess, if any,
of (i) the sum of (a) the Cash Flow Shortfall Amount, if any, on the first day
of the Pricing Rate Period ending on such Remittance Date plus (b) the aggregate
amount of all Eligible Cash Receipts deposited or required to be deposited in
the New Note Collection Account and the Cash Management Account during such
Pricing Rate Period over (ii) the sum of (a) all Permitted Cash Payments made
during such Pricing Rate Period out of funds on deposit in the Cash Management
Account plus (b) any portion of the Cash Flow Shortfall
Amount referred to in clause (i)(a) that represents Permitted Note Payments
that were not due and payable during such Pricing Rate Period; provided,
however, that, if Buyer did not receive the Applicable TDA on the Remittance
Date occurring on the first day of such Pricing Rate Period, then Net Cash Flow
shall be calculated without giving effect, for purposes of clause (ii)(a), to
any Permitted Cash Payments other than Permitted Note Payments that were made
during such Pricing Rate Period out of funds on deposit in the Cash Management
Account.
"New Equity Dividend Cap" shall mean, with respect to any twelve-month
period during the term of this Agreement, an aggregate amount of cash dividends
on Common Stock or Preferred Stock issued to a New Equity Investor equal to the
lesser of (a) $5 million and (b) the amount necessary to provide such New Equity
Investor a twelve percent (12%) per annum payment on such New Equity Investor's
equity investment in Seller with respect to such twelve-month period.
"New Equity Investor" shall mean any Person, other than a Subsidiary of
Seller, to whom equity securities of Seller are issued after the Purchase Date
in consideration of an Equity Investment in Seller made by such Person.
"New Note Collection Account" shall mean a segregated deposit account
established at the CMA Bank in the name of Seller but under the sole dominion
and control of the Collateral Agent for the benefit of Buyer and the New Note
Trustees, as their respective interests in such account may appear.
"New Note Indentures" shall mean, collectively, the Series A Note Indenture
and the Series B Note Indenture.
"New Note Trustees" shall mean, collectively, the Series A Trustee and the
Series B Trustee.
"New Notes" shall mean, collectively, the Series A Notes and the Series B
Notes.
"Noteholder Preferred Stock" shall mean the two series of Preferred Stock
of Seller, having the rights and privileges set forth in Exhibit B to each New
Note Indenture as in effect on the Purchase Date, into which holders of the
applicable New Notes may convert their New Notes in the event of (i) a prior
determination by Seller that payment of a cash dividend is required to satisfy
the requirement that Seller distribute not less than a specified percentage of
its real estate investment trust taxable income each year in order to maintain
its status as a "real estate investment trust" for federal income tax purposes
and (ii) a prior declaration by Seller of such cash dividend, such cash dividend
to be payable first to redeem Noteholder Preferred Stock of holders of New Notes
who elect to convert their New Notes as aforesaid.
"Payment Cap" shall have the meaning specified in Section 5(g).
"Permitted Cash Payments" shall mean, with respect to any relevant period,
(i) all general operating and administrative expenses of Seller and its
Consolidated Subsidiaries on an accrual basis for such period, to the extent
such expenses do not exceed the total as set forth in the Approved Operating
Budget applicable to such period; provided, however, that (a) no interest
expense relating to indebtedness incurred by Seller or any of its Subsidiaries
to purchase or carry any Investment Securities shall be paid from Eligible Cash
Receipts deposited or required to be deposited in the New Note Collection
Account or the Cash Management Account, and (b) notwithstanding the fact that
the general operating and administrative expenses of CMSLP are not included in
the Approved Operating Budget, such expenses of CMSLP may be paid from Eligible
Cash Receipts deposited or required to be deposited in the New Note Collection
Account or the Cash Management Account so long as all revenues and other
available Cash resources of CMSLP shall have first been applied toward payment
of such CMSLP expenses;
(ii) subject to any applicable restrictions appearing in Section 5(h), (a)
accrued and unpaid interest on the Series A Notes and accrued and unpaid
current-pay interest on the Series B Notes and (b) cash dividends on any
outstanding Noteholder Preferred Stock to the extent payable at the same times
and in the same amounts as the cash interest payments that would have been
payable on the New Notes that were converted into such Noteholder Preferred
Stock, as contemplated in the definition thereof, had such New Notes not been so
converted (the Permitted Cash Payments described in this clause (ii) being
"Permitted Note Payments");
(iii) subject to any applicable restrictions appearing in Section 5(h),
principal paydowns on the Series A Notes in amounts equal to (a) $5,000,000 on
the date that is twenty-four (24) months after the date hereof, (b) $15,000,000
on the date that is thirty-six (36) months after the date hereof, and (c)
$15,000,000 on the date that is forty-eight (48) months after the date hereof;
(iv) subject to any applicable restrictions appearing in Section 5(h), cash
dividends on Seller's Series F Preferred Stock and/or Series G Preferred Stock;
(v) subject to any applicable restrictions appearing in Section 5(h), cash
dividends on any Dividend Preferred Stock and/or cash distributions (in the form
of redemption payments) on the Noteholder Preferred Stock as contemplated in the
definition thereof, but only to the extent Seller shall have provided Buyer with
evidence reasonably satisfactory to Buyer that payment of such cash dividends
and/or cash redemption payments is required to satisfy the requirement that
Seller distribute not less than a specified percentage of its real estate
investment trust taxable income each year in order to maintain its status as a
"real estate investment trust" for federal income tax purposes;
(vi) subject to any applicable restrictions appearing in Section 5(h),
non-discretionary cash dividends on any Common Stock or Preferred Stock issued
to a New Equity Investor in consideration for its Equity Investment;
(vii) payments, such as excise taxes (but excluding cash dividends), that
are necessary to maintain Seller's status as a real estate investment trust for
federal income tax purposes; and
(viii) payments required to be made by Seller pursuant to any Hedging
Transaction.
"Permitted Liens" shall mean, with respect to the Collateral, (i) subject
to the provisions of the Intercreditor Agreement, the security interests created
under the Security Agreement in favor of the Collateral Agent for the benefit of
the New Note Trustees (as representatives of the holders of the New Notes), (ii)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (iii) Liens created in favor of the New Note Trustees
pursuant to the New Note Indentures as in effect on the date hereof, (iv)
judgment Liens not giving rise to an Event of Default, in each case so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of the related judgment shall not have
finally terminated and the period within which such proceedings may be initiated
shall not have expired, and (v) Liens on Proceeds of Collateral consisting of
setoff, chargeback and other rights of depository and collecting banks and other
regulated financial institutions with respect to any such Proceeds on deposit
with or in the possession of such institutions.
"Permitted Note Payments" shall have the meaning specified in clause (ii)
of the definition of "Permitted Cash Payments".
"Person" shall mean an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Phase I Remittance Date" shall mean any Remittance Date occurring prior to
such time as the Required Repurchase Price Downpayment shall have been paid in
full.
"Phase II Remittance Date" shall mean any Remittance Date occurring on or
after such time as the Required Repurchase Price Downpayment shall have been
paid in full.
"Plan" shall mean an employee benefit or other plan established or
maintained by Seller or any ERISA Affiliate or to which Seller or any ERISA
Affiliate makes, is obligated to make or has been required to make contributions
and that is covered by Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code, other than
a Multiemployer Plan.
"Preferred Stock" shall mean, as of any date, collectively, (i) all shares
of Seller's Series B Preferred Stock and Series E Preferred Stock issued and
outstanding on such date, (ii) all shares of Seller's Series F Preferred Stock
and Series G Preferred Stock and any additional series of Dividend Preferred
Stock issued and outstanding on such date, (iii) all shares of any series of
preferred stock issued by Seller in respect of any Equity Investment, which
shares are outstanding on such date, and (iv) all shares of Noteholder Preferred
Stock issued and outstanding on such date.
"Price Differential" shall mean, as of any date of determination, an amount
equal to (a) the sum of the amounts obtained by daily application of the Pricing
Rate to the Unamortized Purchase Price as of each day during the period
commencing on (and including) the Purchase Date and ending on (but excluding)
such date of determination, calculated on the basis of a 360-day year (or,
during any period with respect to which the Pricing Rate shall have been
converted to the Prime-Based Rate pursuant to Section 3(g) or 3(h), a
365/366-day year) for the actual number of days elapsed during the period for
which such calculation is made, minus (b) all payments previously received by
Buyer which, pursuant to the terms of the Agreement, are applied to reduce the
Price Differential.
"Pricing Rate" shall mean, for any Pricing Rate Period, a per annum rate
equal to the LIBO Rate for such Pricing Rate Period plus (i) so long as no Event
of Default shall have occurred and be continuing, 325 basis points (3.25%), and
(ii) at any time when an Event of Default shall have occurred and be continuing,
725 basis points (7.25%); provided, however, that the Pricing Rate shall be
subject to adjustment and/or conversion as provided in Sections 3(g) and 3(h).
"Pricing Rate Determination Date" shall mean, with respect to any Pricing
Rate Period, the second (2nd) Business Day preceding the first day of such
Pricing Rate Period.
"Pricing Rate Period" shall mean, (a) in the case of the first Pricing Rate
Period, the period commencing on (and including) the Purchase Date and ending on
(and excluding) the first Remittance Date, and (b) in the case of any subsequent
Pricing Rate Period, the period commencing on (and including) the Remittance
Date that is the last day of the immediately preceding Pricing Rate Period and
ending on (and excluding) the following Remittance Date; provided, however, that
in no event shall any Pricing Rate Period end subsequent to the Repurchase Date.
"Prime-Based Rate" shall mean, as of any date of determination, a per annum
rate equal to the Prime Rate as of such date plus 325 basis points (3.25%), it
being understood and agreed that for purposes of this definition any change in
the Prime Rate shall take effect at the opening of business on the date of
publication of such change.
"Proceeds" shall mean, with respect to any property (whether real, personal
or mixed, and whether tangible or intangible), whatever is received upon the
sale, exchange, collection, or other disposition of such property or any
Proceeds thereof, including without limitation (i) insurance payable by reason
of loss or damage to such property (except to the extent payable to a Person
other than the owner of such property) and (ii) in the case of any "investment
property" (as defined in the UCC), any payments or distributions, whether of
principal, interest or otherwise, in respect of such property.
"Purchase Price" shall mean the sum of $262,441,039.49, representing the
purchase price paid, or deemed to have been paid, by Buyer for the Purchased
Securities pursuant to the Agreement.
"Purchased Securities" shall mean, collectively, all of the issued and
outstanding shares of capital stock of CBO REIT owned by Seller, as of the date
hereof, immediately prior to giving effect to the sale effected hereby.
"QRS-1" shall mean CRIIMI MAE QRS 1, Inc., a Delaware corporation.
"QRS-1 Pledged Stock" shall have the meaning ascribed to that term in the
Security Agreement.
"Remittance Date" shall mean the thirteenth (13th) calendar day of each
month, or the next succeeding Business Day, if such calendar day shall not be a
Business Day.
"Repurchase Date" shall have the meaning specified in Section 3(e).
"Repurchase Price" shall mean, as of any date of determination, the price
that would be required to be paid by Seller to Buyer in order to repurchase the
Purchased Securities as of such date, which price shall be calculated in each
case as the sum of the Unamortized Purchase Price as of such date, plus the
Price Differential as of such date.
"Repurchase Price Downpayment" shall mean any payment received by Buyer
which, pursuant to the terms of the Agreement, is applied to reduce the
Unamortized Purchase Price, including without limitation any such payment
pursuant to Section 3(d), 3(e), 4(b), 4(c), 4(e), 5(b), 5(c), 5(e), 5(f), 5(h),
5(i) or 5(j).
"Required Repurchase Price Downpayment" shall mean $50 million.
"Requirement of Law" shall mean any law, treaty, rule, regulation, code,
directive, policy, order or requirement or determination of an arbitrator or a
court or other governmental authority, whether now or hereafter enacted or in
effect.
"Reserve Requirement" shall mean, with respect to any day during any
Pricing Rate Period, the percentage (expressed as a decimal fraction) which is
in effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor), for determining the maximum reserve
requirement (including, without
limitation, all basic, supplemental, marginal, emergency and other reserves
and taking into account any transitional adjustments or other scheduled changes
in reserve requirements) for a member bank of the Federal Reserve System in
respect of eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board of Governors). Buyer shall promptly
notify Seller of any change in Reserve Requirements during the term of the
Agreement, and the LIBO Rate shall be adjusted automatically on and as of the
effective date of any change in Reserve Requirements.
"Reset Date" shall mean the last day of each Pricing Rate Period.
"Restricted Payment" shall mean (i) any Cash dividend or other Cash
distribution on account of any shares of Common Stock or Preferred Stock or (ii)
any Cash payment made to redeem, retire, purchase, repurchase or otherwise
acquire any shares of Common Stock or Preferred Stock.
"Revised Repurchase Price Installment" shall mean, with respect to any
Phase II Remittance Date, a payment on account of the Repurchase Price
calculated in accordance with the Revised Repurchase Price Installment Formula.
"Revised Repurchase Price Installment Formula" shall mean the formula set
forth below for calculating the Revised Repurchase Price Installment payable on
any Phase II Remittance Date:
(PR) x (1 + PR)n
RRPI = UPP x ---------------------
[(1 + PR)n - 1]
For purposes of this definition only:
"RRPI" shall mean the Revised Repurchase Price Installment for the
applicable Phase II Remittance Date;
"UPP" shall mean the Unamortized Purchase Price as of the first day (for
purposes of this definition, the "Calculation Date") of the Pricing Rate Period
(for purposes of this definition, the "Current Pricing Rate Period") ending on
the applicable Phase II Remittance Date, in each case after (a) giving effect to
any Repurchase Price Downpayments made on the Calculation Date and (b)
subtracting any Carryover Repurchase Price Installment with respect to the
applicable Phase II Remittance Date;
"PR" shall mean (a) the Pricing Rate in effect for the Current Pricing Rate
Period divided by (b) 12; and
"n" shall mean the number of months from the Calculation Date to the last
day of the calendar month ending closest to the thirteenth (13th) anniversary of
the Purchase Date.
Seller and Buyer acknowledge and agree that the Revised Repurchase Price
Installment Formula is designed to calculate, as of the Calculation Date, the
amount that would be required to be paid on the applicable Phase II Remittance
Date pursuant to a monthly payment schedule providing for a fixed aggregate
amount to be paid each month in respect of the Unamortized Purchase Price and
the Price Differential over the period (for purposes of this definition, the
"Nominal Amortization Period") commencing on the Calculation Date and ending on
the last day of the calendar month ending closest to the thirteenth (13th)
anniversary of the Purchase Date, which aggregate amount would be sufficient (a)
to reduce the Price Differential to zero on the applicable Phase II Remittance
Date and on each subsequent Remittance Date during the Nominal Amortization
Period, assuming that the Pricing Rate in effect for the Current Pricing Rate
Period will remain in effect for the remainder of the Nominal Amortization
Period, and (b) to reduce the Unamortized Purchase Price as of the Calculation
Date (after giving effect to all Repurchase Price Downpayments made on the
Calculation Date, and after subtracting any Carryover Repurchase Price
Installment with respect to the applicable Phase II Remittance Date) to zero on
the last day of the Nominal Amortization Period.
"Securitization Document" shall mean, as the context may require, the
pooling and servicing agreement, trust indenture, master servicing agreement
and/or special servicing agreement for a securitization transaction involving
mortgage loans or commercial mortgage-backed securities.
"Security Agreement" shall mean that certain Security and Pledge Agreement,
dated as of the date hereof, between Seller and the Collateral Agent, as it may
be amended, supplemented or otherwise modified from time to time.
"Seller" shall mean CRIIMI MAE Inc., a Maryland corporation. ------
"Seller Disclosure Schedule" shall mean the Seller Disclosure Schedule
attached to this Annex I as Schedule X.
"Series A Note Indenture" shall mean the Indenture, dated as of the date
hereof, between Seller and the Series A Trustee relating to the Series A Notes,
as it may be amended, supplemented or otherwise modified from time to time to
the extent not prohibited under the Agreement.
"Series A Notes" shall mean, collectively, the 11.75% Series A Senior
Secured Notes due 2006 issued on the date hereof by Seller pursuant to the
Series A Note Indenture to the holders of Allowed Class A9 and A10 Claims (as
defined in the Amended Plan), together with any additional such Notes issued as
payment-in-kind of fees pursuant to Section 1 of the Series A Notes as in effect
on the date hereof.
"Series A Trustee" shall mean the trustee under the Series A Note
Indenture.
"Series B Note Indenture" shall mean the Indenture, dated as of the date
hereof, between Seller and the Series B Trustee relating to the Series B Notes,
as it may be amended, supplemented or otherwise modified from time to time to
the extent not prohibited under the Agreement.
"Series B Notes" shall mean, collectively, the 20% Series B Senior Secured
Notes due 2007 issued on the date hereof by Seller pursuant to the Series B Note
Indenture to the holders of Allowed Class A9 and A10 Claims (as defined in the
Amended Plan), together with any additional such Notes issued as payment-in-kind
of interest or fees pursuant to Section 1 of the Series B Notes as in effect on
the date hereof.
