(c)
As a condition to the
payment of principal of and interest on any Note without the imposition of U.S. withholding tax, the Issuer shall require certification acceptable to it to enable the Issuer, the Co-Issuer, the Trustee, the Preferred Share Paying Agent and the
Paying Agent to determine their duties and liabilities with respect to any taxes or other charges that they may be required to deduct or withhold from payments in respect of such Security under any present or future law or regulation of the
United States or the Cayman Islands or any present or future law or regulation of any political subdivision thereof or taxing authority therein or to comply with any reporting or other requirements under any such law or regulation. Such
certification may include U.S. federal income tax forms, such as IRS Form W‑8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)), IRS Form W-8BEN-E (Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding and Reporting (Entities), IRS Form W‑8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity or Certain U.S. Branches for United States Tax Withholding and Reporting), IRS
Form W‑9 (Request for Taxpayer Identification Number and Certification), or IRS Form W‑8ECI (Certificate of Foreign Person’s Claim that Income Is Effectively Connected with the Conduct of a Trade or Business in the United States) or any
successors to such IRS forms). In addition, each of the Issuer, Co-Issuer, the Trustee, Preferred Share Paying Agent or any Paying Agent may require certification acceptable to it to enable the Issuer to qualify for a reduced rate of
withholding in any jurisdiction from or through which the Issuer receives payments on its Collateral. Each Holder and each beneficial owner of Notes agree to provide any certification requested pursuant to this
Section 2.7(f)
and to update or replace such form or certification in accordance with its terms or its subsequent amendments. Furthermore, the Issuer shall require information to
comply with FATCA requirements pursuant to clause (xii) of the representations and warranties set forth under the third paragraph of
Exhibit C‑1
hereto, as
deemed made pursuant to
Section 2.5(g)
hereto, or pursuant to clause (xiii) of the representations and warranties set forth under the third paragraph of
Exhibit C‑2
hereto, as deemed made pursuant to
Section 2.5(h)
hereto, or
pursuant to clause (vii) of the representations and warranties set forth under the third paragraph of
Exhibit C-3
hereto, made pursuant to
Section 2.5(i)
hereto, as applicable.
(d)
Payments in respect of interest on and principal
of the Notes shall be payable by wire transfer in immediately available funds to a Dollar account maintained by the Holder or its nominee;
provided
that the Holder
has provided wiring instructions to the Paying Agent on or before the related Record Date or, if wire transfer cannot be effected, by a Dollar check drawn on a bank in the United States, or by a Dollar check mailed to the Holder at its address
in the Notes Register. The Issuer expects that the Depository or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note held by the Depository or its nominee, shall immediately credit the applicable Agent
Members’ accounts with payments in amounts proportionate to the respective beneficial interests in such Global Note as shown on the records of the Depository or its nominee. The Issuer also expects that payments by Agent Members to owners of
beneficial interests in such Global Note held through Agent Members will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for
such customers. Such payments will be the responsibility of the Agent Members. Upon final payment due on the Maturity of a Note, the Holder thereof shall present and surrender such Note at the Corporate Trust Office of the Note Administrator
or at the office of the Paying Agent (or, to a foreign paying agent appointed by the Note Administrator outside of the United States if then required by applicable law, in the case of a Definitive Note issued in exchange for a beneficial
interest in the Regulation S Global Note) on or prior to such Maturity. None of the Issuer, the Co-Issuer, the Trustee, the Note Administrator or the Paying Agent will have any responsibility or liability with respect to any records maintained
by the Holder of any Note with respect to the beneficial holders thereof or payments made thereby on account of beneficial interests held therein. In the case where any final payment of principal and interest is to be made on any Note (other
than on the Stated Maturity Date thereof) the Issuer or, upon Issuer Request, the Note Administrator, in the name and at the expense of the Issuer, shall not more than thirty (30) nor fewer than five (5) Business Days prior to the date on which
such payment is to be made, mail to the Persons entitled thereto at their addresses appearing on the Notes Register, a notice which shall state the date on which such payment will be made and the amount of such payment and shall specify the
place where such Notes may be presented and surrendered for such payment.
(e)
Subject to the provisions of
Sections 2.7(a)
and
Section 2.7(d)
hereof, Holders of Notes as of the Record Date in respect
of a Payment Date shall be entitled to the interest accrued and payable in accordance with the Priority of Payments and principal payable in accordance with the Priority of Payments on such Payment Date. All such payments that are mailed or
wired and returned to the Paying Agent shall be held for payment as herein provided at the office or agency of the Issuer and the Co-Issuer to be maintained as provided in
Section
7.2
(or returned to the Trustee).
(f)
Interest on any Note which is payable, and is
punctually paid or duly provided for, on any Payment Date shall be paid to the Person in whose name that Note (or one or more predecessor Notes) is registered at the close of business on the Record Date for such interest.
(g)
Payments of principal to Holders of the Notes of
each Class shall be made in the proportion that the Aggregate Outstanding Amount of the Notes of such Class registered in the name of each such Holder on such Record Date bears to the Aggregate Outstanding Amount of all Notes of such Class on
such Record Date.
(h)
Interest accrued with respect to the Notes shall
be calculated as described in the applicable form of Note attached hereto.
(i)
All reductions in the principal amount of a
Note (or one or more predecessor Notes) effected by payments of installments of principal made on any Payment Date, Redemption Date or upon Maturity shall be binding upon all future Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, whether or not such payment is noted on such Note.
(j)
Notwithstanding anything contained in this
Indenture to the contrary, the obligations of the Issuer under the Notes and the Co-Issuer under the Offered Notes, this Indenture and the other Transaction Documents are limited-recourse obligations of the Issuer and non-recourse obligations
of the Co-Issuer and are payable solely from the Collateral and following realization of the Collateral, all obligations of the Co-Issuers and any claims of the Noteholders, the Trustee or any other parties to any Transaction Documents shall be
extinguished and shall not thereafter revive. No recourse shall be had for the payment of any amount owing in respect of the Notes against any Officer, director, employee, shareholder, limited partner or incorporator of the Issuer, the
Co-Issuer or any of their respective successors or assigns for any amounts payable under the Notes or this Indenture. It is understood that the foregoing provisions of this paragraph shall not (i) prevent recourse to the Collateral for the
sums due or to become due under any security, instrument or agreement which is part of the Collateral or (ii) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or secured by this Indenture (to
the extent it relates to the obligation to make payments on the Notes) until such Collateral have been realized, whereupon any outstanding indebtedness or obligation in respect of the Notes, this Indenture and the other Transaction Documents
shall be extinguished and shall not thereafter revive. It is further understood that the foregoing provisions of this paragraph shall not limit the right of any Person to name the Issuer or the Co-Issuer as a party defendant in any Proceeding
or in the exercise of any other remedy under the Notes or this Indenture, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained) enforced against any such Person or
entity.
(k)
Subject to the foregoing provisions of this
Section 2.7
, each Note delivered under this Indenture and upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights of unpaid
interest and principal that were carried by such other Note.
(l)
Notwithstanding any of the foregoing
provisions with respect to payments of principal of and interest on the Notes (but subject to
Sections 2.7(e)
and
(h)
), if the Notes have become or been declared due and payable following an Event of Default and such acceleration of Maturity and its consequences have not been rescinded and annulled and the provisions of
Section 5.5
are not applicable, then payments of principal of and interest on such Notes shall be made in accordance with
Section 5.7
hereof.
(m)
Payments in respect of the Preferred Shares as
contemplated by
Sections
11.1(a)(i)(19)
,
11.1(a)(ii)(16)
and
11.1(a)(iii)(17)
shall be made by the Paying Agent to the Preferred Share Paying Agent.
Section 2.8
Persons Deemed Owners
.
The Issuer, the Co-Issuer, the Trustee, the Note Administrator, the Collateral Manager, the Servicer, the Special Servicer and any of
their respective agents may treat as the owner of a Note the Person in whose name such Note is registered on the Notes Register on the applicable Record Date for the purpose of receiving payments of principal of and interest and other amounts on
such Note and on any other date for all other purposes whatsoever (whether or not such Note is overdue), and none of the Note Administrator, the Collateral Manager, the Servicer, the Special Servicer or any of their respective agents shall be
affected by notice to the contrary;
provided
,
however
, that the Depository, or its nominee, shall be deemed the owner of the Global Notes, and owners of beneficial interests in Global Notes will not be
considered the owners of any Notes for the purpose of receiving notices. With respect to the Preferred Shares, on any Payment Date, the Trustee shall deliver to the Preferred Share Paying Agent the distributions thereon for distribution to the
Preferred Shareholders.
Section 2.9
Cancellation
.
All Notes surrendered for payment, registration of transfer, exchange or redemption, or deemed lost or stolen, shall, upon delivery
to the Notes Registrar, be promptly canceled by the Notes Registrar and may not be reissued or resold. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this
Section 2.9
, except as expressly permitted by this Indenture. All canceled Notes held by the Notes Registrar shall be destroyed or held by the Notes Registrar in accordance with its standard
retention policy. Notes of the most senior Class Outstanding that are held by the Issuer, the Co-Issuer, the Collateral Manager or any of their respective Affiliates (and not Notes of any other Class) may be submitted to the Notes Registrar
for cancellation at any time.
Section 2.10
Global Notes; Definitive Notes; Temporary Notes
.
(a)
Definitive Notes
. Definitive Notes shall only be issued in the following limited circumstances:
(i) at the discretion of the Issuer, at the direction of the Collateral Manager, with respect to any Class of Notes,
(ii)
upon Transfer of Global
Notes to an IAI in accordance with the procedures set forth in
Section 2.5(e)(ii)
or
Section 2.5(e)(iii);
(iii)
if a
holder of a Definitive Note wishes at any time to exchange such Definitive Note for one or more Definitive Notes or transfer such Definitive Note to a transferee who wishes to take delivery thereof in the form of a Definitive Note in accordance
with this
Section 2.10
, such holder may effect such exchange or transfer upon receipt by the Notes Registrar of (A) a Holder’s Definitive Note properly
endorsed for assignment to the transferee, and (B) duly completed certificates in the form of
Exhibit C-3
, upon receipt of which the Notes Registrar shall
then cancel such Definitive Note in accordance herewith, record the transfer in the Notes Register in accordance with
Section 2.5(a)
and upon execution by
the Co-Issuers, the Authenticating Agent shall authenticate and deliver one or more Definitive Notes bearing the same designation as the Definitive Note endorsed for transfer, registered in the names specified in the assignment described in
clause (A) above, in principal amounts designated by the transferee (the aggregate of such principal amounts being equal to the aggregate principal amount of the Definitive Note surrendered by the transferor);
(iv)
in the
event that the Depository notifies the Issuer and the Co-Issuer that it is unwilling or unable to continue as Depository for a Global Note or if at any time such Depository ceases to be a “Clearing Agency” registered under the Exchange Act and
a successor depository is not appointed by the Issuer within 90 days of such notice, the Global Notes deposited with the Depository pursuant to
Section 2.2
hereof shall be transferred to the beneficial owners thereof subject to the procedures and conditions set forth in this
Section 2.10
.
(b)
Any Global Note that is exchanged for a
Definitive Note shall be surrendered by the Depository to the Notes Administrator’s Corporate Trust Office together with necessary instruction for the registration and delivery of a Definitive Note to the beneficial owners (or such owner’s
nominee) holding the ownership interests in such Global Note. Any such transfer shall be made, without charge, and the Authenticating Agent shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal
aggregate principal amount of Definitive Notes of the same Class and authorized denominations. Any Definitive Notes delivered in exchange for an interest in a Global Note shall, except as otherwise provided by
Section 2.5(f)
, bear the applicable legend set forth in
Exhibits C-1
or
C-2
, as applicable, and shall be subject to the transfer restrictions referred to in such applicable legend. The Holder of each such registered individual Global Note may transfer such Global Note by
surrendering it at the Corporate Trust Office of the Note Administrator, or at the office of the Paying Agent.
(c)
Subject to the provisions of
Section 2.10(b)
above, the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.
(d)
[
Reserved]
.
(e)
In the event of the occurrence of either of the
events specified in
Section 2.10(a)
above, the Issuer and the Co-Issuer shall promptly make available to the Notes Registrar a reasonable supply of Definitive Notes.
Pending the preparation of Definitive Notes pursuant to this
Section
2.10
, the Issuer and the Co-Issuer may execute and, upon Issuer Order, the Authenticating Agent shall authenticate and deliver, temporary Notes that are printed, lithographed, typewritten, mimeographed or otherwise reproduced, in
any authorized denomination, substantially of the tenor of the Definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Definitive Notes
may determine, as conclusively evidenced by their execution of such Definitive Notes.
If temporary Definitive Notes are issued, the Issuer and the Co-Issuer shall cause permanent Definitive Notes to be prepared without
unreasonable delay. The Definitive Notes shall be printed, lithographed, typewritten or otherwise reproduced, or provided by any combination thereof, or in any other manner permitted by the rules and regulations of any applicable notes
exchange, all as determined by the Officers executing such Definitive Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the applicable temporary Definitive Notes
at the office or agency maintained by the Issuer and the Co-Issuer for such purpose, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Definitive Note, the Issuer and the Co-Issuer shall execute, and
the Authenticating Agent shall authenticate and deliver, in exchange therefor the same aggregate principal amount of Definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive Notes.
(f)
Each Holder of a Definitive Note agrees to
provide the Issuer or its agents with such information and documentation that may be required for the Issuer to comply with the Cayman AML Regulations and shall update or replace such information or documentation as may be necessary.
Section 2.11
U.S. Tax Treatment of Notes and the Issuer
.
(a)
Each of the Issuer and the Co-Issuer intends that, for U.S. federal income tax purposes, (i) the
Notes (unless held by KREF Sub-REIT or any entity disregarded into KREF Sub-REIT) be treated as debt, (ii) 100% of
the Retained Securities and 100% of the ordinary shares of the Issuer be beneficially owned by KREF Sub-REIT, and (iii) the Issuer be treated as a Qualified REIT Subsidiary or other disregarded entity of a REIT for U.S. federal income tax
purpose (unless, in the case of clause (iii), the Issuer has received a No Trade or Business Opinion)
. Each prospective purchaser and any subsequent transferee of a Note or any
interest therein shall, by virtue of its purchase or other acquisition of such Note or interest therein, be deemed to have agreed to treat such Note in a manner consistent with the preceding sentence for U.S. federal income tax purposes.
(b)
The Issuer and the Co-Issuer shall account for
the Notes and prepare any reports to Noteholders and tax authorities consistent with the intentions expressed in
Section 2.11(a)
above.
(c)
Each Holder of Notes shall timely furnish to
the Issuer and the Co-Issuer or their respective agents any U.S. federal income tax form or certification, such as IRS Form W‑8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting
(Individuals)), IRS Form W-8BEN-E (Certificate of Foreign Status of Beneficial Owner for the United States Tax Withholding and Reporting (Entities)) IRS Form W‑8IMY (Certificate of Foreign Intermediary, Foreign Flow Through Entity, or Certain
U.S. Branches for United States Tax Withholding and Reporting), IRS Form W‑9 (Request for Taxpayer Identification Number and Certification), or IRS Form W‑8ECI (Certificate of Foreign Person’s Claim that Income is Effectively Connected with the
Conduct of a Trade or Business in the United States) or any successors to such IRS forms that the Issuer, the Co-Issuer or their respective agents may reasonably request and shall update or replace such forms or certification in accordance with
its terms or its subsequent amendments. Furthermore, Noteholders shall timely furnish any information required pursuant to
Section 2.7(c)
.
(d)
The Issuer shall be responsible for all
calculations of original issue discount on the Notes, if any.
(e)
The Retention Holder, by acceptance of the
Retained Securities and the ordinary shares of the Issuer, agrees to take no action inconsistent with such treatment and, for so long as any Note is Outstanding, agrees not to sell, transfer, convey, setover, pledge or encumber any Retained
Securities and/or the ordinary shares of the Issuer, except to the extent permitted pursuant to
Section 2.5(n)
.
Section 2.12
Authenticating Agents
.
Upon the request of the Issuer and, in the case of the Offered Notes, the Co-Issuer, the Note Administrator shall, and if the Note
Administrator so chooses the Note Administrator may, pursuant to this Indenture, appoint one or more Authenticating Agents with power to act on its behalf and subject to its direction in the authentication of Notes in connection with issuance,
transfers and exchanges under
Sections 2.4,
2.5
,
2.6
and
8.5
hereof, as fully to all intents and purposes as though each such Authenticating Agent had been expressly
authorized by such Sections to authenticate such Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this
Section 2.12
shall be deemed to be the authentication of Notes by the Note Administrator.
Any corporation or banking association into which any Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation. Any
Authenticating Agent may at any time resign by giving written notice of resignation to the Note Administrator, the Trustee, the Issuer and the Co-Issuer. The Note Administrator may at any time terminate the agency of any Authenticating Agent
by giving written notice of termination to such Authenticating Agent, the Trustee, the Issuer and the Co-Issuer. Upon receiving such notice of resignation or upon such a termination, the Note Administrator shall promptly appoint a successor
Authenticating Agent and shall give written notice of such appointment to the Issuer.
The Note Administrator agrees to pay to each Authenticating Agent appointed by it from time to time reasonable compensation for its
services, and reimbursement for its reasonable expenses relating thereto and the Note Administrator shall be entitled to be reimbursed for such payments, subject to
Section 6.7
hereof. The provisions of
Sections 2.9
,
6.4
and
6.5
hereof shall be applicable to any Authenticating Agent.
Section 2.13
Forced Sale on Failure to Comply with Restrictions
.
(a)
Notwithstanding anything to the contrary
elsewhere in this Indenture, any transfer of a Note or interest therein to a U.S. Person who is determined not to have been both (1) a QIB or an IAI and (2) a Qualified Purchaser at the time of acquisition of the Note or interest therein shall
be null and void and any such proposed transfer of which the Issuer, the Co-Issuer, the Note Administrator or the Trustee shall have written notice (which includes via electronic mail) may be disregarded by the Issuer, the Co-Issuer, the Note
Administrator and the Trustee for all purposes.
(b)
If the Issuer determines that any Holder of a
Note has not satisfied the applicable requirement described in
Section 2.13(a)
above or such person is a Non-Permitted AML Holder (any such Person a “
Non-Permitted Holder
”), then the Issuer shall promptly after discovery that such Person is a Non-Permitted Holder by the Issuer, the Co-Issuer or a Responsible Officer of
the Paying Agent (and notice by the Paying Agent or the Co-Issuer to the Issuer, if either of them makes the discovery), send notice (or cause notice to be sent) to such Non-Permitted Holder demanding that such Non-Permitted Holder transfer its
interest to a Person that is not a Non-Permitted Holder within 30 days of the date of such notice. If such Non-Permitted Holder fails to so transfer its Note or interest therein, the Issuer shall have the right, without further notice to the
Non-Permitted Holder, to sell such Note or interest therein to a purchaser selected by the Issuer that is not a Non-Permitted Holder on such terms as the Issuer may choose. The Issuer, or a third party acting on behalf of the Issuer, may
select the purchaser by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to the Note, and selling such Note to the highest such bidder. However, the Issuer may select
a purchaser by any other means determined by it in its sole discretion. The Holder of such Note, the Non-Permitted Holder and each other Person in the chain of title from the Holder to the Non-Permitted Holder, by its acceptance of an interest
in the Note, agrees to cooperate with the Issuer and the Note Administrator to effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale shall be remitted to the Non-Permitted
Holder. The terms and conditions of any sale under this
Section 2.13(b)
shall be determined in the sole discretion of the Issuer, and the Issuer shall not be liable
to any Person having an interest in the Note sold as a result of any such sale of exercise of such discretion.
Section 2.14
No Gross Up
.
The Issuer shall not be obligated to pay any additional amounts to the Holders or beneficial owners of the Notes as a result of any
withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges.
ARTICLE 3
CONDITIONS PRECEDENT; PLEDGED COLLATERAL INTERESTS
Section 3.1
General Provisions
.
The Notes to be issued on the Closing Date shall be executed by the Issuer and, in the case of the Offered Notes, the Co-Issuer upon
compliance with
Section 3.2
and shall be delivered to the Authenticating Agent for authentication and thereupon the same shall be authenticated and delivered by the
Authenticating Agent upon Issuer Request. The Issuer shall cause the following items to be delivered to the Trustee on or prior to the Closing Date:
(a)
an Officer’s Certificate of the Issuer (i)
evidencing the authorization by Board Resolution of the execution and delivery of this Indenture and the Placement Agency Agreement and related documents, the execution, authentication and delivery of the Notes and specifying the Stated
Maturity Date of each Class of Notes, the principal amount of each Class of Notes and the applicable Note Interest Rate of each Class of Notes to be authenticated and delivered, and (ii) certifying that (A) the attached copy of the Board
Resolution is a true and complete copy thereof, (B) such resolutions have not been rescinded and are in full force and effect on and as of the Closing Date, (C) the Directors authorized to execute and deliver such documents hold the offices and
have the signatures indicated thereon and (D) the total aggregate Notional Amount of the Preferred Shares shall have been received in Cash by the Issuer on the Closing Date;
(b)
an Officer’s Certificate of the Co-Issuer (i)
unless such authorization is contemplated in the Governing Documents of the Co-Issuer, evidencing the authorization by Board Resolution of the execution and delivery of this Indenture and related documents, the execution, authentication and
delivery of the Offered Notes and specifying the Stated Maturity Date of each Class of Offered Notes, the principal amount of each Class of Offered Notes and the applicable Note Interest Rate of each Class of Offered Notes to be authenticated
and delivered, and (ii) certifying that (A) if Board Resolutions are attached, the attached copy of the Board Resolutions is a true and complete copy thereof and such resolutions have not been rescinded and are in full force and effect on and
as of the Closing Date and (B) each Officer authorized to execute and deliver the documents referenced in clause (b)(i) above holds the office and has the signature indicated thereon;
(c)
an opinion of Dechert LLP, special U.S. counsel
to the Co-Issuers, the Seller, the Collateral Manager and certain of their Affiliates (which opinions may be limited to the laws of the State of New York and the federal law of the United States and may assume, among other things, the
correctness of the representations and warranties made or deemed made by the owners of Notes pursuant to
Sections 2.5(g)
, (h) and
(i)
) dated the Closing Date, as to certain matters of New York law and certain United States federal income tax and securities law matters, in a form satisfactory to the Placement Agents;
(d)
opinions of Dechert LLP, special counsel to the Issuer and the Co-Issuer, dated the Closing Date, relating to
(i) the validity of the Grant hereunder and the perfection of the Trustee’s security interest in the
Collateral, (ii) certain bankruptcy matters and (iii) certain 1940 Act matters;
(e)
an opinion of Hunton Andrews Kurth LLP, special
counsel to KREF Sub-REIT, dated the Closing Date, regarding its qualification and taxation as a REIT and the Issuer’s qualification as a Qualified REIT Subsidiary for U.S. federal income tax purposes;
(f)
[reserved];
(g)
an opinion of Maples and Calder, Cayman Islands
counsel to the Issuer, dated the Closing Date, regarding certain issues of Cayman Islands law;
(h)
an opinion of Richards, Layton & Finger
P.A., special Delaware counsel to the Co-Issuer, the Seller, the Collateral Manager, the Retention Holder and KREF Holdings, dated the Closing Date, regarding certain issues of Delaware law;
(i)
an opinion of Dechert LLP, counsel to KREF
dated the Closing Date, relating to certain U.S. credit risk retention rules;
(j)
an opinion of (i) Andrascik & Tita LLC,
counsel to the Servicer and (ii) in-house counsel to the Servicer, each dated as of the Closing Date, regarding certain matters of United States law, entity matters and enforceability of agreements to which the Servicer is a party;
(k)
an opinion of (i) Andrascik & Tita LLC,
counsel to the Special Servicer and (ii) in-house counsel to the Servicer, each dated as of the Closing Date, regarding certain matters of United States law, entity matters and enforceability of agreements to which the Special Servicer is a
party;
(l)
of (i) in-house counsel of the Note
Administrator, dated as of the Closing Date, regarding certain matters of United States law and (ii) Aini & Associates PLLC, counsel to the Note Administrator
;
(m)
an opinion of Aini & Associates PLLC, counsel
to Trustee
;
(n)
an opinion of counsel to the Issuer regarding
certain matters of Minnesota law with respect to the Minnesota Collateral
;
(o)
an Officer’s Certificate given on behalf of the
Issuer and without personal liability, stating that the Issuer is not in Default under this Indenture and that the issuance of the Securities by the Issuer will not result in a breach of any of the terms, conditions or provisions of, or
constitute a Default under, the Governing Documents of the Issuer, any indenture or other agreement or instrument to which the Issuer is a party or by which it is bound, or any order of any court or administrative agency entered in any
Proceeding to which the Issuer is a party or by which it may be bound or to which it may be subject; that all conditions precedent provided in this Indenture relating to the authentication and delivery of the Notes applied for and all
conditions precedent provided in the Preferred Share Paying Agency Agreement relating to the issuance by the Issuer of the Preferred Shares have been complied with and that all expenses due or accrued with respect to the offering or relating to
actions taken on or in connection with the Closing Date have been paid;
(p)
an Officer’s Certificate given on behalf of the
Co-Issuer stating that the Co-Issuer is not in Default under this Indenture and that the issuance of the Offered Notes by the Co-Issuer will not result in a breach of any of the terms, conditions or provisions of, or constitute a Default under,
the Governing Documents of the Co-Issuer, any indenture or other agreement or instrument to which the Co-Issuer is a party or by which it is bound, or any order of any court or administrative agency entered in any Proceeding to which the
Co-Issuer is a party or by which it may be bound or to which it may be subject; that all conditions precedent provided in this Indenture relating to the authentication and delivery of the Notes applied for have been complied with and that all
expenses due or accrued with respect to the offering or relating to actions taken on or in connection with the Closing Date have been paid;
(q)
executed counterparts of the Collateral Interest
Purchase Agreement, the Servicing Agreement, the Collateral Management Agreement, the Participation Agreements, the Future Funding Agreement, the Advisory Committee Member Agreement, the Placement Agency Agreement, the Preferred Share Paying
Agency Agreement, the EU Risk Retention Agreement and the Securities Account Control Agreement;
(r)
an Accountants’ Report on applying Agreed-Upon
Procedures with respect to certain information concerning the Collateral Interests in the data tape, dated November 5, 2018, an Accountants’ Report on applying Agreed-Upon Procedures with respect to certain information concerning the Collateral
Interests in the Preliminary Offering Memorandum of the Co-Issuers, dated November 5, 2018, and the Structural and Collateral Term Sheet dated November 4, 2018 and an Accountant’s Report on applying Agreed-Upon Procedures with respect to
certain information concerning the Collateral Interests in the Offering Memorandum;
(s)
evidence of preparation for filing at the
appropriate filing office in the District of Columbia of a financing statement, on behalf of the Issuer, relating to the perfection of the lien of this Indenture in that Collateral in which a security interest may be perfected by filing under
the UCC;
(t)
an Issuer Order executed by the Issuer and the
Co-Issuer directing the Authenticating Agent to (i) authenticate the Notes specified therein, in the amounts set forth therein and registered in the name(s) set forth therein and (ii) deliver the authenticated Notes as directed by the Issuer
and the Co-Issuer; and
(u)
the EU Risk Retention Agreement.
Section 3.2
Security for Notes
.
Prior to the issuance of the Notes on the Closing Date, the Issuer shall cause the following conditions to be satisfied:
(a)
Grant of Security Interest; Delivery of Collateral Interests
. The Grant pursuant to the Granting Clauses of this Indenture of all of the Issuer’s right, title and interest in and to the Collateral shall be
effective and all Collateral Interests acquired in connection therewith purchased by the Issuer on the Closing Date (as set forth in
Schedule A
hereto) together with
the Loan Documents with respect thereto shall have been delivered to, and received by, the Custodian on behalf of the Trustee, without recourse (except as expressly provided in the Collateral Interest Purchase Agreement), in the manner provided
in
Section 3.3(a)
;
(b)
Certificate of the Issuer
. A certificate of an Authorized Officer of the Issuer given on behalf of the Issuer and without personal liability, dated as of the Closing Date, delivered to the Trustee and the Note
Administrator, to the effect that, in the case of each Closing Date Collateral Interest pledged to the Trustee for inclusion in the Collateral on the Closing Date and immediately prior to the delivery thereof on the Closing Date:
(i)
the
Issuer is the owner of such Closing Date Collateral Interest free and clear of any liens, claims or encumbrances of any nature whatsoever except for those which are being released on the Closing Date;
(ii)
the
Issuer has acquired its ownership in such Closing Date Collateral Interest in good faith without notice of any adverse claim, except as described in paragraph (i) above;
(iii)
the
Issuer has not assigned, pledged or otherwise encumbered any interest in such Closing Date Collateral Interest (or, if any such interest has been assigned, pledged or otherwise encumbered, it has been released) other than interests Granted
pursuant to this Indenture;
(iv)
the Loan
Documents with respect to such Closing Date Collateral Interest do not prohibit the Issuer from granting a security interest in and assigning and pledging such Closing Date Collateral Interest to the Trustee;
(v)
the list
of Closing Date Collateral Interests in
Schedule A
identifies every Closing Date Collateral Interest sold to the Issuer on the Closing Date pursuant to the
Collateral Interest Purchase Agreement and pledged to the Issuer on the Closing Date hereunder;
(vi)
the
requirements of
Section 3.2(a)
with respect to such Closing Date Collateral Interests have been satisfied; and
(vii)
(A) the
Grant pursuant to the Granting Clauses of this Indenture shall, upon execution and delivery of this Indenture by the parties hereto, result in a valid and continuing security interest in favor of the Trustee for the benefit of the Secured
Parties in all of the Issuer’s right, title and interest in and to the Collateral Interests pledged to the Trustee for inclusion in the Collateral on the Closing Date; and
(B) upon the delivery of each participation certificate evidencing each Closing Date Collateral Interest to the
Custodian on behalf of the Trustee, at the Custodian’s office in Minneapolis, Minnesota, the Trustee’s security interest in all Closing Date Collateral Interests shall be a validly perfected, first priority security interest under the UCC as in
effect in the State of Minnesota.
(c)
Rating Letters
.
The Issuer and/or Co-Issuer’s receipt of (i) a signed letter from (i) Moody’s confirming that the Class A Notes have been
issued with a rating of at least “Aaa(sf)” by Moody’s and (ii) KBRA confirming that (A) the Class A Notes have been issued with a rating of “AAA(sf)” by KBRA, (B) the Class A-S Notes have been issued with a rating of at least “AAA(sf)” by KBRA,
(C) the Class B Notes have been issued with a rating of at least “AA-(sf)” by KBRA, (D) the Class C Notes have been issued with a rating of at least “A-(sf)” by KBRA, (E) the Class D Notes have been issued with a rating of at least “BBB-(sf)”
by KBRA, (F) the Class E Notes have been issued with a rating of at least “BB-(sf)” by KBRA and (G) the Class F Notes have been issued with a rating of at least “B-(sf)” by KBRA
.
(d)
Accounts
.
Evidence of the establishment of the Payment Account, the Preferred Share Payment Account, the Reinvestment Account, the
Custodial Account, the Expense Reserve Account and the Collection Account.
(e)
Deposit to Expense Reserve Account
. On the Closing Date, the Issuer shall deposit U.S.$150,000 into the Expense Reserve Account from the gross proceeds of the offering of the Securities.
(f)
[reserved
].
(g)
Issuance of Preferred Shares
. The Issuer shall have confirmed that the Preferred Shares have been, or contemporaneously with the issuance of the Notes will be, (i) issued by the Issuer and (ii) acquired in
their entirety by the Retention Holder.
Section 3.3
Transfer of Collateral
.
(a)
The Note Administrator, as document custodian (in such capacity, the “
Custodian
”), is hereby appointed as Custodian to hold all of the participation certificates and mortgage notes (if any), which shall be delivered to it by the Issuer on the Closing Date or on the date of acquisition of any Reinvestment
Collateral Interest or Exchange Collateral Interest, as the case may be, in accordance with the terms of this Indenture, at its office in
Minneapolis, Minnesota. Any
successor to the Custodian shall be a U.S. state or national bank or trust company that is not an Affiliate of the Issuer or the Co-Issuer and has capital and surplus of at least U.S.$200,000,000 and whose long-term unsecured debt is rated at
least
“A2” by Moody’s
;
provided, that it may maintain a long-term unsecured debt rating of at least “Baa1” by Moody’s for so long as it maintains a short-term
unsecured debt rating of at least “P-2” by Moody’s and the Servicer maintains a long-term unsecured debt rating of at least “A2” by Moody’s, or such other rating with respect to which the Rating Agencies have provided a No Downgrade
Confirmation
(provided that this proviso shall not impose on the Servicer any obligation to maintain such rating). Subject to the limited right to relocate Collateral set forth in
Section 7.5(b)
, the Custodian shall hold all Loan Documents at its Corporate Trust Office.
(b)
All Eligible Investments and other investments
purchased in accordance with this Indenture in the respective Accounts in which the funds used to purchase such investments shall be held in accordance with
Article 10
and, in respect of each Indenture Account, the Trustee on behalf of the Secured Parties shall have entered into a securities account control agreement with the Issuer, as debtor and the Securities Intermediary, as “securities intermediary”
(within the meaning of Section 8-102(a)(14) of the UCC as in effect in the State of New York) and the Trustee, as secured party (the “
Securities Account Control Agreement
”)
providing,
inter alia
, that the establishment and maintenance of such Indenture Account will be governed by the law of the State of New York. The
security interest of the Trustee in Collateral shall be perfected and otherwise evidenced as follows:
(i)
in the
case of such Collateral consisting of Security Entitlements, by the Issuer (A) causing the Securities Intermediary, in accordance with the Securities Account Control Agreement, to indicate by book entry that a Financial Asset has been credited
to the Custodial Account and (B) causing the Securities Intermediary to agree pursuant to the Securities Account Control Agreement that it will comply with Entitlement Orders originated by or on behalf of the Trustee with respect to each such
Security Entitlement without further consent by the Issuer;
(ii)
in the
case of assets that consist of Instruments or Certificated Securities (the “
Minnesota Collateral
”), to the extent that any such Minnesota Collateral does not
constitute a Financial Asset forming the basis of a Security Entitlement acquired by the Trustee pursuant to clause (i), by the Issuer causing (A) the Custodian, on behalf of the Trustee, to acquire possession of such Minnesota Collateral in
the State of Minnesota or (B) another Person (other than the Issuer or a Person controlling, controlled by, or under common control with, the Issuer) (1) to (x) take possession of such Minnesota Collateral in the State of Minnesota and (y)
authenticate a record acknowledging that it holds such possession for the benefit of the Trustee or (2) to (x) authenticate a record acknowledging that it will hold possession of such Minnesota Collateral for the benefit of the Trustee and (y)
take possession of such Minnesota Collateral in the State of Minnesota;
(iii)
in the
case of Collateral that consist of General Intangibles and all other Collateral of the Issuer in which a security interest may be perfected by filing a financing statement under Article 9 of the UCC as in effect in the District of Columbia,
filing or causing the filing of a UCC financing statement naming the Issuer as debtor and the Trustee as secured party, which financing statement reasonably identifies all such Collateral, with the Recorder of Deeds of the District of Columbia;
(iv)
in the
case of Collateral, causing the registration of the security interests granted under this Indenture in the register of mortgages and charges of the Issuer maintained at the Issuer’s registered office in the Cayman Islands; and
(v)
in the
case of Collateral that consists of Cash on deposit in any Servicing Account managed by the Servicer or Special Servicer pursuant to the terms of the Servicing Agreement, to deposit such Cash in a Servicing Account, which Servicing Account is
in the name of the Servicer or Special Servicer on behalf of the Trustee.
(c)
The Issuer hereby authorizes the filing of UCC
financing statements describing as the collateral covered thereby “all of the debtor’s personal property and Collateral,” or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this
Indenture.
(d)
Without limiting the foregoing, the Trustee
shall cause the Note Administrator to take such different or additional action as the Trustee may be advised by advice of counsel to the Trustee, Note Administrator or the Issuer (delivered to the Trustee and the Note Administrator) is
reasonably required in order to maintain the perfection and priority of the security interest of the Trustee in the event of any change in applicable law or regulation, including Articles 8 and 9 of the UCC and Treasury Regulations governing
transfers of interests in Government Items (it being understood that the Note Administrator shall be entitled to rely upon an Opinion of Counsel, including an Opinion of Counsel delivered in accordance with
Section 3.1(d)
, as to the need to file any financing statements or continuation statements, the dates by which such filings are required to be made and the jurisdictions in which such filings are
required to be made).
(e)
Without limiting any of the foregoing, in
connection with each Grant of a Collateral Interest hereunder, the Issuer shall deliver (or cause to be delivered by the Seller) to the Custodian, in each case to the extent specified on the closing checklist for such Collateral Interest
provided to the Custodian (with a copy to the Servicer) by the Issuer (or the Seller) the following documents (collectively, the “
Collateral Interest File
”):
(i)
if such Collateral Interest
is a Mortgage Loan or a Mezzanine Loan:
(1)
the promissory note
bearing, or accompanied by, all intervening endorsements, endorsed in blank or
“
Pay to the order of KREF 2018-FL1
Ltd., without recourse,” and signed in the name of the last endorsee by an authorized Person;
(2)
with respect to a Mortgage Loan,
the original mortgage (or a copy thereof certified from the applicable recording office) and, if applicable, the originals of all intervening assignments of mortgage (or copies thereof certified from the applicable recording office), in each
case, with evidence of recording thereon, showing an unbroken chain of title from the originator thereof to the last endorsee;
(3)
with respect to a Mortgage Loan,
the original assignment of leases and rents (or a copy thereof certified from the applicable recording office), if any, and, if applicable, the originals of all intervening assignments of assignment of leases and rents (or copies thereof
certified from the applicable recording office), in each case, with evidence of recording thereon, showing an unbroken chain of recordation from the originator thereof to the last endorsee;
(4)
with respect to a Mezzanine
Loan, the original pledge and security agreement (including, without limitation, all original membership certificates, equity interest powers in blank, acknowledgements and confirmations related thereto);
(5)
an original blanket assignment of all unrecorded documents
(including a complete chain of intervening assignments, if applicable)
in
favor of the Issuer;
(6)
a filed copy of the UCC-1
financing statements with evidence of filing thereon, and UCC-3 assignments showing a complete chain of assignment from the secured party named in such UCC-1 financing statement to the Issuer, with evidence of filing thereon;
(7)
originals or copies of all
assumption, modification, consolidation or extension agreements, with evidence of recording thereon, together with any other recorded document relating to such Collateral Interest;
(8)
with respect to a Mortgage Loan,
an original or a copy (which may be in electronic form) mortgagee policy of title insurance or a conformed version of the mortgagee’s title insurance commitment either marked as binding for insurance or attached to an escrow closing letter,
countersigned by the title company or its authorized agent if the original mortgagee’s title insurance policy has not yet been issued;
(9)
with respect to a Mezzanine
Loan, an original or a copy (which may be in electronic form) lender’s UCC title insurance policy and a copy of the owner’s title insurance policy (with a mezzanine endorsement and assignment of title proceeds) or a conformed version of the
lender’s UCC title insurance policy commitment or owner’s title insurance policy commitment, as applicable, either marked as binding for insurance or attached to an escrow closing letter, countersigned by the title company or its authorized
agent if such original title insurance policy has not yet been issued;
(10)
with respect to a Mortgage Loan,
the original of any security agreement, chattel mortgage or equivalent document, if any;
(11)
the original or copy of any
related loan agreement as well as any related letter of credit, lockbox agreement, cash management agreement and construction contract;
(12)
the original or copy of any
related guarantee;
(13)
the original or copy of any
related environmental indemnity agreement;
(14
copies of any property
management agreements;
(15)
a copy of a survey of the
related Mortgaged Property, together with the surveyor’s certificate thereon;
(16)
a copy of any power of attorney
relating to such Mortgage Loan or Mezzanine Loan;
(17)
with respect to any Collateral
Interest secured in whole or in part by a ground lease, copies of any ground leases;
(18)
a copy of any related
environmental insurance policy and environmental report with respect to the related Mortgaged Properties;
(19)
with respect to any Mortgage Loan
with related mezzanine or other subordinate debt (other than a Mezzanine Loan that is also a Collateral Interest or a Companion Participation),
a copy of any related co-lender
agreement, intercreditor agreement, subordination agreement or other similar agreement;
(20)
with respect to any Mortgage Loan
secured by a hospitality property, a copy of any related franchise agreement, an original or copy of any comfort letter related thereto, and if, pursuant to the terms of such comfort letter, the general assignment of the Mortgage Loan is not
sufficient to transfer or assign the benefits of such comfort letter to the Issuer, a copy of the notice by the Seller to the franchisor of the transfer of such Mortgage Loan and/or a copy of the request for the issuance of a new comfort letter
in favor of the Issuer (in each case, as and to the extent required pursuant to the terms of such comfort letter);
(21)
the following additional
documents, (a) allonge, endorsed in blank; (b) assignment of mortgage, in blank, in form and substance acceptable for recording; (c) if applicable, assignment of leases and rents, in blank, in form and substance acceptable for recording; and
(d) assignment of unrecorded documents, in blank, in form and substance acceptable for recording.
(ii)
if such Collateral Interest is a
Pari Passu
Participation:
(1)
each of the documents specified
in (i) above with respect to the related Participated Loan;
(2)
an original participation certificate evidencing such
Pari Passu
Participation in the name of the Issuer;
(3)
a copy of the related
Participation Agreement
;
(4)
a copy of any related companion
participation certificate; and
(5)
an assignment of the
participation certificate evidencing such Pari Passu Participation or of the rights of the holder of such Pari Passu Participation under the related Participation Agreement from the Issuer to blank
.
