Exhibit 10.48
INVESTMENT MANAGEMENT
AGREEMENT
This AGREEMENT is entered into on
November 9, 2006 (this “ Agreement ”), between
Berkley Insurance Company, a Delaware insurance company (“
the Investor ”), and CT High Grade Mezzanine Manager,
LLC, a Delaware limited liability company (the “ the
Manager ” and, together with the Investor, each a “
Party ”).
WHEREAS, the Investor desires to
retain the Manager to acquire, sell, and otherwise manage certain
commercial real estate debt and related investments of the Investor
in a separate account (each, an “ Account ”) in
the manner and on the terms set forth herein;
NOW THEREFORE, in consideration of
the mutual promises and agreements herein contained and other good
and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as
follows:
1.
Services, Investment
Discretion .
(a)
The Manager will source, underwrite, negotiate, close, manage and,
in accordance with Section 1(b), sell and/or liquidate on behalf of
the Investor commercial real estate debt and related investments
(“ Investments ”). At origination, such
Investments shall meet the investment criteria as listed in
Exhibit A hereto (the “ Investment Criteria
”) or as mutually agreed upon in writing by the Manager and
the Investor.
(b)
Following origination or acquisition of an Investment, the
Investor shall have the authority and power to direct the
Manager to sell or liquidate any such Investment whereupon the
Manager shall dispose of such Investment in accordance with the
Investor’s direction.
(c)
Subject to Sections 1(a) and (b), the Investor hereby grants the
Manager full and exclusive discretion as to all decisions regarding
the Investments made on behalf of the Investor in accordance with
Section 1(a) hereof.
2.
Commitments, Capital
Calls .
(a)
Subject to the terms and conditions set forth in this Section 2,
the Investor agrees to make available for investment up to
$85million (the Investor’s “ Commitment
”), such Commitment to be (i) reduced by the amount of
outstanding and committed Investments in the Account (on a cost
basis) and (ii) increased by any principal repayments with respect
to the Investor’s Investments during the Commitment Period
(as defined below).
(b)
The “ Commitment Period ” shall be a period
beginning on the date hereof and ending on the first anniversary of
the date hereof at which time the Commitment Period shall be
automatically extended until the 45th day after the date that
either the Investor,
on the one hand, or the Manager, on
the other hand, delivers written notice to the other Party hereto
of its election to terminate the Commitment Period unless (i)
either the Investor, on the one hand, or the Manager, on the other
hand, provides 30 day prior notice of its election to terminate the
Commitment Period as of such first anniversary date or (ii) the
Investor, on the one hand, or the Manager, on the other hand,
elects to terminate the Agreement.
(c)
During the Commitment Period, the Investor shall meet capital calls
made to the Investor by depositing cash into a bank account (the
Investor’s “ Capital Call Account ”) from
time to time when called by the Manager pursuant to a written
notice in accordance with Section 16(c) in the form of Exhibit
B hereto (a “ Funding Notice ”). The
Investor will be required to fund into its Capital Call Account the
amount set forth in a Funding Notice on the date specified in such
Funding Notice, which date shall not be earlier than three Business
Days after the date that such Funding Notice was delivered to the
Investor. For purposes of this Agreement, “ Business
Day ” shall mean any day of the week other than
Saturdays, Sundays and days on which federally chartered banks in
the State of New York are not open for business.
(d)
The Manager agrees that capital calls shall be made no earlier than
is reasonably necessary to fund the Investments at the scheduled
closing on the transaction. Subsequent to the Investor’s
deposit of cash into the Capital Call Account, in the event that
the Manager becomes aware of a material delay in the closing of the
Investment with respect to which such cash was deposited, or the
Manager determines that such closing will not occur, the Manager
will provide written notice thereof to the Investor, whereupon the
Investor may withdraw such cash from the Capital Call Account
(provided that such amount will be added back to the
Investor’s uncalled Commitment).