"Series B Trustee" shall mean the trustee under the Series B Note
Indenture.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Target Downpayment Amount" shall mean, with respect to any Phase I
Remittance Date, a cumulative amount of Repurchase Price Downpayments made on or
prior to such Phase I Remittance Date equal to the amount set forth below
opposite such Phase I Remittance Date:
------------------------------------ -------------------------------------------
Phase I Remittance Date Target Downpayment Amount
------------------------------------ -------------------------------------------
June 13, 2001 $ 1,562,500
------------------------------------ -------------------------------------------
July 13, 2001 $ 3,125,000
------------------------------------ -------------------------------------------
August 13, 2001 $ 5,625,000
------------------------------------ -------------------------------------------
September 13, 2001 $ 6,250,000
------------------------------------ -------------------------------------------
October 15, 2001 $ 7,812,500
------------------------------------ -------------------------------------------
November 13, 2001 $11,250,000
------------------------------------ -------------------------------------------
December 13, 2001 $11,250,000
------------------------------------ -------------------------------------------
January 14, 2002 $12,500,000
------------------------------------ -------------------------------------------
------------------------------------ -------------------------------------------
February 13, 2002 $16,875,000
------------------------------------ -------------------------------------------
March 13, 2002 $18,750,000
------------------------------------ -------------------------------------------
April 15, 2002 $20,625,000
------------------------------------ -------------------------------------------
May 13, 2002 $25,000,000
------------------------------------ -------------------------------------------
June 13, 2002 $26,562,500
------------------------------------ -------------------------------------------
July 15, 2002 $28,125,000
------------------------------------ -------------------------------------------
August 13, 2002 $30,625,000
------------------------------------ -------------------------------------------
September 13, 2002 $31,250,000
------------------------------------ -------------------------------------------
October 14, 2002 $32,812,500
------------------------------------ -------------------------------------------
November 13, 2002 $36,250,000
------------------------------------ -------------------------------------------
December 13, 2002 $36,250,000
------------------------------------ -------------------------------------------
January 13, 2003 $37,500,000
------------------------------------ -------------------------------------------
February 13, 2003 $41,875,000
------------------------------------ -------------------------------------------
March 13, 2003 $43,750,000
------------------------------------ -------------------------------------------
April 14, 2003 $45,625,000
------------------------------------ -------------------------------------------
May 13, 2003 $50,000,000
--------------------------------------------------------------------------------
"Telerate Page 3750" shall mean the display page currently so designated on
the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Transaction" shall mean the transaction in which Seller transfers the
Purchased Securities to Buyer pursuant to the Amended Plan, with a simultaneous
agreement by Buyer, as set forth in the Agreement, to transfer the Purchased
Securities to Seller at a date certain against the transfer of funds by Seller.
"Transaction Documents" shall mean, collectively, the Master Repurchase
Agreement, the Confirmation, this Annex I and Annex II to the Agreement, and the
Security Agreement.
"Transaction Fee" shall have the meaning specified in Section 3(f).
"UCC" shall have the meaning specified in Section 6.
"Unamortized Purchase Price" shall mean, as of any date of determination,
an amount equal to the Purchase Price minus (a) the aggregate amount of all
Repurchase Price Downpayments received by Buyer as of such date and (b) any
proceeds from the sale of the Purchased Securities applied to the Unamortized
Purchase Price pursuant to Section 14(a)(iii).
"Voting Stock" of any Person as of any date shall mean the capital stock of
such Person that is entitled under ordinary circumstances to vote in the
election of the Board of Directors of such Person (irrespective of whether or
not, at the time, equity interests of any other class or classes shall have, or
might have, voting power by reason of the happening of any contingency).
(b) Paragraph 2 of the Master Repurchase Agreement is hereby amended by
deleting therefrom the following defined terms: "Additional Purchased
Securities," "Buyer's Margin Amount," "Buyer's Margin Percentage," "Margin
Deficit," "Margin Excess," "Margin Notice Deadline," "Seller's Margin Amount,"
and "Seller's Margin Percentage."
(c) References in this Annex I to "Sections" shall be to Sections of this
Annex I unless otherwise specifically provided.
3. INITIATION; CONFIRMATION; TERMINATION; FEES
The provisions of Paragraph 3 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 3:
(a) On the Purchase Date, the Purchased Securities shall be transferred by
Seller to the Collateral Agent, as agent for Buyer and as collateral agent for
the New Note Trustees.
(b) Concurrently with their execution and delivery of the Master Repurchase
Agreement, Seller and Buyer are executing and delivering (with a copy to the
Collateral Agent) a confirmation with respect to the Transaction (the
"Confirmation"). A true and complete copy of the Confirmation is attached hereto
as Exhibit I. The Confirmation, together with the Master Repurchase Agreement
and this Annex I, shall constitute conclusive evidence of the terms agreed
between Buyer and Seller with respect to the Transaction.
(c) The Pricing Rate for the first Pricing Rate Period shall be the
"Initial Pricing Rate" specified in the Confirmation. The Pricing Rate for each
succeeding Pricing Rate Period shall be reset on the Reset Date occurring on the
last day of the immediately preceding Pricing Rate Period. Buyer or its agent
shall determine the Pricing Rate on each Pricing Rate Determination Date for the
related Pricing Rate Period and shall notify Seller of such rate for such period
on the applicable Reset Date.
(d) Seller shall be entitled, without premium or penalty, to terminate the
Transaction on demand and repurchase the Purchased Securities on any Business
Day prior to the Repurchase Date (an "Early Repurchase Date"); provided,
however, that:
(i) Seller shall repurchase on such Early Repurchase Date all of the
Purchased Securities;
(ii) Seller shall have notified Buyer in writing of its intent to terminate
the Transaction and repurchase the Purchased Securities no later than five (5)
Business Days prior to such Early Repurchase Date (such notice to be
irrevocable); and
(iii) on such Early Repurchase Date, Seller shall pay to Buyer an amount
equal to the sum of the Repurchase Price and any other amounts payable under the
Agreement (including, without limitation, amounts payable under clause (ii) of
Section 3(i)) against transfer to Seller or its agent of the Purchased
Securities.
In addition to the mandatory Repurchase Price Downpayments required by other
provisions of this Annex I, Seller shall be entitled, on any date prior to the
Repurchase Date, to make one or more voluntary Repurchase Price Downpayments,
and any such voluntary Repurchase Price Downpayment made by Seller shall be
applied as follows on the date on which such voluntary Repurchase Price
Downpayment is received: (A) first, to reduce the Price Differential to zero as
of such date, and (B) thereafter, to reduce the Unamortized Purchase Price.
(e) On the Repurchase Date (as hereinafter defined) or on any Early
Repurchase Date, termination of the Transaction will be effected as follows: (i)
Buyer will instruct the Collateral Agent to transfer to Seller or its agent (A)
the Purchased Securities and (B) any amounts remaining on deposit in the
Collection Account and (ii) Seller will simultaneously transfer the Repurchase
Price to such account or accounts as may be designated in writing by Buyer;
provided, however, that if the Purchased Securities and the Collection Account
are subject to Liens in favor of the Collateral Agent for the benefit of the New
Note Trustees at the time of termination of the Transaction pursuant to this
Section 3(e), all of Buyer's right, title and interest in and to the Purchased
Securities and the Collection Account (and any amounts remaining on deposit
therein) shall be deemed to be terminated and any further disposition of the
Purchased Securities and the Collection Account (and any amounts remaining on
deposit therein) shall be governed by the agreements between Seller and the
Collateral Agent (in its capacity as agent for the New Note Trustees) with
respect thereto. As used in the Agreement, "Repurchase Date" shall mean the
Business Day immediately preceding the second (2nd) anniversary of the date
hereof (the "Initial Repurchase Date"), as such date may be extended from time
to time upon and subject to the terms and conditions specified in clauses (i),
(ii), (iii) and (iv) below:
(i) Provided that no Event of Default under the Agreement shall have
occurred and be continuing as of the Initial Repurchase Date, and provided that
Seller shall have paid Buyer a fee (an "Extension Fee") in an amount equal to
one and one-half percent (1.5%) of the Unamortized Purchase Price as of the
Initial Repurchase Date, the Repurchase Date shall be automatically extended
from the Initial Repurchase Date to the
Business Day immediately preceding the date which is thirty (30) months
after the date hereof (the "First Extended Repurchase Date");
(ii) Provided that no Event of Default under the Agreement shall have
occurred and be continuing as of the First Extended Repurchase Date, and
provided that Seller shall have paid Buyer an Extension Fee in an amount equal
to one and one-half percent (1.5%) of the Unamortized Purchase Price as of the
First Extended Repurchase Date, the Repurchase Date shall be automatically
extended from the First Extended Repurchase Date to the Business Day immediately
preceding the third (3rd) anniversary of the date hereof (the "Second Extended
Repurchase Date");
(iii) Provided that no Event of Default under the Agreement shall have
occurred and be continuing as of the Second Extended Repurchase Date, and
provided that Seller shall have paid Buyer an Extension Fee in an amount equal
to one and one-half percent (1.5%) of the Unamortized Purchase Price as of the
Second Extended Repurchase Date, the Repurchase Date shall be automatically
extended from the Second Extended Repurchase Date to the Business Day
immediately preceding the date which is forty-two (42) months after the date
hereof (the "Third Extended Repurchase Date"); and
(iv) Provided that no Event of Default under the Agreement shall have
occurred and be continuing as of the Third Extended Repurchase Date, and
provided that Seller shall have paid Buyer an Extension Fee in an amount equal
to one and one-half percent (1.5%) of the Unamortized Purchase Price as of the
Third Extended Repurchase Date, the Repurchase Date shall be automatically
extended from the Third Extended Repurchase Date to the Business Day immediately
preceding the fourth (4th) anniversary of the date hereof (the "Final Extended
Repurchase Date").
In the event that Seller fails to pay Buyer the applicable Extension Fee on or
before the Initial Repurchase Date, the First Extended Repurchase Date, the
Second Extended Repurchase Date or the Third Extended Repurchase Date, as the
case may be, the Repurchase Date shall not be extended as provided in the
immediately preceding clause (i), (ii), (iii) or (iv), as the case may be, and
the Repurchase Price shall be immediately due and payable on the Initial
Repurchase Date, the First Extended Repurchase Date, the Second Extended
Repurchase Date or the Third Extended Repurchase Date, as the case may be.
(f) Concurrently with its execution and delivery of the Master Repurchase
Agreement, Seller shall pay Buyer a transaction fee (the "Transaction Fee") in
an amount equal to $3,936,615.59 (such amount representing one and one-half
percent (1.5%) of the Purchase Price).
(g) If, prior to the first day of any Pricing Rate Period, (i) Buyer shall
have determined (which determination shall be conclusive and binding upon Seller
absent manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining LIBOR for
such Pricing Rate Period, or (ii) the LIBO Rate determined or to be determined
for such Pricing Rate Period will not adequately and fairly reflect the cost to
any Beneficial Purchaser (as determined and certified by such Beneficial
Purchaser)
of maintaining its interest in the Transaction as a LIBOR transaction
during such Pricing Rate Period, Buyer or such Beneficial Purchaser shall give
telecopy notice thereof to Seller as soon as practicable thereafter. If such
notice is given, the Pricing Rate for such Pricing Rate Period, and for any
subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer,
shall be the Prime-Based Rate.
(h) Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
shall make it unlawful for any Beneficial Purchaser to continue to fund or
maintain its interest in the Transaction as a LIBOR transaction as contemplated
by the Transaction Documents, (a) the obligation of Buyer hereunder to continue
the Transaction as a LIBOR Transaction shall forthwith be terminated, and (b)
the Pricing Rate shall be converted automatically to the Prime-Based Rate on the
last day of the then current Pricing Rate Period or within such earlier period
as may be required by law.
(i) Upon demand by Buyer or any applicable Beneficial Purchaser, Seller
shall indemnify Buyer and each Beneficial Purchaser, and hold Buyer and each
Beneficial Purchaser harmless from any net loss or expense (including, without
limitation, any such loss or expense arising from the reemployment of funds
obtained by Buyer or such Beneficial Purchaser to maintain the Transaction
hereunder or from fees payable to terminate the deposits from which such funds
were obtained) which Buyer or such Beneficial Purchaser may actually sustain or
incur as a consequence of (i) default by Seller in terminating the Transaction
after Seller has given a notice in accordance with Section 3(d) of a termination
of the Transaction, or (ii) any payment of the Repurchase Price or any
Repurchase Price Downpayment on any day other than a Remittance Date. A
certificate as to such actual costs, losses, damages and expenses, setting forth
the calculations therefor, shall be submitted promptly by Buyer or such
Beneficial Purchaser to Seller and shall be conclusive and binding on Seller in
the absence of manifest error.
(j) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by Buyer or any Beneficial
Purchaser with any request or directive (whether or not having the force of law)
from any central bank or other governmental authority made subsequent to the
date hereof:
(i) shall subject Buyer or such Beneficial Purchaser to any tax of any kind
whatsoever with respect to the Transaction Documents, the Purchased Securities
or the Transaction, or change the basis of taxation of payments to Buyer or such
Beneficial Purchaser in respect thereof; or
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of Buyer or such
Beneficial Purchaser which is not otherwise included in the determination of the
LIBO Rate hereunder; or
(iii) shall impose on Buyer or such Beneficial Purchaser any other
condition;
and the result of any of the foregoing is to increase the cost to Buyer or such
Beneficial Purchaser, by an amount which Buyer or such Beneficial Purchaser
deems to be material, of entering into, continuing or maintaining the
Transaction or to reduce any amount receivable under the Transaction Documents
in respect thereof, then, in any such case, Seller shall promptly pay Buyer or
such Beneficial Purchaser, upon its demand, any additional amounts necessary to
compensate Buyer or such Beneficial Purchaser for such increased cost or reduced
amount receivable. If Buyer or any Beneficial Purchaser becomes entitled to
claim any additional amounts pursuant to this Section 3(j), it shall (in the
case of a Beneficial Purchaser, directly or through Buyer) promptly notify
Seller of the event by reason of which it has become so entitled. A certificate
as to the calculation of any additional amounts payable pursuant to this
subsection shall be submitted by Buyer or such Beneficial Purchaser to Seller
and shall be conclusive and binding upon Seller in the absence of manifest
error. This covenant shall survive the termination of the Agreement and the
repurchase by Seller of any or all of the Purchased Securities.
(k) If Buyer or any Beneficial Purchaser shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by Buyer or such
Beneficial Purchaser or any Person controlling Buyer or such Beneficial
Purchaser with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the rate of return on
Buyer's or such Beneficial Purchaser's or such Person's capital as a consequence
of its obligations hereunder to a level below that which Buyer or such
Beneficial Purchaser or such Person could have achieved but for such adoption,
change or compliance (taking into consideration Buyer's or such Beneficial
Purchaser's or such Person's policies with respect to capital adequacy) by an
amount deemed by Buyer or such Beneficial Purchaser to be material, then from
time to time, after submission by Buyer or such Beneficial Purchaser to Seller
of a written request therefor, Seller shall pay to Buyer or such Beneficial
Purchaser such additional amount or amounts as will compensate Buyer or such
Beneficial Purchaser or such Person for such reduction; provided, however, that
neither Buyer nor any Beneficial Purchaser shall be entitled to avail itself of
the benefit of this Section 3(k) with respect to any such reduction in respect
of a period occurring more than six months prior to the time Buyer or such
Beneficial Purchaser first requests compensation therefor unless the
circumstances giving rise to such reduction became applicable retrospectively,
in which case no such time limitation shall apply so long as Buyer or such
Beneficial Purchaser requests compensation for such reduction within six months
after the date such circumstances became applicable). This covenant shall
survive the termination of the Agreement and the repurchase by Seller of any or
all of the Purchased Securities.