With respect to any documents which have been delivered or are being delivered to recording offices for recording and have not been returned to the
Issuer (or the Seller) in time to permit their delivery hereunder at the time required, the Issuer (or the Seller) shall deliver such original or certified recorded documents to the Custodian promptly when received by the Issuer (or the Seller)
from the applicable recording office.
(f)
The execution and delivery of this Indenture by
the Note Administrator shall constitute certification that (i) each original note and/or participation certificate required to be delivered to the Custodian on behalf of the Trustee by the Issuer (or the Seller) and all allonges thereto or
assignments thereof, if any, have been received by the Custodian; and (ii) such original note or participation certificate has been reviewed by the Custodian and (A) appears regular on its face (handwritten additions, changes or corrections
shall not constitute irregularities if initialed by the borrower), (B) appears to have been executed and (C) purports to relate to the related Collateral Interest. The Custodian agrees to review or cause to be reviewed the Collateral Interest
Files within sixty (60) days after the Closing Date, and to deliver to the Issuer, the Note Administrator, the Servicer, the Collateral Manager and the Trustee a certification in the form of
Exhibit D
attached hereto, indicating, subject to any exceptions found by it in such review (and any related exception report and any subsequent reports thereto shall be delivered to the other parties hereto and the
Servicer in electronic format, which shall be Excel-compatible), (A) those documents referred to in
Section 3.3(e)
that have been received, and (B) that such
documents have been executed, appear on their face to be what they purport to be, purport to be recorded or filed (as applicable) and have not been torn, mutilated or otherwise defaced, and appear on their faces to relate to the Collateral
Interest. The Custodian shall have no responsibility for reviewing the Collateral Interest File except as expressly set forth in this
Section 3.3(f)
. None of the
Trustee, the Note Administrator, and the Custodian shall be under any duty or obligation to inspect, review, or examine any such documents, instruments or certificates to independently determine that they are valid, genuine, enforceable,
legally sufficient, duly authorized, or appropriate for the represented purpose, whether the text of any assignment or endorsement is in proper or recordable form (except to determine if the endorsement conforms to the requirements of
Section 3.3(e))
, whether any document has been recorded in accordance with the requirements of any applicable jurisdiction, to independently determine that any document
has actually been filed or recorded in the appropriate office, that any document is other than what it purports to be on its face, or whether the title insurance policies relate to the Mortgaged Property.
(g)
No later than the 90
th
day after the Closing Date, the Custodian shall (i) deliver to the Issuer, with a copy to the Note Administrator, the Trustee, the Collateral Manager and the Servicer a final exception
report (which report and any updates or modifications thereto shall be delivered in electronic format, including Excel-compatible format) as to any remaining documents that are required to be, but are not in the Collateral Interest File and
(ii) request that the Issuer cause such document deficiency to be cured.
(h)
Without limiting the generality of the
foregoing:
(i)
from time
to time upon the request of the Trustee, Collateral Manager, Servicer or Special Servicer, the Issuer shall deliver (or cause to be delivered) to the Custodian any Loan Document in the possession of the Issuer and not previously delivered
hereunder (including originals of Loan Documents not previously required to be delivered as originals) and as to which the Trustee, Collateral Manager, Servicer or Special Servicer, as applicable, shall have reasonably determined, or shall have
been advised, to be necessary or appropriate for the administration of such Real Estate Loan hereunder or under the Servicing Agreement or for the protection of the security interest of the Trustee under this Indenture;
(ii)
in
connection with any delivery of documents to the Custodian pursuant to clause (i) above, the Custodian shall deliver to the Collateral Manager, on behalf of the Issuer, a Certification in the form of
Exhibit D
acknowledging the receipt of such documents by the Custodian and that it is holding such documents subject to the terms of this Indenture; and
(iii)
from time to time upon request of the Servicer or the Special Servicer, the Custodian shall, upon delivery by the Servicer or the Special Servicer, as applicable, of a
Request for Release in the form of
Exhibit E
hereto, release to the Servicer or the Special Servicer, as applicable, such of the Loan Documents then in its custody as the Servicer or the Special Servicer, as applicable, reasonably so requests.
By submission of any such
Request for Release, the Servicer or the Special Servicer, as applicable, shall be deemed to have represented and warranted that it has determined in accordance with the Servicing Standard set forth in the Servicing Agreement
that the requested release is necessary for the administration of such Real Estate Loan hereunder or under the Servicing Agreement or for the protection of the security interest of the Trustee under this Indenture. The Servicer or the
Special Servicer shall return to the Custodian each Loan Document released from custody pursuant to this clause (iii) within 20 Business Days of receipt thereof (except such Loan Documents as are released in connection with a sale, exchange
or other disposition, in each case only as permitted under this Indenture, of the related Collateral Interest that is consummated within such 20-day period). Notwithstanding the foregoing provisions of this clause (iii), any note,
participation certificate or other instrument evidencing a Pledged Collateral Interest shall be released only for the purpose of (1) a sale, exchange or other disposition of such Pledged Collateral Interest that is permitted in accordance
with the terms of this Indenture, (2) presentation, collection, renewal or registration of transfer of such Collateral Interest or (3) in the case of any note, in connection with a payment in full of all amounts owing under such note.
(i)
As of the Closing Date (with respect to the
Collateral owned or existing as of the Closing Date) and each date on which any Collateral is acquired (only with respect to each Collateral so acquired or arising after the Closing Date), the Issuer represents and warrants as follows:
(i)
this
Indenture creates a valid and continuing security interest (as defined in the UCC) in the Collateral in favor of the Trustee for the benefit of the Secured Parties, which security interest is prior to all other liens, and is enforceable as such
against creditors of and purchasers from the Issuer;
(ii)
the
Issuer owns and has good and marketable title to such Collateral free and clear of any lien, claim or encumbrance of any Person;
(iii)
in the
case of each Collateral, the Issuer has acquired its ownership in such Collateral in good faith without notice of any adverse claim as defined in Section 8‑102(a)(1) of the UCC as in effect on the date hereof;
(iv)
other than
the security interest granted to the Trustee for the benefit of the Secured Parties pursuant to this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral;
(v)
the Issuer
has not authorized the filing of, and is not aware of, any financing statements against the Issuer that include a description of collateral covering the Collateral other than any financing statement (x) relating to the security interest granted
to the Trustee for the benefit of the Secured Parties hereunder or (y) that has been terminated; the Issuer is not aware of any judgment lien, Pension Benefit Guarantee Corporation lien or tax lien filings against the Issuer;
(vi)
the
Issuer has received all consents and approvals required by the terms of each Collateral and the Transaction Documents to grant to the Trustee its interest and rights in such Collateral hereunder;
(vii)
the
Issuer has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the
Collateral granted to the Trustee for the benefit of the Secured Parties hereunder;
(viii)
all of the
Collateral constitutes one or more of the following categories: an Instrument, a General Intangible, a Certificated Security or an uncertificated security, or a Financial Asset in which a Security Entitlement has been created and that has been
or will have been credited to a Securities Account and Proceeds of all the foregoing;
(ix)
the
Securities Intermediary has agreed to treat all Collateral credited to the Custodial Account as a Financial Asset;
(x)
the Issuer
has delivered a fully executed Securities Account Control Agreement pursuant to which the Securities Intermediary has agreed to comply with all instructions originated by the Trustee relating to the Indenture Accounts without further consent of
the Issuer; none of the Indenture Accounts is in the name of any Person other than the Issuer, the Note Administrator or the Trustee; the Issuer has not consented to the Securities Intermediary to comply with any Entitlement Orders in respect
of the Indenture Accounts and any Security Entitlement credited to any of the Indenture Accounts originated by any Person other than the Trustee or the Note Administrator on behalf of the Trustee;
(xi)
(A) all
original executed copies of each promissory note, participation certificate or other writings that constitute or evidence any pledged obligation that constitutes an Instrument have been delivered to the Custodian for the benefit of the Trustee
and (B) none of the promissory notes, participation certificates or other writings that constitute or evidence such collateral has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed by the Issuer to
any Person other than the Trustee;
(xii)
each of
the Indenture Accounts constitutes a Securities Account in respect of which the Securities Intermediary has accepted to be Securities Intermediary pursuant to the Securities Account Control Agreement on behalf of the Trustee as secured party
under this Indenture.
(j)
The Note Administrator shall cause all
Eligible Investments delivered to the Note Administrator on behalf of the Issuer (upon receipt by the Note Administrator thereof) to be promptly credited to the applicable Account.
Section 3.4
Credit Risk Retention
.
None of the Trustee, the Note Administrator or the Custodian shall be obligated to monitor, supervise or enforce compliance with the
requirements set forth in Regulation RR.
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.1
Satisfaction and Discharge of Indenture
.
This Indenture shall be discharged and shall cease to be of further effect except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) the rights, protections, indemnities and immunities of the Note
Administrator (in each of its capacities) and the Trustee and the specific obligations set forth below hereunder, (v) the rights, obligations and immunities of the Servicer, the Special Servicer and the Collateral Manager hereunder and under
the Servicing Agreement and the Collateral Management Agreement, as applicable, and (vi) the rights of Noteholders as beneficiaries hereof with respect to the property deposited with the Custodian or Securities Intermediary (on behalf of the
Trustee) and payable to all or any of them (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture) when:
(a)
(i) either:
(1)
all Notes theretofore
authenticated and delivered to Noteholders (other than (A) Notes which have been mutilated, defaced, destroyed, lost or stolen and which have been replaced or paid as provided in
Section
2.6
and (B) Notes for which payment has theretofore irrevocably been deposited in trust and thereafter repaid to the Issuer or discharged from such trust, as provided in
Section 7.3
) have been delivered to the Note Registrar for cancellation; or
(2)
all Notes not theretofore delivered to the Note Registrar for cancellation (A) have become due and payable, or (B) shall become due and payable at their Stated Maturity Date within one year, or (C) are to be
called for redemption pursuant to
Article 9
under an arrangement satisfactory to the Note
Administrator for the giving of notice of redemption by the Issuer and the Co-Issuer pursuant to
Section 9.3
and either (x) the Issuer has irrevocably deposited or caused to be deposited with the Note Administrator, Cash or non-callable direct obligations of the United States of America; which obligations are entitled to the full faith
and credit of the United States of America or are debt obligations which are rated
“Aaa” by Moody’s
in an amount sufficient, as recalculated by a firm of Independent
nationally-recognized certified public accountants, to pay and discharge the entire indebtedness (including, in the case of a redemption pursuant to
Section 9.1
, the Redemption Price) on such Notes not theretofore delivered to the Note Administrator for cancellation, for principal and interest to the date of such deposit (in the case of Notes
which have become due and payable), or to the respective Stated Maturity Date or the respective Redemption Date, as the case may be or (y) in the event all of the Collateral is liquidated following the satisfaction of the conditions specified
in
Article 5
, the Issuer shall have deposited or caused to be deposited with the Note
Administrator, all proceeds of such liquidation of the Collateral, for payment in accordance with the Priority of Payments;
(ii)
the
Issuer and the Co-Issuer have paid or caused to be paid all other sums then due and payable hereunder (including any amounts then due and payable pursuant to the Collateral Management Agreement and the Servicing Agreement) by the Issuer and
Co-Issuer and no other amounts are scheduled to be due and payable by the Issuer other than Dissolution Expenses; and
(iii)
the
Co-Issuers have delivered to the Trustee and the Note Administrator Officer’s certificates and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture
have been complied with;
provided,
however
, that in the case of clause (a)(i)(2)(x) above, the Issuer has delivered to the Trustee and Note Administrator an opinion of Dechert LLP, Hunton Andrews Kurth LLP or an opinion of another tax counsel
of nationally recognized standing in the United States experienced in such matters to the effect that the Noteholders would recognize no income, gain or loss for U.S. federal income tax purposes as a result of such deposit and satisfaction and
discharge of this Indenture; or
(b)
(i) each of the Co-Issuers has delivered to the
Trustee and Note Administrator a certificate stating that (1) there is no Collateral (other than (x) the Collateral Management Agreement, the Servicing Agreement and the Servicing Accounts related thereto and the Securities Account Control
Agreement and the Indenture Accounts related thereto and (y) Cash in an amount not greater than the Dissolution Expenses) that remain subject to the lien of this Indenture, and (2) all funds on deposit in or to the credit of the Accounts have
been distributed in accordance with the terms of this Indenture or have otherwise been irrevocably deposited with the Servicer under the Servicing Agreement for such purpose; and
(ii)
the
Co-Issuers have delivered to the Note Administrator and the Trustee Officer’s certificates and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the rights and obligations of the Issuer, the Co-Issuer, the
Trustee, the Note Administrator, and, if applicable, the Noteholders, as the case may be, under
Sections 2.7
,
4.2
,
5.4(d)
,
5.9
,
5.18
,
6.7
,
7.3
and
14.12
hereof shall survive.
Section 4.2
Application of
Amounts held in
Trust
.
All amounts deposited with the Note Administrator pursuant to
Section
4.1
shall be held in trust and applied by it in accordance with the provisions of the Notes and this Indenture (including, without limitation, the Priority of Payments) to the payment of the principal and interest, either
directly or through any Paying Agent, as the Note Administrator may determine, and such amounts shall be held in a segregated account identified as being held in trust for the benefit of the Secured Parties.
Section 4.3
Repayment of Amounts Held by Paying Agent
.
In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all amounts then held by any Paying
Agent, upon demand of the Issuer and the Co-Issuer, shall be remitted to the Note Administrator to be held and applied pursuant to
Section 7.3
hereof and, in the case
of amounts payable on the Notes, in accordance with the Priority of Payments and thereupon such Paying Agent shall be released from all further liability with respect to such amounts.
Section 4.4
Limitation on Obligation to Incur Company Administrative Expenses
.
If at any time after an Event of Default has occurred and the Notes have been declared immediately due and payable, the sum of (i)
Eligible Investments, (ii) Cash and (iii) amounts reasonably expected to be received by the Issuer with respect to the Collateral Interests in Cash during the current Due Period (as certified by the Collateral Manager in its reasonable
judgment) is less than the sum of Dissolution Expenses and any accrued and unpaid Company Administrative Expenses, then notwithstanding any other provision of this Indenture, the Issuer shall no longer be required to incur Company
Administrative Expenses as otherwise required by this Indenture to any Person, other than with respect to fees and indemnities of, and other payments, charges and expenses incurred in connection with opinions, reports or services to be provided
to or for the benefit of, the Trustee, the Note Administrator, or any of their respective Affiliates. Any failure to pay such amounts or provide or obtain such opinions, reports or services no longer required hereunder shall not constitute a
Default hereunder.
ARTICLE 5
REMEDIES
Section 5.1
Events of Default
.
“
Event of Default
,” wherever used herein, means any one
of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a)
a default in the payment of any interest on any
of the Class A Notes, the Class A-S Notes and the Class B Notes (or, if none of the Class A Notes, the Class A-S Notes and the Class B Notes are Outstanding, any Note of the most senior Class Outstanding) when the same becomes due and payable
and the continuation of any such default for three (3) Business Days after a Trust Officer of the Note Administrator has actual knowledge or receives notice from any holder of Notes of such payment default;
provided
that in the case of a failure to disburse funds due to an administrative error or omission by the Collateral Manager, Note Administrator or any paying agent, such failure continues for
five (5) Business Days after a trust officer of the Note Administrator receives written notice or has actual knowledge of such administrative error or omission; or
(b)
a default in the payment of principal (or the
related Redemption Price, if applicable) of any Class of Notes when the same becomes due and payable at its Stated Maturity Date or any Redemption Date;
provided
, in
each case, that in the case of a failure to disburse funds due to an administrative error or omission by the Collateral Manager, Note Administrator or any paying agent, such failure continues for five (5) Business Days after a trust officer of
the Note Administrator receives written notice or has actual knowledge of such administrative error or omission;
(c)
the failure on any Payment Date to disburse
amounts available in the Payment Account in accordance with the Priority of Payments set forth under
Section 11.1(a)
(other than (i) a default in payment described in
clause (a) or (b) above and (ii) unless the Holders of the Preferred Shares object, a failure to disburse any amounts to the Preferred Share Paying Agent for distribution to the Holders of the Preferred Shares), which failure continues for a
period of three (3) Business Days or, in the case of a failure to disburse such amounts due to an administrative error or omission by the Note Administrator or Paying Agent, which failure continues for five (5) Business Days;
(d)
any of the Issuer, the Co-Issuer or the pool of
Collateral becomes an investment company required to be registered under the 1940 Act;
(e)
a default in the performance, or breach, of any
other covenant or other agreement of the Issuer or Co-Issuer (other than the covenant to make the payments described in clauses (a), (b) or (c) above or to satisfy the Note Protection Tests) or any representation or warranty of the Issuer or
Co-Issuer hereunder or in any certificate or other writing delivered pursuant hereto or in connection herewith proves to be incorrect in any material respect when made, and the continuation of such default or breach for a period of 30 days (or,
if such default, breach or failure has an adverse effect on the validity, perfection or priority of the security interest granted hereunder, 15 days) after either the Issuer, the Co-Issuer or the Collateral Manager has actual knowledge thereof
or after notice thereof to the Issuer and the Co-Issuer by the Trustee or to the Issuer, the Co-Issuer, the Collateral Manager and the Trustee by Holders of at least 25% of the Aggregate Outstanding Amount of the Controlling Class;
(f)
the entry of a decree or order by a court
having competent jurisdiction adjudging the Issuer or the Co-Issuer as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer or the
Co-Issuer under the Bankruptcy Code, or any bankruptcy, insolvency, reorganization or similar law enacted under the laws of the Cayman Islands or any other applicable law, or appointing a receiver, liquidator, assignee, or sequestrator (or
other similar official) of the Issuer or the Co-Issuer or of any substantial part of its property, respectively, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days;
(g)
the institution by the Issuer or the Co-Issuer of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under
the Bankruptcy Code, or any bankruptcy, insolvency, reorganization or similar law enacted under the laws of the Cayman Islands or any other similar applicable law, or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Issuer or the Co-Issuer or of any substantial part of its property, respectively, or the making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of any action by the Issuer in furtherance of any such action;
(h)
one or more final judgments being rendered
against the Issuer or the Co-Issuer which exceed, in the aggregate, U.S.$1,000,000 and which remain unstayed, undischarged and unsatisfied for 30 days after such judgment(s) becomes nonappealable, unless adequate funds have been reserved or set
aside for the payment thereof, and unless (except as otherwise specified in writing by the Rating Agencies) a No Downgrade Confirmation has been received from the Rating Agencies; or
(i)
the Issuer loses its status as a Qualified REIT
Subsidiary or other disregarded entity of KREF Sub-REIT or any other entity treated as a REIT for U.S. federal income tax purposes, unless (A) within 90 days, the Issuer either (1) delivers an opinion of tax counsel of nationally recognized
standing in the United States experienced in such matters to the effect that, notwithstanding the Issuer’s loss of Qualified REIT Subsidiary or disregarded entity status for U.S. federal income tax purposes, the Issuer is not, and has not been,
an association (or publicly traded partnership) taxable as a corporation, or is not, and has not been, otherwise subject to U.S. federal income tax on a net basis and the Noteholders are not otherwise materially adversely affected by the loss
of Qualified REIT Subsidiary or disregarded entity status for U.S. federal income tax purposes or (2) receives an amount from the Preferred Shareholders sufficient to discharge in full the amounts then due and unpaid on the Notes and amounts
and expenses described in clauses (1) through (18) under
Section 11.1(a)(i)
in accordance with the Priority of Payments or (B) all Classes of the Notes are subject to
a Tax Redemption announced by the Issuer in compliance with this Indenture, and such redemption has not been rescinded.
Upon becoming aware of the occurrence of an Event of Default, the Issuer, shall promptly notify (or shall procure the prompt
notification of) the Trustee, the Note Administrator, the Servicer, the Special Servicer, the Collateral Manager, the Preferred Share Paying Agent and the Preferred Shareholders in writing. If the Collateral Manager or Note Administrator has
actual knowledge of the occurrence of an Event of Default, the Collateral Manager or the Note Administrator shall promptly notify, in writing, the Trustee, the Servicer, the Special Servicer, the Noteholders and the Rating Agencies of the
occurrence of such Event of Default.
Section 5.2
Acceleration of Maturity; Rescission and Annulment
.
(a)
If an Event of Default shall occur and be
continuing (other than the Events of Default specified in
Section 5.1(f)
or
5.1(g)
), the
Trustee may (and shall at the direction of a Majority, by outstanding principal amount, of each Class of Notes voting as a separate Class (excluding any Notes owned by the Issuer, the Seller, the Collateral Manager or any of their respective
Affiliates)), declare the principal of and accrued and unpaid interest on all the Notes to be immediately due and payable (and any such acceleration shall automatically terminate the Reinvestment Period). Upon any such declaration such
principal, together with all accrued and unpaid interest thereon, and other amounts payable thereunder in accordance with the Priority of Payments will become immediately due and payable. If an Event of Default described in
Section 5.1(f)
or
5.1(g)
above occurs, such an acceleration shall occur automatically and
without any further action, and any such acceleration shall automatically terminate the Reinvestment Period. If the Notes are accelerated, payments shall be made in the order and priority set forth in
Section 11.1(a)
hereof.
(b)
At any time after such a declaration of
acceleration of Maturity of the Notes has been made, and before a judgment or decree for payment of the amounts due has been obtained by the Trustee as hereinafter provided in this
Article
5
, a Majority of each Class of Notes (voting as a separate Class), other than with respect to an Event of Default specified in
Section 5.1(d)
,
5.1(f)
,
5.1(g)
, or
5.1(i)
,
by written notice to the Issuer, the Co-Issuer and the Trustee, may rescind and annul such declaration and its consequences if:
(i)
the Issuer or the
Co-Issuer has paid or deposited with the Note Administrator a sum sufficient to pay:
(A)
all unpaid
installments of interest on and principal of the Notes that would be due and payable hereunder if the Event of Default giving rise to such acceleration had not occurred;
(B)
all unpaid
taxes of the Issuer and the Co-Issuer, Company Administrative Expenses and other sums paid or advanced by or otherwise due and payable to the Note Administrator or to the Trustee hereunder;
(C)
with
respect to the Advancing Agent and the Backup Advancing Agent, any amount due and payable for unreimbursed Interest Advances and Reimbursement Interest;
(D)
with
respect to the Collateral Management Agreement, any Collateral Manager Fee then due and any Company Administrative Expense due and payable to the Collateral Manager thereunder; and
(E)
any
other Company Administrative Expenses then due and payable;
(ii)
the Trustee has received
notice that all Events of Default, other than the non-payment of the interest on and principal of the Notes that have become due solely by such acceleration, have been cured and a Majority of the Controlling Class, by written notice to the
Trustee, has agreed with such notice (which agreement shall not be unreasonably withheld or delayed) or waived as provided in
Section 5.14
.
At any such time that the Trustee, subject to
Section 5.2(b)
,
shall rescind and annul such declaration and its consequences as permitted hereinabove, the Collateral shall be preserved in accordance with the provisions of
Section 5.5
with respect to the Event of Default that gave rise to such declaration;
provided
,
however
, that if such preservation of the Collateral is rescinded pursuant to
Section 5.5
,
the Notes may be accelerated pursuant to the first paragraph of this
Section 5.2
, notwithstanding any previous rescission and annulment of a declaration of
acceleration pursuant to this paragraph.
No such rescission shall affect any subsequent Default or impair any right consequent thereon.
(c)
Subject to
Sections 5.4
and
5.5
, a Majority of the Controlling Class shall have the right to direct the Trustee in the conduct
of any Proceedings for any remedy available to the Trustee or in the sale of any or all of the Collateral;
provided
that (i) such direction will not conflict with any
rule of law or this Indenture; (ii) the Trustee may take any other action not inconsistent with such direction; (iii) the Trustee has received security or indemnity satisfactory to it; and (iv) any direction to undertake a sale of the
Collateral may be made only as described in
Section 5.17
. The Trustee shall be entitled to refuse to take any action absent such direction.
(d)
As security for the payment by the Issuer of the
compensation and expenses of the Trustee, the Note Administrator, and any sums the Trustee or Note Administrator shall be entitled to receive as indemnification by the Issuer, the Issuer hereby grants the Trustee a lien on the Collateral, which
lien is senior to the lien of the Noteholders. The Trustee’s lien shall be subject to the Priority of Payments and exercisable by the Trustee only if the Notes have been declared due and payable following an Event of Default and such
acceleration has not been rescinded or annulled.
(e)
A Majority of the Aggregate Outstanding Amount
of each Class of Notes may, prior to the time a judgment or decree for the payment of amounts due has been obtained by the Trustee, waive any past Default on behalf of the holders of all the Notes and its consequences in accordance with
Section 5.14
.
Section 5.3
Collection of Indebtedness and Suits for Enforcement by Trustee
.
(a)
The Issuer covenants that if a Default shall
occur in respect of the payment of any interest and principal on any Class of Notes (but only after any amounts payable pursuant to
Section 11.1(a)
having a higher
priority have been paid in full), the Issuer and Co-Issuer shall, upon demand of the Trustee or any affected Noteholder, pay to the Note Administrator on behalf of the Trustee, for the benefit of the Holder of such Note, the whole amount, if
any, then due and payable on such Note for principal and interest or other payment with interest on the overdue principal and, to the extent that payments of such interest shall be legally enforceable, upon overdue installments of interest, at
the applicable interest rate and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Note
Administrator, the Trustee and such Noteholder and their respective agents and counsel.
If the Issuer or the Co-Issuer fails to pay such amounts forthwith upon such demand, the Trustee, as Trustee of an express trust,
and at the expense of the Issuer, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer and the Co-Issuer or any
other obligor upon the Notes and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the Collateral.
If an Event of Default occurs and is continuing, the Trustee shall proceed to protect and enforce its rights and the rights of the
Noteholders by such Proceedings (x) as directed by a Majority of the Controlling Class or (y) in the absence of direction by a Majority of the Controlling Class, as determined by the Trustee acting in good faith;
provided
, that (a) such direction must not conflict with any rule of law or with any express provision of this Indenture, (b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction, (c) the Trustee has been provided with security or indemnity satisfactory to it, and (d) notwithstanding the foregoing, any direction to the Trustee to undertake a sale of Collateral may be given
only in accordance with the preceding paragraph, in connection with any sale and liquidation of all or a portion of the Collateral, the preceding sentence, and, in all cases, the applicable provisions of this Indenture. Such Proceedings shall
be used for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture
or by law. Any direction to the Trustee to undertake a Sale of Collateral Interests pursuant to this Article 5 shall be forwarded to the Special Servicer, and the Special Servicer shall conduct any such Sale in accordance with the terms of the
Servicing Agreement.
In the case where (x) there shall be pending Proceedings relative to the Issuer or the Co-Issuer under the Bankruptcy Code, any
bankruptcy, insolvency, reorganization or similar law enacted under the laws of the Cayman Islands, or any other applicable bankruptcy, insolvency or other similar law, (y) a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or the Co-Issuer, or their respective property, or (z) there shall be any other comparable Proceedings relative to the Issuer or the
Co-Issuer, or the creditors or property of the Issuer or the Co-Issuer, regardless of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration, or otherwise and regardless of whether the Trustee
shall have made any demand pursuant to the provisions of this
Section 5.3
, the Trustee shall be entitled and empowered, by intervention in such Proceedings or
otherwise:
(i)
to file
and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in any Proceedings relative to the Issuer, the Co-Issuer or other obligor upon the Notes or to the creditors or property of the
Issuer, the Co-Issuer or such other obligor;
(ii)
unless
prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or of a Person
performing similar functions in comparable Proceedings; and
(iii)
to
collect and receive (or cause the Note Administrator to collect and receive) any amounts or other property payable to or deliverable on any such claims, and to distribute (or cause the Note Administrator to distribute) all amounts received with
respect to the claims of the Noteholders and of the Trustee on their behalf; the Secured Parties, and any trustee, receiver or liquidator, custodian or other similar official is hereby authorized by each of the Noteholders to make payments to
the Trustee (or the Note Administrator on its behalf), and, in the event that the Trustee shall consent to the making of payments directly to the Noteholders, to pay to the Trustee and the Note Administrator such amounts as shall be sufficient
to cover reasonable compensation to the Trustee and the Note Administrator, each predecessor trustee and note administrator, and their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all
advances made, by the Backup Advancing Agent and each predecessor backup advancing agent.
Nothing herein contained shall be deemed to authorize the Trustee to authorize, consent to, vote for, accept or adopt, on behalf of
any Noteholder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such Proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without
the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any action or Proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, shall be applied as set forth in
Section 5.7
.
Notwithstanding anything in this
Section 5.3
to the
contrary, the Trustee may not sell or liquidate the Collateral or institute Proceedings in furtherance thereof pursuant to this
Section 5.3
unless the conditions
specified in
Section 5.5(a)
are met and any sale of Collateral contemplated to be conducted by the Special Servicer under this Indenture shall be effected by the
Special Servicer pursuant to the terms of the Servicing Agreement, and the Trustee shall have no liability or responsibility for or in connection with any such sale by the Special Servicer.
Section 5.4
Remedies
.
(a)
If an Event of Default has occurred and is
continuing, and the Notes have been declared due and payable and such declaration and its consequences have not been rescinded and annulled, the Issuer and the Co-Issuer agree that the Trustee, or, with respect to any sale of any Collateral
Interests, the Special Servicer, may, after notice to the Note Administrator and the Noteholders, and shall, upon direction by a Majority of the Controlling Class, to the extent permitted by applicable law, exercise one or more of the following
rights, privileges and remedies:
(i)
institute
Proceedings for the collection of all amounts then payable on the Notes or otherwise payable under this Indenture (whether by declaration or otherwise), enforce any judgment obtained and collect from the Collateral any amounts adjudged due;
(ii)
sell all
or a portion of the Collateral or rights of interest therein, at one or more public or private sales called and conducted in any manner permitted by law and in accordance with
Section 5.17
hereof (provided that any such sale shall be conducted by the Special Servicer pursuant to the Servicing Agreement);
(iii)
institute
Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Collateral;
(iv)
exercise
any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Secured Parties hereunder; and
(v)
exercise
any other rights and remedies that may be available at law or in equity;
provided
,
however
, that no sale or liquidation of the Collateral or institution of Proceedings in furtherance thereof pursuant to this
Section 5.4
may be effected unless either of the conditions specified in
Section 5.5(a)
are
met.
The Issuer shall, at the Issuer’s expense, upon request of the Trustee or the Special Servicer, obtain and rely upon an opinion of
an Independent investment banking firm as to the feasibility of any action proposed to be taken in accordance with this
Section 5.4
and as to the sufficiency of the
proceeds and other amounts expected to be received with respect to the Collateral to make the required payments of principal of and interest on the Notes and other amounts payable hereunder, which opinion shall be conclusive evidence as to such
feasibility or sufficiency.
(b)
If an Event of Default as described in
Section 5.1(e)
hereof shall have occurred and be continuing, the Trustee may, and at the request of the Holders of not less than 25% of the Aggregate Outstanding Amount of
the Controlling Class shall, institute a Proceeding solely to compel performance of the covenant or agreement or to cure the representation or warranty, the breach of which gave rise to the Event of Default under such Section, and enforce any
equitable decree or order arising from such Proceeding.
(c)
Upon any Sale, whether made under the power of
sale hereby given or by virtue of judicial proceedings, any Noteholder, Preferred Shareholder, the Collateral Manager or the Servicer or any of their Affiliates may bid for and purchase the Collateral or any part thereof and, upon compliance
with the terms of Sale, may hold, retain, possess or dispose of such property in its or their own absolute right without accountability; and any purchaser at any such Sale may, in paying the purchase money, turn in any of the Notes in lieu of
Cash equal to the amount which shall, upon distribution of the net proceeds of such sale, be payable on the Notes so turned in by such Holder (taking into account the Class of such Notes). Such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall either be returned to the Holders thereof after proper notation has been made thereon to show partial payment or a new note shall be delivered to the Holders reflecting the reduced interest
thereon.
Upon any Sale, whether made under the power of sale hereby given or by virtue of judicial proceedings, the receipt of the Note
Administrator or of the Officer making a sale under judicial proceedings shall be a sufficient discharge to the purchaser or purchasers at any sale for its or their purchase money and such purchaser or purchasers shall not be obliged to see to
the application thereof.
Any such Sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall (x) bind the Issuer, the
Co-Issuer, the Trustee, the Note Administrator, the Noteholders and the Preferred Shareholders, shall operate to divest all right, title and interest whatsoever, either at law or in equity, of each of them in and to the property sold and (y) be
a perpetual bar, both at law and in equity, against each of them and their successors and assigns, and against any and all Persons claiming through or under them.
(d)
Notwithstanding any other provision of this
Indenture or any other Transaction Document, none of the Advancing Agent, the Trustee, the Note Administrator or any other Secured Party, any other party to any Transaction Document, the Holder of the Notes and the holders of the equity in the
Issuer and the Co-Issuer or third party beneficiary of this Indenture may, prior to the date which is one year and one day, or, if longer, the applicable preference period then in effect (including any period established pursuant to the laws of
the Cayman Islands) after the payment in full of all Notes, institute against, or join any other Person in instituting against, the Issuer, the Co-Issuer or any Permitted Subsidiary any bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings, or other proceedings under federal or State bankruptcy or similar laws of any jurisdiction. Nothing in this
Section 5.4
shall
preclude, or be deemed to stop, the Advancing Agent, the Trustee, the Note Administrator, or any other Secured Party or any other party to any Transaction Document (i) from taking any action prior to the expiration of the aforementioned one
year and one day period, or, if longer, the applicable preference period then in effect (including any period established pursuant to the laws of the Cayman Islands) period in (A) any case or proceeding voluntarily filed or commenced by the
Issuer or the Co-Issuer or (B) any involuntary insolvency proceeding filed or commenced by a Person other than the Trustee, the Note Administrator or any other Secured Party or any other party to any Transaction Document, or (ii) from
commencing against the Issuer or the Co-Issuer or any of their respective properties any legal action which is not a bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceeding.
Section 5.5
Preservation of Collateral
.
(a)
Notwithstanding anything to the contrary herein,
if an Event of Default shall have occurred and be continuing when any of the Notes are Outstanding, the Trustee and the Note Administrator, as applicable, shall (except as otherwise expressly permitted or required under this Indenture) retain
the Collateral securing the Notes, collect and cause the collection of the proceeds thereof and make and apply all payments and deposits and maintain all accounts in respect of the Collateral and the Notes in accordance with the Priority of
Payments and the provisions of
Articles 10
,
12
and
13
and shall not sell or liquidate the Collateral, unless either:
(i)
the Note
Administrator, pursuant to
Section 5.5(c)
, determines that the anticipated proceeds of a sale or liquidation of the Collateral (after deducting the
reasonable expenses of such sale or liquidation) would be sufficient to discharge in full the amounts then due and unpaid on the Notes, Company Administrative Expenses due and payable pursuant to the Priority of Payments, the Collateral Manager
Fees due and payable pursuant to the Priority of Payments and amounts due and payable to the Advancing Agent and the Backup Advancing Agent, in respect of unreimbursed Interest Advances and Reimbursement Interest, for principal and interest
(including accrued and unpaid Deferred Interest), and, upon receipt of information from Persons to whom fees are expenses are payable, all other amounts payable prior to payment of principal of the Notes due and payable pursuant to
Section 11.1(a)(iii)
and the holders of a Majority of the Controlling Class agrees with such determination; or
(ii)
a
Supermajority of each Class of Notes (voting as a separate Class) directs the sale and liquidation of all or a portion of the Collateral.
In the event of a sale of a portion of the Collateral pursuant to
clause
(ii)
above representing Collateral Interests, the Special Servicer, on behalf of the Trustee, shall sell those items of the Collateral representing Collateral Interests identified by requisite Noteholders pursuant to a written
direction, received by the Special Servicer, in form and substance satisfactory to the Trustee and all proceeds of such sale shall be remitted to the Note Administrator for distribution in the order set forth in
Section 11.1(a)
. The Note Administrator shall give written notice of the retention of the Collateral by the Custodian to the Issuer, the Co-Issuer, the Collateral Manager, the Trustee, the
Servicer, the Special Servicer and the Rating Agencies. So long as such Event of Default is continuing, any such retention pursuant to this
Section 5.5(a)
may be
rescinded at any time when the conditions specified in clause (i) or (ii) above exist.
(b)
Nothing contained in
Section 5.5(a)
shall be construed to require a sale of the Collateral securing the Notes if the conditions set forth in this
Section
5.5(a)
are not satisfied. Nothing contained in
Section 5.5(a)
shall be construed to require the Trustee to preserve the Collateral securing the Notes
if prohibited by applicable law.
(c)
In determining whether the condition specified
in
Section 5.5(a)(i)
exists, the Collateral Manager shall obtain bid prices with respect to each Collateral Interest from two dealers (Independent of the Collateral
Manager and any of its Affiliates) at the time making a market in such Collateral Interests that, at that time, engage in the trading, origination or securitization of loans or participation interests in loans similar to the Collateral
Interests (or, if only one such dealer can be engaged, then the Collateral Manager shall obtain a bid price from such dealer or, if no such dealer can be engaged, from a pricing service). The Collateral Manager shall compute the anticipated
proceeds of sale or liquidation on the basis of the lowest of such bid prices for each such Collateral Interest and provide the Trustee, the Special Servicer and the Note Administrator with the results thereof. For the purposes of determining
issues relating to the market value of any Collateral Interest and the execution of a sale or other liquidation thereof, the Special Servicer may, but need not, retain at the expense of the Issuer and rely on an opinion of an Independent
investment banking firm of national reputation or other appropriate advisors (the cost of which shall be payable as a Company Administrative Expense) in connection with a determination as to whether the condition specified in
Section 5.5(a)(i)
exists.
The Note Administrator shall promptly deliver to the Noteholders and the Servicer, and the Note Administrator shall post to the Note
Administrator’s Website, a report stating the results of any determination required to be made pursuant to
Section 5.5(a)(i)
.
Section 5.6
Trustee May Enforce Claims Without Possession of Notes
.
All rights of action and claims under this Indenture or under any of the Notes may be prosecuted and enforced by the Trustee without
the possession of any of the Notes or the production thereof in any trial or other Proceeding relating thereto, and any such action or Proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment in respect of the Notes shall be applied as set forth in
Section 5.7
hereof.
In any Proceedings brought by the Trustee (and in any Proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) in respect of the Notes, the Trustee shall be deemed to represent all the Holders of the Notes.
Section 5.7
Application of Amounts Collected
.
Any amounts collected by the Note Administrator with respect to the Notes pursuant to this
Article 5
and any amounts that may then be held or thereafter received by the Note Administrator with respect to the Notes hereunder shall be applied subject to
Section 13.1
hereof and in accordance with the Priority of Payments set forth in
Section 11.1(a)(iii)
hereof, at the
date or dates fixed by the Note Administrator.
Section 5.8
Limitation on Suits
.
No Holder of any Notes shall have any right to institute any Proceedings (the right of a Noteholder to institute any proceeding with
respect to the Indenture or the Notes is subject to any non-petition covenants set forth in the Indenture or the Notes), judicial or otherwise, with respect to this Indenture or the Notes, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless:
(a)
such Holder has previously given to the Trustee
written notice of an Event of Default;
(b)
except as otherwise provided in
Section 5.9
hereof, the Holders of at least 25% of the then Aggregate Outstanding Amount of the Controlling Class shall have made written request to the Trustee to
institute Proceedings in respect of such Event of Default in its own name as Trustee hereunder and such Holders have offered to the Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in
compliance with such request;
(c)
the Trustee for 30 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such Proceeding; and
(d)
no direction inconsistent with such written
request has been given to the Trustee during such 30-day period by a Majority of the Controlling Class; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatsoever by virtue of, or by
availing of, any provision of this Indenture or the Notes to affect, disturb or prejudice the rights of any other Holders of Notes of the same Class or to obtain or to seek to obtain priority or preference over any other Holders of the Notes of
the same Class or to enforce any right under this Indenture or the Notes, except in the manner herein or therein provided and for the equal and ratable benefit of all the Holders of Notes of the same Class subject to and in accordance with
Section 13.1
hereof and the Priority of Payments.
In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of the
Controlling Class, each representing less than a Majority of the Controlling Class, the Trustee shall not be required to take any action until it shall have received the direction of a Majority of the Controlling Class.
Section 5.9
Unconditional Rights of Noteholders to Receive Principal and Interest
.
Notwithstanding any other provision in this Indenture (except for
Section
2.7(d)
and
2.7(m)
), the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and
interest on such Note as such principal, interest and other amounts become due and payable in accordance with the Priority of Payments and
Section 13.1
, and, subject
to the provisions of
Sections 5.4
and
5.8
to institute Proceedings for the enforcement
of any such payment, and such right shall not be impaired without the consent of such Holder;
provided
,
however
, that the right of such Holder to institute proceedings for the enforcement of any such payment shall not be subject to the
25% threshold requirement set forth in
Section 5.8(b)
.
Section 5.10
Restoration of Rights and Remedies
.
If the Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Noteholder, then (and in every such case) the Issuer, the Co-Issuer, the Trustee, and the Noteholder shall, subject to any
determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.11
Rights and Remedies Cumulative
.
No right or remedy herein conferred upon or reserved to the Trustee, the Note Administrator or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 5.12
Delay or Omission Not Waiver
.
