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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ____________ 

Commission File No. 001-35845 
OAKS-20210630_G1.JPG
LUMENT FINANCE TRUST, INC.
(Exact name of registrant as specified in its charter) 
Maryland 45-4966519
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
230 Park Avenue, 20th Floor, New York, New York
10169
(Address of principal executive offices) (Zip code)

Registrant's Telephone Number, including area code (212) 521-6323
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class: Trading Symbol(s) Name of Exchange on Which Registered:
Common Stock, par value $0.01 per share LFT New York Stock Exchange
7.875% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share LFTPrA New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  
Large accelerated filer ☐
Accelerated Filer ☐
Non-accelerated Filer ☒
Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class  
Outstanding at August 9, 2021
Common stock, $0.01 par value   24,947,883



LUMENT FINANCE TRUST, INC.
 
INDEX
 
PART I - Financial Information
 
     
Item 1.  
 
1
 
2
 
3
 
5
 
6
Item 2.
22
Item 3.
36
Item 4.
37
     
37
     
Item 1.
37
Item 1A.
Risk Factors
37
Item 2.
37
Item 3.
37
Item 4.
37
Item 5.
37
Item 6.
38
     
 
39




PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 

LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 
June 30, 2021(1)
December 31, 2020(1)
  (unaudited)  
ASSETS    
Cash and cash equivalents $ 14,576,852  $ 11,375,960 
Restricted cash 330,260,821  57,999,396 
Commercial mortgage loans held-for-investment, at amortized cost 611,820,226  547,345,334 
Mortgage servicing rights, at fair value 678,788  919,678 
Accrued interest receivable 2,811,728  2,015,617 
Investment related receivable 79,457,686  — 
Other assets 2,356,934  1,833,794 
Total assets $ 1,041,963,035  $ 621,489,779 
LIABILITIES AND EQUITY    
LIABILITIES:    
Collateralized loan obligations, net 826,070,345  463,060,090 
Secured term loan, net 39,635,259  39,556,198 
Accrued interest payable 666,277  432,936 
Dividends payable 2,967,184  3,242,640 
Fees and expenses payable to Manager 1,527,809  1,156,340 
Other accounts payable and accrued expenses 859,151  338,423 
Total liabilities 871,726,025  507,786,627 
COMMITMENTS AND CONTINGENCIES (NOTES 10 & 11)
EQUITY:    
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized; 7.875% Series A Cumulative Redeemable, $60,000,000 aggregate liquidation preference, 2,400,000 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
57,258,435  — 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 24,947,883 and 24,943,383 shares issued and outstanding, at June 30, 2021 and December 31, 2020, respectively
249,434  249,389 
Additional paid-in capital 233,856,352  233,850,271 
Cumulative distributions to stockholders (136,575,566) (131,355,978)
Accumulated earnings 15,348,855  10,859,970 
Total stockholders' equity 170,137,510  113,603,652 
Noncontrolling interests $ 99,500  $ 99,500 
Total equity $ 170,237,010  $ 113,703,152 
Total liabilities and equity $ 1,041,963,035  $ 621,489,779 

(1)     Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of June 30, 2021 and December 31, 2020, assets of consolidated VIEs totaled $1,002,544,374 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $826,663,669 and $463,411,967 respectively. See Note 4 for further discussion.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1



LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
Revenues:    
Interest income:    
Commercial mortgage loans held-for-investment $ 8,227,979  $ 8,472,153  $ 15,698,096  $ 17,637,958 
Cash and cash equivalents 12,778  7,620  17,078  35,787 
Interest expense:    
Collateralized loan obligations (2,211,947) (2,915,638) (4,397,189) (7,153,527)
Secured term loan (774,363) (780,441) (1,546,228) (1,560,882)
Net interest income 5,254,447  4,783,694  9,771,757  8,959,336 
Other income (loss):    
Unrealized (loss) on mortgage servicing rights (220,435) (375,176) (240,890) (1,252,925)
Loss on extinguishment of debt (1,663,926) —  (1,663,926) — 
Servicing income, net 95,766  204,380  219,922  398,527 
Other income —  —  —  2 
Total other income (loss) (1,788,595) (170,796) (1,684,894) (854,396)
Expenses:    
Management and incentive fees 725,465  590,211  1,446,464  1,175,032 
General and administrative expenses 520,013  978,842  1,200,327  1,744,734 
Operating expenses reimbursable to Manager 496,599  346,653  809,053  807,774 
Other operating expenses 48,054  833,998  82,807  1,134,924 
Compensation expense 49,491  52,762  98,626  106,894 
Total expenses 1,839,622  2,802,466  3,637,277  4,969,358 
Net income before provision for income taxes 1,626,230  1,810,432  4,449,586  3,135,582 
Benefit from income taxes 54,012  68,271  39,299  294,792 
Net income 1,680,242  1,878,703  4,488,885  3,430,374 
Dividends accrued to preferred stockholders (725,667) (3,750) (729,375) (7,500)
Net income attributable to common stockholders $ 954,575  $ 1,874,953  $ 3,759,510  $ 3,422,874 
Earnings per share:
Net income attributable to common stockholders (basic and diluted) $ 954,575  $ 1,874,953  $ 3,759,510  $ 3,422,874 
Weighted average number of shares of common stock outstanding 24,944,075  24,939,575  24,943,731  24,925,529 
Basic and diluted income per share $ 0.04  $ 0.08  $ 0.15  $ 0.14 
Dividends declared per share of common stock $ 0.09  $ 0.08  $ 0.18  $ 0.15 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2



LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Equity
(unaudited)
  Preferred Stock Common Stock Additional
Paid-in
Capital 		Cumulative
Distributions to
Stockholders 		Accumulated Earnings Total Stockholders' Equity Noncontrolling interests Total
Equity
  Shares ParValue Shares Par Value
Balance at December 31, 2020 —  $ —  24,943,383  $ 249,389  $ 233,850,271  $ (131,355,978) $ 10,859,970  $ 113,603,652  $ 99,500  $ 113,703,152 
Issuance of common stock —  —  —  —  —  —  —  $ —  —  $ — 
Cost of issuing common stock —  —  —  —  —  —  —  $ —  —  $ — 
Issuance of preferred stock, net —  —  —  —  —  —  —  —  —  $ — 
Restricted stock compensation expense —  —  —  —  2,885  —  —  $ 2,885  —  $ 2,885 
Net income —  —  —  —  —  —  2,808,643  $ 2,808,643  —  $ 2,808,643 
Common stock dividends —  —  —  —  —  (2,244,904) —  $ (2,244,904) —  $ (2,244,904)
Preferred stock dividends —  —  —  —  —  (3,708) —  (3,708) —  $ (3,708)
Balance at March 31, 2021 —  —  24,943,383  $ 249,389  $ 233,853,156  $ (133,604,590) $ 13,668,613  $ 114,166,568  $ 99,500  $ 114,266,068 
Issuance of common stock —  —  4,500  45  11,655  —  —  $ 11,700  —  $ 11,700 
Cost of issuing common stock —  —  —  —  —  —  —  $ —  —  $ — 
Issuance of preferred stock, net 2,400,000  57,258,435  —  —  —  —  —  $ 57,258,435  —  $ 57,258,435 
Restricted stock compensation expense —  —  —  —  (8,459) —  —  $ (8,459) —  $ (8,459)
Net income —  —  —  —  —  —  1,680,242  $ 1,680,242  —  $ 1,680,242 
Common stock dividends —  —  —  —  —  (2,245,309) —  $ (2,245,309) —  $ (2,245,309)
Preferred stock dividends —  —  —  —  —  (725,667) —  $ (725,667) —  $ (725,667)
Balance at June 30, 2021 2,400,000  57,258,435  24,947,883  249,434  233,856,352  (136,575,566) 15,348,855  170,137,510  99,500  170,237,010 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3



LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Equity
(unaudited)
Common Stock Additional
Paid-in
Capital 		Cumulative
Distributions to
Stockholders 		Accumulated
Earnings 		Total Stockholders' Equity Noncontrolling interests Total
Equity
Shares Par Value
Balance at December 31, 2019 23,692,164  $ 236,877  $ 228,135,116  $ (122,236,981) $ 2,410,200  $ 108,545,212  $ 99,500  $ 108,644,712 
Issuance of common stock 1,246,719  12,467  5,734,908  —  —  $ 5,747,375  —  $ 5,747,375 
Cost of issuing common stock —  —  (13,333) —  —  $ (13,333) —  $ (13,333)
Restricted stock compensation expense —  —  7,882  —  —  $ 7,882  —  $ 7,882 
Net income —  —  —  —  1,551,671  $ 1,551,671  —  $ 1,551,671 
Common stock dividends —  —  —  (1,870,416) —  $ (1,870,416) —  $ (1,870,416)
Preferred stock dividends —  —  —  (3,750) —  $ (3,750) —  $ (3,750)
Balance at March 31, 2020 24,938,883  249,344  233,864,573  (124,111,147) 3,961,871  113,964,641  99,500  114,064,141 
Issuance of common stock 4,500  45  14,940  —  —  $ 14,985  —  $ 14,985 
Cost of issuing common stock —  —  (13,333) —  —  $ (13,333) —  $ (13,333)
Restricted stock compensation expense —  —  (8,473) —  —  $ (8,473) —  $ (8,473)
Net income —  —  —  —  1,878,703  $ 1,878,703  —  $ 1,878,703 
Common stock dividends —  —  —  (1,870,754) —  $ (1,870,754) —  $ (1,870,754)
Preferred stock dividends —  —  —  (3,750) —  $ (3,750) —  $ (3,750)
Balance at June 30, 2020 24,943,383  249,389  233,857,707  (125,985,651) 5,840,574  113,962,019  99,500  114,061,519 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4



LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
June 30, 2021 		Six Months Ended
June 30, 2020
Cash flows from operating activities:    
Net income $ 4,488,885  $ 3,430,374 
Adjustments to reconcile net income to net cash provided by operating activities:    
Accretion of commercial mortgage loans held-for-investment discounts (3,781) — 
Amortization of commercial mortgage loans held-for-investment premiums 78,008  — 
Accretion of collateralized loan obligations discounts 207,767  570,039 
Amortization of deferred offering costs —  (26,667)
Amortization of deferred financing costs 573,113  512,136 
Loss on extinguishment of debt 1,663,926  — 
Unrealized loss on mortgage servicing rights 240,890  1,252,925 
Restricted stock compensation expense 6,126  14,394 
Net change in:    
Accrued interest receivable (796,111) 169,742 
Deferred offering costs —  26,667 
Other assets (523,140) (571,307)
Accrued interest payable 233,341  (376,506)
Fees and expenses payable to Manager 371,469  (36,481)
Other accounts payable and accrued expenses 520,727  185,432 
Net cash provided by operating activities 7,061,220  5,150,748 
Cash flows from investing activities:    
Purchase of commercial mortgage loans held-for-investment (338,386,251) (41,990,011)
Principal payments from commercial mortgage loans held-for-investment 273,837,132  67,402,863 
Investment related receivable (79,457,686) (23,781,668)
Net cash (used in) provided by investing activities (144,006,805) 1,631,184 
Cash flows from financing activities:    
Proceeds from issuance of common stock —  5,747,375 
Net proceeds from issuance of preferred stock 57,258,435  — 
Proceeds from collateralized loan obligation 833,750,000  — 
Dividends paid on common stock (5,487,543) (3,647,328)
Dividends paid on preferred stock (7,500) (7,500)
Payment of collateralized loan obligations (465,316,126) (8,615,358)
Payment of deferred financing costs (7,789,364) — 
Net cash provided by (used in) financing activities 412,407,902  (6,522,811)
Net increase in cash, cash equivalents and restricted cash 275,462,317  259,121 
Cash, cash equivalents and restricted cash, beginning of period 69,375,356  16,011,830 
Cash, cash equivalents and restricted cash, end of period $ 344,837,673  $ 16,270,951 
Supplemental disclosure of cash flow information    
Cash paid for interest $ 4,929,197  $ 8,008,740 
Non-cash investing and financing activities information    
Dividends declared but not paid at end of period $ 3,164,059  $ 1,870,754 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

Lument Finance Trust, Inc. (together with its consolidated subsidiaries, the "Company"), formerly Hunt Companies Finance Trust, Inc., is a Maryland corporation that focuses primarily on investing in, financing and managing a portfolio of commercial real estate ("CRE") debt investments. Effective January 3, 2020, the Company is externally managed by OREC Investment Management, LLC, doing business as Lument Investment Management (the "Manager" or "Lument IM"), who replaced the prior manager, Hunt Investment Management, LLC ("HIM"). On December 28, 2020, the Company changed its name from Hunt Companies Finance Trust, Inc. to Lument Finance Trust, Inc., and its common stock began trading on the NYSE under the symbol "LFT." Previously, the Company's common stock was listed on the NYSE under the symbol "HCFT."

The Company was incorporated on March 28, 2012 and commenced operations on May 16, 2012. The Company began trading as a publicly traded company on March 22, 2013.

The Company has elected to be taxed as a real estate investment trust ("REIT") and to comply with Sections 856 through 859 of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met.
 
On January 3, 2020, the Company and HIM entered into a termination agreement pursuant to which the Company and HIM agreed to mutually and immediately terminate that certain management agreement dated January 18, 2018. The Company simultaneously entered into a new management agreement with Lument IM. Pursuant to the terms of the termination agreement between the Company and HIM, the termination of the management agreement did not trigger, and HIM was not paid, a termination fee by the Company. See Note 10 for further discussion.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission (“SEC”) on March 15, 2021.

Principles of Consolidation

The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and all subsidiaries which it controls (i) through voting or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIEs in which the Company is not the primary beneficiary are accounted for under the equity method or other appropriate GAAP. All significant intercompany transactions have been eliminated on consolidation.

VIEs

An entity is considered a VIE when any of the following applies: (1) the equity investors (if any) lack one or more essential characteristics of a controlling financial interest; (2) the equity investment at risk is not sufficient to finance that entity's activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both the following characteristics: (1) the power to direct activities that, when taken together, most significantly impact the VIE performance; and (2) the obligation to absorb losses and right to receive returns from the VIE that would be significant to the VIE.

The Company evaluates quarterly its junior retained notes and preferred shares of LFT 2021-FL1, Ltd. for potential consolidation and prior to the unwinding in the second quarter of 2021, Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. At June 30, 2021, the Company determined it was the primary beneficiary of LFT CRE 2021-FL1, Ltd. based on its obligation to absorb losses derived from ownership of its preferred shares, and prior to the second quarter of 2021 determined it was the primary beneficiary of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying issuing entities. The Company's maximum exposure to loss from collateralized loan obligations ("CLO") was $166,250,000 and $124,046,671 at June 30, 2021 and December 31, 2020.

Use of Estimates

The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires the Company to make a number of significant estimates. As of June 30, 2021, the novel coronavirus, or COVID-19, pandemic is ongoing. During 2020, the COVID-19 pandemic created disruption in global supply chains, increased rates of unemployment and adversely impacted many industries, including industries related to the collateral underlying certain of our loans. In 2021, the global economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. Nonetheless, the recovery could remain uneven, particularly given uncertainty with respect to the distribution and acceptance of the vaccines and their effectiveness with respect to new variants of the virus, including the Delta variant which is believed to be more contagious than previous variants of the virus. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2021, however uncertainty over the ultimate impact of COVID-19 on the global economy generally, and our business in particular, makes any estimates and assumptions as of June 30, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results could differ from our estimates and the differences may be material.

6


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents at time of purchase include cash held in bank accounts on an overnight basis and other short term deposit accounts with banks having maturities of 90 days or less at time of acquisition. The Company maintains its cash and cash equivalents with highly rated financial institutions, and at times these balances exceed insurable amounts.

Restricted cash includes cash held within LFT CRE 2021-FL1 as of June 30, 2021 and Hunt CRE 2018-FL2 as of December 31, 2020.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows.

June 30, 2021 December 31, 2020
Cash and cash equivalents $ 14,576,852  $ 11,375,960 
Restricted cash CRE 2018-FL2, Ltd. $ —  $ 57,999,396 
Restricted cash CRE 2021-FL1, Ltd. $ 330,260,821  $ — 
Total cash, cash equivalents and restricted cash $ 344,837,673  $ 69,375,356 

Deferred Offering Costs

Direct costs incurred to issue shares classified as equity, such as legal and accounting fees, are deducted from the related proceeds and the net amount recorded as stockholders’ equity. Accordingly, payments made by the Company in respect of such costs related to the issuance of shares are recorded as an asset in the accompanying consolidated balance sheets in the line item "Deferred offering costs", for subsequent deduction from the related proceeds upon closing of the offering. To the extent that certain costs, in particular legal fees, are known to have been accrued but have not yet been invoiced and paid, they are included in "Other accounts payable and accrued expenses" on the accompanying consolidated balance sheets.

Fair Value Measurements

The "Fair Value Measurements and Disclosures" Topic 820 of the FASB, or ASC 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurement under GAAP. Specifically, the guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at measurement date. ASC 820 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value.

Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable market data from independent sources, while unobservable inputs reflect the Company's market assumptions. The three levels are defined as follows:

•Level 1 Inputs – Quoted prices for identical instruments in active markets.
•Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
•Level 3 Inputs – Instruments with primarily unobservable value drivers.

Pursuant to ASC 820 we disclose fair value information about financial instruments, which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate fair value for those certain instruments.

The following methods and assumptions are used to estimate the fair value of each class of financial instrument, for which it is practicable to estimate that value:
•Cash and cash equivalents: The carrying amount of cash and cash equivalents approximates fair value.
•Restricted cash: The carrying amount of restricted cash approximates fair value.
•Commercial mortgage loans: The Company determines the fair value of commercial mortgage loans by utilizing a pricing model based on discounted cash flow methodologies using discount rates, which reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Additionally, the Company may record fair value adjustments on a non-recurring basis when it has determined it necessary to record a specific impairment reserve or charge-off against a loan and the Company measures such specific reserve or charge-off using the fair value of the loan's collateral. To determine the fair value of loan collateral, the Company employs the income capitalization approach, appraised values, broker opinion of value, sale offers, letter of intentions of purchase, or other valuation benchmarks, as applicable, depending upon the nature of such collateral and other relevant market factors.
•Mortgage servicing rights: The Company determines the fair value of MSRs from a third-party pricing service on a recurring basis. The third-party pricing service uses common market pricing methods that include using discounted cash flow models to calculate present value, estimated net servicing income and observed market pricing for MSR purchase and sale transactions. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors.
•Collateralized loan obligations: The Company determines the fair value of collateralized loan obligations by utilizing a third-party pricing service. In determining the value of a particular investment, pricing service providers may use market spreads, inventory levels, trade and bid history, as well as market insight from clients, trading desks and global research platform.
•Secured term loan: The Company determines the fair value of its secured term loan based on a discounted cash flow methodology.





7


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Commercial Mortgage Loans Held-for-Investment

Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased by the Company. These loans include loans sold into securitizations that the Company consolidates. Commercial mortgage loans held-for-investment are intended to be held-to-maturity and, accordingly, are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs (in respect of originated loans), premiums and discounts (in respect of purchased loans) and impairment, if any.

Interest income is recognized as revenue using the effective interest method and is recorded on the accrual basis according to the terms of the underlying loan agreement. Any fees, costs, premiums and discounts associated with these loan investments are deferred and amortized over the term of the loan using the effective interest method, or on a straight line basis when it approximates the effective interest method. Income accrual is generally suspended and loans are placed on non-accrual status on the earlier of the date at which payment has become 90 days past due or when full and timely collection of interest and principal is considered not probable. The Company may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the underlying loan agreement. As of June 30, 2021, the Company did not hold any loans placed in non-accrual status.

Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratio ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. The Company's loans are rated on a 5-point scale, from least risk to greatest risk, respectively, which ratings are described as follows:

1.Very Low Risk: exceeds expectations and is outperforming underwriting or it is very likely that the underlying loan can be refinanced easily in the period's prevailing capital market conditions
2.Low Risk: meeting or exceeding underwritten expectations
3.Moderate Risk: in-line with underwritten expectations or the sponsor may be in the early stages of executing the business plan and the loan structure appropriately mitigates additional risks
4.High Risk: potential risk of default, a loss may occur in the event of default
5.Default Risk: imminent risk of default, a loss is likely in the event of default

The Company evaluates each loan rated High Risk or above as to whether it is impaired on a quarterly basis. Impaired loans are individually evaluated based on the Company's quarterly assessment of each loan and assignment of a risk rating. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, all of which are deemed collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses.

In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of June 30, 2021, the Company has not recognized any impairments on its loans held-for-investment. We also assessed the remainder of the portfolio, considering the absence of delinquencies and current market conditions, and, as such has not recorded any allowance for loan losses.

Mortgage Servicing Rights, at Fair Value

Mortgage servicing rights ("MSRs") are associated with residential mortgage loans that the Company historically purchased and subsequently sold or securitized. MSRs are held and managed at Five Oaks Acquisition Corp. ("FOAC"), the Company’s taxable REIT subsidiary ("TRS"). As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a subservicer, the associated loan. MSRs are reported at fair value. Residential mortgage loans for which the Company owns the MSRs are directly serviced by two sub-servicers retained by the Company. The Company does not directly service any residential mortgage loans.
 
MSR income is recognized at the contractually agreed upon rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time.

Collateralized Loan Obligations

Collateralized loan obligations represent third-party liabilities of LFT CRE 2021-FL1, Ltd. as of June 30, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. prior to June 30, 2021 (the "CLOs"). The CLOs are VIEs that the Company has determined it is the primary beneficiary of and accordingly are consolidated in the Company's financial statements, excluding liabilities of the CLOs acquired by the Company that are eliminated on consolidation. The third-party obligations of the CLOs do not have any recourse to the Company as the consolidator of the CLOs. CLOs are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Any premiums, discounts or deferred financing costs associated with these liabilities are amortized to interest expense using the effective interest method over the expected average life of the related obligations, or on a straight line basis when it approximates the effective interest method. In the second quarter of 2020, $624,816 in costs related to a contemplated collateralized loan transaction, that were previously deferred as "other assets" in the consolidated balance sheets were expensed as "other operating expenses" in the consolidated statements of operations as a result of abandoning the contemplated transaction due to the then current market environment, which had been impacted by the COVID-19 pandemic.

Secured Term Loan

The Company and certain of its subsidiaries are party to a $40.25 million credit and guaranty agreement with the lenders referred to therein and Cortland Capital Service LLC, as administrative agent and collateral agent for the lenders (the "Secured Term Loan"). The Secured Term Loan is carried at its unpaid
8


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

principal balance, net of deferred financing costs. Deferred financing costs of $1,017,419 associated with this liability are amortized to interest expense on a straight line basis when it approximates the effective interest method. See Note 16 for additional information related to the Secured Term Loan.

Common Stock

At June 30, 2021 and December 31, 2020, the Company was authorized to issue up to 450,000,000 shares of common stock, par value $0.01 per share. The Company had 24,947,883 and 24,943,383 shares of common stock issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

Stock Repurchase Program

On December 15, 2015, the Company’s Board of Directors authorized a stock repurchase program ("Repurchase Program"), to repurchase up to $10 million of the Company’s outstanding common stock. Subject to applicable securities laws, the repurchase of common stock under the Repurchase Program may be made at times and in amounts as the Company deems appropriate, using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice.

Preferred Stock

At June 30, 2021 and December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company's Board of Directors. The Company had 2,400,000 of preferred stock issued and outstanding at June 30, 2021 and no shares of preferred stock issued and outstanding as of December 31, 2020. Our preferred stock is classified as permanent equity and carried at its liquidation preference less offering costs. On May 3, 2021, the Company classified 2,400,000 shares of its authorized but unissued preferred stock as shares of 7.875% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock"). See Note 12 for additional information related to our Series A Preferred Stock.

Income Taxes

The Company has elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with the Company’s short taxable period ended December 31, 2012. A REIT is generally taxable as a U.S. C-Corporation; however, so long as the Company qualifies as a REIT it is entitled to a special deduction for dividends paid to stockholders not otherwise available to corporations. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent its distributions to stockholders equals, or exceeds, its REIT taxable income for the year. In addition, the Company must continue to meet certain REIT qualification requirements with respect to distributions, as well as certain asset, income and share ownership tests, in accordance with Sections 856 through 860 of the Code, as summarized below. In addition, the TRS is maintained to perform certain services and earn income for the Company that the Company is not permitted to engage in as a REIT.

To maintain its qualification as a REIT, the Company must meet certain requirements, including but not limited to the following: (i) distribute at least 90% of its REIT taxable income to its stockholders; (ii) invest at least 75% of its assets in REIT qualifying assets, with additional restrictions with respect to asset concentration risk; and (iii) earn at least 95% of its gross income from qualifying sources of income, including at least 75% from qualifying real estate and real estate related sources. Regardless of the REIT election, the Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax as a U.S. C-Corporation, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders.

Certain activities of the Company are conducted through a TRS and therefore are taxed as a standalone U.S. C-Corporation. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
The TRS is not subject to a distribution requirement with respect to its REIT owner. The TRS may retain earnings annually, resulting in an increase in the consolidated book equity of the Company and without a corresponding distribution requirement by the REIT. If the TRS generates net income, and declares dividends to the Company, such dividends will be included in its taxable income and necessitate a distribution to its stockholders in accordance with the REIT distribution requirements.

The Company assesses its tax positions for all open tax years and determines whether the Company has any material unrecognized liabilities in accordance with ASC 740, Income Taxes. The Company records these liabilities to the extent the Company deems them more likely than not to be incurred. The Company's accounting policy with respect to interest and penalties is to classify these amounts as other interest expense.

Earnings per Share

The Company calculates basic and diluted earnings per share by dividing net income attributable to common stockholders for the period by the weighted-average shares of the Company’s common stock outstanding for that period. Diluted earnings per share takes into account the effect of dilutive instruments, such as warrants, stock options, and unvested restricted stock, but use the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. See Note 13 for details of the computation of basic and diluted earnings per share.

Stock-Based Compensation

The Company is required to recognize compensation costs relating to stock-based payment transactions in the consolidated financial statements. The Company accounts for share-based compensation issued to its Manager and non-management directors using the fair-value based methodology prescribed by
9


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ASC 505, Equity ("ASC 505"), or ASC 718, Share-Based Payment ("ASC 718"), as appropriate. Compensation cost related to restricted common stock issued to the Manager is initially measured at estimated fair value at the grant date, and is remeasured on subsequent dates to the extent the awards are unvested. Additionally, the compensation cost related to restricted common stock issued to the non-management directors is measured at its estimated fair value at the grant date and amortized and expensed over the vesting period. See Note 9 for details of stock-based awards issuable under the Manager Equity Plan.

Comprehensive Income (Loss) Attributable to Common Stockholders

For the three and six months ended June 30, 2021 and 2020, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Recently Issued and/or Adopted Accounting Standards

Credit Losses

In June 2016, the FASB issued ASU 2016-13, which is a comprehensive amendment of credit losses on financial instruments. Currently GAAP requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The standard’s core principle is that an entity replaces the "incurred loss" impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. For public business entities that are SEC filers, the amendment in this update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

In November 2019, the FASB issued ASU 2019-10 which amended the effective dates for implementation of ASU 2016-13. ASU 2019-10 defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, public business entities that are not SEC filers and all other companies, including not-for-profit companies and employee benefit plans for fiscal years beginning after December 15 2022, including interim periods within those fiscal years. The Company is designated as a smaller reporting company and has deferred implementation of ASU 2016-13 pursuant to ASU 2019-10 and is continuing to assess the impact of this guidance.

In February 2020, the FASB issued ASU 2020-02, amending SEC paragraphs in the Codification to reflect the issuance of SEC Staff Accounting Bulletin ("SAB") No. 119 related to the new credit losses standard and revised effective date of the new leases standard. SAB No. 119 provides interpretive guidance on methodologies and supporting documentation for measuring credit losses, with a focus on the documentation the staff would normally expect registrants engaged in lending transactions to prepare and maintain to support estimates of current expected credit losses for loan transactions. This new guidance is effective for fiscal years beginning after December 15, 2022 for smaller reporting companies such as the Company. The Company is assessing the impact of this guidance.

Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. The Company adopted ASU 2019-12 beginning with the first quarter of 2021, which had no material impact on the Company's financial condition or results of operations.

Financial Instruments

In March 2020, the FASB issued ASU 2020-03 which makes improvements to financial instruments guidance, including the current expected credit losses (CECL) guidance in ASU 2016-13. Only Issue 1, of the 7 improvement issues applies to the Company, which is effective upon issuance, requires all entities to provide fair value option disclosures. MSRs are reported at fair value as a result of the fair value election, as discussed in Mortgage Servicing Rights, at Fair Value above.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 828): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The standard was issued to ease the accounting effects of reform to the London Interbank Offered Rate ("LIBOR") and other reference rates. The standard provides optional expedients and exceptions for applying GAAP to debt instruments, leases, derivatives and other contracts affected by reference rate reform. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The standard is effective for all entities as of March 12, 2020 through December 31, 2022 and may be elected over time as reference rate reform activities occur. We are currently evaluating the impact of this guidance on our consolidated financial statements.

CARES Act

On March 27, 2020, former President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). Section 4013 of the CARES Act includes a provision that permits financial institutions an election to suspend temporarily troubled debt restructuring ("TDR") accounting under ASC Subtopic 310-40 in certain circumstances ("Section 4013 Elections"). Additionally, Section 4014 of the CARES Act includes a provision that permits deferral of the effective date of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), for insured depository institutions, bank holding companies, or any affiliates thereof ("Section 4014 Election"). The Company is not a financial institution, nor a depository institution, bank holding company or an affiliate of one and therefore would not be permitted to make Section 4013 or Section 4014 Elections. The Company is designated as a smaller reporting company for SEC filing purposes and has previously deferred implementation of ASU 2016-13 until January 1, 2023 pursuant to ASU 2019-10.

10


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 3 – COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT


The following tables summarize certain characteristics of the Company's investments in commercial mortgage loans as of June 30, 2021 and December 31, 2020:
Weighted Average
Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan %
Coupon(1)
Remaining
Term
 (Years)(2)
June 30, 2021
Loans held-for-investment
Senior secured loans(3)
$ 611,527,493  $ 611,820,226  44  100.0  % 5.0  % 2.9
611,527,493  611,820,226  44  100.0  % 5.0  % 2.9
Weighted Average
Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan %
Coupon(1)
Remaining
Term
 (Years)(2)
December 31, 2020
Loans held-for-investment
Senior secured loans(3)
$ 547,345,334  $ 547,345,334  40  100.0  % 5.1  % 3.1
547,345,334  547,345,334  40  100.0  % 5.1  % 3.1

(1)    Weighted average coupon assumes applicable one-month LIBOR of 0.08% and 0.14% as of June 30, 2021 and December 31, 2020, respectively, inclusive of weighted average floors of 1.32% and 1.64%, respectively.
(2)    Weighted average remaining term assumes all extension options are exercised by the borrower, provided, however, that our loans may be repaid prior to such date.
(3)    As of June 30, 2021, $590,574,226 of the outstanding senior secured loans were held in VIEs and $21,246,000 of the outstanding senior secured loans were held outside VIEs. As of December 31, 2020, $531,363,401 of the outstanding senior secured loans were held in VIEs and $15,981,933 of the outstanding senior secured loans were held outside VIEs.

Activity: For the six months ended June 30, 2021, the loan portfolio activity was as follows:
Commercial Mortgage Loans Held-for-Investment
Balance at December 31, 2020 $ 547,345,334 
Purchases and fundings 338,386,251 
Proceeds from principal payments (273,837,132)
Accretion of purchase discount 3,781 
Amortization of purchase premium (78,008)
Balance at June 30, 2021
$ 611,820,226 

Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis and assigns a risk rating based on a variety of factors. The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020
Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value Number of Loans Unpaid Principal Balance Net Carrying Value
1 —  $ —  —  —  —  — 
2 21  250,914,540  250,837,143  14  168,401,366  168,401,366 
3 21  342,169,149  342,539,279  20  309,726,343  309,726,343 
4 2  18,443,804  18,443,804  6  69,217,625  69,217,625 
5 —  —  —  —  —  — 
44  $ 611,527,493  611,820,226  40  547,345,334  547,345,334 

As of June 30, 2021, the average risk rating of the commercial mortgage loan portfolio was 2.6 (Moderate Risk), weighted by investment carrying value, with 97.0% of the net carrying value of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager.