(l) Each of Buyer and each Beneficial Purchaser agrees that, as promptly as
practicable after the officer of Buyer or such Beneficial Purchaser responsible
for administering Buyer's or such Beneficial Purchaser's interest in the
Transaction becomes aware of the occurrence of an event or the existence of a
condition that (i) affects Buyer or such Beneficial
Purchaser in a manner that would result in a conversion of the Pricing Rate
to the Prime-Based Rate pursuant to Section 3(g) or 3(h) or (ii) would entitle
Buyer or such Beneficial Purchaser to receive payments under Section 3(j) or
3(k), it will, to the extent not inconsistent with the internal policies of
Buyer or such Beneficial Purchaser and any applicable legal or regulatory
restrictions, use commercially reasonable efforts (x) to maintain its interest
in the Transaction through another office of Buyer or such Beneficial Purchaser
or (y) to take such other measures as Buyer or such Beneficial Purchaser may
deem reasonable, if as a result thereof the circumstances which would result in
such conversion of the Pricing Rate to the Prime Based Rate would cease to exist
or such additional amounts which would otherwise be required to be paid to Buyer
or such Beneficial Purchaser would be materially reduced and if, as determined
by such Buyer or Beneficial Purchaser in its sole discretion, the maintaining of
Buyer's or such Beneficial Purchaser's interest in the Transaction through such
other office or in accordance with such other measures, as the case may be,
would not otherwise materially adversely affect the interests of Buyer or such
Beneficial Purchaser in the Transaction; provided, however, that Buyer or such
Beneficial Purchaser will not be obligated to utilize such other office or take
such other measures pursuant to this Section 3(l) unless Seller agrees to pay
all incremental expenses incurred by Buyer or such Beneficial Purchaser as a
result of utilizing such other office or taking such other measures. A
certificate as to the amount of any such expenses payable by Seller pursuant to
this Section 3(l) (setting forth in reasonable detail the basis for requesting
such amount) submitted by Buyer or such Beneficial Purchaser (directly or
through Buyer) to Seller (with a copy to Buyer) shall be conclusive absent
manifest error.
(m) Neither Buyer nor any Beneficial Purchaser shall be entitled to demand
indemnification or compensation by Seller pursuant to Section 3(i), (j) or (k)
unless Buyer or such Beneficial Purchaser customarily demands similar
indemnification or compensation from other customers of Buyer or such Beneficial
Purchaser that are similarly situated to Seller and that are subject to
agreements which entitle Buyer or such Beneficial Purchaser to demand such
indemnification or compensation.
(n) In the event that any Beneficial Purchaser shall give notice to Seller
that such Beneficial Purchaser is affected in the manner described in clause (i)
of Section 3(l) or that such Beneficial Purchaser is entitled to receive
payments under Section 3(j) or 3(k), unless the circumstances which have caused
such Beneficial Purchaser to be so affected or which entitle such Beneficial
Purchaser to receive such payments are no longer in effect, Seller may, if such
Beneficial Purchaser shall fail to withdraw such notice within five Business
Days after Seller's request for such withdrawal, upon 30 days' prior written
notice by Seller to Buyer and such Beneficial Purchaser, elect to cause such
Beneficial Purchaser to assign its interest in the Transaction in full, at par,
to a Person designated by Seller and approved by all of the Beneficial
Purchasers other than such Beneficial Purchaser; provided, however, that Seller
shall pay any amounts payable to such Beneficial Purchaser pursuant to Section
3(j) or 3(k) or otherwise on the date of such assignment.
(o) If any sum payable by Seller to Buyer under the Agreement shall not be
paid on the date when due (except in the case of non-payment of the Repurchase
Price when due), Seller shall pay to Buyer upon demand an amount (the "Late
Payment Charge") equal to four percent
(4%) of such unpaid sum or the maximum amount permitted by law, whichever
is less, to defray the expenses incurred by Buyer in handling and processing
such delinquent payment.
4. EQUITY INVESTMENT; PAYDOWN of eligible debt
The provisions of Paragraph 4 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 4:
(a) Notwithstanding any other provision of the Agreement, Seller shall be
entitled to utilize the first $10,000,000 in aggregate net proceeds of any
Equity Investments to reduce the amount of outstanding principal of and accrued
interest on the New Notes.
(b) Except as otherwise provided in this Section 4 or elsewhere in this
Annex I, Seller shall be entitled to utilize the proceeds of any Equity
Investment (including proceeds derived from the sale of any assets purchased
with the proceeds of any Equity Investment) without restriction. Notwithstanding
the foregoing (but subject to Section 4(a)), if at any time CBO-2 Visible Losses
exceed the Loss Threshold Amount, then, unless and until Buyer shall have been
paid, from Extrinsic Funds, the amount by which CBO-2 Visible Losses exceed the
Loss Threshold Amount, (i) fifty percent (50%) of the proceeds that Seller
subsequently receives from any Equity Investments in an aggregate amount of
$50,000,000 or less (including proceeds derived from the sale of any assets
purchased with the proceeds of such Equity Investments but excluding proceeds
covered by Section 4(a)) shall be paid by Seller to Buyer on account of the
Repurchase Price and/or applied by Seller in reduction (by way of repayment,
redemption, repurchase, defeasance or otherwise) of the outstanding principal
amount of the New Notes and/or the aggregate liquidation preference of the
outstanding Noteholder Preferred Stock, and (ii) seventy-five percent (75%) of
that portion of the aggregate proceeds of any Equity Investments subsequently
received by Seller that exceeds $50,000,000 (including proceeds derived from the
sale of any assets purchased with the proceeds of such Equity Investments but
excluding proceeds covered by Section 4(a)) shall be paid by Seller to Buyer on
account of the Repurchase Price and/or applied by Seller in such a reduction of
the outstanding principal amount of the New Notes and/or the aggregate
liquidation preference of the outstanding Noteholder Preferred Stock. In
addition, if, after making the payments in respect of the New Notes that are
permitted under Section 4(a), Seller shall elect or be obligated to use any
portion of the proceeds of any Equity Investment (or any portion of the proceeds
derived from the sale of any assets purchased with the proceeds of such Equity
Investment), directly or indirectly, to so reduce the outstanding principal
amount of the New Notes and/or the aggregate liquidation preference of the
outstanding Noteholder Preferred Stock, then the portion of the proceeds of such
Equity Investment that is paid by Seller to Buyer on account of the Repurchase
Price and/or applied by Seller in such a reduction of the outstanding principal
amount of the New Notes and/or the aggregate liquidation preference of the
outstanding Noteholder Preferred Stock shall be allocated, as between Buyer, on
the one hand, and the holders of the New Notes and the Noteholder Preferred
Stock, on the other hand, in a ratio that is no less favorable to Buyer than the
Indebtedness Ratio; provided, however, that, after such time as Seller shall
have made an aggregate of $10,000,000 in payments in respect of the New Notes
pursuant to Section 4(a), Seller shall pay the next $5,000,000 in aggregate net
proceeds of any Equity Investments to
Buyer on account of the Repurchase Price. Any amounts paid to the holder(s)
of the New Notes pursuant to this Section 4(b) shall be applied to reduce the
amount of outstanding principal of and accrued interest on the New Notes, and
any amounts paid to the holder(s) of Noteholder Preferred Stock pursuant to this
Section 4(b) shall be applied to reduce the amount of the aggregate liquidation
preference of such Noteholder Preferred Stock.
(c) Notwithstanding any other provision of the Agreement permitting or
authorizing Seller to utilize certain funds (other than Cash and Trading Assets)
to reduce the amount of indebtedness owing on the New Notes and/or the aggregate
liquidation preference of the outstanding Noteholder Preferred Stock, and in
addition to any other provision of the Agreement restricting payments to the
holder(s) of the New Notes and/or the Noteholder Preferred Stock, if and when
the sum of the aggregate outstanding principal balance owing on the New Notes
plus the aggregate liquidation preference of the outstanding Noteholder
Preferred Stock (excluding, however, any portion of the principal amount of the
Series B Notes representing capitalized interest) shall have been reduced
(whether by way of repayment, redemption, repurchase, defeasance or otherwise,
and from whatever source of funds, including, by way of example only and not by
way of limitation, proceeds of Equity Investments, proceeds of asset sales and
cash flow from the operation of Seller's business) to $100,000,000 or less, any
funds that Seller would thereafter otherwise have been permitted or authorized
to use to so reduce the outstanding principal balance owing on the New Notes
and/or the aggregate liquidation preference of the outstanding Noteholder
Preferred Stock, and which Seller in fact pays to Buyer on account of the
Repurchase Price and/or applies in such a reduction of the outstanding principal
balance owing on the New Notes and/or the aggregate liquidation preference of
the outstanding Noteholder Preferred Stock, shall be allocated, as between
Buyer, on the one hand, and the holders of the New Notes and the Noteholder
Preferred Stock, on the other hand, in a ratio that is no less favorable to
Buyer than the Indebtedness Ratio; provided, however, that the provisions of
this Section 4(c) shall not apply to any payments in respect of the New Notes or
the Noteholder Preferred Stock that are expressly required by the terms of any
of the following sections of the New Note Indentures as in effect on the
Purchase Date (and without giving effect to any amendments thereto): 3.08(b),
3.08(c), 3.08(d) (Series A Note Indenture only), 3.08(e) (Series A Note
Indenture only), 4.07(b)(ii)(D), 4.10(b)(iv), 4.15 or 4.17 (Series A Note
Indenture only). Any amounts paid to the holder(s) of the New Notes pursuant to
this Section 4(c) shall be applied to reduce the amount of outstanding principal
of and accrued interest on the New Notes.
(d) Seller shall be prohibited from (i) using the proceeds of an Equity
Investment to purchase a new asset, (ii) reselling such asset and (iii) applying
the proceeds of such resale in a manner that Sections 4(b) and 4(c) would not
have permitted the proceeds of such Equity Investment itself to have been
applied.
(e) Notwithstanding any other provision of the Agreement permitting or
authorizing Seller to utilize certain funds to reduce the amount of indebtedness
owing on the New Notes and/or the aggregate liquidation preference of the
outstanding Noteholder Preferred Stock, and in addition to any other provision
of the Agreement restricting payments to the holder(s) of the New Notes and/or
the Noteholder Preferred Stock, in the event Seller shall elect to use any
portion of the Cash and Trading Assets, directly or indirectly, to reduce the
principal amount of the New
Notes and/or the aggregate liquidation preference of the outstanding
Noteholder Preferred Stock (by way of repayment, redemption, repurchase,
defeasance or otherwise), then a portion of the aggregate amount so used by
Seller shall be paid to Buyer on account of the Repurchase Price such that such
aggregate amount shall be allocated, as between Buyer, on the one hand, and the
holders of the New Notes and the Noteholder Preferred Stock, on the other hand,
in a ratio that is no less favorable to Buyer than the Indebtedness Ratio;
provided, however, that the provisions of this Section 4(e) shall not apply to
any payments in respect of the New Notes or the Noteholder Preferred Stock that
are expressly required by the terms of any of the following sections of the New
Note Indentures as in effect on the Purchase Date (and without giving effect to
any amendments thereto): 3.08(b), 3.08(c), 3.08(d) (Series A Note Indenture
only), 3.08(e) (Series A Note Indenture only), 4.07(b)(ii)(D), 4.10(b)(iv), 4.15
or 4.17 (Series A Note Indenture only).
5. INCOME AND OTHER PAYMENTS; COLLECTION ACCOUNT; CASH MANAGEMENT ACCOUNT
The provisions of Paragraph 5 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 5:
(a) The Collection Account shall be established at the Depository
concurrently with the execution and delivery of the Master Repurchase Agreement
and this Annex I by Seller and Buyer. The Collection Account shall be in the
name of Seller but under the sole dominion and control of the Collateral Agent
for the benefit of Buyer and the New Note Trustees, as their respective
interests in such account may appear, and both Seller and Buyer shall be
entitled to receive monthly statements of account from the Depository with
respect to the Collection Account. Pursuant to the Security Agreement, Seller
has granted the Collateral Agent security interests in the Collection Account
for the benefit of Buyer and the New Note Trustees (subject to the terms of the
Security Agreement and the Intercreditor Agreement). Seller shall (i) cause all
Proceeds received by CMBS Corp in respect of the CBO-2 Securities held by it to
be immediately dividended to CBO REIT and to be transferred to (or at the
direction of) CBO REIT no later than one (1) Business Day after receipt, (ii)
cause all such dividends from CMBS Corp to CBO REIT, as well as all Proceeds
payable directly to CBO REIT in respect of any of the CBO-2 Securities held by
it, to be immediately dividended to Seller and to be deposited directly into the
Collection Account , and (iii) cause any Proceeds received directly by Seller
with respect to any of the CBO-2 Securities, any Proceeds received by Seller
with respect to the Purchased Securities that represent Proceeds of the CBO-2
Securities, any payments received by Seller in respect of any Hedging
Transactions entered into by Seller, and such Extrinsic Funds, if any, as Seller
in its sole and absolute discretion may deem appropriate, to be deposited
directly into the Collection Account or otherwise to be transferred to the
Collection Account no later than one (1) Business Day after receipt, and all
such amounts shall be applied by the Depository in accordance with the
applicable provisions of Sections 5(b), 5(c) and 5(i); provided, however, that,
notwithstanding the foregoing, in the event CBO REIT or Seller shall directly
receive any Proceeds in respect of the CBO-2 Securities held by CMBS Corp,
Seller shall cause such Proceeds to be transferred to CMBS Corp and applied as
provided in clause (i) of this Section 5(a) as if such Proceeds had been
received directly by CMBS Corp in the first instance. All interest accrued on
the Collection Account shall be for the benefit of Seller and shall be credited
toward the balance in the Collection Account available for application in
accordance with the applicable provisions of Sections 5(b), 5(c) and 5(i). Any
amounts received by Seller that are required to be deposited into the Collection
Account in accordance with this Section 5(a) shall, until such amounts are so
deposited, be held by Seller in trust for the Collateral Agent and segregated
from other funds of Seller, as collateral security for Seller's obligations
under the Transaction Documents and the New Notes.
(b) Prior to the Required Repurchase Price Downpayment having been paid in
full in accordance with the applicable provisions of the Agreement, and so long
as no Event of Default shall have occurred and be continuing, all amounts
deposited (or required to be deposited) into the Collection Account in
accordance with Section 5(a), together with all amounts transferred from the
Cash Management Account into the Collection Account as required by Section 5(e),
shall be applied by the Depository on each Phase I Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the Minimum Repurchase
Price Installment due and payable on such Phase I Remittance Date, which amount
shall be applied in the following order: (A) first, to reduce the Price
Differential as of the applicable Phase I Remittance Date to zero and (B)
thereafter, to reduce the Unamortized Purchase Price;
(ii) second, to remit to the Cash Management Account an amount equal to the
CMA Shortfall, if any, as of such Phase I Remittance Date; and
(iii) third, to remit to Buyer the remainder, if any, which amount shall be
applied to reduce the Unamortized Purchase Price.
(c) Subsequent to the Required Repurchase Price Downpayment having been
paid in full in accordance with the applicable provisions of the Agreement, and
so long as no Event of Default shall have occurred and be continuing, all
amounts deposited (or required to be deposited) into the Collection Account in
accordance with Section 5(a), together with all amounts transferred from the
Cash Management Account into the Collection Account as required by Section 5(f),
shall be applied by the Depository on each Phase II Remittance Date as follows:
(i) first, to remit to Buyer an aggregate amount equal to the sum of (A)
the Minimum Repurchase Price Installment due and payable on such Phase II
Remittance Date plus (B) the excess of (1) the Revised Repurchase Price
Installment due and payable on such Phase II Remittance Date over (2) the
Minimum Repurchase Price Installment due and payable on such Phase II Remittance
Date plus (C) any Carryover Repurchase Price Installment with respect to such
Phase II Remittance Date plus (D) the Price Differential which has accrued and
is outstanding with respect to any such Carryover Repurchase Price Installment
(to the extent such Price Differential is not included in the amount described
in any of clauses (A), (B) and (C) of this clause (i)), which aggregate amount
shall be applied in the following order: (1) to reduce the Price Differential as
of the applicable Phase II Remittance Date to zero and (2) thereafter, to reduce
the Unamortized Purchase Price;
(ii) second, to remit to the Cash Management Account an amount equal to the
CMA Shortfall, if any, asof such Phase II Remittance Date; and
(iii) third, to remit to Seller the remainder, if any.