No delay or omission of the Trustee or of any Noteholder to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein or a waiver of a subsequent Event of Default. Every right and remedy given by this
Article 5
or by law to the Trustee, or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, or by the Noteholders, as the case may be.
Section 5.13
Control by the Controlling Class
.
Subject to
Sections 5.2(a)
and
(b)
, but notwithstanding any other provision of this Indenture, if an Event of Default shall have occurred and be continuing when any of the Notes are Outstanding, a
Majority of the Controlling Class shall have the right to cause the institution of, and direct the time, method and place of conducting, any Proceeding for any remedy available to the Trustee and for exercising any trust, right, remedy or power
conferred on the Trustee in respect of the Notes;
provided
that:
(a)
such direction shall not conflict with any rule
of law or with this Indenture;
(b)
the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction;
provided
,
however
, that, subject to
Section 6.1
, the Trustee need not take any action that it
determines might involve it in liability (unless the Trustee has received indemnity satisfactory to it against such liability as set forth below);
(c)
the Trustee shall have been provided with
indemnity satisfactory to it; and
(d)
notwithstanding the foregoing, any direction to
the Trustee to undertake a Sale of the Collateral Interests shall be performed by the Special Servicer on behalf of the Trustee, and must satisfy the requirements of
Section 5.5
.
Section 5.14
Waiver of Past Defaults
.
Prior to the time a judgment or decree for payment of the amounts due has been obtained by the Trustee, as provided in this
Article 5
, a Majority of each and every Class of Notes (voting as a separate Class) may, on behalf of the Holders of all the Notes, waive any past Default in respect of
the Notes and its consequences, except a Default:
(a)
in the payment of principal of any Note;
(b)
in the payment of interest in respect of the
Controlling Class;
(c)
in respect of a covenant or provision hereof
that, under
Section 8.2
, cannot be modified or amended without the waiver or consent of the Holder of each Outstanding Note adversely affected thereby; or
(d)
in respect of any right, covenant or provision
hereof for the individual protection or benefit of the Trustee or the Note Administrator, without the Trustee’s or the Note Administrator’s express written consent thereto, as applicable.
In the case of any such waiver, the Issuer, the Co-Issuer, the Trustee, and the Holders of the Notes shall be restored to their
respective former positions and rights hereunder, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. Any such waiver shall be effectuated upon receipt by the Trustee and the Note Administrator
of a written waiver by such Majority of each Class of Notes.
Section 5.15
Undertaking for Costs
.
All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section 5.15
shall not apply to any suit instituted by (x) the Trustee, (y) any
Noteholder, or group of Noteholders, holding in the aggregate more than 10% of the Aggregate Outstanding Amount of the Controlling Class or (z) any Noteholder for the enforcement of the payment of the principal of or interest on any Note or any
other amount payable hereunder on or after the Stated Maturity Date (or, in the case of redemption, on or after the applicable Redemption Date).
Section 5.16
Waiver of Stay or Extension Laws
.
Each of the Issuer and the Co-Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force (including but not limited to filing a voluntary petition under Chapter 11 of the
Bankruptcy Code and by the voluntary commencement of a proceeding or the filing of a petition seeking winding up, liquidation, reorganization or other relief under any bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws now or hereafter in effect), which may affect the covenants, the performance of or any remedies under this Indenture; and each of the Issuer and the Co-Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.17
Sale of Collateral
.
(a)
The power to effect any sale (a “
Sale
”) of any portion of the Collateral pursuant to
Sections 5.4
and
5.5
hereof shall not be exhausted by any one or more Sales as to any portion of such Collateral remaining unsold, but shall continue unimpaired until all amounts secured by the Collateral
shall have been paid or if there are insufficient proceeds to pay such amount until the entire Collateral shall have been sold. The Special Servicer may, upon notice to the Securityholders, and shall, upon direction of a Majority of the
Controlling Class, from time to time postpone any Sale by public announcement made at the time and place of such Sale;
provided
,
however
, that if the Sale is rescheduled for a date more than three Business Days after the date of the determination by the Note Administrator pursuant to
Section 5.5(a)(i)
hereof, such Sale shall not occur unless and until the Note Administrator has again made the determination required by
Section 5.5(a)(i)
hereof. The Trustee hereby expressly waives its rights to any amount fixed by law as compensation for any Sale;
provided
that the Special Servicer shall be authorized to deduct the reasonable costs, charges and expenses incurred by it, or by the Trustee or the Note Administrator in connection with such Sale from the proceeds thereof notwithstanding the provisions
of
Section 6.7
hereof.
(b)
The Notes need not be produced in order to
complete any such Sale, or in order for the net proceeds of such Sale to be credited against amounts owing on the Notes.
(c)
The Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of the Collateral in connection with a Sale thereof, which, in the case of any Collateral Interests, shall be upon request and delivery of any such instruments by the
Special Servicer. In addition, the Special Servicer, with respect to Collateral Interests, and the Trustee, with respect to any other Collateral, is hereby irrevocably appointed the agent and attorney in fact of the Issuer to transfer and
convey its interest in any portion of the Collateral in connection with a Sale thereof, and to take all action necessary to effect such Sale. No purchaser or transferee at such a Sale shall be bound to ascertain the Trustee’s or Special
Servicer’s authority, to inquire into the satisfaction of any conditions precedent or to see to the application of any amounts.
(d)
In the event of any Sale of the Collateral
pursuant to
Section 5.4
or
Section 5.5
, payments shall be made in the order and priority
set forth in
Section 11.1(a)
in the same manner as if the Notes had been accelerated.
(e)
Notwithstanding anything herein to the
contrary, any Sale by the Trustee of any portion of the Collateral Interests shall be executed by the Special Servicer on behalf of the Issuer, and the Trustee shall have no responsibility or liability therefor.
Section 5.18
Action on the Notes
.
The Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the application for
or obtaining of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Trustee against
the Issuer or the Co-Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the Collateral of the Issuer or the Co-Issuer.
ARTICLE 6
THE TRUSTEE AND NOTE ADMINISTRATOR
Section 6.1
Certain Duties and Responsibilities
.
(a)
Except during the continuance of an Event of
Default:
(i)
each of
the Trustee and the Note Administrator undertakes to perform such duties and only such duties as are set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Note
Administrator; and any permissive right of the Trustee or the Note Administrator contained herein shall not be construed as a duty; and
(ii)
in the
absence of manifest error, or bad faith on its part, each of the Note Administrator and the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and the Note Administrator, as the case may be, and conforming to the requirements of this Indenture;
provided
,
however
, that in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished to the Trustee or the Note Administrator, the Trustee and the Note Administrator shall be under a duty to examine the same to determine whether or not they
substantially conform to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate or opinion does not conform. If a corrected form shall not have been delivered to the Trustee or the Note
Administrator within 15 days after such notice from the Trustee or the Note Administrator, the Trustee or the Note Administrator, as applicable, shall notify the party providing such instrument and requesting the correction thereof.
(b)
In case an Event of Default actually known to a
Trust Officer of the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from a Majority of the Controlling Class (or other Noteholders to the extent provided in
Article 5
hereof), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under
the circumstances in the conduct of such Person’s own affairs.
(c)
If, in performing its duties under this
Indenture, the Trustee or the Note Administrator is required to decide between alternative courses of action, the Trustee and the Note Administrator may request written instructions from the Collateral Manager as to courses of action desired by
it. If the Trustee and the Note Administrator does not receive such instructions within two (2) Business Days after it has requested them, it may, but shall be under no duty to, take or refrain from taking such action. The Trustee and the
Note Administrator shall act in accordance with instructions received after such two (2) Business Day period except to the extent it has already taken, or committed itself to take, action inconsistent with such instructions. The Trustee and
the Note Administrator shall be entitled to request and rely on the advice of legal counsel and Independent accountants in performing its duties hereunder and be deemed to have acted in good faith and shall not be subject to any liability if it
acts in accordance with such advice.
(d)
No provision of this Indenture shall be
construed to relieve the Trustee or the Note Administrator from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that neither the Trustee nor the Note Administrator shall be liable:
(i)
for any
error of judgment made in good faith by a Trust Officer, unless it shall be proven that it was negligent in ascertaining the pertinent facts; or
(ii)
with
respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Issuer, the Collateral Manager, and/or a Majority of the Controlling Class relating to the time, method and place of conducting any
Proceeding for any remedy available to the Trustee or the Note Administrator in respect of any Note or exercising any trust or power conferred upon the Trustee or the Note Administrator under this Indenture.
(e)
No provision of this Indenture shall require the
Trustee or the Note Administrator to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers contemplated hereunder, if it
shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it unless such risk or liability relates to its ordinary services under this Indenture,
except where this Indenture provides otherwise.
(f)
Neither the Trustee nor the Note Administrator
shall be liable to the Noteholders for any action taken or omitted by it at the direction of the Issuer, the Co-Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Controlling Class, the Trustee (in the case of the Note
Administrator), the Note Administrator (in the case of the Trustee) and/or a Noteholder under circumstances in which such direction is required or permitted by the terms of this Indenture.
(g)
For all purposes under this Indenture, neither
the Trustee nor the Note Administrator shall be deemed to have notice or knowledge of any Event of Default, unless a Trust Officer of either the Trustee or the Note Administrator, as applicable, has actual knowledge thereof or unless written
notice of any event which is in fact such an Event of Default or Default is received by the Trustee or the Note Administrator, as applicable at the respective Corporate Trust Office, and such notice references the Notes and this Indenture. For
purposes of determining the Trustee’s and Note Administrator’s responsibility and liability hereunder, whenever reference is made in this Indenture to such an Event of Default or a Default, such reference shall be construed to refer only to
such an Event of Default or Default of which the Trustee or Note Administrator, as applicable, is deemed to have notice as described in this
Section 6.1
.
(h)
The Trustee and the Note Administrator shall,
upon reasonable prior written notice, permit the Issuer, the Collateral Manager and their designees, during its normal business hours, to review all books of account, records, reports and other papers of the Trustee relating to the Notes and to
make copies and extracts therefrom (the reasonable out-of-pocket expenses incurred in making any such copies or extracts to be reimbursed to the Trustee or the Note Administrator, as applicable, by such Person).
Section 6.2
Notice of Default
.
Promptly (and in no event later than three Business Days) after the occurrence of any Default actually known to a Trust Officer of
the Trustee or after any declaration of acceleration has been made or delivered to the Trustee pursuant to
Section 5.2
, the Trustee shall transmit by mail to the
17g‑5 Information Provider and to the Note Administrator (who shall post such notice the Note Administrator’s Website) and the Note Administrator shall deliver to the Collateral Manager, all Holders of Notes as their names and addresses appear
on the Notes Register, and to Preferred Share Paying Agent, notice of such Default, unless such Default shall have been cured or waived.
Section 6.3
Certain Rights of Trustee and Note Administrator
.
Except as otherwise provided in
Section 6.1
:
(a)
the Trustee and the Note Administrator may rely
and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b)
any request or direction of the Issuer or the
Co-Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be;
(c)
whenever in the administration of this Indenture
the Trustee or the Note Administrator shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee and the Note Administrator (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate;
(d)
as a condition to the taking or omitting of any
action by it hereunder, the Trustee and the Note Administrator may consult with counsel and the advice of such counsel or any Opinion of Counsel (including with respect to any matters, other than factual matters, in connection with the
execution by the Trustee or the Note Administrator of a supplemental indenture pursuant to
Section 8.3
) shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and in reliance thereon;
(e)
neither the Trustee nor the Note Administrator
shall be under any obligation to exercise or to honor any of the rights or powers vested in it by this Indenture at the request or direction of any of the Noteholders pursuant to this Indenture, or to make any investigation of matters arising
hereunder or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Noteholders unless such Noteholders shall have offered to the Trustee and the Note Administrator, as
applicable indemnity acceptable to it against the costs, expenses and liabilities which might reasonably be incurred by it in compliance with such request or direction;
(f)
neither the Trustee nor the Note Administrator
shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper documents and shall be entitled to
rely conclusively thereon;
(g)
each of the Trustee and the Note Administrator
may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and upon any such appointment of an agent or attorney, such agent or attorney shall be conferred with all
the same rights, indemnities, and immunities as the Trustee or Note Administrator, as applicable;
(h)
neither the Trustee nor the Note Administrator
shall be liable for any action it takes or omits to take in good faith that it reasonably and prudently believes to be authorized or within its rights or powers hereunder;
(i)
neither the Trustee nor the Note Administrator
shall be responsible for the accuracy of the books or records of, or for any acts or omissions of, the Depository, any Transfer Agent (other than the Note Administrator itself acting in that capacity), Clearstream, Luxembourg, Euroclear, any
Calculation Agent (other than the Note Administrator itself acting in that capacity) or any Paying Agent (other than the Note Administrator itself acting in that capacity);
(j)
neither the Trustee nor the Note Administrator
shall be liable for the actions or omissions of the Issuer, the Co-Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Trustee (in the case of the Note Administrator) or the Note Administrator (in the case of the Trustee);
and without limiting the foregoing, neither the Trustee nor the Note Administrator shall be under any obligation to verify compliance by any party hereto with the terms of this Indenture (other than itself) or to verify or independently
determine the accuracy of information received by it from the Servicer or Special Servicer (or from any selling institution, agent bank, trustee or similar source) with respect to the Real Estate Loans;
(k)
to the extent any defined term hereunder, or any
calculation required to be made or determined by the Trustee or Note Administrator hereunder, is dependent upon or defined by reference to generally accepted accounting principles in the United States in effect from time to time (“
GAAP
”), the Trustee and Note Administrator shall be entitled to request and receive (and rely upon) instruction from the Issuer or the accountants appointed pursuant to
Section 10.12
as to the application of GAAP in such connection, in any instance;
(l)
neither the Trustee nor the Note Administrator
shall have any responsibility to the Issuer or the Secured Parties hereunder to make any inquiry or investigation as to, and shall have no obligation in respect of, the terms of any engagement of Independent accountants by the Issuer (or the
Collateral Manager on its behalf);
(m)
the Trustee and the Note Administrator shall be
entitled to all of the same rights, protections, immunities and indemnities afforded to it as Trustee or as Note Administrator, as applicable, in each capacity for which it serves hereunder and under the Future Funding Agreement, the Future
Funding Account Control Agreement and the Securities Account Control Agreement (including, without limitation, as Secured Party, Paying Agent, Authenticating Agent, Calculation Agent, Transfer Agent, Custodian, Securities Intermediary, Backup
Advancing Agent and Notes Registrar);
(n)
in determining any affiliations of Noteholders
with any party hereto or otherwise, each of the Trustee and the Note Administrator shall be entitled to request and conclusively rely on a certification provided by a Noteholder;
(o)
except in the case of actual fraud (as
determined by a non-appealable final court order), in no event shall the Trustee or Note Administrator be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Trustee or Note Administrator has been advised of the likelihood of such loss or damage and regardless of the form of action;
(p)
neither the Trustee nor the Note Administrator
shall be required to give any bond or surety in respect of the execution of the trusts created hereby or the powers granted hereunder;
(q)
neither the Trustee nor the Note Administrator
shall be responsible for any delay or failure in performance resulting from acts beyond its control (such acts include but are not limited to acts of God, strikes, lockouts, riots and acts of war);
provided
that such delay or failure is not also a result of its own negligence, bad faith or willful misconduct
;
(r)
except as otherwise expressly set forth in this
Indenture, Wells Fargo Bank, National Association, acting in any particular capacity hereunder will not be deemed to be imputed with knowledge of (i) Wells Fargo Bank, National Association acting in a capacity that is unrelated to the
transactions contemplated by this Indenture, or (ii) Wells Fargo Bank, National Association acting in any other capacity hereunder, except, in the case of either clause (i) or clause (ii), where some or all of the obligations performed in such
capacities are performed by one or more employees within the same group or division of Wells Fargo Bank, National Association or where the groups or divisions responsible for performing the obligations in such capacities have one or more of the
same Responsible Officers; and
(s)
nothing herein shall require the Note
Administrator or the Trustee to act in any manner that is contrary to applicable law.
Section 6.4
Not Responsible for Recitals or Issuance of Notes
.
The recitals contained herein and in the Notes, other than the Certificate of Authentication thereon, shall be taken as the
statements of the Issuer and the Co-Issuer, and neither the Trustee nor the Note Administrator assumes any responsibility for their correctness. Neither the Trustee nor the Note Administrator makes any representation as to the validity or
sufficiency of this Indenture, the Collateral or the Notes. Neither the Trustee nor the Note Administrator shall be accountable for the use or application by the Issuer or the Co-Issuer of the Notes or the proceeds thereof or any amounts paid
to the Issuer or the Co-Issuer pursuant to the provisions hereof.
Section 6.5
May Hold Notes
.
The Trustee, the Note Administrator, the Paying Agent, the Notes Registrar or any other agent of the Issuer or the Co-Issuer, in its
individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer and the Co-Issuer with the same rights it would have if it were not Trustee, Note Administrator, Paying Agent, Notes Registrar or
such other agent.
Section 6.6
Amounts Held in Trust
.
Amounts held by the Note Administrator hereunder shall be held in trust to the extent required herein. The Note Administrator shall
be under no liability for interest on any amounts received by it hereunder except to the extent of income or other gain on investments received by the Note Administrator on Eligible Investments.
Section 6.7
Compensation and Reimbursement
.
(a)
The Issuer agrees:
(i)
to pay
the Trustee and Note Administrator on each Payment Date in accordance with the Priority of Payments reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee or note administrator of an express trust);
(ii)
except
as otherwise expressly provided herein, to reimburse the Trustee and Note Administrator in a timely manner upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee or Note Administrator in
connection with its performance of its obligations under, or otherwise in accordance with any provision of this Indenture;
(iii)
to
indemnify the Trustee or Note Administrator and its Officers, directors, employees and agents for, and to hold them harmless against, any loss, liability or expense (including any expenses incurred in connection with the enforcement of this
indemnity) incurred without negligence, willful misconduct or bad faith on their part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of their powers or duties hereunder or under the Servicing Agreement or the Preferred Share Paying Agency; and
(iv)
to pay
the Trustee and Note Administrator reasonable additional compensation together with its expenses (including reasonable counsel fees) for any collection action taken pursuant to
Section 6.13
hereof.
(b)
The Issuer may remit payment for such fees and
expenses to the Trustee and Note Administrator or, in the absence thereof, the Note Administrator may from time to time deduct payment of its and the Trustee’s fees and expenses hereunder from amounts on deposit in the Payment Account in
accordance with the Priority of Payments.
(c)
The Note Administrator, in its capacity as Note
Administrator, Paying Agent, Calculation Agent, Transfer Agent, Custodian, Securities Intermediary, Backup Advancing Agent and Notes Registrar, hereby agrees not to cause the filing of a petition in bankruptcy against the Issuer, the Co-Issuer
or any Permitted Subsidiary until at least one year and one day (or, if longer, the applicable preference period then in effect) after the payment in full of all Notes issued under this Indenture. This provision shall survive termination of
this Indenture.
(d)
The Trustee and Note Administrator agree that
the payment of all amounts to which it is entitled pursuant to
Sections 6.7(a)(i)
,
(a)(ii)
,
(a)(iii)
and
(a)(iv)
shall be subject to the Priority of Payments, shall be payable only
to the extent funds are available in accordance with such Priority of Payments, shall be payable solely from the Collateral and following realization of the Collateral, any such claims of the Trustee or Note Administrator against the Issuer,
and all obligations of the Issuer, shall be extinguished. The Trustee and Note Administrator will have a lien upon the Collateral to secure the payment of such payments to it in accordance with the Priority of Payments;
provided
that the Trustee and Note Administrator shall not institute any proceeding for enforcement of such lien except in connection with an action taken pursuant to
Section 5.3
hereof for enforcement of the lien of this Indenture for the benefit of the Noteholders.
The Trustee and Note Administrator shall receive amounts pursuant to this
Section 6.7
and
Section 11.1(a)
only to the extent that such payment is made in accordance with the Priority of Payments and the failure to
pay such amounts to the Trustee and Note Administrator will not, by itself, constitute an Event of Default. Subject to
Section 6.9
, the Trustee and Note
Administrator shall continue to serve under this Indenture notwithstanding the fact that the Trustee and Note Administrator shall not have received amounts due to it hereunder;
provided
that the Trustee and Note Administrator shall not be required to expend any funds or incur any expenses unless reimbursement therefor is reasonably assured to it. No direction by a Majority of the Controlling Class shall affect the right of
the Trustee and Note Administrator to collect amounts owed to it under this Indenture.
If on any Payment Date, an amount payable to the Trustee and Note Administrator pursuant to this Indenture is not paid because there
are insufficient funds available for the payment thereof, all or any portion of such amount not so paid shall be deferred and payable on any later Payment Date on which sufficient funds are available therefor in accordance with the Priority of
Payments.
Section 6.8
Corporate Trustee Required; Eligibility
.
There shall at all times be a Trustee and a Note Administrator hereunder which (i) shall be a corporation organized and doing
business under the laws of the United States of America or of any State thereof, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least U.S.$200,000,000, subject to supervision or
examination by federal or State authority, having a long-term unsecured debt rating of at least “A2” by Moody’s and a rating by KBRA equivalent to at least a “A2” rating by Moody’s; provided, that with respect to the Trustee, it may maintain a
long-term unsecured debt rating of at least “Baa1” by Moody’s and a rating by KBRA equivalent to at least a “Baa1” rating by Moody’s and a short-term unsecured debt rating of at least “P-2” by Moody’s and a rating by KBRA equivalent to at least
a “P-2” rating by Moody’s so long as the Servicer maintains a long-term unsecured debt rating of at least “A2” by Moody’s and a rating by KBRA equivalent to at least a “A2” rating by Moody’s (the Servicer shall have no obligation to maintain
such rating), or such other rating with respect to which the Rating Agencies have provided a No Downgrade Confirmation (provided that this proviso shall not impose on the Servicer any obligation to maintain such rating), and having an office
within the United States and (ii) with respect to the Trustee, is not an affiliate (as that term is defined under Rule 405 under the Securities Act) of the Issuer or any Person involved in the organization or operation of the Issuer. If such
corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this
Section 6.8
, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee or the Note Administrator shall cease to be eligible in accordance with the provisions of this
Section 6.8
, the Trustee or the Note Administrator, as applicable, shall resign immediately in the manner and with the effect hereinafter specified in this
Article 6.
Section 6.9
Resignation and Removal; Appointment of Successor
.
(a)
No resignation or removal of the Note
Administrator or the Trustee and no appointment of a successor Note Administrator or Trustee, as applicable, pursuant to this
Article 6
shall become effective until
the acceptance of appointment by such successor Note Administrator or Trustee under
Section 6.10
.
(b)
Each of the Trustee and the Note Administrator
may resign at any time by giving written notice thereof to the Issuer, the Co-Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Noteholders, the Note Administrator (in the case of the Trustee), the Trustee (in the case of
the Note Administrator), and the Rating Agencies. Upon receiving such notice of resignation, the Issuer and the Co-Issuer shall promptly appoint a successor trustee or trustees, or a successor Note Administrator, as the case may be, by written
instrument, in duplicate, executed by an Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer, one copy of which shall be delivered to the Note Administrator or the Trustee so resigning and one copy to the successor Note
Administrator, Trustee or Trustees, together with a copy to each Noteholder, the Servicer, the parties hereto and the Rating Agencies;
provided
that such successor
Note Administrator and Trustee shall be appointed only upon the written consent of a Majority of the Notes (or if there are no Notes Outstanding, a Majority of Preferred Shareholders) or, at any time when an Event of Default shall have occurred
and be continuing or when a successor Note Administrator and Trustee has been appointed pursuant to
Section 6.10
, by Act of a Majority of the Controlling Class. If
no successor Note Administrator and Trustee shall have been appointed and an instrument of acceptance by a successor Trustee or Note Administrator shall not have been delivered to the Trustee or the Note Administrator within 30 days after the
giving of such notice of resignation, the resigning Trustee or Note Administrator, as the case may be, the Controlling Class of Notes or any Holder of a Note, on behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a successor Trustee or a successor Note Administrator, as the case may be, at the expense of the Issuer. No resignation or removal of the Note Administrator or the Trustee and no appointment of a
successor Note Administrator or Trustee will become effective until the acceptance of appointment by the successor Note Administrator or Trustee, as applicable.
(c)
The Note Administrator and Trustee may be removed
at any time by Act of a Supermajority of the Notes, upon not less than 30 days’ written notice (or if there are no Notes Outstanding, a Majority of Preferred Shareholders) or when a successor Trustee has been appointed pursuant to
Section 6.10
, by Act of a Majority of the Controlling Class, in each case, upon written notice delivered to the parties hereto.
(d)
If at any time:
(i)
the
Trustee or the Note Administrator shall cease to be eligible under
Section 6.8
and shall fail to resign after written request therefor by the Issuer, the
Co-Issuer, or by any Holder; or
(ii)
the
Trustee or the Note Administrator shall become incapable of acting or there shall be instituted any proceeding pursuant to which it could be adjudged as bankrupt or insolvent or a receiver or liquidator of the Trustee or the Note Administrator
or of its respective property shall be appointed or any public officer shall take charge or control of the Trustee or the Note Administrator or of its respective property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case (subject to
Section 6.9(a)
), (a) the Issuer or the
Co-Issuer, by Issuer Order, may remove the Trustee or the Note Administrator, as applicable, or (b) subject to
Section 5.15
, a Majority of the Controlling Class or
any Holder may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee or the Note Administrator, as the case may be, and the appointment of a successor thereto.
(e)
If the Trustee or the Note Administrator shall
resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Trustee or the Note Administrator for any reason, the Issuer and the Co-Issuer, by Issuer Order, subject to the written consent of the Collateral
Manager, shall promptly appoint a successor Trustee or Note Administrator, as applicable, and the successor Trustee or Note Administrator so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee or the
successor Note Administrator, as the case may be. If the Issuer and the Co-Issuer shall fail to appoint a successor Trustee or Note Administrator within 30 days after such resignation, removal or incapability or the occurrence of such vacancy,
a successor Trustee or Note Administrator may be appointed by Act of a Majority of the Controlling Class delivered to the Collateral Manager and the parties hereto, including the retiring Trustee or the retiring Note Administrator, as the case
may be, and the successor Trustee or Note Administrator so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee or Note Administrator, as applicable, and supersede any successor Trustee or Note
Administrator proposed by the Issuer and the Co-Issuer. If no successor Trustee or Note Administrator shall have been so appointed by the Issuer and the Co-Issuer or a Majority of the Controlling Class and shall have accepted appointment in
the manner hereinafter provided, subject to
Section 5.15
, the Controlling Class or any Holder may, on behalf of itself or himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor Trustee or Note Administrator.
(f)
The Issuer and the Co-Issuer shall give prompt
notice of each resignation and each removal of the Trustee or Note Administrator and each appointment of a successor Trustee or Note Administrator by mailing written notice of such event by first class mail, postage prepaid, to the Rating
Agencies, the Preferred Share Paying Agent, the Collateral Manager, the parties hereto, and to the Holders of the Notes as their names and addresses appear in the Notes Register. Each notice shall include the name of the successor Trustee or
Note Administrator, as the case may be, and the address of its respective Corporate Trust Office. If the Issuer or the Co-Issuer fail to mail such notice within ten days after acceptance of appointment by the successor Trustee or Note
Administrator, the successor Trustee or Note Administrator shall cause such notice to be given at the expense of the Issuer or the Co-Issuer, as the case may be.
(g)
The resignation or removal of the Note
Administrator in any capacity in which it is serving hereunder, including Note Administrator, Paying Agent, Authenticating Agent, Calculation Agent, Transfer Agent, Custodian, Securities Intermediary, Backup Advancing Agent and Notes Registrar,
shall be deemed a resignation or removal, as applicable, in each of the other capacities in which it serves.
Section 6.10
Acceptance of Appointment by Successor
.
Every successor Trustee or Note Administrator appointed hereunder shall execute, acknowledge and deliver to the Collateral Manager,
the Servicer, and the parties hereto including the retiring Trustee or the retiring Note Administrator, as the case may be, an instrument accepting such appointment. Upon delivery of the required instruments, the resignation or removal of the
retiring Trustee or the retiring Note Administrator shall become effective and such successor Trustee or Note Administrator, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of the retiring Trustee or Note Administrator, as the case may be; but, on request of the Issuer, the Co-Issuer, a Majority of the Controlling Class, the Collateral Manager or the successor Trustee or Note Administrator, such
retiring Trustee or Note Administrator shall, upon payment of its fees, indemnities and other amounts then unpaid, execute and deliver an instrument transferring to such successor Trustee or Note Administrator all the rights, powers and trusts
of the retiring Trustee or Note Administrator, as the case may be, and shall duly assign, transfer and deliver to such successor Trustee or Note Administrator all property and amounts held by such retiring Trustee or Note Administrator
hereunder, subject nevertheless to its lien, if any, provided for in
Section 6.7(d)
. Upon request of any such successor Trustee or Note Administrator, the Issuer and
the Co-Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee or Note Administrator all such rights, powers and trusts.
No successor Trustee or successor Note Administrator shall accept its appointment unless (a) at the time of such acceptance such
successor shall be qualified and eligible under this
Article 6
, (b) such successor shall have a long-term unsecured debt rating satisfying the requirements set forth
in
Section 6.8
, and (c) the Rating Agency Condition is satisfied.
Section 6.11
Merger, Conversion, Consolidation or Succession to Business of Trustee and Note Administrator
.
Any corporation or banking association into which the Trustee or the Note Administrator may be merged or converted or with which it
may be consolidated, or any corporation or banking association resulting from any merger, conversion or consolidation to which the Trustee or the Note Administrator, shall be a party, or any corporation or banking association succeeding to all
or substantially all of the corporate trust business of the Trustee or the Note Administrator, shall be the successor of the Trustee or the Note Administrator, as applicable, hereunder;
provided
that with respect to the Trustee, such corporation or banking association shall be otherwise qualified and eligible under this
Article 6
,
without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any of the Notes have been authenticated, but not delivered, by the Note Administrator then in office, any successor by merger,
conversion or consolidation to such authenticating Note Administrator may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Note Administrator had itself authenticated such Notes.
Section 6.12
Co-Trustees and Separate Trustee
.
At any time or times, including, but not limited to, for the purpose of meeting the legal requirements of any jurisdiction in which
any part of the Collateral may at the time be located, for enforcement actions, or where a conflict of interest exists, the Trustee shall have power to appoint, one or more Persons to act as co‑trustee jointly with the Trustee or as a separate
trustee with respect to of all or any part of the Collateral, with the power to file such proofs of claim and take such other actions pursuant to
Section 5.6
herein
and to make such claims and enforce such rights of action on behalf of the Holders of the Notes as such Holders themselves may have the right to do, subject to the other provisions of this
Section 6.12
.
Each of the Issuer and the Co-Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint a co-trustee. If the Issuer and the Co-Issuer do not both join in such appointment within 15 days after the receipt by them of a request to do so, the Trustee shall have power to make such appointment
on its own.
Should any written instrument from the Issuer or the Co-Issuer be required by any co-trustee, so appointed, more fully confirming to
such co-trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Issuer or the Co-Issuer, as the case may be. The Issuer agrees to pay (but only from and to
the extent of the Collateral) to the extent funds are available therefor under the Priority of Payments, for any reasonable fees and expenses in connection with such appointment.
Every co-trustee, shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms:
(a)
all rights, powers, duties and obligations
hereunder in respect of the custody of securities, Cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely by the Trustee;
(b)
the rights, powers, duties and obligations
hereby conferred or imposed upon the Trustee in respect of any property covered by the appointment of a co-trustee shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee jointly in the
case of the appointment of a co-trustee as shall be provided in the instrument appointing such co-trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be
incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by a co-trustee;
(c)
the Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer and the Co-Issuer evidenced by an Issuer Order, may accept the resignation of, or remove, any co-trustee appointed under this
Section 6.12
, and in case an Event of Default has occurred and is continuing, the Trustee shall have the power to accept the resignation of, or remove, any such co-trustee without the concurrence of the Issuer or the
Co-Issuer. A successor to any co-trustee so resigned or removed may be appointed in the manner provided in this
Section 6.12
;
(d)
no co-trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee hereunder, and any co-trustee hereunder shall be entitled to all the privileges, rights and immunities under Article 6 hereof, as if it were named the Trustee hereunder;
(e)
except as required by applicable law, the
appointment of a co-trustee or separate trustee under this
Section 6.12
shall not relieve the Trustee of its duties and responsibilities hereunder; and
(f)
any Act of Securityholders delivered to the
Trustee shall be deemed to have been delivered to each co-trustee.
Section 6.13
Direction to enter into the Servicing Agreement
.
The Issuer hereby directs the Trustee and the Note Administrator to enter into the Servicing Agreement. Each of the Trustee and the
Note Administrator shall be entitled to the same rights, protections, immunities and indemnities afforded to each herein in connection with any matter contained in the Servicing Agreement.
Section 6.14
Representations and Warranties of the Trustee
.
The Trustee represents and warrants for the benefit of the other parties to this Indenture and the parties to the Servicing
Agreement that:
(a)
the Trustee is a national banking association
with trust powers, duly and validly existing under the laws of the United States of America, with corporate power and authority to execute, deliver and perform its obligations under this Indenture and the Servicing Agreement, and is duly
eligible and qualified to act as Trustee under this Indenture and the Servicing Agreement;
(b)
this Indenture and the Servicing Agreement have
each been duly authorized, executed and delivered by the Trustee and each constitutes the valid and binding obligation of the Trustee, enforceable against it in accordance with its terms except (i) as limited by bankruptcy, fraudulent
conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general equitable principles, regardless of
whether considered in a proceeding in equity or at law, and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(c)
neither the execution, delivery and performance
of this Indenture or the Servicing Agreement, nor the consummation of the transactions contemplated by this Indenture or the Servicing Agreement, (i) is prohibited by, or requires the Trustee to obtain any consent, authorization, approval or
registration under, any law, statute, rule, regulation, or any judgment, order, writ, injunction or decree that is binding upon the Trustee or any of its properties or Collateral or (ii) will violate the provisions of the Governing Documents of
the Trustee; and
(d)
there are no proceedings
pending or, to the best knowledge of the Trustee, threatened against the Trustee before any Federal, state or other governmental agency, authority, administrator or regulatory body, arbitrator, court or other tribunal, foreign or domestic,
which could have a material adverse effect on the Collateral or the performance by the Trustee of its obligations under this Indenture or the Servicing Agreement.
Section 6.15
Representations and Warranties of the Note Administrator
.
The Note Administrator represents and warrants for the benefit of the other parties to this Indenture and the parties to the
Servicing Agreement that:
(a)
the Note Administrator is a national banking
association with trust powers, duly and validly existing under the laws of the United States of America, with corporate power and authority to execute, deliver and perform its obligations under this Indenture and the Servicing Agreement, and is
duly eligible and qualified to act as Note Administrator under this Indenture and the Servicing Agreement;
(b)
this Indenture and the Servicing Agreement have
each been duly authorized, executed and delivered by the Note Administrator and each constitutes the valid and binding obligation of the Note Administrator, enforceable against it in accordance with its terms except (i) as limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general equitable
principles, regardless of whether considered in a proceeding in equity or at law, and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought;
(c)
neither the execution, delivery and performance of
this Indenture of the Servicing Agreement, nor the consummation of the transactions contemplated by this Indenture or the Servicing Agreement, (i) is prohibited by, or requires the Note Administrator to obtain any consent, authorization,
approval or registration under, any law, statute, rule, regulation, or any judgment, order, writ, injunction or decree that is binding upon the Note Administrator or any of its properties or Collateral or (ii) will violate the provisions of the
Governing Documents of the Note Administrator; and
(d)
there are no proceedings pending or, to the best
knowledge of the Note Administrator, threatened against the Note Administrator before any Federal, state or other governmental agency, authority, administrator or regulatory body, arbitrator, court or other tribunal, foreign or domestic, which
could have a material adverse effect on the Collateral or the performance by the Note Administrator of its obligations under this Indenture or the Servicing Agreement.
Section 6.16
Requests for Consents
.
In the event that the Trustee and Note Administrator receives written notice of any offer or any request for a waiver, consent,
amendment or other modification with respect to any Collateral Interest (before or after any default) or in the event any action is required to be taken in respect to a Loan Document, the Note Administrator shall promptly forward such notice to
the Issuer, the Servicer and the Special Servicer. The Special Servicer shall take such action as required under the Servicing Agreement as described in
Section 10.10(f)
.
Section 6.17
Withholding
.
(a)
If any amount is required to be deducted or
withheld from any payment to any Noteholder or other payee, such amount shall reduce the amount otherwise distributable to such Noteholder or payee. The Note Administrator is hereby authorized to withhold or deduct from amounts otherwise
distributable to any Noteholder or other payee sufficient funds for the payment of any tax that is legally required to be withheld or deducted (but such authorization shall not prevent the Note Administrator from contesting any such tax in
appropriate proceedings and legally withholding payment of such tax, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to any Noteholder or other payee shall be treated as Cash distributed to such
Noteholder or payee at the time it is deducted or withheld by the Issuer or the Note Administrator, as applicable, and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to a
distribution, the Note Administrator may in its sole discretion withhold such amounts in accordance with this
Section 6.17
. The Issuer and the Co-Issuer agree to
timely provide to the Note Administrator accurate and complete copies of all documentation received from Noteholders pursuant to
Sections 2.7(f)
and
2.11(c)
. Solely with respect to FATCA compliance and reporting, nothing herein shall impose an obligation on the part of the Note Administrator to determine the amount of
any tax or withholding obligation on the part of the Issuer or in respect of the Notes. In addition, initial purchasers and transferees of Definitive Notes after the Closing Date will be required to provide to the Issuer, the Trustee, the Note
Administrator, or their agents, all information, documentation or certifications reasonably required to permit the Issuer to comply with its tax reporting obligations under applicable law, including any applicable cost basis reporting
obligation. For the avoidance of doubt, the Note Administrator will have no responsibility for the preparation of any tax returns or related reports on behalf of or for the benefit of the Issuer or any noteholder, or the calculation of any
original issue discount on the Notes.
(b)
For the avoidance of doubt, the Note
Administrator shall reasonably cooperate with Issuer, at Issuer’s direction and expense, to permit Issuer to fulfill its obligations under FATCA;
provided
that the
Note Administrator shall have no independent obligation to cause or maintain Issuer’s compliance with FATCA and shall have no liability for any withholding on payments to Issuer as a result of Issuer’s failure to achieve or maintain FATCA
compliance.
Section 6.18
Registrar of Participation Holders
Pursuant to each related Participation Agreement and
Section
3.25(b)
of the Servicing Agreement, the Note Administrator shall maintain the registrar for the Participation holders under such Participation Agreement on behalf of the Issuer, for so long as the related Pari Passu Participation
is included in this KREF 2018-FL1 securitization. The Note Administrator shall maintain the registrar of Participation holders and facilitate transfers in accordance with the terms of the related Participation Agreement and as compensation
therefor shall be entitled to the Participation Fee payable in accordance with the Servicing Agreement.
ARTICLE 7
COVENANTS
Section 7.1
Payment of Principal and Interest
.
The Issuer and the Co-Issuer shall duly and punctually pay the principal of and interest on each Class of Notes in accordance with
the terms of this Indenture. Amounts properly withheld under the Code or other applicable law by any Person from a payment to any Noteholder of interest and/or principal shall be considered as having been paid by the Issuer and the Co-Issuer,
and, with respect to the Preferred Shares, by the Issuer, to such Preferred Shareholder for all purposes of this Indenture.
The Note Administrator shall, unless prevented from doing so for reasons beyond its reasonable control, give notice to each
Securityholder of any such withholding requirement no later than ten days prior to the related Payment Date from which amounts are required, as directed by the Issuer (or the Collateral Manager on its behalf) to be withheld,
provided
that, despite the failure of the Note Administrator to give such notice, amounts withheld pursuant to applicable tax laws shall be considered as having been paid
by the Issuer and the Co-Issuer, as provided above.
Section 7.2
Maintenance of Office or Agency
.
The Co-Issuers hereby appoint the Note Administrator as a Paying Agent for the payment of principal of and interest on the Notes and
where Notes may be surrendered for registration of transfer or exchange and the Issuer hereby appoints Corporation Service Company in New York, New York, as its agent where notices and demands to or upon the Issuer in respect of the Notes or
this Indenture may be served.
The Issuer may at any time and from time to time vary or terminate the appointment of any such agent or appoint any additional
agents for any or all of such purposes;
provided
,
however
, that the Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served, and, subject to any laws or regulations applicable thereto, an office or agency outside of the United States where Notes may be presented and surrendered for payment;
provided
,
further
, that no paying agent
shall be appointed in a jurisdiction which subjects payments on the Notes to withholding tax. The Issuer shall give prompt written notice to the Trustee, the Note Administrator, the Rating Agencies and the Noteholders of the appointment or
termination of any such agent and of the location and any change in the location of any such office or agency.
If at any time the Issuer shall fail to maintain any such required office or agency in the Borough of Manhattan, The City of New
York, or outside the United States, or shall fail to furnish the Trustee and the Note Administrator with the address thereof, presentations and surrenders may be made (subject to the limitations described in the preceding paragraph) at and
notices and demands may be served on the Issuer and Co-Issuer and Notes may be presented and surrendered for payment to the appropriate Paying Agent at its main office and the Issuer and the Co-Issuer hereby appoint the same as their agent to
receive such respective presentations, surrenders, notices and demands.
Section 7.3
Amounts for Note Payments to be Held in Trust
.