(e)
Notwithstanding the foregoing, the Manager may require that
the Investor deposit cash into its Capital Call Account
following the Commitment Period in order to fund the acquisition of
any Investment which, prior to the termination of the Commitment
Period, the Manager, on behalf of the Investor, entered into a
binding commitment or letter of intent to acquire or in order to
meet unfunded commitments for outstanding Investments of the
Investor.
(f)
The aggregate amount which the Investor will be required to fund
into its Capital Call Account shall not exceed its
Commitment.
(g)
On or about the date hereof, the Manager is entering into
investment management agreements substantially in the form of this
Agreement (together with this Agreement, the “ Berkley
Agreements ”) with each of the entities identified on
Schedule A hereto (together, the “ Berkley
Entities ”). Investments will be acquired on behalf
of the Investor and the other Berkley Entities in a serial manner,
i.e. the first Investment closed under the Berkley Agreements will
be acquired on behalf of the first Berkley Entity listed on
Schedule A, the second Investment closed under the Berkley
Agreements will be acquired on behalf of the second Berkley Entity
listed on Schedule A, the third Investment closed under the Berkley
Agreements will be acquired on behalf of the third Investor listed
on Schedule A, the fourth Investment closed under the Berkley
Agreements will be acquired on behalf of the first Berkley Entity
listed on Schedule A and so on.
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3.
Agent and
Attorney-in-Fact .
To enable the Manager to exercise
fully its discretion and authority as provided in this Agreement,
the Investor does hereby constitute and appoint the Manager, and
any officer of the Manager acting on its behalf from time to time,
as the Investor’s true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute,
sign, deliver and file any agreements, contracts, instruments,
certificates or documents authorized by the Manager in accordance
with its authority under Section 1. This power of attorney is
deemed to be coupled with an interest.
4.
Servicing and Custody
.
(a)
The Investor and the Manager agree to enter into a servicing
agreement with Midland Investment Services, Inc. (“
Midland ”), in the form of Exhibit E
hereto, pursuant to which Midland will be retained, at the
Investor’s cost, to perform customary servicing with respect
to the Investor’s Investments, including (i) the receipt of
payments with respect to each of the Investor’s Investment
from the applicable primary servicer and distribution of such
payments to the Investor and (ii) the production of monthly
servicing reports which will be subject to review by the
Manager.
(b)
The Manager may cause each of the Investor’s Investments (and
documents relating thereto) to be held, at the Investor’s
cost, by the Manager or by a custodian agreed to by the Manager and
the Investor, subject to insurance laws and regulations governing
the Investor. The Investor agrees to enter into a custodial
agreement (providing for market terms) with such
custodian.
(c)
The Manager agrees that it will maintain all records, memoranda,
instructions or authorizations relating to the acquisition or
disposition of the Investor’s Investments authorized
hereunder on behalf of the Investor in accordance with the
Manager’s document retention standards and practices.
All documents maintained by Manager with respect to the foregoing
shall (i) be open at all times to inspection and audit by the
Investor or its authorized representatives; (ii) be delivered to
the Investor upon demand; and (iii) be and remain the property of
the Investor. The Manager will provide copies of documents retained
in accordance with the foregoing at the Investor’s
cost.
(d)
The Manager shall, at the request of the Investor and at the
Investor’s cost, assist and provide operational support in
connection with the audit of any documents with respect to the
services provided under this Agreement undertaken by the
Investor’s internal auditors, certified public accountants or
the insurance department or commissioner of any state, or upon the
request of any governmental agency.
(e)
The Manager shall provide, upon the Investor’s request and at
the Investor’s cost, copies any records which are necessary
to file any report required by any federal, state, or local
government or agency.
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5.
Management, Termination and
Liquidation Fees .
(a)
During the Commitment Period, the Investor shall pay to the Manager
an annual management fee (the “ Management Fee
”) equal to 0.25% of the aggregate amount of the
Investor’s Investments (on a cost basis, less any principal
repayments and realized losses thereon and less the amount of any
such Investment withdrawn from the Account pursuant to the last
sentence of Section 10 hereof). The Management Fee payable by
the Investor will be payable in advance on a quarterly basis based
upon the Investments of the Investor outstanding as of the first
day of such quarter and the Investments of the Investor acquired
during the quarter on a pro rated basis. The payment of
Management Fees by the Investor shall not serve to reduce the
Investor’s outstanding unfunded Commitment.