As of December 31, 2020, the average risk rating of the commercial mortgage loan portfolio was 3.1 (Moderate Risk), weighted by investment carrying value, with 84.4% of the net carrying value of commercial loans held-for-invested rated 3 (Moderate Risk) or better by the Company's Manager.

11


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 3 - COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT (Continued)
The decrease in average risk rating is primarily the result of commercial mortgage loans that paid off with a risk rating of "2" of $68.9 million, a risk rating of "3" of $177.2 million and a risk rating of "4" of $17.4 million, offset by the the purchase of commercial mortgage loans with a risk rating of "2" of $151.2 million, a risk rating of "3" of $165.7 million and a risk rating of "4" of $11.1 million during the first half of 2021.

Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value as of June 30, 2021 and December 31, 2020:

Loans Held-for-Investment
June 30, 2021 December 31, 2020
Geography
South 36.2  % 36.5  %
Southwest 31.7  38.7 
West 21.0  1.8 
Midwest 11.1  16.8 
Mid-Atlantic —  6.2 
Total 100.0  % 100.0  %
June 30, 2021
December 31, 2020
Collateral Property Type
Multifamily 84.8  % 89.5  %
Self-Storage 9.2  0.8 
Office 3.2  3.3 
Retail 2.8  6.4 
Total 100.0  % 100.0  %

We did not have any impaired loans, nonaccrual loans, or loans in maturity default as of June 30, 2021 or December 31, 2020.

NOTE 4 - USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES

We account for CLO transactions on our consolidated balance sheet as financing facilities. Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements. The investment grade tranches are treated as secured financings, and are non-recourse to us. See Note 2 ("Summary of Significant Accounting Policies - Principles Consolidation - VIE") for further discussion.

On June 14, 2021, the Company completed a CRE CLO ("LFT CRE 2021-FL1, Ltd."), issuing eight tranches of CLO notes through two newly-formed wholly-owned subsidiaries totaling $903.8 million. Of the total CLO notes issued $833.8 million were investment grade notes issued to third party investors and $70 million were below investment-grade notes retained by us. In addition, a $96.25 million equity interest in the portfolio was retained by us. As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $669.7 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio and affiliates of the Company. The financing has a two-and-a-half year reinvestment period that allows principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities also included $330.3 million for the purpose of acquiring additional loan obligations or a period of up to 180 days from the CLO closing date, resulting in the issuer owning loan obligations with a face value of $1.0 billion, representing leverage of 83%. We retained a residual interest in the portfolio with a notional amount of $166.2 million, including the $70 million below investment-grade notes.

On June 14, 2021, the Company unwound Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. redeeming $388.2 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets primarily within LFT 2021-FL1, Ltd., as well as cash held within Hunt CRE 2018-FL2, and expensed $1.7 million of deferred financing costs into loss on extinguishment of debt on the consolidated statements of operations. As of this date, the Company no longer consolidates the assets and liabilities as of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.

The CRE CLO we consolidate is subject to collateralization and coverage tests that are customary for these types of securitizations. As of June 30, 2021 and December 31, 2020 all such collateralization and coverage tests in the CRE CLOs we consolidate were met. If the duration of the COVID-19 pandemic continues to prolong, its impact on our borrowers and their tenants could result in a sustained deterioration in a material amount of assets and may impact these tests.

The carrying values of the Company's total assets and liabilities related to LFT CRE 2021-FL1, Ltd. at June 30, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at December 31, 2020 included the following VIE assets and liabilities:

ASSETS June 30, 2021 December 31, 2020
Cash, cash equivalents and restricted cash $ 330,260,821  $ 57,999,396 
Accrued interest receivable 2,251,641  1,955,709 
Investment related receivable 79,457,686  — 
Loans held for investment 590,574,226  531,363,401 
12


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 4 – USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES (Continued)
Total Assets $ 1,002,544,374  $ 591,318,506 
LIABILITIES
Accrued interest payable $ 593,324  $ 351,877 
Collateralized loan obligations(1)
826,070,345  463,060,090 
Total Liabilities $ 826,663,669  $ 463,411,967 
Equity 175,880,705  127,906,539 
Total liabilities and equity $ 1,002,544,374  $ 591,318,506 

(1)     The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is June 14, 2039 for LFT CRE 2021-FL1, Ltd., August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd.

The following tables present certain loan and borrowing characteristics of LFT CRE 2021-FL1, Ltd. as of June 30, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. as of December 31, 2020:
As of June 30, 2021
Collateralized Loan Obligations Count Principal Value
Carrying Value(1)
Wtd. Avg. Yield
Collateral (loan investments) 42 $ 590,281,493  $ 590,574,226 
L + 3.67%
Financings provided 2 833,750,000  826,070,345 
L + 1.43%
As of December 31, 2020
Collateralized Loan Obligations Count Principal Value
Carrying Value(1)
Wtd. Avg. Yield
Collateral (loan investments) 40 $ 531,363,401  $ 531,363,401 
L + 3.50%
Financing provided 2 465,316,126  463,060,090 
L + 1.44%

(1)     The carrying value for LFT CRE 2021-FL1, Ltd. is net of debt issuance costs of $7,679,655 for June 30, 2021, Hunt CRE 2017-FL1, Ltd. is net of discount of $207,767 for December 31, 2020, and the carrying value for Hunt CRE 2018-FL2, Ltd. is net of debt issuance costs of $2,048,269 for December 31, 2020.

The statement of operations related to LFT CRE 2021-FL1, Ltd., Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for the three and six months ended June 30, 2021 and June 30, 2020 include the following income and expense items:

Statements of Operations Three Months Ended June 30, 2021 Three Months Ended June 30, 2020
Interest income $ 7,867,960  $ 8,292,797 
Interest expense (2,211,947) (2,915,638)
Net interest income $ 5,656,013  $ 5,377,159 
General and administrative fees 91,786  (149,643)
Net income $ 5,747,799  $ 5,227,516 

Statements of Operations Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
Interest income $ 15,131,821  $ 17,324,969 
Interest expense (4,397,189) (7,153,527)
Net interest income $ 10,734,632  $ 10,171,442 
General and administrative fees (28,800) (295,629)
Net income $ 10,705,832  $ 9,875,813 

NOTE 5 - RESTRICTED CASH

LFT CRE 2021-FL1, Ltd., Ltd. is actively managed with an initial reinvestment period of 30 months that expires in December 2023. As loans payoff or mature, as applicable, during this reinvestment period, cash received is restricted and intended to be reinvested within LFT CRE 2021-Fl1, Ltd. in accordance with the terms and conditions of their respective governing agreements.

NOTE 6 - SECURED TERM LOAN

On January 15, 2019, the Company, together with its FOAC and Hunt CMT Equity subsidiaries (together with the Company, the "Credit Parties"), entered into the Secured Term Loan, as amended on February 13, 2019, July 9, 2020 and April 21, 2021 with the lenders party thereto and Cortland Capital Market
13


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 6 – SECURED TERM LOAN (Continued)
Services, LLC, as administrative agent (in such capacity, the "Agent"), providing for a term facility ("Credit Agreement") to be drawn in an aggregate principal amount of $40.25 million with a maturity of 6 years.

On February 14, 2019, the Company drew on the Secured Term Loan in the aggregate principal amount of $40.25 million generating net proceeds of $39.2 million. The outstanding balance of the Secured Term Loan in the table below is presented gross of deferred financing costs ($614,741 and $693,802 at June 30, 2021 and December 31, 2020, respectively). As of June 30, 2021 and December 31, 2020, the outstanding balance and total commitment under the Credit Agreement consisted of the following:


June 30, 2021 December 31, 2020
Outstanding Balance Total Commitment Outstanding Balance Total Commitment
Secured Term Loan $ 40,250,000  $ 40,250,000  $ 40,250,000  $ 40,250,000 
Total $ 40,250,000  $ 40,250,000  $ 40,250,000  $ 40,250,000 

The borrowings under the Secured Term Loan are joint and several obligations of the Credit Parties. In addition, the Credit Parties’ obligations under the Secured Term Loan are secured by substantially all the assets of the Credit Parties through pledge and security documentation. Amounts advanced under the Secured Term Loan are subject to compliance with a borrowing base comprised of assets of the Credit Parties and certain of their subsidiaries, and include senior and subordinated CRE mortgage loans, preferred equity in CRE as sets (directly or indirectly), CRE construction mortgage loans and certain types of equity interests (the "Eligible Assets"). Borrowings under the Secured Term Loan bear interest at a fixed rate of 7.25% for the six-year period following the initial draw-down, which is subject to step up by 0.25% for the first four months after the sixth anniversary of the borrowing of the Senior Secured Term Loan, then by 0.375% for the following four months, then by 0.50% for the last four months until maturity.

In response to the continued COVID-19 pandemic, on July 9, 2020, the Company entered into the Second Amendment to the Credit and Guaranty Agreement. This amendment provides the Company with additional flexibility to effectively manage any potential borrower distress related to COVID-19 that were not originally contemplated in loan documentation.

On April 21, 2021, the Company, together with its Credit Parties, entered into an amendment (the "Third Amendment") to the Credit and Guaranty Agreement. The amendment, among other things, (i) provides the Company with an incremental secured term loan in the aggregate principal amount of $7.5 million; (ii) extends the maturity date of the Secured Term Loan from February 14, 2025 to February 14, 2026; (iii) amends certain asset concentration limits and (iv) amends certain financial covenants. On May 5, 2021 the Third Amendment became effective.

The Credit Agreement contains affirmative and negative covenants binding the Company and its subsidiaries that are customary for credit facilities of this type, including, but not limited to: minimum asset coverage ratio; minimum unencumbered assets ratio; maximum total net leverage ratio; minimum tangible net worth; and an interest charge coverage ratio. As of June 30, 2021 and December 31, 2020 we were in compliance with these covenants. If the duration of the COVID-19 pandemic continues to prolong, its impact on our borrowers and their tenants could result in a sustained deterioration in a material amount of assets and may impact these covenants.

The Credit Agreement contains events of default that are customary for facilities of this type, including, but not limited to, nonpayment of principal, interest, fees and other amounts when due, violation of covenants, cross default with material indebtedness, and change of control.

NOTE 7 - MSRs

As of June 30, 2021, the Company retained the servicing rights associated with an aggregate principal balance of $127,453,198 of residential mortgage loans that the Company had previously transferred to residential mortgage loan securitization trusts. The Company’s MSRs are held and managed at the Company’s TRS, and the Company employs two licensed sub-servicers to perform the related servicing activities.

The following table presents the Company’s MSR activity for the six months ended June 30, 2021 and the six months ended June 30, 2020:
  June 30, 2021 June 30, 2020
Balance at beginning of period $ 919,678  $ 2,700,207 
Changes in fair value due to:
Changes in valuation inputs or assumptions used in valuation model 68,314  (777,330)
Other changes to fair value(1)
(309,204) (475,595)
Balance at end of period $ 678,788  $ 1,447,282 
Loans associated with MSRs(2)
$ 127,453,198  $ 274,570,339 
MSR values as percent of loans(3)
0.53  % 0.53  %
(1)Amounts represent changes due to realization of expected cash flows and prepayment of principal of the underlying loan portfolio.
(2)Amounts represent the unpaid principal balance of loans associated with MSRs outstanding at June 30, 2021 and June 30, 2020, respectively.
(3)Amounts represent the carrying value of MSRs at June 30, 2021 and June 30, 2020, respectively divided by the outstanding balance of the loans associated with these MSRs.

The following table presents the servicing income recorded on the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2021 and June 30, 2020:
14


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 7 – MSRs (Continued)
Three Months Ended
June 30, 2021 		Three Months Ended
June 30, 2020
Servicing income, net $ 95,766  $ 204,380 
Total servicing income $ 95,766  $ 204,380 

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
Servicing income, net $ 219,922  $ 398,527 
Total servicing income $ 219,922  $ 398,527 

NOTE 8 - FAIR VALUE

The following tables summarize the valuation of the Company’s assets and liabilities carried at fair value on a recurring basis within the fair value hierarchy levels as of June 30, 2021 and December 31, 2020:

  June 30, 2021
Quoted prices in
active markets
for identical assets
Level 1 		Significant
other observable
inputs
Level 2 		Unobservable
inputs
Level 3
Balance as of June 30, 2021
Assets:        
Mortgage servicing rights —  —  678,788  678,788 
Total $ —  $ —  $ 678,788  $ 678,788 

  December 31, 2020
Quoted prices in
active markets
for identical assets
Level 1 		Significant
other observable
inputs
Level 2 		Unobservable
inputs
Level 3 		Balance as of
December 31, 2020
Assets:        
Mortgage servicing rights —  —  919,678  919,678 
Total $ —  $ —  $ 919,678  $ 919,678 

As of June 30, 2021 and December 31, 2020, the Company had $678,788 and $919,678, respectively, in Level 3 assets. The Company’s Level 3 assets are comprised of MSRs. For more detail about Level 3 assets, also see Notes 2 and 7.

The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company’s MSRs classified as Level 3 fair value assets at June 30, 2021 and December 31, 2020:

As of June 30, 2021
Valuation Technique Unobservable Input Range Weighted Average
Discounted cash flow Constant prepayment rate
11.8 - 30.0%
18.5  %
  Discount rate 12.0  % 12.0  %
As of December 31, 2020
Valuation Technique Unobservable Input Range Weighted Average
Discounted cash flow Constant prepayment rate
12.4 - 28.0%
21.1  %
  Discount rate 12.0  % 12.0  %

As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the condensed consolidated balance sheets, for which it is practicable to estimate that value. The following table details the carrying amount, face amount and fair value of the financial instruments described in Note 2:
15


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 8 – FAIR VALUE (Continued)
June 30, 2021
Level in Fair Value Hierarchy Carrying Value Face Amount Fair Value
Assets:
Cash and cash equivalents 1 14,576,852  14,576,852  14,576,852 
Restricted cash 1 330,260,821  330,260,821  330,260,821 
Commercial mortgage loans held-for-investment 3 611,820,226  611,527,493  611,505,951 
Total $ 956,657,899  $ 956,365,166  $ 956,343,624 
Liabilities:
Collateralized loan obligations 2 826,070,345  833,750,000  837,030,000 
Secured Term Loan 3 39,635,259  40,250,000  44,233,486 
Total $ 865,705,604  $ 874,000,000  $ 881,263,486 
December 31, 2020
Level in Fair Value Hierarchy Carrying Value Face Amount Fair Value
Assets:
Cash and cash equivalents 1 11,375,960  11,375,960  11,375,960 
Restricted cash 1 57,999,396  57,999,396  57,999,396 
Commercial mortgage loans held-for-investment 3 547,345,334  547,345,334  547,134,755 
Total $ 616,720,690  $ 616,720,690  $ 616,510,111 
Liabilities:
Collateralized loan obligations 2 463,060,090  465,316,126  458,094,412 
Secured term loan 3 39,556,198  40,250,000  44,514,373 
Total $ 502,616,288  $ 505,566,126  $ 502,608,785 

Estimates of cash and cash equivalents and restricted cash are measured using quoted prices, or Level 1 inputs. Estimates of the fair value of collateralized loan obligations are measured using observable, quoted market prices, in active markets, or Level 2 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 2 for further discussion regarding fair value measurement of certain of our assets and liabilities.

NOTE 9 - RELATED PARTY TRANSACTIONS

Management and Incentive Fee

The Company is externally managed and advised by the Manager and through January 3, 2020 by HIM, our prior manager. Pursuant to the terms of the prior management agreement in effect for the year ended December 31, 2019, the Company paid the prior manager a management fee equal to 1.5% per annum, calculated and payable quarterly (0.375% per quarter) in arrears. For purposes of calculating the management fee, the Company’s stockholders’ equity included the sum of the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus the Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less any amount that the Company paid for repurchases of the Company’s common stock since inception, and excluding any unrealized gains, losses or other items that did not affect realized net income (regardless of whether such items were included in other comprehensive income or loss, or in net income). This amount was adjusted to exclude one-time events pursuant to changes in GAAP and certain non-cash items after discussions between the manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. To the extent asset impairment reduced the Company’s retained earnings at the end of any completed calendar quarter, it would reduce the management fee for such quarter. The Company’s stockholders’ equity for the purposes of calculating the management fee could be greater than the amount of stockholders’ equity shown on the consolidated financial statements. Additionally, under the terms of the prior management agreement, starting in the first full calendar quarter following January 18, 2019, the Company was also required to pay the Manager a quarterly incentive fee equal to 20% of the excess of Core Earnings (as defined in the management agreement) over the product of (i) Stockholders' Equity as of the end of such fiscal quarter, and (ii) 8% per annum. On January 3, 2020, the management agreement in effect for the year ended December 31, 2019 was terminated, and a new management agreement with the Manager became effective. Pursuant to the terms of the new management contract, the Company is required to pay the Manager an annual base management fee of 1.50% of Stockholders' Equity (as defined in the management agreement), payable quarterly (0.375% per quarter) in arrears. The definition of stockholders' equity in the new management agreement is materially unchanged from the definition in the prior management agreement. Additionally, starting in the first full calendar quarter following January 3, 2020, the Company is also required to pay the Manager a quarterly incentive fee equal to 20% of the excess of Core Earnings (as defined in the management agreement) over the product of (i) the Stockholders' Equity as of the end of such fiscal quarter, and (ii) 8% per annum.

16


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 9 - RELATED PARTY TRANSACTIONS (Continued)

For the three months ended June 30, 2021, the Company incurred management fees of $725,465 (June 30, 2020: $590,211), recorded as "Management and incentive fees" in the condensed consolidated statement of operations, of which $726,000 (June 30, 2020: $588,000) was accrued but had not been paid, included in "Fees and expenses payable to Manager" in the condensed consolidated balance sheets.

For the six months ended June 30, 2021, the Company incurred management fees of $1,314,232 (June 30, 2020: $1,175,032), recorded as "Management and incentive fees" in the condensed consolidated statement of operations, of which $726,000 (June 30, 2020: $588,000) was accrued but had not been paid, included in "Fees and expenses payable to Manager" in the condensed consolidated balance sheets.

For the three months ended June 30, 2021 and the three months ended June 30, 2020 the Company did not incur any incentive fees.

For the six months ended June 30, 2021 the Company incurred incentive fees of $132,232 (June 30, 2020: $0), recorded as "Management and incentive fees" in the condensed consolidated statement of operations, of which $132,232 (June 30, 2020: $0) was accrued but had not been paid, included in "Fees and expenses payable to Manager" in the condensed consolidated balance sheets.

Expense Reimbursement

Pursuant to the management agreement, the Company is required to reimburse the Manager for operating expenses related to the Company incurred by the Manager, including accounting, auditing and tax services, technology and office facilities, operations, compliance, legal and filing fees, and miscellaneous general and administrative costs, including the cost of non-investment management personnel of the Manager who spend all or a portion of their time managing the Company’s affairs. The Manager has agreed to certain limitations on manager expense reimbursement from the Company.

On March 18, 2019, the Company entered into a support agreement with the prior manager, pursuant to which, the prior manager agreed to reduce the reimbursement cap by 25% per annum (subject to such reduction not exceeding $568,000 per annum) until such time as the aggregate support provided thereunder equaled approximately $1.96 million. Pursuant to the new management agreement, the terms of the support agreement are materially unchanged.

For the three months ended June 30, 2021, the Company incurred reimbursable expenses of $496,599 (June 30, 2020: $346,653), recorded as "operating expenses reimbursable to Manager" in the condensed consolidated statement of operations, of which $497,000 (June 30, 2020: $367,500) was accrued but had not yet been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. Per the management agreement, any exit fees waived by the Company as a result of permanent financing by the Manager or any of its affiliates, shall result in a reduction to reimbursed expenses by an amount equal to 50% of the amount of any such waived exit fee. For the three months ended June 30, 2021, the Company waived $46,838 of reimbursable expense exit fees and for the three months ended June 30, 2020, the Company waived $73,549 of reimbursable expense exit fees.

For the six months ended June 30, 2021, the Company incurred reimbursable expenses of $809,053 (June 30, 2020: $807,774), recorded as "operating expenses reimbursable to Manager" in the condensed consolidated statement of operations, of which $497,000 (June 30, 2020: $367,500) was accrued but had not yet been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. Per the management agreement, any exit fees waived by the Company as a result of permanent financing by the Manager or any of its affiliates, shall result in a reduction to reimbursed expenses by an amount equal to 50% of the amount of any such waived exit fee. For the six months ended June 30, 2021, the Company waived $175,959 of reimbursable expense exit fees and for the six months ended June 30, 2020, the Company waived $73,549 of reimbursable expense exit fees.

Manager Equity Plan

The Company has in place a Manager Equity Plan under which the Company may compensate the Manager and the Company’s independent directors or consultants, or officers whom it may employ in the future. In turn, the Manager, in its sole discretion, grants such awards to its directors, officers, employees or consultants. The Company is able to issue under the Manager Equity Plan up to 3.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis) at the time of each award. Stock based compensation arrangements may include incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock awards and other awards based on the Company’s common stock.

The following table summarizes the activity related to restricted common stock for the six months ended June 30, 2021 and June 30, 2020:

Six Months Ended June 30, 2021
2021 2020
Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value
Outstanding Unvested Shares at Beginning of Period 4,500  $ 2.60  4,500  $ 3.33 
Granted 4,500  4.18  4,500  2.60 
Vested (4,500) 2.60  (4,500) $ 3.33 
Outstanding Unvested Shares at End of Period 4,500  $ 4.18  4,500  $ 2.60 

For the period ended June 30, 2021, the Company recognized compensation expense related to restricted common stock of $6,126 (2020: $14,394). The Company has unrecognized compensation expense of $18,036 as of June 30, 2021 (2020: $11,251) for unvested shares of restricted common stock. As of June 30, 2021, the weighted average period for which the unrecognized compensation expense will be recognized is 11.7 months.

OREC Structured Finance, LLC

During the first quarter of 2021, Hunt CRE 2018-FL2, Ltd. purchased three loans with an aggregate unpaid principal balance of $34.9 million at par from OREC Structured Finance, LLC d/b/a Lument Structured Finance ("LSF"), an affiliate of our Manager.
17


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 9 - RELATED PARTY TRANSACTIONS (Continued)

During the second quarter of 2021, Hunt CRE 2018-FL1, Ltd. purchased six loans with an aggregate unpaid principal balance of $67.8 million at par from LSF, Lument Commercial Mortgage Trust ("LCMT") purchased two loans with an aggregate unpaid principal balance of $21.2 million and funded 18 loan advances with an unpaid principal balance of $14.5 million from LSF and LFT CRE 2021-FL1, Ltd. purchased eight loans with an aggregate unpaid principal balance of $82.6 million at par from LSF.

During the first quarter of 2020, Hunt CRE 2017-FL1, Ltd. purchased two loans with an aggregate unpaid principal balance of $31.9 million at par from LSF.

OREC 2018-CRE1, Ltd.

During the second quarter of 2021, LFT CRE 2021-FL1, Ltd. purchased nine loans with an aggregate unpaid principal balance of $112.5 million at a premium of $0.35 million from OREC 2018-CRE1, Ltd., an affiliate of our Manager..

ORIX Real Estate Holdings, LLC

During the second quarter of 2021, LFT CRE 2021-FL1, Ltd. purchased eight loans with an aggregate unpaid principal balance of $4.6 million at a premium of $0.02 million from ORIX Real Estate Holdings, LLC, an affiliate of our Manager.

ORIX Real Estate Capital

ORIX Real Estate Capital, LLC d/b/a Lument Capital ("OREC"), an affiliate of the Manager, was appointed as the servicer and special servicer with respect to mortgage assets for LFT CRE 2021-FL1, Ltd..

Lument IM

Lument IM was appointed as the collateral manager with respect to LFT CRE 2021-FL1, Ltd. Lument IM has agreed to waive all its entitlements to collateral management fees for so long as Lument IM or an affiliate is the collateral manager.

Hunt Companies, Inc.

One of the Company's directors is also Chief Executive Officer and President of Hunt Companies, Inc. ("Hunt") and is a member of the Hunt Board of Directors, with which affiliates of the Manager have a commercial business relationship. The Manager's affiliates may from time to time sell commercial mortgage loans to Hunt or various of its subsidiaries and affiliates.

NOTE 10 - GUARANTEES

The Company, through FOAC, is party to customary and standard loan repurchase obligations in respect of residential mortgage loans that it has sold into securitizations or to third parties, to the extent it is determined that there has been a breach of standard seller representations and warranties in respect of such loans. To date, the Company has not been required to repurchase any loan due to a claim of breached seller reps and warranties.

In July 2016, the Company announced that it would no longer aggregate and securitize residential mortgage loans; however, the Company sought to capitalize on its infrastructure and knowledge to become the provider of seller eligibility review and backstop services to MAXEX. MAXEX's wholly owned clearinghouse subsidiary, MAXEX Clearing LLC, formerly known as Central Clearing and Settlement LLC ("MAXEX Clearing LLC"), functions as the central counterparty with which buyers and sellers transact, and acts as the buyer's counterparty for each transaction. Pursuant to a Master Agreement dated June 15, 2016, as amended on August 29, 2016, January 30, 2017 and June 27, 2018, among MAXEX, MAXEX Clearing LLC and FOAC (the "Master Agreement"), FOAC provided seller eligibility review services under which it reviewed, approved and monitored sellers that sold loans via MAXEX Clearing LLC. Once approved, and having signed the standardized loan sale contract, the seller sold loan(s) to MAXEX Clearing LLC, and MAXEX Clearing LLC simultaneously sold loan(s) to the buyer on substantially the same terms including representations and warranties. The Master Agreement was terminated on November 28, 2018 (the "MAXEX Termination Date"). To the extent that a seller approved by FOAC prior to the MAXEX Termination Date failed to honor its obligations to repurchase a loan based on an arbitration finding that it breached its representations and warranties, FOAC was obligated to backstop the seller's repurchase obligation. The term of the backstop guarantee is the earlier of the contractual maturity of the underlying mortgage, or its earlier repayment in full; however, the incidence of claims for breaches of representations and warranties over time is considered unlikely to occur more than five years from the sale of a mortgage. FOAC's obligations to provide further seller eligibility review and backstop guarantee services terminated on the MAXEX Termination Date. Pursuant to an Assumption Agreement dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC assumed all of FOAC's obligations under its backstop guarantees and agreed to indemnify and hold FOAC harmless against any losses, liabilities, costs, expenses and obligations under the backstop guarantee. FOAC paid MAXEX Clearing LLC, as the replacement backstop provider, a fee of $426,770 (the "Alternate Backstop Fee"). MAXEX Clearing LLC represented to FOAC in the Assumption Agreement that it (i) is rated at least "A" (or equivalent) by at least one nationally recognized statistical rating agency or (ii) has (a) adjusted tangible net worth of at least $20 million and (b) minimum available liquidity equal to the greater of (x) $5 million and (y) 0.1% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees. MAXEX's chief financial officer is required to certify ongoing compliance by MAXEX Clearing LLC with the aforementioned criteria on a quarterly basis and if MAXEX Clearing LLC fails to satisfy such criteria, MAXEX Clearing LLC is required to deposit into an escrow account for FOAC's benefit an amount equal to the greater of (A) the unamortized Alternate Backstop Fee for each outstanding loan covered by the backstop guarantee and (B) the product of 0.01% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees.

The maximum potential amount of future payments that the Company could be required to make under the outstanding backstop guarantees, which represents the outstanding balance of all underlying mortgage loans sold by approved sellers to MAXEX Clearing LLC, was estimated to be $465.2 million and $860.5 million as of June 30, 2021 and December 31, 2020, respectively, although the Company believes this amount is not indicative of the Company's actual potential losses. Amounts payable in excess of the outstanding principal balance of the related mortgage, for example any premium paid by the loan buyer or costs associated with collecting mortgage payments, are not currently estimable. Amounts that may become payable under the backstop guarantee are normally
18


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 10 - GUARANTEES (Continued)
recoverable from the related seller, as well as from any payments received on (or from the sale of property securing) the mortgage loan repurchased and, as noted above, MAXEX Clearing LLC has assumed all of FOAC's obligations in respect of its backstop guarantees. Pursuant to the Master Agreement, FOAC is required to maintain minimum available liquidity equal to the greater of (i) $5.0 million or (ii) 0.10% of the aggregate unpaid principal balance of loans backstopped by FOAC, either directly or through a credit support agreement acceptable by MAXEX. As of June 30, 2021, the Company was not aware of any circumstances expected to lead to the triggering of a backstop guarantee obligation.

In addition, the Company enters into certain contracts that contain a variety of indemnification obligations, principally with the Manager, brokers and counterparties to repurchase agreements. The maximum potential future payment amount the Company could be required to pay under these indemnification obligations is unlimited. The Company has not incurred any costs to defend lawsuits or settle claims related to the indemnification obligations. As a result, the estimated fair value of these agreements is minimal. Accordingly, the Company recorded no liabilities for these agreements as of June 30, 2021.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Impact of COVID-19

As further discussed in Note 2, the full extent of the impact of COVID-19 on the global economy generally, and our business in particular, remains uncertain. As of June 30, 2021, no contingencies have been recorded on our consolidated balance sheet as a result of COVID-19, however, as the global pandemic continues, it may have long-term impacts on our financial condition, results of operations, and cash flows. Refer to Note 2 for further discussion of COVID-19.

Litigation

From time to time, LFT may be involved in various claims and legal actions arising in the ordinary course of business. LFT establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.

As of June 30, 2021, LFT was not involved in any material legal proceedings regarding claims or legal actions against LFT.

Unfunded Commitments

As of June 30, 2021, LSF, an affiliate of the Manager, had $47.4 million of unfunded commitments related to loans held in LFT CRE 2021-FL1, Ltd. and $1.6 million of unfunded commitments related to loans held in LCMT. These commitments are not reflected on the Company's condensed consolidated balance sheets.

As of December 31, 2020, LSF, an affiliate of the Manager had $5.6 million in funded commitments and $24.6 million of unfunded commitments related to loans held in Hunt CRE 2017-FL1, Ltd that the Company could be required to purchase from LSF under the Future Funding Participation Transfer. These commitments are not reflected on the Company's condensed consolidated balance sheets.

As of December 31, 2020, LSF, an affiliate of the Manager, had $25.8 million of unfunded commitments related to loans held in Hunt CRE 2018-FL2, Ltd. These commitments are not reflected on the Company's condensed consolidated balance sheets.

Future loan fundings comprise funding for capital improvements, leasing costs, interest and carry costs, and fundings will vary depending on the progress of the business plan and cash flows at the mortgage assets. Therefore, the exact timing and amounts of such future loan fundings are uncertain and will depend on the current and future performance of the underlying mortgage assets. Due to the ongoing COVID-19 pandemic, the progress of capital improvements and leasing is anticipated to be slower than otherwise expected, and, as such the pace of future funding relating to these capital needs may be commensurately lower.

NOTE 12 - EQUITY

Common Stock

The Company has 450,000,000 authorized shares of common stock, par value $0.01 per share, with 24,947,883 and 24,943,383 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

On January 3, 2020, the Company issued 1,246,719 shares of common stock to an affiliate of the Manager in a private placement at a purchase price of $4.61 per share resulting in aggregate net proceeds of $5.7 million.

Stock Repurchase Program

On December 15, 2015, the Company’s board of directors authorized a stock repurchase program (or the "Repurchase Program"), to repurchase up to $10 million of the Company’s outstanding common stock. Shares of the Company’s common stock may be purchased in the open market, including through block purchases, or through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b18(b)(1) of the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any repurchases will be determined at the Company’s discretion and the program may be suspended, terminated or modified at any time for any reason. Among other factors, the Company intends to only consider repurchasing shares of the Company’s common stock when the purchase price is less than the Company’s estimate of the Company’s current net asset value per common share. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of the Company’s common stock. Through June 30, 2021, the Company had repurchased 126,856 shares of common stock at a weighted average share price of $5.09. No share repurchases have been made since January 19, 2016. As of June 30, 2021, $9.4 million of common stock remained authorized for future share repurchase under the Repurchase Program.

19


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 12 – EQUITY (Continued)
Preferred Stock

At June 30, 2021 and December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with 2,400,000 shares of Series A Preferred Stock issued and outstanding as of June 30, 2021, and no shares of preferred stock issued and outstanding at December 31, 2020. Voting and other rights and preferences will be determined by the Company's Board of Directors upon issuance.

On May 5, 2021, LFT issued 2,400,000 shares of Series A Preferred Stock, and received net proceeds, after underwriting discounts and commissions but before offering expenses payable by the Company, of $58.1 million. The Series A Preferred Stock is redeemable, at LFT's option, at a liquidation preference price of $25.00 per share plus accrued dividends commencing on May 5, 2026. Dividends on the Series A Preferred Stock are payable quarterly in arrears beginning on July 15, 2021.