(d) The New Note Collection Account and the Cash Management Account shall
be established at the CMA Bank concurrently with the execution and delivery of
the Master Repurchase Agreement and this Annex I by Seller and Buyer. The New
Note Collection Account and the Cash Management Account shall each be in the
name of Seller, but the New Note Collection Account shall be under the sole
dominion and control of the Collateral Agent for the benefit of Buyer and the
New Note Trustees, as their respective interests in such accounts may appear,
and both Seller and Buyer shall be entitled to receive monthly statements of
account from the CMA Bank with respect to the New Note Collection Account and
the Cash Management Account. Pursuant to the Security Agreement, Seller has
granted the Collateral Agent security interests in the New Note Collection
Account for the benefit of Buyer and the New Note Trustees (subject to the terms
of the Security Agreement and the Intercreditor Agreement). On the date hereof,
Seller shall deposit cash in an amount not less than $7.5 million into the Cash
Management Account. In addition, Seller shall (i) cause all Eligible Cash
Receipts received by QRS-1 to be dividended to CBO REIT immediately upon
receipt, (ii) cause all such dividends received by CBO REIT, as well as all
Eligible Cash Receipts received directly by CBO REIT, to be deposited by CBO
REIT into the New Note Collection Account immediately upon receipt, and (iii)
cause any Eligible Cash Receipts received directly by Seller, as well as such
Extrinsic Funds, if any, as Seller in its sole and absolute discretion may deem
appropriate, to be deposited into the Cash Management Account immediately upon
receipt; provided, however, that, notwithstanding the foregoing, in the event
CBO REIT or Seller shall directly receive any Eligible Cash Receipts in respect
of the CBO-1/Nomura Securities held by QRS-1, Seller shall cause such Eligible
Cash Receipts to be transferred to QRS-1 and applied as provided in clause (i)
of this Section 5(d) as if such Eligible Cash Receipts had been received
directly by QRS-1 in the first instance. So long as no Event of Default shall
have occurred and be continuing, upon deposit of any amounts into the New Note
Collection Account the CMA Bank will immediately transfer such amounts to the
Cash Management Account (it being understood that no Permitted Cash Payments
shall be made directly out of the New Note Collection Account). Amounts
deposited in or transferred to the Cash Management Account may be used by
Seller, except as otherwise provided in Sections 5(g) and 5(h), to make
Permitted Cash Payments, and the Net Cash Flow, if any, in the Cash Management
Account as of each Remittance Date shall be remitted by Seller (or by the CMA
Bank, at the direction of Seller) in accordance with the applicable provisions
of Sections 5(e), 5(f) and 5(j). Nothing appearing in this Section 5(d) or
elsewhere in this Annex I or any other Transaction Document shall be construed
as limiting Seller's obligation to make any Minimum Repurchase Price Installment
on the applicable Remittance Date, as subordinating Buyer's right to receive any
Minimum Repurchase Price Installment to the right of any creditor of Seller to
receive any payment owing to such creditor, or as limiting or impairing Seller's
right or ability to transfer funds from the Cash Management Account to the
Collection Account at such times and in such amounts as may be required under
Sections 5(e)(i) and 5(f)(i). Seller shall not take or permit to be taken any
action the intent or effect of which is to circumvent the requirement that all
Eligible Cash
Receipts be deposited in the New Note Collection Account or the Cash
Management Account, as applicable, as provided in this Section 5(d).
(e) Prior to the Required Repurchase Price Downpayment having been paid in
full in accordance with the applicable provisions of the Agreement, and so long
as no Event of Default shall have occurred and be continuing, funds on deposit
in the Cash Management Account as of each Phase I Remittance Date (after giving
effect to any transfers of funds from the New Note Collection Account that are
made or required to be made on such Phase I Remittance Date) shall be remitted
by Seller (or by the CMA Bank, at the direction of Seller) on such Phase I
Remittance Date as follows:
(i) first, to remit to the Collection Account an amount equal to the lesser
of (A) the Available Transfer Amount, if any, and (B) the Collection Account
Shortfall, if any, as of such Phase I Remittance Date; and
(ii) second, to remit to Buyer the excess, if any, of Net Cash Flow as of
such Phase I Remittance Date over any amount remitted to the Collection Account
pursuant to Section 5(e)(i) on such Phase I Remittance Date, which amount shall
be applied to reduce the Unamortized Purchase Price; provided, however, that,
unless Buyer shall not have received the Applicable TDA, any remittance to Buyer
pursuant to this Section 5(e)(ii) shall not reduce the sum of the amounts
remaining in the Cash Management Account and the New Note Collection Account
below the Minimum Working Capital Balance.
(f) Subsequent to the Required Repurchase Price Downpayment having been
paid in full in accordance with the applicable provisions of the Agreement, and
so long as no Event of Default shall have occurred and be continuing, funds on
deposit in the Cash Management Account as of each Phase II Remittance Date
(after giving effect to any transfers of funds from the New Note Collection
Account that are made or required to be made on such Phase II Remittance Date)
shall be remitted by Seller (or by the CMA Bank, at the direction of Seller) on
such Phase II Remittance Date as follows:
(i) first, to remit to the Collection Account an amount equal to the lesser
of (A) the Available Transfer Amount, if any, and (B) the Collection Account
Shortfall, if any, as of such Phase II Remittance Date; and
(ii) second, to remit to Seller the excess, if any of Net Cash Flow as of
such Phase II Remittance Date over any amount remitted to the Collection Account
pursuant to Section 5(f)(i) on such Phase II Remittance Date; provided, however,
that if, after application of all payments received by Buyer pursuant to Section
5(c)(i) on such Phase II Remittance Date, a Carryover Repurchase Price
Installment would otherwise exist with respect to the next Phase II Remittance
Date , then all Net Cash Flow that would otherwise be remitted to Seller
pursuant to this Section 5(f)(ii) shall instead be remitted to Buyer and applied
in the same manner as payments received by Buyer pursuant to Section 5(c)(i)
until such time as Buyer shall have received remittances pursuant to this
proviso in an aggregate amount sufficient to reduce the amount of such
Carryover Repurchase Price Installment to zero. Buyer's right to receive
remittances on any Phase II Remittance Date pursuant to the foregoing proviso
shall be in addition to, and not in lieu of, any other rights or remedies that
Buyer may be entitled to exercise or enforce, under the Transaction Documents,
at law or in equity, in the event the full amount of any Revised Repurchase
Price Installment shall not have been received by Buyer on such Phase II
Remittance Date when due.
(g) Notwithstanding anything appearing to the contrary in Section 5(d), and
in addition to any restrictions on Restricted Payments appearing in Section
5(h):
(i) from and after the first Phase I Remittance Date until such time as the
Required Repurchase Price Downpayment shall have been paid in full in accordance
with the applicable provisions of the Agreement, in the event that Buyer fails
to receive the Applicable TDA on any Phase I Remittance Date, Seller shall not
make any Permitted Cash Payments, other than Permitted Note Payments, out of
Eligible Cash Receipts subsequently deposited in or transferred to the Cash
Management Account, or out of funds subsequently transferred to the Cash
Management Account from the Collection Account, in each case until Buyer shall
have received the Applicable TDA (it being understood that the foregoing
limitation shall not restrict the ability of Seller to make Permitted Cash
Payments out of the Core MWCB); and
(ii) from and after the first Phase II Remittance Date, at any time when
Buyer shall not have received the full amount of each Revised Repurchase Price
Installment in respect of each Phase II Remittance Date occurring at or prior to
such time, Seller shall not make any Permitted Cash Payments, other than
Permitted Note Payments, out of Eligible Cash Receipts subsequently deposited in
or transferred to the Cash Management Account, or out of funds transferred to
the Cash Management Account from the Collection Account, in each case until
Buyer shall have received the full amount of each Revised Repurchase Price
Installment in respect of each Phase II Remittance Date that has occurred at or
prior to the time of determination (it being understood that the foregoing
limitation shall not restrict the ability of Seller to make Permitted Cash
Payments out of any other funds on deposit in the Cash Management Account).
The limitations on Permitted Cash Payments set forth in clauses (i) and (ii) of
this Section 5(g) are sometimes referred to in this Annex I as the "Payment
Cap".
(h) Notwithstanding anything appearing to the contrary in the definition of
"Permitted Cash Payments" or elsewhere in this Annex I, and in addition to the
limitations on Permitted Cash Payments set forth in Section 5(g) (it being
understood that, unless otherwise expressly provided in this Section 5(h), the
limitations on Restricted Payments set forth in this Section 5(h) are applicable
without regard to the source of funds used (or proposed to be used) to make any
Restricted Payment in question):
(i) the aggregate amount of Restricted Payments paid to holders of the
Series F Preferred Stock and Series G Preferred Stock of Seller during any
twelve-month period shall not exceed $4,100,000;
(ii) in addition to the limitations set forth in Section 5(h)(v), (A) the
aggregate amount of Restricted Payments paid during any twelve-month period to
holders of any Common Stock or Preferred Stock (other than the Noteholder
Preferred Stock) issued to a New Equity Investor that is an Affiliate of Seller
or a holder of any New Notes shall not exceed the New Equity Dividend Cap and
(B) no Restricted Payments shall be paid in respect of the Common Stock or any
series of Preferred Stock, to the extent such Restricted Payments are directly
or indirectly funded with Cash and Trading Assets or any Proceeds thereof,
unless such Restricted Payments would be permitted under Section 4.07(b)(ii) of
each New Note Indenture as in effect on the date hereof (and without giving
effect to any subsequent amendments thereto);
(iii) no Restricted Payments shall be paid in respect of the Noteholder
Preferred Stock except as contemplated by clauses (ii) and (v) of the definition
of "Permitted Cash Payments";
(iv) prior to the Required Repurchase Price Downpayment having been paid in
full in accordance with the applicable provisions of the Agreement, no
Restricted Payments (other than Permitted Note Payments described in clause
(ii)(b) of the definition of Permitted Cash Payments) shall be paid in respect
of the Common Stock or any series of Preferred Stock at any time when the funds
available in the Collection Account (taking into account any funds transferred
from the Cash Management Account to the Collection Account in accordance with
Section 5(e)(i) or 5(f)(i)) shall be insufficient to pay Buyer, on the next
Phase I Remittance Date, the Minimum Repurchase Price Installment that will be
due and payable on such Phase I Remittance Date;
(v) if the Required Repurchase Price Downpayment shall not have been
received by Buyer prior to the second (2nd) anniversary of the date hereof, then
no Restricted Payments shall be paid in respect of the Common Stock or any
series of Preferred Stock (other than (A) cash dividends on Common Stock or any
series of Preferred Stock issued to a New Equity Investor in consideration for
its New Equity Investment in an aggregate amount not to exceed the New Equity
Dividend Cap, and (B) Restricted Payments in respect of any one or more series
of Preferred Stock to the extent (and only to the extent) Seller shall have
provided Buyer with evidence reasonably satisfactory to Buyer that payment of
such Restricted Payments in respect of such Preferred Stock is required to
satisfy the requirement that Seller distribute not less than a specified
percentage of its real estate investment trust taxable income each year in order
to maintain its status as a "real estate investment trust" for federal income
tax purposes, subject in the case of both (A) and (B) to the Payment Cap) at any
time from and after the second (2nd) anniversary of the date hereof until Buyer
shall have received the Required Repurchase Price Downpayment; and
(vi) if at any time CBO-2 Visible Losses shall exceed the Loss Threshold
Amount, (A) irrespective of whether the Required Repurchase Price Downpayment
shall theretofore have been received by Buyer, no Restricted Payments shall be
paid in respect of the Common Stock or any series of Preferred Stock (other than
Restricted Payments in respect of any one or more series of Preferred Stock to
the extent (and only to the extent) Seller shall have provided Buyer with
evidence reasonably satisfactory to Buyer that payment of such Restricted
Payments is required to satisfy the requirement that Seller distribute not less
than a specified percentage of its real estate investment trust taxable income
each year in order to maintain its status as a "real estate investment trust"
for federal income tax purposes, subject to the Payment Cap) and (B) until such
time as Buyer shall have received the Required Repurchase Price Downpayment,
Seller shall pay to Buyer as a Repurchase Price Downpayment, in addition to any
other Repurchase Price Downpayments required to be paid under this Annex I, all
net cash flow that is excluded from the definition of "Eligible Cash Receipts"
and is received by Seller or any of its Consolidated Subsidiaries in respect of
any assets acquired by Seller or any of its Consolidated Subsidiaries after the
date hereof (it being understood that in no event shall the net cash flow
described in this clause (B) include either (1) any cash flow in respect of the
Miscellaneous Assets or (2) any proceeds from the sale of any Investment
Securities); provided, however, that the provisions of the foregoing clauses (A)
and (B) shall cease to apply at such time as either (1) Buyer shall have been
paid, from Extrinsic Funds, one or more Repurchase Price Downpayments in an
aggregate amount equal to the amount by which CBO-2 Visible Losses exceed the
Loss Threshold Amount, or (2) CBO-2 Visible Losses no longer exceed the Loss
Threshold Amount.
(i) If an Event of Default shall have occurred and be continuing, then from
and after the date the Depository is notified of the existence of such Event of
Default all amounts deposited (or required to be deposited) into the Collection
Account shall be applied by the Depository, on the Business Day next following
the Business Day on which such funds are deposited in the Collection Account, as
follows:
(i) first, to remit to Buyer an amount equal to the Price Differential
which has accrued and is outstanding as of such Business Day;
(ii) second, to make a payment to Buyer on account of the Unamortized
Purchase Price until the Unamortized Purchase Price has been reduced to zero;
and
(iii) third, to remit the remainder, if any, (A) first, to the Collateral
Agent for the benefit of the New Note Trustees to the extent required under the
terms of the Security Agreement and (B) thereafter, to Seller or such other
Person as may be legally entitled to the same.
(j) If an Event of Default shall have occurred and be continuing, then (X)
from and after the date the CMA Bank is notified of the existence of such Event
of Default, no transfers of amounts from the New Note Collection Account into
the Cash Management Account shall be made without written authorization from the
Collateral Agent, and (Y) all Net Cash Flow in the Cash Management Account as of
each Remittance Date shall be remitted by Seller (or by the CMA Bank, at the
direction of Seller) on such Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the Price Differential
which has accrued and is outstanding as of such Remittance Date (after taking
into account the application of any other payments received by Buyer on such
Remittance Date);
(ii) second, to make a payment to Buyer on account of the Unamortized
Purchase Price until the Unamortized Purchase Price has been reduced to zero;
and
(iii) third, to remit the remainder, if any, (A) first, to the Collateral
Agent for the benefit of the New Note Trustees to the extent required under the
terms of the Security Agreement and (B) thereafter, to Seller or such other
Person as may be legally entitled to the same.
(k) Buyer's right to receive remittances pursuant to Sections 5(i) and 5(j)
following the occurrence of an Event of Default shall be in addition to, and not
in lieu of, any other rights or remedies Buyer may be entitled to exercise or
enforce, under the Transaction Documents, at law or in equity, by reason of such
Event of Default, and the receipt, acceptance or application of any such
remittance shall not constitute a waiver or cure of such Event of Default.
(l) Anything contained in the Agreement to the contrary notwithstanding,
Seller shall not be required to cause CBO REIT (and CBO REIT shall not be
required), directly or indirectly, to deposit into the Collection Account, the
New Note Collection Account or the Cash Management Account such portion of the
Proceeds received by CBO REIT (directly or through CMBS Corp or QRS-1) in
respect of the CBO-2 Securities and/or the CBO-1/Nomura Securities as is
necessary to enable CBO REIT to pay, in a timely manner, the annual cash
dividends required to be paid by CBO REIT to the holders of its Series A
Preferred Stock pursuant to Section 4.3(a) of the Articles of Incorporation of
CBO REIT as in effect on the Purchase Date.
6. SECURITY INTEREST
The provisions of Paragraph 6 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 6:
Buyer and Seller intend that the Transaction be a sale to Buyer of the
Purchased Securities and not a loan from Buyer to Seller secured by the
Purchased Securities. However, in the event the Transaction is deemed to be a
loan, Seller shall be deemed to have pledged to Buyer all of its right, title,
and interest in, to and under, and to have granted a security interest in favor
of Buyer in, all of the following property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located (collectively,
the "Collateral"), to secure the payment and performance of all amounts or
obligations owing to Buyer pursuant to the Transaction Documents, in each case
subject only to Permitted Liens:
(a) the Purchased Securities;
(b) any Hedging Transactions entered into by Seller as part of the Hedging
Strategy;
(c) all books, records and files relating to any of the Collateral (but
excluding any financial models or other proprietary information); and
(d) all proceeds (as defined in the UCC) of any and all of the foregoing.
Buyer's security interest in the Collateral shall terminate only upon
termination of Seller's obligations under the Transaction Documents. For
purposes of the grant of the security interest pursuant to Paragraph 6 of the
Agreement, the Agreement shall be deemed to constitute a security agreement
under the New York Uniform Commercial Code (the "UCC"). Buyer shall have all of
the rights and may exercise all of the remedies of a secured creditor under the
UCC and the other laws of the State of New York. In furtherance of the
foregoing, Seller, at its sole cost and expense, shall (a) execute and deliver
to Buyer, for filing in such locations as Buyer may determine to be necessary to
perfect and maintain the perfection and priority of the security interest
granted hereby, UCC-1 financing statements and continuation statements, and (b)
from time to time take such further actions as may be reasonably requested by
Buyer in order to maintain and continue the perfection and priority of the
security interest granted hereby.
7. PAYMENT, TRANSFER AND CUSTODY
The provisions of Paragraph 7 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 7:
(a) On the Purchase Date, record ownership of the Purchased Securities
shall be transferred to Buyer.
(b) The original certificate or certificates representing the Purchased
Securities, registered in the name of Buyer, shall be held by the Collateral
Agent, as bailee and agent for Buyer, the Series A Trustee (for the equal and
ratable benefit of the holders of the Series A Notes) and the Series B Trustee
(for the equal and ratable benefit of the holders of the Series B Notes), as
their respective interests may appear. Subject to the provisions of Sections
5(a) and 5(d), Seller shall be entitled to receive all cash dividends and
distributions paid in respect of the Purchased Securities.