(a)
All payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the Payment Account shall be made on behalf of the Issuer and the Co-Issuer by the Note Administrator or a Paying Agent (in each case, from and to the extent of available
funds in the Payment Account and subject to the Priority of Payments) with respect to payments on the Notes.
When the Paying Agent is not also the Notes Registrar, the Issuer and the Co-Issuer shall furnish, or cause the Notes Registrar to
furnish, no later than the fifth calendar day after each Record Date a list, if necessary, in such form as such Paying Agent may reasonably request, of the names and addresses of the Holders of Notes and of the certificate numbers of individual
Notes held by each such Holder together with wiring instructions, contact information, and such other information reasonably required by the paying agent.
Whenever the Paying Agent is not also the Note Administrator, the Issuer, the Co-Issuer, and such Paying Agent shall, on or before
the Business Day next preceding each Payment Date or Redemption Date, as the case may be, direct the Note Administrator to deposit on such Payment Date with such Paying Agent, if necessary, an aggregate sum sufficient to pay the amounts then
becoming due pursuant to the terms of this Indenture (to the extent funds are then available for such purpose in the Payment Account, and subject to the Priority of Payments), such sum to be held for the benefit of the Persons entitled thereto
and (unless such Paying Agent is the Note Administrator) the Issuer and the Co-Issuer shall promptly notify the Note Administrator of its action or failure so to act. Any amounts deposited with a Paying Agent (other than the Note
Administrator) in excess of an amount sufficient to pay the amounts then becoming due on the Notes with respect to which such deposit was made shall be paid over by such Paying Agent to the Note Administrator for application in accordance with
Article 11
. Any such Paying Agent shall be deemed to agree by assuming such role not to cause the filing of a petition in bankruptcy against the Issuer, the Co-Issuer
or any Permitted Subsidiary for the non-payment to the Paying Agent of any amounts payable thereto until at least one year and one day (or, if longer, the applicable preference period then in effect) after the payment in full of all Notes
issued under this Indenture.
The initial Paying Agent shall be as set forth in
Section 7.2
.
Any additional or successor Paying Agents shall be appointed by Issuer Order of the
Issuer and Issuer Order of the Co-Issuer and at the sole cost and expense (including such Paying Agent’s fee) of the Issuer and the Co‑Issuer, with written notice thereof to the Note Administrator;
provided
,
however
, that so long as any
Class of the Notes are rated by a Rating Agency and with respect to any additional or successor Paying Agent for the Notes, either (i) such Paying Agent has a long-term unsecured debt rating of “Aa3” or higher by Moody’s or (ii) each of the
Rating Agencies confirms that employing such Paying Agent shall not adversely affect the then-current ratings of the Notes. In the event that such successor Paying Agent ceases to have a long-term debt rating of “Aa3” or higher by Moody’s, the
Issuer and the Co-Issuer shall promptly remove such Paying Agent and appoint a successor Paying Agent. The Issuer and the Co-Issuer shall not appoint any Paying Agent that is not, at the time of such appointment, a depository institution or
trust company subject to supervision and examination by federal and/or state and/or national banking authorities. The Issuer and the Co-Issuer shall cause the Paying Agent other than the Note Administrator to execute and deliver to the Note
Administrator an instrument in which such Paying Agent shall agree with the Note Administrator (and if the Note Administrator acts as Paying Agent, it hereby so agrees), subject to the provisions of this
Section 7.3
, that such Paying Agent will
:
(i)
allocate
all sums received for payment to the Holders of Notes in accordance with the terms of this Indenture;
(ii)
hold all
sums held by it for the payment of amounts due with respect to the Notes for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons
as herein provided;
(iii)
if such
Paying Agent is not the Note Administrator, immediately resign as a Paying Agent and forthwith pay to the Note Administrator all sums held by it for the payment of Notes if at any time it ceases to satisfy the standards set forth above required
to be met by a Paying Agent at the time of its appointment;
(iv)
if such
Paying Agent is not the Note Administrator, immediately give the Note Administrator notice of any Default by the Issuer or the Co-Issuer (or any other obligor upon the Notes) in the making of any payment required to be made; and
(v)
if such
Paying Agent is not the Note Administrator at any time during the continuance of any such Default, upon the written request of the Note Administrator, forthwith pay to the Note Administrator all sums so held by such Paying Agent.
The Issuer or the Co-Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Issuer Order direct the Paying Agent to pay, to the Note Administrator all sums held by the Issuer or the Co-Issuer or held by the Paying Agent for payment of the Notes, such sums to be held by the Note
Administrator in trust for the same Noteholders as those upon which such sums were held by the Issuer, the Co-Issuer or the Paying Agent; and, upon such payment by the Paying Agent to the Note Administrator, the Paying Agent shall be released
from all further liability with respect to such amounts.
Except as otherwise required by applicable law, any amounts deposited with the Note Administrator in trust or deposited with the
Paying Agent for the payment of the principal of or interest on any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Issuer on request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for payment of such amounts and all liability of the Note Administrator or the Paying Agent with respect to such amounts (but only to the extent of the amounts so paid to the
Issuer or the Co-Issuer, as applicable) shall thereupon cease. The Note Administrator or the Paying Agent, before being required to make any such release of payment, may, but shall not be required to, adopt and employ, at the expense of the
Issuer or the Co-Issuer, as the case may be, any reasonable means of notification of such release of payment, including, but not limited to, mailing notice of such release to Holders whose Notes have been called but have not been surrendered
for redemption or whose right to or interest in amounts due and payable but not claimed is determinable from the records of the Paying Agent, at the last address of record of each such Holder.
Section 7.4
Existence of the Issuer and Co-Issuer
.
(a)
So long as any Note is Outstanding, the Issuer
shall, to the maximum extent permitted by applicable law, maintain in full force and effect its existence and rights as an exempted company incorporated with limited liability under the laws of the Cayman Islands and shall obtain and preserve
its qualification to do business as a foreign limited liability company in each jurisdiction in which such qualifications are or shall be necessary to protect the validity and enforceability of this Indenture, the Notes or any of the
Collateral;
provided
that the Issuer shall be entitled to change its jurisdiction of registration from the Cayman Islands to any other jurisdiction reasonably
selected by the Issuer so long as (i) such change is not disadvantageous in any material respect to the Holders of the Notes or the Preferred Shares, (ii) it delivers written notice of such change to the Note Administrator for delivery to the
Holders of the Notes or Preferred Shares, the Preferred Share Paying Agent and the Rating Agencies and (iii) on or prior to the fifteenth (15th) Business Day following delivery of such notice by the Note Administrator to the Noteholders, the
Note Administrator shall not have received written notice from a Majority of the Controlling Class or a Majority of Preferred Shareholders objecting to such change. So long as any Rated Notes are Outstanding, the Issuer will maintain at all
times at least one director who is Independent of the Collateral Manager and its Affiliates.
(b)
So long as any Note is Outstanding, the Co-Issuer
shall maintain in full force and effect its existence and rights as a limited liability company organized under the laws of Delaware and shall obtain and preserve its qualification to do business as a foreign limited liability company in each
jurisdiction in which such qualifications are or shall be necessary to protect the validity and enforceability of this Indenture or the Notes;
provided
,
however
, that the Co-Issuer shall be entitled to change its jurisdiction of
formation from Delaware to any other jurisdiction reasonably selected by the Co-Issuer so long as (i) such change is not disadvantageous in any material respect to the Holders of the Notes, (ii) it delivers written notice of such change to the
Note Administrator for delivery to the Holders of the Notes and the Rating Agencies and (iii) on or prior to the fifteenth (15th) Business Day following such delivery of such notice by the Note Administrator to the Noteholders, the Note
Administrator shall not have received written notice from a Majority of the Controlling Class objecting to such change. So long as any Rated Notes are Outstanding, the Co‑Issuer will maintain at all times at least one director who is
Independent of the Collateral Manager and its Affiliates.
(c)
So long as any Note is Outstanding, the Issuer
shall ensure that all corporate or other formalities regarding its existence are followed (including correcting any known misunderstanding regarding its separate existence). So long as any Note is Outstanding, the Issuer shall not take any
action or conduct its affairs in a manner that is likely to result in its separate existence being ignored or its Collateral and liabilities being substantively consolidated with any other Person in a bankruptcy, reorganization or other
insolvency proceeding. So long as any Note is Outstanding, the Issuer shall maintain and implement administrative and operating procedures reasonably necessary in the performance of the Issuer’s obligations hereunder, and the Issuer shall at
all times keep and maintain, or cause to be kept and maintained, separate books, records, accounts and other information customarily maintained for the performance of the Issuer’s obligations hereunder. Without limiting the foregoing, so long
as any Note is Outstanding, (i) the Issuer shall (A) pay its own liabilities only out of its own funds and (B) use separate stationery, invoices and checks, (C) hold itself out and identify itself as a separate and distinct entity under its own
name; (D) not commingle its assets with assets of any other Person; (E) hold title to its assets in its own name; (F) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person
and not have its assets listed on any financial statement of any other Person; provided, however, that the Issuer’s assets may be included in a consolidated financial statement of its Affiliate provided that (1) appropriate notation shall be
made on such consolidated financial statements to indicate the separateness of the Issuer from such Affiliate and to indicate that the Issuer’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or
any other Person and (2) such assets shall also be listed on the Issuer’s own balance sheet; (G) not guarantee any obligation of any Person, including any Affiliate or become obligated for the debts of any other Person or hold out its credit or
assets as being available to satisfy the obligations of others; (H) allocate fairly and reasonably any overhead expenses, including for shared office space; (I) not have its obligations guaranteed by any Affiliate; (J) not pledge its assets to
secure the obligations of any other Person; (K) correct any known misunderstanding regarding its separate identity; (L) maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; (M) not acquire any
securities of any Affiliate of the Issuer; and (N) not own any asset or property other than property arising out of the actions permitted to be performed under the Transaction Documents; and (ii) the Issuer shall not (A) have any subsidiaries
(other than a Permitted Subsidiary and, in the case of the Issuer, the Co-Issuer); (B) engage, directly or indirectly, in any business other than the actions required or permitted to be performed under the Transaction Documents; (C) engage in
any transaction with any shareholder that is not permitted under the terms of the Servicing Agreement; (D) pay dividends other than in accordance with the terms of this Indenture, its governing documents and the Preferred Share Paying Agency
Agreement; (E) conduct business under an assumed name (i.e., no “
DBAs
”); (F) incur, create or assume any indebtedness other than as expressly permitted under the
Transaction Documents; (G) enter into any contract or agreement with any of its Affiliates, except upon terms and conditions that are commercially reasonable and substantially similar to those available in arm’s-length transactions;
provided
that the foregoing shall not prohibit the Issuer from entering into the transactions contemplated by the Company Administration Agreement with the Company
Administrator, the Preferred Share Paying Agency Agreement with the Share Registrar and any other agreement contemplated or permitted by the Servicing Agreement or this Indenture; (H) make or permit to remain outstanding any loan or advance to,
or own or acquire any stock or securities of, any Person, except that the Issuer may invest in those investments permitted under the Transaction Documents and may make any advance required or expressly permitted to be made pursuant to any
provisions of the Transaction Documents and permit the same to remain outstanding in accordance with such provisions; (I) to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, asset sale or
transfer of ownership interests other than such activities as are expressly permitted pursuant to any provision of the Transaction Documents.
(d)
So long as any Note is Outstanding, the Co-Issuer
shall ensure that all limited liability company or other formalities regarding its existence are followed, as well as correcting any known misunderstanding regarding its separate existence. The Co-Issuer shall not take any action or conduct
its affairs in a manner, that is likely to result in its separate existence being ignored or its Collateral and liabilities being substantively consolidated with any other Person in a bankruptcy, reorganization or other insolvency proceeding.
The Co-Issuer shall maintain and implement administrative and operating procedures reasonably necessary in the performance of the Co-Issuer’s obligations hereunder, and the Co-Issuer shall at all times keep and maintain, or cause to be kept and
maintained, books, records, accounts and other information customarily maintained for the performance of the Co-Issuer’s obligations hereunder. Without limiting the foregoing, the Co-Issuer shall not (A) have any subsidiaries, (B) have any
employees (other than its managers), (C) join in any transaction with any member that is not permitted under the terms of the Servicing Agreement or this Indenture, (D) pay dividends other than in accordance with the terms of this Indenture,
(E) commingle its funds or Collateral with those of any other Person, or (F) enter into any contract or agreement with any of its Affiliates, except upon terms and conditions that are commercially reasonable and substantially similar to those
available in arm’s-length transactions with an unrelated party.
Section 7.5
Protection of Collateral
.
(a)
The Note Administrator, at the expense of the
Issuer, upon receipt of any Opinion of Counsel received pursuant to
Section 7.5(d)
shall execute and deliver all such Financing Statements, continuation statements,
instruments of further assurance and other instruments, and may take such other action as may be necessary or advisable or desirable to secure the rights and remedies of the Secured Parties hereunder and to:
(i)
Grant
more effectively all or any portion of the Collateral;
(ii)
maintain
or preserve the lien (and the priority thereof) of this Indenture or to carry out more effectively the purposes hereof;
(iii)
perfect,
publish notice of or protect the validity of any Grant made or to be made by this Indenture (including, without limitation, any and all actions necessary or desirable as a result of changes in law or regulations);
(iv)
cooperate
with the Servicer and the Special Servicer with respect to enforcement on any of the Collateral Interests or enforce on any other instruments or property included in the Collateral;
(v)
instruct
the Special Servicer to preserve and defend title to the Collateral Interests and preserve and defend title to the other Collateral and the rights of the Trustee, the Holders of the Notes in the Collateral against the claims of all persons and
parties; and
(vi)
pursuant
to
Sections 11.1(a)(i)(1)
and
11.1(a)(ii)(1)
, pay or cause to be
paid any and all taxes levied or assessed upon all or any part of the Collateral.
The Issuer hereby designates the Note Administrator as its agent and attorney-in-fact to execute any Financing Statement,
continuation statement or other instrument required pursuant to this
Section 7.5
. The Note Administrator agrees that it will from time to time execute and cause such
Financing Statements and continuation statements to be filed (it being understood that the Note Administrator shall be entitled to rely upon an Opinion of Counsel described in
Section
7.5(d)
, at the expense of the Issuer, as to the need to file such Financing Statements and continuation statements, the dates by which such filings are required to be made and the jurisdictions in which such filings are required
to be made).
(b)
Neither the Trustee nor the Note Administrator
shall (except in accordance with
Section 10.12(a)
,
(b)
or
(c)
and except for payments, deliveries and distributions otherwise expressly permitted under this Indenture) cause or permit the Custodial Account or the Custodian to be located in a different
jurisdiction from the jurisdiction in which the Custodian was located on the Closing Date, unless the Trustee or the Note Administrator, as applicable, shall have first received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will continue to be maintained after giving effect to such action or actions.
(c)
The Issuer shall (i) pay or cause to be paid
taxes, if any, levied on account of the beneficial ownership by the Issuer of any Collateral that secure the Notes and timely file all tax returns and information statements as required, (ii) take all actions necessary or advisable to prevent
the Issuer from becoming subject to any withholding or other taxes or assessments and to allow the Issuer to comply with FATCA, and (iii) if required to prevent the withholding or imposition of United States income tax, deliver or cause to be
delivered a United States IRS Form W‑9 (or the applicable IRS Form W‑8, if appropriate) or successor applicable form, to each borrower, counterparty or paying agent with respect to (as applicable) an item included in the Collateral at the time
such item is purchased or entered into and thereafter prior to the expiration or obsolescence of such form.
(d)
For so long as the Notes are Outstanding, on or
about June 2023 and every 60 months thereafter, the Issuer (or the Collateral Manager on its behalf) shall deliver to the Trustee and the Note Administrator, for the benefit of the Trustee, the Collateral Manager, the Note Administrator and the
Rating Agencies, at the expense of the Issuer, an Opinion of Counsel stating what is required, in the opinion of such counsel, as of the date of such opinion, to maintain the lien and security interest created by this Indenture with respect to
the Collateral, and confirming the matters set forth in the Opinion of Counsel, furnished pursuant to
Section 3.1(d)
, with regard to the perfection and priority of
such security interest (and such Opinion of Counsel may likewise be subject to qualifications and assumptions similar to those set forth in the Opinion of Counsel delivered pursuant to
Section 3.1(d)
).
Section 7.6
Notice of Any Amendments
.
Each of the Issuer and the Co-Issuer shall give notice to the 17g‑5 Information Provider of, and satisfy the Rating Agency Condition
with respect to, any amendments to its Governing Documents.
Section 7.7
Performance of Obligations
.
(a)
Each of the Issuer and the
Co-Issuer shall not take any action, and will use commercially reasonable efforts not to permit any action to be taken by others, that would release any Person from any of such Person’s covenants or obligations under any Instrument included in
the Collateral, except in the case of enforcement action taken with respect to any Defaulted Collateral Interest in accordance with the provisions hereof and as otherwise required hereby.
(b)
The Issuer or the Co-Issuer may, with the prior
written consent of the Majority of the Notes (or if there are no Notes Outstanding, a Majority of Preferred Shareholders), contract with other Persons, including the Servicer, the Special Servicer, the Note Administrator, the Collateral Manager
or the Trustee, for the performance of actions and obligations to be performed by the Issuer or the Co-Issuer, as the case may be, hereunder by such Persons and the performance of the actions and other obligations with respect to the Collateral
of the nature set forth in the Indenture. Notwithstanding any such arrangement, the Issuer or the Co-Issuer, as the case may be, shall remain primarily liable with respect thereto. In the event of such contract, the performance of such
actions and obligations by such Persons shall be deemed to be performance of such actions and obligations by the Issuer or the Co-Issuer; and the Issuer or the Co-Issuer shall punctually perform, and use commercially reasonable efforts to cause
the Servicer, the Special Servicer, the Collateral Manager or such other Person to perform, all of their obligations and agreements contained in the Indenture or such other agreement.
(c)
Unless the Rating Agency Condition is satisfied
with respect thereto, the Issuer shall maintain the Servicing Agreement in full force and effect so long as any Notes remain Outstanding and shall not terminate the Servicing Agreement with respect to any Collateral Interest except upon the
sale or other liquidation of such Collateral Interest in accordance with the terms and conditions of this Indenture.
(d)
If the Co-Issuers receive a notice from the
Rating Agencies stating that they are not in compliance with Rule 17g-5, the Co-Issuers shall take such action as mutually agreed between the Co-Issuers and the Rating Agencies in order to comply with Rule 17g-5.
Section 7.8
Negative Covenants
.
(a)
The Issuer and the Co-Issuer shall not:
(i)
sell,
assign, participate, transfer, exchange or otherwise dispose of, or pledge, mortgage, hypothecate or otherwise encumber (or permit such to occur or suffer such to exist), any part of the Collateral, except as otherwise expressly permitted by
this Indenture or the Servicing Agreement;
(ii)
claim
any credit on, make any deduction from, or dispute the enforceability of, the payment of the principal or interest payable in respect of the Notes (other than amounts required to be paid, deducted or withheld in accordance with any applicable
law or regulation of any governmental authority) or assert any claim against any present or future Noteholder by reason of the payment of any taxes levied or assessed upon any part of the Collateral;
(iii)
(A)
incur or assume or guarantee any indebtedness, other than the Notes and this Indenture and the transactions contemplated hereby; (B) issue any additional class of securities, other than the Notes, the Preferred Shares, the ordinary shares of
the Issuer and the limited liability company membership interests of the Co-Issuer; or (C) issue any additional shares of stock, other than the ordinary shares of the Issuer and the Preferred Shares;
(iv)
(A)
permit the validity or effectiveness of this Indenture or any Grant hereunder to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to this Indenture or the Notes, except as may be expressly permitted hereby; (B) permit any lien, charge, adverse claim, security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden the Collateral or any part thereof, any interest therein or the proceeds thereof, except as may be expressly permitted hereby; or (C) take any action that would permit
the lien of this Indenture not to constitute a valid first priority security interest in the Collateral, except as may be expressly permitted hereby;
(v)
amend the
Servicing Agreement, except pursuant to the terms thereof;
(vi)
amend the
Preferred Share Paying Agency Agreement, except pursuant to the terms thereof;
(vii)
to the
maximum extent permitted by applicable law, dissolve or liquidate in whole or in part, except as permitted hereunder;
(viii)
make or
incur any capital expenditures, except as reasonably required to perform its functions in accordance with the terms of this Indenture and, in the case of the Issuer, the Preferred Share Paying Agency Agreement;
(ix)
become
liable in any way, whether directly or by assignment or as a guarantor or other surety, for the obligations of the lessee under any lease, hire any employees or pay any dividends to its shareholders, except with respect to the Preferred Shares
in accordance with the Priority of Payments;
(x)
maintain
any bank accounts other than the Accounts and the bank account in the Cayman Islands in which (
inter alia
) the proceeds of the Issuer’s issued
share capital and the transaction fees paid to the Issuer for agreeing to issue the Securities will be kept;
(xi)
conduct
business under an assumed name, or change its name without first delivering at least 30 days’ prior written notice to the Trustee, the Note Administrator, the Noteholders and the Rating Agencies and an Opinion of Counsel to the effect that such
name change will not adversely affect the security interest hereunder of the Trustee or the Secured Parties;
(xii)
take any
action that would result in it failing to qualify as a Qualified REIT Subsidiary or other disregarded entity of KREF Sub-REIT for U.S. federal income tax purposes (including, but not limited to, an election to treat the Issuer as a “taxable
REIT subsidiary,” as defined in Section 856(l) of the Code), unless (A) based on an Opinion of Counsel of Dechert LLP, Hunton Andrews Kurth LLP or another nationally-recognized tax counsel experienced in such matters, the Issuer will be treated
as a Qualified REIT Subsidiary or other disregarded entity of a REIT other than KREF Sub-REIT, or (B) based on an Opinion of Counsel of Dechert LLP, Hunton Andrews Kurth LLP or another nationally-recognized tax counsel experienced in such
matters, the Issuer will be treated as a foreign corporation that is not engaged in a trade or business within the United States for U.S. federal income tax purposes;
(xiii)
except for
any agreements involving the purchase and sale of Collateral Interests having customary purchase or sale terms and documented with customary loan trading documentation, enter into any agreements unless such agreements contain “non-petition” and
“limited recourse” provisions; or
(xiv)
amend
their respective organizational documents without satisfaction of the Rating Agency Condition in connection therewith.
(b)
Neither the Issuer nor the Trustee shall sell,
transfer, exchange or otherwise dispose of Collateral, or enter into or engage in any business with respect to any part of the Collateral, except as expressly permitted or required by this Indenture or the Servicing Agreement.
(c)
The Co-Issuer shall not invest any of its
Collateral in “securities” (as such term is defined in the 1940 Act) and shall keep all of the Co-Issuer’s Collateral in Cash.
(d)
For so long as any of the Notes are
Outstanding, the Co-Issuer shall not issue any limited liability company membership interests of the Co-Issuer to any Person other than KREF Sub-REIT or a wholly-owned subsidiary of KREF Sub-REIT.
(e)
The Issuer shall not enter into any material new
agreements (other than any Collateral Interest Purchase Agreement or other agreement contemplated by this Indenture) (including, without limitation, in connection with the sale of Collateral by the Issuer) without the prior written consent of
the Holders of at least a Majority of the Notes (or if there are no Notes Outstanding, a Majority of Preferred Shareholders) and shall provide notice of all new agreements (other than any Collateral Interest or other agreement specifically
contemplated by this Indenture) to the Holders of the Notes. The foregoing notwithstanding, the Issuer may agree to any material new agreements;
provided
that (i)
the Issuer (or the Collateral Manager on its behalf) determines that such new agreements would not, upon becoming effective, adversely affect the rights or interests of any Class or Classes of Noteholders and (ii) subject to satisfaction of the
Rating Agency Condition.
(f)
As long as any Offered Note is Outstanding, the
Retention Holder may not transfer (whether by means of actual transfer or a transfer of beneficial ownership for U.S. federal income tax purposes), pledge or hypothecate any of the Preferred Shares or ordinary shares of the Issuer to any Person
(except to an affiliate that is wholly-owned by KREF Sub-REIT and is disregarded for U.S. federal income tax purposes) unless the Issuer receives an opinion of Dechert LLP, Hunton Andrews Kurth LLP or another nationally recognized tax counsel
experienced in such matters that such transfer, pledge or hypothecation will not cause the Issuer to be treated as a foreign corporation engaged in a trade or business within the United States for U.S. federal income tax purposes or otherwise
to become subject to U.S. federal income tax on a net basis, which opinion may be conditioned on compliance with certain restrictions on the investment or other activities of the Issuer and the Collateral Manager on behalf of the Issuer (such
opinion, a “
No Entity-Level Tax Opinion
”) (or has previously received a No Trade or Business Opinion) which opinion may be conditioned, in each case, on compliance
with certain restrictions on the investment or other activities of the Issuer and the Servicer on behalf of the Issuer.
(g)
Any financing arrangement pursuant to
Section 7.8(f)
shall prohibit any further transfer (whether by means of actual transfer or a transfer of beneficial ownership for U.S. federal income tax purposes) of the
Retained Securities and Issuer Ordinary Shares, including a transfer in connection with any exercise of remedies under such financing unless the Issuer receives a No Entity-Level Tax Opinion.
Section 7.9
Statement as to Compliance
.
On or before January 31 in each calendar year, commencing in 2019 or immediately if there has been a Default in the fulfillment of
an obligation under this Indenture, the Issuer shall deliver to the Trustee, the Note Administrator and the 17g-5 Information Provider an Officer’s Certificate given on behalf of the Issuer and without personal liability stating, as to each
signer thereof, that, since the date of the last certificate or, in the case of the first certificate, the Closing Date, to the best of the knowledge, information and belief of such Officer, the Issuer has fulfilled all of its obligations under
this Indenture or, if there has been a Default in the fulfillment of any such obligation, specifying each such Default known to them and the nature and status thereof.
Section 7.10
Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms
.
(a)
The Issuer shall not consolidate or merge with
or into any other Person or transfer or convey all or substantially all of its Collateral to any Person, unless permitted by the Governing Documents and Cayman Islands law and unless:
(i)
the Issuer
shall be the surviving entity, or the Person (if other than the Issuer) formed by such consolidation or into which the Issuer is merged or to which all or substantially all of the Collateral of the Issuer are transferred shall be an entity
incorporated or formed and existing under the laws of the Cayman Islands or such other jurisdiction approved by a Majority of each and every Class of the Notes (each voting as a separate Class), and a Majority of Preferred Shareholders;
provided
that no such approval shall be required in connection with any such transaction undertaken solely to effect a change in the jurisdiction of registration
pursuant to
Section 7.4
hereof; and
provided
,
further
, that the surviving entity shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, the Note Administrator, and each Noteholder, the due and punctual payment of the principal of and interest on all Notes and other amounts payable hereunder and under the Servicing
Agreement and the performance and observance of every covenant of this Indenture and the Servicing Agreement on the part of the Issuer to be performed or observed, all as provided herein;
(ii)
the
Rating Agency Condition shall be satisfied;
(iii)
if the
Issuer is not the surviving entity, the Person formed by such consolidation or into which the Issuer is merged or to which all or substantially all of the Collateral of the Issuer are transferred shall have agreed with the Trustee and the Note
Administrator (A) to observe the same legal requirements for the recognition of such formed or surviving entity as a legal entity separate and apart from any of its Affiliates as are applicable to the Issuer with respect to its Affiliates and
(B) not to consolidate or merge with or into any other Person or transfer or convey all or substantially all of the Collateral or all or substantially all of its Collateral to any other Person except in accordance with the provisions of this
Section 7.10
, unless in connection with a sale of the Collateral pursuant to
Article
5
,
Article 9
or
Article 12
;
(iv)
if the
Issuer is not the surviving entity, the Person formed by such consolidation or into which the Issuer is merged or to which all or substantially all of the Collateral of the Issuer are transferred shall have delivered to the Trustee, the Note
Administrator, the Servicer, the Special Servicer, the Collateral Manager and the Rating Agencies an Officer’s Certificate and an Opinion of Counsel each stating that such Person is duly organized, validly existing and in good standing in the
jurisdiction in which such Person is organized; that such Person has sufficient power and authority to assume the obligations set forth in
Section 7.10(a)(i)
above and to execute and deliver an indenture supplemental hereto for the purpose of assuming such obligations; that such Person has duly authorized the execution, delivery and performance of an indenture supplemental hereto for the purpose of
assuming such obligations and that such supplemental indenture is a valid, legal and binding obligation of such Person, enforceable in accordance with its terms, subject only to bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the enforcement of creditors’ rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); that, immediately following the event which causes such
Person to become the successor to the Issuer, (A) such Person has good and marketable title, free and clear of any lien, security interest or charge, other than the lien and security interest of this Indenture, to the Collateral securing, in
the case of a consolidation or merger of the Issuer, all of the Notes or, in the case of any transfer or conveyance of the Collateral securing any of the Notes, such Notes, (B) the Trustee continues to have a valid perfected first priority
security interest in the Collateral securing, in the case of a consolidation or merger of the Issuer, all of the Notes, or, in the case of any transfer or conveyance of the Collateral securing any of the Notes, such Notes and (C) such other
matters as the Trustee, the Note Administrator, the Servicer, the Special Servicer, the Collateral Manager or any Noteholder may reasonably require;
(v)
immediately
after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;
(vi)
the
Issuer shall have delivered to the Trustee, the Note Administrator, the Preferred Share Paying Agent and each Noteholder, an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger, transfer or conveyance
and such supplemental indenture comply with this
Article 7
and that all conditions precedent in this
Article 7
provided for relating to such transaction have been complied with;
(vii)
the
Issuer has received an opinion from Dechert LLP, Hunton Andrews Kurth LLP or an opinion of other nationally recognized U.S. tax counsel experienced in such matters that the Issuer or the Person referred to in clause (a) either will (a) be
treated as a Qualified REIT Subsidiary or (b) be treated as a foreign corporation not engaged in a trade or business within the United States for U.S. federal income tax purposes or otherwise not subject to U.S. federal income tax on a net
basis;
(viii)
the Issuer
has received an opinion from Dechert LLP, Hunton Andrews Kurth LLP or an opinion of other nationally recognized U.S. tax counsel experienced in such matters that such action will not adversely affect the tax treatment of the Noteholders as
described in the Offering Memorandum under the heading “Certain U.S. Federal Income Tax Considerations” to any material extent; and
(ix)
after
giving effect to such transaction, the Issuer shall not be required to register as an investment company under the 1940 Act.
(b)
The Co-Issuer shall not consolidate or merge
with or into any other Person or transfer or convey all or substantially all of its Collateral to any Person, unless no Notes remain Outstanding or:
(i)
the
Co-Issuer shall be the surviving entity, or the Person (if other than the Co-Issuer) formed by such consolidation or into which the Co-Issuer is merged or to which all or substantially all of the Collateral of the Co-Issuer are transferred
shall be a company organized and existing under the laws of Delaware or such other jurisdiction approved by a Majority of the Controlling Class;
provided
that no such approval shall be required in connection with any such transaction undertaken solely to effect a change in the jurisdiction of formation pursuant to
Section
7.4
; and
provided
,
further
, that the surviving entity shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the Note Administrator,
and each Noteholder, the due and punctual payment of the principal of and interest on all Notes and the performance and observance of every covenant of this Indenture on the part of the Co‑Issuer to be performed or observed, all as provided
herein;
(ii)
the
Rating Agency Condition has been satisfied;
(iii)
if the
Co-Issuer is not the surviving entity, the Person formed by such consolidation or into which the Co-Issuer is merged or to which all or substantially all of the Collateral of the Co-Issuer are transferred shall have agreed with the Trustee and
the Note Administrator (A) to observe the same legal requirements for the recognition of such formed or surviving entity as a legal entity separate and apart from any of its Affiliates as are applicable to the Co-Issuer with respect to its
Affiliates and (B) not to consolidate or merge with or into any other Person or transfer or convey all or substantially all of its Collateral to any other Person except in accordance with the provisions of this
Section 7.10
;
(iv)
if the
Co-Issuer is not the surviving entity, the Person formed by such consolidation or into which the Co-Issuer is merged or to which all or substantially all of the Collateral of the Co-Issuer are transferred shall have delivered to the Trustee,
the Note Administrator and the Rating Agencies an Officer’s Certificate and an Opinion of Counsel each stating that such Person is duly organized, validly existing and in good standing in the jurisdiction in which such Person is organized; that
such Person has sufficient power and authority to assume the obligations set forth in
Section 7.10(b)(i)
above and to execute and deliver an indenture
supplemental hereto for the purpose of assuming such obligations; that such Person has duly authorized the execution, delivery and performance of an indenture supplemental hereto for the purpose of assuming such obligations and that such
supplemental indenture is a valid, legal and binding obligation of such Person, enforceable in accordance with its terms, subject only to bankruptcy, reorganization, insolvency, moratorium and other laws affecting the enforcement of creditors’
rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); such other matters as the Trustee, the Note Administrator or any Noteholder may reasonably
require;
(v)
immediately
after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;
(vi)
the
Co-Issuer shall have delivered to the Trustee, the Note Administrator, the Preferred Share Paying Agent and each Noteholder an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger, transfer or conveyance
and such supplemental indenture comply with this
Article 7
and that all conditions precedent in this
Article 7
provided for relating to such transaction have been complied with and that no adverse tax consequences will result therefrom to the Holders of the Notes or the Preferred Shareholders; and
(vii)
after
giving effect to such transaction, the Co-Issuer shall not be required to register as an investment company under the 1940 Act.
Section 7.11
Successor Substituted
.
Upon any consolidation or merger, or transfer or conveyance of all or substantially all of the Collateral of the Issuer or the
Co-Issuer, in accordance with
Section 7.10
hereof, the Person formed by or surviving such consolidation or merger (if other than the Issuer or the Co-Issuer), or the
Person to which such consolidation, merger, transfer or conveyance is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer or the Co-Issuer, as the case may be, under this Indenture with the same
effect as if such Person had been named as the Issuer or the Co-Issuer, as the case may be, herein. In the event of any such consolidation, merger, transfer or conveyance, the Person named as the “Issuer” or the “Co-Issuer” in the first
paragraph of this Indenture or any successor which shall theretofore have become such in the manner prescribed in this
Article 7
may be dissolved, wound-up and
liquidated at any time thereafter, and such Person thereafter shall be released from its liabilities as obligor and maker on all the Notes and from its obligations under this Indenture.
Section 7.12
No Other Business
.
The Issuer shall not engage in any business or activity other than issuing and selling the Notes pursuant to this Indenture and any
supplements thereto, issuing its ordinary shares and issuing and selling the Preferred Shares in accordance with its Governing Documents, and acquiring, owning, holding, disposing of and pledging the Collateral in connection with the Notes and
such other activities which are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith. The Co-Issuer shall not engage in any business or activity other than issuing and selling the Notes
pursuant to this Indenture and any supplements thereto and such other activities which are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith.
Section 7.13
Reporting
.
At any time when the Issuer and/or the Co-Issuer is not subject to Section 13 or 15(d) of the Exchange Act and is not exempt from
reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder or beneficial owner of a Note, the Issuer and/or the Co-Issuer shall promptly furnish or cause to be furnished “Rule 144A Information” (as defined below)
to such Holder or beneficial owner, to a prospective purchaser of such Note designated by such Holder or beneficial owner or to the Note Administrator for delivery to such Holder or beneficial owner or a prospective purchaser designated by such
Holder or beneficial owner, as the case may be, in order to permit compliance by such Holder or beneficial owner with Rule 144A under the Securities Act in connection with the resale of such Note by such Holder or beneficial owner. “
Rule 144A Information
” shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). The Note
Administrator shall reasonably cooperate with the Issuer and/or the Co-Issuer in mailing or otherwise distributing (at the Issuer’s expense) to such Noteholders or prospective purchasers, at and pursuant to the Issuer’s and/or the Co-Issuer’s
written direction the foregoing materials prepared by or on behalf of the Issuer and/or the Co-Issuer;
provided
,
however
, that the Note Administrator shall be entitled to prepare and affix thereto or enclose therewith reasonable disclaimers
to the effect that such Rule 144A Information was not assembled by the Note Administrator, that the Note Administrator has not reviewed or verified the accuracy thereof, and that it makes no representation as to such accuracy or as to the
sufficiency of such information under the requirements of Rule 144A or for any other purpose.
Section 7.14
Calculation Agent
.
(a)
The Issuer and the Co-Issuer hereby agree that
for so long as any Notes remain Outstanding there shall at all times be an agent appointed to calculate LIBOR in respect of each Interest Accrual Period in accordance with the terms of
Schedule B
attached hereto (the “
Calculation Agent
”). The Issuer and the Co-Issuer initially have appointed the Note Administrator as
Calculation Agent for purposes of determining LIBOR for each Interest Accrual Period. The Calculation Agent may be removed by the Issuer at any time with cause, and upon no less than thirty (30) days’ notice without cause. The Calculation
Agent may resign at any time by giving written notice thereof to the Issuer, the Co-Issuer, the Collateral Manager, the Noteholders and the Rating Agencies. If the Calculation Agent is unable or unwilling to act as such or is removed by the
Issuer in respect of any Interest Accrual Period, the Issuer and the Co-Issuer shall promptly appoint as a replacement Calculation Agent a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar
market and which does not control or is not controlled by or under common control with the Issuer or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed. If no successor Calculation
Agent shall have been appointed within 30 days after giving of a notice of resignation, the resigning Calculation Agent or a Majority of the Holders of the Notes, on behalf of himself and all others similarly situated, may petition a court of
competent jurisdiction, at the Issuer’s expense, for the appointment of a successor Calculation Agent.
(b)
The Calculation Agent shall be required to
agree that, as soon as practicable after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in
Schedule B
attached hereto), but in no event later
than 11:00 a.m. (New York time) on the London Banking Day immediately following each LIBOR Determination Date, the Calculation Agent shall calculate LIBOR (or in the event that the Notes convert to the Substitute Index, the Substitute Index, as
applicable) for the next Interest Accrual Period and will communicate such information to the Note Administrator, who shall include such calculation on the next Monthly Report following such Libor Determination Date. The Calculation Agent
shall notify the Issuer, the Co-Issuer and the Collateral Manager before 5:00 p.m. (New York time) on each LIBOR Determination Date if it has not determined and is not in the process of determining LIBOR and the Interest Distribution Amounts
for each Class of Notes, together with the reasons therefor. The determination of the Note Interest Rates and the related Interest Distribution Amounts, respectively, by the Calculation Agent shall, absent manifest error, be final and binding
on all parties.
Section 7.15
REIT Status
.
(a)
KREF Holdings shall not take any action that
results in the Issuer failing to qualify as a Qualified REIT Subsidiary or other disregarded entity of KREF Sub-REIT for U.S. federal income tax purposes, unless (A) based on an Opinion of Counsel, the Issuer will be treated as a Qualified REIT
Subsidiary or other disregarded entity of a REIT other than KREF Sub-REIT, or (B) based on an Opinion of Counsel, the Issuer will be treated as a foreign corporation that is not engaged in a trade or business within the United States for U.S.
federal income tax purposes.
(b)
Without limiting the generality of
Section
7.16
, if the Issuer is no longer a Qualified REIT Subsidiary or other disregarded entity of a REIT, prior to the time that:
(i)
any
Collateral Interest would cause the Issuer to be treated as engaged in a trade or business within the United States for U.S. federal income tax purposes or to become subject to U.S. federal income tax on a net basis,
(ii)
restructuring
of a Collateral Interest that could cause the Issuer to be treated as engaged in a trade or business within the United States for U.S. federal income tax purposes or to become subject to U.S. federal income tax on a net basis,
(iii)
the
Issuer would acquire the real property underlying any Collateral Interest pursuant to a foreclosure or deed-in-lieu of foreclosure, or
(iv)
any Real
Estate Loan is modified in such a manner that could cause the Issuer to be treated as engaged in a trade or business within the United States for U.S. federal income tax purposes or to become subject to U.S. federal income tax on a net basis,
the Issuer will either (x) organize one or more Permitted Subsidiaries and contribute the subject property to such Permitted Subsidiary, (y) contribute
such Collateral Interest to an existing Permitted Subsidiary, or (z) sell such Collateral Interest in accordance with Section 12.1.
(c)
At the direction of 100% of the Preferred
Shareholders (including any party that will become the beneficial owner of 100% of the Preferred Shares because of a default under any financing arrangement for which the Preferred Shares are security), the Issuer may operate as a foreign
corporation that is not engaged in a trade or business within the United States for U.S. federal income tax purposes,
provided
that (i) the Issuer receives a No
Entity-Level Tax Opinion; (ii) this Indenture and the Servicing Agreement, as applicable, are amended or supplemented (A) to adopt written tax guidelines governing the Issuer’s origination, acquisition, disposition and modification of Real
Estate Loans designed to prevent the Issuer from being treated as engaged in a trade or business within the United States for U.S. federal income tax purposes, (B) to form one or more “grantor trusts” to the hold Real Estate Loans and (C) to
implement any other provisions deemed necessary (as determined by the tax counsel providing the opinion) to prevent the Issuer from being treated as a foreign corporation engaged in a trade or business within the United States for U.S. federal
income tax purposes or otherwise becoming subject to U.S. federal withholding tax or U.S. federal income tax on a net basis; (iii) the Preferred Shareholder shall pay the administrative and other costs related to the Issuer converting from a
Qualified REIT Subsidiary to operating as a foreign corporation, including the costs of any opinions and amendments; and (iv) the Preferred Shareholder agrees to pay any ongoing expenses related to the Issuer’s status as a foreign corporation
not engaged in a trade or business within the United States for U.S. federal income tax purposes, including but not limited to U.S. federal income tax filings required by the Issuer, the “grantor trusts” or any taxable subsidiaries or required
under FATCA.