Distributions to Stockholders

For the 2021 taxable year to date, the Company has declared dividends to common stockholders totaling $4,490,213, or $0.18 per share. The following table presents cash dividends declared by the Company on its common stock during the six months ended June 30, 2021:

Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share
March 15, 2021 March 31, 2021 April 15, 2021 $ 2,244,904  $ 0.090 
June 15, 2021 June 30, 2021 July 15, 2021 $ 2,245,309  $ 0.090 

The following table presents cash dividends declared by the Company on its Series A Preferred stock for the six months ended June 30, 2021:

Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share
June 15, 2021 July 1, 2021 July 15, 2021 $ 918,750  $ 0.383 


Non-controlling Interests
 
On November 29, 2018, Lument Commercial Mortgage Trust, Inc. ("LCMT"), formerly known as Hunt Commercial Mortgage Trust ("HCMT"), an indirect wholly-owned subsidiary of the Company that has elected to be taxed as a REIT issued 125 shares of Series A Preferred Shares ("LCMT Preferred Shares").  Net proceeds to LCMT were $99,500 representing $125,000 in equity raised, less $25,500 in expenses and is reflected as "Non-controlling interests" in the Company’s consolidated balance sheets.  Dividends on the LCMT Preferred Shares are cumulative annually, in an amount equal to 12% of the initial purchase price plus any accrued unpaid dividends.  The LCMT Preferred Shares are redeemable at any time by LCMT.  The redemption price through December 31, 2020 is 1.1x the initial purchase price plus all accrued and unpaid dividends, and the initial purchase price plus all accrued and unpaid dividends thereafter.  The holders of the LCMT Preferred Shares have limited voting rights, which do not entitle the holders to participate or otherwise direct the management of LCMT or the Company.  The LCMT Preferred Shares are not convertible into or exchangeable for any other property or securities of LCMT or the Company.  Dividends on the LCMT Preferred Shares, which amounted to $15,000 for the year ended December 31, 2020 are reflected in "Dividends to preferred stockholders" in the Company’s consolidated statements of operations. As of June 30, 2021, LCMT paid $7,500 in dividends on the LCMT Preferred Shares which are reflected in "dividends to preferred stockholders" in the Company's condensed consolidated statements of operations.

NOTE 13 - EARNINGS PER SHARE

In accordance with ASC 260, outstanding instruments that contain rights to non-forfeitable dividends are considered participating securities. The Company is required to apply the two-class method or the treasury stock method of computing basic and diluted earnings per share when there are participating securities outstanding. The Company has determined that outstanding unvested restricted shares issued under the Manager Equity Plan are participating securities, and they are therefore included in the computation of basic and diluted earnings per share. The following tables provide additional disclosure regarding the computation for the three and six months ended June 30, 2021 and June 30, 2020:

  Three Months Ended June 30, 2021 Three Months Ended June 30, 2020
Net income $ 1,680,242  $ 1,878,703 
Less dividends:        
Common stock $ 2,245,309    $ 1,870,754   
Preferred stock 725,667    3,750   
  2,970,976    1,874,504 
Undistributed earnings (deficit) $ (1,290,734) $ 4,199 

Unvested Share-Based
Payment Awards 		Common Stock Unvested Share-Based
Payment Awards 		Common Stock
Distributed earnings $ 0.09  $ 0.09  $ 0.08  $ 0.08 
Undistributed earnings (deficit) —  (0.05) —  — 
Total $ 0.09  $ 0.04  $ 0.08  $ 0.08 

For the three months ended June 30,
2021 2020
Basic weighted average shares of common stock 24,939,575  24,935,372 
Weighted average of non-vested restricted stock 4,500  4,203 
Diluted weighted average shares of common stock outstanding 24,944,075  24,939,575 

  Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
Net income $ 4,488,885  $ 3,430,374 
Less dividends:
Common stock $ 4,490,214  $ 3,741,170 
Preferred stock 729,375  7,500 
5,219,589  3,748,670 
Undistributed earnings (deficit) $ (730,704) $ (318,296)

Unvested Share-Based
Payment Awards 		Common Stock Unvested Share-Based
Payment Awards 		Common Stock
Distributed earnings $ 0.18  $ 0.18  $ 0.15  $ 0.15 
Undistributed earnings (deficit) —  (0.03) —  (0.01)
Total $ 0.18  $ 0.15  $ 0.15  $ 0.14 

For the six months ended June 30,
2021 2020
Basic weighted average shares of common stock 24,939,231  24,921,177 
Weighted average of non-vested restricted stock 4,500  4,352 
Diluted weighted average shares of common stock outstanding 24,943,731  24,925,529 

NOTE 14 - SEGMENT REPORTING

The Company invests in a portfolio comprised of commercial mortgage loans and other mortgage-related investments, and operates as a single reporting segment.

NOTE 15 - INCOME TAXES

The Company has elected to be treated as a REIT under federal income tax laws. As a REIT, the Company must generally distribute annually at least 90% of our taxable income, subject to certain adjustments and excluding any capital net gain, in order for U.S. federal income not to apply to our earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

Certain activities of the Company that produce prohibited income are conducted through a TRS, FOAC, to protect REIT election and FOAC is therefore subject to tax as a U.S. C-Corporation. To maintain our REIT election, the Company must continue to meet certain ownership, asset and income requirements set forth in the Code. As further discussed below, the Company may be subject to non-income taxes on excess amounts of assets or income that cause a failure of any of the REIT testing requirements. As of June 30, 2021 and December 31, 2020, we were in compliance with all REIT requirements.

As of June 30, 2021, tax years 2017 through 2020 remain subject to examination by taxing authorities.

20


LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2021
NOTE 16 - SUBSEQUENT EVENTS


On July 29, 2021, LFT CRE 2021-FL1 deployed $249.5 million of restricted cash to acquire twelve loans from OSF, an affiliate of our manager, with a weighted average interest rate of one month U.S. LIBOR plus 3.37% and a weighted average LIBOR floor of 0.16%.
21



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
In this Quarterly Report on Form 10-Q, or this "report", we refer to Lument Finance Trust as "we," "us," or "our," unless we specifically state otherwise or the context indicates otherwise. We refer to our external manager, OREC Investment Management, LLC doing business as Lument Investment Management, as our "Manager" or "Lument IM".
 
The following discussion should be read in conjunction with our condensed consolidated financial statements and the accompanying notes to our financial statements which are included in Item 1 of this report, as well as information contained in our Annual Report on Form 10-K for the year ended December 31, 2020, or our 2020 10-K, filed with the Securities and Exchange Commission, or SEC, on March 15, 2021.
 
Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains forward-looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. Forward-looking statements are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In addition, our management may from time to time make oral forward-looking statements. You can identify forward-looking statements by use of words such as "believe," "expect," "anticipate," "project," "estimate," "approximately," "plan," "continue," "intend," "should," "may," "will," "seek," "could," "would" or the negative of these words and phrases or similar words and phrases, or by discussions of strategy, plans or intentions. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us on the date of this quarterly report. Actual results may differ from expectations, estimates and projections. Readers are cautioned not to place undue reliance on forward-looking statements in this quarterly report and should consider carefully the risk factors described in Part I, Item IA "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2020 in evaluating these forward-looking statements. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 pandemic. It is not possible to predict or identify all such risks. Additional information concerning these and other risk factors are contained in our 2020 10-K which is available on the Securities and Exchange Commission’s website at www.sec.gov.
 
Overview 
 
We are a Maryland corporation that is focused on investing in, financing and managing a portfolio of commercial real estate ("CRE") debt investments.
 
In January 2020, we entered into a series of transactions with subsidiaries of ORIX Corporation USA ("ORIX USA"), a diversified financial company with the ability to provide investment capital and asset management services to clients in the corporate, real estate and municipal finance sectors. We entered into a new management agreement with Lument IM, while another affiliate of ORIX USA purchased an ownership stake of approximately 5.0% through a privately-placed stock issuance. These transactions are expected to enhance the scale of LFT and generate shareholder value through leveraging ORIX USA's expansive originations, asset management and servicing platform.

Lument IM is an affiliate of Lument, a nationally recognized leader in multifamily and seniors housing and care finance. The Company leverages Lument's broad platform and significant expertise when originating and underwriting investments.

We invest primarily in transitional floating rate CRE mortgage loans with an emphasis on middle market multifamily assets. We may also invest in other CRE-related investments including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans and other CRE debt instruments. We finance our current investments in transitional multifamily and other CRE loans primarily through match term non-recourse CRE collateralized loan obligations ("CLO"). We may utilize warehouse repurchase agreements or other forms of financing in the future. Our primary sources of income are net interest from our investment portfolio and non-interest income from our mortgage loan-related activities. Net interest income represents the interest we earn on investments less the expense of funding these investments.

Our investments typically have the following characteristics:
 
•Sponsors with experience in particular real estate sectors and geographic markets;
•Located in U.S. markets with multiple demand drivers, such as growth in employment and household formation;
•Fully funded principal balance greater than $5 million;
•Loan to Value ratio up to 85% of as-is value and up to 75% of as stabilized value;
•Floating rate loans tied to one-month U.S. denominated LIBOR or any index replacement; and
•Three-year term with two one-year extension options.

We believe that our current investment strategy provides for a significant opportunity to achieve attractive risk-adjusted returns for our stockholders over time. However, to capitalize on the investment opportunities at different points in the economic and real estate investment cycle, we may modify or expand our investment strategy. We believe that the flexibility of our strategy, which is supported by the significant CRE experience of Lument's investment team, and the extensive resources of ORIX USA, will allow us to take advantage of changing market conditions to maximize risk-adjusted returns to our stockholders.

We have elected to be taxed as a REIT and comply with the provisions of the Internal Revenue Code with respect thereto. Accordingly, we are generally not subject to federal income tax on our REIT taxable income that we currently distribute to our stockholders so long as we maintain our qualification as a REIT. Our continued qualification as a REIT depends on our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code relating to, among other things, the source of our gross income, the composition and values of our assets, our distribution levels and the concentration of ownership of our capital stock. Even if we maintain our qualification as a REIT, we may become subject to some federal, state and local taxes on our income generated in our wholly owned taxable REIT subsidiary, Five Oaks Acquisition Corp. ("FOAC").



22



Recent Developments
As of June 30, 2021, there continues to be an ongoing global outbreak of a novel coronavirus, or COVID-19. On March 11, 2020, the World Health Organization ("WHO") declared COVID-19 a global pandemic, and numerous countries, including the United States, declared national emergencies with respect to COVID-19. The United States and other countries reacted to the COVID-19 outbreak with unprecedented government intervention, including interest rate cuts and economic stimulus. The global impact of the outbreak rapidly evolved (and continues to do so), and many countries reacted by instituting, or strongly encouraging, quarantines and restrictions on travel, closing financial markets and/or restricting trading, limiting operations of non-essential offices, retail centers, hotels, and other businesses, and taking other restrictive measures to help slow the spread of COVID-19. Businesses also implemented similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, have created disruption in global supply chains, increasing rates of unemployment and adversely impacting many industries, including industries related to the collateral underlying certain of our loans. Moreover, with the continued spread of COVID-19 and reported variants of the virus, including the spread of the Delta variant, which is believed to be more contagious than the prior variants, governments and businesses may continue to take measures to help contain its spread. At the same time, the acceleration of the availability of vaccines for the general public is expected to aid in inhibiting such spread, thus providing potentially countervailing considerations towards a more positive trajectory for business recovery. However, the potential impacts, including the length and scope of a global, regional, or other economic recession, are uncertain and difficult to assess.
Given the uncertainty around the potential full magnitude or duration of the COVID-19 outbreak and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas, we face future uncertainty and risk with respect to our financial condition, results of operations, liquidity and ability to pay distributions. Even if potential positive economic developments occur, the scope and differences in timing of economic recovery across different local and regional areas may still cause possible future declines in rental rates and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, or rent abatements for tenants severely impacted by the COVID-19 pandemic, and may result in decreases in cash flows to our borrowers and potentially in defaults in paying debt service on outstanding indebtedness, which could adversely impact our results of operations and financial performance. Impending declines in economic conditions and/or residual effects following an eventual resolution to COVID-19, could negatively impact real estate and real estate capital markets and result in lower occupancy, lower rental rates and declining values in our portfolio, which could adversely impact the value of investments, making it more difficult for us to make distributions or meet our financing obligations. Although there are effective vaccines for COVID-19 that have been approved for use, distribution of the vaccines did not begin until late 2020 and access to the general public only commenced in early spring 2021. Accordingly, the full extent of the impact and effects of COVID-19 will depend on future developments, including among other factors, the duration and spread of the outbreak, along with travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the economic slowdown. We are unable to predict these factors.
The effects of the COVID-19 pandemic did not significantly impact our operating results for the three and six months ended June 30, 2021. However, the prolonged duration and impact of the COVID-19 pandemic could materially disrupt our business operations and negatively impact our business, financial performance and operating results for the year ending December 31, 2021 and potentially longer.

Second Quarter 2021 Summary and Subsequent Events
 
•Acquired twenty-three loans and acquired eighteen loan advances with an initial unpaid principal balance of $303.1 million with a weighted average interest rate of one month U.S. LIBOR plus 3.79% and a weighted LIBOR floor of 1.13%.
•On June 15, 2021, the Company announced its second quarter common dividend of $0.09 per share of common stock, in line with the previous quarter.
•On June 15, 2021, the Company announced its second quarter preferred dividend of $0.38 per share of Series A Preferred Stock.
•On April 21, 2021, the Company, together with its FOAC and Hunt CMT Equity subsidiaries (together with the Company, the "Credit Parties"), entered into an amendment (the "Third Amendment") to the Credit and Guaranty Agreement dated January 15, 2019, as amended on February 13, 2019 and July 9, 2020 with Cortland Capital Market Services, LLC, as the administrative agent and collateral agent (the "Administrative Agent") and the lenders party thereto. The Third Amendment amends the Credit and Guaranty Agreement to, among other things (i) provide the Company with an incremental secured term loan in the aggregate principal amount of $7.5 million ("Incremental Secured Term Loan"); (ii) extend the maturity date of the Secured Term Loan from February 14, 2025 to February 14, 2026; (iii) amend certain asset concentration limits and; (iv) amend certain financial covenants. Pursuant to the terms of the Amended Credit and Guaranty Agreement, borrowings under the Secured Term Loan bear interest at a fixed rate of 7.25% per annum, which is subject to step up by 0.25% per annum for the first four months after February 14, 2025, then by 0.375% per annum for the following four months and then by 0.50% for the last four months until the maturity date. Effectiveness of the Third Amendment was conditioned on the completion of the Company's public offering of Series A Cumulative Redeemable Preferred Stock.
•On May 5, 2021, LFT issued 2,400,000 shares of Series A Preferred Stock, and received net proceeds, after underwriting discounts and commissions but before offering expenses payable by the Company, of $58.1 million. The Series A Preferred Stock is redeemable, at LFT's option, at a liquidation preference price of $25.00 per share plus accrued dividends commencing in May 2026. Dividends on the Series A Preferred Stock are payable quarterly in arrears.
•On May 5, 2021, the Third Amendment became effective as a result of the issuance of the Series A Preferred Stock.
•On June 14, 2021, the Company closed LFT CRE 2021-FL1, a collateralized loan obligation, totaling $1.0 billion of real estate related assets and cash, of which $833.75 million of investment grade notes were issued to third party investors and $70 million of below investment-grade notes and $96.25 million equity interest in the portfolio were retained by us.
•In relation to the closing of LFT CRE 2021-FL1, on June 14, 2021, the Company unwound Hunt CRE 2017-FL1 and Hunt CRE 2018-FL1, redeeming $388.2 million of outstanding notes which were repaid primarily from refinancing the assets within Hunt CRE 2017-FL1 and Hunt CRE 2018-FL2.
•On July 29, 2021, LFT CRE 2021-FL1 deployed $249.5 million of restricted cash to acquire twelve loans from OSF, an affiliate of our manager, with a weighted average interest rate of one month U.S. LIBOR plus 3.37% and a weighted average LIBOR floor of 0.16%.
The ORIX Transaction
On January 6, 2020 we announced the entry into a new external management agreement with Lument IM and the concurrent mutual termination of our management agreement with HIM. Lument IM is part of Lument, a nationally recognized leader in multifamily and seniors housing and healthcare finance.. The terms of the new management agreement align with the terms of our prior management agreement with HIM in all material respects, including a cap on reimbursable expenses. Pursuant to the terms of the termination agreement between the Company and HIM, the termination of the management agreement did not trigger, and HIM was not paid, a termination fee by the Company.
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In connection with the transaction, an affiliate of ORIX USA purchased 1,246,719 shares of the Company's common stock in a private placement by the Company at a purchase price of $4.61 per share, resulting in an aggregate capital raise of $5.7 million. The purchase price per share represented a 43% premium over the LFT common share price on January 2, 2020. As a result of this share purchase, an affiliate of ORIX USA owns approximately 5% of LFT's outstanding common shares. Also, in connection with the transaction, James C. Hunt resigned as the Company's Chairman of the Board, but continues to serve as a member of the Board. In addition, the Board appointed Interim Chief Financial Officer James A. Briggs as Chief Financial Officer of the Company. James Flynn continues to serve as Chief Executive Officer and now serves as Chairman of the Board, and Michael Larsen continues to serve as President.
Factors Impacting Our Operating Results

Market conditions.    The results of our operations are and will continue to be affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, our target assets in the marketplace. Our net interest income, will vary primarily as a result of changes in market interest rates and prepayment speeds, and by the ability of the borrowers underlying our commercial mortgage loans to continue making payments in accordance with the contractual terms of their loans, which may be impacted by unanticipated credit events experienced by such borrowers, such as the ongoing COVID-19 pandemic. Interest rates vary according to the type of investment, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty, and have most recently been impacted by the ongoing COVID-19 pandemic. Our operating results will also be affected by general U.S. real estate fundamentals and the overall U.S. economic environment, including the pace and degree of recovery from the ongoing COVID-19 pandemic. In particular, our strategy is influenced by the specific characteristics of the underlying real estate markets, including prepayment rates, credit market conditions and interest rate levels.

 Changes in market interest rates.    Generally, our business model is such that rising interest rates will increase our net interest income, while declining interest rates will decrease our net interest income. Substantially all of our investments and all of our collateralized loan obligations are indexed to 30-day LIBOR, and as a result we are less sensitive to variability in our net interest income resulting from interest rate changes. Our net interest income currently benefits from in-the-money LIBOR floors in our commercial loan portfolio, with a weighted average LIBOR floor of 1.32% as of June 30, 2021. There can be no assurance that we will continue to utilize LIBOR floors. As of June 30, 2021, 98.3% of the loans in our commercial loan portfolio had a LIBOR floor greater than the current spot LIBOR rate. While we expect low LIBOR rates to persist as the economy continues to recover from the current COVID-19 pandemic, no assurance can be made that our current portfolio profile will be maintained. Additionally, there can be no assurance that we will continue to obtain LIBOR floors as current market conditions reflect transactions with lower or no floors. Similarly, net interest income is also impacted by the spread in our commercial loan portfolio. As of June 30, 2021, the weighted average spread of our commercial loan portfolio was 3.66%, but there is no assurance that these spreads will be maintained as market environments fluctuate. Current market conditions have reflected a tightening trend in commercial mortgage loan credit spreads. A decrease to the weighted average LIBOR floor and/or spread would result in a decrease to net interest income. Additionally, a simultaneous decrease of both weighted average LIBOR floor and portfolio spread would exacerbate the impact to net interest income.

In addition to the risk related to fluctuations in cash flows associated with movements in interest rates, there is also the risk of non-performance on floating rate assets. In the case of significant increase in interest rates, the additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and/or impact their ability to be refinanced at such higher interest rates, potentially, contribute to non-performance or, in severe cases, default.

On November 30, 2020, the ICE Benchmark Administration ("IBA"), with the support of the United States Federal Reserve and United Kingdom's Financial Conduct Authority ("FCA"), announced plans to consult on ceasing publication of LIBOR on December 31, 2021 for only the one week and two month LIBOR tenors, and on June 30, 2023 for all other LIBOR tenors. While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021. On March 5, 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of the one week and two month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. The Alternative Reference Rate Committee ("ARRC"), a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate. On July 29, 2021 the ARRC ratified term rates for the one-, three- and six-month tenors based on SOFR futures traded. This announcement is expected to expedite the transition from LIBOR to SOFR. The outcome of these reforms is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR's phase-out could cause LIBOR to perform differently than in the past.

As of June 30, 2021, 100% of our commercial loans by principal balance and 100% of our collateralized loan obligations bear interest related to one-month U.S. LIBOR. All of these arrangements provide procedures for determining an alternative base rate in the event that LIBOR is discontinued. Regardless, there can be no assurances as to what alternative base rates may be and whether such base rate will be more or less favorable LIBOR and any other unforeseen impacts of the discontinuation of LIBOR. We are monitoring the developments with respect to the phasing out of LIBOR and are working with our lenders and borrowers to minimize the impact of any LIBOR transition on our financial condition and results of operations, but can provide no assurances regarding the impact of the discontinuation of LIBOR.
 
Credit risk.    Our commercial mortgage loans and other investments are also subject to credit risk. The performance and value of our loans and other investments depend upon the sponsor's ability to operate properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, the Manager's asset management team reviews our portfolio and maintains regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as lender. The market values of commercial mortgage assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. As of June 30, 2021, 100% of the commercial mortgage loans in our portfolio were current as to principal and interest. Additionally, we have reviewed the loans designated as High Risk for impairment. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. As of June 30, 2021, the Company has not recognized any impairments on its loan portfolio. However, due to the continued widespread impact of the COVID-19 pandemic we consider there to be heightened credit risk associated with our commercial mortgage loan portfolio. Uncertainty about the severity and duration of the economic impact of the COVID-19 pandemic, as exacerbated by events related to virus strains, persist and potential exists for the credit risk of our portfolio to heighten further. We can provide no assurances that our borrowers will remain current as to principal and interest, or that we will not enter into forbearance agreements or loan modifications in order to protect the value of our commercial mortgage loan assets. Should that occur, it could have a material negative impact on our results of operations.
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Liquidity and financing markets. Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments and repay borrowings and other general business needs. Our primary sources of liquidity have been proceeds of common or preferred stock issuances, net proceeds from corporate debt obligations, net cash provided by operating activities and other financing arrangements. We finance our commercial mortgage loans primarily with collateralized loan obligations, the maturities of which are matched to the maturities of the loans, and which are not subject to margin calls or additional collateralization requirements. However, to the extent that we seek to invest in additional commercial mortgage loans outside of our CLO, we will in part be dependent on our ability to issue additional collateralized loan obligations, to secure alternative financing facilities or to raise additional common or preferred equity. Additionally, we have $330.3 million in cash related to the closing of LFT 2021-FL1 to invest in commercial mortgage loans which will negatively impact our net interest income until such time this cash is invested.

Prepayment speeds.    Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest earned on the assets. All of our commercial mortgage loans were acquired at par, and accordingly we do not believe this to be a material risk for us at present. Additionally, we are subject to prepayment risk associated with the terms of our collateralized loan obligations. Due to the generally short-term nature of transitional floating-rate commercial mortgage loans, our CLOs include a reinvestment period during which principal repayments and prepayments on our commercial mortgage loans may be reinvested in similar assets, subject to meeting certain eligibility criteria. The reinvestment period for LFT CRE 2021-FL1 remains in place through December 2023. While the interest-rate spreads of our collateralized loan obligations are fixed until they are repaid, the terms, including spreads, of newly originated loans are subject to uncertainty based on a variety of factors, including market and competitive conditions, which remain uncertain and volatile in light of the COVID-19 pandemic. To the extent that such conditions result in lower spreads on the assets in which we reinvest, we may be subject to a reduction in interest income in the future.
 
Changes in market value of our assets.    We account for our commercial mortgage loans at amortized cost. As such, our earnings will generally not be directly impacted by changes in the market values of these loans. However, if a loan is considered to be impaired as a result of adverse credit performance, an allowance is recorded to reduce the carrying value through a charge to the provision for loan losses. Impairment is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. Provisions for loan losses will directly impact our earnings. Given the widespread impact of the COVID-19 pandemic, we consider there to be a heightened credit risk associated with our commercial mortgage loan portfolio.

 Governmental actions. Since 2008, when both Fannie Mae and Freddie Mac were placed under the conservatorship of the U.S. government, there have been a number of proposals to reform the U.S. housing finance system in general, and Fannie Mae and Freddie Mac in particular. We anticipate debate on residential housing and mortgage reform to continue through 2021 and beyond, but a deep divide persists between factions in Congress and as such it remains unclear what shape any reform would take and what impact, if any, reform would have on mortgage REITs.

Managing Our Business through COVID-19

As of March 13, 2020, our Manager, and its affiliates, implemented a work from home, or WFH, policy for employees in all locations. The WFH policy remains in effect as of the date of this filing. Our Manager's highly experienced senior team and dedicated employees are fully operational during this ongoing disruption and are continuing to execute on all investment management, asset management, servicing, portfolio monitoring, financial reporting and related control activities. Our Manager's and affiliates employees are in constant communication to ensure timely coordination and early identification of issues. We continue to engage in ongoing active dialogue with the borrowers in our commercial mortgage loan portfolio to understand what is taking place at the properties collateralizing our investments.

Considering the current economic environment caused by COVID-19 we are mindful of local ordinance constraints on lender protection and continue to monitor the impact of fiscal stimulus on our loan portfolio. More recently, the CDC issued a nationwide moratorium on residential evictions. Specifically, from September 4, 2020, through July 31, 2021, residential landlords and those with similar eviction rights could not evict "covered persons" for nonpayment of rent in any U.S. state or territory. Covered persons (a) use best efforts to obtain government assistance; (b) make less than $99,000 or $198,000 jointly; (c) have suffered loss of income or extraordinary medical expenses; (d) use of best efforts to make partial payments; and (e) have no other housing options. As a result of this national restriction, multifamily apartment borrowers had less ability to address non-payment of tenants, which in turn could have negatively impacted a property's cash flow coverage of the debt service of their loans. While this moratorium expired on July 31, 2021, on August 3, 2021, the CDC issued a new 60-day moratorium on residential evictions in areas with high-levels of COVID-19 infections. This new moratorium expands the definition of "covered persons" to include (f) the individual resides in a U.S. county experiencing substantial or high rates of community transmission levels of SARS-COV-2 as defined by CDC. Additionally, due to COVID-19, there are potential challenges facing third-party providers, such as appraisers, environmental and engineering consultants we rely on to make new investments which may make it more difficult to make these investments.

Key Financial Measure and Indicators

As a real estate investment trust, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings, and book value per share of common stock. For the three months ended June 30, 2021, we recorded earnings per share of $0.04, declared a quarterly dividend of $0.09 per share, and reported $0.11 per share of Distributable Earnings. In addition, our book value per share of common stock was $4.41.

As further described below, Distributable Earnings is a measure that is not prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, which helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is a performance metric we consider when declaring our dividends.







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Earnings Per Share and Dividends Declared

The following table sets forth the calculation of basic and diluted net income per share and dividends declared per share:
Three Months Ended
June 30, 2021 March 31, 2021
Net income(1)
$ 954,575  $ 2,804,935 
Weighted-average shares outstanding, basic and diluted 24,944,075  24,943,383 
Net income per share, basic and diluted $ 0.04  $ 0.11 
Dividends declared per share $ 0.09  $ 0.09 
(1)    Represents net income attributable to Lument Finance Trust, Inc.

Distributable Earnings

Distributable Earnings is a non-GAAP financial measure, which we define as GAAP net income (loss) attributable to holders of common stock, or, without duplication, owners of our subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation, (ii) incentive compensation payable to the Manager, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other similar non-cash items that are included in net income for that applicable repotting period, regardless of whether such items are included in other comprehensive income (loss) or net income (loss), and (v) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items after discussions with the Company's board of directors and approved by a majority of the Company's independent directors. We also add back one-time charges such as acquisition costs and one-time gains/losses on the early extinguishment of debt and redemption of preferred stock. Distributable Earnings mirrors how we calculate Core Earnings (as defined in our management agreement between our Manager and us) for purposes of calculating the incentive fee payable to our Manager.

While Distributable Earnings excludes the impact of any unrealized provisions for credit losses, any loan losses are charged off and realized through Distributable Earnings when deemed non-recoverable. Non-recoverability is determined (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or in the case of foreclosures, when the underlying asset is sold), or (ii) with respect to any amount due under any loan, when such amount is determined to be non-collectible.

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Refer to Note 16 to our consolidated financial statements for further discussion of our distribution requirements as a REIT. Furthermore, Distributable Earnings help us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends.

Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar performance measures, and accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.

The following table provides a reconciliation of Distributable Earnings to GAAP net income:
Three Months Ended
June 30, 2021 March 31, 2021
Net income attributable to common stockholders $ 954,575  $ 2,804,935 
Unrealized loss on mortgage servicing rights 220,435  20,455 
Loss on extinguishment of debt 1,663,926  — 
Recognized compensation expense related to restricted common stock 3,241  2,885 
Adjustment for benefit from income taxes (54,012) 14,713 
Distributable Earnings $ 2,788,165  $ 2,842,988 
Weighted-average shares outstanding, basic and diluted 24,944,075  24,943,383 
Distributable Earnings per share, basic and diluted $ 0.11  $ 0.11 

Book Value Per Share of Common Stock

The following table calculates our book value per share of common stock:
June 30, 2021 March 31, 2021
Total stockholders' equity $ 170,137,510  $ 114,166,568 
Less preferred stock (liquidation preference of $25.00 per share) (60,000,000) — 
Total common stockholders' equity 110,137,510  114,166,568 
Shares of common stock issued and outstanding at period end 24,947,883  24,943,383 
Book value per share of common stock $ 4.41  $ 4.58 
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As of June 30, 2021, our common stockholders' equity was $110.1 million, and our book value per share of common stock was $4.41 on a basic and fully diluted basis. Our equity decreased by $4.1 million compared to our equity as of March 31, 2021 primarily as a result of the $1.7 million loss on extinguishment of debt and $2.7 million of preferred offering costs related to the issuance if the Series A Preferred Stock.

Investment Portfolio

Commercial Mortgage Loans

As of June 30, 2021, we have determined that we are the primary beneficiary of LFT CRE 2021-FL1, Ltd. based on our obligation to absorb losses derived from ownership of our residual interests. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying issuing entities, collateralized loan obligations.

The following table details our loan activity by unpaid principal balance:
Commercial Mortgage Loans Held-for-Investment
Balance at December 31, 2020 $ 547,345,334 
Purchases and fundings 338,386,251 
Proceeds from principal repayments (273,837,132)
Accretion of purchase discount $ 3,781 
Amortization of purchase premium $ (78,008)
Balance at June 30, 2021
$ 611,820,226 

The following table details overall statistics for our loan portfolio as of June 30, 2021 and December 31, 2020:
Weighted Average
Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan %
Coupon(1)
Remaining
 Term
 (Years)(2)
June 30, 2021
Loans held-for-investment
Senior secured loans(3) $ 611,527,493  $ 611,820,226  44  100.0  % 5.0  % 2.9
$ 611,527,493  $ 611,820,226  44  100.0  % 5.0  % 2.9
Weighted Average
Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan %
Coupon(1)
Remaining
 Term
 (Years)(2)
December 31, 2020
Loans held-for-investment
Senior secured loans(3) $ 547,345,334  $ 547,345,334  40  100.0  % 5.1  % 3.1
$ 547,345,334  $ 547,345,334  40  100.0  % 5.1  % 3.1


(1)    Weighted average coupon assumes applicable one-month LIBOR of 0.08% and 0.14% as of June 30, 2021 and December 31, 2020, respectively, inclusive of weighted average floors of 1.32% and 1.64%, respectively.
(2)    Weighted average remaining term assumes all extension options are exercised by the borrower, provided, however, that our loans may be repaid prior to such date.
(3)    As of June 30, 2021, $590,574,226 of the outstanding senior secured loans are held in VIEs and $21,246,000 of the outstanding senior secured loans were held outside VIEs. As of December 31, 2020, $531,363,401 of the outstanding senior secured loans were held in VIEs and $15,981,933 of the outstanding senior secured loans were held outside VIEs.