(c) (i) Subject to the provisions of Section 7(c)(ii), Seller shall be
entitled to exercise all voting and other corporate rights and powers of
ownership with respect to
the Purchased Securities. In furtherance and support of the foregoing,
Buyer, in compliance with the Maryland General Corporation Law (the "MGCL"),
hereby expressly grants Seller an irrevocable proxy to vote the Purchased
Securities on (or consent to) all actions requiring the vote or consent of
common or preferred shareholders of CBO REIT including, without limitation, the
election of directors and extraordinary actions. Such proxy shall be deemed
coupled with an interest and shall expire upon the satisfaction in full of the
Repo Obligations and the transfer of the Purchased Securities to Seller;
provided, however, that upon termination of Seller's right to exercise all
voting and other corporate rights and powers of ownership with respect to the
Purchased Securities in accordance with the provisions of Section 7(c)(ii) and
upon written notice to Seller and CBO REIT, Buyer may convert such proxy into a
revocable proxy and, upon written notice to Seller and CBO REIT, may revoke such
proxy at anytime thereafter. All stock certificates representing or evidencing
Purchased Securities shall contain a legend including the following: "THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN IRREVOCABLE PROXY. ANY HOLDER
OR TRANSFEREE OF THIS CERTIFICATE IS SUBJECT TO THE TERMS AND LIMITATIONS OF THE
IRREVOCABLE PROXY SET FORTH IN THE MASTER REPURCHASE AGREEMENT (INCLUDING ALL
ANNEXES THERETO) BY AND BETWEEN CRIIMI MAE INC. AND ▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL,
ACTING THROUGH ITS AGENT ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED,
DATED APRIL 17, 2001". Seller shall, at all times while the foregoing proxy
shall remain in effect, exercise all voting and other corporate rights and
powers of ownership with respect to the Purchased Securities in a manner that
does not conflict with, or result in a breach or violation of, any provision of
any Transaction Document or either of the New Note Indentures.
(ii) Anything contained in the Agreement to the contrary notwithstanding,
(A) if an Act of Insolvency shall have occurred with respect to Seller or any
Designated Seller Affiliate (an "Insolvency Event of Default"), Seller's right
to exercise all voting and other corporate rights and powers of ownership with
respect to the Purchased Securities shall thereupon automatically terminate,
without notice, demand or other requirements of any kind, all of which are
hereby expressly waived by Seller, and (B) if (1) an Event of Default shall have
occurred and be continuing under clause (viii) or (ix) of the first paragraph of
Section 14 (each a "Payment Event of Default"), or (2) an Event of Default other
than an Insolvency Event of Default or a Payment Event of Default shall have
occurred and be continuing for a period of thirty (30) consecutive days, then in
either such case described in this clause (B) Buyer may, upon written notice to
Seller, terminate Seller's right to exercise all voting and other corporate
rights and powers of ownership with respect to the Purchased Securities.
8. TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES
The provisions of Paragraph 8 of the Master Repurchase Agreement are hereby
modified and superseded in their respective entireties by the following
provisions of this Section 8:
(a) Record title to all of the Purchased Securities shall pass to Buyer on
the Purchase Date. Nothing in the Agreement or any other Transaction Document
shall preclude Buyer from engaging in repurchase transactions with the Purchased
Securities or otherwise pledging, repledging, hypothecating, or rehypothecating
the Purchased Securities, but no such transaction shall (i) impair the rights of
Seller under Section 7(c)(i), (ii) permit any counterparty of Buyer under such
transaction to satisfy an obligation to redeliver the Purchased Securities to
Buyer by delivering any other Securities in substitution therefor, or (iii)
relieve Buyer of its obligation to transfer the Purchased Securities to Seller
pursuant to Section 3 or Section 14(b) or its obligation to credit or pay any
Proceeds of the Purchased Securities to Seller, or to apply any such Proceeds to
the obligations of Seller, in accordance with the provisions of Section 5.
(b) Notwithstanding anything to the contrary in the Agreement or any other
Transaction Document, no Purchased Security shall remain in the custody of
Seller or any Affiliate of Seller.
9. SUBSTITUTION
Paragraph 9 of the Master Repurchase Agreement (captioned "Substitution")
is hereby deleted in its entirety.
10. REPRESENTATIONS OF SELLER AND BUYER
(a) Representations of Seller. In addition to the representations and
warranties appearing in Paragraph 10 of the Master Repurchase Agreement, Seller
represents and warrants to Buyer that as of the date of the Master Repurchase
Agreement:
(i) Organization. Seller is duly incorporated, validly existing and in good
standing under the laws and regulations of the state of Seller's incorporation
and is duly licensed, qualified, and in good standing in every state where such
licensing or qualification is necessary for the transaction of Seller's
business, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect. Seller has the corporate
power to own and hold the assets it purports to own and hold, and to carry on
its business as now being conducted and proposed to be conducted, and has the
corporate power to execute, deliver, and perform its obligations under the
Agreement and the other Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents have been
duly executed and delivered by Seller, for good and valuable consideration. The
Transaction Documents constitute the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
except
as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
(iii) Non-Contravention. Except as set forth in Schedule 10(a)(iii)
attached to this Annex I, (a) neither the execution, delivery and performance of
the Transaction Documents by Seller, nor the consummation of the transactions
contemplated by the Transaction Documents, will (i) violate any provision of any
law or any governmental rule or regulation applicable to Seller or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Seller
or any of its Subsidiaries, or any order, judgment or decree of any court or
other agency of government binding on Seller or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any of the terms, conditions or provisions of any
Contractual Obligation of Seller or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Seller or any of its Subsidiaries (other than any Liens created under
any of the Transaction Documents in favor of Buyer and/or in favor of the
Collateral Agent for the benefit of Buyer, the Series A Trustee (for the equal
and ratable benefit of the holders of the Series A Notes) and the Series B
Trustee (for the equal and ratable benefit of the holders of the Series B
Notes)), or (iv) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of Seller or any of its
Subsidiaries, except for such approvals or consents which will be obtained on or
before the Purchase Date and disclosed in writing to Buyer, and (b) Seller has
all necessary licenses, permits and other consents from Governmental Authorities
necessary to own and sell the Purchased Securities, and for the performance of
its obligations under the Transaction Documents.
(iv) Litigation; Compliance With Laws, etc.. Except as set forth in
Schedule 10(a)(iv) attached to this Annex I, (a) there are no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Seller or any of its Subsidiaries), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that are pending or, to the knowledge of Seller, overtly threatened
against or affecting Seller or any of its Subsidiaries or any property of Seller
or any of its Subsidiaries and that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, and (b) neither
Seller nor any of its Subsidiaries (i) is in violation of any applicable laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect, or (ii) is subject to or in default with respect
to any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
(v) No Broker. Except as set forth in Schedule 10(a)(v) attached to this
Annex I, Seller has not dealt with any broker, investment banker, agent, or
other Person (other than Buyer or an Affiliate of Buyer) who may be entitled to
any commission or compensation in connection with the sale of the Purchased
Securities pursuant to the Transaction Documents.
(vi) Good Title to Purchased Securities. Seller has good and marketable
title to the Purchased Securities, free and clear of any Liens (other than Liens
created under the Transaction Documents in favor of Buyer and Permitted Liens).
Upon transfer of the Purchased Securities to Buyer in accordance with the
provisions of Sections 3 and 7, Buyer shall be the record owner of the Purchased
Securities and, in the event the Transaction is recharacterized as a secured
financing of the Purchased Securities, Buyer shall have a valid and perfected
security interest in the Purchased Securities, subject only to Permitted Liens.
(vii) Performance of Agreements. After giving effect to the transactions
contemplated by the Amended Plan, neither Seller nor any of its Subsidiaries is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any, would not
reasonably be expected to have a Material Adverse Effect.
(viii) Valid Issuance of Purchased Securities, etc. The Purchased
Securities, the CMBS Corp Pledged Stock and the QRS-1 Pledged Stock have been
validly issued and are fully paid and non-assessable. The Purchased Securities,
the CMBS Corp Pledged Stock, the QRS-1 Pledged Stock, the CBO-2 Securities and
the CBO-1/Nomura Securities (other than the CBO-1/Nomura Securities identified
as "Nomura Securities" on Schedule I-B attached to this Annex I) have been
offered, issued and sold in compliance with (or pursuant to an available
exemption from) all applicable securities laws.
(ix) Governmental Consents. Except as set forth in Schedule 10(a)(ix)
attached to this Annex I, the execution, delivery and performance by Seller of
the Transaction Documents and the consummation by Seller of the transactions
contemplated by the Transaction Documents do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
(x) Organizational Documents. Seller has delivered to Buyer copies of its
Amended and Restated Articles of Incorporation and its Second Amended and
Restated Bylaws, in each case as the same will be in effect on the Purchase Date
after giving effect to the filings to be made by Seller on the Purchase Date
with the Secretary of State of Maryland, and Seller will provide Buyer with
certified copies of such documents promptly after such filings are made.
(xi) No Options, Warrants, etc. There are no outstanding rights, options,
warrants or agreements that would entitle any Person to purchase or otherwise
acquire all or any portion of the Purchased Securities, the CBO-2 Securities,
the CBO-1/Nomura Securities, the CMBS Corp Pledged Stock or the QRS-1 Pledged
Stock.
(xii) Certain Federal Regulations. Seller is not (A) an "investment
company," or a company "controlled by an investment company," within the meaning
of the Investment Company Act of 1940, as amended, or (B) a "holding company,"
or a "subsidiary company of a holding company," or an "affiliate" of either a
"holding company" or a "subsidiary company of a holding company," as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended.
(xiii) Taxes. All material tax returns and reports of Seller and its
Subsidiaries required to be filed by any of them have been timely filed, and all
material taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Seller and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Seller knows of no proposed tax assessment against Seller or any of its
Subsidiaries which is not being actively contested by Seller or such Subsidiary
in good faith and by appropriate proceedings; provided that such reserves or
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
(xiv) ERISA. Except as set forth in Schedule 10(a)(xiv) attached to this
Annex I, Seller does not have any Plans or any ERISA Affiliates and makes no
contributions to any Plans or any Multiemployer Plans.
(xv) Disclosure. Except as set forth in Schedule 10(a)(xv) attached to this
Annex I, no representation or warranty of Seller or any of its Subsidiaries
contained in any Transaction Document or in any other document, certificate or
written statement furnished to Buyer and/or any Beneficial Purchaser by or on
behalf of Seller or any of its Subsidiaries for use in connection with the
transactions contemplated by the Agreement contains any untrue statement of a
material fact or omits to state a material fact (known to Seller, in the case of
any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in
such materials are based upon good faith estimates and assumptions believed
by Seller to be reasonable at the time made. There are no facts known to Seller
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Buyer and/or Beneficial Purchasers for use in
connection with the transactions contemplated by the Agreement.
(xvi) Financial Information. All financial data (other than projections and
pro forma financial information) concerning the Purchased Securities, the CBO-2
Securities, the CBO-1/Nomura Securities, the CMBS Corp Pledged Stock or the
QRS-1 Pledged Stock that has been delivered by or on behalf of Seller to Buyer
and/or any Beneficial Purchaser in connection with the Transaction was, at the
time so delivered, correct in all material respects, and all projections and pro
forma financial information so delivered were based on good faith estimates and
assumptions believed by Seller to be reasonable at the time when made. All
balance sheets and statements of cash flows of Seller and its Consolidated
Subsidiaries constituting part of the consolidated financial statements
contained in (A) Seller's Annual Reports on Form 10-K for the years ended
December 31, 1999 and December 31, 2000 and (B) Seller's Quarterly Reports on
Form 10-Q for the first three quarters of the year ended December 31, 2000, in
each case as filed with the Securities and Exchange Commission, were prepared in
conformity with GAAP and fairly present, in all material respects, the financial
position (on a consolidated and, where applicable, consolidating basis) of the
Seller and its Consolidated Subsidiaries as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of Seller and its Consolidated Subsidiaries for
each of the periods then ended, subject, in the case of any such financial
statements that are unaudited, to changes resulting from audit and normal
year-end adjustments and the absence of footnotes. Seller does not have any
contingent liabilities or liabilities for taxes, long-term leases or unusual
forward or long-term commitments that are not reflected in the most recent such
financial statements or the notes thereto and which in any such case are
material in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Seller and its Subsidiaries, taken as a
whole.
(xvii) No Material Adverse Change. Except as set forth in Schedule
10(a)(xvii) attached to this Annex I, since December 31, 2000, no event or
change has occurred that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect.
(b) Representations of Buyer. In addition to the representations and
warranties appearing in Paragraph 10 of the Master Repurchase Agreement, Buyer
represents and warrants to Seller that as of the date of the Master Repurchase
Agreement:
(i) Beneficial Ownership. As of the Purchase Date, (A) neither Buyer nor
the DB Co-Purchaser has the stock ownership described in section 542(a) of the
Code and (B) if Buyer and the DB Co-Purchaser were considered to be the owners
of the Purchased Securities for federal income tax purposes, then CBO REIT would
satisfy the requirements of section 856(a)(6) of the Code.
(ii) Investment Intent. It is purchasing the Purchased Securities for
investment only and with no view to a distribution of the Purchased Securities,
and it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act of 1933 or a "qualified institutional
buyer" within the meaning of Rule 144A promulgated under the Securities Act of
1933.
(iii) Due Execution; Enforceability. The Transaction Documents have been
duly executed and delivered by Buyer, for good and valuable consideration. The
Transaction Documents constitute the legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
(iv) Non-Contravention. Neither the execution, delivery and performance of
the Transaction Documents by Buyer, nor the consummation of the transactions
contemplated by the Transaction Documents, will (i) violate any provision of any
law or any governmental rule or regulation applicable to Buyer or any order,
judgment or decree of any court or other agency of government binding on Buyer,
or (ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any of the terms, conditions or
provisions of any Contractual Obligation of Buyer. Buyer has all necessary
licenses, permits and other consents from Governmental Authorities necessary for
the performance of its obligations under the Transaction Documents.
11. NEGATIVE COVENANTS OF SELLER
Seller agrees that, from the date hereof until the Transaction is
terminated and the Agreement is no longer in force, Seller shall not, and shall
not permit any of its Subsidiaries to:
(a) take any action that would impair the value or marketability of the
Purchased Securities or be inconsistent with, or result in a violation of, any
provision of any of the Transaction Documents;
(b) directly or indirectly sell, transfer, assign or otherwise dispose of,
or create, incur or permit to exist any Lien upon, any interest in the
Collateral to or for the benefit of any Person other than Buyer (other than
Permitted Liens), or engage in repurchase transactions or similar transactions
with respect to the Purchased Securities with any Person other than Buyer;
(c) unless otherwise expressly permitted by the Agreement, directly or
indirectly assign or transfer any revenues, receipts or assets of Seller or any
of its Consolidated Subsidiaries to CMSLP or the AIM Funds; provided, however,
that the provisions of this clause (c) shall not apply to payments made by
Seller or any of its Consolidated Subsidiaries to CMSLP for services rendered by
CMSLP pursuant to any arm's-length transaction entered into in the ordinary
course of business;
(d) modify or amend any of the constituent documents (i) of Seller in a
manner that could reasonably be expected to have a Material Adverse Effect or
that would otherwise be inconsistent with or result in a violation of any of the
terms of the Transaction Documents or (ii) of any Designated Seller Affiliate
without the prior written consent of Buyer in each instance;
(e) modify or amend the terms of the New Note Indentures or the New Notes
or the Noteholder Preferred Stock, or any of them, so as to (i) change the
scheduled maturity thereof (or so as to give any holder thereof any additional
right to accelerate the maturity thereof or require full or partial prepayment
thereof prior to the occurrence of an event of default thereunder) to a date
earlier than the fifth (5th) anniversary of the date hereof (in the case of the
Series A Notes) or the sixth (6th) anniversary of the date hereof (in the case
of the Series B Notes) without the prior written consent of Buyer or (ii)
without limiting the generality of the immediately preceding clause (i), provide
for any mandatory prepayment, redemption, repurchase or defeasance of any of the
New Notes or any Noteholder Preferred Stock other than those provided for in the
following sections of the New Note Indentures as in effect on the Purchase Date
(and without giving effect to any amendments thereto): 3.08(b), 3.08(c), 3.08(d)
(Series A Note Indenture only), 3.08(e) (Series A Note Indenture only),
4.07(b)(ii)(D), 4.10(b)(iv), 4.15 and 4.17 (Series A Note Indenture only);
(f) consent or assent to any amendment, modification or termination of any
Securitization Document directly or indirectly relating to any of the CBO-2
Securities or the CBO-1/Nomura Securities (in each case other than a purely
ministerial amendment or modification);
(g) enter into, modify, amend or terminate any Hedging Transaction without
the prior written consent of Buyer (which consent shall not be unreasonably
withheld to the extent so provided in Section 12(d));
(h) (i) make any principal payment on the New Notes in contravention of
Section 4, or (ii) regardless of whether such action shall be permitted under
Section ▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or otherwise acquire any New Notes or
any shares of Noteholder Preferred Stock unless such New Notes or shares of
Noteholder Preferred Stock are promptly cancelled;
(i) declare or pay any Restricted Payments in respect of the Common Stock
or any series of Preferred Stock in contravention of Section 5(g) or 5(h) or the
definition
of "Permitted Cash Payments" contained in this Annex I or any other
applicable provision of the Agreement;
(j) in the case of CBO REIT, (i) issue any stock or other securities in
addition to, in substitution for, upon conversion or exchange of, or otherwise
in respect of, the Purchased Securities, in each case unless such stock or other
securities (A) are issued to the Collateral Agent, as agent for Buyer and as
collateral agent for the New Note Trustees (for the benefit of the holders of
the New Notes), and (B) are issued in certificated form, (ii) engage in any
business other than as provided for in its Articles of Incorporation as in
effect on the Purchase Date, or (iii) fail to comply with the "corporate
separateness" provisions of its Articles of Incorporation as in effect on the
Purchase Date; or
(k) in the case of CMBS Corp or QRS-1, (i) directly or indirectly sell,
transfer, assign or otherwise dispose of, or create, incur or permit to exist
any Lien upon, any interest in any of the CBO-2 Securities or CBO-1/Nomura
Securities held by it to or for the benefit of any Person, (ii) engage in any
business other than as provided for in its Articles of Incorporation as in
effect on the Purchase Date, or (iii) fail to comply with the "corporate
separateness" provisions of its Articles of Incorporation as in effect on the
Purchase Date.