Section 7.16
Permitted Subsidiaries
.
Notwithstanding any other provision of this Indenture, the Collateral Manager on behalf of the Issuer shall, following delivery of
an Issuer Order to the parties hereto, be permitted to sell to a Permitted Subsidiary at any time any Sensitive Asset for consideration consisting entirely of the equity interests of such Permitted Subsidiary (or for an increase in the value of
equity interests already owned). Such Issuer Order shall certify that the sale of a Sensitive Asset is being made in accordance with satisfaction of all requirements of this Indenture. The Custodian shall, upon receipt of a Request for
Release with respect to a Sensitive Asset, release such Sensitive Asset and shall deliver such Sensitive Asset as specified in such Request for Release. The following provisions shall apply to all Sensitive Asset and Permitted Subsidiaries:
(a)
For all purposes under this Indenture, any
Sensitive Asset transferred to a Permitted Subsidiary shall be treated as if it were an asset owned directly by the Issuer.
(b)
Any distribution of Cash by a Permitted
Subsidiary to the Issuer shall be characterized as Interest Proceeds or Principal Proceeds to the same extent that such Cash would have been characterized as Interest Proceeds or Principal Proceeds if received directly by the Issuer and each
Permitted Subsidiary shall cause all proceeds of and collections on each Sensitive Asset owned by such Permitted Subsidiary to be deposited into the Payment Account.
(c)
To the extent applicable, the Issuer shall form
one or more Securities Accounts with the Securities Intermediary for the benefit of each Permitted Subsidiary and shall, to the extent applicable, cause Sensitive Asset to be credited to such Securities Accounts.
(d)
Notwithstanding the complete and absolute
transfer of a Sensitive Asset to a Permitted Subsidiary, the ownership interests of the Issuer in a Permitted Subsidiary or any property distributed to the Issuer by a Permitted Subsidiary shall be treated as a continuation of its ownership of
the Sensitive Asset that was transferred to such Permitted Subsidiary (and shall be treated as having the same characteristics as such Sensitive Asset).
(e)
If the Special Servicer on behalf of the
Trustee, or any other authorized party takes any action under this Indenture to sell, liquidate or dispose of all or substantially all of the Collateral, the Issuer (or the Collateral Manager on its behalf) shall cause each Permitted Subsidiary
to sell each Sensitive Asset and all other Collateral held by such Permitted Subsidiary and distribute the proceeds of such sale, net of any amounts necessary to satisfy any related expenses and tax liabilities, to the Issuer in exchange for
the equity interest in such Permitted Subsidiary held by the Issuer.
Section 7.17
Repurchase Requests
.
If the Issuer, the Trustee, the Note Administrator, the Collateral Manager, the Servicer or the Special Servicer receives any
request or demand that a Collateral Interest be repurchased or replaced arising from any Material Breach of a representation or warranty made with respect to such Collateral Interest or any Material Document Defect (any such request or demand,
a “
Repurchase Request
”) or a withdrawal of a Repurchase Request from any Person other than the Servicer or Special Servicer, then the Collateral Manager (on behalf of
the Issuer), the Trustee or the Note Administrator, as applicable, shall promptly forward such notice of such Repurchase Request or withdrawal of a Repurchase Request, as the case may be, to the Servicer (if related to a performing Real Estate
Loan) or Special Servicer, and include the following statement in the related correspondence: “This is a “Repurchase Request/withdrawal of a Repurchase Request” under Section 3.19 of the Servicing Agreement relating to KREF 2018-FL1 Ltd. and
KREF 2018-FL1 LLC, requiring action from you as the “Repurchase Request Recipient” thereunder.” Upon receipt of such Repurchase Request or withdrawal of a Repurchase Request by the Collateral Manager, Servicer or Special Servicer pursuant to
the prior sentence, the Servicer or the Special Servicer, as applicable, shall be deemed to be the Repurchase Request Recipient in respect of such Repurchase Request or withdrawal of a Repurchase Request, as the case may be, and shall be
responsible for complying with the procedures set forth in Section 3.19 of the Servicing Agreement with respect to such Repurchase Request.
Section 7.18
Servicing of Real Estate Loans and Control of Servicing Decisions
.
The Real Estate Loans will be serviced by the Servicer or, with respect to Specially Serviced Loans, the Special Servicer, in each
case pursuant to the Servicing Agreement, subject to the consultation, consent and direction rights of the Collateral Manager, as set forth in the Servicing Agreement, subject to those conditions, restrictions or termination events expressly
provided therein. Nothing in this Indenture shall be interpreted to limit in any respect the rights of the Collateral Manager under the Servicing Agreement and none of the Issuer, Co-Issuer, Note Administrator and Trustee shall take any action
under the Indenture inconsistent with the Collateral Manager’s rights set forth under the Servicing Agreement.
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1
Supplemental Indentures Without Consent of Securityholders
.
(a)
Without the consent of the Holders of any Notes
or any Preferred Shareholders, and without satisfaction of the Rating Agency Condition, the Issuer, the Co-Issuer, when authorized by Board Resolutions of the Co-Issuers, the Trustee, the Advancing Agent and the Note Administrator, at any time
and from time to time subject to the requirement provided below in this
Section 8.1
, may enter into one or more indentures supplemental hereto, in form satisfactory
to the parties thereto, for any of the following purposes:
(i)
evidence
the succession of any Person to the Issuer or the Co-Issuer and the assumption by any such successor of the covenants of the Issuer or the Co-Issuer, as applicable, herein and in the Notes;
(ii)
add to
the covenants of the Issuer, the Co-Issuer, the Note Administrator, the Advancing Agent or the Trustee for the benefit of the Holders of the Notes or the Preferred Shareholders or to surrender any right or power herein conferred upon the Issuer
or the Co-Issuer, as applicable;
(iii)
convey,
transfer, assign, mortgage or pledge any property to or with the Trustee, or add to the conditions, limitations or restrictions on the authorized amount, terms and purposes of the issue, authentication and delivery of the Notes;
(iv)
evidence
and provide for the acceptance of appointment hereunder of a successor Trustee or a successor Note Administrator and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Sections 6.9
,
6.10
and
6.12
hereof;
(v)
correct
or amplify the description of any property at any time subject to the lien of this Indenture, or to better assure, convey and confirm unto the Trustee any property subject or required to be subject to the lien of this Indenture (including,
without limitation, any and all actions necessary or desirable as a result of changes in law or regulations) or to subject any additional property to the lien of this Indenture;
(vi)
modify
the restrictions on and procedures for resales and other transfers of Notes to reflect any changes in applicable law or regulation (or the interpretation thereof) or to enable the Issuer and the Co-Issuer to rely upon any exemption or exclusion
from registration under the Securities Act, the Exchange Act or the 1940 Act (including, without limitation, (A) to prevent any Class of Notes from being considered an “ownership interest” under the Volcker Rule or (B) to prevent the Issuer or
the Co-Issuer from being considered a “covered fund” under the Volcker Rule) or to remove restrictions on resale and transfer to the extent not required thereunder;
(vii)
accommodate
the issuance, if any, of Notes in global or book-entry form through the facilities of DTC or otherwise;
(viii)
take any
action commercially reasonably necessary or advisable as required for the Issuer to comply with the requirements of FATCA (including for Cayman FATCA Legislation); or to prevent the Issuer from failing to qualify as a Qualified REIT Subsidiary
or other disregarded entity of a REIT for U.S. federal income tax purposes or from otherwise being treated as a foreign corporation engaged in a trade or business within the United States for U.S. federal income tax purposes, or to prevent the
Issuer, the Holders of the Notes, the Holders of the Preferred Shares, or the Trustee from being subject to withholding or other taxes, fees or assessments or from otherwise being subject to U.S. federal, state, local or foreign income or
franchise tax on a net basis;
(ix)
amend or
supplement any provision of this Indenture to the extent necessary to maintain the then-current ratings assigned to the Notes;
(x)
accommodate
the settlement of the Notes in book-entry form through the facilities of DTC, Euroclear, Clearstream, Luxembourg or otherwise;
(xi)
authorize
the appointment of any listing agent, transfer agent, paying agent or additional registrar for any Class of Notes required or advisable in connection with the listing of any Class of Notes on any stock exchange, and otherwise to amend this
Indenture to incorporate any changes required or requested by any governmental authority, stock exchange authority, listing agent, transfer agent, paying agent or additional registrar for any Class of Notes in connection therewith;
(xii)
evidence
changes to applicable laws and regulations, including, without limitation, with the consent of the Sponsor and, in the case of the EU Risk Retention Laws, the Retention Holder, to modify, eliminate, or add to any of its provisions to address or
otherwise accommodate any changes to the U.S. Risk Retention Rules or the EU Risk Retention Laws (including such changes as may be required by the Securitization Regulation), as applicable
;
(xiii)
reduce
the minimum denominations required for transfer of the Notes;
(xiv)
modify the
provisions of this Indenture with respect to reimbursement of Nonrecoverable Interest Advances if (a) the Collateral Manager determines that the commercial mortgage securitization industry standard for such provisions has changed, in order to
conform to such industry standard and (b) such modification does not adversely affect the status of Issuer for U.S. federal income tax purposes, as evidenced by an Opinion of Counsel;
(xv)
modify
the procedures set forth in this Indenture relating to compliance with Rule 17g-5 of the Exchange Act;
provided
that the change would not materially increase the obligations of the Collateral Manager, the Note Administrator, the Trustee, any paying agent, the Servicer or the Special Servicer (in
each case, without such party’s consent) and would not adversely affect in any material respect the interests of any Noteholder or Holder of the Preferred Shares;
provided
,
further
, that the Collateral Manager must provide a copy of any such amendment to the 17g-5 Information Provider for posting to the Rule 17g-5 Website and
provide notice of any such amendment to the Rating Agencies
;
(xvi)
at the
direction of 100% of the holders of the Preferred Shares (including any party that shall become the beneficial owner of 100% of the Preferred Shares because of a default under any financing arrangement for which the Preferred Shares are
security), modify the provisions of this Indenture to adopt restrictions provided by tax counsel in order to prevent the Issuer from being treated as a foreign corporation that is engaged in a trade or business within the United States for U.S.
federal income tax purposes or otherwise become subject to U.S. federal withholding tax or U.S. federal income tax on a net basis;
(xvii)
make such
changes (including the removal and appointment of any listing agent, transfer agent, paying agent or other additional registrar in Ireland) as will be necessary or advisable in order for the Offered Notes to be or to remain listed on an
exchange, including The Irish Stock Exchange plc trading as Euronext Dublin, and otherwise to amend the Indenture to incorporate any changes required or requested by governmental authority, stock exchange authority, listing agent, transfer
agent, paying agent or additional registrar for the Notes in connection therewith; and
(xviii)
make any
change to any other provisions with respect to matters or questions arising under this Indenture;
provided
that the required action will not adversely
affect in any material respect the interests of any Noteholder not consenting thereto, as evidenced by (A) an Opinion of Counsel or (B) satisfaction of the Rating Agency Condition.
The Note Administrator and Trustee are each hereby authorized to join in the execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations which may be therein contained, but the Note Administrator and Trustee shall not be obligated to enter into any such supplemental indenture which affects the Note Administrator’s or Trustee’s own rights,
duties, liabilities or immunities under this Indenture or otherwise, except to the extent required by law.
(b)
Notwithstanding
Section 8.1(a)
or any other provision of this Indenture, without prior notice to, and without the consent of the Holders of any Notes or any Preferred
Shareholders, and without satisfaction of the Rating Agency Condition, the Issuer, the Co-Issuer, when authorized by Board Resolutions of the Co-Issuers, the Trustee, the Advancing Agent and the Note Administrator, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee and the Note Administrator, for any of the following purposes:
(i)
conform
this Indenture to the provisions described in the Offering Memorandum (or any supplement thereto); and
(ii)
to
correct any defect or ambiguity in this Indenture in order to address any manifest error, omission or mistake in any provision of this Indenture.
Additionally, at the direction of the Collateral Manager and without the consent of the Noteholders, the Issuer, the Co-Issuer, the
Note Administrator, the Advancing Agent and the Trustee shall enter into a supplemental indenture to provide for the Notes of each Class to bear interest based on an industry benchmark rate selected by the Collateral Manager and generally
accepted in the financial markets as the sole or predominant replacement benchmark to LIBOR (the “
Successor Benchmark Rate
”) plus a Successor Benchmark Spread
Adjustment from and after a Payment Date specified in such supplemental indenture;
provided
that no such supplemental indenture shall become effective unless the
Rating Agency Condition has been satisfied with respect thereto. In no event shall the Issuer, the Co-Issuer, the Note Administrator, the Advancing Agent or the Trustee be liable for entering into such supplemental indenture without the
affirmative consent of any Noteholders.
(c)
In the event that any or all restrictions and/or limitations under the Regulation RR or European Union laws or regulations relating to risk retention requirements in securitization transaction
are withdrawn, repealed or modified to be less restrictive on the Sponsor, at the request of the Sponsor and, in the case of the EU Risk Retention Laws, the Retention Holder, the Issuer, the Co-Issuer, the Trustee and the Note Administrator
agree to modify any corresponding terms of this Indenture in accordance with
Section 8.1(a)(xii)
to reflect any such withdrawal, repeal or modification.
Section 8.2
Supplemental Indentures with Consent of Securityholders
.
Except as set forth below, the Note Administrator, the Advancing Agent, the Trustee and the Co‑Issuers may enter into one or more
indentures supplemental hereto to add any provisions to, or change in any manner or eliminate any of the provisions of, this Indenture or modify in any manner the rights of the Holders of any Class of Notes or the Preferred Shares under this
Indenture only (x) with the written consent of the Holders of at least Majority in Aggregate Outstanding Amount of the Notes of each Class materially and adversely affected thereby (excluding any Notes owned by the Seller, the Collateral
Manager or any of their Affiliates) and the Holder of Preferred Shares if materially and adversely affected thereby, by Act of said Securityholders delivered to the Trustee, the Note Administrator, the Advancing Agent and the Co-Issuers, and
(y) subject to satisfaction of the Rating Agency Condition, notice of which may be in electronic form. The Note Administrator shall provide (x) fifteen (15) Business Days’ notice of such change to the Holders of each Class of Notes and the
Holder of the Preferred Shares, requesting notification by such Noteholders and Holders of the Preferred Shares if any such Noteholders or Holders of the Preferred Shares would be materially and adversely affected by the proposed supplemental
indenture and (y) following such initial fifteen (15) Business Day period, the Note Administrator shall provide an additional fifteen (15) Business Days’ notice to any holder of Notes or Preferred Shares that did not respond to the initial
notice. Unless the Note Administrator is notified (after giving such initial fifteen (15) Business Days’ notice and a second fifteen (15) Business Days’ notice, as applicable) by Holders of at least a Majority in Aggregate Outstanding Amount
of the Notes (excluding any Notes held by the Seller, the Collateral Manager or any of their Affiliates or by any accounts managed by them) of any Class that such Class of Notes or a Majority of Preferred Shareholders will be materially and
adversely affected by the proposed supplemental indenture (and upon receipt of an Officer’s Certificate of the Collateral Manager), the interests of such Class and the interests of the Preferred Shares will be deemed not to be materially and
adversely affected by such
proposed supplemental indenture and the Trustee will be permitted to enter into such supplemental indenture. Such determinations shall be
conclusive and binding on all present and future Noteholders. The consent of the Holders of the Preferred Shares shall be binding on all present and future Holders of the Preferred Shares.
Without the consent of (x) all of the Holders of each Outstanding Class of Notes materially adversely affected and (y) all of the
Holders of the Preferred Shares materially adversely affected thereby, no supplemental indenture may:
(a)
change the Stated Maturity Date of the principal
of or the due date of any installment of interest on any Note, reduce the principal amount thereof or the Note Interest Rate thereon or the Redemption Price with respect to any Note, change the date of any scheduled distribution on the
Preferred Shares, or the Redemption Price with respect thereto, change the earliest date on which any Note may be redeemed at the option of the Issuer, change the provisions of this Indenture that apply proceeds of any Collateral to the payment
of principal of or interest on Notes or of distributions to the Preferred Share Paying Agent for the payment of distributions in respect of the Preferred Shares or change any place where, or the coin or currency in which, any Note or the
principal thereof or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity Date thereof (or, in the case of redemption, on or after the applicable Redemption
Date);
(b)
reduce the percentage of the Aggregate
Outstanding Amount of Holders of Notes of each Class or the Notional Amount of Preferred Shares of the Holders thereof whose consent is required for the authorization of any such supplemental indenture or for any waiver of compliance with
certain provisions of this Indenture or certain Defaults hereunder or their consequences provided for in this Indenture;
(c)
impair or adversely affect the Collateral
except as otherwise permitted in this Indenture;
(d)
permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture with respect to any part of the Collateral or terminate such lien on any property at any time subject hereto or deprive the Holder of any Note, or the Holder of any Preferred Share as an indirect
beneficiary, of the security afforded to such Holder by the lien of this Indenture;
(e)
reduce the percentage of the Aggregate
Outstanding Amount of Holders of Notes of each Class whose consent is required to request the Trustee to preserve the Collateral or rescind any election to preserve the Collateral pursuant to
Section 5.5
or to sell or liquidate the Collateral pursuant to
Section 5.4
or
5.5
hereof;
(f)
modify any of the provisions of this
Section 8.2
, except to increase any percentage of Outstanding Notes whose holders’ consent is required for any such action or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby;
(g)
modify the definition of the term “Outstanding”
or the provisions of
Section 11.1(a)
or
Section 13.1
hereof;
(h)
modify any of the provisions of this Indenture in
such a manner as to affect the calculation of the amount of any payment of interest on or principal of any Note on any Payment Date or of distributions to the Preferred Share Paying Agent for the payment of distributions in respect of the
Preferred Shares on any Payment Date (or any other date) or to affect the rights of the Securityholders to the benefit of any provisions for the redemption of such Securities contained herein;
(i)
modify any of the provisions of this Indenture
in such a manner as to affect the requirement that the Issuer be treated as a Qualified REIT Subsidiary or other disregarded entity of a REIT for U.S. federal income tax purposes;
(j)
reduce the permitted minimum denominations of
the Notes below the minimum denomination necessary to maintain an exemption from the registration requirements of the Securities Act or the 1940 Act; or
(k)
modify any provisions regarding non- recourse or
non-petition covenants with respect to the Issuer and the Co-Issuer.
The Trustee and Note Administrator shall be entitled to rely upon an Officer’s Certificate of the Issuer (or the Collateral Manager
on its behalf) in determining whether or not the Securityholders would be materially or adversely affected by such change (after giving notice of such change to the Securityholders). Such determination shall be conclusive and binding on all
present and future Securityholders. Neither the Trustee nor the Note Administrator shall be liable for any such determination made in good faith.
Section 8.3
Execution of Supplemental Indentures
.
In executing or accepting the additional trusts created by any supplemental indenture permitted by this
Article 8
or the modifications thereby of the trusts created by this Indenture, the Note Administrator and Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that all conditions precedent thereto have been satisfied (which Opinion of Counsel may rely upon an
Officer’s Certificate as to whether or not the Securityholders would be materially and adversely affected by such supplemental indenture). The Note Administrator and Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects its own rights, duties or immunities under this Indenture or otherwise.
The Sponsor’s written consent shall be required prior to any amendment to this Indenture by which the Sponsor is adversely affected.
The Servicer and Special Servicer will not be bound to follow any amendment or supplement to this Indenture that affect their
respective rights and obligations unless the Servicer or Special Servicer, as applicable, gives written consent to the Note Administrator, the Trustee and the Issuer to such amendment. The Issuer, the Trustee and the Note Administrator shall
give written notice to the Servicer and Special Servicer of any amendment made to this Indenture pursuant to its terms. In addition, the Servicer and Special Servicer’s written consent shall be required prior to any amendment to this Indenture
by which it is adversely affected.
The Collateral Manager will be bound to follow any amendment or supplement to this Indenture of which it has received written notice
at least ten (10) Business Days prior to the execution and delivery of such amendment or supplement;
provided
,
however
, that with respect to any amendment or supplement to this Indenture which may, in the judgment of the Collateral Manager adversely affect the Collateral Manager, the Collateral Manager, as applicable, shall not
be bound (and the Issuer agrees that it will not permit any such amendment to become effective) unless the Collateral Manager, as applicable, gives written consent to the Note Administrator, the Trustee and the Issuer to such amendment. The
Issuer, the Trustee and the Note Administrator shall give written notice to the Collateral Manager, the Servicer and the Special Servicer of any amendment made to this Indenture pursuant to its terms. In addition, the Collateral Manager’s
written consent shall be required prior to any amendment to this Indenture by which it is adversely affected.
At the cost of the Issuer, the Note Administrator shall provide to each Noteholder, each holder of Preferred Shares and, for so long
as any Class of Notes shall remain Outstanding and is rated, the Note Administrator shall provide to the 17g-5 Information Provider and the Rating Agencies a copy of any proposed supplemental indenture at least fifteen (15) Business Days prior
to the execution thereof by the Note Administrator, and following execution shall provide to the 17g-5 Information Provider and the Rating Agencies a copy of the executed supplemental indenture.
The Trustee shall not enter into any such supplemental indenture (i) if such action would adversely affect the tax treatment of the
Holders of the Notes as described in the Offering Memorandum under the heading “Certain U.S. Federal Income Tax Considerations” to any material extent or otherwise cause any of the statements described in the Offering Memorandum under the
heading “Certain U.S. Federal Income Tax Considerations” to be inaccurate or incorrect to any material extent, and (ii) unless the Trustee and the Note Administrator has received an Opinion of Counsel from Dechert LLP, Hunton Andrews Kurth LLP
or other nationally recognized U.S. tax counsel experienced in such matters that the proposed supplemental indenture will not cause the Issuer to be treated as a foreign corporation that is engaged in a trade or business within the United
States for U.S. federal income tax purposes. The Trustee and the Note Administrator shall be entitled to rely upon (i) the receipt of notice from the Rating Agencies or the Requesting Party, which may be in electronic form, that the Rating
Agency Condition has been satisfied and (ii) receipt of an Opinion of Counsel forwarded to the Trustee and Note Administrator certifying that, following provision of notice of such supplemental indenture to the Noteholders and holders of the
Preferred Shares, that the Securityholders would not be materially and adversely affected by such supplemental indenture. Such determination shall be conclusive and binding on all present and future Securityholders. Neither the Trustee nor
the Note Administrator shall be liable for any such determination made in good faith and in reliance upon such Opinion of Counsel, as the case may be.
It shall not be necessary for any Act of Securityholders under this
Section
8.3
to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer, the Co-Issuer, the Note Administrator and the Trustee of any supplemental indenture
pursuant to this
Section 8.3
, the Note Administrator, at the expense of the Issuer, shall mail to the Securityholders, the Preferred Share Paying Agent, the Servicer,
the Special Servicer, the Sponsor and, so long as the Notes are Outstanding and so rated, the Rating Agencies a copy thereof based on an outstanding rating. Any failure of the Trustee and the Note Administrator to publish or mail such notice,
or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
Section 8.4
Effect of Supplemental Indentures
.
Upon the execution of any supplemental indenture under this
Article
8
, this Indenture shall be modified in accordance therewith, such supplemental indenture shall form a part of this Indenture for all purposes and every Holder of Notes theretofore and thereafter authenticated and delivered
hereunder, and every Holder of Preferred Shares, shall be bound thereby.
Section 8.5
Reference in Notes to Supplemental Indentures
.
Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this
Article 8
may, and if required by the Note Administrator shall, bear a notice in form approved by the Note Administrator as to any matter provided for in such supplemental indenture. If the
Issuer and the Co-Issuer shall so determine, new Notes, so modified as to conform in the opinion of the Note Administrator and the Issuer and the Co-Issuer to any such supplemental indenture, may be prepared and executed by the Issuer and the
Co-Issuer and authenticated and delivered by the Note Administrator in exchange for Outstanding Notes. Notwithstanding the foregoing, any Note authenticated and delivered hereunder shall be subject to the terms and provisions of this
Indenture, and any supplemental indenture.
ARTICLE 9
REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES
Section 9.1
Clean-up Call; Tax Redemption; Optional Redemption; and Auction Call Redemption
.
(a)
The Notes shall be redeemed by the Issuer and the
Co-Issuer, as applicable, at the direction of the Collateral Manager delivered to the Issuer, the Note Administrator and the Trustee (such redemption, a “
Clean-up Call
”),
in whole but not in part, at a price equal to the applicable Redemption Prices on any Payment Date (the “
Clean-up Call Date
”) on or after the Payment Date on which the
Aggregate Outstanding Amount of the Offered Notes (excluding Deferred Interest amounts) has been reduced to 10% or less of the Aggregate Outstanding Amount of the Offered Notes on the Closing Date;
provided
that that the funds available to be used for such Clean-up Call will be sufficient to pay the Total Redemption Price. Disposition of Collateral in connection with a Clean-up Call may include sales
of Collateral to more than one purchaser, including by means of sales of participation interests in one or more Real Estate Loans to more than one purchaser.
(b)
The Notes shall be redeemable by the Issuer and
the Co-Issuer, as applicable, in whole but not in part, at the written direction of a Majority of Preferred Shareholders delivered to the Issuer, the Note Administrator, the Preferred Share Paying Agent and the Trustee, on the Payment Date (the
“
Tax Redemption Date
”) following the occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a price equal to the applicable Redemption Prices (such
redemption, a “
Tax Redemption
”);
provided
that that the funds available to be used for
such Tax Redemption will be sufficient to pay the Total Redemption Price. Upon the receipt of such written direction of a Tax Redemption, the Note Administrator shall provide written notice thereof to the Securityholders and the Rating
Agencies. Any sale or disposition of a Collateral Interest by the Trustee in connection with a Tax Redemption shall be performed upon Issuer Order by the Collateral Manager on behalf of the Issuer.
(c)
The Notes shall be redeemable by the Issuer and
the Co-Issuer, as applicable, in whole but not in part, in whole but not in part and without payment of any penalty or premium, at a price equal to the applicable Redemption Prices, on any Payment Date after the end of the Non-call Period, at
the written direction of a Majority of the Preferred Shareholders to the Issuer, the Note Administrator and the Trustee (such redemption, an “
Optional Redemption
”);
provided
,
however
,
that the funds available to be used for such Optional Redemption will be sufficient to pay the Total Redemption Price. Notwithstanding anything herein to the contrary, the Issuer shall not sell any Collateral Interest to any Affiliate other
than the Retention Holder in connection with an Optional Redemption.
Notwithstanding anything herein to the contrary in this Indenture, in the case of an Optional Redemption, if the Holder of the
Preferred Shares and/or one or more Affiliates thereof own 100% of one or more of the most junior Classes of Notes, such Holder(s) may elect to exchange such Notes and the Preferred Shares for all of the remaining Collateral Interests and other
assets of the Issuer, in lieu of the Issuer paying such Holder(s) the Redemption Price for such Securities.
(d)
The Notes shall be redeemable by the Issuer and
the Co-Issuer, as applicable, in whole but not in part, at a price equal to the applicable Redemption Prices, on any Payment Date occurring in January, April, July or October in each year, beginning on the Payment Date occurring in December
2028, upon the occurrence of a Successful Auction, as defined in, and pursuant to the procedures set forth in, Section 3.18(b) of the Servicing Agreement (such redemption, an “
Auction
Call Redemption
”).
(e)
The election by the Collateral Manager to redeem
the Notes pursuant to a Clean-up Call shall be evidenced by an Officer’s Certificate from the Collateral Manager directing the Note Administrator to pay to the Paying Agent the Redemption Price of all of the Notes to be redeemed from funds in
the Payment Account in accordance with the Priority of Payments. In connection with a Tax Redemption, the occurrence of a Tax Event and satisfaction of the Tax Materiality Condition and the election by a Majority of Preferred Shareholders to
redeem the Notes pursuant to a Tax Redemption shall be evidenced by an Officer’s Certificate from the Collateral Manager certifying that such conditions for a Tax Redemption have occurred. The election by a Majority of Preferred Shareholders
to redeem the Notes pursuant to an Optional Redemption shall be evidenced by an Officer’s Certificate from the Collateral Manager certifying that the conditions for an Optional Redemption have occurred.
(f)
A redemption pursuant to
Section 9.1(a)
,
9.1(b)
or
9.1(c)
shall not occur unless (i) at least five (5) Business Days before the scheduled Redemption Date, (A) the Collateral Manager shall have furnished to the Trustee and the Note Administrator evidence (in a
form reasonably satisfactory to the Trustee and the Note Administrator) that the Collateral Manager, on behalf of the Issuer, has entered into a binding agreement or agreements with one or more financial institutions whose long-term unsecured
debt obligations (other than such obligations whose rating is based on the credit of a Person other than such institution) have a credit rating from Moody’s at least equal to the highest rating of any Notes then Outstanding or whose
short-term unsecured debt obligations have a credit rating of
“P-1” or higher by Moody’s
(as long as the term of such agreement is ninety (90) days or less), to sell
(directly or by participation or other arrangement) all or part of the Collateral not later than the Business Day immediately preceding the scheduled Redemption Date, (B) the Rating Agency Condition has been satisfied with respect to the
applicable method of redemption, (C) the Collateral Manager shall have furnished to the Trustee and the Note Administrator evidence (in a form reasonably satisfactory to the Trustee and the Note Administrator) that the Collateral Manager, on
behalf of the Issuer, has entered into a binding agreement or agreements with the Retention Holder (or an Affiliate or agent thereof) to sell (directly or by participation or other arrangement) all or part of the Collateral not later than the
scheduled Redemption Date, or (D) KREF Holdings (or an Affiliate or agent thereof) has priced but not yet closed another securitization transaction, and (ii) the related Sale Proceeds pursuant to clause (i)(A) or clause (i)(C), or the net
proceeds pursuant to clause (i)(D), as applicable, (in immediately available funds), together with all other available funds (including proceeds from the sale of the Collateral, Eligible Investments maturing on or prior to the scheduled
Redemption Date, all amounts in the Accounts and available Cash), shall be an aggregate amount sufficient to pay all amounts, payments, fees and expenses in accordance with the Priority of Payments due and owing on such Redemption Date.
Section 9.2
Notice of Redemption
.
(a)
In connection with a Clean-up Call pursuant to
Section 9.1(a)
, a Tax Redemption pursuant to
Section 9.1(b)
, an Optional Redemption pursuant
to
Section 9.1(c)
, or an Auction Call Redemption pursuant to
Section 9.1(d),
the Note
Administrator shall set the applicable Record Date ten (10) Business Days prior to the proposed Redemption Date. The Note Administrator shall deliver to the Rating Agencies any notice received by it from the Issuer or the Special Servicer of
such proposed Redemption Date, the applicable Record Date, the principal amount of Notes to be redeemed on such Redemption Date and the Redemption Price of such Notes in accordance with
Section 9.1
.
(b)
Any such notice of an Optional Redemption,
Clean-up Call or Tax Redemption may be withdrawn by the Issuer and the Co-Issuer at the direction of the Collateral Manager up to the second Business Day prior to the scheduled Redemption Date by written notice to the Note Administrator, the
Trustee, the Preferred Share Paying Agent, the Servicer, the Special Servicer, the Operating Advisor and each Holder of Notes to be redeemed. The failure of any Optional Redemption, Clean-up Call or Tax Redemption that is withdrawn in
accordance with this Indenture shall not constitute an Event of Default.
Section 9.3
Notice of Redemption or Maturity
.
Any sale or disposition of a Collateral Interest by the Trustee in connection with an Optional Redemption, Clean-up Call, Tax
Redemption or Auction Call Redemption shall be performed upon Issuer Order by the Collateral Manager on behalf of the Issuer, and the Trustee shall have no responsibility or liability therefore. Notice of redemption (or a withdrawal thereof)
or Clean-up Call pursuant to
Section 9.1
or the Maturity of any Notes shall be given by first class mail, postage prepaid, mailed not less than ten (10) Business Days
(or, where the notice of an Optional Redemption, a Clean-up Call or a Tax Redemption is withdrawn pursuant to
Section 9.2(b)
, four (4) Business Days (or promptly
thereafter upon receipt of written notice, if later)) prior to the applicable Redemption Date or Maturity, to (unless the Note Administrator agrees to a shorter notice period) the Collateral Manager, the Trustee, the Servicer, the Special
Servicer, the Preferred Share Paying Agent, the Rating Agencies, and each Securityholder to be redeemed, at its address in the Notes Register.
All notices of redemption shall state:
(a)
the applicable Redemption Date;
(b)
the applicable Redemption Price;
(c)
that all the Notes are being paid in full and
that interest on the Notes shall cease to accrue on the Redemption Date specified in the notice; and
(d)
the place or places where such Notes to be
redeemed in whole are to be surrendered for payment of the Redemption Price which shall be the office or agency of the Paying Agent as provided in
Section 7.2
.
Notice of redemption shall be given by the Issuer and Co-Issuer, or at their request, by the Note Administrator in their names, and
at the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any Holder of any Note shall not impair or affect the validity of the redemption of any other Notes.
Section 9.4
Notes Payable on Redemption Date
.
Notice of redemption having been given as aforesaid, the Notes to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after the Redemption Date (unless the Issuer shall Default in the payment of the Redemption Price and accrued interest thereon) the Notes shall cease to bear interest on the Redemption
Date. Upon final payment on a Note to be redeemed, the Holder shall present and surrender such Note at the place specified in the notice of redemption on or prior to such Redemption Date;
provided
,
however
, that if there is delivered to
the Issuer, the Co-Issuer, the Note Administrator and the Trustee such security or indemnity as may be required by them to hold each of them harmless and an undertaking thereafter to surrender such Note, then, in the absence of notice to the
Issuer, the Note Administrator and the Trustee that the applicable Note has been acquired by a bona fide purchaser, such final payment shall be made without presentation or surrender. Payments of interest on the Notes so to be redeemed whose
Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more predecessor Notes, registered as such at the close of business on the relevant Record Date according to the terms and provisions of
Section 2.7(f)
.
If any Note called for redemption shall not be paid upon surrender thereof for redemption, the principal thereof shall, until paid,
bear interest from the Redemption Date at the applicable Note Interest Rate for each successive Interest Accrual Period the Note remains Outstanding.
Section 9.5
Mandatory Redemption
.
(a)
If either of the Note Protection Tests is not
satisfied as of the most recent Measurement Date, one or more Classes of Notes shall be redeemed (a “
Mandatory Redemption
”), first from Interest Proceeds as set forth
in
Section 11.1(a)(i)(12)
in an amount necessary, and only to the extent necessary, for such Note Protection Test to be satisfied. On or promptly after such
Mandatory Redemption, the Issuer shall certify or cause to be certified to the Rating Agencies and the Note Administrator whether the Note Protection Tests have been satisfied.
ARTICLE 10
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 10.1
Collection of Amounts; Custodial Account
.
(a)
Except as otherwise expressly provided herein,
the Note Administrator may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all amounts and other property payable to or receivable by the
Note Administrator pursuant to this Indenture, including all payments due on the Collateral in accordance with the terms and conditions of such Collateral. The Note Administrator shall segregate and hold all such amounts and property received
by it in an Eligible Account in trust for the Secured Parties, and shall apply such amounts as provided in this Indenture. Any Indenture Account may include any number of subaccounts deemed necessary or appropriate by the Trustee for
convenience in administering sub account.
(b)
The Note Administrator in its capacity as
Securities Intermediary on behalf of the Trustee for the benefit of the Secured Parties (the “
Securities Intermediary
”) shall, upon receipt, credit all Collateral
Interests and Eligible Investments to an account in its own name for the benefit of the Secured Parties designated as the “
Custodial Account
.”
Section 10.2
Reinvestment Account
.
(a)
The Note Administrator shall, on or prior to the
Closing Date, establish a single, segregated trust account which shall be designated as the “
Reinvestment Account
,” which shall be held in trust in the name of the
Note Administrator for the benefit of the Secured Parties and over which the Note Administrator shall have exclusive control and the sole right of withdrawal;
provide
d,
however
, that the Note Administrator shall only withdraw such amounts as directed by the Issuer or the Collateral Manager on behalf of the Issuer. All amounts
credited to the Reinvestment Account pursuant to
Section 11.1(a)(ii)
of this Indenture or otherwise shall be held by the Note Administrator as part of the Collateral
and shall be applied to the purposes herein provided.
(b)
The Note Administrator agrees to give the Issuer
and the Collateral Manager prompt notice if it becomes aware that the Reinvestment Account or any funds on deposit therein, or otherwise to the credit of the Reinvestment Account, becomes subject to any writ, order, judgment, warrant of
attachment, execution or similar process. The Issuer shall have no legal, equitable or beneficial interest in the Reinvestment Account other than in accordance with the Priority of Payments. The Reinvestment Account shall remain at all times
an Eligible Account.
(c)
The Collateral Manager, on behalf of the Issuer,
may direct the Note Administrator to, and upon such direction the Note Administrator shall, invest all funds in the Reinvestment Account in Eligible Investments designated by the Collateral Manager, and in accordance with
Section 11.2
. All interest and other income from such investments shall be deposited in the Reinvestment Account, any gain realized from such investments shall be
credited to the Reinvestment Account, and any loss resulting from such investments shall be charged to the Reinvestment Account. The Note Administrator shall not in any way be held liable (except as a result of negligence, willful misconduct
or bad faith) by reason of any insufficiency of such Reinvestment Account resulting from any loss relating to any such investment, except with respect to investments in obligations of the Note Administrator or any Affiliate thereof. If the
Note Administrator does not receive written investment instructions from an Authorized Officer of the Collateral Manager, funds in the Reinvestment Account shall be held uninvested.
(d)
Amounts in the Reinvestment Account shall remain
in the Reinvestment Account (or invested in Eligible Investments) until the earlier of (i) the time the Collateral Manager instructs the Note Administrator in writing to transfer any such amounts (or related Eligible Investments) to the Payment
Account, (ii) the time the Collateral Manager notifies the Note Administrator in writing that such amounts (or related Eligible Investments) are to be applied to the acquisition of Reinvestment Collateral Interests in accordance with
Section 12.2(a)
and (iii) the first Business Day after the last day of the Reinvestment Period. Upon receipt of notice pursuant to clause (i) above and on the date
described in clause (iii) above, the Note Administrator shall transfer the applicable amounts (or related Eligible Investments) to the Payment Account, in each case for application on the next Payment Date pursuant to
Section 11.1(a)(ii)
as Principal Proceeds.
(e)
During the Reinvestment Period, the Collateral
Manager on behalf of the Issuer may, by notice to the Note Administrator, direct the Note Administrator to, and upon receipt of such notice the Note Administrator shall, reinvest amounts (and related Eligible Investments) credited to the
Reinvestment Account in Real Estate Loans and Pari Passu Participations selected by the Collateral Manager as permitted under and in accordance with the requirements of
Article
12
and such notice. The Note Administrator shall be entitled to conclusively rely on such notice and shall not be required to make any determination as to whether any loans or participations satisfy the Eligibility Criteria, the
Reinvestment Criteria or the Acquisition and Disposition Requirements.
Section 10.3
Payment Account
.
(a)
The Note Administrator shall, on or prior to the
Closing Date, establish a single, segregated trust account which shall be designated as the “Payment Account,” which shall be held in trust for the benefit of the Secured Parties and over which the Note Administrator shall have exclusive
control and the sole right of withdrawal. Any and all funds at any time on deposit in, or otherwise to the credit of, the Payment Account shall be held in trust by the Note Administrator, on behalf of the Trustee for the benefit of the Secured
Parties. Except as provided in
Sections 11.1
and
11.2
, the only permitted withdrawal
from or application of funds on deposit in, or otherwise to the credit of, the Payment Account shall be (i) to pay the interest on and the principal of the Notes and make other payments in respect of the Notes in accordance with their terms and
the provisions of this Indenture, (ii) to deposit into the Preferred Share Payment Account for distributions to the Preferred Shareholders, (iii) upon Issuer Order, to pay other amounts specified therein, and (iv) otherwise to pay amounts
payable pursuant to and in accordance with the terms of this Indenture, each in accordance with the Priority of Payments.
(b)
The Note Administrator agrees to give the Issuer
and the Collateral Manager prompt notice if it becomes aware that the Payment Account or any funds on deposit therein, or otherwise to the credit of the Payment Account, becomes subject to any writ, order, judgment, warrant of attachment,
execution or similar process. The Issuer shall have no legal, equitable or beneficial interest in the Payment Account other than in accordance with the Priority of Payments. The Payment Account shall remain at all times an Eligible Account.
Section 10.4
[Reserved].
Section 10.5
Expense Reserve Account
.
(a)
The Note Administrator shall, on or prior to the
Closing Date, establish a single, segregated trust account which shall be designated as the “
Expense Reserve Account
,” which shall be held in trust in the name of the
Note Administrator for the benefit of the Secured Parties and over which the Note Administrator shall have exclusive control and the sole right of withdrawal. The only permitted withdrawal from or application of funds on deposit in, or
otherwise standing to the credit of, the Expense Reserve Account shall be to pay (on any day other than a Payment Date), accrued and unpaid Company Administrative Expenses (other than accrued and unpaid expenses and indemnities payable to the
Collateral Manager under the Collateral Management
Agreement
);
provided
that the Collateral Manager shall be entitled (but not required) without liability on its part, to direct the Note Administrator to refrain from making any such payment of a
Company Administrative Expense on any day other than a Payment Date if, in its reasonable determination, taking into account the Priority of Payments, the payment of such amounts is likely to leave insufficient funds available to pay in full
each of the items payable prior thereto in the Priority of Payments on the next succeeding Payment Date. At the direction of the Collateral Manager, amounts credited to the Expense Reserve Account may be applied on or prior to the
Determination Date preceding the first Payment Date to pay amounts due in connection with the offering of the Notes. On or after the first Payment Date, any amount remaining in the Expense Reserve Account may, at the election of the Collateral
Manager, be designated as Interest Proceeds. On the date on which all or substantially all of the Issuer’s assets have been sold or otherwise disposed of, the Issuer by Issuer Order executed by an Authorized Officer of the Collateral Manager
shall direct the Note Administrator to, and upon receipt of such Issuer Order, the Note Administrator shall, transfer all amounts on deposit in the Expense Reserve Account to the Payment Account for application pursuant to
Section 11.1(a)(i)
as Interest Proceeds.