The table below sets forth additional information relating to the Company's portfolio as of June 30, 2021:

Loan # Form of Investment Origination Date
Total Loan Commitment(1)
Current Principal Amount Location Property Type Coupon Max Remaining Term (Years)
LTV(2)
1   Senior secured June 5, 2018 $ 65,091,416  $ 39,454,344   Palatine, IL  Multi-Family 1mL + 4.3 2.0 68.5  %
2   Senior secured November 22, 2019 $ 39,500,000  $ 36,781,588   Virginia Beach, VA  Multi-Family 1mL + 2.8 3.5 77.1  %
3   Senior secured November 30, 2018 $ 72,000,000  $ 36,719,999   Nacogdoches, TX  Multi-Family 1mL + 4.1 2.5 70.4  %
4   Senior secured November 26, 2019 $ 32,525,000  $ 31,115,334   Doraville , GA  Multi-Family 1mL + 2.8 3.5 76.1  %
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5   Senior secured February 25, 2021 $ 28,000,000  $ 28,000,000   Sacramento, CA  Multi-Family 1mL + 3.5 0.8 63.6  %
6   Senior secured April 22, 2021 $ 27,750,000  $ 27,750,000   Los Angeles, CA  Multi-Family 1mL + 3.3 1.4 55.0  %
7   Senior secured December 10, 2019 $ 45,000,000  $ 27,411,724   San Antonio, TX  Multi-Family 1mL + 3.2 3.6 71.9  %
8   Senior secured January 15, 2020 $ 27,350,000  $ 25,094,805   Chattanooga, TN  Multi-Family 1mL + 3.0 3.7 80.6  %
9   Senior secured December 20, 2018 $ 24,320,000  $ 24,320,000   Fort Myers, FL  Multi-Family 1mL + 4.8 2.6 65.7  %
10   Senior secured March 31, 2021 $ 25,350,000  $ 22,000,000   Jacksonville, FL  Multi-Family 1mL + 3.7 4.8 77.7  %
11   Senior secured November 20, 2019 $ 20,000,000  $ 19,648,818   Seattle, WA  Self Storage 1mL + 3.6 3.4 46.5  %
12   Senior secured December 28, 2018 $ 24,123,000  $ 17,172,623   Austin, TX  Retail 1mL + 4.1 1.6 60.5  %
13   Senior secured April 12, 2021 $ 17,000,000  $ 15,000,000   Cedar Park, TX  Multi-Family 1mL + 3.8 4.9 66.7  %
14   Senior secured October 11, 2019 $ 17,000,000  $ 14,500,000   Pompano Beach, FL  Self Storage 1mL + 3.8 3.3 75.0  %
15   Senior secured February 28, 2018 $ 14,550,000  $ 14,280,165   Portland, OR  Multi-Family 1mL + 7.5 1.7 75.9  %
16   Senior secured August 8, 2019 $ 14,400,000  $ 13,671,010   Fort Worth, TX  Multi-Family 1mL + 3.0 3.3 75.8  %
17   Senior secured July 23, 2018 $ 16,200,000  $ 13,148,199   Chicago, IL  Office 1mL + 3.8 2.2 72.7  %
18   Senior secured March 12, 2021 $ 13,703,000  $ 12,375,000   Mesa, AZ  Multi-Family 1mL + 3.6 4.8 75.0  %
19   Senior secured December 23, 2019 $ 12,900,000  $ 11,857,066   Memphis, TN  Multi-Family 1mL + 4.0 1.5 62.8  %
20   Senior secured February 8, 2019 $ 12,625,000  $ 10,676,822   Federal Way, WA  Self Storage 1mL + 4.8 2.7 65.8  %
21   Senior secured April 23, 2021 $ 11,600,000  $ 10,497,000   Tualatin, OR  Multi-Family 1mL + 3.2 4.9 73.9  %
22   Senior secured March 26, 2021 $ 9,623,000  $ 9,623,000   Alhambra, CA  Multi-Family 1mL + 3.3 1.3 49.0  %
23   Senior secured September 10, 2020 $ 9,527,000  $ 9,527,000   Winchester, OH  Multi-Family 1mL + 4.3 0.3 61.9  %
24   Senior secured November 13, 2019 $ 9,310,000  $ 8,620,367   Holly Hill, FL  Multi-Family 1mL + 2.9 1.5 77.8  %
25   Senior secured January 13, 2020 $ 8,510,000  $ 8,037,399   Fort Lauderdale, FL  Multi-Family 1mL + 3.2 3.7 78.4  %
26   Senior secured April 7, 2021 $ 10,152,000  $ 7,963,794   Phoenix, AZ  Multi-Family 1mL + 3.6 4.9 69.5  %
27   Senior secured March 12, 2018 $ 9,112,000  $ 7,912,000   Waco, TX  Multi-Family 1mL + 4.8 1.8 72.9  %
28   Senior secured March 19, 2021 $ 8,348,000  $ 7,513,000   Glendora, CA  Multi-Family 1mL + 3.6 4.8 72.2  %
29   Senior secured February 3, 2020 $ 7,250,000  $ 6,959,953   Fort Worth, TX  Self Storage 1mL + 3.8 3.8 63.8  %
30   Senior secured March 31, 2021 $ 8,432,000  $ 6,893,000   Tucson, AZ  Multi-Family 1mL + 3.6 4.8 72.8  %
31   Senior secured June 10, 2019 $ 7,000,000  $ 6,888,915   San Antonio, TX  Multi-Family 1mL + 3.4 3.1 77.7  %
32   Senior secured November 30, 2018 $ 8,250,000  $ 6,488,831   Decatur, GA  Office 1mL + 4.1 2.4 56.8  %
33   Senior secured December 9, 2019 $ 6,495,000  $ 6,344,748   Fort Worth, TX  Multi-Family 1mL + 3.2 3.6 77.7  %
34   Senior secured August 28, 2019 $ 6,250,000  $ 6,054,427   Austin, TX  Multi-Family 1mL + 3.3 3.3 69.9  %
35   Senior secured June 22, 2018 $ 6,200,000  $ 5,900,550   Chicago, IL  Multi-Family 1mL + 4.1 2.1 80.5  %
36   Senior secured December 13, 2019 $ 5,900,000  $ 5,632,870   Jacksonville, FL  Multi-Family 1mL + 2.9 3.6 74.9  %
37   Senior secured June 10, 2019 $ 6,000,000  $ 5,295,605   San Antonio, TX  Multi-Family 1mL + 2.9 3.1 62.9  %
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38   Senior secured April 30, 2021 $ 5,472,000  $ 5,285,500   Daytona Beach, FL  Multi-Family 1mL + 3.7 4.9 77.4  %
39   Senior secured December 29, 2020 $ 4,920,000  $ 4,920,000   Fayetteville, NC  Multi-Family 1mL + 4.0 1.1 70.3  %
40   Senior secured November 30, 2018 $ 4,446,000  $ 4,446,000   Anderson, SC  Multi-Family 1mL + 3.3 0.4 53.7  %
41   Senior secured May 31, 2019 $ 4,350,000  $ 4,275,035   Austin, TX  Multi-Family 1mL + 3.5 3.0 74.1  %
42   Senior secured November 12, 2019 $ 4,225,000  $ 4,225,000   Chesapeake, VA  Self Storage 1mL + 3.2 3.5 64.5  %
43   Senior secured May 12, 2021 $ 8,950,000  $ 8,220,000   Lakeland, FL  Multi-Family 1mL + 3.4 5.0 76.8  %
44   Senior secured May 12, 2021 $ 13,930,000  $ 13,026,000   Fort Worth, TX  Multi-Family 1mL + 3.4 5.0 74.9  %

(1)    See Note 11 Commitments and Contingencies to our condensed consolidated financial statements for further discussion of unfunded commitments.
(2)    LTV as of the date the loan was originated by a Hunt/ORIX affiliate and is calculated after giving effect to capex and earn-out reserves, if applicable. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value, which may have occurred subsequent to the origination date.

Our loan portfolio is 100% performing with no loan impairments, loan defaults, or non-accrual loans as of June 30, 2021.

We maintain strong relationships with our borrowers and utilized those relationships to address potential impacts of the COVID-19 pandemic on loans secured by properties experiencing cash flow pressure. All of our loans are current with respect to principal and interest, however, some of our borrowers have expressed concern on delays in the implementation of business plans due to the prolonged impact of the COVID-19 pandemic. Accordingly, we will continue to engage in discussions with them to work towards the maximization of cash flows and values of our commercial mortgage loan assets should these difficulties arise.

We have not entered into any forbearance agreements or loan modifications to date. However, due to the continued economic impact of the COVID-19 pandemic we consider there to be heightened credit risk associated with our commercial mortgage loan portfolio. As such, we can provide no assurances that our borrowers will remain current as to principal and interest, or that we will not enter into any forbearance agreements or loan modifications in order to protect the value of our commercial mortgage loan assets.

As discussed in Note 2 to our consolidated financial statements, our Manager performs a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns a risk rating between "1" and "5," from less risk to greater risk. The weighted average risk rating of our total loan exposure was 2.6 and 3.1 as of June 30, 2021 and December 31, 2020, respectively. The decrease in average risk rating is primarily the result of commercial mortgage loans that paid off with a risk rating of "2" of $68.9 million, a risk rating of "3" of $177.2 million and a risk rating of "4" of $17.4 million, offset by the the purchase of commercial mortgage loans with a risk rating of "2" of $151.2 million, a risk rating of "3" of $165.7 million and a risk rating of "4" of $11.1 million during the first half of 2021. The following table presents the principal balance and net book value based on our internal risk ratings:
June 30, 2021
Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value
1 —  $ —  $ — 
2 21  250,914,540  250,837,143 
3 21  342,169,149  342,539,279 
4 2  18,443,804  18,443,804 
5 —  —  — 
44  $ 611,527,493  $ 611,820,226 

Collateralized Loan Obligations

We may seek to enhance returns on our commercial mortgage loan investments through securitizations, or CLOs, if available, as well as the utilization of warehouse repurchase agreement financing. To the extent available, we intend to securitize the senior portion of some of our loans, while retaining the subordinate securities in our investment portfolio. The securitizations of this senior portion will be accounted for as either a "sale" or as a "financing." If they are accounted for as a sale, the loan will be removed from the balance sheet and if they are accounted for as a financing the loans will be classified as "commercial mortgage loans held-for-investment" in our consolidated balance sheets, depending on the structure of the securitization. As of June 30, 2021, the carrying amounts and outstanding principal balances of our collateralized loan obligations were $826.1 million and $833.8 million, respectively. See Note 4 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional terms and details of our CLOs.
  
FOAC and Our Residential Mortgage Loan Business
 
In June 2013, we established FOAC as a Taxable REIT Subsidiary, or TRS, to increase the range of our investments in mortgage-related assets. Until August 1, 2016, FOAC aggregated mortgage loans primarily for sale into securitization transactions, with the expectation that we would purchase the subordinated tranches issued by the related securitization trusts, and that these would represent high quality credit investments for our portfolio. Residential mortgage loans for which FOAC owns the MSRs continue to be directly serviced by one or more licensed sub-servicers since FOAC does not directly service any residential mortgage loans.
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As noted earlier, we previously determined to cease the aggregation of prime jumbo loans for the foreseeable future, and therefore no longer maintain warehouse financing to acquire prime jumbo loans. We do not expect the previous changes to our mortgage loan business strategy to impact the existing MSRs that we own, or the securitizations we have sponsored to date.

Pursuant to a Master Agreement dated June 15, 2016, as amended on August 29, 2016, January 30, 2017 and June 27, 2018, among MAXEX, LLC ("MAXEX"), MAXEX Clearing LLC, MAXEX's wholly-owned clearinghouse subsidiary and FOAC, FOAC provided seller eligibility review services under which it reviewed, approved and monitored sellers that sold loans via MAXEX Clearing LLC. To the extent that a seller approved by FOAC failed to honor its obligations to repurchase a loan based on an arbitration finding that it breached its representations and warranties, FOAC was obligated to backstop the seller's repurchase obligation. The term of such backstop guarantee was the earlier of the contractual maturity of the underlying mortgage and its repayment in full. However, the incidence of claims for breaches of representations and warranties over time is considered unlikely to occur more than five years from the sale of a mortgage. FOAC's obligations to provide such seller eligibility review and backstop guarantee services terminated on November 28, 2018. Pursuant to an Assumption Agreement dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC assumed all of FOAC's obligations under its backstop guarantees and agreed to indemnify and hold FOAC harmless against any losses, liabilities, costs, expenses and obligations under the backstop guarantee. FOAC paid MAXEX Clearing LLC, as the replacement backstop provider, a fee of $426,770 (the "Alternative Backstop Fee"). MAXEX Clearing LLC represented to FOAC in the Assumption Agreement that it (i) is rated at least "A" (or equivalent) by at least one nationally recognized statistical rating agency or (ii) has (a) adjusted tangible net worth of at least $20.0 million and (b) minimum available liquidity equal to the greater of (x) $5.0 million and (y) 0.1% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees. MAXEX's chief financial officer is required to certify ongoing compliance by MAXEX Clearing LLC with the aforementioned criteria on a quarterly basis and if MAXEX Clearing LLC fails to satisfy such criteria, MAXEX Clearing LLC is required to deposit into an escrow account FOAC's benefit an amount equal to the greater of (A) the unamortized Alternative Backstop Fee for each outstanding loan covered by the backstop guarantee and (B) the product of 0.01% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees. See Note 10 to our condensed consolidated financial statements included in this Quarterly Report on form 10-Q for a further description of MAXEX.

Critical Accounting Policies and Estimates  
 
Our consolidated financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and use of assumptions as to future uncertainties. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to understanding our financial statements because they involve significant judgments and uncertainties that could affect our reported assets and liabilities, as well as our reported revenues and expenses. All of these estimates reflect our best judgments about current, and for some estimates, future economic and market conditions and their effects based on information available as of the date of the financial statements. The three and six months ended June 30, 2021 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates made by management. If conditions change from those expected, it is possible that the judgments and estimates described below could change, which may result in a change in our interest income recognition, allowance for loan losses, tax liability, future impairment of our investments, and valuation of our investment portfolio, among other effects. We believe that the following accounting policies are among the most important to the portrayal of our financial condition and results of operations and require the most difficult, subjective or complex judgments.   

Commercial Mortgage Loans Held-for-Investment

Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased by the Company. These loans include loans sold into securitizations that the Company consolidates. Commercial mortgage loans held-for-investment are intended to be held-to-maturity and, accordingly, are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs (in respect of originated loans), premiums and discounts (in respect of purchased loans) and impairment, if any.

Interest income is recognized as revenue using the effective interest method and is recorded on the accrual basis according to the terms of the underlying loan agreement. Any fees, costs, premiums and discounts associated with these loan investments are deferred and amortized over the term of the loan using the effective interest method, or on a straight line basis when it approximates the effective interest method. Income accrual is generally suspended and loans are placed on non-accrual status on the earlier of the date at which payment has become 90 days past due or when full and timely collection of interest and principal is considered not probable. The Company may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the underlying loan agreement. As of June 30, 2021, the Company did not hold any loans placed on non-accrual status.

Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratio ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. The Company's loans are rated on a 5-point scale, from least risk to greatest risk, respectively, which ratings are described as follows:


1.Very Low Risk: exceeds expectations and is outperforming underwriting or it is very likely that the underlying loan can be refinanced easily in the period's prevailing capital market conditions
2.Low Risk: meeting or exceeding underwritten expectations
3.Moderate Risk: in-line with underwritten expectations or the sponsor may be in the early stages of executing the business plan and the loan structure appropriately mitigates additional risks
4.High Risk: potential risk of default, a loss may occur in the event of default
5.Default Risk: imminent risk of default, a loss is likely in the event of default

The Company evaluates each loan rated High Risk or above as to whether it is impaired on a quarterly basis. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses.

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In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of June 30, 2021, the Company has not recognized any impairments on its loans held-for-investment. We also assessed the remainder of the portfolio, considering the absence of delinquencies and current market conditions, and, have not recorded any allowance for loan losses.

Mortgage Servicing Rights, at Fair Value

Mortgage servicing rights ("MSRs") are associated with residential mortgage loans that the Company historically purchased and subsequently sold or securitized. MSRs are held and managed at Five Oaks Acquisition Corp. ("FOAC"), the Company’s taxable REIT subsidiary ("TRS"). As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a sub-servicer, the associated loan. MSRs are reported at fair value as a result of a fair value option election. Residential mortgage loans for which the Company owns the MSRs are directly serviced by two sub-servicers retained by the Company. The Company does not directly service any residential mortgage loans.
 
MSR income is recognized at the contractually agreed upon rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time.

See Note 2 to our consolidated financial statements for the complete listing of our significant accounting policies.

Capital Allocation
 
The following tables set forth our allocated capital by investment type at June 30, 2021 and December 31, 2020:

This information represents non-GAAP financial measures within the meaning of Item 10(e) of Regulation S-K, as promulgated by the SEC. We believe that this non-GAAP information enhances the ability of investors to better understand the capital necessary to support each income-earning asset category, and thus our ability to generate operating earnings. While we believe that the non-GAAP information included in this report provides supplemental information to assist investors in analyzing our portfolio, these measures are not in accordance with GAAP, and they should not be considered a substitute for, or superior to, our financial information calculated in accordance with GAAP.

June 30, 2021
  Commercial Mortgage Loans MSRs
Unrestricted Cash(1)
Total(2)
Carrying Value $ 611,820,226  $ 678,788  $ 14,576,852  $ 627,075,866 
Collateralized Loan Obligations (826,070,345) —  —  (826,070,345)
Other(3)
81,676,090  —  (3,070,163) 78,605,927 
Restricted Cash 330,260,821  —  —  330,260,821 
Capital Allocated $ 197,686,792  $ 678,788  $ 11,506,689  $ 209,872,269 
% Capital 94.2  % 0.3  % 5.5  % 100.0  %

December 31, 2020
Commercial Mortgage Loans MSRs
Unrestricted Cash(1)
Total(2)
Carrying Value $ 547,345,334  $ 919,678  $ 11,375,960  $ 559,640,972 
Collateralized Loan Obligations (463,060,090) —  —  (463,060,090)
Other(3)
1,663,740  —  (2,984,668) (1,320,928)
Restricted Cash 57,999,396  —  —  57,999,396 
Capital Allocated $ 143,948,380  $ 919,678  $ 8,391,292  $ 153,259,350 
% Capital 93.9  % 0.6  % 5.5  % 100.0  %

(1)Includes cash and cash equivalents.
(2)Includes the carrying value of our Secured Term Loan.
(3)Includes principal and interest receivable, investment related receivable, prepaid and other assets, interest payable, dividend payable and accrued expenses and other liabilities.
 
Results of Operations  
 
As of June 30, 2021, we consolidated the assets and liabilities of one CRE CLO, LFT CRE 2021-FL1, Ltd. Additionally, although the COVID-19 pandemic did not significantly impact our operating results for the period ended June 30, 2021, should the pandemic and resulting economic deterioration persist, we expect it may affect our business, financial condition, results of operations and cash flows going forward, including but not limited to, interest income, credit losses and commercial mortgage loan reinvestment, in ways that may vary widely depending on the duration and magnitude of the COVID-19 pandemic and ensuing economic turmoil, as well as numerous factors, many of which are outside of our control.

Further in May 2021, we issued 2,400,000 shares of 7.875% Series A Cumulative Redeemable Preferred Stock resulting in net proceeds (after underwriting discount and commission but before operating expenses) of $58.1 million. We expect the Incremental Secured Term Loan of $7.5 million provided for in the Third Amendment to the Credit and Guaranty Agreement to fund during the third quarter of 2021. We believe that Lument IM and its affiliates continue to identify attractive CRE lending opportunities which we expect will allow us to deploy our capital base into assets that are consistent with our investment strategy. The deployment of these proceeds into our target assets may take time and as such, may result in a temporary decline in net interest
31



income. Additionally, as a result of the Series A Preferred Stock issuance, Stockholders Equity as calculated per our management agreement will increase, resulting in increased management fees, changes to the core earnings hurdle over which incentive fees are due and payable to our Manager and increase to the reimbursable expense cap.

The table below presents certain information from our Statement of Operations for the three and six months ended June 30, 2021 and June 30, 2020, respectively:

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:    
Interest income:    
Commercial mortgage loans held-for-investment $ 8,227,979  $ 8,472,153  $ 15,698,096  $ 17,637,958 
Cash and cash equivalents 12,778  7,620  17,078  35,787 
Interest expense:    
Collateralized loan obligations (2,211,947) (2,915,638) (4,397,189) (7,153,527)
Secured Term Loan (774,363) (780,441) (1,546,228) (1,560,882)
Net interest income 5,254,447  4,783,694  9,771,757  8,959,336 
Other income (loss):    
Unrealized (loss) on mortgage servicing rights (220,435) (375,176) (240,890) (1,252,925)
Los on extinguishment of debt (1,663,926) —  (1,663,926) — 
Servicing income, net 95,766  204,380  219,922  398,527 
Other income —  —  —  2 
Total other income (loss) (1,788,595) (170,796) (1,684,894) (854,396)
Expenses:    
Management and incentive fees 725,465  590,211  1,446,464  1,175,032 
General and administrative expenses 520,013  978,842  1,200,327  1,744,734 
Operating expenses reimbursable to Manager 496,599  346,653  809,053  807,774 
Other operating expenses 48,054  833,998  82,807  1,134,924 
Compensation expense 49,491  52,762  98,626  106,894 
Total expenses 1,839,622  2,802,466  3,637,277  4,969,358 
Net income before provision for income taxes 1,626,230  1,810,432  4,449,586  3,135,582 
Benefit from income taxes 54,012  68,271  39,299  294,792 
Net income 1,680,242  1,878,703  4,488,885  3,430,374 
Dividends accrued to preferred stockholders (725,667) (3,750) (729,375) (7,500)
Net income attributable to common stockholders $ 954,575  $ 1,874,953  $ 3,759,510  $ 3,422,874 
Earnings per share:    
Net income attributable to common stockholders (basic and diluted) $ 954,575  $ 1,874,953  $ 3,759,510  $ 3,422,874 
Weighted average number of shares of common stock outstanding 24,944,075  24,939,575  24,943,731  24,925,529 
Basic and diluted income per share $ 0.04  $ 0.08  $ 0.15  $ 0.14 
Dividends declared per share of common stock $ 0.09  $ 0.08  $ 0.18  $ 0.15 
 
Net Income Summary
 
For the six months ended June 30, 2021, our net income attributable to common stockholders was $3,759,510, or $0.15 basic and diluted net income per average share, compared with net income of $3,422,874, or $0.14 basic and diluted net income per average share, for the six months ended June 30, 2020.  The principal drivers of this net income variance were an increase in net interest income from $8,959,336 for the six months ended June 30, 2020 to $9,771,757 for the six months ended June 30, 2021 and a decrease in total expenses from $4,969,358 for the six months ended June 30, 2020 to $3,637,277 for the six months ended June 30, 2021., which more than offset an increase in total other loss from a loss of $854,396 for the six months ended June 30, 2020 to $1,684,894 for the six months ended June 30, 2021 and an increase in accrued preferred dividends of $7,500 for the six months ended June 30, 2020 to $729,375 for the six months ended June 30, 2021.

For the three months ended June 30, 2021, our net income attributable to common stockholders was $954,575, or $0.04 basic and diluted net income per average share, compared with net income of $1,874,953, or $0.08 basic and diluted net income per average share, for the three months ended June 30, 2020. The principal drivers of this net income variance were an increase in other loss from $170,796 three months ended June 30, 2020 to $1,788,595 for the three months ended June 30, 2021 and an increase in accrued preferred dividends from $3,750 three months ended June 30, 2020 to $725,667 for the three months ended June 30, 2021, which more than offset an increase in net interest income from $4,783,694 for the three months ended June 30, 2020 to $5,254,447 for the three months ended June 30, 2021.

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Net Interest Income
 
For the six months ended June 30, 2021 and the six months ended June 30, 2020, our net interest income was $9,771,757 and $8,959,336, respectively. The increase was primarily due to (i) a $45.3 million decrease in weighted-average principal balance of our CLO liabilities; (ii) a decrease in weighted-average LIBOR of 88bps for our CLO liabilities and (iii) an in increase in exit/extension fees of $1.7 million for our loan portfolio. This was offset by (i) a $117.2 million decrease in weighted-average principal of our loan portfolio; (ii) a decrease of 8bps in weighted-average LIBOR floors on our loan portfolio for the six months ended June 30, 2021 compared to the corresponding period in 2020; (iii) a 3bps decrease in weighted-average spread on the loan portfolio for the six months ended June 30, 2021 compared to the corresponding period in 2020, and (iv) an increase of 8bps in weighted-average spread for our CLO liabilities.

For the three months ended June 30, 2021 and the three months ended June 30, 2020, our net interest income was $5,254,447 and 4,783,694, respectively. The increase was primarily due to (i) a $26.3 million decrease in weighted-average principal balance of our CLO liabilities; (ii) a decrease in weighted-average LIBOR of 38bps for our CLO liabilities and (iii) an in increase in exit/extension fees of $1.3 million for our loan portfolio. This was offset by (i) a $113.2 million decrease in weighted-average principal of our loan portfolio; (ii) a decrease of 18bps in weighted-average LIBOR floors on our loan portfolio for the six months ended June 30, 2021 compared to the corresponding period in 2020; (iii) a 2bps decrease in weighted-average spread on the loan portfolio for the six months ended June 30, 2021 compared to the corresponding period in 2020, and (iv) an increase of 10bps in weighted-average spread for our CLO liabilities.

Other Income (Loss)
 
For the six months ended June 30, 2021,we incurred a loss of $1,684,894. This loss was driven by loss on extinguishment of debt of $1,663,926 resulting from the unwind of Hunt CRE 2018-FL2 and the impact of net unrealized losses on mortgage servicing rights of $240,890 caused by decreased unpaid principal balance and lower interest rates which increased prepayments and lower projected float income which more than offset net servicing income of $219,922.
 
For the six months ended June 30, 2020, we incurred a loss of $854,396. This loss was driven by the impact of net unrealized losses on mortgage servicing rights of $1,252,925 caused by a decrease in interest rates which increased prepayments and lower projected float income, which more than offset net mortgage servicing income of $398,527.

The period-over-period increase in other loss was primarily due to the change in unrealized loss on mortgage servicing rights as a result of decreased unpaid principal balance and higher interest rates and lower prepayment speeds and loss on extinguishment of dent related to the unwind of Hunt CRE 2018-FL2.

For the three months ended June 30, 2021, we incurred a loss of $1,788,595. This loss was driven by loss on extinguishment of debt of $1,663,926 resulting from the unwind of Hunt CRE 2018-FL2 and the impact of net unrealized losses on mortgage servicing rights of $220,435 caused by decreased unpaid principal balance and lower interest rates which increased prepayments and lower projected float income which more than offset net servicing income of 95,766.

For the three months ended June 30, 2020, we incurred a loss of $170,796. This loss was primarily drive by the impact of net unrealized losses on mortgage servicing rights of $375,176 caused by a decrease in interest rates which increased prepayments and lower projected float income, which more than offset net mortgage servicing rights of $204,380.

The period-over-period increase in other loss was primarily due to the change in unrealized loss on mortgage servicing rights as a result of decreased unpaid principal balance and higher interest rates and lower prepayment speeds and loss on extinguishment of dent related to the unwind of Hunt CRE 2018-FL2.

Expenses
 
For the six months ended June 30, 2021, we incurred management and incentive fees of $1,446,464 representing amounts payable to our Manager under our management agreement. We also incurred operating expense of $2,190,813, of which $809,053 was payable to our Manager and $1,381,760 was payable directly by us.
 
For the six months ended June 30, 2020, we incurred management fees of $1,175,032 representing amounts payable to our Manager under our management agreement. We also incurred operating expense of $3,794,326 of which $807,774 was payable to our Manager and $2,986,552 was payable directly by us.

The period-over-period decrease in operating expenses primarily reflects a decrease in audit, accounting, legal fees and discontinued deal costs, which more than offset increased insurance, management and incentive fees.

For the three months ended June 30, 2021, we incurred management and incentive fees of $725,465 representing amounts payable to our Manager under our management agreement. We also incurred operating expense of $1,114,157, of which $496,599 was payable to our Manager and $617,558 was payable directly by us.

For the three months ended June 30, 2020, we incurred management fees of $590,211 representing amounts payable to our Manager under our management agreement. We also incurred operating expense of $2,212,255 of which $346,653 was payable to our Manager and $1,865,602 was payable directly by us.

The period-over-period decrease in operating expenses primarily reflects a decrease in audit, accounting, legal fees and discontinued deal costs, which more than offset expense reimbursement expensed during the period and increased management and incentive fees.

Impairment
 
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We review each loan classified as held-for-investment for impairment on a quarterly basis. For the three and six months ended June 30, 2021 and the three and six months ended June 30, 2020, the Company has not recognized any impairments on its loans held-for-investment and therefore has not recorded any allowance for loan losses.

Income Tax Expense (Benefit)

For the six months ended June 30, 2021, the Company recognized a provision for income taxes of $39,299 and for the six months ended June 30, 2020, the Company recognized a benefit for income taxes in the amount of $294,792. The period-over-period increase in tax expense primarily reflects the change in gross deferred revenue at FOAC due to the change in unrealized loss on mortgage servicing rights.

For the three months ended June 30, 2021, the Company recognized a provision for income taxes of $54,012 and for the three months ended June 30, 2020, the Company recognized a benefit for income taxes in the amount of $68,271. The period-over-period increase in tax expense primarily reflects the change in gross deferred revenue at FOAC due to the change in unrealized loss on mortgage servicing rights.

Liquidity and Capital Resources
 
Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments, comply with margin requirements, if any, and repay borrowings and other general business needs. Our primary sources of liquidity have been met with net proceeds of common or preferred stock issuance, net proceeds from debt offerings and net cash provided by operating activities. We have added to our liquidity position in May 2021 by issuing 2,400,000 shares of 7.875% Series A Cumulative Redeemable Preferred Stock resulting in net proceeds (after underwriting discount and commission but before operating expense) of $58.1 million. We finance our commercial mortgage loans primarily with match term collateralized loan obligations, which are not subject to margin calls or additional collateralization requirements. On June 14, 2021, we closed LFT CRE 2021-FL1 issuing eight tranches of CLO notes totaling $903.8 million. Of the total CLO notes issued $833.8 million were investment grade notes issued to third-party investors and $70 million were below investment-grade notes retained by us. As of June 30, 2021, our balance sheet included $40.2 million of a secured term loan and $833.8 million in collateralized loan financing, gross of discounts and debt issuance costs. Our secured term loan matures in January 2026 and our collateralized loan financing is term-matched and matures in 2039 or later. However, to the extent that we seek to invest in additional commercial mortgage loans, we will in part be dependent on our ability to issue additional collateralized loan obligations to secure alternative financing facilities or to raise additional common or preferred equity.

If we were required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we previously recorded our assets, particularly in a financial market that has been significantly disrupted and less liquid as a result of the ongoing COVID-19 pandemic. Assets that are illiquid are more difficult to finance, and to the extent that we use leverage to finance assets that become illiquid, we may lose that leverage or have it reduced if such leverage is, at least in part, dependent on the market value of our assets. Assets tend to become less liquid during times of financial stress, which is often the time that liquidity is most needed. As a result, our ability to sell assets or vary our portfolio in response to changes in economic and other conditions may be limited by liquidity constraints, which could adversely affect our results of operations and financial condition. We seek to limit our exposure to illiquidity risk to the extent possible, by ensuring that the collateralized loan obligations that we use to finance our commercial mortgage loans are not subject to margin calls or other limitations that are dependent on the market value of the related loan collateral.

We intend to continue to maintain a level of liquidity in relation to our assets that enables us to meet reasonably anticipated investment requirements and unforeseen business needs but that also allows us to be substantially invested in our target assets. We may misjudge the appropriate amount of our liquidity by maintaining excessive liquidity, which would lower our investment returns, or by maintaining insufficient liquidity, which would force us to liquidate assets into unfavorable market conditions and harm our operating results.  As of June 30, 2021, we had unrestricted cash and cash equivalents of $11.7 million, compared to $11.4 million as of December 31, 2020.

As of June 30, 2021, we had $40.2 million in outstanding principal under our Senior Secured Term Loan, with a borrowing rate of 7.25%. As of June 30, 2021, the ratio of our recourse debt to equity was 0.2:1.

As of June 30, 2021, we consolidated the assets and liabilities of LFT CRE 2021-FL1, Ltd. The assets of the trust are restricted and can only be used to fulfill their respective obligations, and accordingly the obligations of the trust, which we classify as collateralized loan obligations, do not have any recourse to us as the consolidator of the trust. As of June 30, 2021, the carrying value of these non-recourse liabilities aggregated to $826.1 million. As of June 30, 2021, our total debt to equity ratio was 5.1:1 on a GAAP basis.