12. AFFIRMATIVE COVENANTS OF SELLER
Seller agrees that, from the date hereof until the Transaction is
terminated and the Agreement is no longer in force:
(a) Seller shall give Buyer prompt written notice of the occurrence of any
event or the existence of any condition that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; provided, however, that
no such notification shall relieve Seller of any of its obligations under the
Agreement. Any such notice shall specify the nature and period of existence of
such event or condition and what action Seller has taken, is taking and proposes
to take with respect thereto.
(b) Seller, at its sole expense and promptly upon request by Buyer, shall
execute all such documents and instruments and take all such further actions as
may be necessary or, in the reasonable opinion of Buyer, desirable in order to
(i) defend the record ownership of Buyer and the beneficial ownership of Seller
in respect of the Purchased Securities against the claims and demands of all
Persons (other than Permitted Liens) or (ii) perfect and protect the
precautionary or "backstop" security interest granted to Buyer in the Collateral
in the event the Transaction is recharacterized as a secured financing.
(c) Seller shall give Buyer written notice of the occurrence of any Default
or Event of Default as soon as possible, but in no event later than the first
(1st) Business Day after obtaining actual knowledge thereof; provided, however,
that no such notification shall relieve Seller of any of its obligations under
the Agreement. Any such notice shall specify the nature and period of existence
of such Default or Event of Default and what action Seller has taken, is taking
and proposes to take with respect thereto.
(d) Seller shall enter into (or cause the appropriate Designated Seller
Affiliate to enter into) one or more Hedging Transactions reasonably acceptable
to Buyer and Seller. Seller shall instruct in writing all counterparties on any
such Hedging Transactions entered into by Seller or a Designated Seller
Affiliate to recognize Buyer as the sole pledgee of such Hedging Transactions,
and shall execute all documents necessary and desirable to effect the foregoing.
(e) Seller shall promptly (and in any event not later than two (2) Business
Days following receipt thereof by Seller or any of its Subsidiaries) deliver to
Buyer a copy of (i) any written notice of the occurrence of an event of default
under any Securitization Document relating to any of the CBO-2 Securities or the
CBO-1/Nomura Securities, (ii) unless otherwise instructed by Buyer in writing,
any material report received by or required to be delivered by Seller or any of
its Subsidiaries pursuant to any such Securitization Document (other than any
such reports included in the monthly reporting package referred to in Section
12(h)(iv), and (iii) unless otherwise instructed by Buyer in writing, any
written notice of transfer of servicing and/or special servicing under any such
Securitization Document (other than any such transfer of servicing and/or
special servicing to CMSLP).
(f) Seller shall permit, and shall cause each of its Subsidiaries (other
than the AIM Funds) to permit, Buyer or its designated representative to inspect
any records of Seller or such Subsidiary with respect to the CBO-2 Securities or
the CBO-1/Nomura Securities or the conduct and operation of Seller's or such
Subsidiary's business upon two (2) Business Days' notice (or such shorter notice
as may be reasonable under the circumstances) from Buyer or its designated
representative, and to copy and take extracts from any and all thereof, at such
reasonable times during normal business hours and as often as may reasonably be
requested.
(g) If, notwithstanding the provisions of Section 12(j), Seller shall at
any time become entitled to receive or shall receive any stock or securities of
CBO REIT in addition to, in substitution for, upon conversion or exchange of, or
otherwise in respect of, the Purchased Securities, Seller shall accept the same
as agent for Buyer and the Collateral Agent, shall hold the same in trust for
Buyer and the Collateral Agent, shall cause the same to be registered in the
name of Buyer and shall deliver the same forthwith to the Collateral Agent, to
be held by the Collateral Agent in the same capacity and for the same purposes
as it holds the Purchased Securities on the date hereof.
(h) Seller shall provide, or cause the appropriate Designated Seller
Affiliate to provide, Buyer and each Beneficial Purchaser with the following
financial and reporting information:
(i) As soon as available and in any event within forty-five (45) days after
the last day of each of the first three fiscal quarters in any fiscal year of
Seller, a consolidated balance sheet of Seller and its Consolidated Subsidiaries
as at the end of such fiscal quarter and the related consolidated statements of
income and cash flows of Seller and its Consolidated Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current fiscal
year of Seller to the end of such fiscal quarter, all prepared in reasonable
detail and in accordance
with GAAP and certified by the chief financial officer of Seller that they
fairly present, in all material respects, the financial condition of Seller and
its Consolidated Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments and the absence of
footnotes; provided that, so long as Seller shall be required to file a
quarterly report on Form 10-Q with the Securities and Exchange Commission, the
obligations of Seller under this Section 12(h)(i) shall be satisfied if Seller
delivers to Buyer a copy of said filing on Form 10-Q concurrently with the
filing thereof with the Securities and Exchange Commission;
(ii) As soon as available and in any event within ninety (90) days after
the last day of each fiscal year of Seller (or, in the case of fiscal year 2000,
no later than April 16, 2001), (A) a consolidated balance sheet of Seller and
its Consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and cash flows of Seller and its Consolidated
Subsidiaries for such fiscal year, all prepared in reasonable detail and in
accordance with GAAP and certified by the chief financial officer of Seller that
they fairly present, in all material respects, the financial condition of Seller
and its Consolidated Subsidiaries as at the date indicated and the results of
their operations and their cash flows for the period indicated, and (B) except
in the case of such consolidated financial statements for the fiscal year ended
December 31, 2000 (in which case such report may be qualified in the manner
disclosed to Buyer in writing on April 12, 2001), an unqualified report thereon
by a nationally-recognized independent certified public accounting firm;
provided that, so long as Seller shall be required to file an annual report on
Form 10-K with the Securities and Exchange Commission, the obligations of Seller
under this Section 12(h)(ii) shall be satisfied if Seller delivers to Buyer a
copy of said filing on Form 10-K concurrently with the filing thereof with the
Securities and Exchange Commission;
(iii) Within forty-five (45) days after the last day of each calendar
quarter in any fiscal year of Seller, an officer's certificate from Seller
addressed to Buyer certifying that, as of the last day of such calendar quarter
and as of the date of such certificate, (A) no condition or event existed or
exists that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action Seller has taken, is taking and proposes to
take with respect thereto, and (B) CBO REIT had and has no liabilities of any
nature whatsoever, whether liquidated or unliquidated, contingent or matured,
including without limitation any liabilities with respect to any federal, state
or local taxes of any nature, or if any such liabilities existed or exist,
specifying the nature and amount thereof and what action Seller has taken, is
taking and proposes to take with respect thereto; provided, however, that the
delivery of such certificate shall not relieve Seller of any of its obligations
under the Agreement;
(iv) Within fifteen (15) days after the end of each calendar month, a
monthly reporting package containing all information set forth on Exhibit II
attached hereto, including without limitation (A) calculations of Appraisal
Reductions and Realized Losses (as such terms are defined in the definition of
"CBO-2 Visible Losses") in respect of all applicable mortgage loans underlying
any of the CBO-2 Securities, including without limitation any such mortgage loan
with respect to which the Securitization Document for the securitization
transaction relating to such mortgage loan does not contain definitions of
"Appraisal Reduction" and "Realized Losses" (or comparable terms) and therefore
does not require a determination of such amounts (in which case Seller shall use
its best efforts to (1) cause such amounts to be determined as promptly as
possible by the applicable master servicer or special servicer with respect to
such mortgage loan and to be reported to Seller for inclusion in such monthly
reporting package or (2) (x) obtain the information necessary to make such
determination as promptly as possible from such master servicer or special
servicer and (y) make such determination for inclusion in such monthly reporting
package) and (B) a calculation of CBO-2 Visible Losses as of the end of such
calendar month (based on the most recent information available to Seller and its
Subsidiaries at the time of determination);
(v) When and to the extent such information shall be made available to the
general public, all publicly filed financial information with respect to Seller
(to the extent not provided under any other clause of this Section 12(h),
including, without limitation, Seller's quarterly and annual reports filed with
the Securities and Exchange Commission on Forms 10-Q and 10-K, respectively, and
all press releases and other statements made available generally by Seller or
any of its Subsidiaries to the public concerning material developments in the
business of Seller or any of its Subsidiaries;
(vi) (A) Not later than December 1 of each fiscal year of Seller, a
proposed annual operating budget (the "Proposed Budget") for Seller and its
Consolidated Subsidiaries for the next succeeding fiscal year (the "Budget
Year") setting forth, in form and level of detail reasonably acceptable to
Buyer, the general operating and administrative expenses of Seller and its
Consolidated Subsidiaries for each fiscal quarter of the Budget Year; provided,
however, that the Proposed Budget shall not constitute the "Approved Operating
Budget" for the Budget Year unless and until the Proposed Budget shall have been
approved in writing by Buyer (such approval not to be unreasonably withheld);
provided further, however, that Buyer shall be deemed to have approved the
Proposed Budget if (1) the aggregate annual amount of general operating and
administrative expenses of Seller and its Consolidated Subsidiaries set forth in
the Proposed Budget does not exceed 105% of the corresponding aggregate annual
amount set forth in the Approved Operating Budget for the fiscal year
immediately preceding the Budget Year (prior to giving
effect to any modifications to such Approved Operating Budget pursuant to
clause (B) of this Section 12(h)(vi)), (2) Seller shall have delivered to Buyer,
together with the Proposed Budget, a certificate of the chief financial officer
of Seller setting forth calculations (which shall include, to the extent
relevant, the projected revenues of Seller and its Consolidated Subsidiaries for
the Budget Year) demonstrating that, based on the Proposed Budget, Buyer will
receive an aggregate amount of Repurchase Price Downpayments equal to not less
than the Applicable TDA on or before each Phase I Remittance Date during the
Budget Year, and (3) Buyer does not notify Seller in writing within ten (10)
calendar days after receipt of the Proposed Budget that it has determined (which
determination shall be made in the exercise of Buyer's good faith business
judgment) that the assumptions utilized by Seller in preparing the certificate
referred to in the immediately preceding clause (2) and the related calculations
are not reasonably supportable; and
(B) Prior to incurring general operating and administrative expenses during
any fiscal quarter (the "Current Fiscal Quarter") of any fiscal year of Seller
(the "Current Fiscal Year") that would cause the cumulative aggregate amount of
general operating and administrative expenses incurred by Seller and its
Consolidated Subsidiaries during the Current Fiscal Quarter to exceed the
corresponding cumulative aggregate amount set forth in the Approved Operating
Budget in effect for the Current Fiscal Year (after giving effect to any
modifications to such Approved Operating Budget pursuant to this clause (B)),
Seller shall prepare and deliver to Buyer and each Beneficial Purchaser a
proposed modification to the Approved Operating Budget for the Current Fiscal
Year that would provide for such increase in general operating and
administrative expenses; provided, however, that such proposed modification
shall not be effective for purposes of the definition of "Approved Operating
Budget" unless and until such proposed modification shall have been approved in
writing by Buyer (such approval not to be unreasonably withheld); provided
further, however, that Buyer shall be deemed to have approved such proposed
modification if such proposed modification would not cause the aggregate amount
of general operating and administrative expenses of Seller and its Consolidated
Subsidiaries for the Current Fiscal Year to exceed 105% of the corresponding
amount set forth in the Approved Operating Budget for the Current Fiscal Year
(prior to giving effect to any modifications to such Approved Operating Budget
pursuant to this clause (B)); and
(vii) With reasonable promptness, such other information and data with
respect to Seller or any of its Subsidiaries (including without limitation any
Designated Seller Affiliate or CMSLP), the CBO-2 Securities or the CBO-
1/Nomura Securities as from time to time may be reasonably requested by
Buyer or any Beneficial Purchaser.
(i) Seller shall, and shall cause each of its Subsidiaries to, (i) at all
times comply in all material respects with all laws, rules, regulations and
orders of any governmental authority having jurisdiction over Seller or any of
its Subsidiaries or any of their respective assets and (ii) do or cause to be
done all things necessary to preserve and maintain in full force and effect its
legal existence, all licenses material to its business and, if applicable, its
status as a "real estate investment trust" for federal income tax purposes.
(j) Seller shall at all times maintain, and cause each of its Subsidiaries
to maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of Seller's consolidated
financial statements in conformity with GAAP.
(k) Seller shall, and shall cause each of its Subsidiaries to, pay and
discharge all taxes, assessments and other governmental charges imposed upon it
or any of its assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services and supplies) for sums that have become due and payable and
that by law have or may become a Lien upon any of its properties or assets, in
each case prior to the time when any penalty or fine shall be incurred with
respect thereto; provided, however, that no such charge or claim need be paid if
it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (1) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (2) such charge or claim does not result in a
Lien upon the Purchased Securities, any of the CBO-2 Securities, any of the
CBO-1/Nomura Securities, the CMBS Corp Pledged Stock or the QRS-1 Pledged Stock.
(l) Seller shall advise Buyer in writing of any change in its name or its
chief executive office, the name or chief executive office of any Designated
Seller Affiliate, or the places where the books and records pertaining to the
Purchased Securities, the CBO-2 Securities, the CBO-1/Nomura Securities, the
CMBS Corp Pledged Stock and the QRS-1 Pledged Stock are maintained, in each case
not less than ten (10) Business Days prior to taking any such action.
(p) Seller will take all such actions as may be legally permissible in
order to ensure that (i) CMBS Corp declares and pays all dividends contemplated
by clause (i) of Section 5(a), in the amounts and at the times so contemplated,
and (ii) QRS-1 declares and pays all dividends contemplated by clause (i) of
Section 5(d), in the amounts and at the times so contemplated.
13. SPECIAL SERVICING RIGHTS; REIT TAX MATTERS
(a) Buyer and Seller hereby acknowledge and agree that, so long as Seller
shall be entitled to exercise all voting and other corporate rights and powers
of ownership with respect to the Purchased Securities as provided in Section
7(c)(i), Seller shall be entitled, through its resultant control of each
Designated Seller Affiliate, to continue to appoint the Person or Persons (each,
for purposes of this Section 13, a "Special Servicer") that will exercise all
special servicing rights with respect to all mortgage loans underlying the
CBO-2 Securities and the CBO-1/Nomura Securities; provided, however, that
(i) each Person appointed by Seller to act as a Special Servicer shall be an
Approved Servicer at the time of such appointment and (ii) if at any time any
Special Servicer shall cease to be an Approved Servicer, Seller shall promptly
take all such actions as may be necessary to replace such Special Servicer with
a Special Servicer that qualifies as an Approved Servicer.
(b) Buyer and Seller hereby further acknowledge and agree that, if Buyer
shall have terminated Seller's right to exercise all voting and other corporate
rights and powers of ownership with respect to the Purchased Securities pursuant
to Section 7(c)(ii), Buyer's resultant control of each Designated Seller
Affiliate shall entitle Buyer, subject to compliance with applicable corporate
law and the terms and conditions of the relevant Securitization Documents
relating to the CBO-2 Securities and the CBO-1/Nomura Securities, to take all
actions necessary to appoint and/or give directions to each Special Servicer. In
furtherance and support of the foregoing, (i) in the event of such a termination
of Seller's right to exercise all voting and other corporate rights and powers
of ownership with respect to the Purchased Securities, Seller shall promptly
execute and deliver all such documents and instruments and take all such other
actions as may be reasonably requested by Buyer in connection with Buyer's
appointment of, and/or the exercise of its right to direct, any Special
Servicer, and (ii) Seller hereby irrevocably appoints Buyer as such Seller's
attorney-in-fact, with full authority in the place and stead of Seller and in
the name of such Seller, Buyer or otherwise, from time to time in Buyer's
discretion to take any action and to execute any instrument that Buyer may
reasonably deem necessary to accomplish the purposes of this Section 13(b).