(b)
On each Payment Date, the Collateral Manager may
designate Interest Proceeds (in an amount not to exceed U.S.$100,000 on such Payment Date) after application of amounts payable pursuant to clauses (1) through (17) of
Section
11.1(a)(i)
for deposit into the Expense Reserve Account.
(c)
The Note Administrator agrees to give the Issuer
and the Collateral Manager prompt notice if it becomes aware that the Expense Reserve Account or any funds on deposit therein, or otherwise to the credit of the Expense Reserve Account, becomes subject to any writ, order, judgment, warrant
of
attachment, execution or similar process. The Issuer shall have no legal, equitable or beneficial interest in the Expense Reserve Account other than in accordance with the
Priority of Payments. The Expense Reserve Account shall remain at all times an Eligible Account.
(d)
The Collateral Manager, on behalf of the Issuer,
may direct the Note Administrator to, and upon such direction the Note Administrator shall, invest all funds in the Expense Reserve Account in Eligible Investments designated by the Collateral Manager as provided in
Section 11.2
. All interest and other income from such investments shall be deposited in the Expense Reserve Account, any gain realized from such investments shall be credited to the
Expense Reserve Account, and any loss resulting from such investments shall be charged to the Expense Reserve Account. The Note Administrator shall not in any way be held liable (except as a result of negligence, willful misconduct or bad
faith) by reason of any insufficiency of such Expense Reserve Account resulting from any loss relating to any such investment, except with respect to investments in obligations of the Note Administrator or any Affiliate thereof. If the Note
Administrator does not receive written investment instructions from an Authorized Officer of the Collateral Manager, funds in the Expense Reserve Account shall be held uninvested.
Section 10.6
[
Reserved
].
Section 10.7
Interest Advances
.
(a)
With respect to each Payment Date for which the
sum of Interest Proceeds and, if applicable, Principal Proceeds, collected during the related Due Period and remitted to the Note Administrator are insufficient to remit the interest due and payable with respect to the Class A Notes, the Class
A-S Notes and the Class B Notes on such Payment Date as a result of interest shortfalls on the Class A Notes, the Class A-S Notes and the Class B Notes (or the application of interest received on the Class A Notes, the Class A-S Notes and the
Class B Notes to pay certain expenses in accordance with the terms of the Servicing Agreement) (the amount of such insufficiency, an “
Interest Shortfall
”), the Note
Administrator shall provide the Advancing Agent with email notice of such Interest Shortfall no later than the close of business on the Business Day preceding such Payment Date, at the following address: KREFCLO@KKR.com, or such other email
address as provided by the Advancing Agent to the Note Administrator. The Note Administrator shall provide the Advancing Agent with additional email notice, prior to any funding of an Interest Advance by the Advancing Agent, of any additional
interest remittances received by the Note Administrator after delivery of such initial notice that reduces such Interest Shortfall. No later than 10:00 a.m. (New York time) on the related Payment Date, the Advancing Agent shall advance the
difference between such amounts (each such advance, an “
Interest Advance
”) by deposit of an amount equal to such Interest Advance in the Payment Account, subject to a
determination of recoverability by the Advancing Agent as described in
Section 10.7(b)
, and subject to a maximum limit in respect of any Payment Date equal to the
lesser of (i) the aggregate of such Interest Shortfalls that would otherwise occur on the Class A Notes, the Class A-S Notes and the Class B Notes and (ii) the aggregate of the interest payments not received in respect of Collateral Interests
with respect to such Payment Date (including, for such purpose, interest payments received on the Collateral Interests but applied to pay certain expenses in accordance with the terms of the Servicing Agreement).
Notwithstanding the foregoing, in no circumstance will the Advancing Agent be required to make an Interest Advance in respect of a
Collateral Interest to the extent that the aggregate outstanding amount of all unreimbursed Interest Advances would exceed the Aggregate Outstanding Amount of the Offered Notes. In addition, in no event will the Advancing Agent or Backup
Advancing Agent be required to advance any payments in respect of interest on any Class of Notes other than the Class A Notes, the Class A-S Notes and the Class B Notes or principal of any Note. Any Interest Advance made by the Advancing Agent
with respect to a Payment Date that is in excess of the actual Interest Shortfall for such Payment Date shall be refunded to the Advancing Agent by the Note Administrator on the related Payment Date (or, if such Interest Advance is made prior
to final determination by the Note Administrator of such Interest Shortfall, on the Business Day of such final determination).
The Advancing Agent shall provide the Note Administrator written notice of a determination by the Advancing Agent that a proposed
Interest Advance would constitute a Nonrecoverable Interest Advance no later than 10:00 a.m. (New York time) on the related Payment Date. If the Advancing Agent shall fail to make any required Interest Advance by 10:00 a.m. (New York time) on
the Payment Date upon which distributions are to be made pursuant to
Section 11.1(a)(i)
, the Collateral Manager shall remove the Advancing Agent in its capacity as
advancing agent hereunder as required under
Section 16.5(d)
and the Backup Advancing Agent shall be required to make such Interest Advance no later than 11:00 a.m.
(New York time) on the Payment Date, subject to a determination of recoverability by the Backup Advancing Agent as described in
Section 10.7(b)
.
Based upon available information at the time, the Backup Advancing Agent and the Advancing Agent or the Collateral Manager, as applicable, will provide
fifteen (15) days prior notice to the Rating Agencies if recovery of a Nonrecoverable Interest Advance would result in an Interest Shortfall on the next succeeding Payment Date. No later than the close of business on the Determination Date
related to a Payment Date on which the recovery of a Nonrecoverable Interest Advance would result in an Interest Shortfall, the Backup Advancing Agent and the Advancing Agent or the Collateral Manager, as applicable, will provide the Rating
Agencies notice of such recovery.
(b)
Notwithstanding anything herein to the contrary,
neither the Advancing Agent nor the Backup Advancing Agent, as applicable, shall be required to make any Interest Advance unless such Person determines, in its sole discretion, exercised in good faith that such Interest Advance, or such
proposed Interest Advance, plus interest expected to accrue thereon at the Reimbursement Rate, will not be a Nonrecoverable Interest Advance. In determining whether any proposed Interest Advance will be, or whether any Interest Advance
previously made is, a Nonrecoverable Interest Advance, the Advancing Agent or the Backup Advancing Agent, as applicable, will take into account:
(i)
amounts
that may be realized on each Mortgaged Property in its “as is” or then-current condition and occupancy;
(ii)
the
potential length of time before such Interest Advance may be reimbursed and the resulting degree of uncertainty with respect to such reimbursement; and
(iii)
the
possibility and effects of future adverse changes with respect to the Mortgaged Properties, and
(iv)
the fact
that Interest Advances are intended to provide liquidity only and not credit support to the Holders of any Class of Notes entitled thereto.
For purposes of any such determination of whether an Interest Advance constitutes or would constitute a Nonrecoverable Interest
Advance, an Interest Advance will be deemed to be nonrecoverable if the Advancing Agent or the Backup Advancing Agent, as applicable, determines that future Interest Proceeds and Principal Proceeds may be ultimately insufficient to fully
reimburse such Interest Advance, plus interest thereon at the Reimbursement Rate within a reasonable period of time. The Backup Advancing Agent will be entitled to conclusively rely on any affirmative determination by the Advancing Agent that
an Interest Advance would have been a Nonrecoverable Interest Advance. Absent bad faith, the determination by the Advancing Agent or the Backup Advancing Agent, as applicable, as to the nonrecoverability of any Interest Advance shall be
conclusive and binding on the Holders of the Notes.
(c)
Each of the Advancing Agent and the Backup
Advancing Agent may recover any previously unreimbursed Interest Advance made by it (including any Nonrecoverable Interest Advance), together with interest thereon,
first
, from Interest Proceeds and
second
(to the extent that there are insufficient Interest Proceeds for such reimbursement), from
Principal Proceeds to the extent that such reimbursement would not trigger an additional Interest Shortfall;
provided
that if at any time an Interest Advance is
determined to be a Nonrecoverable Interest Advance, the Advancing Agent or the Backup Advancing Agent shall be entitled to recover all outstanding Interest Advances from the Collection Account pursuant to the Servicing Agreement on any Business
Day during any Interest Accrual Period prior to the related Determination Date. The Advancing Agent shall be permitted (but not obligated) to defer or otherwise structure the timing of recoveries of Nonrecoverable Interest Advances in such
manner as the Advancing Agent determines is in the best interest of the Holders of the Notes, as a collective whole, which may include being reimbursed for Nonrecoverable Interest Advances in installments.
(d)
The Advancing Agent and the Backup Advancing Agent
will each be entitled with respect to any Interest Advance made by it (including Nonrecoverable Interest Advances) to interest accrued on the amount of such Interest Advance for so long as it is outstanding at the Reimbursement Rate.
(e)
The obligations of the Advancing Agent and the
Backup Advancing Agent to make Interest Advances in respect of the Class A Notes, the Class A-S Notes and the Class B Notes will continue through the Stated Maturity Date, unless the Class A Notes, the Class A-S Notes and the Class B Notes are
previously redeemed or repaid in full.
(f)
In no event will the Advancing Agent, in its
capacity as such hereunder or the Note Administrator, in its capacity as Backup Advancing Agent hereunder, be required to advance any amounts in respect of payments of principal of any Collateral Interest or Note.
(g)
In consideration of the performance of its
obligations hereunder, the Advancing Agent shall be entitled to receive, at the times set forth herein and subject to the Priority of Payments, to the extent funds are available therefor, the Advancing Agent Fee. For so long as the Seller (or
one of its Affiliates) (i) is the Advancing Agent and (ii) owns the Preferred Shares, the Advancing Agent hereby agrees, on behalf of itself and its affiliates, to waive its rights to receive the Advancing Agent Fee and any Reimbursement
Interest. The Note Administrator shall not be entitled to an additional fee in respect of its role as Backup Advancing Agent. If the Advancing Agent is terminated for failing to make an Interest Advance hereunder (as provided in
Section 16.5(d)
) (or for failing to make a Servicing Advance under the Servicing Agreement) that the Advancing Agent did not determine to be nonrecoverable, the Backup
Advancing Agent or any applicable subsequent successor advancing agent will be entitled to receive the Advancing Agent Fee (plus Reimbursement Interest on any Interest Advance made by the Backup Advancing Agent or the applicable subsequent
successor advancing agent) and shall make Interest Advances until a successor Advancing Agent is appointed under the Indenture.
(h)
The determination by the Advancing Agent or the
Backup Advancing Agent (in its capacity as successor Advancing Agent), as applicable, (i) that it has made a Nonrecoverable Interest Advance (together with Reimbursement Interest thereon) or (ii) that any proposed Interest Advance, if made,
would constitute a Nonrecoverable Interest Advance, shall be evidenced by an Officer’s Certificate delivered promptly to the Trustee, the Note Administrator, the Issuer and the 17g-5 Information Provider, setting forth the basis for such
determination;
provided
that failure to give such notice, or any defect therein, shall not impair or affect the validity of, or the Advancing Agent or the Backup
Advancing Agent, entitlement to reimbursement with respect to, any Interest Advance.
Section 10.8
Reports by Parties
.
(a)
The Note Administrator shall supply, in a timely
fashion, to the Issuer, the Trustee, the Servicer, the Special Servicer and the Collateral Manager any information regularly maintained by the Note Administrator that the Issuer, the Trustee, the Servicer, the Special Servicer or the Collateral
Manager may from time to time request in writing with respect to the Collateral or the Indenture Accounts and provide any other information reasonably available to the Note Administrator by reason of its acting as Note Administrator hereunder
and required to be provided by
Section 10.9
or to permit the Collateral Manager to perform its obligations under the Collateral Management Agreement. Each of the
Issuer, the Servicer, and the Special Servicer shall promptly forward to the Collateral Manager, the Trustee and the Note Administrator any information in their possession or reasonably available to them concerning any of the Collateral that
the Trustee or the Note Administrator reasonably may request or that reasonably may be necessary to enable the Note Administrator to prepare any report or to enable the Trustee or the Note Administrator to perform any duty or function on its
part to be performed under the terms of this Indenture.
Section 10.9
Reports; Accountings
.
(a)
Based on the CREFC
®
Loan Periodic Update File prepared by the Servicer and delivered by the Servicer to the Note Administrator no later than 2:00 p.m. (New York time) on the second Business Day before the
Payment Date, the Note Administrator shall prepare and make available on its website initially located at
www.ctslink.com
(or, upon written request from
registered Holders of the Notes or from those parties that cannot receive such statement electronically, provide by first class mail), on each Payment Date to Privileged Persons, a report substantially in the form of
Exhibit G
hereto (the “
Monthly Report
”), setting forth the following information:
(i)
the
amount of the distribution of principal and interest on such Payment Date to the Noteholders and any reduction of the Aggregate Outstanding Amount of the Notes;
(ii)
the
aggregate amount of compensation paid to the Note Administrator, the Trustee and servicing compensation paid to the Servicer during the related Due Period;
(iii)
the
Aggregate Outstanding Portfolio Balance outstanding immediately before and immediately after the Payment Date;
(iv)
the
number, Aggregate Outstanding Portfolio Balance, weighted average remaining term to maturity and weighted average interest rate of the Collateral Interests as of the end of the related Due Period;
(v)
the number
and Aggregate Principal Balance of Collateral Interests that are (A) delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or more and (D) current but Specially Serviced Loans or in foreclosure but not an REO Property;
(vi)
the value
of any REO Property owned by the Issuer or any Permitted Subsidiary as of the end of the related Due Period, on an individual Collateral Interest basis, based on the most recent appraisal or valuation;
(vii)
the
amount of Interest Proceeds and Principal Proceeds received in the related Due Period;
(viii)
the
amount of any Interest Advances made by the Advancing Agent or the Backup Advancing Agent, as applicable;
(ix)
the
payments due pursuant to the Priority of Payments with respect to each clause thereof;
(x)
the number
and related principal balances of any Collateral Interests that have been (or are related to Real Estate Loans that have been) extended or modified during the related Due Period on an individual Collateral Interest basis;
(xi)
the
amount of any remaining unpaid Interest Shortfalls as of the close of business on the Payment Date;
(xii)
a listing
of each Collateral Interest that was the subject of a principal prepayment during the related collection period and the amount of principal prepayment occurring;
(xiii)
the
aggregate unpaid principal balance of the Collateral Interests outstanding as of the close of business on the related Determination Date;
(xiv)
with
respect to any Collateral Interest as to which a liquidation occurred during the related Due Period (other than through a payment in full), (A) the number thereof and (B) the aggregate of all liquidation proceeds which are included in the
Payment Account and other amounts received in connection with the liquidation (separately identifying the portion thereof allocable to distributions of the Notes);
(xv)
with
respect to any REO Property owned by the Issuer or any Permitted Subsidiary thereof, as to which the Special Servicer determined that all payments or recoveries with respect to the related property have been ultimately recovered during the
related collection period, (A) the related Collateral Interest and (B) the aggregate of all liquidation proceeds and other amounts received in connection with that determination (separately identifying the portion thereof allocable to
distributions on the Securities);
(xvi)
the amount
on deposit in the Expense Reserve Account;
(xvii)
the
aggregate amount of interest on monthly debt service advances in respect of the Collateral Interests paid to the Advancing Agent and/or the Backup Advancing Agent since the prior Payment Date;
(xviii)
a listing
of each modification, extension or waiver made with respect to each Collateral Interest;
(xix)
an
itemized listing of any Special Servicing Fees received from the Special Servicer or any of its affiliates during the related Due Period;
(xx)
the
amount of any dividends or other distributions to the Preferred Shares on the Payment Date; and
(xxi)
the Net
Outstanding Portfolio Balance.
(b)
The Note Administrator will post on the Note
Administrator’s Website, any report received from the Servicer or Special Servicer detailing any breach of the representations and warranties with respect to any Collateral Interest by the Seller or any of its affiliates and the steps taken by
the Seller or any of its affiliates to cure such breach; a listing of any breach of the representations and warranties with respect to any Collateral Interest by the Seller or any of its affiliates and the steps taken by the Seller or any of
its affiliates to cure such breach;
(c)
All information made available on the Note
Administrator’s Website will be restricted and the Note Administrator will only provide access to such reports to Privileged Persons in accordance with this Indenture. In connection with providing access to its website, the Note Administrator
may require registration and the acceptance of a disclaimer.
(d)
Not more than five (5) Business Days after
receiving an Issuer Request requesting information regarding a Clean-up Call, a Tax Redemption, an Auction Call Redemption or an Optional Redemption as of a proposed Redemption Date, the Note Administrator shall, subject to its timely receipt
of the necessary information to the extent not in its possession, compute the following information and provide such information in a statement (the “
Redemption Date Statement
”)
delivered to the Collateral Manager and the Preferred Share Paying Agent:
(i)
the
Aggregate Outstanding Amount of the Notes of the Class or Classes to be redeemed as of such Redemption Date;
(ii)
the
amount of accrued interest due on such Notes as of the last day of the Due Period immediately preceding such Redemption Date;
(iii)
the
Redemption Price;
(iv)
the sum
of all amounts due and unpaid under
Section 11.1(a)
(other than amounts payable on the Notes being redeemed or to the Noteholders thereof); and
(v)
the
amounts in the Collection Account and the Indenture Accounts (other than the Preferred Share Payment Account) available for application to the redemption of such Notes.
(e)
No later than sixty (60) days after the end of
each calendar quarter, beginning with the calendar quarter ending on December 31, 2018, the Collateral Manager shall make reasonable efforts to deliver to the Note Administrator a report containing a Collateral Interest summary substantially in
the form set forth in Annex B to the Offering Memorandum for all Collateral Interests in the pool, but only to the extent the Collateral Manager has received the necessary information to compile such report on a timely basis, with such
modifications as the Collateral Manager shall deem reasonably necessary.
(f)
The Issuer shall provide quarterly updates on
the status of the business plan for each Collateral Interest, which reports shall be posted to the Note Administrator’s Website.
Section 10.10
Release of Collateral Interests; Release of Collateral
.
(a)
If no Event of Default has occurred and is
continuing and subject to
Article 12
hereof, the Issuer (or the Collateral Manager on its behalf) may direct the Trustee to release a Pledged Collateral Interest from
the lien of this Indenture, by Issuer Order delivered to the Trustee and the Custodian at least two (2) Business Days prior to the settlement date for any sale of a Pledged Collateral Interest, which Issuer Order shall be accompanied by a
certification of the Collateral Manager that (i) the Pledged Collateral Interest has been sold pursuant to and in compliance with
Article 12
or (ii) in the case of a
redemption pursuant to
Section 9.1
, the proceeds from any such sale of Collateral Interests are sufficient to redeem the Notes pursuant to
Section 9.1
, and, upon receipt of a Request for Release of such Collateral Interest from the Collateral Manager, the Servicer or the Special Servicer, the Custodian shall deliver any such
Pledged Collateral Interest, if in physical form, duly endorsed to the broker or purchaser designated in such Issuer Order or to the Issuer if so requested in the Issuer Order, or, if such Pledged Collateral Interest is represented by a
Security Entitlement, cause an appropriate transfer thereof to be made, in each case against receipt of the sales price therefor as set forth in such Issuer Order. If requested, the Custodian may deliver any such Pledged Collateral Interest in
physical form for examination (prior to receipt of the sales proceeds) in accordance with street delivery custom. The Custodian shall (i) deliver any agreements and other documents in its possession relating to such Pledged Collateral Interest
and (ii) the Trustee, if applicable, duly assign each such agreement and other document, in each case, to the broker or purchaser designated in such Issuer Order or to the Issuer if so requested in the Issuer Order.
(b)
The Issuer (or the Collateral Manager on behalf
of the Issuer) may deliver to the Trustee and Custodian at least three (3) Business Days prior to the date set for redemption or payment in full of a Pledged Collateral Interest, an Issuer Order certifying that such Pledged Collateral Interest
is being paid in full. Thereafter, the Collateral Manager, the Servicer or the Special Servicer, by delivery of a Request for Release, may direct the Custodian to deliver such Pledged Collateral Interest and the related Collateral Interest
File therefor on or before the date set for redemption or payment, to the Collateral Manager, the Servicer or the Special Servicer for redemption against receipt of the applicable redemption price or payment in full thereof.
(c)
With respect to any Collateral Interest subject
to a workout or restructuring, the Issuer (or the Collateral Manager on behalf of the Issuer) may, by Issuer Order delivered to the Trustee and Custodian at least two (2) Business Days prior to the date set for an exchange, tender or sale,
certify that a Collateral Interest is subject to a workout or restructuring and setting forth in reasonable detail the procedure for response thereto. Thereafter, the Collateral Manager, the Servicer or the Special Servicer may, in accordance
with the terms of, and subject to any required consent and consultation obligations set forth in the Servicing Agreement, direct the Custodian, by delivery to the Custodian of a Request for Release, to deliver any Collateral to the Collateral
Manager, the Servicer or the Special Servicer in accordance with such Request for Release.
(d)
The Special Servicer shall remit to the Servicer
for deposit into the Collection Account any proceeds received by it from the disposition of a Pledged Collateral Interest and treat such proceeds as Principal Proceeds, for remittance by the Servicer to the Note Administrator on the first
Remittance Date occurring thereafter. None of the Trustee, the Note Administrator or the Securities Intermediary shall be responsible for any loss resulting from delivery or transfer of any such proceeds prior to receipt of payment in
accordance herewith.
(e)
The Trustee shall, upon receipt of an Issuer
Order declaring that there are no Notes Outstanding and all obligations of the Issuer hereunder have been satisfied, release the Collateral from the lien of this Indenture.
(f)
Upon receiving actual notice of any offer or
any request for a waiver, consent, amendment or other modification with respect to any Collateral Interest, or in the event any action is required to be taken in respect to a Loan Document, the Special Servicer on behalf of the Issuer will
promptly notify the Collateral Manager and the Servicer of such request, and the Special Servicer shall grant any waiver or consent, and enter into any amendment or other modification pursuant to the Servicing Agreement in accordance with the
Servicing Standard. In the case of any modification or amendment that results in the release of the related Collateral Interest, notwithstanding anything to the contrary in
Section
5.5(a)
, the Custodian, upon receipt of a Request for Release, shall release the related Collateral Interest File upon the written instruction of the Servicer or the Special Servicer, as applicable.
Section 10.1
1
[Reserved
].
Section 10.12
Information Available Electronically
.
(a)
The Note Administrator shall make available to
any Privileged Person the following items (in each case, as applicable, to the extent received by it) by means of the Note Administrator’s Website the following items (to the extent such items were prepared by or delivered to the Note
Administrator in electronic format):
(i)
The
following documents, which will initially be available under a tab or heading designated “deal documents”:
(1)
the final Offering Memorandum
related to the Notes offered thereunder;
(2)
this Indenture, and any
schedules, exhibits and supplements thereto;
(3)
the CREFC
®
Loan Setup file;
(4)
the Issuer Charter;
(5)
the Servicing Agreement, any
schedules, exhibits and supplements thereto:
(6)
the Preferred Share Paying
Agency Agreement, and any schedules, exhibits and supplements thereto;
(ii)
The
following documents will initially be available under a tab or heading designated “periodic reports”:
(1)
the Monthly Reports prepared
by the Note Administrator pursuant to
Section 10.9(a)
; and
(2)
certain information and
reports specified in the Servicing Agreement (including the collection of reports specified by CRE Finance Council or any successor organization reasonably acceptable to the Note Administrator and the Servicer) known as the “CREFC
®
Investor Reporting Package” relating to the Collateral Interests to the extent that the Note Administrator receives such information and reports from the Servicer
from time to time;
(iii)
The
following documents, which will initially be available under a tab or heading designated “Additional Documents”:
(1)
inspection reports delivered
to the Note Administrator under the terms of the Servicing Agreement;
(2)
appraisals delivered to the
Note Administrator under the terms of the Servicing Agreement;
(3)
any quarterly updates on the
status of the business plan for each Collateral Interest delivered by the Issuer to the Note Administrator; and
(4)
the Issuer hereby directs the
Note Administrator to post any reports or such other information that, from time to time, the Issuer or the Special Servicer provides to the Note Administrator to be made available on the Note Administrator’s Website;
(iv)
The
following documents, which will initially be available under a tab or heading designated “special notices”:
(1)
notice of final payment on the
Notes delivered to the Note Administrator pursuant to
Section 2.7(d)
;
(2)
notice of termination of the
Servicer or the Special Servicer;
(3)
notice of a Servicer
Termination Event or a Special Servicer Termination Event, each as defined in the Servicing Agreement and delivered to the Note Administrator under the terms of the Servicing Agreement;
(4)
notice of the resignation of
any party to the Indenture and notice of the acceptance of appointment of a replacement for any such party, to the extent such notice is prepared or received by the Note Administrator;
(5)
officer’s certificates
supporting the determination that any Interest Advance was (or, if made, would be) a Nonrecoverable Interest Advance delivered to the Note Administrator pursuant to
Section
10.7(b)
;
(6)
any direction received by the
Note Administrator from the Collateral Manager for the termination of the Special Servicer during any period when such Person is entitled to make such a direction, and any direction of a Majority of the Notes to terminate the Special Servicer;
(7)
any direction received by the
Note Administrator from a Majority of the Controlling Class or a Supermajority of the Notes for the termination of the Note Administrator or the Trustee pursuant to
Section
6.9(c)
; and
(8)
written notice from the Servicer that it has effected or is effecting a conversion
that results in at
least 50% of the Real Estate Loans
by Stated Principal Balance
(as of the date of such conversion) accruing interest based on
an alternative or substitute index in lieu LIBOR in accordance with the related
Loan Documents
, which notice shall identify such alternative or substitute index and the date of conversion
;
(v)
the
following notices provided by the Retention Holder or the Collateral Manager to the Note Administrator, if any, which will initially be available under a tab or heading designated “risk retention special notices”:
(1)
any changes to the fair values set forth in the “
Credit Risk Retention
” section of the Offering Memorandum between the date of the Offering Memorandum and the Closing Date;
(2)
any material differences between the valuation methodology or any of the key inputs and assumptions that were used in calculating the fair value or range of fair values prior
to the pricing of the Notes and the Closing Date;
(3)
any noncompliance of the applicable credit risk retention requirements under the credit risk retention requirements under Section 15G of the Exchange Act by the Retention
Holder or a Subsequent Retaining Holder as and to the extent the Sponsor is required under the credit risk retention requirements under Section 15G of the Exchange Act; and
(4)
any notices required pursuant to the EU Risk Retention Agreement;
(vi)
the
“Investor Q&A Forum” pursuant to
Section 10.13
; and
(vii)
solely
to the Noteholders and holders of any Preferred Shares, the “Investor Registry” pursuant to
Section 10.13
.
Privileged Persons who execute
Exhibit H-2
shall only
be entitled to access the Monthly Report, and shall not have access to any other information on the Note Administrator’s Website.
The Note Administrator’s Website shall initially be located at
www.ctslink.com
. The foregoing information shall be made available by the Note Administrator
on the Note Administrator’s Website promptly following receipt. The Note Administrator may change the titles of the tabs and headings on portions of its website, and may re-arrange the files as it deems proper. The Note Administrator shall
have no obligation or duty to verify, confirm or otherwise determine whether the information being delivered is accurate, complete, conforms to the transaction, or otherwise is or is not anything other than what it purports to be. In the
event that any such information is delivered or posted in error, the Note Administrator may remove it from the Note Administrator’s Website. The Note Administrator has not obtained and shall not be deemed to have obtained actual knowledge of
any information posted to the Note Administrator’s Website to the extent such information was not produced by the Note Administrator. In connection with providing access to the Note Administrator’s Website, the Note Administrator may require
registration and the acceptance of a disclaimer. The Note Administrator shall not be liable for the dissemination of information in accordance with the terms of this
Indenture
, makes no representations or warranties as to the accuracy or completeness of such information being made available, and assumes no responsibility for such information. Assistance in using the Note Administrator’s Website can be
obtained by calling
(866) 846-4526.
Section 10.13
Investor Q&A Forum; Investor Registry
.
(a)
The Note Administrator shall make the “
Investor Q&A Forum
” available to
Privileged Persons and prospective purchasers of Notes by means of the Note Administrator’s Website, where the Noteholders (including beneficial owners of Notes) may (i) submit inquiries to the Note Administrator relating to the Monthly
Reports, and submit inquiries to the Collateral Manager, the Servicer or the Special Servicer (each, a “
Q&A Respondent
”) relating to any servicing reports prepared by that party, the Collateral Interests, or the properties related thereto (each an “
Inquiry
” and collectively, “
Inquiries
”), and
(ii) view Inquiries that have been previously submitted and answered, together with the answers thereto. Upon receipt of an Inquiry for a Q&A Respondent, the Note Administrator shall forward the Inquiry to the applicable Q&A
Respondent, in each case via email or such other method as the Note Administrator and the Servicer or the Special Servicer agree within a commercially reasonable period of time following receipt thereof. Following receipt of an Inquiry, the
Note Administrator and the applicable Q&A Respondent, unless such party determines not to answer such Inquiry as provided below, shall reply to the Inquiry, which reply of the applicable Q&A Respondent shall be by email to the Note
Administrator, the Servicer and the Special Servicer or such other method as the Note Administrator and the Servicer or the Special Servicer will agree. The Note Administrator shall post (within a commercially reasonable period of time
following preparation or receipt of such answer, as the case may be) such Inquiry and the related answer to the Note Administrator’s
Website. If the Note Administrator or
the applicable Q&A Respondent determines, in its respective sole discretion, that (i) any Inquiry is not of a type described above, (ii) answering any Inquiry would not be in the best interests of the Issuer or the Noteholders, (iii)
answering any Inquiry would be in violation of applicable law, the Loan Documents, the Collateral Management Agreement, this Indenture or the Servicing Agreement, (iv) answering any Inquiry would materially increase the duties of, or result
in significant additional cost or expense to, the Note Administrator, the Collateral Manager, the Servicer or the Special Servicer, as applicable or (v) answering any such inquiry would reasonably be expected to result in the waiver of an
attorney client privilege or the disclosure of attorney work product, or is otherwise not advisable to answer, it shall not be required to answer such Inquiry and shall promptly notify the Note Administrator of such determination. The Note
Administrator shall notify the Person who submitted such Inquiry in the event that the Inquiry shall not be answered in accordance with the terms of this
Indenture
. Any
notice by the Note Administrator to the Person who submitted an Inquiry that shall not be answered shall include the following statement: “Because the Indenture and the Servicing Agreement provides that the Note Administrator, the Collateral
Manager, the Servicer, and the Special Servicer shall not answer an Inquiry if it determines, in its respective sole discretion, that (i) any Inquiry is beyond the scope of the topics described in the Indenture, (ii) answering any Inquiry
would not be in the best interests of the Issuer and/or the Noteholders, (iii) answering any Inquiry would be in violation of applicable law or the Loan Documents, the Collateral Management Agreement, this Indenture or the Servicing
Agreement, (iv) answering any Inquiry would materially increase the duties of, or result in significant additional cost or expense to, the Note Administrator, the
Collateral
Manager, the Servicer or the Special Servicer, as applicable, or (v) answering any such inquiry would reasonably be expected to result in the waiver of an attorney client privilege or the disclosure of attorney work product, or is otherwise
not advisable to answer, no inference shall be drawn from the fact that the Trustee, the Collateral Manager, the Servicer or the Special Servicer has declined to answer the Inquiry.” Answers posted on the Investor Q&A Forum shall be
attributable only to the Q&A Respondent, and shall not be deemed to be answers from any other Person.
Any Inquiry and the related answer posted to the Note Administrator’s Website may be amended, modified, deleted or otherwise
altered as the Note Administrator, the Collateral Manager, Servicer or Special Servicer, as applicable, may determine in its sole discretion.
None of the Placement Agents, the
Issuer, the Co-Issuer, the Seller, the Collateral Manager, the Advancing Agent, the Future Funding Indemnitor, the Retention Holder, the Servicer, the Special Servicer, the Note Administrator or the Trustee, or any of their respective
Affiliates shall certify to any of the information posted in the Investor Q&A Forum and no such party shall have any responsibility or liability for the content of any such information. The Note Administrator shall not be required to
post to the Note Administrator’s Website any Inquiry or answer thereto that the Note Administrator determines, in its sole discretion, is administrative or ministerial in nature. The Investor Q&A Forum shall not reflect questions,
answers and other communications that are not submitted via the Note Administrator’s Website. Additionally, the Note Administrator may require acceptance of a waiver and disclaimer for access to the Investor Q&A Forum.
(b)
The Note Administrator shall make available to
any Noteholder or holder of Preferred Shares and any beneficial owner of a Note, the Investor Registry. The “Investor Registry” shall be a voluntary service available on the Note Administrator’s Website, where Noteholders and beneficial owners
of Notes can register and thereafter obtain information with respect to any other Noteholder or beneficial owner that has so registered. Any Person registering to use the Investor Registry shall be required to certify that (i) it is a
Noteholder, a beneficial owner of a Note or a holder of a Preferred Share and (ii) it grants authorization to the Note Administrator to make its name and contact information available on the Investor Registry for at least 45 days from the date
of such certification to other registered Noteholders and registered beneficial owners or Notes. Such Person shall then be asked to enter certain mandatory fields such as the individual’s name, the company name and email address, as well as
certain optional fields such as address, and phone number. If any Noteholder or beneficial owner of a Note notifies the Note Administrator that it wishes to be removed from the Investor Registry (which notice may not be within forty-five (45)
days of its registration), the Note Administrator shall promptly remove it from the Investor Registry. The Note Administrator shall not be responsible for verifying or validating any information submitted on the Investor Registry, or for
monitoring or otherwise maintaining the accuracy of any information thereon. The Note Administrator may require acceptance of a waiver and disclaimer for access to the Investor Registry.
(c)
Certain information concerning the Collateral
and the Notes, including the Monthly Reports, CREFC
®
Reports and supplemental notices, shall be provided by the Note Administrator to certain market data providers
upon receipt by the Note Administrator from such persons of a certification in the form of
Exhibit I
hereto, which certification may be submitted electronically via
the Note Administrator’s Website. The Issuer hereby authorizes the provision of such information to Bloomberg, L.P., Trepp, LLC, Intex Solutions, Inc., CMBS.com, Inc., Markit, LLC, Interactive Data Corporation, and Thomson Reuters Corporation.
(d)
[
Reserved
].
(e)
The 17g-5 Information Provider will make the
“Rating Agency Q&A Forum and Servicer Document Request Tool” available to NRSROs via the 17g-5 Information Providers Website, where NRSROs may (i) submit inquiries to the Note Administrator relating to the Monthly Report, (ii) submit
inquiries to the Collateral Manager, the Servicer or the Special Servicer relating to servicing reports prepared by such parties, or the Collateral, except to the extent already obtained, (iii) submit requests for loan-level reports and
information, and (iv) view previously submitted inquiries and related answers or reports, as the case may be. Upon receipt of an inquiry or request for the Note Administrator, the Collateral Manager, the Servicer or the Special Servicer, as
the case may be, the 17g-5 Information Provider shall forward such inquiry or request to the Note Administrator, the Collateral Manager, the Servicer or the Special Servicer, as applicable, in each case via email within a commercially
reasonable period of time following receipt thereof. The Trustee, the Note Administrator, the Collateral Manager, the Servicer or the Special Servicer, as applicable, will be required to answer each inquiry, unless it determines that (a)
answering the inquiry would be in violation of applicable law, the Servicing Standard, the Collateral Management Standard, the Indenture, the Collateral Management Agreement, the Servicing Agreement, or the applicable loan documents, (b)
answering the inquiry would or is reasonably expected to result in a waiver of an attorney-client privilege or the disclosure of attorney work product, or (c) answering the inquiry would materially increase the duties of, or result in
significant additional cost or expense to, such party, and the performance of such additional duty or the payment of such additional cost or expense is beyond the scope of its duties under the Indenture or the Servicing Agreement, as
applicable. In the event that any of the Trustee, the Note Administrator, the Servicer or the Special Servicer declines to answer an inquiry, it shall promptly email the 17g-5 Information Provider with the basis of such declination. The 17g-5
Information Provider will be required to post the inquiries and the related answers (or reports, as applicable) on the Rating Agency Q&A Forum and Servicer Document Request Tool promptly upon receipt, or in the event that an inquiry is
unanswered, the inquiry and the basis for which it was unanswered. The Rating Agency Q&A Forum and Servicer Document Request Tool may not reflect questions, answers, or other communications which are not submitted through the 17g-5
Website. Answers and information posted on the Rating Agency Q&A Forum and Servicer Document Request Tool will be attributable only to the respondent, and will not be deemed to be answers from any other Person. No such other Person will
have any responsibility or liability for, and will not be deemed to have knowledge of, the content of any such information.
Section 10.14
Certain Procedures
.
For so long as the Notes may be transferred only in accordance with Rule 144A, the Issuer (or the Collateral Manager on its behalf)
will ensure that any Bloomberg screen containing information about the Rule 144A Global Notes includes the following (or similar) language:
(i)
the “Note
Box” on the bottom of the “Security Display” page describing the Rule 144A Global Notes will state: “Iss’d Under 144A”;
(ii)
the
“Security Display” page will have the flashing red indicator “See Other Available Information”; and
The indicator will link to the “Additional Security Information” page, which will state that the Offered Notes “are being offered in
reliance on the exemption from registration under Rule 144A of the Securities Act to persons who are qualified institutional buyers (as defined in Rule 144A under the Securities Act)”.
ARTICLE 11
APPLICATION OF FUNDS
Section 11.1
Disbursements of Amounts from Payment Account
.
(a)
Notwithstanding any other provision in this
Indenture, but subject to the other subsections of this
Section 11.1
hereof, on each Payment Date, the Note Administrator shall disburse amounts transferred to the
Payment Account in accordance with the following priorities (the “
Priority of Payments
”):
(i)
Interest Proceeds
. On each Payment Date that is not a Redemption Date, the Stated Maturity Date or a Payment Date following an acceleration of the Notes as a
result of the occurrence and continuation of an Event of Default, Interest Proceeds with respect to the related Due Period shall be distributed in the following order of priority:
(1)
to the payment of taxes and
filing fees (including any registered office and government fees) owed by the Issuer or the Co-Issuer, if any;
(2)
(a) first, to the extent not
previously reimbursed, to the Backup Advancing Agent and the Advancing Agent, in that order, the aggregate amount of any Nonrecoverable Interest Advances due and payable to such party; (b) second, to the Backup Advancing Agent if the Advancing
Agent has failed to make any Interest Advance required to be made by the Advancing Agent pursuant to the terms hereof and the Advancing Agent, in that order, the Advancing Agent Fee and any previously due but unpaid Advancing Agent Fee (with
respect to amounts owed to the Advancing Agent, unless waived by the Advancing Agent) (provided that the Advancing Agent or Backup Advancing Agent, as applicable, has not failed to make any Interest Advance required to be made in respect of any
Payment Date pursuant to the terms of the Indenture); and (c) third, to the Backup Advancing Agent and the Advancing Agent, in that order, to the extent due and payable to such party, Reimbursement Interest and reimbursement of any outstanding
Interest Advances not to exceed, in each case, the amount that would result in an Interest Shortfall with respect to such Payment Date;
(3)
(a) first,
pro rata
to the payment to the Note Administrator and to the Trustee of the accrued and unpaid fees in respect of their services equal to U.S. $5,000, in each
case payable monthly, (b) second, to the payment of other accrued and unpaid Company Administrative Expenses of the Note Administrator, the Trustee, the Paying Agent and the Preferred Share Paying Agent not to exceed the sum of U.S. $250,000
per Expense Year, and (c) third, to the payment of any other accrued and unpaid Company Administrative Expenses;
(4)
to the payment of the
Collateral Manager Fee and any previously due but unpaid Collateral Manager Fee (if not waived by the Collateral Manager);
(5)
to the payment of the Class A
Interest Distribution Amount plus any Class A Defaulted Interest Amount;
(6)
to the payment of the Class
A-S Interest Distribution Amount plus any Class A-S Defaulted Interest Amount;
(7)
to the payment of the Class B
Interest Distribution Amount plus any Class B Defaulted Interest Amount;
(8)
to the payment of the Class C
Interest Distribution Amount and, if no Class A Notes, Class A-S Notes and Class B Notes are outstanding, any Class C Defaulted Interest Amount;
(9)
to the payment of the Class C
Deferred Interest Amount (in reduction of the Aggregate Outstanding Amount of the Class C Notes);
(10)
to the payment of the Class D
Interest Distribution Amount and, if no Class A Notes, Class A-S Notes, Class B Notes and Class C Notes are outstanding, any Class D Defaulted Interest Amount;
(11)
to the payment of the Class D
Deferred Interest Amount (in reduction of the Aggregate Outstanding Amount of the Class D Notes);
(12)
if either of the Note
Protection Tests is not satisfied as of the Determination Date relating to such Payment Date, to the payment of, first, principal on the Class A Notes, second, principal on the Class A-S Notes, third, principal on the Class B Notes, fourth,
principal on the Class C Notes, and fifth, principal on the Class D Notes, in each case, to the extent necessary to cause each of the Note Protection Tests to be satisfied or, if sooner, until the Class A Notes, the Class A-S Notes, the Class B
Notes, the Class C Notes and the Class D Notes have been paid in full;
(13)
to the payment of the Class E
Interest Distribution Amount and, if no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes and Class D Notes are outstanding, any Class E Defaulted Interest Amount;
(14)
to the payment of the Class E
Deferred Interest Amount (in reduction of the Aggregate Outstanding Amount of the Class E Notes);
(15)
to the payment of the Class F
Interest Distribution Amount and, if no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes are outstanding, any Class F Defaulted Interest Amount;
(16)
to the payment of the Class F
Deferred Interest Amount (in reduction of the Aggregate Outstanding Amount of the Class F Notes);
(17)
to the payment of any Company
Administrative Expenses not paid pursuant to clause (3) above in the order specified therein;
(18)
upon
direction of the Collateral Manager, for deposit into the Expense Reserve Account in an amount not to exceed U.S.$100,000 in respect of such Payment Date; and
(19)
any remaining Interest Proceeds
to be released from the lien of the Indenture and paid (upon standing order of the Issuer) to the Preferred Share Paying Agent for deposit into the Preferred Share Payment Account for distribution to the holder of the Preferred Shares subject
to and in accordance with the provisions of the Preferred Share Paying Agency Agreement.