Cash Flows

The following table sets forth changes in cash, cash equivalents and restricted cash for the six months ended June 30, 2021 and 2020:
For the three months ended March 31,
2021 2020
Cash Flows From Operating Activities 7,061,220  5,150,748 
Cash Flows From Investing Activities (144,006,805) 1,631,184 
Cash Flows From Financing Activities 412,407,902  (6,522,811)
Net Increase in Cash, Cash Equivalents and Restricted Cash $ 275,462,317  $ 259,121 

During the six months ended June 30, 2021, cash, cash equivalents and restricted cash increased by $275.5 million and for the six months ended June 30, 2020, cash, cash equivalents and restricted cash increased by $0.3 million.

Operating Activities

For the six months ended June 30, 2021 and 2020, net cash provided by operating activities totaled $7.1 million and $5.2 million, respectively. For the six months ended June 30, 2021, our cash flows from operating activities were primarily driven by interest received from the junior retained notes and preferred
34



shares of Hunt CRE 2017-FL1, Ltd., Hunt CRE 2018-FL2, Ltd. and LFT CRE 2021-FL1, Ltd., VIE’s we consolidated during the period, of $10.9 million, interest received from our senior secured loans held outside the VIE’s we consolidate of $0.5 million and cash received from mortgage servicing rights of $0.2 million exceeding cash interest expense paid on our Secured Term Loan of $1.6 million, management fees of $1.2 million, expense reimbursements of $0.7 million and other operating expenditures of $1.6 million. For the six months ended June 30, 2020, our cash flows from operating activities were primarily driven by interest received from the junior retained notes and preferred shares of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd., VIE’s we consolidated in the period, of $10.4 million, interest received from our senior secured loans held outside VIE’s we consolidate of $0.3 million and cash received from mortgage servicing rights of $0.4 million exceeding cash interest expense paid on our Secured Term Loan of $1.5 million, management fees of $1.1 million, expense reimbursement of $0.9 million and other operating expenditures of $2.9 million.

Investing Activities

For the six months ended June 30, 2021, net cash used in investing activities totaled $144.0 million. This was a result of the cash used for the purchase and funding of commercial mortgage loans held for investment exceeding the principal repayment of commercial mortgage loans held for investment during the period. For the six months ended June 30, 2020 net cash provided by investing activities totaled $1.6 million. This was the result of cash received fomr principal repayment of commercial mortgage loans held for investment exceeding the cash used for purchase and funding of commercial mortgage loans held for investment for the purchase and funding of commercial mortgage loans held for investment.

Financing Activities

For the six months ended June 30, 2021, net provided by financing activities totaled $412.4 million and primarily related to proceeds from issuance of our Series A Preferred Stock of $57.6 million and proceeds from issuance of collateralized loan obligations of $833.8 million which more than offset payments of common stock dividends of $5.5 million, repayment of collateralized loan obligations of $465.3 million and payment of debt issuance costs of $7.8 million.. For the six months ended June 30, 2020, net cash used in financing activities totaled $6.5 million and primarily related to proceeds from issuance of common stock of $5.7 million more than offset by payments of common dividends of $3.6 million and repayment of collateralized loan obligations of $8.6 million.

Forward-Looking Statements Regarding Liquidity  
 
Based upon our current portfolio, leverage rate and available borrowing arrangements, we believe that the net proceeds of our prior equity sales combined with cash flow from operations and available borrowing capacity will be sufficient to enable us to meet anticipated short-term (one year or less) liquidity requirements to fund our investment activities, pay fees under our management agreement, fund our distributions to stockholders and for other general corporate expenses.  

Our ability to meet our long-term (greater than one-year) liquidity and capital resource requirements will be subject to, amongst other things, obtaining additional debt financing and equity capital. We may increase our capital resources by obtaining long-term credit facilities, additional collateralized loan obligations or making additional public or private offerings of equity or debt securities, possibly including classes of preferred stock, common stock and senior and subordinated notes.
 
To maintain our qualification as a REIT, we generally must distribute annually at least 90% of our "REIT taxable income" (determined without regard to the deduction for dividends paid and excluding net capital gain). These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations.  

Off-Balance Sheet Arrangements   

As of June 30, 2021, we did not maintain any relationships with unconsolidated financial partnerships, or special purpose or variable interest entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, as of June 30, 2021, we had not guaranteed any obligations of unconsolidated entities or entered into any commitment or intent to provide funding to any such entities.   

In connection with the provision of seller eligibility and backstop guarantee services provided to MAXEX, we previously accounted for the related non-contingent liability at its fair value on our condensed consolidated balance sheet as a liability. As of June 30, 2021, pursuant to an Assumption Agreement dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC assumed all of FOAC's obligations under its backstop guarantees and agreed to indemnify and hold FOAC harmless against any losses, liabilities, costs, expenses and obligations under the backstop guarantee, see Note 10 for further information.

Distributions  
 
We intend to continue to make regular quarterly distributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its "REIT taxable income" (determined without regard to the deduction for dividends paid and excluding net capital gain) and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its "REIT taxable income." We have historically made regular monthly distributions, and with effect from the third quarter of 2018 we now make regular quarterly distributions, to our stockholders in an amount equal to all or substantially all of our REIT taxable income. Although FOAC no longer aggregates and securitizes residential mortgages, it continues to generate taxable income from MSRs and other mortgage-related activities. This taxable income will be subject to regular corporate income taxes. We generally anticipate the retention of profits generated and taxed at FOAC. Before we make any distribution on our common stock, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and any debt service obligations on debt payable. If cash available for distribution to our stockholders is less than our taxable income, we could be required to sell assets or borrow funds to make cash distributions, or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.   
 
If substantially all of our taxable income has not been paid by the close of any calendar year, we may declare a special dividend prior to the end of such calendar year, to achieve this result. On June 15, 2021, we announced that our board of directors had declared a cash dividend rate for the second quarter of 2021 of $0.090 per share of common stock which was paid on July 15, 2021 and declared an initial cash dividend for the period from May 5, 2021 through July 15, 2021 of $0.383 per share of Series A Preferred Stock which was paid on July 15, 2021.


35



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
 
Not applicable.

36



ITEM 4.  CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
Our management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)) under the Securities Exchange Act of 1934, as amended, or Exchange Act, that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
 
Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 as of June 30, 2021. Based upon our evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of June 30, 2021.

Changes in Internal Control Over Financial Reporting
 
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 or 15d-15 that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
   
PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings
 
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of the date hereof, neither we nor, to our knowledge, our Manager, are subject to any legal proceedings that we or our Manager considers to be material (individually or in the aggregate). 
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
None.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors previously disclosed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020.



Item 3. Defaults Upon Senior Securities
 
None.

Item 4. Mine Safety Disclosures
 
Not applicable.
 
Item 5. Other Information
 
None.
 
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Item 6. Exhibits
 
The exhibits listed on the accompanying Index of Exhibits are filed or furnished herewith, as applicable, as a part of this report. Such Index is incorporated herein by reference.

EXHIBIT INDEX
 
Exhibit
Number 		  Exhibit Description
3.1
3.2
10.1*
10.2*
10.3*
10.4*
31.1*
31.2*
32.1**
32.2**
101.INS* XBRL Instance Document
101.SCH* XBRL Taxonomy Extension Schema Document
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* XBRL Taxonomy Extension Label Linkbase Document
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
** Furnished herewith


38




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  LUMENT FINANCE TRUST, INC.
   
Dated: August 9, 2021
By /s/ James P. Flynn
    James P. Flynn
    Chief Executive Officer (Principal Executive Officer)
     
Dated: August 9, 2021
By /s/ James A. Briggs
    James A. Briggs
    Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


39

Exhibit 10.1
INDENTURE
dated as of June 14, 2021
by and among
LFT CRE 2021-FL1, LTD.,
as Issuer
LFT CRE 2021-FL1, LLC,
as Co-Issuer
LUMENT COMMERCIAL MORTGAGE TRUST,
as Advancing Agent
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Note Administrator
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Custodian
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TABLE OF CONTENTS
Page
ARTICLE I

DEFINITIONS
Section 1.1    Definitions
3
Section 1.2    Interest Calculation Convention
58
Section 1.3    Rounding Convention
58
ARTICLE II

THE NOTES
Section 2.1    Forms Generally
58
Section 2.2    Forms of Notes and Certificate of Authentication
59
Section 2.3    Authorized Amount; Stated Maturity Date; and Denominations
60
Section 2.4    Execution, Authentication, Delivery and Dating
61
Section 2.5    Registration, Registration of Transfer and Exchange
62
Section 2.6    Mutilated, Defaced, Destroyed, Lost or Stolen Note
69
Section 2.7    Payment of Principal and Interest and Other Amounts; Principal and Interest Rights Preserved
70
Section 2.8    Persons Deemed Owners
74
Section 2.9    Cancellation
74
Section 2.10    Global Notes; Definitive Notes; Temporary Notes
74
Section 2.11    U.S. Tax Treatment of Notes and the Issuer
76
Section 2.12    Authenticating Agents
77
Section 2.13    Forced Sale on Failure to Comply with Restrictions
77
Section 2.14    No Gross Up
78
Section 2.15    Credit Risk Retention
79
Section 2.16    Effect of Benchmark Transition Event
79
ARTICLE III

CONDITIONS PRECEDENT; PLEDGED MORTGAGE ASSETS
Section 3.1    General Provisions
80
Section 3.2    Security for Notes
83
Section 3.3    Transfer of Collateral
85
ARTICLE IV

SATISFACTION AND DISCHARGE
Section 4.1    Satisfaction and Discharge of Indenture
93
Section 4.2    Application of Amounts held in Trust
95
Section 4.3    Repayment of Amounts Held by Paying Agent
95
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Section 4.4    Limitation on Obligation to Incur Company Administrative Expenses
95
ARTICLE V

REMEDIES
Section 5.1    Events of Default
95
Section 5.2    Acceleration of Maturity; Rescission and Annulment
98
Section 5.3    Collection of Indebtedness and Suits for Enforcement by Trustee
99
Section 5.4    Remedies
102
Section 5.5    Preservation of Collateral
104
Section 5.6    Trustee May Enforce Claims Without Possession of Notes
105
Section 5.7    Application of Amounts Collected
106
Section 5.8    Limitation on Suits
106
Section 5.9    Unconditional Rights of Noteholders to Receive Principal and Interest
106
Section 5.10    Restoration of Rights and Remedies
107
Section 5.11    Rights and Remedies Cumulative
107
Section 5.12    Delay or Omission Not Waiver
107
Section 5.13    Control by the Controlling Class
107
Section 5.14    Waiver of Past Defaults
108
Section 5.15    Undertaking for Costs
108
Section 5.16    Waiver of Stay or Extension Laws
109
Section 5.17    Sale of Collateral
109
Section 5.18    Action on the Notes
110
ARTICLE VI

THE TRUSTEE AND NOTE ADMINISTRATOR
Section 6.1    Certain Duties and Responsibilities
110
Section 6.2    Notice of Default
112
Section 6.3    Certain Rights of Trustee and Note Administrator
112
Section 6.4    Not Responsible for Recitals or Issuance of Notes
115
Section 6.5    May Hold Notes
116
Section 6.6    Amounts Held in Trust
116
Section 6.7    Compensation and Reimbursement
116
Section 6.8    Corporate Trustee Required; Eligibility
117
Section 6.9    Resignation and Removal; Appointment of Successor
118
Section 6.10    Acceptance of Appointment by Successor
120
Section 6.11    Merger, Conversion, Consolidation or Succession to Business of Trustee and Note Administrator
121
Section 6.12    Co-Trustees and Separate Trustee
121
Section 6.13    Direction to enter into the Servicing Agreement and Other Documents
122
Section 6.14    Representations and Warranties of the Trustee
122
Section 6.15    Representations and Warranties of the Note Administrator
123
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Section 6.16    Requests for Consents
124
Section 6.17    Withholding
124
ARTICLE VII

COVENANTS
Section 7.1    Payment of Principal and Interest
125
Section 7.2    Maintenance of Office or Agency
125
Section 7.3    Amounts for Note Payments to be Held in Trust
126
Section 7.4    Existence of the Issuer and the Co-Issuer
128
Section 7.5    Protection of Collateral
130
Section 7.6    Notice of Any Amendments
131
Section 7.7    Performance of Obligations
131
Section 7.8    Negative Covenants
132
Section 7.9    Statement as to Compliance
134
Section 7.10    Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms
135
Section 7.11    Successor Substituted
138
Section 7.12    No Other Business
138
Section 7.13    Reporting
138
Section 7.14    Calculation Agent
139
Section 7.15    REIT Status
140
Section 7.16    Permitted Subsidiaries
141
Section 7.17    Repurchase Requests
141
Section 7.18    Purchase of Ramp-Up Mortgage Assets
142
Section 7.19    Ramp-Up Completion Date Actions
142
Section 7.20    Servicing of Mortgage Loans and Control of Servicing Decisions
143
Section 7.21    ABS Due Diligence Services
143
ARTICLE VIII

SUPPLEMENTAL INDENTURES
Section 8.1    Supplemental Indentures Without Consent of Securityholders
143
Section 8.2    Supplemental Indentures with Consent of Securityholders
147
Section 8.3    Execution of Supplemental Indentures
149
Section 8.4    Effect of Supplemental Indentures
150
Section 8.5    Reference in Notes to Supplemental Indentures
150
ARTICLE IX

REDEMPTION OF Securities; REDEMPTION PROCEDURES
Section 9.1    Clean-up Call; Tax Redemption; Optional Redemption; and Auction Call Redemption
151
Section 9.2    Record Date for Redemption
152
Section 9.3    Notice of Redemption or Maturity
152
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Section 9.4    Notes Payable on Redemption Date
153
Section 9.5    Mandatory Redemption
154
ARTICLE X

ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 10.1    Collection of Amounts; Custodial Account
154
Section 10.2    Reinvestment Account
154
Section 10.3    Payment Account
156
Section 10.4    Unused Proceeds Account
156
Section 10.5    Expense Reserve Account
157
Section 10.6    [Reserved]
158
Section 10.7    Interest Advances
158
Section 10.8    Reports by Parties
162
Section 10.9    Reports; Accountings
162
Section 10.10    Release of Mortgage Assets; Release of Collateral
165
Section 10.11    Reports by Independent Accountants
166
Section 10.12    Information Available Electronically
167
Section 10.13    Investor Q&A Forum; Investor Registry
170
Section 10.14    Certain Procedures
172
ARTICLE XI

APPLICATION OF FUNDS
Section 11.1    Disbursements of Amounts from Payment Account
173
Section 11.2    Securities Accounts
180
ARTICLE XII

SALE OF MORTGAGE ASSETS; REINVESTMENT MORTGAGE ASSETS; FUTURE FUNDING AGREEMENT
Section 12.1    Sales of Mortgage Assets
180
Section 12.2    Reinvestment Mortgage Assets
184
Section 12.3    Conditions Applicable to all Transactions Involving Sale or Grant
184
Section 12.4    Modifications to Note Protection Tests
185
Section 12.5    Future Funding Agreement
185
ARTICLE XIII

NOTEHOLDERS’ RELATIONS
Section 13.1    Subordination
186
Section 13.2    Standard of Conduct
188
ARTICLE XIV

MISCELLANEOUS
Section 14.1    Form of Documents Delivered to the Trustee and Note Administrator
189
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Section 14.2    Acts of Securityholders
189
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
190
Section 14.4    Notices to Noteholders; Waiver
193
Section 14.5    Effect of Headings and Table of Contents
194
Section 14.6    Successors and Assigns
194
Section 14.7    Severability
194
Section 14.8    Benefits of Indenture
194
Section 14.9    Governing Law; Waiver of Jury Trial
194
Section 14.10    Submission to Jurisdiction
194
Section 14.11    Counterparts
195
Section 14.12    Liability of Co-Issuers
195
Section 14.13    17g-5 Information
195
Section 14.14    Rating Agency Condition
197
Section 14.15    Patriot Act Compliance
198
ARTICLE XV

ASSIGNMENT OF THE MORTGAGE ASSET PURCHASE AGREEMENTS
Section 15.1    Assignment of Mortgage Asset Purchase Agreement
198
ARTICLE XVI

CURE RIGHTS; PURCHASE RIGHTS
Section 16.1    [Reserved]
200
Section 16.2    Mortgage Asset Purchase Agreements
200
Section 16.3    Representations and Warranties Related to Ramp-Up Mortgage Assets and Reinvestment Mortgage Assets
200
Section 16.4    Operating Advisor
201
Section 16.5    Purchase Right; Holder of a Majority of the Preferred Shares
201
ARTICLE XVII

ADVANCING AGENT
Section 17.1    Liability of the Advancing Agent
202
Section 17.2    Merger or Consolidation of the Advancing Agent
202
Section 17.3    Limitation on Liability of the Advancing Agent and Others
202
Section 17.4    Representations and Warranties of the Advancing Agent
203
Section 17.5    Resignation and Removal; Appointment of Successor
204
Section 17.6    Acceptance of Appointment by Successor Advancing Agent
205
Section 17.7    Removal and Replacement of Backup Advancing Agent
205
SCHEDULES
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Schedule A    Schedule of Mortgage Assets
Schedule B    LIBOR
Schedule C    List of Authorized Officers of Collateral Manager
EXHIBITS
Exhibit A-1    Form of Class A Senior Secured Floating Rate Note (Global Note)
Exhibit A-2    Form of Class A Senior Secured Floating Rate Note (Definitive Note)
Exhibit B-1    Form of Class A-S Second Priority Secured Floating Rate Note (Global Note)
Exhibit B-2    Form of Class A-S Second Priority Secured Floating Rate Note (Definitive Note)
Exhibit C-1    Form of Class B Third Priority Secured Floating Rate Note (Global Note)
Exhibit C-2    Form of Class B Third Priority Secured Floating Rate Note (Definitive Note)
Exhibit D-1    Form of Class C Fourth Priority Secured Floating Rate Note (Global Note)
Exhibit D-2    Form of Class C Fourth Priority Secured Floating Rate Note (Definitive Note)
Exhibit E-1    Form of Class D Fifth Priority Secured Floating Rate Note (Global Note)
Exhibit E-2    Form of Class D Fifth Priority Secured Floating Rate Note (Definitive Note)
Exhibit F-1    Form of Class E Sixth Priority Floating Rate Note (Global Note)
Exhibit F-2    Form of Class E Sixth Priority Floating Rate Note (Definitive Note)
Exhibit G-1    Form of Class F Seventh Priority Floating Rate Note (Global Note)
Exhibit G-2    Form of Class F Seventh Priority Floating Rate Note (Definitive Note)
Exhibit H-1    Form of Class G Eighth Priority Floating Rate Note (Global Note)
Exhibit H-2    Form of Class G Eighth Priority Floating Rate Note (Definitive Note)
Exhibit I-1    Form of Transfer Certificate – Regulation S Global Note
Exhibit I-2    Form of Transfer Certificate – Rule 144A Global Note
Exhibit I-3    Form of Transfer Certificate – Definitive Note
Exhibit J    Form of Closing Document Checklist Regarding the Mortgage Asset File
Exhibit K    Form of Custodian Receipt
Exhibit L    Form of Request for Release
Exhibit M    [RESERVED]
Exhibit N    Form of NRSRO Certification
Exhibit O    [RESERVED]
Exhibit P    Form of Note Administrator’s Monthly Report
Exhibit Q-1    Form of Investor Certification (for Non-Borrower Affiliates)
Exhibit Q-2    Form of Investor Certification (for Borrower Affiliates)
Exhibit R    Form of Online Market Data Provider Certification

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INDENTURE, dated as of June 14, 2021, by and among LFT CRE 2021-FL1, LTD., an exempted company incorporated in the Cayman Islands with limited liability (the “Issuer”), LFT CRE 2021-FL1, LLC, a limited liability company formed under the laws of Delaware (the “Co-Issuer”), LUMENT COMMERCIAL MORTGAGE TRUST, a Maryland Corporation (“LCMT”), as advancing agent (herein, together with its permitted successors and assigns, the “Advancing Agent”), WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee (herein, together with its permitted successors and assigns in the trusts hereunder, the “Trustee”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as note administrator, paying agent, calculation agent, transfer agent, authentication agent and backup advancing agent (herein, in all of the foregoing capacities, together with its permitted successors and assigns, the “Note Administrator”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as custodian (herein, together with its permitted successors and assigns in the trusts hereunder, the “Custodian”).
PRELIMINARY STATEMENT
Each of the Issuer and the Co-Issuer is duly authorized to execute and deliver this Indenture to provide for the Notes issuable as provided in this Indenture. All covenants and agreements made by the Issuer and Co-Issuer herein are for the benefit and security of the Secured Parties. The Issuer, the Co-Issuer, the Note Administrator, in all of its capacities hereunder, the Custodian, the Trustee and the Advancing Agent are entering into this Indenture, and the Trustee is accepting the trusts created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the Issuer and Co-Issuer in accordance with this Indenture’s terms have been done.
GRANTING CLAUSES
1The Issuer hereby Grants to the Trustee, for the benefit and security of the Secured Parties, all of its right, title and interest in, to and under, in each case, whether now owned or existing, or hereafter acquired or arising out of (in each case, to the extent of the Issuer’s interest therein and specifically excluding any interest in any related Future Funding Participations therein and excluding any interest in the Excepted Property):
(a)the Closing Date Mortgage Assets listed on Schedule A hereto which the Issuer purchases on the Closing Date and causes to be delivered to the Trustee (directly or through an agent or bailee) herewith, including all payments thereon or with respect thereto, and all Mortgage Assets which are delivered to the Trustee (directly or through an agent or bailee) after the Closing Date pursuant to the terms hereof (including, without limitation, all Ramp-Up Mortgage Assets, Reinvestment Mortgage Assets, Exchange Mortgage Assets and Contribution Mortgage Assets acquired by the Issuer after the Closing Date) and all payments thereon or with respect thereto;
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(b)the Servicing Accounts, the Indenture Accounts and the related security entitlements and all income from the investment of funds in any of the foregoing at any time credited to any of the foregoing accounts;
(c)the Eligible Investments;
(d)the rights of the Issuer under the Collateral Management Agreement, the Mortgage Asset Purchase Agreement, the Company Administration Agreement and the Servicing Agreement;
(e)all amounts delivered to the Note Administrator (directly or through a securities intermediary);
(f)all other investment property, instruments and general intangibles in which the Issuer has an interest, other than the Excepted Property;
(g)the Issuer’s ownership interest in, and rights to, all Permitted Subsidiaries; and
(h)all proceeds with respect to the foregoing clauses (a) through (g).
The collateral described in the foregoing clauses (a) through (h), with the exception of the Excepted Property, is referred to herein as the “Collateral.” Such Grants are made to secure the Offered Notes equally and ratably without prejudice, priority or distinction between any Offered Note and any other Offered Note for any reason, except as expressly provided in this Indenture (including, but not limited to, the Priority of Payments) and to secure (i) the payment of all amounts due on and in respect of the Notes in accordance with their terms, (ii) the payment of all other sums payable under this Indenture and (iii) compliance with the provisions of this Indenture, all as provided in this Indenture. The foregoing Grant shall, for the purpose of determining the property subject to the lien of this Indenture, be deemed to include any securities and any investments granted by or on behalf of the Issuer to the Trustee for the benefit of the Secured Parties, whether or not such securities or such investments satisfy the criteria set forth in the definitions of “Mortgage Asset” or “Eligible Investment,” as the case may be.
Except to the extent otherwise provided in this Indenture, this Indenture shall constitute a security agreement under the laws of the State of New York applicable to agreements made and to be performed therein, for the benefit of the Noteholders. Upon the occurrence and during the continuation of any Event of Default hereunder, and in addition to any other rights available under this Indenture or any other Collateral held for the benefit and security of the Noteholders or otherwise available at law or in equity but subject to the terms hereof, the Trustee shall have all rights and remedies of a secured party under the laws of the State of New York and other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this Indenture, to exercise, sell or apply any rights and other
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interests assigned or pledged hereby in accordance with the terms hereof at public and private sale.
The Trustee acknowledges such Grants, accepts the trusts hereunder in accordance with the provisions hereof, and agrees to perform the duties herein in accordance with, and subject to, the terms hereof, in order that the interests of the Secured Parties may be adequately and effectively protected in accordance with this Indenture.
Notwithstanding anything in the Indenture to the contrary, for all purposes hereunder, no holder of Class F Notes and/or Class G Notes shall be a secured party for purposes of the Grant by virtue of holding such Notes.
ARTICLE I