(b)
If the Investor shall terminate the Commitment Period pursuant to
Section 2(b)(i), the Investor shall continue to pay Management Fees
to the Manager in accordance with Section 5(a) until the
Investor’s Investments have been satisfied or liquidated in
accordance with their terms.
(c)
If the Investor shall terminate the Agreement pursuant to Section
2(b)(ii), the Investor shall pay the Manager a termination fee
equal to 0.25% of the aggregate amount of the Investor’s
Investments as of the effective date of such termination (on a cost
basis, less any principal repayments and realized losses thereon
and less the amount of any such Investment withdrawn from the
Account pursuant to the last sentence of Section 10 hereof), which
fee shall be payable within three Business Days of such
termination. Notwithstanding the foregoing, if the Investor
shall (i) terminate the Agreement pursuant to Section 2(b)(ii) and
(ii) direct the disposition of any of the Investor’s
Investments pursuant to Section 1(b), then the Investor shall (x)
pay the liquidation fee set forth in Section 5(d) with respect to
each such Investment which the Investor has directed should be
disposed of and (y) pay the termination fee set forth in this
Section 5(c) with respect to each other Investment.
(d)
If the Investor shall direct the disposition of any of the
Investor’s Investments pursuant to Section 1(b), the Investor
shall pay the Manager a liquidation fee equal to 0.25% of the
aggregate Disposition Amount (as defined herein) of the
Investment(s) directed to be disposed by the Investor, which fee
shall be payable within three Business Days of such
disposition. For the purposes hereof, with respect to any
Investment, “ Disposition Amount ” means the
greater of (i) the cost of such Investment, less any principal
repayments and realized losses thereon and less the amount of any
such Investment withdrawn from the Account pursuant to the last
sentence of Section 10 hereof and (ii) the amount received in
connection with the disposition of such Investment.
(e)
Upon termination of the Agreement, the Manager shall no longer have
the right to Management Fees other than Management Fees which have
accrued but are unpaid as of the date of termination of this
Agreement.
6.
Expenses .
(a)
The Investor, on the one hand, and the Manager, on the other hand,
shall bear and be responsible for the payment of all out of pocket
expenses related to the
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preparation of this Agreement and
the organization of the Account (including the Manager’s
legal fees and expenses) on 50/50 even basis. Thereafter, the
Investor and the Manager shall each bear their respective costs and
expense related to any amendment or modification of this
Agreement.
(b)
The Investor shall bear and be responsible for the payment of all
reasonable, out of pocket costs and expenses related to the
Account’s activities and operations, including all
investment, reinvestment, holding, management and disposition of
the Investor’s Investments, and including, but not limited to
the following: (i) all out-of-pocket costs and expenses incurred in
developing, negotiating and structuring Investments allocated to
the Investor in accordance with Section 2(g) hereof, whether
consummated or not consummated, and acquiring, disposing of or
otherwise dealing with such Investments, including, without
limitation, any investment banking, engineering, appraisal,
environmental, travel, legal and accounting expenses, any deposits
and commitment fees and other fees and out-of-pocket costs related
thereto, provided that in such cases where the Manager or an
affiliate of the Manager and the Investor both participate in the
same transaction, expenses will be shared on pro rata basis;
(ii) all costs and expenses, if any, incurred in monitoring the
Investor’s Investments, including, without limitation, any
engineering, environmental, third-party payment processing, travel,
legal, servicing, custodial and accounting expenses and other fees
and out-of-pocket costs related thereto, provided that in
such cases where the Manager or an affiliate of the Manager and the
Investor both have an interest in the same asset, expenses will be
shared on pro rata basis; (iii) taxes of the Investor; (iv)
costs related to litigation and threatened litigation involving the
Account and Investments; (v) expenses associated with third party
accountants, attorneys and tax advisors with respect to the Account
and its activities, including the preparation of reports and
statements and other similar matters, and costs associated with the
distribution of reports to the Investor; (vi) origination fees
or commissions and other investment costs incurred by or on behalf