(ii)
Principal Proceeds
. On each Payment Date that is not a Redemption Date, the Stated Maturity Date or a Payment Date following an acceleration of the Notes as a
result of the occurrence and continuation of an Event of Default, Principal Proceeds with respect to the related Due Period shall be distributed in the following order of priority:
(1)
to the payment of the amounts
referred to in clauses (1) through (5)
of
Section 11.1(a)(i)
in the same order of priority specified therein, without giving effect to any limitations on amounts payable set forth therein, but only to the extent not paid in full thereunder
;
(2)
during the Reinvestment Period
and for so long as the Note Protection Tests are satisfied, so long as the Issuer is permitted to purchase Reinvestment Collateral Interests under
Section 12.2
at the
direction of the Collateral Manager, for deposit in the Reinvestment Account the amount designated by the Collateral Manager during the related Interest Accrual Period to be held for reinvestment in Reinvestment Collateral Interests or for
payment of the purchase price of Reinvestment Collateral Interests (it being understood that the Collateral Manager shall be deemed to have directed the reinvestment of all Principal Proceeds until such time as it has provided the Note
Administrator with a notice to the contrary);
(3)
to the payment of principal of
the Class A Notes until the Class A Notes have been paid in full
;
(4)
to the payment of amounts
referred to in clause (6)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder;
(5)
to the payment of principal of
the Class A-S Notes until the Class A-S Notes have been paid in full;
(6)
to the payment of amounts
referred to in clause (7)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder;
(7)
to the payment of principal of
the Class B Notes until the Class B Notes have been paid in full;
(8)
to the payment of amounts
referred to in clause (8)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder
(9)
to the payment of principal of
the Class C Notes (including any Class C Deferred Interest Amounts) until the Class C Notes have been paid in full;
(10)
to the payment of amounts
referred to in clause (10)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder;
(11)
to the payment of principal of
the Class D Notes (including any Class D Deferred Interest Amounts) until the Class D Notes have been paid in full;
(12)
to the payment of amounts
referred to in clause (13)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder;
(13)
to the payment of principal of
the Class E Notes (including any Class E Deferred Interest Amounts) until the Class E Notes have been paid in full;
(14)
to the payment of amounts
referred to in clause (15)
of
Section 11.1(a)(i)
,
but only to the extent not paid in full thereunder;
(15)
to the payment of principal of
the Class F Notes (including any Class F Deferred Interest Amounts) until the Class F Notes have been paid in full; and
(16)
any remaining Principal
Proceeds to be released from the lien of the Indenture and paid (upon standing order of the Issuer) to the Preferred Share Paying Agent for deposit into the Preferred Share Payment Account for distribution to the Holder of the Preferred Shares
subject to and in accordance with the provisions of the Preferred Share Paying Agency Agreement.
(iii)
Redemption Dates and Payment Dates During Events of Default
. On any Redemption Date, the Stated Maturity Date or a Payment Date following the occurrence and
continuation of an Event of Default, Interest Proceeds and Principal Proceeds with respect to the related Due Period will be distributed in the following order of priority:
(1)
to the payment of the amounts
referred to in clauses (1) through (4) of
Section 11.1(a)(i)
in the same order of priority specified therein, but without giving effect to any limitations on amounts
payable set forth therein;
(2)
to the payment of any
out-of-pocket fees and expenses of the Issuer, the Note Administrator and Trustee (including legal fees and expenses) incurred in connection with an acceleration of the Notes following an Event of Default, including in connection with sale and
liquidation of any of the Collateral in connection therewith;
(3)
to the payment of the Class A
Interest Distribution Amount, plus, any Class A Defaulted Interest Amount;
(4)
to the payment in full of
principal of the Class A Notes;
(5)
to the payment of the Class
A-S Interest Distribution Amount, plus, any Class A-S Defaulted Interest Amount;
(6)
to the payment in full of
principal of the Class A-S Notes;
(7)
to the payment of the Class B
Interest Distribution Amount, plus, any Class B Defaulted Interest Amount;
(8)
to the payment in full of
principal of the Class B Notes;
(9)
to the payment of the Class C
Interest Distribution Amount, plus, any Class C Defaulted Interest Amount;
(10)
to the payment in full of
principal of the Class C Notes (including any Class C Deferred Interest Amount);
(11)
to the payment of the Class D
Interest Distribution Amount, plus, any Class D Defaulted Interest Amount;
(12)
to the payment in full of
principal of the Class D Notes (including any Class D Deferred Interest Amount);
(13)
to the payment of the Class E
Interest Distribution Amount, plus, any Class E Defaulted Interest Amount;
(14)
to the payment in full of the
principal of the Class E Notes (including any Class E Deferred Interest Amount);
(15)
to the payment of the Class F
Interest Distribution Amount plus any Class F Defaulted Interest Amount;
(16)
to the payment in full of the
principal of the Class F Notes (including any Class F Deferred Interest Amount); and
(17)
any remaining Interest
Proceeds and Principal Proceeds to be released from the lien of the Indenture and paid (upon standing order of the Issuer) to the Preferred Share Paying Agent for deposit into the Preferred Share Payment Account for distribution to the Holder
of the Preferred Shares subject to and in accordance with the provisions of the Preferred Share Paying Agency Agreement.
(b)
On or before the Business Day prior to each
Payment Date, the Issuer shall, pursuant to
Section 10.3
, remit or cause to be remitted to the Note Administrator for deposit in the Payment Account an amount of Cash
sufficient to pay the amounts described in
Section 11.1(a)
required to be paid on such Payment Date.
(c)
If on any Payment Date the amount available in
the Payment Account from amounts received in the related Due Period are insufficient to make the full amount of the disbursements required by any clause of
Section 11.1(a)(i)
,
Section 11.1(a)(ii)
or
Section 11.1(a)(iii)
, such payments will be made to Noteholders of
each applicable Class, as to each such clause, ratably in accordance with the respective amounts of such disbursements then due and payable to the extent funds are available therefor.
(d)
In connection with any required payment by the
Issuer to the Servicer or the Special Servicer pursuant to the Servicing Agreement of any amount scheduled to be paid from time to time between Payment Dates from amounts received with respect to the Collateral Interests, the Servicer or the
Special Servicer, as applicable, shall be entitled to retain or withdraw such amounts from the Collection Account pursuant to the terms of the Servicing Agreement.
Section 11.2
Securities Accounts
.
All amounts held by, or deposited with the Note Administrator in the Reinvestment Account, Custodial Account and Expense Reserve
Account pursuant to the provisions of this Indenture shall be invested in Eligible Investments described in
clause (v)
of the definition of Eligible Investments and
such amounts shall be credited to the Indenture Account that is the source of funds for such investment. Absent such direction, funds in the foregoing accounts shall be held uninvested. All amounts held by or deposited with the Note
Administrator in the Payment Account shall be held uninvested.
Any amounts not so invested in Eligible Investments as herein provided, shall be credited to one or more securities
accounts established and maintained pursuant to the Securities Account Control Agreement at the Corporate Trust Office of the Note Administrator, or at another financial institution whose long-term rating is at least equal to
“A2” by
Moody’s
(or such lower rating as the Rating Agencies shall approve) and agrees to act as a Securities Intermediary on behalf of the Note Administrator on behalf of the Secured
Parties pursuant to an account control agreement in form and substance similar to the Securities Account Control Agreement.
ARTICLE 12
SALE AND EXCHANGES OF COLLATERAL INTERESTS; FUTURE FUNDING ESTIMATES
Section 12.
1
Sales and Exchanges of
Collateral Interests
.
(a)
Except as otherwise expressly permitted or
required by this Indenture, the Issuer shall not sell or otherwise dispose of any Collateral Interest. The Collateral Manager, on behalf of the Issuer, acting pursuant to the Collateral Management Agreement may direct the Special Servicer in
writing to sell at any time
:
(i)
any
Defaulted Collateral Interest
;
(ii)
any
Credit Risk Collateral Interest unless (x) the Note Protection Tests were not satisfied as of the immediately preceding Determination Date and have not been cured as of the proposed sale date or (y) the Trustee, upon written direction of a
majority of the Controlling Class, has provided written notice to the Collateral Manager that no further sales of Credit Risk Collateral Interests will be permitted and such notice has not been withdrawn by the Trustee
; or
(iii)
any
Collateral Interest acquired in violation of the Eligibility Criteria, the Reinvestment Criteria or the Acquisition and Disposition Requirements.
Sales of Credit Risk Collateral Interests during the Reinvestment Period shall only be permitted for so long as the subject sale
does not cause the Disposition Limitation Threshold to be met.
The Special Servicer shall sell any Collateral Interest in any sale permitted pursuant to this
Section 12.1(a)
, as directed by the Collateral Manager. Promptly after any sale pursuant to this
Section 12.1(a)
,
the Collateral Manager shall notify the 17g-5 Information Provider of the Collateral Interest sold and the sale price and shall provide such other information relating to such sale as may be reasonably requested by the Rating Agencies.
In connection with the sale of a Credit Risk Collateral Interest or a Defaulted Collateral Interest pursuant to this
Section 12.1(a)
, the Collateral Manager may also cause the Issuer to create one or more participation interests in such Credit Risk Collateral Interest or a Defaulted
Collateral Interest and direct the Special Servicer to sell one or more of such participation interests.
If a Collateral Interest that is a Defaulted Collateral Interest is not sold or otherwise disposed of by the Issuer within three (3)
years of such Collateral Interest becoming a Defaulted Collateral Interest, the Collateral Manager shall use commercially reasonable efforts to cause the Issuer to sell or otherwise dispose of such Collateral Interest as soon as commercially
practicable thereafter. The Issuer or the Collateral Manager shall not sell or otherwise dispose of any Collateral Interest for the primary purpose of recognizing gains or decreasing losses resulting from market value changes.
(b)
In addition, with respect to
any Credit Risk Collateral Interest permitted to be sold pursuant to
Section 12.1(a)
, such Credit Risk Collateral Interest may be sold by the Issuer at the
direction of the Collateral Manager:
(i)
to an entity, other than the
Collateral Manager or an affiliate thereof; or
(ii)
to the Collateral Manager or
an affiliate thereof that is purchasing such Credit Risk Collateral Interest from the Issuer (any purchase described in this clause (ii) is referred to herein as, a “
Credit Risk
Collateral Interest Cash Purchase
”) for a cash purchase price that is:
(a)
until the
Disposition Par Limitation Threshold has been met, equal to or greater than the Par Purchase Price thereof; and
(b)
after the
Disposition Par Limitation Threshold has been met following disclosure to, and approval by, the Advisory Committee equal to the greater of (A) the Par Purchase Price thereof and (B) the fair market value thereof.
(c)
A Credit Risk Collateral
Interest may be disposed of at any time, following disclosure to, and approval by, the Advisory Committee, by the Collateral Manager directing the Issuer to exchange such Credit Risk Collateral Interest for (1) a Collateral Interest owned by
the Collateral Manager or an Affiliate of the Collateral Manager that satisfies the Eligibility Criteria and the Acquisition and Disposition Requirements (such Collateral Interest, an “
Exchange Collateral Interest
”) or (2) a combination of an Exchange Collateral Interest and cash (such exchange for a Credit Risk Collateral Interest, a “
Credit Risk Collateral Interest Exchange
”);
provided
that the sum of (1) the Principal Balance of such Exchange Collateral
Interest plus all accrued and unpaid interest thereon plus (2) the cash amount (if any) to be paid to the Issuer by the Collateral Manager or an affiliate of the Collateral Manager, in connection with such exchange, is equal to or greater than:
(i)
until
the Disposition Par Limitation Threshold has been met, the Par Purchase Price of the Credit Risk Collateral Interest sought to be exchanged; and
(ii)
after
the Disposition Par Limitation Threshold has been met following disclosure to, and approval by, the Advisory Committee, the greater of (x) the Par Purchase Price of the Credit Risk Collateral Interest sought to be exchanged and (y) the fair
market value of such Credit Risk Collateral Interest.
Exchanges of Credit Risk Collateral Interests at all times shall only be permitted for so long as the subject exchange does not
cause the Disposition Limitation Threshold to be met.
(d)
In addition to the above, the Majority of
Preferred Shareholders shall have the right to purchase (i) any Defaulted Collateral Interest for a purchase price equal to the Par Purchase Price and (ii) any Credit Risk Collateral Interest for a purchase price equal to, (x) until the
Disposition Par Limitation Threshold has been met, the Par Purchase Price, and (y) after the Disposition Par Limitation Threshold has been met following disclosure to, and approval by, the Advisory Committee the greater of (1) the Par Purchase
Price and (2) the fair market value thereof.
During the Reinvestment Period, the Majority of Preferred Shareholders’ right to purchase Credit Risk Collateral Interests shall be
permitted only for so long as the subject sale does not cause the Disposition Limitation Threshold to be met.
(e)
If the Collateral Manager directs the sale of a
Defaulted Collateral Interest pursuant to
Section 12.1(a)
, the Special Servicer shall sell such Defaulted Collateral Interest for a price that the Special Servicer
determines, in accordance with the Servicing Standard, to be at least equal to the fair market value of such Defaulted Collateral Interest,
provided
that if the
purchaser of such Defaulted Collateral Interest is the Collateral Manager, the Special Servicer or an Affiliate thereof, the Trustee shall determine that such offer is for at least the fair market value of such Defaulted Collateral Interest.
In addition, with respect to any exchange of a Collateral Interest and any exercise of the Majority of Preferred Shareholders’ right to purchase Credit Risk Collateral Interests, the determination of fair market value, to the extent it is
applicable, shall be made by the Trustee. In connection with any determination of fair market value required to be made by the Trustee, the Trustee shall retain an independent third party expert in real estate or commercial mortgage loan
matters with at least five (5) years’ experience in valuing or investing in real estate loans similar to such Defaulted Collateral Interest, that has been selected with reasonable care by the Trustee to determine the fair market value for such
Defaulted Collateral Interest. The Trustee shall conclusively rely upon any such third party determination, and all reasonable fees and costs of any appraisals, inspection reports, and opinions of value incurred by any such third party shalll
be covered by, and shall be paid in advance of any determination by the Collateral Manager or its Affiliate;
provided
that the Trustee may not engage a third-party
expert whose fees exceed a commercially reasonable amount as determined by the Trustee.
(f)
If the Collateral Manager directs the sale a
Collateral Interest acquired in violation of the Eligibility Criteria, the Reinvestment Criteria or the Acquisition and Disposition Requirements, the Issuer may sell such Collateral Interest to the Collateral Manager or an Affiliate thereof for
a cash purchase price that is equal to its Par Purchase Price.
(g)
After the Issuer has notified the Trustee and the
Note Administrator of an Optional Redemption, a Clean-up Call, a Tax Redemption or an Auction Call Redemption in accordance with
Section 9.1
, the Collateral Manager,
on behalf of the Issuer, and acting pursuant to the Collateral Management Agreement, may at any time direct the Trustee (in the case of an Optional Redemption, Clean-up Call Redemption or Tax Redemption) or the Special Servicer (in the case of
an Auction Call Redemption) in writing by Issuer Order to sell, and the Trustee or the Special Servicer, as applicable, shall sell in the manner directed by the Majority of Preferred Shareholders in writing, any Collateral Interest without
regard to the foregoing limitations in
Section 12.1(a)
;
provided
that:
(i)
the Sale
Proceeds therefrom must be used to pay certain expenses and redeem all of the Notes in whole but not in part pursuant to
Section 9.1
, and upon any such sale
the Trustee shall release the lien of such Collateral Interest, and the Custodian shall, upon receipt of a Request for Release, release the related Collateral Interest File, pursuant to
Section 10.10
;
(ii)
the
Collateral Manager on behalf of the Issuer shall not sell (and the Trustee shall not be required to release) a Collateral Interest pursuant to this
Section 12.1(f)
unless the Collateral Manager certifies to the Trustee and the Note Administrator that, in the Collateral Manager’s reasonable business judgment based on calculations included in the certification (which shall include the sales prices of the
Collateral Interests), the Sale Proceeds from the sale of one or more of the Collateral Interests and all Cash and proceeds from Eligible Investments will be at least equal to the Total Redemption Price; and
(iii)
in connection with an
Optional Redemption, a Clean-Up Call, a Tax Redemption or an Auction Call Redemption
, all the Collateral Interests to be sold pursuant to this
Section 12.1(f)
must be sold in accordance with the requirements set forth in
Section 9.1(f)
.
(h)
In the event that any Notes remain Outstanding as
of the Payment Date occurring six months prior to the Stated Maturity Date of the Notes, the Collateral Manager will be required to determine whether the proceeds expected to be received on the Collateral Interests prior to the Stated Maturity
Date of the Notes will be sufficient to pay in full the principal amount of (and accrued interest on) the Notes on the Stated Maturity Date. If the Collateral Manager determines, in its sole discretion, that such proceeds will not be
sufficient to pay the outstanding principal amount of and accrued interest on the Notes (a “
Note Liquidation Event
”) on the Stated Maturity Date of the Notes, the
Issuer will, at the direction of the Collateral Manager, be obligated to liquidate the portion of Collateral Interests sufficient to pay the remaining principal amount of and interest on the Notes on or before the Stated Maturity Date. The
Collateral Interests to be liquidated by the Issuer will be selected by the Collateral Manager.
(i)
Notwithstanding anything herein to the contrary,
the Collateral Manager on behalf of the Issuer shall be permitted to sell to a Permitted Subsidiary any Sensitive Asset for consideration consisting of equity interests in such Permitted Subsidiary (or an increase in value of equity interests
already owned).
(j)
In the case of a sale of a Credit Risk Collateral
Interest or a Defaulted Collateral Interest, or the exchange of a Credit Risk Collateral Interest, in each case, which is a Combined Loan, the related Mortgage Loan and the corresponding Mezzanine Loan shall be sold or exchanged together.
(k)
Under no circumstances shall the Trustee be
required to acquire any Collateral Interests or property related thereto.
(l)
Any Collateral Interest sold pursuant to this
Section 12.1
shall be released from the lien of this Indenture.
Section 12.2
Reinvestment Collateral Interest.
(a)
Except as provided in
Section 12.3(
c)
, during the Reinvestment Period, amounts (or Eligible Investments) credited to the Reinvestment
Account may, but are not required to, be reinvested in Reinvestment Collateral Interests (which shall be, and hereby are upon acquisition by the Issuer, Granted to the Trustee pursuant to the Granting Clause of this Indenture) that satisfy the
applicable Eligibility Criteria and the Acquisition and Disposition Requirements and the following additional criteria (the “
Reinvestment Criteria
”), as evidenced by
an Officer’s Certificate of the Collateral Manager on behalf of the Issuer delivered to the Trustee, delivered as of the date of the commitment to purchase such Reinvestment Collateral Interests:
(i)
the Note
Protection Tests are satisfied; and
(ii)
no Event
of Default has occurred and is continuing.
(b)
Notwithstanding the foregoing provisions, (i)
Cash on deposit in the Reinvestment Account may be invested in Eligible Investments pending investment in Reinvestment Collateral Interests and (ii) if an Event of Default shall have occurred and be continuing, no Reinvestment Collateral
Interest may be acquired unless it was the subject of a commitment entered into by the Issuer prior to the occurrence of such Event of Default.
(c)
Notwithstanding the foregoing provisions, at any
time when
the Retention Holder or any Affiliate that is wholly-owned by KREF Sub-REIT and a “disregarded entity” for U.S. federal income tax purposes continues to own 100% of the
Preferred Shares, it may contribute additional Cash, Eligible Investments and Collateral Interests to the Issuer
so long as, in the case of Collateral Interests, any such Collateral Interests satisfy the Eligibility Criteria at the
time of such contribution, including, but not limited to, for purposes of effecting any cure rights reserved for the holder of the Pari Passu Participations, pursuant to and in accordance with the terms of the related Participation Agreement.
Cash or Eligible Investments contributed to the Issuer by the Retention Holder (during the Reinvestment Period) shall be credited to the Reinvestment Account (unless the Retention Holder directs otherwise) and may be reinvested by the Issuer in
Reinvestment Collateral Interests so long as no Event of Default has occurred and is continuing.
Section 12.3
Conditions
Applicable to all
Transactions Involving Sale or Grant.
(a)
Any transaction effected after the Closing Date
under this
Article 12
shall be conducted in accordance with the requirements of the Collateral Management Agreement;
provided
that (1) the Collateral Manager shall not direct the Special Servicer to acquire any Collateral Interest for
inclusion in the Collateral from the Collateral Manager or any of its Affiliates as principal or to sell any Collateral Interest from the Collateral to the Collateral Manager or any of its Affiliates as principal unless the transaction is
effected in accordance with the Collateral Management Agreement and (2) the Collateral Manager shall not direct the Special Servicer to acquire any Collateral Interest for inclusion in the Collateral from any account or portfolio for which the
Collateral Manager serves as investment adviser or direct the Special Servicer to sell any Collateral Interest to any account or portfolio for which the Collateral Manager serves as investment adviser unless such transactions comply with the
Collateral Management Agreement and Section 206(3) of the Advisers Act. The Special Servicer shall have no responsibility to oversee compliance with this clause by the other parties.
(b)
Upon any Grant pursuant to this
Article 12
, all of the Issuer’s right, title and interest to the Collateral Interest or Securities shall be Granted to the Trustee pursuant to this Indenture, such
Collateral Interest or Securities shall be registered in the name of the Issuer, and the Trustee (or the Custodian on its behalf) shall receive such Pledged Collateral Interest or Securities as evidenced by the Collateral Interest File. The
original note and/or participation certificate and all allonges thereto or assignments thereof
that are required to be included in the Collateral Interest File related to any
Reinvestment Collateral Interest or Exchange Collateral Interest acquired by the Issuer after the Closing Date shall be delivered no later than one (1) Business Day before the date of acquisition of such Reinvestment Collateral Interest or
Exchange Collateral Interest, as applicable, by the Issuer and the remaining documents constituting such Collateral Interest File shall be delivered by no later than three (3) Business Days after the date of acquisition.
(c)
Notwithstanding anything contained in this
Article 12
to the contrary, the Issuer shall, subject to this
Section 12.3(c)
, have the right
to effect any transaction which has been consented to by the Holders of Notes evidencing 100% of the Aggregate Outstanding Amount of each and every Class of Notes (or if there are no Notes Outstanding, 100% of the Preferred Shares).
(d)
The acquisition by the Issuer of any Reinvestment
Collateral Interest or Exchange Collateral Interest shall be conditioned upon delivery by the Issuer to the Custodian of a Subsequent Transfer Instrument substantially in the form of Exhibit C to the Collateral Interest Purchase Agreement.
(e)
Any acquisition or disposition of a Collateral
Interest shall be conditioned upon delivery by the Collateral Manager to the Issuer, the Note Administrator and the Special Servicer of an Officer’s Certificate of the Collateral Manager substantially in the form of
Exhibit J
hereto stating that the Reinvestment Criteria, the Eligibility Criteria, the Acquisition and Disposition Requirements and the requirements of
Section 12.3(a)
have been satisfied (and setting forth, to the extent appropriate, calculations in reasonable detail necessary to determine compliance with the Eligibility Criteria).
Section 12.4
Modifications to Note Protection Tests.
In the event that (1) Moody’s modifies the definitions or calculations relating to any of the Moody’s specific Eligibility Criteria
or (2) any Rating Agency modifies the definitions or calculations relating to either of the Note Protection Tests (each, a “
Rating Agency Test Modification
”), in any
case in order to correspond with published changes in the guidelines, methodology or standards established by such Rating Agency, the Issuer may, but is under no obligation solely as a result of this
Section 12.4
to, incorporate corresponding changes into this Indenture by an amendment or supplement hereto without the consent of the Holders of the Notes (except as provided below) (but with written notice
to the Noteholders) or the Preferred Shares if (x) in the case of a modification of a Moody’s specific Eligibility Criteria, the Rating Agency Condition is satisfied with respect to Moody’s, (y) in the case of a modification of a Note
Protection Test, the Rating Agency Condition is satisfied with respect to each Rating Agency then rating any Class of Notes and (z) written notice of such modification is delivered by the Collateral Manager to the Note Administrator and the
Trustee and the Holders of the Notes and Preferred Shares (which notice may be included in the next regularly scheduled report to Noteholders). Any such Rating Agency Test Modification shall be effected without execution of a supplemental
indenture;
provided
,
however
, that such amendment shall be (i) evidenced by a written
instrument executed and delivered by each of the Co‑Issuers and the Collateral Manager and delivered to the Trustee, and (ii) accompanied by delivery by the Issuer to the Trustee of an Officer’s Certificate of the Issuer (or the Collateral
Manager on behalf of the Issuer) certifying that such amendment has been made pursuant to and in compliance with this
Section 12.4
.
Section 12.5
Ongoing Future Advance Estimates.
(a)
The Note Administrator and the Trustee, on behalf
of the Noteholders and the Holders of the Preferred Shares, are hereby directed by the Issuer to (i) enter into the Future Funding Agreement and the Future Funding Account Control Agreement, pursuant to which the Seller will agree to pledge
certain collateral described therein in order to secure certain future funding obligations of any Affiliated Future Funding Companion Participation Holder as holder of any Future Funding Companion Participations and (ii) administer the rights
of the Note Administrator and the secured party, as applicable, under the Future Funding Agreement and the Future Funding Account Control Agreement. In the event an Access Termination Notice (as defined in the Future Funding Agreement) has
been sent by the Note Administrator to the related account bank and for so long as such Access Termination Notice is not withdrawn by the Note Administrator, the Note Administrator shall, pursuant to the direction of the Issuer or the Special
Servicer on its behalf, direct the use of funds on deposit in the Future Funding Controlled Reserve Account pursuant to the terms of the Future Funding Agreement. Neither the Trustee nor the Note Administrator shall have any obligation to
ensure that the Seller is depositing or causing to be deposited all amounts into the Future Funding Controlled Reserve Account that are required to be deposited therein pursuant to the Future Funding Agreement.
(b)
Pursuant to the Future Funding Agreement, on the Closing Date, (i) KREF Holdings, in its capacity as Future Funding Indemnitor, shall deliver its Largest One Quarter Future Advance Estimate to the Collateral Manager, the
Servicer, the Special Servicer and the Note Administrator and (ii) the Future Funding Indemnitor shall deliver to the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator and the 17g-5 Information Provider a
certification of a responsible financial officer of the Future Funding Indemnitor that the Future Funding Indemnitor has Segregated Liquidity at least equal to the Largest One Quarter Future Advance Estimate. Thereafter, so long as any
Future Funding Companion Participation
is held by an Affiliated Future Funding Companion Participation Holder
and any future advance obligations remain outstanding under
such Future Funding Companion Participation, no later than the 18th day (or, if such day is not a Business Day, the next succeeding Business Day) of the calendar-month preceding the beginning of each calendar quarter, the Future Funding
Indemnitor shall deliver (which may be by email) to the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator and the 17g-5 Information Provider a certification of a responsible financial officer of the Future Funding
Indemnitor that the Future Funding Indemnitor has Segregated Liquidity equal to the greater of (i) the Largest One Quarter Future Advance Estimate or (ii) the controlling Two Quarter Future Advance Estimate for the immediately following two
calendar quarters.
(c)
Pursuant to the Future Funding Agreement, for so long as any Future Funding Companion Participations
is held by an Affiliated Future Funding Companion Participation Holder
and any future advance obligations remain outstanding under such Future Funding Companion Participation and, subject to
Section 12.5(d)
, by (x) no earlier than the thirty-five (35) days prior to, and (y) no later than the fifth (5th) day of, the calendar-month preceding the beginning of each calendar quarter, the
Seller is required to deliver to the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator and the Future Funding Indemnitor (i) a Two Quarter Future Advance Estimate for the immediately following two calendar
quarters and (ii) such supporting documentation and other information (including any relevant calculations) as is reasonably necessary for the Servicer to perform its obligations described below. The Issuer shall cause the Servicer to,
within ten (10) days after receipt of the Two Quarter Future Advance Estimate and supporting documentation from the Seller, (A) review the Seller’s Two Quarter Future Advance Estimate and such supporting documentation and other information
provided by the Seller in connection therewith, (B) consult with the Seller with respect thereto and make such inquiry, and request such additional information (and the Seller shall promptly respond to each such request for consultation,
inquiry or request for information), in each case as is commercially reasonable for the Servicer to perform its obligations described in the following clause (C), and (C) by written notice to the Note Administrator, the Seller and the Future
Funding Indemnitor substantially in the form set forth in the Servicing Agreement, either (1) confirm that nothing has come to the attention of the Servicer in the documentation provided by the Seller that in the reasonable opinion of the
Servicer would support a determination of a Two Quarter Future Advance Estimate that is at least 25% higher than the Seller’s Two Quarter Future Advance Estimate for such period and shall state that the Seller’s Two Quarter Future Advance
Estimate for such period shall control or (2) deliver its own Two Quarter Future Advance Estimate for such period. If the
Servicer’s Two Quarter Future Advance Estimate
is at least 25% higher than the Seller’s Two Quarter Future Advance Estimate for any period, then the Servicer’s Two Quarter Future Advance Estimate for such period shall control; otherwise, the Seller’s Two Quarter Future Advance Estimate
for such period shall control.
(d)
No Two Quarter Future Advance Estimate shall be
made by the Seller or the
Servicer
for a calendar quarter if, by the fifth (5th) day of the calendar-month preceding the beginning of such calendar quarter, the Future
Funding Indemnitor delivers (which may be by email) to the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator and the 17g-5 Information Provider a certificate of a responsible financial officer of the Future Funding
Indemnitor certifying that (i) the Future Funding Indemnitor has Segregated Liquidity equal to at least 100% of the aggregate amount of outstanding future advance obligations (subject to the same exclusions as the calculation of the Two Quarter
Future Advance Estimate) under the Future Funding Companion Participations
held by Affiliated Future Funding Companion Participation Holders
or (ii) no such future funding
obligations remain outstanding under the Future Funding Companion Participations held by Affiliated Future Funding Companion Participation Holders. All certifications regarding Segregated Liquidity, any Two Quarter Future Advance Estimates, or
any notices
described in (b) and (c) above shall be emailed to the Note Administrator at trustadministrationgroup@wellsfargo.com and cts.cmbs.bond.admin@wellsfargo.com or
such other email address as provided by the Note Administrator.
(e)
The 17g-5 Information Provider shall promptly post to the 17g-5 Website pursuant to
Section 14.13(d)
of this
Indenture
, any certification with respect to the holder of the Future Funding Companion Participations that is delivered to it in accordance
with the Future Funding Agreement.
ARTICLE 13
NOTEHOLDERS’ RELATIONS
Section 13.1
Subordination
.
(a)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree that, for the benefit of the Holders of the Class A Notes that the rights of the Holders of the Class A-S Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F
Notes shall be subordinate and junior to the Class A Notes to the extent and in the manner set forth in
Article 11
of this Indenture;
provided
that on each Redemption Date and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all
accrued and unpaid interest on and outstanding principal on the Class A Notes shall be paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of
Holders of the Class A Notes consent, other than in Cash, before any further payment or distribution is made on account of any other Class of Notes, to the extent and in the manner provided in
Section 11.1(a)(iii)
.
(b)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree, for the benefit of the Holders of the Class A-S Notes, that the rights of the Holders of the Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F Notes shall be
subordinate and junior to the Class A-S Notes to the extent and in the manner set forth in
Article 11
of this Indenture;
provided
that on each Redemption Date and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all accrued and
unpaid interest on and outstanding principal on the Class A-S Notes shall be paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of Holders
of the Class A-S Notes consent, other than in Cash, before any further payment or distribution is made on account of any of the Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F Notes to the extent and in the manner
provided in
Section 11.1(a)(iii)
.
(c)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree, for the benefit of the Holders of the Class B Notes, that the rights of the Holders of the Class C Notes, Class D Notes, Class E Notes and Class F Notes shall be subordinate and junior
to the Class B Notes to the extent and in the manner set forth in
Article 11
of this Indenture;
provided
that on each Redemption Date and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all accrued and unpaid interest on and outstanding principal on
the Class B Notes shall be paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of Holders of the Class B Notes consent, other than in Cash,
before any further payment or distribution is made on account of any of the Class C Notes, Class D Notes, Class E Notes and Class F Notes to the extent and in the manner provided in
Section 11.1(a)(iii)
.
(d)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree, for the benefit of the Holders of the Class C Notes, that the rights of the Holders of the Class D Notes, Class E Notes and Class F Notes shall be subordinate and junior to the Class C
Notes to the extent and in the manner set forth in
Article 11
of this Indenture;
provided
that on each Redemption Date and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all accrued and unpaid interest on and outstanding principal on
the Class C Notes shall be paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of Holders of the Class C Notes consent, other than in Cash,
before any further payment or distribution is made on account of any of the Class D Notes, Class E Notes and Class F Notes to the extent and in the manner provided in
Section
11.1(a)(iii)
.
(e)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree, for the benefit of the Holders of the Class D Notes, that the rights of the Holders of the Class E Notes and Class F Notes shall be subordinate and junior to the Class D Notes to the
extent and in the manner set forth in
Article 11
of this Indenture;
provided
that on
each Redemption Date and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all accrued and unpaid interest on and outstanding principal on the
Class D Notes shall be paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of Holders of the Class D Notes consent, other than in Cash,
before any further payment or distribution is made on account of the Class E Notes and Class F Notes to the extent and in the manner provided in
Section 11.1(a)(iii)
.
(f)
Anything in this Indenture or the Notes to the
contrary notwithstanding, the Issuer and the Holders agree, for the benefit of the Holders of the Class E Notes, that the rights of the Holders of the Class F Notes shall be subordinate and junior to the Class E Notes to the extent and in the
manner set forth in
Article 11
of this Indenture;
provided
that on each Redemption Date
and each Payment Date as a result of the occurrence and continuation of the acceleration of the Notes following the occurrence of an Event of Default, all accrued and unpaid interest on and outstanding principal on the Class E Notes shall be
paid pursuant to
Section 11.1(a)(iii)
in full in Cash or, to the extent 100% of Holders of the Class E Notes consent, other than in Cash, before any further payment
or distribution is made on account of the Class F Notes to the extent and in the manner provided in
Section 11.1(a)(iii)
.
(g)
In the event that notwithstanding the provisions
of this Indenture, any Holders of any Class of Notes shall have received any payment or distribution in respect of such Class contrary to the provisions of this Indenture, then, unless and until all accrued and unpaid interest on and
outstanding principal of all more senior Classes of Notes have been paid in full in accordance with this Indenture, such payment or distribution shall be received and held in trust for the benefit of, and shall forthwith be paid over and
delivered to, the Note Administrator, which shall pay and deliver the same to the Holders of the more senior Classes of Notes in accordance with this Indenture.
(h)
Each Holder of any Class of Notes agrees with the
Note Administrator on behalf of the Secured Parties that such Holder shall not demand, accept, or receive any payment or distribution in respect of such Notes in violation of the provisions of this Indenture including
Section 11.1(a)
and this
Section 13.1
;
provided
,
however
, that after all accrued and unpaid interest on, and principal of, each
Class of Notes senior to such Class have been paid in full, the Holders of such Class of Notes shall be fully subrogated to the rights of the Holders of each Class of Notes senior thereto. Nothing in this
Section 13.1
shall affect the obligation of the Issuer to pay Holders of such Class of Notes any amounts due and payable hereunder.
(i)
The Trustee agrees and the Holders of each Class
of Notes and the holders of the equity in the Issuer, the Co-Issuer and the Collateral Manager are deemed to agree, not to institute against, or join any other person in instituting against, the Issuer, the Co-Issuer or any Permitted
Subsidiary, any petition for bankruptcy, reorganization, arrangement, moratorium, liquidation or similar proceedings under the laws of any jurisdiction before one year and one day or, if longer, the applicable preference period then in effect,
have elapsed since the final payments to the Holders of the Notes.
Section 13.2
Standard of Conduct
.
In exercising any of its or their voting rights, rights to direct and consent or any other rights as a Securityholder under this
Indenture, a Securityholder or Securityholders shall not have any obligation or duty to any Person or to consider or take into account the interests of any Person and shall not be liable to any Person for any action taken by it or them or at
its or their direction or any failure by it or them to act or to direct that an action be taken, without regard to whether such action or inaction benefits or adversely affects any Securityholder, the Issuer, or any other Person, except for any
liability to which such Securityholder may be subject to the extent the same results from such Securityholder’s taking or directing an action, or failing to take or direct an action, in bad faith or in violation of the express terms of this
Indenture.
ARTICLE 14
MISCELLANEOUS
Section 14.1
Form of Documents Delivered to the Trustee and Note Administrator
.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer or the Co-Issuer may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel, unless such Authorized Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer of the Issuer or the Co-Issuer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, the Issuer, the Co-Issuer, the Collateral Manager or any other Person, stating that the information with respect to such factual matters is in the possession of the Issuer, the Co-Issuer, the Collateral
Manager or such other Person, unless such Authorized Officer of the Issuer or the Co-Issuer or such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Any Opinion of Counsel also may be
based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Authorized Officer of the Issuer or the Co-Issuer, or the Collateral Manager on behalf of the Issuer, certifying as to the factual
matters that form a basis for such Opinion of Counsel and stating that the information with respect to such matters is in the possession of the Issuer or the Co-Issuer or the Collateral Manager on behalf of the Issuer, unless such counsel knows
that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Whenever in this Indenture it is
provided
that
the absence of the occurrence and continuation of a Default or Event of Default is a condition precedent to the taking of any action by the Trustee or the Note Administrator at the request or direction of the Issuer or the Co-Issuer, then
notwithstanding that the satisfaction of such condition is a condition precedent to the Issuer’s or the Co-Issuer’s rights to make such request or direction, the Trustee or the Note Administrator shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and continuation of such Default or Event of Default as provided in
Section 6.1(g)
.
Section 14.2
Acts of Securityholders
.
(a)
Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by
an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and the Note Administrator, and, where it is hereby
expressly required, to the Issuer and/or the Co-Issuer. Such instrument or instruments (and the action or actions embodied therein and evidenced thereby) are herein sometimes referred to as the “
Act
” of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee, the Note Administrator, the Issuer and the Co-Issuer, if made in the manner provided in this
Section 14.2
.
(b)
The fact and date of the execution by any Person
of any such instrument or writing may be proved in any manner which the Trustee or the Note Administrator deems sufficient.
(c)
The principal amount and registered numbers of
Notes held by any Person, and the date of his holding the same, shall be proved by the Notes Register. The Notional Amount and registered numbers of the Preferred Shares held by any Person, and the date of his holding the same, shall be proved
by the register of members maintained with respect to the Preferred Shares. Notwithstanding the foregoing, the Trustee and Note Administrator may conclusively rely on an Investor Certification to determine ownership of any Notes.
(d)
Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Securityholder shall bind such Securityholder (and any transferee thereof) of such Security and of every Security issued upon the registration thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee, the Note Administrator, the Preferred Share Paying Agent, the Share Registrar, the Issuer or the Co-Issuer in reliance thereon, whether or not notation of such action is
made upon such Security.
Section 14.3
Notices, etc
.