DEFINITIONS
Section I.1Definitions. Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Indenture, and the definitions of such terms are equally applicable both to the singular and plural forms of such terms and to the masculine, feminine and neuter genders of such terms. The word “including” and its variations shall mean “including without limitation.” Whenever any reference is made to an amount the determination of which is governed by Section 1.2 hereof, the provisions of Section 1.2 shall be applicable to such determination or calculation, whether or not reference is specifically made to Section 1.2, unless some other method of calculation or determination is expressly specified in the particular provision. All references in this Indenture to designated “Articles,” “Sections,” “Subsections” and other subdivisions are to the designated Articles, Sections, Subsections and other subdivisions of this Indenture as originally executed. The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Subsection or other subdivision.
“17g-5 Information”: The meaning specified in Section 14.3(i) hereof.
“17g-5 Information Provider”: The meaning specified in Section 14.13(a) hereof.
“17g-5 Website”: A password-protected internet website maintained by the 17g-5 Information Provider, which shall initially be located at https://www.ctslink.com, under the “NRSRO” tab for this transaction. Any change of the 17g-5 Website shall only occur after notice has been delivered by the 17g-5 Information Provider to the Issuer, the Note Administrator, the Trustee, the Collateral Manager, the Placement Agents and the Rating Agencies, which notice shall set forth the date of change and new location of the 17g-5 Website.
“Accepted Loan Servicer”: Any commercial mortgage loan master or primary servicer that (1) is engaged in the business of servicing commercial mortgage loans (with a minimum servicing portfolio of U.S.$100,000,000) that are comparable to the Mortgage Loans owned or to be owned by the Issuer, (2) as to which Moody’s has not cited servicing concerns of
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such servicer as the sole or material factor in any downgrade or withdrawal of the ratings (or placement on “watch status” in contemplation of a ratings downgrade or withdrawal) of securities in any commercial mortgage backed securities transaction serviced by such servicer prior to the time of determination and (3) within the prior twelve (12) month period, has acted as a servicer in a commercial mortgage backed securities transaction rated by KBRA and KBRA has not cited servicing concerns of such servicer as the sole or material factor in any downgrade or withdrawal of the ratings (or placement on “watch status” in contemplation of a ratings downgrade or withdrawal) of securities in any commercial mortgage backed securities transaction serviced by such servicer prior to the time of determination.
“Access Termination Notice”: The meaning specified in the Future Funding Agreement.
“Account”: Any of the Servicing Accounts, the Indenture Accounts and the Preferred Share Distribution Account.
“Accountants’ Report”: A report of a firm of Independent certified public accountants of recognized national reputation.
“Act” or “Act of Securityholders”: The meaning specified in Section 14.2 hereof.
“Acquisition Criteria”: The acquisition of a Ramp-Up Mortgage Asset or Reinvestment Mortgage Asset will be permitted only if, as of the date of the commitment to purchase such Mortgage Asset:
(a) for commitments to purchase made after the Ramp-Up Acquisition Period, the Interest Coverage Test is satisfied;
(b) for commitments to purchase made after the Ramp-Up Acquisition Period, the Par Value Ratio is equal to or greater than 117.54%;
(c) for commitments to purchase made at any time, no Event of Default has occurred and is continuing; and
(d) for commitments to purchase made at any time, the Class A Notes are rated “Aa3(sf)” or higher by Moody’s and “AA-(sf)” or higher by KBRA.
“Administrative Modification”: The meaning specified in the Servicing Agreement.
“Advance Rate”: The meaning specified in the Servicing Agreement.
“Advancing Agent”: Lument Commercial Mortgage Trust, a Maryland corporation, solely in its capacity as advancing agent hereunder, unless a successor Person shall have become the Advancing Agent pursuant to the applicable provisions of this Indenture, and thereafter “Advancing Agent” shall mean such successor Person.
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“Advancing Agent Fee”: The fee payable monthly in arrears on each Payment Date to the Advancing Agent in accordance with the Priority of Payments, equal to 0.25% per annum on the Aggregate Outstanding Amount of the Class A Notes, the Class A-S Notes and the Class B Notes on such Payment Date prior to giving effect to distributions with respect to such Payment Date; which fee is hereby waived by the Advancing Agent for so long as LCMT (or any of its Affiliates) (i) is the Advancing Agent and (ii) owns the Preferred Shares.
“Advisers Act”: The Investment Advisers Act of 1940, as amended.
“Advisory Committee”: The meaning specified in the Collateral Management Agreement.
“Advisory Committee Member Agreement”: The Advisory Committee Member Agreement dated as of June 14, 2021 among the Issuer and the members of the Advisory Committee.
“Affiliate”: With respect to a Person, (i) any other Person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such Person or (ii) any other Person who is a director, Officer or employee (a) of such Person, (b) of any subsidiary or parent company of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, control of a Person shall mean the power, direct or indirect, (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of such Person, or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; provided that neither the Company Administrator nor any other company, corporation or Person to which the Company Administrator provides directors and/or administrative services and/or acts as share trustee shall be an Affiliate of the Issuer or Co-Issuer. The Note Administrator, the Servicer, the Special Servicer and the Trustee may rely on certifications of any Holder or party hereto regarding such Person’s affiliations and none of the Collateral Manager, the Seller, LFT Holder, the Securitization Sponsor other accounts or funds managed by the Collateral Manager nor any of their respective subsidiaries shall be deemed to be Affiliates of the Issuer.
“Agent Members”: Members of, or participants in, the Depository, Clearstream, Luxembourg or Euroclear.
“Aggregate Outstanding Amount”: With respect to any Class or Classes of the Notes as of any date of determination, the aggregate principal balance of such Class or Classes of Notes Outstanding as of such date of determination (including, (i) in the case of the Class C Notes, any Class C Deferred Interest, (ii) in the case of the Class D Notes, any Class D Deferred Interest, (iii) in the case of the Class E Notes, any Class E Deferred Interest, (iv) in the case of the Class F Notes, any Class F Deferred Interest or (v) in the case of the Class G Notes, any Class G Deferred Interest).
“Aggregate Outstanding Portfolio Balance”: On the date of determination thereof, the sum of (without duplication) (i) the aggregate Principal Balance of the Mortgage
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Assets, (ii) the aggregate amount of Cash held in the Accounts; and (iii) the aggregate Principal Balance of all Eligible Investments held in the Accounts.
“Aggregate Principal Balance”: When used with respect to any Mortgage Assets as of any date of determination, the sum of the Principal Balances on such date of determination of all such Mortgage Assets.
“AML Compliance”: Compliance with the Cayman AML Regulations.
“Annual Debt Service”: With respect to any Mortgage Asset, the monthly payments of principal and interest due pursuant to the terms of the related Asset Documents, excluding (1) any balloon payments, (2) required (non-monthly) principal paydowns and (3) reserve payments for the 12 payments following the applicable Cut-off Date (as defined in the Mortgage Asset Purchase Agreement).
“Appraisal”: The meaning specified in the Servicing Agreement.
“Appraisal Reduction Amount”: For any Mortgage Asset with respect to which an Appraisal Reduction Event has occurred, an amount equal to the excess, if any, of (a) the Principal Balance thereof, plus all other amounts due and unpaid with respect thereto, over (b) the sum of (i) an amount equal to 90% percent of the aggregate appraised value for the underlying mortgaged properties related to such Mortgage Asset (net of any liens senior to the lien of the related mortgage) as determined by an Updated Appraisal on each such underlying mortgaged property related to such Mortgage Asset, plus (ii) the aggregate amount of all reserves, letters of credit and escrows held in connection therewith (other than escrows and reserves for unpaid real estate taxes and assessments and insurance premiums), plus (iii) all insurance and casualty proceeds and condemnation awards that constitute collateral therefor (whether paid or then payable by any insurance company or government authority). With respect to any Mortgage Asset that is a Participation, any Appraisal Reduction Amount will be allocated to such participation interest as provided under the applicable Participation Agreement (and any applicable co-lender agreement).
“Appraisal Reduction Event”: With respect to any Mortgage Asset, the occurrence of any of the following events: (i) the 90th day following the occurrence of any uncured delinquency in any monthly payment; (ii) receipt of notice that the related borrower has filed a bankruptcy petition or the date on which a receiver is appointed and continues in such capacity or the 90th day after the related borrower becomes the subject of involuntary bankruptcy proceedings and such proceedings are not dismissed; (iii) the date on which any related underlying mortgaged property becomes an REO Property as set forth pursuant to the Servicing Agreement; (iv) the date on which such Mortgage Asset becomes a Modified Mortgage Asset; or (v) a payment default occurs with respect to a balloon payment due on such Mortgage Asset; provided, however, that if (i) the related borrower is diligently seeking a refinancing commitment, (ii) the related borrower continues to make its original scheduled payments, (iii) no other Appraisal Reduction Event has occurred with respect to such Mortgage Asset, and (iv) the Collateral Manager consents, then an Appraisal Reduction Event with respect to this clause (v) will be deemed not to occur on or before the 60th day after the original maturity date (inclusive of
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all extension options that the related borrower had right to elect and did so elect pursuant to the instrument related to such Mortgage Asset) of such Mortgage Asset; and provided, further, that if the related borrower has delivered to the Servicer, on or before the 60th day after the original maturity date, a refinancing Commitment Letter or purchase and sale agreement reasonably acceptable to the Servicer, and the borrower continues to make its original scheduled payments and no other Appraisal Reduction Event has occurred with respect to such Mortgage Asset, then an Appraisal Reduction Event will be deemed not to occur until the earlier of (A) 90 days following the original maturity date of such Mortgage Asset and (B) termination of the refinancing Commitment Letter or purchase and sale agreement.
“Article 15 Agreement”: The meaning specified in Section 15.1(a) hereof.
“As-Stabilized Appraisal LTV”: With respect to any Reinvestment Mortgage Asset, the ratio, expressed as a percentage, as calculated by the Collateral Manager in accordance with the Collateral Management Standard, of the Principal Balance of such Mortgage Asset to the value estimate of the related mortgaged property as reflected in an appraisal that was obtained not more than twelve (12) months prior to the date of determination (or, in connection with the acquisition of a Future Funding Participation, not more than 12 months prior to the first date of acquisition of a related Participation), which value is based on the appraisal or portion of an appraisal that states an “as-stabilized” value and/or “as-renovated” value for such property, which may be based on the assumption that certain events will occur, including without limitation, with respect to the re-tenanting, renovation or other repositioning of such property and, may be based on the capitalization rate reflected in such appraisal. If the appraisal was not obtained within three (3) months prior to the date of origination, the Collateral Manager may adjust such capitalization rate in its reasonable good faith judgment executed in accordance with the Collateral Management Standard. In determining As-Stabilized Appraisal LTV for any Reinvestment Mortgage Asset that is a Participation, the calculation of As-Stabilized Appraisal LTV will take into account the outstanding Principal Balance of the Participation being acquired by the Issuer and the related pari passu Non-Acquired Participation(s) (assuming, fully funded). In determining the As-Stabilized Appraisal LTV for any Reinvestment Mortgage Asset that is cross-collateralized with one or more other Mortgage Assets, the As-Stabilized Appraisal LTV will be calculated with respect to the cross-collateralized group in the aggregate.
“Asset Documents”: The indenture, loan agreement, note, mortgage, intercreditor agreement, participation agreement, co-lender agreement or other agreement pursuant to which a Mortgage Asset or an Eligible Investment has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Mortgage Asset or an Eligible Investment or of which holders of such Mortgage Asset or an Eligible Investment are the beneficiaries.
“Asset Replacement Percentage”: On any date of calculation, a fraction (expressed as a percentage) where (1) the numerator is the Aggregate Principal Balance of the Mortgage Assets as to which interest payments are calculated with reference to a benchmark other than the then-current Benchmark and (2) the denominator is the Aggregate Principal Balance of all of the Mortgage Assets as of such calculation date.
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“Auction Call Redemption”: The meaning specified in Section 9.1(d) hereof.
“Authenticating Agent”: With respect to the Notes or a Class of the Notes, the Person designated by the Note Administrator to authenticate such Notes on behalf of the Note Administrator pursuant to Section 2.12 hereof.
“Authorized Officer”: With respect to the Issuer or Co-Issuer, any Officer (or attorney-in-fact appointed by the Issuer or the Co-Issuer) who is authorized to act for the Issuer or Co-Issuer in matters relating to, and binding upon, the Issuer or Co-Issuer. With respect to the Collateral Manager, the Persons listed on Schedule C attached hereto or such other Person or Persons specified by the Collateral Manager by written notice to the other parties hereto. With respect to the Servicer, a “Responsible Officer” of the Servicer as set forth in the Servicing Agreement. With respect to the Note Administrator or the Trustee or any other bank or trust company acting as trustee of an express trust, a Trust Officer. Each party may receive and accept a certification of the authority of any other party as conclusive evidence of the authority of any Person to act, and such certification may be considered as in full force and effect until receipt by such other party of written notice to the contrary.
“Backup Advancing Agent”: The Note Administrator, solely in its capacity as Backup Advancing Agent hereunder, or any successor Backup Advancing Agent; provided that any such successor Backup Advancing Agent must be a financial institution having a long-term unsecured debt rating at least equal to “A2” by Moody’s and a short-term unsecured debt rating from Moody’s at least equal to “P-1.”
“Bankruptcy Code”: The federal Bankruptcy Code, Title 11 of the United States Code, Part V of the Companies Act (as amended) of the Cayman Islands, the Bankruptcy Act (as amended) of the Cayman Islands, the Companies Winding Up Rules (as amended) of the Cayman Islands and the Foreign Bankruptcy Proceedings (International Cooperation) Rules (as amended) of the Cayman Islands.
“Benchmark”: Initially, LIBOR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement.
“Benchmark Determination Date”: With respect to any Interest Accrual Period, (1) if the Benchmark is LIBOR, the second London Banking Day preceding the first day of such Interest Accrual Period and (2) if the Benchmark is not LIBOR, the time determined by the Collateral Manager in accordance with the Benchmark Replacement Conforming Changes.
1“Benchmark Replacement”: The first alternative set forth in the order below that can be determined by the Collateral Manager as of the Benchmark Replacement Date:
(1)the sum of: (a) Term SOFR and (b) the Benchmark Replacement Adjustment;
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(2)the sum of: (a) Compounded SOFR and (b) the Benchmark Replacement Adjustment;
(3)the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment;
(4)the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; and
(5)the sum of: (a) the alternate rate of interest that has been selected by the Collateral Manager as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated securitizations at such time and (b) the Benchmark Replacement Adjustment.
2In no event may the Benchmark Replacement be less than zero.
3“Benchmark Replacement Adjustment”: The first alternative set forth in the order below that can be determined by the Collateral Manager as of the Benchmark Replacement Date:
(1)the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero), that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;
(2)if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment; and
(3)the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Collateral Manager giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated securitization transactions at such time.
“Benchmark Replacement Conforming Changes”: With respect to any Benchmark Replacement, any technical, administrative or operational changes (including, but not limited to, changes to the definition of “Interest Accrual Period”, setting an applicable Benchmark Determination Date and Reference Time, the timing and frequency of determining rates and making payments of interest, the method for calculating the Benchmark Replacement and other administrative matters, which may, for the avoidance of doubt, have a material economic impact on the Notes) that, the Collateral Manager decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market
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practice (or, if the Collateral Manager decides that adoption of any portion of such market practice is not administratively feasible or if the Collateral Manager determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Collateral Manager determines is reasonably necessary).
“Benchmark Replacement Date”: In the case of:
(1) clause (1) or (2) of the definition of “Benchmark Transition Event,” the earlier of (i) the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the relevant Benchmark permanently or indefinitely ceases to provide such Benchmark and (ii) the date selected by the Collateral Manager, in its sole discretion, to be an appropriate Benchmark Replacement Date based on market practice;
(2) clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information; or
(3) clause (4) of the definition of “Benchmark Transition Event,” the 30th Business Day following the date of such servicer report;
provided, however, that, other than in the case of clause (1)(ii) above, on or after the 60th day preceding the date on which such Benchmark Replacement Date would otherwise occur (if applicable), the Collateral Manager may give written notice to the Issuer, the Co-Issuer, the Advancing Agent, the Servicer, the Special Servicer, the Note Administrator, the Trustee and the Calculation Agent (if different from the Note Administrator) in which the Collateral Manager designates an earlier date (but not earlier than the 30th day following such notice) and represents that such earlier date will facilitate an orderly transition of the transaction to the Benchmark Replacement, in which case such earlier date shall be the Benchmark Replacement Date. In the case of clause (1)(ii) above, the Collateral Manager will be required to provide written notice to the Issuer, the Co-Issuer, the Advancing Agent, the Servicer, the Special Servicer, the Note Administrator, the Trustee and the Calculation Agent (if different from the Note Administrator) at least 30 days prior to the Benchmark Replacement Date selected by the Collateral Manager.
On March 8, 2021, the ARRC announced that based on the FCA/IBA Announcements, the Benchmark Replacement Date for one-month LIBOR is expected to be on or immediately after June 30, 2023 (although if other Benchmark Transition Events occur the Benchmark Replacement Date could be earlier).
4“Benchmark Transition Event”: The occurrence of one or more of the following events with respect to the then-current Benchmark:
(1)a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that the administrator has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;
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(2)a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;
(3)a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative; or
(4)the Asset Replacement Percentage is greater than 50%, as calculated by the Collateral Manager based on the aggregate principal balance of each applicable Mortgage Loan, as reported in the most recent monthly report of the Servicer.
On March 8, 2021, the ARRC announced that the FCA/IBA Announcements of March 5, 2021, amounted to a Benchmark Transition Event.
“Board of Directors”: With respect to the Issuer, the directors of the Issuer duly appointed in accordance with the Governing Documents of the Issuer and, with respect to the Co-Issuer, the LLC Managers duly appointed by the sole member of the Co-Issuer or otherwise.
“Board Resolution”: With respect to the Issuer, a resolution of the Board of Directors of the Issuer and, with respect to the Co-Issuer, a resolution or unanimous written consent of the LLC Managers or the sole member of the Co-Issuer.
“Business Day”: Any day other than (i) a Saturday or Sunday or (ii) a day on which commercial banks are authorized or required by applicable law, regulation or executive order to close in New York, New York, in the States of Texas or Ohio or the location of the Corporate Trust Office of the Note Administrator or the Trustee, or (iii) days when the New York Stock Exchange or the Federal Reserve Bank of New York are closed.
“Calculation Agent”: The meaning specified in Section 7.14(a) hereof.
“Calculation Amount”: At any time, (i) with respect to any Modified Mortgage Asset, the Principal Balance thereof minus any related Appraisal Reduction Amounts; and (ii) with respect to any Defaulted Mortgage Asset, the lowest of (a) the Moody’s Recovery Rate of such Mortgage Asset multiplied by the Principal Balance of such Mortgage Asset, (b) the market value of such Mortgage Asset, as determined by the Collateral Manager in accordance with the Collateral Management Standard based upon, among other things, a recent Appraisal and information from one or more third party commercial real estate brokers and such other information as the Collateral Manager deems appropriate and (c) the Principal Balance of such Mortgage Asset, minus any applicable Appraisal Reduction Amounts.
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“Cash”: Such coin or currency of the United States of America as at the time shall be legal tender for payment of all public and private debts.
“Cash Collateral Accounts”: The meaning specified in the Servicing Agreement.
“Cayman AML Regulations”: The Cayman Islands Anti-Money Laundering Regulations (as amended) (together with The Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing in the Cayman Islands (or equivalent legislation and guidance, as applicable), each as amended and revised from time to time.
“Cayman FATCA Legislation”: The Cayman Islands Tax Information Authority Act (as amended), together with related legislation, regulations, rules and guidance notes made pursuant to such act (including the CRS).
“Certificate of Authentication”: The meaning specified in Section 2.1 hereof.
“Certificated Security”: A “certificated security” as defined in Section 8-102(a)(4) of the UCC.
“Class”: The Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes or the Class G Notes, as applicable.
“Class A Defaulted Interest Amount”: With respect to the Class A Notes as of each Payment Date, the accrued and unpaid amount due to Holders of the Class A Notes on account of any shortfalls in the payment of the Class A Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class A Rate.
“Class A Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class A Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class A Notes on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class A Rate.
“Class A Notes”: The Class A Senior Secured Floating Rate Notes due 2039, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
“Class A Rate”: With respect to any Class A Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 1.17%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 1.42%.
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“Class A-S Defaulted Interest Amount”: With respect to the Class A-S Notes as of each Payment Date, the accrued and unpaid amount due to Holders of the Class A-S Notes on account of any shortfalls in the payment of the Class A-S Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class A-S Rate.
“Class A-S Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class A-S Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class A-S Notes on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class A-S Rate.
“Class A-S Notes”: The Class A-S Second Priority Secured Floating Rate Notes due 2039, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
“Class A-S Rate”: With respect to any Class A-S Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 1.35%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 1.60%.
“Class B Defaulted Interest Amount”: With respect to the Class B Notes as of each Payment Date, the accrued and unpaid amount due to Holders of the Class B Notes on account of any shortfalls in the payment of the Class B Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class B Rate.
“Class B Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class B Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class B Notes on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class B Rate.
“Class B Notes”: The Class B Third Priority Secured Floating Rate Notes due 2039, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
“Class B Rate”: With respect to any Class B Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 1.75%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 2.25%.
“Class C Defaulted Interest Amount”: With respect to the Class C Notes as of each Payment Date for which no Class A Notes, Class A-S Notes or Class B Notes are
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outstanding, the accrued and unpaid amount due to Holders of the Class C Notes on account of any shortfalls in the payment of the Class C Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class C Rate.
“Class C Deferred Interest”: So long as any Class A Notes, Class A-S Notes or Class B Notes are Outstanding, any interest due on the Class C Notes that is not paid as a result of the operation of the Priority of Payments on any Payment Date.
“Class C Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class C Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class C Notes (including Class C Deferred Interest) on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class C Rate.
“Class C Notes”: The Class C Fourth Priority Secured Floating Rate Notes due 2039, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
“Class C Rate”: With respect to any Class C Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 1.95%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 2.45%.
“Class D Defaulted Interest Amount”: With respect to the Class D Notes as of each Payment Date for which no Class A Notes, Class A-S Notes, Class B Notes or Class C Notes are outstanding, the accrued and unpaid amount due to Holders of the Class D Notes on account of any shortfalls in the payment of the Class D Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class D Rate.
“Class D Deferred Interest”: So long as any Class A Notes, Class A-S Notes, Class B Notes, or Class C Notes are Outstanding, any interest due on the Class D Notes that is not paid as a result of the operation of the Priority of Payments on any Payment Date.
“Class D Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class D Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class D Notes (including Class D Deferred Interest) on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class D Rate.
“Class D Notes”: The Class D Fifth Priority Secured Floating Rate Notes due 2039, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
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“Class D Rate”: With respect to any Class D Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 2.45%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 2.95%.
“Class E Defaulted Interest Amount”: With respect to the Class E Notes as of each Payment Date for which no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes or Class D Notes are outstanding, the accrued and unpaid amount due to Holders of the Class E Notes on account of any shortfalls in the payment of the Class E Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class E Rate.
“Class E Deferred Interest”: So long as any Class A Notes, Class A-S Notes, Class B Notes, Class C Notes or Class D Notes are Outstanding, any interest due on the Class E Notes that is not paid as a result of the operation of the Priority of Payments on any Payment Date.
“Class E Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class E Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class E Notes (including Class E Deferred Interest) on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class E Rate.
“Class E Notes”: The Class E Sixth Priority Floating Rate Notes due 2039, issued by the Issuer pursuant to this Indenture.
“Class E Rate”: With respect to any Class E Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) (i) with respect to each Payment Date (and related Interest Accrual Period) prior to the Payment Date in March 2027, 2.95%, and (ii) with respect to each Payment Date (and related Interest Accrual Period) on and after the Payment Date in March 2027, 3.45%.
“Class F Defaulted Interest Amount”: With respect to the Class F Notes as of each Payment Date for which no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes are outstanding, the accrued and unpaid amount due to Holders of the Class F Notes on account of any shortfalls in the payment of the Class F Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class F Rate.
“Class F Deferred Interest”: So long as any Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes are Outstanding, any interest due on the Class F Notes that is not paid as a result of the operation of the Priority of Payments on any Payment Date.
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“Class F Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class F Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class F Notes (including Class F Deferred Interest) on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class F Rate.
“Class F Notes”: The Class F Seventh Priority Floating Rate Notes due 2039, issued by the Issuer pursuant to this Indenture.
“Class F Rate”: With respect to any Class F Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) 4.25%.
“Class G Defaulted Interest Amount”: With respect to the Class G Notes as of each Payment Date for which no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes or Class F Notes are outstanding, the accrued and unpaid amount due to Holders of the Class G Notes on account of any shortfalls in the payment of the Class G Interest Distribution Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued thereon (to the extent lawful) at the Class G Rate.
“Class G Deferred Interest”: So long as any Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes or Class F Notes are Outstanding, any interest due on the Class G Notes that is not paid as a result of the operation of the Priority of Payments on any Payment Date.
“Class G Interest Distribution Amount”: On each Payment Date, the amount due to Holders of the Class G Notes on account of interest equal to the product of (i) the Aggregate Outstanding Amount of the Class G Notes (including Class G Deferred Interest) on the first day of the related Interest Accrual Period, (ii) the actual number of days in such Interest Accrual Period divided by three hundred sixty (360) and (iii) the Class G Rate.
“Class G Notes”: The Class G Eighth Priority Floating Rate Notes due 2039, issued by the Issuer pursuant to this Indenture.
“Class G Rate”: With respect to any Class G Note, the per annum rate at which interest accrues on such Note for any Interest Accrual Period, which shall be equal to (a) the Benchmark for such Interest Accrual Period plus (b) 6.00%.
“Clean-up Call”: The meaning specified in Section 9.1(a) hereof.
“Clearing Agency”: An organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.
“Clearstream, Luxembourg”: Clearstream Banking, société anonyme, a limited liability company organized under the laws of the Grand Duchy of Luxembourg.
“Closing Date”: June 14, 2021.
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“Closing Date Mortgage Assets”: The Whole Loans and Participations listed on Schedule A attached hereto.
“Code”: The United States Internal Revenue Code of 1986, as amended.
“Co-Issuer”: LFT CRE 2021-FL1, LLC, a limited liability company formed under the laws of the State of Delaware, until a successor Person shall have become the Co-Issuer pursuant to the applicable provisions of this Indenture, and thereafter “Co-Issuer” shall mean such successor Person.
“Co-Issuers”: The Issuer and the Co-Issuer.
“Collateral”: The meaning specified in the first paragraph of the Granting Clause of this Indenture.
“Collateral Management Agreement”: The Collateral Management Agreement, dated as of the Closing Date, by and between the Issuer and the Collateral Manager, as amended, supplemented or otherwise modified from time to time in accordance with its terms.
“Collateral Management Standard”: The meaning set forth in the Collateral Management Agreement.
“Collateral Manager”: OREC Investment Management, LLC dba Lument Investment Management, each of its permitted successors and assigns or any successor Person that shall have become the Collateral Manager pursuant to the provisions of the Collateral Management Agreement and thereafter “Collateral Manager” shall mean such successor Person.
“Collateral Manager Fee”: The meaning set forth in the Collateral Management Agreement.
“Collection Account”: The meaning specified in the Servicing Agreement.
“Commitment Letter”: A definitive letter of commitment or term sheet provided by an institutional lender.
“Committed Ramp-Up Mortgage Asset”: Any Ramp-Up Mortgage Asset for which the Collateral Manager (or an affiliate or third party on behalf of the Collateral Manager) has entered into a loan application or a binding commitment to purchase a Ramp-Up Mortgage Asset on or before the last day of the Ramp-Up Acquisition Period.
“Committed Reinvestment Mortgage Asset”: Any Reinvestment Mortgage Asset for which, on or before the last day of the Reinvestment Period, the Issuer (or the Collateral Manager (or an affiliate or third party on behalf of the Collateral Manager) on behalf of the Issuer) has entered into a loan application or binding commitment to purchase such Reinvestment Mortgage Asset.
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“Committed Warehouse Line”: A warehouse facility, repurchase facility or other similar financing facility pursuant to which the related lender has approved advances (at a 60% or greater advance rate) to fund future advance requirements under Future Funding Participations, subject only to the satisfaction of general conditions precedent in the related facility documents.
“Company Administration Agreement”: The administration agreement, dated on or about the Closing Date, by and among the Issuer, LFT Holder and the Company Administrator, as modified and supplemented and in effect from time to time.
“Company Administrative Expenses”: All fees, expenses and other amounts due or accrued with respect to any Payment Date and payable by the Issuer, Co-Issuer or any Permitted Subsidiary (including legal fees and expenses) to (i) the Note Administrator, the Custodian and the Trustee pursuant to this Indenture or any co-trustee appointed pursuant to Section 6.7 hereof (including amounts payable by the Issuer as indemnification pursuant to this Indenture), (ii) the Company Administrator under the Company Administration Agreement (including amounts payable by the Issuer as indemnification pursuant to the Company Administration Agreement) and to provide for the costs of liquidating the Issuer following redemption of the Notes, (iii) the LLC Managers (including indemnification), (iv) the independent accountants, agents and counsel of the Issuer for reasonable fees and expenses (including amounts payable in connection with the preparation of tax forms on behalf of the Issuer and the Co-Issuer), and any registered office and government filing fees, in each case, payable in the order in which invoices are received by the Issuer, (v) a Rating Agency for fees and expenses in connection with any rating (including the annual fee payable with respect to the monitoring of any rating) of the Notes, including fees and expenses due or accrued in connection with any credit assessment or rating of the Mortgage Assets, (vi) the Collateral Manager under this Indenture and the Collateral Management Agreement (including amounts payable by the Issuer as indemnification pursuant to this Indenture or the Collateral Management Agreement), (vii) other Persons as indemnification pursuant to the Collateral Management Agreement, (viii) the Advancing Agent or other Persons as indemnification pursuant to the provisions pertaining to the Advancing Agent in this Indenture, (ix) the Servicer or the Special Servicer as indemnification or reimbursement of expenses pursuant to the Servicing Agreement, (x) the CREFC® Intellectual Property Royalty License Fee, (xi) the Preferred Share Paying Agent and the Share Registrar pursuant to the Preferred Share Paying Agency Agreement (including amounts payable as indemnification), (xii) each member of the Advisory Committee (including amounts payable as indemnification) under the Advisory Committee Member Agreement, the Collateral Manager and the Issuer (and the amounts payable by the Issuer to each member of the Advisory Committee as indemnification pursuant to each such agreement), (xiii) any other Person in respect of any governmental fee, charge or tax (including any FATCA and Cayman FATCA legislation compliance costs) in relation to the Issuer or the Co-Issuer (in each case as certified by an Authorized Officer of the Issuer or the Co-Issuer to the Note Administrator), in each case, payable in the order in which invoices are received by the Issuer, and (xiv) any other Person in respect of any other fees or expenses (including indemnifications) permitted under this Indenture (including, without limitation, any costs or expenses incurred in connection with certain modeling systems and services) and the documents delivered pursuant to or in connection
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with this Indenture and the Notes and any amendment or other modification of any such documentation, in each case unless expressly prohibited under this Indenture (including, without limitation, the payment of all transaction fees and all legal and other fees and expenses required in connection with the purchase of any Mortgage Assets or any other transaction authorized by this Indenture), in each case, payable in the order in which invoices are received by the Issuer; provided that Company Administrative Expenses shall not include (a) amounts payable in respect of the Notes and (b) any Collateral Manager Fee payable pursuant to the Collateral Management Agreement.
“Company Administrator”: Walkers Fiduciary Limited, a licensed trust company incorporated in the Cayman Islands, as administrator pursuant to the Company Administration Agreement, unless a successor Person shall have become administrator pursuant to the Company Administration Agreement, and thereafter, Company Administrator shall mean such successor Person.
5“Compounded SOFR”: The compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Interest Accrual Period or compounded in advance) being established by the Collateral Manager in accordance with:
(1)the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:
(2)if, and to the extent that, the Collateral Manager determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Collateral Manager giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated securitization transactions at such time.
“Contribution Mortgage Asset”: Any acquisition of new Mortgage Loans or Participations, whether by contribution by the Holder of the Preferred Shares.
“Controlling Class”: The Class A Notes, so long as any Class A Notes are Outstanding, then the Class A-S Notes, so long as any Class A-S Notes are Outstanding, then the Class B Notes, so long as any Class B Notes are Outstanding, then the Class C Notes, so long as any Class C Notes are Outstanding, then the Class D Notes, so long as any Class D Notes are Outstanding, then the Class E Notes, so long as any Class E Notes are Outstanding, then the Class F Notes, so long as any Class F Notes are Outstanding and then the Class G Notes, so long as any Class G Notes are Outstanding.
“Corporate Trust Office”: The designated corporate trust office of (i) the Trustee, currently located at 1100 North Market Street, Wilmington, Delaware 19890, Attention: CMBS Trustee – LFT 2021-FL1, (ii) the Note Administrator, currently located at (a) with respect to the
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delivery of Asset Documents, at 1055 10th Avenue SE, Minneapolis, Minnesota, 55414, Attention: Document Custody Group, (b) with respect to the delivery of Note transfers and surrenders, at 600 South 4th St., 7th Floor, MAC N9300-070 Minneapolis, Minnesota 55415 and (c) for all other purposes, at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951, Attention: Corporate Trust Services (CMBS), LFT 2021-FL1, telecopy number (410) 715-2380 or (iii) such other address as the Trustee or the Note Administrator, as applicable, may designate from time to time by notice to the Noteholders, the Holder of the Preferred Shares, the 17g-5 Information Provider and the parties hereto.