(c) Seller shall not, and shall not permit any of its Subsidiaries to, take
any action (including the failure to act), whether with respect to Seller, any
Designated Seller Affiliate, the CBO-2 Securities, the CBO-1/Nomura Securities
or otherwise, that would result in (A) CBO REIT failing to qualify as a REIT for
any calendar year during which the Agreement is in effect, (B) CMBS Corp.,
QRS-1, CRIIMI MAE Commercial Mortgage Trust 1996-C1, and/or CRIIMI MAE
Commercial Mortgage Trust 1998-C1 ceasing to be a qualified REIT subsidiary of
CBO REIT, or (C) CBO REIT or any of its Subsidiaries being subject to any
federal income tax under sections 857(b)(1) or 11(a) of the Code, or to any
excise tax under section 4981 of the Code.
14. EVENTS OF DEFAULT; REMEDIES
Paragraph 11 of the Master Repurchase Agreement is amended by the deletion
of clauses (i), (iii) and (iv) in the first paragraph thereof and the addition
of the following at the end of the first paragraph thereof before the phrase
"(each an `Event of Default')":
(viii) Seller for any reason fails to pay (A) the Minimum Repurchase Price
Installment that is due and payable on any Remittance Date or (B) the Repurchase
Price on any Early Repurchase Date;
(ix) Seller fails to pay (A) the Transaction Fee on the date when due under
Section 3(f) or (B) any Extension Fee on the date when due under Section 3(e);
(x) Seller (A) fails to pay any Late Payment Charge on the date when due
under Section 3(o), (B) fails to pay any amount owed to Buyer or any Beneficial
Purchaser under Section 3(i), 3(j) or 3(k) or Section 19, (C) fails to pay any
amount owed to Buyer under Section 19 or Section 20(d), or (D) fails to pay any
amount owed by Seller under any of the Transaction Documents other than the
Agreement, which failure in each case is not remedied within five (5) Business
Days or, in the case of a failure described in clause (D), such longer period of
time, if any, as may be specified in the applicable Transaction Document;
(xi) Seller (A) fails to deliver any Proposed Budget to Buyer in a timely
manner pursuant to Section 12(h)(vi)(A), or (B) fails to perform or comply with
any other term or provision contained in Section 12(h) (other than clause (v)
thereof) and such failure continues for more than five (5) Business Days after
written notice thereof is given by Buyer to Seller;
(xii) Seller breaches any of the covenants appearing in Section 11(other
than Section 11(a));
(xiii) A Change of Control occurs;
(xiv) An Act of Insolvency occurs with respect to (A) any Designated Seller
Affiliate or (B) any other Subsidiary of Seller (other than the AIM Funds);
(xv) A final judgment by any competent court in the United States of
America for the payment of money in an amount greater than $1 million (exclusive
of any amount that is adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) is rendered against
Seller or any of its Subsidiaries (other than the AIM Funds) and remains
undischarged, unpaid, unvacated, unbonded or unstayed for a period of thirty
(30) consecutive days;
(xvi) The Transaction Documents, for any reason other than the
recharacterization of the Transaction as a secured financing, shall not be
effective to cause, or shall cease to cause, Buyer to be the owner of the
Purchased Securities, free of any adverse claim other than Permitted Liens and
the rights of Seller under the Agreement;
(xvii) Assuming, for purposes of this clause (xvii), that the Transaction
shall have been recharacterized on and as of the Purchase Date as a secured
financing, Buyer shall, at any time on or after the Purchase Date, and for any
reason, fail or cease to have a valid and perfected security interest in the
Purchased Securities, subject to no Lien of equal or greater priority other than
(subject to the provisions of the Intercreditor Agreement) the security interest
created pursuant to the Security Agreement in favor of the Collateral Agent for
the benefit of the New Trustees;
(xviii) Seller or any of its Subsidiaries (other than the AIM Funds) (a)
fails to pay when due any amounts owed by Seller or such Subsidiary in respect
of any one or more of the following items: any indebtedness for borrowed money
(including, without limitation, the indebtedness evidenced by the New Notes),
any deferred purchase price obligation (other than trade payables incurred in
the ordinary course of business), any capitalized lease obligation, any Hedging
Transaction, any other obligation evidenced by a note or similar written
instrument, or any obligation in the nature of a guaranty of any of the
foregoing (collectively, "Indebtedness"), if the aggregate principal amount of
all such items of Indebtedness in respect of which Seller and its Subsidiaries
have failed to pay any such amounts when due equals or exceeds $1 million, or
(b) fails to observe or perform any other material terms of any agreements or
instruments relating to one or more items of Indebtedness, if the effect of such
failure to observe or perform is to cause, or to permit the holder or holders of
that Indebtedness (or a trustee on behalf of such holder or holders) to cause,
Indebtedness in an aggregate principal amount equal to or greater than $1
million to become or be declared due and payable prior to its stated maturity
(or, in the case of any such Indebtedness in the nature of a guaranty, the
stated maturity of the underlying obligation), whether upon the giving or
receiving of notice or the lapse of time or otherwise; or
(xix) Seller or Buyer breaches or fails to perform any of the terms,
covenants, obligations or conditions of the Transaction Documents, other than as
specifically otherwise referred to in this definition of "Event of Default", and
such breach or failure to perform continues unremedied for fifteen (15) Business
Days after written notice to Seller or Buyer from the non-defaulting party or
its successors or assigns.
Furthermore, subparagraphs (a) - (i) of Paragraph 11 of the Master Repurchase
Agreement are hereby deleted in their respective entireties and replaced with
Sections 14(a) and 14(b) below:
(a) If an Event of Default shall occur with respect to Seller, the
following rights and remedies shall be available to Buyer:
(i) At the option of Buyer, exercised by written notice to Seller (which
option shall be deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of an Act of Insolvency), the Repurchase Date
shall, if it has not already occurred, be deemed immediately to occur (the date
on which such option is exercised or deemed to have been exercised being
referred to hereinafter as the "Accelerated Repurchase Date")
(ii) If Buyer exercises or is deemed to have exercised the option referred
to in Section 14(a)(i):
(A) Seller's obligations hereunder to repurchase all of the Purchased
Securities shall become immediately due and payable on and as of the Accelerated
Repurchase Date; and
(B) Price Differential shall continue to accrue in respect of the
Unamortized Purchase Price and, to the extent permitted by applicable law, any
unpaid Price Differential as of the Accelerated Repurchase Date, and to be added
to the Repurchase Price until the Repurchase Price shall have been paid in full.
(iii) Upon the occurrence and during the continuation of an Event of
Default with respect to Seller, Buyer may (A) immediately sell, in a recognized
market (or otherwise in a commercially reasonable manner), at such price or
prices as Buyer may reasonably deem satisfactory, any or all of the Purchased
Securities or (B) in its sole discretion elect, in lieu of selling all or a
portion of the Purchased Securities, to retain the Purchased Securities and give
Seller credit for the Purchased Securities in an amount equal to the Market
Value (as hereinafter defined) of the Purchased Securities against the
Repurchase Price and any other amounts then owing by Seller under the
Transaction Documents, with any excess being paid to Seller to the extent
provided below. The proceeds of any disposition of any Purchased Securities
effected pursuant to clause (A) of this Section 14(a)(iii), and the amount
credited to Seller for the Market Value of any Purchased Securities in
accordance with clause (B) of this Section 14(a)(iii), shall in each case be
applied (v) first, to the reasonable costs and expenses incurred by Buyer in
connection with Seller's default and the sale of the Purchased Securities; (w)
second, to the New Note Lien Amount (as hereinafter defined) in order to obtain
the release of the Lien on the Purchased Securities in favor of the Collateral
Agent for the benefit of the New Note Trustees; (x) third, to any unpaid Price
Differential; (y) fourth, to the Unamortized Purchase Price; and (z) fifth,
within five (5) Business Days after the application of all amounts described in
the foregoing clauses (v) through (y), to pay the balance to Seller or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct. As used in this Section 14(a)(iii) and in
Section 14(a)(vii), (1) "Market Value" shall mean, with respect to the Purchased
Securities as of any relevant date, the value of the Purchased Securities as
determined pursuant to the procedures set forth in Schedule I-F attached to this
Annex I, and (2) "New Note Lien Amount" shall mean, as of any relevant date, the
amount, determined in accordance with the procedures set forth in Schedule I-F
attached to this Annex I, that is required to be paid to the Collateral Agent in
order to obtain the release of the Lien on the Purchased Securities in favor of
the Collateral Agent for the benefit of the New Note Trustees.
(iv) The parties recognize that, in the event Buyer elects to sell any or
all of the Purchased Securities in the manner contemplated by clause (A) of
Section 14(a)(iii), it may not be possible to purchase or sell all of the
Purchased Securities on a particular Business Day, or in a transaction with the
same purchaser, or in the same manner, because the market for the Purchased
Securities may not be liquid. In view of the nature of the Purchased Securities,
the parties agree that liquidation of the Purchased Securities does not require
a public purchase or sale and that a good faith private purchase or sale (to the
extent that it is otherwise conducted in a commercially reasonable manner) shall
be deemed to have been made in a commercially reasonable manner. Accordingly,
Buyer
may elect the time and manner of liquidating any Purchased Securities, and
nothing contained herein shall (A) obligate Buyer to liquidate any Purchased
Securities on the occurrence of an Event of Default or to liquidate all of the
Purchased Securities in the same manner or on the same Business Day or (B)
constitute a waiver of any right or remedy of Buyer.
(v) Seller shall be liable to Buyer for (A) the amount of all reasonable
expenses, including reasonable legal fees and expenses, incurred by Buyer in
connection with or as a consequence of an Event of Default with respect to
Seller, and (B) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default with respect to Seller.
(vi) Buyer shall have, in addition to its rights and remedies under the
Transaction Documents, all of the rights and remedies provided by applicable law
(including without limitation, if the Transaction is recharacterized as a
secured financing, the rights and remedies of a secured party under the UCC), in
equity, and under any other agreement between Buyer and Seller. Without limiting
the generality of the foregoing, Buyer shall be entitled to set off the proceeds
of the liquidation of the Purchased Securities against all of Seller's
obligations to Buyer under the Transaction Documents, whether or not such
obligations are then due, without prejudice to Buyer's right to recover any
deficiency.
(vii) Except as otherwise specifically provided in clause (B)(ii) of
Section 7(c)(ii), Buyer may exercise any or all of the remedies available to
Buyer immediately upon the occurrence of an Event of Default, and at any time
thereafter so long as an Event of Default shall be continuing, without notice to
Seller; provided, however, that, in the event Buyer elects to retain the
Purchased Securities in the manner contemplated by clause (B) of Section
14(a)(iii), Buyer shall not be entitled to sell or otherwise dispose of any of
the Purchased Securities or any of the CBO-2 Securities or the CBO-1/Nomura
Securities until such time as (a) the Market Value and the New Note Lien Amount
have been determined in accordance with Schedule I-F attached to this Annex I,
(b) Buyer shall have given credit to Seller for the Market Value in the manner
provided in Section 14(a)(iii) (including without limitation the deduction of
the New Note Lien Amount therefrom pursuant to clause (w) of Section
14(a)(iii)), and (c) if applicable, Buyer shall have paid (or shall concurrently
pay) to Seller any amount required to be paid to Seller pursuant to clause (z)
of Section 14(a)(iii). All rights and remedies arising under the Transaction
Documents, as amended from time to time, are cumulative and not exclusive of any
other rights or remedies which Buyer may have.
(viii) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any defenses
Seller might otherwise have to require Buyer to enforce its rights by judicial
process. Seller also waives any defense Seller might otherwise have arising from
the use of nonjudicial process in connection with the disposition of any or all
of the Purchased Securities or from any other election of remedies. Seller
recognizes that such nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm's length.
(b) If an Event of Default occurs with respect to Buyer, the following
rights and remedies shall be available to Seller:
(i) Upon tender by Seller of payment of the aggregate Repurchase Price for
all Purchased Securities, all of Buyer's right, title and interest in the
Purchased Securities shall be deemed transferred to Seller, and Buyer shall
instruct the Collateral Agent to deliver the Purchased Securities to Seller upon
Buyer's receipt of such payment; provided, however, that if the Purchased
Securities are then subject to a Lien in favor of the Collateral Agent for the
benefit of the New Note Trustees, any further disposition of the Purchased
Securities shall be governed by the agreements between Seller and the Collateral
Agent (in its capacity as agent for the New Note Trustees) with respect thereto.
(ii) Buyer shall be liable to Seller for (A) the amount of all expenses,
including reasonable legal fees and expenses, incurred by Seller in connection
with or as a consequence of an Event of Default with respect to Buyer, and (B)
any other loss, damage, cost or expense directly arising or resulting from the
occurrence of an Event of Default with respect to Buyer.
(iii) Seller shall have, in addition to its rights and remedies under the
Transaction Documents, all of the rights and remedies provided by applicable
law, in equity, and under any other agreement between Buyer and Seller. Without
limiting the generality of the foregoing, Seller shall be entitled to the remedy
of specific performance to enforce Buyer's obligation to deliver the Purchased
Securities to Seller pursuant to Section 14(b)(i).
15. NOTICES AND OTHER COMMUNICATIONS
The provisions of Paragraph 13 of the Master Repurchase Agreement are
hereby modified and superseded in their respective entireties by the following
provisions of this Section 15:
Unless another address is specified in writing by the party to whom any
written notice or other communication is to be given hereunder, all notices or
communications to either party shall be in writing or confirmed in writing and
delivered to the address for such party specified in Annex II to the Master
Repurchase Agreement; provided, however, that, until such time as Seller shall
have received written notice from the DB Co-Purchaser that it is no longer a
party to the Co-Purchaser Agreement, Seller shall deliver to the DB Co-Purchaser
(at the address specified for the DB Co-Purchaser in Annex II to the Master
Repurchase Agreement), concurrently with the delivery thereof to Buyer, a copy
of each notice or other written communication delivered to Buyer hereunder. All
demands, notices and communications hereunder shall be deemed to have been duly
given if mailed, by overnight courier, registered or certified mail, return
receipt requested, or, if by other means, when received by the other party. Any
such demand, notice or communication hereunder shall be deemed to have been
received on the date delivered to or
received at the premises of the addressees (as evidenced, in the case of
registered or certified mail, by the date noted on the return receipt).
16. ASSIGNABILITY
The provisions of Paragraph 15 of the Master Repurchase Agreement are
hereby modified and superseded in their respective entireties by the following
provisions of this Section 16:
(a) The rights and obligations of Seller under the Transaction Documents
may not be assigned without the prior written consent of Buyer. Buyer or any
Beneficial Purchaser may assign its rights and obligations under the Transaction
Documents or the Co-Purchaser Agreement without the consent of Seller; provided
that Buyer or such Beneficial Purchaser shall give Seller written notice of any
such assignment no later than the time of consummation thereof. Any such
assignment shall not modify or affect in any manner the rights or obligations of
any non-assigning party under the Transaction Documents. In the event of any
assignment of any of the rights and obligations originally held by Buyer under
the Agreement (other than an assignment of all or any portion of Buyer's
beneficial interest in the Purchased Securities and its rights under the
Agreement that is effected pursuant to the Co-Purchaser Agreement), (i) the
assignee shall be deemed to be a party to the Agreement to the extent of the
rights and obligations assigned to it and (ii) the assignor shall be relieved of
its obligations under the Agreement to the extent so assigned and, in the event
of an assignment of all of its rights and obligations under the Agreement, such
assignor shall cease to be a party to the Agreement; provided, however, that in
each such case (x) the assignor shall remain bound by the provisions of Section
20(e), and (y) the assignor shall not be relieved of liability for any material
misrepresentations that it made while a party to the Agreement.
(b) Any Beneficial Purchaser shall be entitled to issue one or more
participation interests with respect to the Transaction; provided, however, that
(i) in any dealings with Seller in connection with the Transaction, each
Beneficial Purchaser shall act as exclusive agent for all such participants
which have purchased any such participation interests from it, and (ii) Seller
shall not be obligated to deal directly with any party other than Buyer, the
Collateral Agent and the Beneficial Purchasers in connection with the
Transaction.
(c) Subject to the foregoing, the Transaction Documents and the Transaction
shall be binding upon and shall inure to the benefit of Buyer, Seller, the
Beneficial Purchasers and their respective successors and permitted assigns.
Nothing in the Transaction Documents, express or implied, shall give to any
Person, other than the parties to the Transaction Documents, the Beneficial
Purchasers and their respective successors and permitted assigns, any benefit or
any legal or equitable right, power, remedy or claim under the Transaction
Documents.
17. consent to jurisdiction; waiver of jury trial
(a) Each party irrevocably and unconditionally (i) submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding
brought to enforce its obligations under the Agreement or relating in any
way to the Agreement or the Transaction and (ii) waives, to the fullest extent
it may effectively do so, any defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court and any right of
jurisdiction on account of its place of residence or domicile.