of the Account and paid to third parties; (vii) all costs and
expenses associated with indemnifying the Covered Persons whom the
Investor has agreed to indemnify (except to the extent that any
such costs or expenses have otherwise been reimbursed pursuant to
Section 11(b) hereof); (viii) fees incurred in connection with the
maintenance of bank or custodian accounts on behalf of the
Investor; and (ix) all expenses of the Account that are not
normally recurring operating expenses (collectively, “
Investment Expenses ”); provided further that
the Manager agrees that it will not incur any costs and expenses in
connection with the origination of any Investment if such costs and
expenses would reduce the weighted average Net Spread (as defined
herein) [****]; and provided further that the Manager agrees
that it will not incur any costs and expenses covered by clauses
(i) and (ix) of this Section 6(b) unless they reflect prevailing
market rates. For purposes hereof, “ Net Spread
” means (A) the gross spread of all Investments originated
for all Berkley Entities (measured as of the date of origination or
acquisition of any Investment) pursuant to the Berkley Agreements
less (B) the sum of all Management Fees, servicing fees and
Transaction Expenses (as defined herein) paid or incurred under all
Berkley Agreements. For purposes hereof, “
Transaction Expenses ” means all out-of-pocket costs
and expenses incurred in developing, negotiating and structuring
Investments and acquiring, disposing of or otherwise dealing with
Investments pursuant to all Berkley Agreements. In
calculating Net Spread, Transaction Expenses will be amortized over
a period of two years.
**** Material omitted pursuant to a
request for confidential treatment under Rule 24b-2 of the Exchange
Act of 1934. Material filed separately with the Securities
and Exchange Commission.
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(c)
Any Investment Expenses paid by the Manager on behalf of the
Account (i.e., out of Manager’s funds and not out of Account
funds and other Investments) shall be reimbursed by the Investor
promptly upon the Manager’s written request therefore.
The reimbursement of any Investment Expenses by the Investor shall
not serve to reduce the Investor’s outstanding unfunded
Commitment hereunder. Upon the Investor’s request, the
Manager shall promptly provide to the Investor documentation of the
Investment Expenses.
(d)
The Manager shall bear the following ordinary day-to-day expenses
incidental to the performance of its services hereunder: (i)
all costs and expenses relating to office space, facilities,
utility service, supplies and necessary administrative and clerical
functions in connection with the Manager’s operations and
(ii) compensation of and provision of benefits to all employees of
the Manager and its affiliates who are engaged in the operation or
management of the Manager’s business.
7.
Reports .
The Manager shall prepare and
deliver to the Investor, within 60 days following each calendar
quarter, a quarterly statement regarding the Account, each which
quarterly report shall include the information described in
Exhibit C hereto. The Manager shall prepare and
deliver to the Investor, within 15 days following the date of
acquisition of each Investment on behalf of the Investor, a closing
package with respect to such Investment, which shall include the
information contained in the then-standard closing package prepared
in connection with similar investments acquired by Capital Trust,
Inc. (with conforming changes thereto to reflect that the holder of
such Investment is the Investor). Attached as Exhibit
D hereto is the standard Capital Trust, Inc. closing package as
of the date hereof.
8.
Representations and
Warranties .
(a)
The Investor represents, warrants and covenants to the Manager as
follows:
(i)
The Investor has the requisite legal capacity and authority to
execute, deliver and perform its obligations under this
Agreement. The person whose signature is affixed to this
Agreement on behalf of the Investor has full power and authority to
execute this Agreement on the Investor’s behalf.
(ii)
This Agreement has been duly authorized, executed and delivered by
the Investor and is the legal, valid and binding agreement of the
Investor, enforceable against the Investor in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and
other similar laws and principles of equity affecting
creditors’ rights and remedies generally.
(iii)
The Investor’s execution of this Agreement and the
performance of its obligations hereunder do not conflict with, or
violate any provisions of, the governing documents of the Investor
or any obligations by which the Inves