“Corresponding Tenor”: With respect to a Benchmark Replacement, a tenor having approximately the same length (disregarding business day adjustment) as the applicable tenor for the then-current Benchmark.
“Credit Risk/Defaulted Mortgage Asset Cash Purchase”: The meaning specified in Section 12.1(b) hereof.
“Credit Risk Mortgage Asset”: Any Mortgage Asset that, in the Collateral Manager’s reasonable business judgment, has (or, in the case of a Participation, the related Participated Mortgage Loan has) a significant risk of declining in credit quality or, with a lapse of time, has a significant risk of becoming a Defaulted Mortgage Asset in the foreseeable future.
“Credit Risk Mortgage Asset Exchange”: The meaning specified in Section 12.1(f) hereof.
“Credit Risk Retention Rules”: Regulation RR (17 C.F.R. Part 246), as such rule may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Department of Treasury, the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Securities and Exchange Commission and the Department of Housing and Urban Development in the adopting release (79 F.R. 77601 et seq.) or by the staff of any such agency, or as may be provided by any such agency or its staff from time to time, in each case, as effective from time to time.
“CREFC® Intellectual Property Royalty License Fee”: With respect to each Mortgage Asset and for any Payment Date, an amount accrued during the related Interest Accrual Period at the CREFC® Intellectual Property Royalty License Fee Rate on the Principal Balance of such Mortgage Asset as of the close of business on the Determination Date in such Interest Accrual Period. Such amounts shall be computed for the same period and on the same interest accrual basis respecting which any related interest payment due or deemed due on the related Mortgage Asset is computed and shall be prorated for partial periods.
“CREFC® Intellectual Property Royalty License Fee Rate”: With respect to each Mortgage Asset, a rate equal to 0.0005% per annum.
“Criteria-Based Modification”: The meaning specified in the Servicing Agreement.
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“CRS”: The OECD Standard for Automatic Exchange of Financial Account information – Common Reporting Standards.
“Custodial Account”: An account at the Securities Intermediary established pursuant to Section 10.1(b) hereof.
“Custodian”: The meaning specified in Section 3.3(a) hereof.
“Default”: Any Event of Default or any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.
“Defaulted Mortgage Asset”: Any Mortgage Asset for which the Underlying Whole Loan is a Defaulted Mortgage Loan.
“Defaulted Mortgage Asset Exchange”: The meaning specified in Section 12.1(f) hereof.
“Defaulted Mortgage Loan”: Any Mortgage Loan for which there has occurred and is continuing for more than 90 days either (x) a default in the payment of any amounts due and payable to lender under the related Asset Documents, including balloon and other mandatory repayments and prepayments (after giving effect to any applicable grace period but without giving effect to any waiver) or (y) any other material monetary or non-monetary event of default that is known to the Servicer and has occurred and is continuing (after giving effect to any applicable grace period but without giving effect to any waiver); provided, however, that any Mortgage Asset as to which an Appraisal Reduction Event has not occurred due to the circumstances specified in clause (v) of the definition thereof and which is not otherwise a Defaulted Mortgage Loan will be deemed not to be a Defaulted Mortgage Loan for purposes of determining the Calculation Amount for the Par Value Test. If a Defaulted Mortgage Loan is the subject of a work-out, modification or otherwise has cured the default such that the subject Defaulted Mortgage Loan is no longer in default pursuant to its terms (as such terms may have been modified), such Mortgage Asset will no longer be treated as a Defaulted Mortgage Loan.
“Deferred Interest”: The Class C Deferred Interest, Class D Deferred Interest, Class E Deferred Interest, the Class F Deferred Interest and the Class G Deferred Interest.
“Definitive Notes”: The meaning specified in Section 2.2(b) hereof.
“Depository” or “DTC”: The Depository Trust Company, its nominees, and their respective successors.
“Determination Date”: The 11th day of each month or, if such date is not a Business Day, the succeeding Business Day, commencing on the Determination Date in July 2021.
“Disposition Limitation Threshold”: The time at which the sum of (i) the cumulative aggregate Principal Balance of Non-Controlling Participations and Credit Risk Mortgage Assets (other than those that are Defaulted Mortgage Assets) sold by the Issuer to the
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Collateral Manager, LCMT or an affiliate of either, or any account managed by the Collateral Manager plus (ii) the cumulative aggregate Principal Balance of Credit Risk Mortgage Assets exchanged for Exchange Mortgage Assets, is equal to or greater than 10% of the aggregate Principal Balance of the Closing Date Mortgage Assets as of the Closing Date.
“Disqualified Transferee”: The meaning specified in Section 2.5(l) hereof.
“Dissolution Expenses”: The amount of expenses reasonably likely to be incurred in connection with the discharge of this Indenture, the liquidation of the Collateral and the dissolution of the Co-Issuers, as reasonably certified by the Collateral Manager or the Issuer, based in part on expenses incurred by the Note Administrator, the Custodian and the Trustee and reported to the Collateral Manager.
“Dodd-Frank”: The Dodd Frank Wall Street Reform and Consumer Protection Act, as amended from time to time.
“Dollar”, “U.S. $” or “$”: A U.S. dollar or other equivalent unit in Cash.
“Due Period”: With respect to any Payment Date, the period commencing on the day immediately succeeding the second preceding Determination Date (or commencing on and excluding the Closing Date, in the case of the Due Period relating to the first Payment Date) and ending on and including the Determination Date immediately preceding such Payment Date.
“EHRI”: Any interest in the Issuer that satisfies the definition of “eligible horizontal residual interest” in the Credit Risk Retention Rules. As of the Closing Date, the Preferred Shares shall constitute the EHRI.
2“Eligibility Criteria”: With respect to any Ramp-Up Mortgage Asset or Reinvestment Mortgage Asset, the criteria set forth below, compliance with which shall be evidenced by an Officer’s Certificate of the Collateral Manager delivered to the Trustee as of the date of such acquisition:
(a)it is a Whole Loan or a Senior Participation in a Participated Mortgage Loan that is secured by a Multi-family Property, Office Property, Industrial Property, Retail Property, Self-Storage Property, Manufactured Housing Community Property or Healthcare Property and is not secured by a Student Housing Property;
(b)it is not an Equity Interest;
(c)it is not a ground-up construction loan;
(d)the aggregate Principal Balance of the Mortgage Assets secured by Mortgaged Properties that are of the following types are subject to limitations as follows:
(i)Office Properties does not exceed 10.0% of the Aggregate Outstanding Portfolio Balance;
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(ii)Industrial Properties does not exceed 10.0% of the Aggregate Outstanding Portfolio Balance;
(iii)Self-Storage Properties does not exceed 10.0% of the Aggregate Outstanding Portfolio Balance;
(iv)Healthcare Properties does not exceed 10.0% of the Aggregate Outstanding Portfolio Balance;
(v)Manufactured Housing Community Properties does not exceed 10.0% of the Aggregate Outstanding Portfolio Balance; and
(vi)Retail Properties does not exceed 5.0% of the Aggregate Outstanding Portfolio Balance;
(e)the sum of (i) the aggregate Principal Balance of the Mortgage Assets that are secured by Multi-family Properties and Healthcare Properties, (ii) the aggregate Principal Balance of all Eligible Investments held in the Accounts and (iii) the aggregate amount of Cash held in the Accounts is not less than 90.0% of the Aggregate Outstanding Portfolio Balance;
(f)if it is secured by a Healthcare Property, the related Mortgage Loan was intended at the time of origination to be eventually refinanced with proceeds of an Agency Mortgage Loan; and
(g)the obligor is incorporated or organized under the laws of, and the Mortgage Asset is secured by property located in, the United States;
(h)except with respect to any Fixed Rate Mortgage Asset, it provides for monthly payments of interest at a floating rate based on one month LIBOR or another generally accepted floating rate index or successor benchmark rate;
(i)if it is a Fixed Rate Mortgage Asset, its acquisition will not cause the aggregate Principal Balance of all Fixed Rate Mortgage Assets to exceed 5.0% of the Aggregate Outstanding Portfolio Balance;
(j)it has a maturity date, assuming the exercise of all extension options (if any) that are exercisable at the option of the related borrower under the terms of such Mortgage Asset, that is not more than five years from the date such Mortgage Asset is acquired by the Issuer (without counting the initial stub interest period for newly originated loans);
(k)the Collateral Manager has determined that it has an As-Stabilized Appraisal LTV that is not greater than (A) in the case of Mortgage Assets secured by Multi-family Properties, 80.0% and (B) in the case of Mortgage Assets secured by any other property type, 75.0%;
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(l)the Collateral Manager has determined that it has an Underwritten Stabilized NCF DSCR that is not less than (A) in the case of Mortgage Assets secured by Multi-Family Properties, 1.15x, (B) in the case of Mortgage Assets secured by any other property type, 1.25x;
(m)(A) the Weighted Average Life of the Mortgage Assets, assuming the exercise of all contractual extension options (if any) that are exercisable by the borrower under each Mortgage Asset, is less than or equal to the number of years (rounded to the nearest one hundredth thereof) during the period from such date of determination to 5.50 years from the Closing Date;
(B) (x) the Weighted Average Spread of the Mortgage Assets (excluding any Fixed Rate Mortgage Asset) is not less than 2.25% and (y) the Weighted Average Coupon of the Fixed Rate Mortgage Assets is not less than 5.00%;
(C) the aggregate Principal Balance of Mortgage Assets secured by Mortgaged Properties located in (x) Texas is no more than 45.0% of the Aggregate Outstanding Portfolio Balance, (y) California, Florida, New York and Georgia is (in each case) no more than 40.0% of the Aggregate Outstanding Portfolio Balance and (z) any other state is no more than 20.0% of the Aggregate Outstanding Portfolio Balance;
(n)the Herfindahl Score is greater than or equal to 14;
(o)if the date of such acquisition is after the end of the Ramp-Up Acquisition Period, the Moody’s Rating Factor for such Mortgage Asset is equal to or less than the original Moody’s Rating Factor for the Mortgage Asset that generated the Principal Proceeds that are being applied to the purchase of such Mortgage Asset, but in no event greater than the Moody’s Rating Factor of 5,600;
(p)a No Downgrade Confirmation has been received from KBRA with respect to the acquisition of such Mortgage Asset, except that such confirmation will not be required with respect to the acquisition of a Participation if (i) the Issuer already owns a Participation in the same underlying Participated Mortgage Loan and (ii) the principal balance of the Participation being acquired is less than $5,000,000;
(q)it will not require the Issuer to make any future payments after the Issuer’s purchase thereof;
(r)if it is a Mortgage Asset with a related Future Funding Participation:
(i)the Future Funding Indemnitor has Segregated Liquidity (evidenced by a certification) in an amount at least equal to the greater of (i) the Largest One Quarter Future Advance Estimate and (ii) the Two Quarter Future Advance Estimate for the immediately following two calendar quarters (based on
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the Future Funding Amounts for all outstanding Future Funding Participations of the Seller and its Affiliates related to the Mortgage Assets);
(ii)the maximum principal amount of all Future Funding Participations, excluding Future Funding Earn-Out Advances, with respect to all Mortgage Assets does not exceed 25.0% of the maximum commitment amount of all Mortgage Assets (which, with respect to each Mortgage Asset, will equal the sum of (i) the related initial Principal Balance and (ii) any related Future Funding Amount); and
(iii)the maximum principal amount of the related Future Funding Participation, excluding Future Funding Earn-Out Advances, does not exceed 35.0% of the maximum principal amount (including all related funded and unfunded Participations) of such Mortgage Asset;
(s)the Principal Balance of such Mortgage Asset is not greater than 12.5% of the Aggregate Outstanding Portfolio Balance;
(t)the sum of the Principal Balance of such Mortgage Asset and the Principal Balance of all Mortgage Assets that have the same guarantor or an affiliated guarantor does not exceed 20.0% of the Aggregate Outstanding Portfolio Balance;
(u)it is not prohibited under its Asset Documents from being purchased by the Issuer and pledged to the Trustee;
(v)it is not the subject of any solicitation by the borrower to amend, modify or waive any provision of any of the related Asset Documents;
(w)it is not an interest that, in the Collateral Manager’s reasonable business judgment, has a significant risk of declining in credit quality or, with lapse of time or notice, becoming a Defaulted Mortgage Asset;
(x)it is not a Defaulted Mortgage Asset (as determined by the Collateral Manager after reasonable inquiry);
(y)it is Dollar denominated and may not be converted into an obligation payable in any other currencies;
(z)if such Mortgage Asset is a Senior Participation, it does not have “buy/sell” rights as a dispute resolution mechanism;
(aa)it provides for the repayment of principal at not less than par no later than upon its fully extended maturity or upon redemption, acceleration or its full prepayment;
(ab)it, or in the case of a Participation, the underlying Participated Mortgage Loan, is serviced pursuant to the Servicing Agreement or it is serviced by an Accepted Loan Servicer pursuant to a commercial mortgage servicing arrangement that includes the
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servicing provisions substantially similar to those that are standard in commercial mortgage-backed securities transactions;
(ac)it is purchased from the Seller, or any of its subsidiaries, and the requirements set forth in Section 16.3 regarding the representations and warranties with respect to such Mortgage Asset and the underlying mortgaged property (as applicable) have been met (subject to such exceptions as are reasonably acceptable to the Collateral Manager);
(ad)if it is a participation interest, the related Participating Institution is (and any “qualified transferee” is required to be) any of (1) a “special purpose entity” or a “qualified institutional lender” as such terms are typically defined in the Asset Documents related to participations; (2) an entity (or a wholly-owned subsidiary of an entity) that has (x) a long-term unsecured debt rating from Moody’s of “A3” or higher and (y) a long-term unsecured debt rating from KBRA of “A” or higher (if rated by KBRA, or if not rated by KBRA, an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s)) (3) a securitization trust, a collateralized loan obligation (“CLO”) issuer or a similar securitization vehicle, or (4) a special purpose entity that is 100% directly or indirectly owned by the Seller or the Future Funding Indemnitor, for so long as the separateness provisions of its organizational documents have not been amended (unless the Rating Agency Condition was satisfied in connection with such amendment), and if any Participating Institution is not the Issuer, the related Asset Documents will be held by a third party custodian;
(ae)its acquisition will be in compliance with Section 206 of the Advisers Act;
(af)its acquisition, ownership, enforcement and disposition will not cause the Issuer to fail to be a Qualified REIT Subsidiary or other disregarded entity of a REIT unless a No Trade or Business Opinion has previously been received (which opinion may be conditioned on compliance with certain restrictions on the investment or other activity of the Issuer and/or the Collateral Manager on behalf of the Issuer);
(ag)its acquisition would not cause the Issuer, the Co-Issuer or the pool of Mortgage Assets to be required to register as an investment company under the Investment Company Act; and if the borrowers with respect to the Mortgage Asset are excepted from the definition of an “investment company” solely by reason of Section 3(c)(1) of the Investment Company Act, then either (x) such Mortgage Asset does not constitute a “voting security” for purposes of the Investment Company Act or (y) the aggregate amount of such Mortgage Asset held by the Issuer is less than 10.0% of the entire issue of such Mortgage Asset;
(ah)it does not provide for any payments which are or will be subject to deduction or withholding for or on account of any withholding or similar tax (other than withholding on amendment, modification and waiver fees, late payment fees, commitment fees, exit fees, extension fees or similar fees), unless the borrower under such Mortgage Asset is required to make “gross up” payments that ensure that the net
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amount actually received by the Issuer (free and clear of taxes) will equal the full amount that the Issuer would have received had no such deduction or withholding been required;
(ai)if it is a Non-Controlling Participation, its acquisition will not cause the aggregate Principal Balance of all Non-Controlling Participations to exceed 35.0% of the aggregate Principal Balance of all Mortgage Assets then owned by the Issuer (a Participation will not be considered a Non-Controlling Participation for purposes of this clause (ii) solely as a result of the holder of such Participation being required to obtain the consent of the holder of a Non-Acquired Participation in order to exercise rights to such effective control over remedies or as to Major Decisions with respect to Defaulted Mortgage Assets or Mortgage Assets that the Collateral Manager determines have a significant risk of becoming a Defaulted Mortgage Asset); and
(aj)it is not acquired for the primary purpose of recognizing gains or decreasing losses resulting from market value changes;
provided, however, that (i) for purposes of clauses (d), (i), (m), (n) and (r)(ii) above, if the acquisition of such Mortgage Asset would either improve compliance with or maintain the same degree of compliance with the applicable concentration limits after giving effect to such acquisition, then such Eligibility Criteria will be deemed to have been satisfied, and (ii) any determination of a percentage pursuant to the Eligibility Criteria (except for the Weighted Average Spread of all Mortgage Assets) shall be rounded to the nearest 1/10th of one percent.
For purposes of determining the satisfaction of the Eligibility Criteria, if the Issuer acquires a Junior Participation in a Participated Mortgage Loan and such acquisition causes the Issuer to own 100% of the participation interests in such Participated Mortgage Loan then the acquisition of such Junior Participation shall be treated as is if the Issuer acquired a Whole Loan and such acquisition shall be permitted if the Junior Participation and its related Senior Participation(s) would, if treated as a single Whole Loan, otherwise satisfy the Eligibility Criteria.
6“Eligible Account”: A separate and identifiable account from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution; (b) an account maintained with Wells Fargo Bank, National Association so long as Wells Fargo Bank, National Association complies with the definition of Eligible Institution; (c) a segregated trust account maintained with the trust department of a federal or state chartered depository institution or trust company acting in its fiduciary capacity; provided that (i) any such institution or trust company has a long-term unsecured rating of at least “Baa1” by Moody’s and a capital surplus of at least U.S.$200,000,000 and (ii) any such account is subject to fiduciary funds on deposit regulations substantially similar to 12 C.F.R. § 9.10(b); or (d) any other account approved by the Rating Agencies as evidenced by a No Downgrade Confirmation. Eligible Accounts may bear interest.
7“Eligible Institution”: A depository institution or trust company insured by the Federal Deposit Insurance Corporation that has, in each case, (a) a long-term unsecured debt
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rating of at least equal to “A2” by Moody’s and the equivalent by KBRA (if then rated by KBRA) if deposits in such account will be held therein for more than 30 days and (b) a short-term unsecured debt rating of at least equal to “P-1” by Moody’s and the equivalent by KBRA (if then rated by KBRA) if deposits on such account will be held therein for 30 days or less.
8“Eligible Investments”: Any Dollar-denominated investment, the maturity for which corresponds to the Issuer’s expected or potential need for funds, that, at the time it is Granted to the Trustee (directly or through a Securities Intermediary or bailee) is Registered and is one or more of the following obligations or securities:
(i)direct obligations of, and obligations the timely payment of principal of and interest on which is fully and expressly guaranteed by, the United States, or any agency or instrumentality of the United States, the obligations of which are expressly backed by the full faith and credit of the United States;
(ii)demand and time deposits in, certificates of deposit of, bankers’ acceptances issued by, or federal funds sold by, any depository institution or trust company incorporated under the laws of the United States or any state thereof or the District of Columbia (including the Note Administrator or the commercial department of any successor Note Administrator, as the case may be; provided that such successor otherwise meets the criteria specified herein) and subject to supervision and examination by federal and/or state banking authorities so long as the commercial paper and/or the debt obligations of such depositary institution or trust company (or, in the case of the principal depositary institution in a holding company system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment providing for such investment have an unsecured debt rating of not less than (x) “Aa3,” in the case of long-term obligations, and “P-1,” in the case of short-term obligations, by Moody’s and (y) “AAA,” in the case of long-term obligations, “R-1(middle),” in the case of short-term obligations with a maturity not greater than ninety (90) days, and “R-1(high),” in the case of short-term obligations with a maturity of or greater than ninety (90) days, by KBRA (if rated by KBRA, or if not rated by KBRA, an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s));
(iii)unleveraged repurchase or forward purchase obligations with respect to (a) any security described in clause (i) above or (b) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (ii) above (including the Note Administrator or the commercial department of any successor Note Administrator, as the case may be; provided that such Person otherwise meets the criteria specified herein) or entered into with a corporation (acting as principal) whose unsecured debt rating is not less than (x) “Aa3,” in the case of long-term obligations, and “P-1,” in the case of short-term obligations, by Moody’s and (y) “AAA,” in the case of long-term obligations, “R-1(middle),” in the case of short-term obligations with a maturity not greater than ninety (90) days, and “R-1(high),” in the case of short-term obligations with a maturity of or greater than ninety (90) days, by KBRA (if rated by KBRA, or if not rated by KBRA, an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s));
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(iv)commercial paper or other similar short-term obligations (including that of the Note Administrator or the commercial department of any successor Note Administrator, as the case may be, or any affiliate thereof; provided that such Person otherwise meets the criteria specified herein) having at the time of such investment a short-term senior unsecured debt rating of not less than “P-1” by Moody’s; provided, further, that the issuer thereof must also have at the time of such investment a long-term senior unsecured debt rating of not less than “Aa3” by Moody’s and “A” by KBRA (if rated by KBRA, or if not rated by KBRA, an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s));
(v)any money market fund (including those managed or advised by the Note Administrator or its Affiliates) that maintain a constant asset value and that are rated “Aaa-mf” by Moody’s and in the highest long-term or short-term rating category by KBRA or, if not rated by KBRA, an equivalent rating by any two other NRSROs (which may include Moody’s); and
(vi)any other investment similar to those described in clauses (i) through (v) above that (1) Moody’s has confirmed may be included in the Collateral as an Eligible Investment without adversely affecting its then-current ratings on the Notes and (2) has a long-term credit rating of not less than “Aa3” by Moody’s and “A” by KBRA (if rated by KBRA, or if not rated by KBRA, an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s));
provided that mortgage-backed securities and interest only securities shall not constitute Eligible Investments; and provided, further, that (a) Eligible Investments shall not have a maturity in excess of 365 days and shall have a fixed principal amount due at maturity that cannot vary or change, (b) Eligible Investments acquired with funds in the Payment Account shall include only such obligations or securities that mature no later than the Business Day prior to the next Payment Date succeeding the acquisition of such obligations or securities, (c) Eligible Investments shall not include obligations bearing interest at inverse floating rates, (d) Eligible Investments shall be treated as indebtedness for U.S. federal income tax purposes and such investment shall not cause the Issuer to fail to be treated as a Qualified REIT Subsidiary or other disregarded entity of a REIT (unless the Issuer has previously received a No Trade or Business Opinion, in which case the investment will not cause the Issuer to be treated as a foreign corporation engaged in a trade or business in the United States for U.S. federal income tax purposes), (e) Eligible Investments shall not be subject to deduction or withholding for or on account of any withholding or similar tax (other than any taxes imposed pursuant to FATCA), unless the payor is required to make “gross up” payments that ensure that the net amount actually received by the Issuer (free and clear of taxes, whether assessed against such obligor or the Issuer) will equal the full amount that the Issuer would have received had no such deduction or withholding been required, (f) Eligible Investments shall not be purchased for a price in excess of par, (g) notwithstanding the minimum unsecured debt rating requirements set forth in clauses (ii), (iii), (iv) or (v) above, Eligible Investments with maturities of thirty (30) days or less shall only require short-term unsecured debt ratings and shall not require long-term senior unsecured debt ratings, and (h) Eligible Investments shall not include margin stock.
“Entitlement Order”: The meaning specified in Section 8-102(a)(8) of the UCC.
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“Equity Interest”: A security or other interest that does not entitle the holder thereof to receive periodic payments of interest and one or more installments of principal, including (i) any bond or note or similar instrument that is by its terms convertible into or exchangeable for an equity interest, (ii) any bond or note or similar instrument that includes warrants or other interests that entitle its holder to acquire an equity interest, or (iii) any other similar instrument that would not entitle its holder to receive periodic payments of interest or a return of a residual value.
“ERISA”: The United States Employee Retirement Income Security Act of 1974, as amended.
“Escrow Accounts”: The meaning specified in the Servicing Agreement.
“EU/UK Retention Holder”: LCMT.
“EU/UK Retention Holder Originated Mortgage Asset”: A Mortgage Asset as to which the EU/UK Retention Holder either (i) itself or through related entities, directly or indirectly, was involved in the original agreement which created such Mortgage Asset or (ii) acquired such Mortgage Asset from a third party for its own account before the sale or transfer of that Mortgage Asset to the Issuer, in each case as contemplated by Article 2(3) of each Securitization Regulation.
“EU/UK Risk Retention Letter”: That certain risk retention letter delivered by the EU/UK Retention Holder and LFT Holder to the Issuer, the Co-Issuer, the Trustee, the Note Administrator and the Placement Agents, dated the Closing Date.
“Euroclear”: Euroclear Bank S.A./N.V., as operator of the Euroclear system.
“Event of Default”: The meaning specified in Section 5.1 hereof.
“Excepted Property”: (i) The U.S.$250 proceeds of share capital contributed by LFT Holder as the holder of the ordinary shares of the Issuer, the U.S.$250 representing a profit fee to the Issuer, and, in each case, any interest earned thereon and the account in which such amounts are held and (ii) the Preferred Share Distribution Account and all of the funds and other property from time to time deposited in or credited to the Preferred Share Distribution Account.
“Exchange Act”: The Securities Exchange Act of 1934, as amended.
“Exchange Mortgage Asset”: The meaning specified in Section 12.1(f) hereof.
“Expense Reserve Account”: The account established pursuant to Section 10.5(a) hereof.
“Expense Year”: For the first year, the period commencing on the Closing Date and ending on the next January Payment Date and, thereafter, each 12-month period commencing on the Business Day following the Payment Date occurring in January and ending on the Payment Date occurring in the following January.
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“FATCA”: Sections 1471 through 1474 of the Code, the treasury regulations promulgated thereunder, and any related provisions of law, court decisions, administrative guidance or agreements with any taxing authority (or laws thereof) in respect thereof.
“FCA”: The United Kingdom’s Financial Conduct Authority.
“FCA/IBA Announcements”: The announcements made by IBA and FCA on March 5, 2021 that all LIBOR settings shall either cease to be provided by any benchmark administrator or shall no longer be representative immediately after December 31, 2021 for all GBP, EUR, CHF and JPY LIBOR settings and one-week and two-month USD LIBOR settings, and immediately after June 30, 2023 for the remaining USD LIBOR settings, including one-month USD LIBOR.
“Federal Reserve Bank of New York’s Website”: The website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
“Financial Asset”: The meaning specified in Section 8-102(a)(9) of the UCC.
“Financing Statements”: Financing statements relating to the Collateral naming the Issuer, as debtor, and the Trustee, on behalf of the Secured Parties, as secured party.
“Fixed Rate Mortgage Asset”: A Mortgage Asset that bears interest at a fixed rate of interest.
“Funded Companion Participation”: With respect to each Mortgage Asset that is a Participation, each related fully funded companion participation which is not an asset of the Issuer and is not part of the Collateral, unless it is acquired after the Closing Date in accordance with the terms of this Indenture.
“Funded Participation Interest”: Any fully funded participation interest in a Future Funding Whole Loan that is acquired by the Issuer.
“Future Funding Account Control Agreement”: Any account control agreement entered into in accordance with the terms of the Future Funding Agreement by and among LCMT, the Trustee, as secured party, the Note Administrator and an account bank, as the same may be amended, supplemented or replaced from time to time.
“Future Funding Agreement”: The meaning specified in the Servicing Agreement.
“Future Funding Amount”: With respect to any Future Funding Participation, the amount of the unfunded portion thereof.
“Future Funding Earn-Out Advance”: A Future Advance that is required to be made by the Future Funding Holder upon the related borrower meeting certain performance metrics and is not required to be used for improvements to, or to pay for expenses incurred in connection with, the related Mortgaged Property.
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“Future Funding Holder”: OREC Structured Finance Co., LLC dba Lument Structured Finance, a Delaware limited liability company.
“Future Funding Indemnitor”: ORIX Real Estate Capital Holdings, LLC, a Delaware limited liability company.
“Future Funding Participation”: With respect to each Mortgage Asset that is a Funded Participation Interest, the related future funding companion participation interest, which (unless it is acquired after the Closing Date in accordance with the terms of this Indenture) is not owned by the Issuer.
“Future Funding Reserve Account”: The meaning specified in the Servicing Agreement.
“Future Funding Whole Loan”: A whole mortgage loan that has been participated into (i) a fully funded participation interest, which will be held by the Issuer as a Mortgage Asset, and (ii) one (1) or more Future Funding Participations, which (unless later acquired, in whole or in part, as a Ramp-Up Mortgage Asset or a Reinvestment Mortgage Asset) will not be acquired by the Issuer.
“GAAP”: The meaning specified in Section 6.3(k) hereof.
“General Intangible”: The meaning specified in Section 9-102(a)(42) of the UCC.
“Global Notes”: The Rule 144A Global Notes and the Regulation S Global Notes.
“Governing Documents”: With respect to (i) the Issuer, the memorandum and articles of association of the Issuer, as amended and restated and/or supplemented and in effect from time to time and (ii) all other Persons, the articles of incorporation, certificate of incorporation, by-laws, certificate of limited partnership, limited partnership agreement, limited liability company agreement, certificate of formation, articles of association and similar charter documents, as applicable to any such Person.
“Government Items”: A security (other than a security issued by the Government National Mortgage Association) issued or guaranteed by the United States of America or an agency or instrumentality thereof representing a full faith and credit obligation of the United States of America and, with respect to each of the foregoing, that is maintained in book-entry form on the records of a Federal Reserve Bank.
“Grant”: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over and confirm. A Grant of the Collateral or of any other security or instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including without limitation the immediate continuing right to claim, collect, receive and take receipt for principal and interest payments in respect of the Collateral
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(or any other security or instrument), and all other amounts payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.
“LFT REIT”: Lument Finance Trust Inc., a publicly traded REIT.
“LCMT”: Lument Commercial Mortgage Trust, a Maryland real estate investment trust.
“Healthcare Property”: A real property secured by healthcare space (including mixed-use property) as to which the majority of the underwritten revenue is from assisted living facilities, independent living facilities, skilled nursing facilities and/or memory care facilities including, in each case, patient rehabilitation and related ancillary capabilities and related office space and other appurtenant and related uses.
“Herfindahl Score”: As of any date of determination, an amount determined by the Collateral Manager by dividing (i) one by (ii) the sum of the series of products obtained for each Mortgage Asset (including any Mortgage Asset which is then acquired), Principal Proceeds collected and not yet distributed and amounts on deposit in the Unused Proceeds Account, by squaring the quotient of (x) the Principal Balance on such date of each such Mortgage Asset (or in the case of Principal Proceeds and amounts in the Unused Proceeds Account, in increments of $5,000,000) and (y) the Aggregate Outstanding Portfolio Balance.
“Holder” or “Securityholder”: With respect to any Note, the Person in whose name such Note is registered in the Notes Register. With respect to any Preferred Share, the Person in whose name such Preferred Share is registered in the register maintained by the Share Registrar.
“Holder AML Obligations”: Information and documentation, and any updates, replacement or corrections of such information or documentation, requested by the Issuer (or its agent, as applicable) to be provided by Securityholders to the Issuer (or its agent, as applicable) that may be required for the Issuer to achieve AML Compliance.
“IAI”: An institution that is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under Regulation D under the Securities Act or an entity in which all of the equity owners are such “accredited investors.”
“IBA”: ICE Benchmark Administration Limited.
“Indenture”: This instrument as originally executed and, if from time to time supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, as so supplemented or amended.
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“Indenture Accounts”: The Payment Account, the Expense Reserve Account, the Custodial Account, the Reinvestment Account and the Unused Proceeds Account.
“Independent”: As to any Person, any other Person (including, in the case of an accountant, or lawyer, a firm of accountants or lawyers and any member thereof or an investment bank and any member thereof) who (i) does not have and is not committed to acquire any material direct or any material indirect financial interest in such Person or in any Affiliate of such Person, and (ii) is not connected with such Person as an Officer, employee, promoter, underwriter, voting trustee, partner, director or Person performing similar functions. “Independent” when used with respect to any accountant may include an accountant who audits the books of such Person if in addition to satisfying the criteria set forth above the accountant is independent with respect to such Person within the meaning of Rule 101 of the Code of Ethics of the American Institute of Certified Public Accountants.
Whenever any Independent Person’s opinion or certificate is to be furnished to the Trustee or Note Administrator such opinion or certificate shall state, or shall be deemed to state, that the signer has read this definition and that the signer is Independent within the meaning hereof.
“Industrial Property”: A real property secured by industrial space (including mixed use property) as to which the majority of the underwritten revenue is from industrial space.
“Inquiry”: The meaning specified in Section 10.13(a) hereof.
“Instrument”: The meaning specified in Section 9-102(a)(47) of the UCC.
“Interest Accrual Period”: With respect to the Notes and (i) with respect to the first Payment Date, the period from and including the Closing Date to and including the 14th day of the month in which such Payment Date occurs, and (ii) with respect to each successive Payment Date, the period from and including the 15th day of the month preceding the month in which such Payment Date occurs and ending on and including the 14th day of the month in which such Payment Date occurs.
“Interest Advance”: The meaning specified in Section 10.7(a) hereof.
3“Interest Coverage Ratio”: As of any Measurement Date, the number (expressed as a percentage) calculated by dividing:
(a)(i) the sum of (A) Cash on deposit in the Expense Reserve Account, plus (B) the expected scheduled interest payments due (in each case regardless of whether the due date for any such interest payment has yet occurred) in the Due Period in which such Measurement Date occurs on (x) the Mortgage Assets (excluding, subject to clause (3) below, accrued and unpaid interest on Defaulted Mortgage Assets); provided that no interest (or dividends or other distributions) will be included with respect to any Mortgage Asset to the extent that such Mortgage Asset does not provide for the
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scheduled payment of interest (or dividends or other distributions) in Cash and (y) the Eligible Investments held in the Accounts (whether purchased with Interest Proceeds or Principal Proceeds), plus (C) Interest Advances, if any, advanced by the Advancing Agent or the Backup Advancing Agent, with respect to the related Payment Date, minus (ii) any amounts scheduled to be paid pursuant to Section 11.1(a)(i)(1) through (4) (other than any Collateral Manager Fees that the Collateral Manager has agreed to waive in accordance with this Indenture and the Collateral Management Agreement); by
(b)the sum of (i) the scheduled interest on the Class A Notes payable on the Payment Date immediately following such Measurement Date, plus (ii) any Class A Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (iii) the scheduled interest on the Class A-S Notes payable immediately following such Measurement Date, plus (iv) any Class A-S Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (v) the scheduled interest on the Class B Notes payable immediately following such Measurement Date, plus (vi) any Class B Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (vii) the scheduled interest on the Class C Notes payable immediately following such Measurement Date, plus (viii) any Class C Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (ix) any Class C Deferred Interest payable on the Payment Date immediately following such Measurement Date, plus (x) the scheduled interest on the Class D Notes payable immediately following such Measurement Date, plus (xi) any Class D Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (xii) any Class D Deferred Interest payable on the Payment Date immediately following such Measurement Date, plus (xiii) the scheduled interest on the Class E Notes payable immediately following such Measurement Date, plus (xiv) any Class E Defaulted Interest Amount payable on the Payment Date immediately following such Measurement Date, plus (xv) any Class E Deferred Interest payable on the Payment Date immediately following such Measurement Date.