, to the Trustee, the Note Administrator, the Issuer, the Co-Issuer, the
Advancing Agent, the Servicer, the Special Servicer, the Preferred Share Paying Agent, the Placement Agents, the Collateral Manager and the Rating Agencies
.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Securityholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to, or filed with:
(a)
the Trustee by any Securityholder or by the Note
Administrator, the Issuer or the Co-Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed, by certified mail, return receipt requested, hand delivered, sent by overnight courier
service guaranteeing next day delivery, to the Trustee addressed to it at Wilmington Trust, National Association, 1100 North Market Street, Wilmington, Delaware 19890, Attention: CMBS Trustee – KREF 2018-FL1, Facsimile number: (302) 636-6196,
with a copy to: E-mail: cmbstrustee@wilmingtontrust.com
,
or at any other address previously furnished in writing to the parties hereto and the Servicing Agreement, and to
the Securityholders
;
(b)
the Note Administrator by the Trustee or by any
Securityholder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service, to the Note Administrator
addressed to it at Wells Fargo Bank, National Association, Corporate Trust Services, 9062 Old Annapolis Road, Columbia, Maryland 21045-1951, Attention: Corporate Trust Services – KREF 2018-FL1, with a copy by email to:
trustadmistrationgroup@wellsfargo.com and cts.cmbs.bond.admin@wellsfargo.com
,
or at any other address previously furnished in writing to the parties hereto and the Servicing
Agreement, and to the Securityholders
;
(c)
the Issuer by the Trustee, the Collateral Manager, the Note Administrator or by any Securityholder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class
postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Issuer addressed to it at
c/o KKR Real Estate Finance Manager LLC, 9 West 57
th
Street, Suite 4200, New York, New York 10019, with a copy by email to: KREFCLO@KKR.com,
or at any other address previously furnished in writing
to the Trustee and the Note Administrator by the Issuer, with a copy to the Special Servicer;
(d)
the Co-Issuer by the Trustee, the Collateral Manager, the Note Administrator or by any Securityholder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first
class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Co-Issuer addressed to it
c/o KKR Real Estate Finance Manager LLC, 9 West 57
th
Street, Suite 4200, New York, New York 10019, with a copy by email to: KREFCLO@KKR.com,
or at any other address previously furnished
in writing to the Trustee and the Note Administrator by the Co-Issuer, with a copy to the Special Servicer at its address set forth below;
(e)
the Advancing Agent by the Trustee, the Collateral Manager, the Note Administrator, the Issuer or the Co-Issuer shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Advancing Agent addressed to it at
c/o KKR Real Estate Finance Manager LLC, 9 West 57
th
Street, Suite 4200, New York, New York 10019, with a copy by email to: KREFCLO@KKR.com,
or at any
other address previously furnished in writing to the Trustee, the Note Administrator, and the Co-Issuers, with a copy to the Special Servicer at its address set forth below.
(f)
the Preferred Share Paying Agent shall be
sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed, by certified mail, return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery or by facsimile in
legible form, to the Preferred Share Paying Agent addressed to it at its Corporate Trust Office or at any other address previously furnished in writing by the Preferred Share Paying Agent;
(g)
the Servicer by the Issuer, the Collateral
Manager, the Note Administrator, the Co-Issuer or the Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid to Midland Loan Services, a Division of PNC Bank, National Association, P.O. Box
25965, Shawnee Mission, Kansas 66225-5965, Attention: Executive Vice President – Division Head, or hand delivered, sent by overnight courier service or by facsimile in legible form, to the Servicer addressed to it at Midland Loan Services, a
Division of PNC Bank, National Association, 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210, telephone number is (913) 253-9000, Attention: Executive Vice President – Division Head, email: noticeadmin@midlandls.com, or
at any other address previously furnished in writing to the Issuer, the Collateral Manager, the Note Administrator, the Co-Issuer and the Trustee;
(h)
the Special Servicer by the Issuer, the
Collateral Manager, the Note Administrator, the Co-Issuer or the Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid to Midland Loan Services, a Division of PNC Bank, National
Association, P.O. Box 25965, Shawnee Mission, Kansas 66225-5965, Attention: Executive Vice President – Division Head, or hand delivered, sent by overnight courier service or by facsimile in legible form, to the Special Servicer addressed to it
at Midland Loan Services, a Division of PNC Bank, National Association, 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210, telephone number is (913) 253-9000, Attention: Executive Vice President – Division Head, email:
noticeadmin@midlandls.com, or at any other address previously furnished in writing to the Issuer, the Collateral Manager, the Note Administrator, the Co-Issuer and the Trustee;
(i)
the Rating Agencies, by the Issuer, the
Co-Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator or the Trustee shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class
postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Rating Agencies addressed to them at (i) Kroll Bond Rating Agency, Inc., 805 Third Avenue, 29th Floor, New York, New York 10022,
Attention: CMBS Surveillance (or by electronic mail at cmbssurveillance@kbra.com) and (ii) Moody’s Investor Services, Inc., 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Attention: CRE CDO Surveillance, (or by electronic
mail at moodys_cre_cdo_monitoring@moodys.com), or such other address that any Rating Agency shall designate in the future;
provided
that any request, demand,
authorization, direction, order, notice, consent, waiver or Act of Securityholders or other documents provided or permitted by this Indenture to be made upon, given or furnished to, or filed with the Rating Agencies shall be given in accordance
with, and subject to, the provisions of
Section 14.13
hereof
;
(j)
Wells Fargo Securities, LLC, as a Placement Agent, as a Placement Agent, by the Issuer, the Co-Issuer,
the Collateral Manager,
the Note Administrator, the
Trustee or the Servicer
shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier
service or by facsimile in legible form to Wells Fargo Securities, LLC, 375 Park Avenue, New York, New York 10152, Attention: A.J. Sfarra, fax: (212) 214-8970, email: anthony.sfarra@wellsfargo.com, with a copy to: Brad W. Funk, Esq., Wells
Fargo Law Department, D1053-300, 301 South College St., Charlotte, North Carolina 28288, fax: (704) 715-2378, email: brad.funk@wellsfargo.com;
(k)
KKR Capital Markets LLC, as a Placement Agent, by the Issuer, the Co-Issuer,
the Collateral Manager,
the Note Administrator, the Trustee or the Servicer shall
be sufficient for every purpose
hereunder
if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in
legible form to 9 West 57th Street, Suite 4200, New York, New York 10019, Attention: Adam Smith, Email: Adam.Smith@kkr.com
(l)
Morgan Stanley & Co. LLC, as a Placement Agent, by the Issuer, the Co-Issuer,
the Collateral Manager,
the Note Administrator, the Trustee or the Servicer
shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form to
Morgan Stanley & Co. LLC, 1585 Broadway,
New York, New York 10036, Attention: Jane Lam, e-mail: jane.lam@morganstanley.com, with a copy to: Morgan Stanley & Co. LLC, Legal Compliance Division, 1221 Avenue of the Americas, New York, New York 10020;
(m)
Goldman Sachs & Co. LLC, as a Placement Agent, by the Issuer, the Co-Issuer,
the Collateral Manager,
the Note Administrator, the Trustee or the Servicer
shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form to Goldman Sachs & Co. LLC, 200 West Street, New
York, New York 10282, Attention: Michael Barbieri, e-mail: michael.barbieri@gs.com, with a copy to: Joe Osborne, facsimile number: (212) 291-5381, email: joe.osborne@gs.com
;
(n)
the Collateral Manager shall be sufficient for
every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Collateral Manager addressed to it at KKR Real Estate Finance Manager LLC,
9 West 57
th
Street, Suite 4200, New York, New York 10019, with a copy by email to: KREFCLO@KKR.com; and
(o)
the Note Administrator, shall be sufficient for
every purpose hereunder if in writing and mailed, first class postage prepaid hand delivered, sent by overnight courier service to the Corporate Trust Office of the Note Administrator.
Section 14.4
Notices to Noteholders; Waiver
.
Except as otherwise expressly provided herein, where this Indenture or the Servicing Agreement provides for notice to Holders of
Notes of any event,
(a)
such notice shall be sufficiently given to
Holders of Notes if in writing and mailed, first class postage prepaid, to each Holder of a Note affected by such event, at the address of such Holder as it appears in the Notes Register, not earlier than the earliest date and not later than
the latest date, prescribed for the giving of such notice;
(b)
such notice shall be in the English language; and
(c)
all reports or notices to Preferred Shareholders
shall be sufficiently given if provided in writing and mailed, first class postage prepaid, to the Preferred Share Paying Agent.
The Note Administrator shall deliver to the Holders of the Notes any information or notice in its possession, requested to be so
delivered by at least 25% of the Holders of any Class of Notes.
Neither the failure to mail any notice, nor any defect in any notice so mailed, to any particular Holder of a Note shall affect the
sufficiency of such notice with respect to other Holders of Notes. In case by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification to
Holders of Notes shall be made with the approval of the Note Administrator and shall constitute sufficient notification to such Holders of Notes for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Trustee and with the Note Administrator, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In the event that, by reason of the suspension of the regular mail service as a result of a strike, work stoppage or similar
activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee and
the Note Administrator shall be deemed to be a sufficient giving of such notice.
Section 14.5
Effect of Headings and Table of Contents
.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction
hereof.
Section 14.6
Successors and Assigns
.
All covenants and agreements in this Indenture by the Issuer and the Co-Issuer shall bind their respective successors and assigns,
whether so expressed or not.
Section 14.7
Severability
.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 14.8
Benefits of Indenture
.
Nothing in this Indenture or in the Securities, expressed or implied, shall give to any Person, other than (i) the parties hereto
and their successors hereunder and (ii) the Servicer, the Special Servicer, the Collateral Manager, the Preferred Shareholders, the Preferred Share Paying Agent, the Share Registrar, the Noteholders and the Sponsor (each of whom shall be an
express third party beneficiary hereunder), any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 14.9
Governing Law; Waiver of Jury Trial
.
THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 14.10
Submission to Jurisdiction
.
Each of the Issuer and the Co-Issuer hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or federal
court sitting in the Borough of Manhattan in The City of New York in any action or proceeding arising out of or relating to the Notes or this Indenture, and each of the Issuer and the Co-Issuer hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New York State or federal court. Each of the Issuer and the Co-Issuer hereby irrevocably waives, to the fullest extent that they may legally do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each of the Issuer and the Co-Issuer irrevocably consents to the service of any and all process in any action or proceeding by the mailing or delivery of copies of such
process to it at the office of the Issuer’s and the Co-Issuer’s agent set forth in
Section 7.2
. Each of the Issuer and the Co-Issuer agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 14.11
Counterparts
.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this
Indenture
in
Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually
executed original counterpart to this
Indenture
.
Section 14.12
Liability of Co-Issuers
.
Notwithstanding any other terms of this Indenture, the Notes or any other agreement entered into between,
inter alios
, the Issuer and the Co-Issuer or otherwise, neither the Issuer nor the Co-Issuer shall have any liability whatsoever to the Co-Issuer or the Issuer, respectively,
under this Indenture, the Notes, any such agreement or otherwise and, without prejudice to the generality of the foregoing, neither the Issuer nor the Co-Issuer shall be entitled to take any steps to enforce, or bring any action or proceeding,
in respect of this Indenture, the Notes, any such agreement or otherwise against the other Co-Issuer or the Issuer, respectively. In particular, neither the Issuer nor the Co-Issuer shall be entitled to petition or take any other steps for the
winding up or bankruptcy of the Co-Issuer or the Issuer, respectively or shall have any claim in respect of any Collateral of the Co-Issuer or the Issuer, respectively.
Section 14.13
17g-5 Information
.
(a)
The Co-Issuers shall comply with their obligations
under Rule 17g-5 promulgated under the Exchange Act (“
Rule 17g-5
”), by their or their agent’s posting on the 17g-5 Website, no later than the time such information is
provided to the Rating Agencies, all information that the Issuer or other parties on its behalf, including the Trustee, the Note Administrator, the Servicer and the Special Servicer, provide the Rating Agencies for the purposes of determining
the initial credit rating of the Notes or undertaking credit rating surveillance of the Notes (the “
17g-5 Information
”);
provided
that no party other than the Issuer, the Trustee, the Note Administrator, the Servicer or the Special Servicer may provide information to the Rating Agencies on the Issuer’s behalf without the prior
written consent of the Special Servicer. At all times while any Notes are rated by the Rating Agencies or any other NRSRO, the Issuer shall engage a third party to post 17g-5 Information to the 17g-5 Website. The Issuer hereby engages the
Note Administrator (in such capacity, the “
17g-5 Information Provider
”), to post 17g-5 Information it receives from the Issuer, the Trustee, the Note Administrator,
the Servicer or the Special Servicer to the 17g-5 Website in accordance with this
Section 14.13
, and the Note Administrator hereby accepts such engagement.
(b)
Any information required to be delivered to the
17g-5 Information Provider by any party under this Indenture or the Servicing Agreement shall be delivered to it via electronic mail at 17g5informationprovider@wellsfargo.com, specifically with a subject reference of “KREF 2018-FL1 Ltd.” and an
identification of the type of information being provided in the body of such electronic mail, or via any alternative electronic mail address following notice to the parties hereto or any other delivery method established or approved by the
17g-5 Information Provider
.
Upon delivery by the Co-Issuers to the 17g-5 Information Provider (in an electronic format mutually agreed upon by the Co-Issuers
and the 17g-5 Information Provider) of information designated by the Co-Issuers as having been previously made available to NRSROs by the Co-Issuers (the “
Pre-Closing 17g-5
Information
”), the 17g-5 Information Provider shall make such Pre-Closing 17g-5 Information available only to the Co-Issuers and to NRSROs via the 17g-5 Information Provider’s Website pursuant this
Section 14.13(b)
The Co-Issuers shall not be entitled to direct the 17g-5 Information Provider to provide access to the Pre-Closing 17g-5 Information or any other information on the 17g-5
Information Provider’s Website to any designee or other third party.
(c)
The 17g-5 Information Provider shall make
available, solely to NRSROs, the following items to the extent such items are delivered to it via email at 17g5informationprovider@wellsfargo.com, specifically with a subject reference of “KREF 2018-FL1 Ltd.” and an identification of the type
of information being provided in the body of the email, or via any alternate email address following notice to the parties hereto or any other delivery method established or approved by the 17g-5 Information Provider if or as may be necessary
or beneficial
:
(i)
any
statements as to compliance and related Officer’s Certificates delivered under
Section 7.9
;
(ii)
any
information requested by the Issuer or the Rating Agencies;
(iii)
any
notice to the Rating Agencies relating to the Special Servicer’s determination to take action without satisfaction of the Rating Agency Condition;
(iv)
any
requests for satisfaction of the Rating Agency Condition that are delivered to the 17g-5 Information Provider pursuant to
Section 14.14
;
(v)
any
summary of oral communications with the Rating Agencies that are delivered to the 17g-5 Information Provider pursuant to
Section 14.13(c)
; provided that the
summary of such oral communications shall not disclose which Rating Agencies the communication was with;
(vi)
any amendment or proposed supplemental indenture to this
Indenture
pursuant to
Section 8.3
; and
(vii)
the
“Rating Agency Q&A Forum and Servicer Document Request Tool” pursuant to
Section 10.13(e)
.
The foregoing information shall be made available by the 17g-5 Information Provider on the 17g-5 Website or such other website as
the Issuer may notify the parties hereto in writing.
(d)
Information shall be posted on the same Business
Day of receipt provided that such information is received by 12:00 p.m. (eastern time) or, if received after 12:00 p.m., on the next Business Day. The 17g-5 Information Provider shall have no obligation or duty to verify, confirm or otherwise
determine whether the information being delivered is accurate, complete, conforms to the transaction, or otherwise is or is not anything other than what it purports to be. In the event that any information is delivered or posted in error, the
17g-5 Information Provider may remove it from the website. The 17g-5 Information Provider (and the Trustee) has not obtained and shall not be deemed to have obtained actual knowledge of any information posted to the 17g-5 Website to the extent
such information was not produced by it. Access will be provided by the 17g-5 Information Provider to NRSROs upon receipt of an NRSRO Certification in the form of
Exhibit F
hereto (which certification may be submitted electronically via the 17g-5 Website).
(e)
Upon request of the Issuer or a Rating Agency,
the 17g-5 Information Provider shall post on the 17g-5 Website any additional information requested by the Issuer or such Rating Agency to the extent such information is delivered to the 17g-5 Information Provider electronically in accordance
with this
Section 14.13
. In no event shall the 17g-5 Information Provider disclose on the 17g-5 Website the Rating Agency or NRSRO that requested such additional
information.
(f)
The 17g-5 Information Provider shall provide a mechanism to notify each Person that has signed-up for access to the 17g-5 Website in respect of the transaction governed by this
Indenture
each time an additional document is posted to the 17g-5 Website.
(g)
Any other information required to be delivered to the Rating Agencies pursuant to this
Indenture
shall be furnished to the Rating Agencies only after the
earlier of (x) receipt of confirmation (which may be by email) from the 17g-5 Information Provider that such information has been posted to the 17g-5 Website and (y) at the same time such information has been delivered to the 17g‑5
Information Provider in accordance with this
Section 14.13
.
(h)
Notwithstanding anything to the contrary in this
Indenture, a breach of this
Section 14.13
shall not constitute a Default or Event of Default.
(i)
If any of the parties to this Indenture receives
a Form ABS Due Diligence-15E from any party in connection with any third-party due diligence services such party may have provided with respect to the Collateral Interests (“
Due
Diligence Service Provider
”), such receiving party shall promptly forward such Form ABS Due Diligence-15E to the 17g-5 Information Provider for posting on the 17g-5 Website. The 17g-5 Information Provider shall post on the 17g-5
Website any Form ABS Due Diligence-15E it receives directly from a Due Diligence Service Provider or from another party to this Indenture, promptly upon receipt thereof.
Section 14.14
Rating Agency Condition
.
Any request for satisfaction of the Rating Agency Condition made by a Requesting Party pursuant to this Indenture, shall be made in
writing, which writing shall contain a cover page indicating the nature of the request for satisfaction of the Rating Agency Condition, and shall contain all back-up material necessary for the Rating Agencies to process such request. Such
written request for satisfaction of the Rating Agency Condition shall be provided in electronic format to the 17g-5 Information Provider in accordance with
Section 14.13
hereof and after receiving actual knowledge of such posting (which may be in the form of an automatic email notification of posting delivered by the 17g-5 Website to such party), the Requesting Party shall send the request for satisfaction of
such Rating Agency Condition in accordance with the instructions for notices set forth in
Section 14.3
hereof.
Section 14.15
Patriot Act Compliance
.
In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking
institutions, including those relating to the funding of terrorist activities and money laundering (“
Applicable Law
”), the Trustee, Note Administrator, the Servicer
and the Special Servicer may be required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Trustee or Note Administrator, as the case may be. Accordingly, each
of the parties agrees to provide to the Trustee and the Note Administrator, upon its request from time to time, such identifying information and documentation as may be available for such party in order to enable the Trustee and the Note
Administrator, as applicable, to comply with Applicable Law.
ARTICLE 15
ASSIGNMENT OF THE COLLATERAL INTEREST PURCHASE AGREEMENT
Section 15.1
Assignment of Collateral Interest Purchase Agreement
.
(a)
The Issuer, in furtherance of the covenants of this Indenture and as security for the Notes and amounts payable to the Secured Parties hereunder and the performance and observance of the provisions hereof, hereby collaterally
assigns, transfers, conveys and sets over to the Trustee, for the benefit of the Noteholders (and to be exercised on behalf of the Issuer by persons responsible therefor pursuant to this
Indenture
and the Servicing Agreement), all of the Issuer’s estate, right, title and interest in, to and under the Collateral Interest Purchase Agreement (now or hereafter entered into) (an “
Article 15 Agreement
”), including, without limitation, (i) the right to give all notices, consents and
releases thereunder, (ii) the right to give all notices of termination and to take any legal action upon the breach of an obligation of the Seller or Collateral Manager thereunder, including the commencement, conduct and consummation of
proceedings at law or in equity, (iii) the right to receive all notices, accountings, consents, releases and statements thereunder and (iv) the right to do any and all other things whatsoever that the Issuer is or may be entitled to do
thereunder;
provided
,
however
, that the Issuer reserves for itself a license to exercise all of the Issuer’s rights pursuant to the Article 15 Agreement without notice
to or the consent of the Trustee or any other party hereto (except as otherwise expressly required by this Indenture, including, without limitation, as set forth in
Section
15.1(f)
) which license shall be and is hereby deemed to be automatically revoked upon the occurrence of an Event of Default hereunder until such time, if any, that
such Event of Default is cured or waived.
(b)
The assignment made hereby is executed as
collateral security, and the execution and delivery hereby shall not in any way impair or diminish the obligations of the Issuer under the provisions of each of the Article 15 Agreement, nor shall any of the obligations contained in each of the
Article 15 Agreement be imposed on the Trustee.
(c)
Upon the retirement of the Notes and the release
of the Collateral from the lien of this Indenture, this assignment and all rights herein assigned to the Trustee for the benefit of the Noteholders shall cease and terminate and all the estate, right, title and interest of the Trustee in, to
and under each of the Article 15 Agreement shall revert to the Issuer and no further instrument or act shall be necessary to evidence such termination and reversion.
(d)
The Issuer represents that it has not executed
any assignment of the Article 15 Agreement other than this collateral assignment.
(e)
The Issuer agrees that this assignment is
irrevocable, and that it shall not take any action which is inconsistent with this assignment or make any other assignment inconsistent herewith. The Issuer shall, from time to time upon the request of the Trustee, execute all instruments of
further assurance and all such supplemental instruments with respect to this assignment as the Trustee may specify.
(f)
The Issuer hereby agrees, and hereby undertakes
to obtain the agreement and consent of the Seller in the Collateral Interest Purchase Agreement to the following:
(i)
the
Seller consents to the provisions of this collateral assignment and agrees to perform any provisions of this Indenture made expressly applicable to the Seller pursuant to the applicable Article 15 Agreement;
(ii)
the
Seller acknowledges that the Issuer is collaterally assigning all of its right, title and interest in, to and under the Collateral Interest Purchase Agreement to the Trustee for the benefit of the Noteholders, and the Seller agrees that all of
the representations, covenants and agreements made by the Seller in the Article 15 Agreement are also for the benefit of, and enforceable by, the Trustee and the Noteholders;
(iii)
the
Seller shall deliver to the Trustee duplicate original copies of all notices, statements, communications and instruments delivered or required to be delivered to the Issuer pursuant to the applicable Article 15 Agreement;
(iv)
none of
the Issuer or the Seller shall enter into any agreement amending, modifying or terminating the applicable Article 15 Agreement, (other than in respect of an amendment or modification to cure any inconsistency, ambiguity or manifest error) or
selecting or consenting to a successor without notifying the Rating Agencies and without the prior written consent and written confirmation of the Rating Agencies that such amendment, modification or termination will not cause its then-current
ratings of the Notes to be downgraded or withdrawn;
(v)
except as
otherwise set forth herein and therein (including, without limitation, pursuant to Section 12 of the Collateral Management Agreement), the Collateral Manager shall continue to serve as Collateral Manager under the Collateral Management
Agreement, notwithstanding that the Collateral Manager shall not have received amounts due it under the Collateral Management Agreement because sufficient funds were not then available hereunder to pay such amounts pursuant to the Priority of
Payments. The Collateral Manager agrees not to cause the filing of a petition in bankruptcy against the Issuer for the nonpayment of the fees or other amounts payable to the Collateral Manager under the Collateral Management Agreement until
the payment in full of all Notes issued under this Indenture and the expiration of a period equal to the applicable preference period under the Bankruptcy Code
plus
ten days following such payment; and
(vi)
the
Collateral Manager irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan in The City of New York in any action or proceeding arising out of or relating to the Notes or
this Indenture, and the Collateral Manager irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or federal court. The Collateral Manager irrevocably waives, to the
fullest extent it may legally do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Collateral Manager irrevocably consents to the service of any and all process in any action or Proceeding by the
mailing by certified mail, return receipt requested, or delivery requiring signature and proof of delivery of copies of such initial process to it at c/o Maples Fiduciary Services (Delaware) Inc., 4001 Kennett Pike, Suite 302, Wilmington,
Delaware 19807. The Collateral Manager agrees that a final and non-appealable judgment by a court of competent jurisdiction 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.
ARTICLE 16
ADVANCING AGENT
Section 16.1
Liability of the Advancing Agent
.
The Advancing Agent shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Advancing Agent.
Section 16.2
Merger or Consolidation of the Advancing Agent
.
(a)
The Advancing Agent will keep in full effect its
existence, rights and franchises as a corporation under the laws of the jurisdiction in which it was formed, and will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this Indenture to perform its duties under this Indenture.
(b)
Any Person into which the Advancing Agent may be
merged or consolidated, or any corporation resulting from any merger or consolidation to which the Advancing Agent shall be a party, or any Person succeeding to the business of the Advancing Agent shall be the successor of the Advancing Agent,
hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding (it being understood and agreed by the parties hereto that the consummation of
any such transaction by the Advancing Agent shall have no effect on the Backup Advancing Agent’s obligations under
Section 10.7
, which obligations shall continue
pursuant to the terms of
Section 10.7
).
Section 16.3
Limitation on Liability of the Advancing Agent and Others
.
None of the Advancing Agent or any of its affiliates, directors, officers, employees or agents shall be under any liability for any
action taken or for refraining from the taking of any action in good faith pursuant to this Indenture, or for errors in judgment;
provided
,
however
, that this provision shall not protect the Advancing Agent against liability to the
Issuer or Noteholders for any breach of warranties or representations made herein or any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of negligent
disregard of obligations and duties hereunder. The Advancing Agent and any director, officer, employee or agent of the Advancing Agent may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Advancing Agent and any director, officer, employee or agent of the Advancing Agent shall be indemnified by the Issuer pursuant to the priorities set forth in
Section 11.1(a)
and held harmless against any loss, liability or expense incurred in connection with any legal action relating to this Indenture or the Notes, other than any loss, liability or
expense (i) specifically required to be borne by the Advancing Agent pursuant to the terms hereof or otherwise incidental to the performance of obligations and duties hereunder (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Indenture); or (ii) incurred by reason of any breach of a representation, warranty or covenant made herein, any misfeasance, bad faith or negligence by the Advancing Agent in the performance of or negligent
disregard of, obligations or duties hereunder or any violation of any state or federal securities law.
Section 16.4
Representations and Warranties of the Advancing Agent
.
The Advancing Agent represents and warrants that:
(a)
the Advancing Agent (i) has been duly organized,
is validly existing and is in good standing under the laws of the State of Delaware, (ii) has full power and authority to own the Advancing Agent’s Collateral and to transact the business in which it is currently engaged, and (iii) is duly
qualified and in good standing under the laws of each jurisdiction where the Advancing Agent’s ownership or lease of property or the conduct of the Advancing Agent’s business requires, or the performance of this Indenture would require, such
qualification, except for failures to be so qualified that would not in the aggregate have a material adverse effect on the business, operations, Collateral or financial condition of the Advancing Agent or the ability of the Advancing Agent to
perform its obligations under, or on the validity or enforceability of, the provisions of this Indenture applicable to the Advancing Agent;
(b)
the Advancing Agent has full power and authority
to execute, deliver and perform this Indenture; this Indenture has been duly authorized, executed and delivered by the Advancing Agent and constitutes a legal, valid and binding agreement of the Advancing Agent, enforceable against it in
accordance with the terms hereof, except that the enforceability hereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and (ii) general
principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law);
(c)
neither the execution and delivery of this
Indenture nor the performance by the Advancing Agent of its duties hereunder conflicts with or will violate or result in a breach or violation of any of the terms or provisions of, or constitutes a default under: (i) the Articles of
Incorporation and bylaws of the Advancing Agent, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement or other evidence of indebtedness or other agreement, obligation, condition, covenant or instrument to
which the Advancing Agent is a party or is bound, (iii) any law, decree, order, rule or regulation applicable to the Advancing Agent of any court or regulatory, administrative or governmental agency, body or authority or arbitrator having
jurisdiction over the Advancing Agent or its properties, and which would have, in the case of any of (i), (ii) or (iii) of this
Section 16.4(c)
, either individually
or in the aggregate, a material adverse effect on the business, operations, Collateral or financial condition of the Advancing Agent or the ability of the Advancing Agent to perform its obligations under this Indenture;
(d)
no litigation is pending or, to the best of the
Advancing Agent’s knowledge, threatened, against the Advancing Agent that would materially and adversely affect the execution, delivery or enforceability of this Indenture or the ability of the Advancing Agent to perform any of its obligations
under this Indenture in accordance with the terms hereof; and
(e)
no consent, approval, authorization or order of
or declaration or filing with any government, governmental instrumentality or court or other Person is required for the performance by the Advancing Agent of its duties hereunder, except such as have been duly made or obtained.
Section 16.5
Resignation and Removal; Appointment of Successor
.
(a)
No resignation or removal of the Advancing Agent
and no appointment of a successor Advancing Agent pursuant to this
Article 16
shall become effective until the acceptance of appointment by the successor Advancing
Agent under
Section 16.6
.
(b)
The Advancing Agent may, subject to
Section 16.5(a)
, resign at any time by giving written notice thereof to the Issuer, the Co-Issuer, the Collateral Manager, the Note Administrator, the Trustee, the
Servicer, the Noteholders and the Rating Agencies.
(c)
The Advancing Agent may be removed at any time by
Act of Supermajority of the Preferred Shares upon written notice delivered to the Trustee and to the Issuer and the Co-Issuer.
(d)
If the Advancing Agent fails to make a required
Interest Advance and it has not determined such Interest Advance to be a Nonrecoverable Interest Advance the Collateral Manager may, and at the direction of the Majority of the Controlling Class shall, terminate the Advancing Agent and replace
the Advancing Agent with a successor Advancing Agent, subject to the satisfaction of the Rating Agency Condition. In the event that the Collateral Manager has not terminated and replaced the Advancing Agent within 30 days of the Advancing
Agent’s failure to make a required Interest Advance, the Note Administrator may, and at the direction of the Majority of the Controlling Class shall, terminate the Advancing Agent and use commercially reasonable efforts for up to 90 days after
such termination to appoint a successor Advancing Agent, subject to the satisfaction of the Rating Agency Condition.
(e)
Subject to
Section 16.5(d)
, if the Advancing Agent shall resign or be removed, upon receiving such notice of resignation or removal, the Issuer and the Co-Issuer shall promptly appoint a successor advancing
agent by written instrument, in duplicate, executed by an Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer, one copy of which shall be delivered to the Advancing Agent so resigning and one copy to the successor
Advancing Agent, together with a copy to each Noteholder, the Collateral Manager, the Trustee, the Note Administrator, the Servicer and the Special Servicer;
provided
that such successor Advancing Agent shall be appointed only subject to satisfaction of the Rating Agency Condition, upon the written consent of a Majority of Preferred Shareholders. If no successor Advancing Agent shall have been appointed and
an instrument of acceptance by a successor Advancing Agent shall not have been delivered to the Advancing Agent within 30 days after the giving of such notice of resignation, the resigning Advancing Agent, the Trustee, the Note Administrator,
or any Preferred Shareholder, on behalf of himself and all others similarly situated, may petition any court of competent jurisdiction for the appointment of a successor Advancing Agent.
(f)
The Issuer and the Co-Issuer shall give prompt
notice of each resignation and each removal of the Advancing Agent and each appointment of a successor Advancing Agent by mailing written notice of such event by first class mail, postage prepaid, to the Rating Agencies, the Trustee, the Note
Administrator, and to the Holders of the Notes as their names and addresses appear in the Notes Register.
Section 16.6
Acceptance of Appointment by Successor Advancing Agent
.
(a)
Every successor Advancing Agent appointed
hereunder shall execute, acknowledge and deliver to the Issuer, the Co-Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Trustee, the Note Administrator, and the retiring Advancing Agent an instrument accepting such
appointment hereunder and under the Servicing Agreement. Upon delivery of the required instruments, the resignation or removal of the retiring Advancing Agent shall become effective and such successor Advancing Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of the retiring Advancing Agent hereunder and under the Servicing Agreement.
(b)
No appointment of a successor Advancing Agent
shall become effective unless (1) the Rating Agency Condition has been satisfied with respect to the appointment of such successor Advancing Agent and (2) such successor has a long-term unsecured debt rating of at least “A2” by Moody’s, and
whose short-term unsecured debt rating is at least “P-1” from Moody’s
.
Section 16.7
Removal and Replacement of Backup Advancing Agent
.
The Note Administrator shall replace any such successor Advancing Agent (excluding the Note Administrator in its capacity as Backup
Advancing Agent) upon receiving notice that such successor Advancing Agent’s long-term unsecured debt rating at any time becomes lower than “A2” by Moody’s, and whose short-term unsecured debt rating becomes lower than “P-1” by Moody’s, with a
successor Advancing Agent that has a long-term unsecured debt rating of at least “A2” by Moody’s, and whose short-term unsecured debt rating is at least “P-1” from Moody’s
.
ARTICLE 17
CURE RIGHTS;
PURCHASE
RIGHTS
Section 17.1
Collateral Interest Purchase Agreements
.
Following the Closing Date, unless a Collateral Interest Purchase Agreement is necessary to comply with the provisions of this
Indenture, the Issuer may acquire Collateral Interests in accordance with customary settlement procedures in the relevant markets. In any event, the Issuer (or the Collateral Manager on behalf of the Issuer) shall obtain from any seller of a
Collateral Interest, all Loan Documents with respect to each Collateral Interest that govern, directly or indirectly, the rights and obligations of the owner of the Collateral Interest with respect to the Collateral Interest and any certificate
evidencing the Collateral Interest.
Section 17.2
Representations and Warranties Related to Reinvestment Collateral Interests and Exchange Collateral Interests
.
(a)
Upon the acquisition of any Collateral Interest
by the Issuer, the Seller shall be required to make representations and warranties substantially in the form
attached
as Exhibit B to the Collateral Interest Purchase
Agreement with such exceptions as may be relevant.
(b)
The representations and warranties in
Section 17.3
with respect to the acquisition of any
Reinvestment
Collateral Interest and Exchange
Collateral Interest may be subject to any modification, limitation or qualification that the Collateral Manager determines to be reasonably acceptable in accordance with the Collateral Management Standard;
provided
that the Collateral Manager will provide the Rating Agencies with a report attached to each
Monthly Report identifying each such affected representation or warranty and the modification, exception, limitation or qualification received with respect to the acquisition of any Reinvestment Collateral Interest and Exchange Collateral
Interest during the period covered by the Monthly Report, which report may contain explanations by the Collateral Manager as to its determinations.
(c)
The Issuer (or the Collateral Manager on behalf
of the Issuer) shall obtain a covenant from the Person making any representation or warranty to the Issuer pursuant to
Section 17.3(a)
that such Person shall
repurchase the related Collateral Interest if any such representation or warranty is materially breached (but only after the expiration of any permitted cure periods and failure to cure such breach). The purchase price for any Collateral
Interest repurchased shall be a price equal to the sum of the following (in each case, without duplication) as of the date of such repurchase: (i) the then outstanding Principal Balance of such Collateral Interest, discounted based on the
percentage amount of any discount that was applied when such Collateral Interest was purchased by the Issuer,
plus
(ii) accrued and unpaid interest on
such Collateral Interest,
plus
(iii) any unreimbursed advances made under the Indenture or the Servicing Agreement on the Collateral Interest,
plus
(iv) accrued and unpaid interest on advances made under the Indenture or the Servicing Agreement on the Collateral Interest,
plus
(v) any reasonable costs and expenses (including, but not limited to, the cost of any enforcement action, incurred by the Issuer or the Trustee in connection with any
such repurchase),
plus
(vi) any Liquidation Fee payable to the Special Servicer in connection with a repurchase of the Collateral Interest by the
Seller.
Section 17.3
Operating Advisor
.
If the Issuer, as a holder of a Pari Passu Participation has the right pursuant to the related Loan Documents to appoint the operating
advisor, directing holder or Person serving a similar function under the Loan Documents, each of the Issuer, the Trustee and the Collateral Manager shall take such actions as are reasonably necessary to appoint the Collateral Manager to such
position.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Indenture as of the day and year first above written.
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KREF 2018-FL1 LTD., as Issuer
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Executed as a deed
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By
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/s/ Cleveland Stewart
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Name: Cleveland Stewart
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Title: Director
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KREF 2018-FL1 LLC, as Co‑Issuer
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By:
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/s/ Patrick Mattson
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Name: Patrick Mattson
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Title: Chief Operating Officer
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KREF CLO LOAN SELLER LLC
, as Advancing Agent
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By:
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/s/ Patrick Mattson
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Name: Patrick Mattson
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Title: Chief Operating Officer
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[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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WILMINGTON TRUST, NATIONAL ASSOCIATION
, as Trustee
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By:
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/s/ Patrick A. Kanar
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Name: Patrick A. Kanar
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Title: Banking Officer
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[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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WELLS FARGO BANK, NATIONAL ASSOCIATION
, as Note Administrator
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By:
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/s/ Amber Nelson
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Name: Amber Nelson
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Title: Assistant Vice President
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SCHEDULE A
COLLATERAL INTEREST SCHEDULE
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Cortland Portfolio 10
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Pari Passu Participation
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451 D Street
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Pari Passu Participation
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Fifth Street Towers
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Pari Passu Participation
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Home Plate Center
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Pari Passu Participation
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1635 & 1835 Market Street
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Pari Passu Participation
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The Duchess
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Pari Passu Participation
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Panorama Apartments
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Pari Passu Participation
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The Vanderbilt
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Pari Passu Participation
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The Lewis
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Pari Passu Participation
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EVIVA on Cherokee
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Pari Passu Participation
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Avenue at East Falls
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Pari Passu Participation
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Wells Fargo Place
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Pari Passu Participation
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Gwinnett Commons
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Pari Passu Participation
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The Tides
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Pari Passu Participation
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41 Flatbush Avenue
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Pari Passu Participation
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1400 Crystal Drive
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Pari Passu Participation
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Queens Industrial
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Pari Passu Participation
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915 West End
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Pari Passu Participation
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715 Peachtree
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Pari Passu Participation
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Bank of America Plaza
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Pari Passu Participation
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San Diego Office Portfolio
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Pari Passu Participation
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Centerview (Main Plaza)
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Pari Passu Participation
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Stadium Innovation Center
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Pari Passu Participation
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Barrington at Mirror Lake
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Pari Passu Participation
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SCHEDULE B
LIBOR
Calculation of LIBOR
For purposes of calculating the London Interbank Offer Rate (“
LIBOR
”),
the Issuer and the Co-Issuer shall initially appoint the Note Administrator as calculation agent (in such capacity, the “
Calculation Agent
”). LIBOR with respect to
any Interest Accrual Period shall be determined by the Calculation Agent in accordance with the following provisions:
1.
On the second London Banking
Day preceding the first Business Day of an Interest Accrual Period (each such day, a “
LIBOR Determination Date
”), LIBOR (other than for the initial Interest Accrual
Period) shall equal the rate, as obtained by the Calculation Agent, for deposits in U.S. Dollars for a period of one month, which appears on the Reuters Page LIBOR01 (or such other page that may replace that page on such service for the purpose
of displaying comparable rates) as reported by Bloomberg Financial Markets Commodities News as of 11:00 a.m., London time, on the LIBOR Determination Date. “
London Banking Day
”
means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.
2.
If, on any LIBOR
Determination Date, such rate does not appear on Reuters Screen LIBOR01, the Calculation Agent shall determine LIBOR (or in the event the Notes convert to the Substitute Index, the Substitute Index) on the basis of the rates at which deposits
in U.S. Dollars are offered by Reference Banks at approximately 11:00 a.m. (London time) on the LIBOR Determination Date to prime banks in the London interbank market for a period of one month commencing on the LIBOR Determination Date and in a
representative amount of $1,000. The Calculation Agent shall request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that LIBOR
Determination Date shall be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that LIBOR Determination Date shall be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Calculation Agent, at approximately 11:00 a.m. (New York City time) on the LIBOR Determination Date for loans in U.S. Dollars to leading European banks for a period of three months commencing on the LIBOR Determination
Date and in a representative amount of $1,000. As used herein, “
Reference Banks
” means four major banks in the London interbank market selected by the Calculation
Agent
.
3.
In respect of the initial
Interest Accrual Period, LIBOR shall be determined on the second London Banking Day preceding the Closing Date
.
4.
Notwithstanding the
foregoing, in no event will LIBOR be less than zero.
If the Servicer effects a conversion with respect to at least 50% of the Real Estate Loans by Stated Principal Balance to an
alternative or substitute index (the “
Substitute Index
”) in accordance with the related Loan Documents, then the Servicer will provide to the Note Administrator notice
of such conversion in accordance with the Servicing Agreement and such Substitute Index plus a Substitute Index Spread Adjustment determined at the time of conversion shall be used in lieu of LIBOR to calculate interest with respect to the
Notes of each Class beginning on the Payment Date that is at least three (3) Business Days after receipt of such notice or such later Payment Date upon which such conversion under the Real Estate Loans will be effective.
In making the above calculations, (A) all percentages resulting from the calculation (other than the calculation determined pursuant
to clause (c) above) will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point (0.00001%) and (B) all percentages determined pursuant to clause (c) above shall be rounded, if necessary, in accordance with the
method set forth in (A), but to the same degree of accuracy as the two rates used to make the determination (except that such percentages will not be rounded to a lower degree of accuracy than the nearest one thousandth of a percentage point
(0.001%)).
“
Substitute Index Spread Adjustment
” means, with
respect to any Class of Notes, either (i) a rate modifier associated with the Substitute Index that is published by a governmental or other source that is generally accepted as authoritative in the commercial real estate industry as reasonably
determined by the Collateral Manager or (ii) if no such rate modifier is then available, the average difference (expressed as the number of basis points) between (x) LIBOR and (y) the Substitute Index over the 60-days (or such shorter period
for which all relevant indices are available) immediately preceding the LIBOR Determination Date on which the Notes convert to accrue interest based on the Substitute Index (or such earlier date on which LIBOR was last available).
SCHEDULE C
LIST OF AUTHORIZED OFFICERS OF COLLATERAL MANAGER
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Name
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Title
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Patrick Mattson
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Chief Operating Officer and Secretary
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Mostafa Nagaty
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Chief Financial Officer and Treasurer
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Christen (Chris) Lee
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Co-Chief Executive Officer and Co-President
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Matthew Salem
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Co-Chief Executive Officer and Co-President
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Christopher Lee
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Assistant Secretary
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