(b) Each party hereby irrevocably consents to the service of any summons
and complaint and any other process by the mailing of copies of such process to
it at its address specified herein. The parties hereby agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 17 shall affect the right of Buyer or
Seller to serve legal process in any other manner permitted by law or affect the
right of Buyer or Seller to bring any action or proceeding against the other
such party or its property in the courts of other jurisdictions.
(c) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE
AGREEMENT, THIS ANNEX I, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR
DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
18. NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants to
the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and the Transaction:
(a) It is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written or oral)
of the other party to the Transaction Documents, other than the representations
expressly set forth in the Transaction Documents.
(b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of the Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party.
(c) It is a sophisticated and informed Person that has a full understanding
of all the terms, conditions and risks (economic and otherwise) of the
Transaction Documents and the Transaction and is capable of assuming and willing
to assume (financially and otherwise) those risks;
(e) It is not acting as a fiduciary or financial, investment or commodity
trading advisor for the other party and has not given the other party (directly
or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal,
regulatory, tax, business, investment, financial accounting or otherwise)
of the Transaction Documents or the Transaction.
In addition, each Beneficial Purchaser, by entering into the Co-Purchaser
Agreement and by accepting the benefits of the Transaction Documents and the
Transaction that inure to it thereunder, acknowledges, represents and warrants,
for the benefit of Buyer, Seller and each other Beneficial Purchaser, as to the
foregoing matters in connection with its entering into the Co-Purchaser
Agreement and accepting such benefits.
19. INDEMNITY
Seller hereby agrees to indemnify Buyer and each Beneficial Purchaser, and
each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties"), on demand, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, taxes (including stamp, excise, sales or other taxes which may be payable
or determined to be payable with respect to the Purchased Securities or in
connection with the Transaction and the documents delivered in connection
therewith, other than (a) taxes measured by the income, gross receipts or
capital of Buyer or any Beneficial Purchaser and (b) any taxes of any
Indemnified Party other than Buyer or a Beneficial Purchaser), fees, costs,
expenses (including reasonable attorneys' fees and disbursements) or
disbursements (all of the foregoing, collectively, "Indemnified Amounts") which
may at any time (including, without limitation, at such time as the Agreement
shall no longer be in effect and the Repurchase Price shall have been paid in
full) be imposed on or asserted against any Indemnified Party in any way
whatsoever arising out of or in connection with, or relating to, the Agreement
or the Transaction or any action taken or omitted to be taken by any Indemnified
Party under or in connection with any of the foregoing; provided, however, that
Seller shall not be obligated to indemnify any Indemnified Party for Indemnified
Amounts (i) resulting from the gross negligence or willful misconduct of such
Indemnified Party or (ii) arising out of any claim asserted against such
Indemnified Party by another Indemnified Party or a stockholder thereof or (iii)
in excess of any limitations applicable to such Indemnified Amounts appearing in
Section 14 or Section 20(d) .
20. MISCELLANEOUS
(a) Time is of the essence under the Transaction Documents and the
Transaction. All references in the Transaction Documents to a time shall mean
New York time in effect on the date of the action unless otherwise expressly
stated in the Transaction Documents.
(b) The Transaction Documents may be executed in counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(c) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(d) Without limiting the rights and remedies of Buyer under the Transaction
Documents, Seller shall pay the reasonable out-of-pocket costs and expenses,
including the
reasonable fees and expenses of accountants, attorneys and advisors,
incurred by Buyer and the DB Co-Purchaser in connection with the negotiation,
execution and consummation of the Transaction Documents and the Transaction;
provided, however, that Seller shall not be obligated to pay more than $500,000
in the aggregate in respect of the foregoing fees, costs and expenses enumerated
in this sentence. In addition, Seller agrees to pay Buyer on demand all costs
and expenses (including reasonable attorneys' fees) in connection with any
enforcement of any of the provisions hereof, or the performance by Buyer of any
obligations of Seller in respect of the Purchased Securities which Seller has
failed or refused to perform, or the custody, care or preservation of the
Purchased Securities, or the maintenance of the Collection Account or the
registration of the Purchased Securities in the name of Buyer or its nominee.
All such expenses shall be obligations of Seller in favor of Buyer under the
Agreement.
(e) Buyer and each Beneficial Purchaser shall hold all non-public
information regarding Seller and its Subsidiaries and their respective
businesses and properties that is obtained pursuant to the requirements of the
Agreement, and which has been identified as confidential by Seller, in
accordance with such Person's customary procedures for handling confidential
information of this nature, it being understood and agreed by Seller that in any
event such Person may make (i) disclosures to Affiliates of such Person, (ii)
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Person of any interest in the Agreement or the Purchased Securities or any
participations therein (but only so long as such prospective assignee,
transferee or participant shall have agreed in writing to be bound by the
provisions of this Section 20(e)), or (iii) disclosures required or requested by
any governmental agency or representative thereof or pursuant to legal process;
provided, however, that, unless specifically prohibited by applicable law or
court order, such Person shall notify Seller of any request by any governmental
agency or representative thereof (other than any such request in connection with
any examination of the financial condition of such Person by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall such Person be
obligated or required to return any materials furnished by Seller or any of its
Subsidiaries.
(f) Each provision of the Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of the
Agreement shall be prohibited by or be invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement.
(g) The Agreement contains a final and complete integration of all prior
expressions by the parties with respect to the subject matter hereof and thereof
and shall constitute the entire agreement among the parties with respect to such
subject matter, superseding all prior oral or written understandings.
(h) The parties understand that the Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice
from counsel of its choice regarding the meaning and legal significance of
the Agreement and that it is satisfied with its legal counsel and the advice
received from it.
(i) Should any provision of the Agreement require judicial interpretation,
it is agreed that a court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against any
Person by reason of the rule of construction that a document is to be construed
more strictly against the Person who itself or through its agent prepared the
same, it being agreed that all parties have participated in the preparation of
the Agreement.
(j) The obligations and liabilities of Seller under the Transaction
Documents and any claim based thereon or otherwise in respect thereof shall be
direct and full recourse obligations of Seller.
(k) This Agreement may not be amended, supplemented or otherwise modified
except by a writing signed by Buyer and Seller.
(l) In the event of any conflict or inconsistency between the provisions of
the Agreement (including without limitation Section 14(a)), on the one hand, and
the provisions of the Intercreditor Agreement, on the other hand, the provisions
of the Intercreditor Agreement shall govern and control as among Buyer, the
Collateral Agent and the New Note Trustees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Annex I as of the ___
day of _______________, 2001.
SELLER:
CRIIMI MAE INC.
By: _________________________
Name:
Title:
BUYER:
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
BY ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By: ___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SCHEDULE 1-A CBO-2 Securities
SCHEDULE 1-B CBO-1/Nomura Securities
SCHEDULE 1-D Loss Threshold Amount
SCHEDULE X CRIIMI MAE Inc.'s
Disclosure Schedule
SCHEDULE 1-A
CBO-2 Securities
CBO-2 Securities
CRIIMI MAE Commercial Mortgage Trust, CRIIMI MAE Commercial Mortgage Bond,
Series 1998-C1, Classes ▇▇, ▇▇, ▇, ▇, ▇, ▇▇, ▇▇ and J and Owner Trust
Certificate, Classes A and R.
SCHEDULE 1-B
CBO-1/Nomura Securities
CBO-1 Securities
CRIIMI MAE Trust I Commercial Mortgage Bond, Series 1996-C1, Class F and Owner
Trust Certificate, Classes P, R and XS
Nomura Securities
Nomura Asset Securities Corporation Commercial Mortgage Pass Through
Certificates Series 1998-D6
Class - B7
Cusip No. - ▇▇▇▇▇▇▇▇▇
Original Face Amount - $46,532,578.00
No physical bond exists (book-entry).
SCHEDULE 1-D
Loss Threshold Amount
Schedule of Quarterly Loss Threshold Amounts
--------------------------------------- ----------------------------------------
For the Quarter Ending Loss Threshold Amount
--------------------------------------- ----------------------------------------
March 31, 2001 $45,300,000
--------------------------------------- ----------------------------------------
June 30, 2001 $51,300,000
--------------------------------------- ----------------------------------------
September 30, 2001 $61,400,000
--------------------------------------- ----------------------------------------
December 31, 2001 $73,600,000
--------------------------------------- ----------------------------------------
March 31, 2002 $85,300,000
--------------------------------------- ----------------------------------------
June 30, 2002 $96,300,000
--------------------------------------- ----------------------------------------
September 30, 2002 $106,200,000
--------------------------------------- ----------------------------------------
December 31, 2002 $115,400,000
--------------------------------------- ----------------------------------------
March 31, 2003 $124,000,000
--------------------------------------- ----------------------------------------
June 30, 2003 $132,200,000
--------------------------------------- ----------------------------------------
September 30, 2003 $140,100,000
--------------------------------------- ----------------------------------------
December 31, 2003 $147,600,000
--------------------------------------- ----------------------------------------
March 31, 2004 $155,000,000
--------------------------------------- ----------------------------------------
June 30, 2004 $162,300,000
--------------------------------------- ----------------------------------------
September 30, 2004 $169,400,000
--------------------------------------- ----------------------------------------
December 31, 2004 $176,300,000
--------------------------------------- ----------------------------------------
SCHEDULE X
SELLER DISCLOSURE SCHEDULE
SCHEDULE 10(a)(iii) Non-Contravention
SCHEDULE 10(a)(iv) Litigation; Compliance with
Laws, etc.
SCHEDULE 10(a)(v) No Broker
SCHEDULE 10(a)(ix) Governmental Consents
SCHEDULE 10(a)(xiv) ERISA
SCHEDULE 10(a)(xv) Disclosures
SCHEDULE 10(a)(xvii) No Material Adverse Change
Seller Disclosure Schedule
On the following pages are the Seller Disclosure Schedules (the
"Schedules") to Annex I to the Master Repurchase Agreement entered into by and
between CRIIMI MAE Inc. ("Seller") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, acting
through its agent, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ("Buyer")
as of April 17, 2001 (the "Master Repurchase Agreement"), each of which is
incorporated by reference into the Master Repurchase Agreement and Annex I
thereto. The Schedules are confidential and shall not be disclosed by Buyer to
any party without the prior written consent of Seller. No statement or
information contained in the Schedules shall be deemed an admission of liability
or fact by Seller in connection with any claim, action or proceeding involving a
third party.
SCHEDULE 10(a)(iii)
Non-Contravention
Section 10(a)(iii) of the Master Repurchase Agreement is hereby amended
and modified as follows:
1. ___ _______ The representation in Section 10(a)(iii) assumes that the
Buyer's and DB Co-Purchasers' representations contained in Section 10(b)(i) are
true and correct and that any other Beneficial Purchaser has made the same
representation.
2. Seller notes that it has obtained the approval of the trustee of the
CBO-2 Securities to contribute the CBO-2 Securities to CBO REIT.
3. Seller notes that it has obtained necessary approvals through the
approval and confirmation of Seller's confirmed plan of reorganization.
SCHEDULE 10(a)(iv)
Litigation; Compliance with Laws, etc.
1. ___ _______ Reference is made to Item 3, "Legal Proceedings", contained
in Seller's Annual Report on Form 10-K for the year ended December 31, 2000, the
contents of which are incorporated herein.
2. Case Name: CRIIMI MAE Services Limited Partnership (the "Partnership"),
individually and as subrogee of ------------------ ----------- GMAC Commercial
Mortgage Corporation, Plaintiff, against Nassau Bay Associated, LP and L.A.G.
Associates, LP, Defendants ("Defendants") ---------- Case No.: 600249/00
-------- Jurisdiction: Supreme Court of the State of New York, County of New
York ------------ Case Status: In 1999, the Partnership failed to collect from
Defendants $820,511.00, a portion of the full amount of a prepayment penalty on
a mortgage loan in the Partnership's direct servicing portfolio. The Partnership
funded the $820,511.00 shortfall to the master servicer and filed an insurance
claim for recovery of the shortfall under its errors and omissions policy. The
insurance company has declined to reimburse the Partnership for the shortfall
but has agreed to provide the Partnership with counsel at its expense to pursue
collection from the Defendants. The Defendants filed a motion to dismiss the
Partnership's initial complaint. As a result, the trial court dismissed two of
the Partnership's three claims for breach of contract and reformation. The
Defendants have appealed the Partnership's third claim for unjust enrichment,
which claim seeks recovery for the entire shortfall amount. Oral arguments were
heard on January 18, 2001. A decision is expected in April 2001. The Partnership
intends to vigorously pursue a full recovery of the shortfall; however, there
can be no assurance that all or any portion will be recovered.
3. Case Name: Argyle Place Limited Partnership, Plaintiff ("Plaintiff"),
against American Insured Mortgage --------- --------- Investors - Series 86,
L.P. , Defendant ("AIM 86"). ------ Case No.: 1CV00841 -------- Jurisdiction:
General Court of Justice, Civil Superior Court Division, Iredell County, North
Carolina ------------ Case Status: Plaintiff filed a claim for $202,042.64 on
March 16, 2001 alleging that the accounting ----------- methods used to
calculate the figures delivered prior to the payoff of an FHA insured mortgage
serviced by CRIIMI MAE Services Limited Partnership (the "Partnership") were
erroneous and resulted in an excessive final payment. AIM 86 contends that the
additional interest calculated for and disclosed on the payoff statement is in
compliance with the Mortgagor-Mortagee Agreement between Plaintiff and
Integrated Funding Inc. The Partnership, on behalf of AIM 86, anticipates
settling this matter for less than the claimed amount, however, there can be no
assurance that the matter will be settled for less than the claimed amount or
settled at all.
4. Case Name: American Insured Mortgage Investors L P Series 88, Plaintiff
("AIM 88"), against Greystone --------- ------ Servicing Corporation, Inc.,
Defendant ("Defendant") --------- Case No.: CL98-273-01 -------- Jurisdiction:
Circuit Court of Fauquier County, Virginia Case Status: On July 30, 1998, after
the Department of Housing and Urban Development ("HUD") disallowed -----------
--- approximately $1.65 million of an assignment claim, AIM 88 filed a motion
for summary judgment against Defendant alleging breach of contract and
negligence claims and sought judgment for $1,653,396.00, the amount disallowed
by HUD, plus interest. In May 2000, the Circuit Court granted AIM 88's motion
for summary judgment in part. Final judgment is still outstanding. The trial
date was continued until May 2001. AIM 88 believes that the allowance for loan
losses of $375,000.00 as of December 31, 2000, is sufficient to provide for
amounts that may not be recovered from the servicer.
SCHEDULE 10(a)(v)
No Broker
Section 10(a)(v) of the Master Repurchase Agreement is hereby amended
and modified as follows:
In connection with the Seller's Chapter 11 reorganization, which
included the negotiation and execution of the Master Repurchase Agreement,
Seller retained ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. as its financial advisor.
SCHEDULE 10(a)(ix)
Governmental Consents
Section 10(a)(ix) of the Master Repurchase Agreement is hereby amended
and modified as follows:
The representation in Section 10(a)(ix) is modified to reflect that
filings and other actions may be necessary in order to comply with applicable
securities laws including, but not limited to, Current Reports on From 8-K and
press releases.
SCHEDULE 10(a)(xiv)
ERISA
ERISA plans for certain Seller affiliates:
1. CRIIMI MAE Management, Inc. Retirement Plan (Plan Number 001)
2. CRIIMI MAE Management, Inc. Welfare Benefit Plan (Plan Number 501)
Included in the Plan are the following:
a. CRIIMI MAE Management, Inc. Short Term Salary Continuation Plan
b. CRIIMI MAE Management, Inc. Health Insurance Premium Conversion Program
c. CRIIMI MAE Management, Inc. Dependent Care Reimbursement Account Program
d. CRIIMI MAE Management, Inc. Health Care Reimbursement Account Program
e. CRIIMI MAE Management, Inc. Health Care Reimbursement Account Program
f. Your Guardian Group Insurance Plan (Dental Coverage)
g. CapitalCare Certificate of Coverage (HMO Coverage through CareFirst Blue
Cross Blue Shield of the National Capital Area)
h. BluePreferred Health Care Benefits (PPO Coverage through CareFirst Blue
Cross Blue Shield of the National Capital Area)
i. Group Live, Accident Dental and Dismemberment and Long Term Disability
Benefits Insurance Program (through the Reliance Insurance Company)
3. All Employee Benefit Plans referenced in Seller's filings pursuant to
the Securities Exchange Act of 1934 are incorporated herein by reference.
SCHEDULE 10(a)(xv)
Disclosures
Reference is made to (i) Schedule 10(a)(xvii), the contents of which
are incorporated herein by reference, with respect to the representation
contained in the third sentence of Section 10(a)(xv) and (ii) Seller's Annual
Report on Form 10-K for the year ended December 31, 2000, the contents of which
are incorporated herein.
SCHEDULE 10(a)(xvii)
No Material Adverse Change
Reference is made to Seller's Annual Report on Form 10-K for the year
ended December 31, 2000, the contents of which are incorporated herein.