For purposes of calculating any Interest Coverage Ratio, (1) the expected interest income on the Mortgage Assets and Eligible Investments and the expected interest payable on the Offered Notes shall be calculated using the interest rates applicable thereto on the applicable Measurement Date, (2) accrued original issue discount on Eligible Investments shall be deemed to be a scheduled interest payment thereon due on the date such original issue discount is scheduled to be paid, (3) there will be excluded all scheduled or deferred payments of interest on or principal of Mortgage Assets and any payment that the Collateral Manager has determined in its reasonable judgment will not be made in Cash or received when due and (4) with respect to any Mortgage Asset as to which any interest or other payment thereon is subject to withholding tax of any relevant jurisdiction, each payment thereon shall be deemed to be payable net of such withholding tax unless the related borrower is required to make additional payments to fully compensate the Issuer for such withholding taxes (including in respect of any such additional payments).
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“Interest Coverage Test”: The test that will be met as of any Measurement Date on which any Offered Notes remain Outstanding if the Interest Coverage Ratio as of such Measurement Date is equal to or greater than 120.00%.
“Interest Distribution Amount”: Each of the Class A Interest Distribution Amount, the Class A-S Interest Distribution Amount, the Class B Interest Distribution Amount, the Class C Interest Distribution Amount, the Class D Interest Distribution Amount, the Class E Interest Distribution Amount, the Class F Interest Distribution Amount and the Class G Interest Distribution Amount.
4“Interest Proceeds”: With respect to any Payment Date, (A) the sum (without duplication) of:
(1)all Cash payments of interest (including any deferred interest and any amount representing the accreted portion of a discount from the face amount of a Mortgage Asset or an Eligible Investment) or other distributions (excluding Principal Proceeds) received during the related Due Period on all Mortgage Assets other than Defaulted Mortgage Assets and Eligible Investments, including, in the Collateral Manager’s commercially reasonable discretion (exercised as of the trade date), the accrued interest received in connection with a sale of such Mortgage Assets or Eligible Investments (to the extent such accrued interest was not applied to the purchase of Reinvestment Mortgage Assets), in each case, excluding any accrued interest included in Principal Proceeds pursuant to clause (A)(2) or (4) of the definition of Principal Proceeds and any origination fees, exit fees and extension fees, which will not be assigned to the Issuer;
(2)all make whole, spread maintenance, yield maintenance or prepayment premiums or any interest amount paid in excess of the stated interest amount of a Mortgage Asset (other than default interest) received during the related Due Period;
(3)all amendment, modification and waiver fees, late payment fees (to the extent not paid to the Servicer as additional servicing compensation or to the Special Servicer as additional special servicing compensation), and commissions received by the Issuer during such Due Period in connection with such Mortgage Assets and Eligible Investments;
(4)those funds in the Expense Reserve Account designated as Interest Proceeds by the Collateral Manager pursuant to Section 10.5(a);
(5)all funds remaining on deposit in the Expense Reserve Account upon redemption of the Notes in whole;
(6)Interest Advances, if any, advanced by the Advancing Agent or the Backup Advancing Agent, with respect to such Payment Date;
(7)all Cash payments corresponding to accrued original issue discount on Eligible Investments;
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(8)any interest payments received in Cash by the Issuer during the related Due Period on any asset held by a Permitted Subsidiary that is not a Defaulted Mortgage Asset;
(9)all payments of principal on Eligible Investments purchased with any other Interest Proceeds;
(10)Cash and Eligible Investments contributed by the Holder of 100% of the Preferred Shares or an affiliate thereof, pursuant to the terms of this Indenture and designated as “Interest Proceeds” by such Holder or Affiliate; and
(11)all other Cash payments received by the Issuer with respect to the Mortgage Assets during the related Due Period to the extent such proceeds are designated “Interest Proceeds” by the Collateral Manager in its sole discretion with notice to the Trustee on or before the related Determination Date; provided that Interest Proceeds will in no event include any payment or proceeds specifically defined as “Principal Proceeds” in the definition thereof,
minus (B) (1) any fees and other compensation and reimbursement of expenses and Servicing Advances and interest thereon (but of amounts payable pursuant to any indemnification provisions) to which the Servicer or the Special Servicer are entitled pursuant to the terms of the Servicing Agreement (and, with respect to each Non-Serviced Mortgage Asset, amounts payable to the servicer and special servicer under the applicable servicing agreement), (2) any reimbursement of Servicing Advances and interest thereon to which a holder of a Non-Acquired Participation is entitled pursuant to the related Participation Agreement and (3) the aggregate amount of such Interest Proceeds that were previously applied to reimburse any Nonrecoverable Interest Advances to the Advancing Agent or the Backup Advancing Agent.
“Interest Shortfall”: The meaning set forth in Section 10.7(a) hereof.
“Investment Company Act”: The Investment Company Act of 1940, as amended.
“Investor Certification”: A certificate, substantially in the form of Exhibit Q-1 or Exhibit Q-2 hereto, representing that such Person executing the certificate is a Noteholder, a beneficial owner of a Note, a holder of a Preferred Share or a prospective purchaser of a Note or a Preferred Share and that either (a) such Person is not an agent of, or an investment advisor to, any borrower or affiliate of any borrower under a Mortgage Asset or an Underlying Whole Loan, in which case such person will have access to all the reports and information made available to Noteholders or Preferred Shareholders under this Indenture, or (b) such Person is an agent or Affiliate of, or an investment advisor to, any borrower under a Mortgage Asset or an Underlying Whole Loan, in which case such person will only receive access to the Monthly Report. The Investor Certification may be submitted electronically by means of the Note Administrator’s website.
“Investor Q&A Forum”: The meaning specified in Section 10.13(a) hereof.
“ISDA Definitions”: The 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented
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from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.
“ISDA Fallback Adjustment”: The spread adjustment, (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.
“ISDA Fallback Rate”: The rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.
“Issuer”: LFT CRE 2021-FL1, Ltd., an exempted company incorporated under the laws of the Cayman Islands with limited liability, until a successor Person shall have become the Issuer pursuant to the applicable provisions of this Indenture, and thereafter “Issuer” shall mean such successor Person.
“Issuer Order” and “Issuer Request”: A written order or request (which may be in the form of a standing order or request) dated and signed in the name of the Issuer (and by an Authorized Officer of the Co-Issuer, if applicable), or by an Authorized Officer of the Issuer, by an Authorized Officer of the Company Administrator on behalf of the Issuer or, if authorized in any Transaction Document, by an Authorized Officer of the Collateral Manager or Special Servicer on behalf of the Issuer. For the avoidance of doubt, an order or request provided in an email (or other electronic communication) sent by an Authorized Officer of the Issuer, Co-Issuer by an Authorized Officer of the Company Administrator on behalf of the Issuer or if authorized in any Transaction Document, by an Authorized Officer of the Collateral Manager or Special Servicer, as applicable, shall constitute an Issuer Order, in each case except to the extent that the Trustee or Note Administrator reasonably requests otherwise.
“JPMS”: J.P. Morgan Securities LLC.
“Junior Participation”: One or more junior participation interests (or B notes) in a Participated Mortgage Loan.
“KBRA”: Kroll Bond Rating Agency, LLC, or any successor thereto.
“Largest One Quarter Future Advance Estimate”: As of any date of determination, an estimate of the largest aggregate amount of future advances that will be required to be made under the Future Funding Participations held by the Future Funding Holder (or LCMT or an Affiliate, agent or advisor of either) during any calendar quarter, subject to the same exclusions as the calculation of the Two Quarter Future Advance Estimate.
“LFT Holder”: LFT CRE 2021-FL1 Preferred, LLC, a wholly-owned subsidiary of LCMT.
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“LIBOR”: The meaning set forth in Schedule B attached hereto.
9“LIBOR Determination Date”: The meaning set forth in Schedule B attached hereto.
“Liquidation Fee”: The meaning specified in the Servicing Agreement.
“LLC Managers”: The managers of the Co-Issuer duly appointed by the sole member of the Co-Issuer (or, if there is only one manager of the Co-Issuer so duly appointed, such sole manager).
“London Banking Day”: The meaning set forth in Schedule B attached hereto.
“Loss Value Payment”: A Cash payment made to the Issuer by the Seller in connection with a Material Breach of a representation or warranty with respect to any Mortgage Asset pursuant to the Mortgage Asset Purchase Agreement in an amount that the Collateral Manager on behalf of the Issuer, subject to the consent of a majority by principal amount of the holders of each Class of Notes (excluding any Note held by the Seller or any of its Affiliates), determines is sufficient to compensate the Issuer for such Material Breach of representation or warranty, which Loss Value Payment will be deemed to cure such Material Breach.
“Major Decisions”: The meaning specified in the Servicing Agreement.
“Majority”: With respect to (i) any Class of Notes, the Holders of more than 50% of the Aggregate Outstanding Amount of the Notes of such Class; and (ii) the Preferred Shares, the Preferred Shareholders representing more than 50% of the aggregate Notional Amount of the Preferred Shares.
“Manufactured Housing Community Property”: A real property secured by pad sites for manufactured homes (including mixed use property) as to which the majority of the underwritten revenue is from manufactured housing pad site units.
“Material Breach”: With respect to each Mortgage Asset, the meaning specified in the Mortgage Asset Purchase Agreement.
“Material Document Defect”: With respect to each Mortgage Asset, the meaning specified in the Mortgage Asset Purchase Agreement.
“Maturity”: With respect to any Note, the date on which the unpaid principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity Date or by declaration of acceleration or otherwise.
“Measurement Date”: Any of the following: (i) the Closing Date, (ii) the date of acquisition or disposition of any Mortgage Asset, (iii) any date on which any Mortgage Asset becomes a Defaulted Mortgage Asset, (iv) each Determination Date and (v) with reasonable notice to the Issuer, the Collateral Manager and the Note Administrator, any other Business Day that the Rating Agencies or the Holders of at least 66-2/3% of the Aggregate Outstanding
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Amount of any Class of Notes requests be a “Measurement Date”; provided that if any such date would otherwise fall on a day that is not a Business Day, the relevant Measurement Date will be the immediately preceding Business Day.
“Minnesota Collateral”: The meaning specified in Section 3.3(b)(ii) hereof.
“Modified Mortgage Asset”: Any Mortgage Asset that is a Modified Mortgage Loan or a participation interest in a Modified Mortgage Loan.
5“Modified Mortgage Loan”: A Mortgage Loan that has been modified, other than pursuant to an Administrative Modification or a Criteria-Based Modification, by the Special Servicer pursuant to the Servicing Agreement in a manner that:
(a)except as expressly contemplated by the related Asset Documents, reduces or delays in a material and adverse manner the amount or timing of any payment of principal or interest due thereon;
(b)except as expressly contemplated by the related Asset Documents, results in a release of the lien of the mortgage on any material portion of the related Mortgaged Property without a corresponding principal prepayment in an amount not less than the fair market value (as is), as determined by an appraisal delivered to the Special Servicer (at the expense of the related borrower and upon which the Special Servicer may conclusively rely), of the property to be released; or
(c)in the reasonable good faith judgment of the Special Servicer, otherwise materially impairs the value of the security for such Mortgage Loan or reduces the likelihood of timely payment of amounts due thereon.
“Monthly Report”: The meaning specified in Section 10.9(a) hereof.
“Moody’s”: Moody’s Investors Service, Inc., and its successor in interest.
“Moody’s Ramp-Up Condition”: A condition that will be satisfied if either (A) the Issuer or the Collateral Manager has provided to Moody’s a Ramp-Up Completion Date Report and the Ramp-Up Completion Date Report confirms that, as of the Ramp-Up Completion Date, the Note Protection Tests were satisfied or (B) with respect to the Ramp-Up Period, Moody’s has provided written confirmation (including by means of electronic message, facsimile transmission, press release, posting to its internet website or other means then considered industry standard) that Moody’s will not downgrade or withdraw its initial rating for any Class of Notes that it has rated.
“Moody’s Rating”: The private credit assessment assigned to any Mortgage Asset by Moody’s for the Issuer.
6“Moody’s Rating Factor”: Relating to any Mortgage Asset, the number set forth in the table below opposite the Moody’s Rating of such Mortgage Asset.
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Moody’s Rating Moody’s Rating Factor Moody’s Rating Moody’s Rating Factor
Aaa 1 Ba1 940
Aa1 10 Ba2 1,350
Aa2 20 Ba3 1,766
Aa3 40 B1 2,220
A1 70 B2 2,720
A2 120 B3 3,490
A3 180 Caa1 4,770
Baa1 260 Caa2 6,500
Baa2 360 Caa3 8,070
Baa3 610 Ca or lower 10,000
“Moody’s Recovery Rate”: With respect to each Mortgage Asset, the rate specified in the table set forth below with respect to the property type of the related Mortgaged Property or Mortgaged Properties:
Property Type Moody’s Recovery Rate
Industrial, multi-family (including student housing) and anchored retail properties 60%
Office and unanchored retail properties 55%
Healthcare Properties 45%
Self-storage and other property types 40%
7“Moody’s Weighted Average Rating Factor”: The amount determined by (i) summing the products obtained by multiplying the Principal Balance of each Mortgage Asset (excluding any Defaulted Mortgage Asset) by its Moody’s Rating Factor and (ii) dividing such sum by the sum of (a) aggregate outstanding Principal Balance of all such Mortgage Assets (excluding any Defaulted Mortgage Asset), and (b) the aggregate amount of Cash and the aggregate Principal Balance of any Eligible Investments held in the Payment Account, the Unused Proceeds Account and the Reinvestment Account, then rounding the full result up to the nearest whole number.
“Mortgage Asset File”: The meaning set forth in Section 3.3(e) hereof.
“Mortgage Asset Purchase Agreement”: The mortgage asset purchase agreement entered into between the Issuer and the Seller on or about the Closing Date, as amended from time to time, which agreement is assigned to the Trustee on behalf of the Issuer pursuant to this Indenture, together with any mortgage asset purchase agreement or subsequent transfer instrument entered into between the Issuer and the Seller in connection with the acquisition of a Ramp-Up Mortgage Asset, Contribution Mortgage Asset, Exchange Mortgage Asset or Reinvestment Mortgage Asset.
“Mortgage Assets”: The Closing Date Mortgage Assets, the Ramp-Up Mortgage Assets, the Contribution Mortgage Assets, the Exchange Mortgage Assets and the Reinvestment Mortgage Assets.
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“Mortgage Loan”: Any Whole Loan or Participated Mortgage Loan, as applicable and as the context may require.
“Mortgaged Property”: With respect to any Mortgage Loan, the real property and improvements thereon securing such Mortgage Loan.
“Multi-Family Property”: A real property with five or more residential rental units (including mixed use property) as to which the majority of the underwritten revenue is from residential rental units, which may be in various formats including high rise or garden style apartments and townhome or single unit rental communities.
10“Net Outstanding Portfolio Balance”: On any Measurement Date, the sum (without duplication) of:
(i)the Aggregate Principal Balance of the Mortgage Assets (other than Modified Mortgage Assets and Defaulted Mortgage Assets);
(ii)the Aggregate Principal Balance of all Principal Proceeds held as Cash and Eligible Investments and all amounts held as Cash and Eligible Investments in the Unused Proceeds Account; and
(iii)with respect to each Modified Mortgage Asset and Defaulted Mortgage Asset, the Calculation Amount of such Mortgage Asset;
provided, however, that (a) with respect to each Defaulted Mortgage Asset that has been owned by the Issuer for more than three years after becoming a Defaulted Mortgage Asset, the Principal Balance of such Defaulted Mortgage Asset will be zero for purposes of computing the Net Outstanding Portfolio Balance and (b) in the case of a Mortgage Asset subject to a Credit Risk/Defaulted Mortgage Asset Cash Purchase or an exchange for an Exchange Mortgage Asset, the Collateral Manager will have 45 days to exercise such purchase or exchange and during such period such Mortgage Asset will not be treated as a Defaulted Mortgage Asset for purposes of computing the Net Outstanding Portfolio Balance.
“No Downgrade Confirmation”: A confirmation from a Rating Agency that any proposed action, or failure to act or other specified event will not, in and of itself, result in the downgrade or withdrawal of the then-current rating assigned to any Class of Notes then rated by such Rating Agency; provided that if the Requesting Party receives a written waiver or acknowledgment indicating its decision not to review the matter for which the No Downgrade Confirmation is sought, then the requirement to receive a No Downgrade Confirmation from the Rating Agency with respect to such matter shall not apply. For the purposes of this definition, any confirmation, waiver, request, acknowledgment or approval which is required to be in writing may be in the form of electronic mail. At any time during which the Notes are no longer rated by a Rating Agency, a No Downgrade Confirmation shall not be required from such Rating Agency.
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“No Entity-Level Tax Opinion”: An opinion of Cadwalader, Wickersham & Taft LLP, Mayer Brown LLP or another nationally recognized tax counsel experienced in such matters that the Issuer will not be treated as a foreign corporation engaged in a trade or business in the United States for U.S. federal income tax purposes or otherwise become subject to U.S. federal income tax on a net income 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.
“No Trade or Business Opinion”: An opinion of Cadwalader, Wickersham & Taft LLP, Mayer Brown LLP or another nationally recognized tax counsel experienced in such matters that the Issuer will be treated as a foreign corporation that is not engaged in a trade or business in the United States for U.S. federal income tax purposes, 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.
“Non-Acquired Participation”: Any Future Funding Participation or Funded Companion Participation that is not acquired by the Issuer.
“Non-call Period”: The period from the Closing Date to and including the Business Day immediately preceding the Payment Date in June 2023 during which no Optional Redemption is permitted to occur.
“Non-Controlling Participation”: Any Participation acquired by the Issuer as to which the Issuer does not have sole and effective control over the remedies relating to the enforcement of the Underlying Whole Loan, including ultimate control of the foreclosure process, by having a right to (x) appoint and remove the special servicer and (y) direct or approve the special servicer’s exercise of remedies; provided that a Participation shall not be considered a Non-Controlling Participation solely as a result of the Issuer being required to obtain the consent of the holder of a Non-Acquired Participation in order to exercise rights to such effective control over remedies or as to Major Decisions with respect to Defaulted Mortgage Assets or Mortgage Assets that the Collateral Manager determines have a significant risk of becoming a Defaulted Mortgage Asset.
“Non-Offered Notes”: The Class F Notes and the Class G Notes, collectively, authorized by, and authenticated and delivered under, this Indenture.
“Non-Permitted AML Holder”: The meaning specified in Section 2.13(c) hereof.
“Non-Permitted Holder”: The meaning specified in Section 2.13(b) hereof.
“Non-Serviced Mortgage Assets”: The meaning specified in the Servicing Agreement.
“Nonrecoverable Interest Advance”: Any Interest Advance previously made or proposed to be made pursuant to Section 10.7 hereof that the Advancing Agent or the Backup Advancing Agent, as applicable, has determined in its sole discretion, exercised in good faith,
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that the amount so advanced or proposed to be advanced plus interest expected to accrue thereon, will not be ultimately recoverable from subsequent payments or collections with respect to the Mortgage Assets.
“Note Administrator”: Wells Fargo Bank, National Association, a national banking association, solely in its capacity as note administrator hereunder, unless a successor Person shall have become the Note Administrator pursuant to the applicable provisions of this Indenture, and thereafter “Note Administrator” shall mean such successor Person. Wells Fargo Bank, National Association will perform its duties as Note Administrator through its Corporate Trust Services division.
“Note Administrator’s Website”: Initially, https://www.ctslink.com; provided that such address may change upon notice by the Note Administrator to the parties hereto, the 17g-5 Information Provider and Noteholders.
“Note Interest Rate”: With respect to the Class A Notes, the Class A Rate, with respect to the Class A-S Notes, the Class A-S Rate, with respect to the Class B Notes, the Class B Rate, with respect to the Class C Notes, the Class C Rate, with respect to the Class D Notes, the Class D Rate, with respect to the Class E Notes, the Class E Rate, with respect to the F Notes, the Class F Rate and with respect to the G Notes, the Class G Rate.
“Note Protection Tests”: The Par Value Test and the Interest Coverage Test.
“Noteholder”: With respect to any Note, the Person in whose name such Note is registered in the Notes Register.
“Notes”: The Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the Class G Notes, collectively, authorized by, and authenticated and delivered under, this Indenture.
“Notes Register” and “Notes Registrar”: The respective meanings specified in Section 2.5(a) hereof.
“Notional Amount”: In respect of the Preferred Shares, the per share notional amount as provided in the Preferred Share Paying Agency Agreement. The aggregate Notional Amount of the Preferred Shares on the Closing Date will be U.S.$96.250,000.
“NRSRO”: Any nationally recognized statistical rating organization, including the Rating Agencies.
“NRSRO Certification”: A certification (a) executed by a NRSRO in favor of the 17g-5 Information Provider substantially in the form attached hereto as Exhibit N or (b) provided electronically and executed by an NRSRO by means of a click-through confirmation on the 17g-5 Website.
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“Offered Notes”: The Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes, collectively, authorized by, and authenticated and delivered under, this Indenture.
“Offering Memorandum”: The Offering Memorandum, dated May 26, 2021, relating to the offering of the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes.
“Office Property”: A real property secured by office space (including mixed use property) as to which the majority of the underwritten revenue is from office space.
“Officer”: With respect to any company, corporation or limited liability company, including the Issuer and the Co-Issuer, any Director, Manager, the Chairman of the Board of Directors, the President, any Senior Vice President any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, General Partner of such entity; and with respect to the Note Administrator and the Trustee, any Trust Officer; and with respect to the Servicer or Special Servicer, a “Responsible Officer” (as defined in the Servicing Agreement).
“Officer’s Certificate”: With respect to the Issuer, the Co-Issuer the Collateral Manager, the Trustee, the Advancing Agent and the Backup Advancing Agent, any certificate executed by an Authorized Officer thereof.
“Opinion of Counsel”: A written opinion addressed to the Trustee and the Note Administrator and, if required by the terms hereof, the Rating Agencies (each, a “Recipient”) in form and substance reasonably satisfactory to each Recipient, of an outside third party counsel of national recognition (or the Cayman Islands, in the case of an opinion relating to the laws of the Cayman Islands), which attorney may, except as otherwise expressly provided in this Indenture, be counsel for the Issuer, and which attorney shall be reasonably satisfactory to the Trustee and the Note Administrator. Whenever an Opinion of Counsel is required hereunder, such Opinion of Counsel may rely on opinions of other counsel who are so admitted and so satisfactory which opinions of other counsel shall accompany such Opinion of Counsel and shall either be addressed to each Recipient or shall state that each Recipient shall each be entitled to rely thereon.
“Optional Redemption”: The meaning specified in Section 9.1(c) hereof.
11“Outstanding”: With respect to the Notes, as of any date of determination, all of the Notes or any Class of Notes, as the case may be, theretofore authenticated and delivered under this Indenture except:
(i)Notes theretofore canceled by the Notes Registrar or delivered to the Notes Registrar for cancellation;
(ii)Notes or portions thereof for whose payment or redemption funds in the necessary amount have been theretofore irrevocably deposited with the Note
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Administrator or the Paying Agent in trust for the Holders of such Notes pursuant to Section 4.1(a)(ii); provided that, if such Notes or portions thereof are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture;
(iii)Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, unless proof satisfactory to the Note Administrator is presented that any such Notes are held by a Holder in due course; and
(iv)Notes alleged to have been mutilated, destroyed, lost or stolen for which replacement Notes have been issued as provided in Section 2.6;
provided that in determining whether the Noteholders of the requisite Aggregate Outstanding Amount have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (x) Notes owned by the Issuer, the Co-Issuer or any Affiliate thereof shall be disregarded and deemed not to be Outstanding, except Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Issuer, the Co-Issuer, the Collateral Manager or any other obligor upon the Notes or any Affiliate of the Issuer, the Co-Issuer, the Collateral Manager or such other obligor and (y) in relation to (i) the exercise by the Noteholders of their right, in connection with certain Events of Default, to accelerate amounts due under the Notes and (ii) any amendment or other modification of, or assignment or termination of, any of the express rights or obligations of the Collateral Manager under the Collateral Management Agreement or the Indenture, Notes owned by the Collateral Manager or any of its Affiliates, or by any accounts managed by them, will be disregarded and deemed not to be Outstanding, unless the Collateral Manager or its Affiliates or funds managed by the Collateral Manager own all of the Outstanding Notes. The Note Administrator and the Trustee will be entitled to rely on certificates from Noteholders to determine any such affiliations and shall be protected in so relying, except to the extent that a Trust Officer of the Trustee or Note Administrator, as applicable, has actual knowledge of any such affiliation.
“Owned Participation”: Each of the Participations included in the Closing Date Mortgage Assets and, upon any acquisition thereof after the Closing Date, any Funded Companion Participation or other Participation acquired by the Issuer.
“Par Purchase Price”: With respect to a Mortgage Asset, the sum of (A) the Principal Balance of such Mortgage Asset as of the date of purchase; plus (B) all accrued and unpaid interest on such Mortgage Asset at the related interest rate to but not including the date of purchase; plus (C) all related unreimbursed Servicing Advances and accrued and unpaid interest on such Servicing Advances at the Advance Rate, plus (D) all Special Servicing Fees and either workout fees or liquidation fees (but not both) allocable to such Mortgage Asset (other than to the extent any such fees are waived by the Special Servicer); plus (E) all unreimbursed expenses incurred by the Issuer (and if applicable, the Seller), the Servicer and the Special Servicer in connection with such Mortgage Asset.
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“Par Value Ratio”: As of any Measurement Date, the number (expressed as a percentage) calculated by dividing (a) the Net Outstanding Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate Outstanding Amount of the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes and the amount of any unreimbursed Interest Advances.
“Par Value Test”: A test that will be satisfied (i) as of any Measurement Date on which any Offered Notes remain outstanding during the Reinvestment Period, if the Par Value Ratio on such Measurement Date is equal to or greater than 113.94% and (ii) as of any Measurement Date on which any Offered Notes remain outstanding after the Reinvestment Period, if the Par Value Ratio on such Measurement Date is equal to or greater than 117.54%.
“Participated Mortgage Loan”: Any mortgage loan of which a Participation represents an interest.
“Participated Mortgage Loan Collection Account”: The meaning specified in the Servicing Agreement.
“Participating Institution”: With respect to any Participation, the entity that holds legal title to the Participated Mortgage Loan.
“Participation”: Any Senior Participation or Junior Participation.
“Participation Agreement”: With respect to each Owned Participation, the participation agreement that governs the rights and obligations of the holders of such Owned Participation, each related Future Funding Participation and/or each related Funded Companion Participation.
“Paying Agent”: The Note Administrator, in its capacity as Paying Agent hereunder, authorized by the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, to pay the principal of or interest on any Notes on behalf of the Issuer and the Co-Issuer as specified in Section 7.2 hereof.
“Payment Account”: The payment account established by the Note Administrator pursuant to Section 10.3 hereof.
“Payment Date”: The 4th Business Day of each month following each Determination Date, to and including the Stated Maturity Date unless the Notes are redeemed or repaid prior thereto.
“Permitted Subsidiary”: Any one or more single purpose entities that are wholly-owned by the Issuer and are established exclusively for the purpose of taking title to mortgage, real estate or any Sensitive Asset in connection, in each case, with the exercise of remedies or otherwise.
“Person”: An individual, corporation (including a business trust), partnership, limited liability company, joint venture, association, joint stock company, trust (including any
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beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof.
“Placement Agreement”: The placement agreement relating to the Notes dated May 26, 2021 by and among the Issuer, the Co-Issuer, LFT REIT, LCMT and the Placement Agents.
“Placement Agents”: WFS and JPMS.
“Pledged Mortgage Asset”: On any date of determination, any Mortgage Asset that has been Granted to the Trustee and not been released from the lien of this Indenture pursuant to Section 10.10 hereof.
“Preferred Share Distribution Account”: A segregated account established and designated as such by the Preferred Share Paying Agent pursuant to the Preferred Share Paying Agency Agreement.
“Preferred Share Paying Agency Agreement”: The Preferred Share Paying Agency Agreement, dated as of the Closing Date, among the Issuer, the Preferred Share Paying Agent relating to the Preferred Shares and the Share Registrar, as amended from time to time in accordance with the terms thereof.
“Preferred Share Paying Agent”: Wells Fargo Bank, National Association, solely in its capacity as Preferred Share Paying Agent under the Preferred Share Paying Agency Agreement and not individually, unless a successor Person shall have become the Preferred Share Paying Agent pursuant to the applicable provisions of the Preferred Share Paying Agency Agreement, and thereafter Preferred Share Paying Agent shall mean such successor Person.
“Preferred Shareholder”: A registered owner of Preferred Shares as set forth in the share register maintained by the Share Registrar.
“Preferred Shares”: The preferred shares issued by the Issuer concurrently with the issuance of the Notes.
“Principal Balance” or “par”: With respect to any Mortgage Loan, Mortgage Asset or Eligible Investment, as of any date of determination, the outstanding principal amount of such Mortgage Loan, Mortgage Asset (as reduced by all payments or other collections of principal received or deemed received, and any principal forgiven by the Special Servicer and other principal losses realized, on such Mortgage Asset during the related collection period) or Eligible Investment; provided that the Principal Balance of any Eligible Investment that does not pay Cash interest on a current basis will be the accreted value thereof.
8“Principal Proceeds”: With respect to any Payment Date, (A) the sum (without duplication) of:
(1)all principal payments (including Unscheduled Principal Payments and any casualty or condemnation proceeds and any proceeds from the exercise of remedies
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(including liquidation proceeds)) received during the related Due Period in respect of (a) Eligible Investments (other than Eligible Investments purchased with Interest Proceeds, Eligible Investments in the Expense Reserve Account and any amount representing the accreted portion of a discount from the face amount of a Mortgage Asset or an Eligible Investment) and (b) Mortgage Assets as a result of (i) a maturity, scheduled amortization or mandatory prepayment on a Mortgage Asset, (ii) optional prepayments made at the option of the related borrower, (iii) recoveries on Defaulted Mortgage Assets, or (iv) any other principal payments received with respect to Mortgage Assets;
(2)Sale Proceeds received during such Due Period in respect of sales in accordance with the Transaction Documents and excluding (i) accrued interest included in Sale Proceeds, (ii) any reimbursement of expenses included in such Sale Proceeds and (iii) any portion of such Sale Proceeds that are in excess of the outstanding principal balance of the related Mortgage Asset or Eligible Investment;
(3)any interest received during such Due Period on such Mortgage Assets or Eligible Investments to the extent such interest constitutes proceeds from accrued interest purchased with Principal Proceeds other than accrued interest purchased by the Issuer on or prior to the Closing Date;
(4)all cash payments of interest received during such Due Period on Defaulted Mortgage Assets;
(5)any principal payments received in cash by the Issuer during the related Due Period on any asset held by a Permitted Subsidiary;
(6)any Loss Value Payment received by the Issuer from the Seller during the related Due Period;
(7)after the Ramp-Up Completion Date, all amounts in the Unused Proceeds Account (excluding (i) during the 60 day period after the Ramp-Up Completion Date, any such amounts that are designated by the Collateral Manager to be held in order to acquire Committed Ramp-Up Mortgage Assets and (ii) at the election of the Collateral Manager, an amount up to $5,000,000 to be held for reinvestment in Reinvestment Mortgage Assets);
(8)Cash and Eligible Investments contributed by the Holder of 100% of the Preferred Shares, pursuant to the terms of this Indenture and designated as “Principal Proceeds” by such Holder or Affiliate; and
(9)Cash and Eligible Investments that were previously held in the Reinvestment Account and that have been transferred to the Payment Account pursuant to Section 10.2;
minus (B) the aggregate amount of (1) any Nonrecoverable Interest Advances that were not previously reimbursed to the Advancing Agent or the Backup Advancing Agent from Interest Proceeds related to such Payment Date, (2) any amounts paid to the Servicer or Special Servicer
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pursuant to the terms of the Servicing Agreement out of amounts that would otherwise be Principal Proceeds and (3) any amounts deposited into the Reinvestment Account in the related Due Period pursuant to Section 3.03(a)(viii) or Section 3.03(d)(vii) of the Servicing Agreement; provided that in no event will Principal Proceeds include any proceeds from the Excepted Property.
“Priority of Payments”: The meaning specified in Section 11.1(a) hereof.
“Privileged Person”: Any of the following: the Placement Agents, the Servicer, the Special Servicer, the Trustee, the Paying Agent, the Note Administrator, the Seller, the Collateral Manager, the Advancing Agent, the Issuer, any Person who provides the Note Administrator with an Investor Certification (provided that access to information provided by the Note Administrator to any Person who provides the Note Administrator with an Investor Certification in the form of Exhibit Q-2 shall be limited to the Monthly Report) and any Rating Agency or other NRSRO that delivers an NRSRO certification to the Note Administrator (which Investor Certification and NRSRO certification may be submitted electronically by means of the Note Administrator’s website).
“Proceeding”: Any suit in equity, action at law or other judicial or administrative proceeding.
“QIB”: A “qualified institutional buyer” as defined in Rule 144A.
“Qualified Purchaser”: A “qualified purchaser” within the meaning of Section 2(a)(51) of the Investment Company Act or an entity owned exclusively by one or more such “qualified purchasers”.
“Qualified REIT Subsidiary”: A corporation that, for U.S. federal tax purposes, is wholly-owned by a real estate investment trust under Section 856(i)(2) of the Code.
“Ramp-Up Acquisition Period”: The period commencing on the Closing Date and ending on the Ramp-Up Completion Date.
12“Ramp-Up Completion Date”: The date that is the earliest of:
(i)the 180th day after the Closing Date;
(ii)the first date on which all funds in the Unused Proceeds Account have been used to purchase Ramp-Up Mortgage Assets;
(iii)the date that the Collateral Manager determines, in its sole discretion, that investment in Ramp-Up Mortgage Assets is no longer practical or desirable and notifies the Trustee and the Note Administrator of such determination; and
(iv)the date on which the Notes are accelerated following an Event of Default.
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“Ramp-Up Completion Date Report”: The meaning specified in Section 7.19(b) hereof.
“Ramp-Up Mortgage Asset”: Any Mortgage Loan or Participation acquired by the Issuer during the Ramp-Up Acquisition Period (or within 60 days after the Ramp-Up Acquisition Period, in the case of any Committed Ramp-Up Mortgage Asset) with funds from the Unused Proceeds Account.
“Rated Notes”: The Offered Notes, the Class F Notes and the Class G Notes.
“Rating Agencies”: Moody’s and KBRA and any successor thereto, or, with respect to the Collateral generally, if at any time Moody’s or KBRA or any such successor ceases to provide rating services with respect to the Rated Notes or certificates similar to the Rated Notes, any other NRSRO selected by the Issuer and reasonably satisfactory to a Majority of the Notes voting as a single Class.
9“Rating Agency Condition”: A condition that is satisfied if:
(a)the party required to satisfy the Rating Agency Condition (the “Requesting Party”) has made a written request to a Rating Agency for a No Downgrade Confirmation; and
(b)any one of the following has occurred:
(i)a No Downgrade Confirmation has been received; or
(ii)  within ten (10) Business Days of such request being sent to such Rating Agency, such Rating Agency has not replied to such request or has responded in a manner that indicates that such Rating Agency is neither reviewing such request nor waiving the requirement for confirmation;
(B)the Requesting Party has confirmed that such Rating Agency has received the confirmation request;
(C)the Requesting Party promptly requests the No Downgrade Confirmation a second time; and
(D)there is no response to either confirmation request within five (5) Business Days of such second request.
“Rating Agency Test Modification”: The meaning specified in Section 12.4 hereof.
“Rating Confirmation Failure”: The meaning specified in Section 7.19(b) hereof.
“Record Date”: With respect to any Holder and any Payment Date, the close of business on the last Business Day of the calendar month immediately preceding the month in
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which such Payment Date occurs, provided that the Record Date with respect to the first Payment Date shall be the Closing Date.
“Redemption Date”: Any Payment Date specified for a redemption of the Notes and/or the Preferred Shares, as applicable, pursuant to Section 9.1 hereof.
“Redemption Price”: The Redemption Price of each Class of Notes or the Preferred Shares, as applicable, on a Redemption Date will be calculated as follows:
Class A Notes. The redemption price for the Class A Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class A Notes to be redeemed, together with the Class A Interest Distribution Amount (plus any Class A Defaulted Interest Amount) due on the applicable Redemption Date;
Class A-S Notes. The redemption price for the Class A-S Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class A-S Notes to be redeemed, together with the Class A-S Interest Distribution Amount (plus any Class A-S Defaulted Interest Amount) due on the applicable Redemption Date.
Class B Notes. The redemption price for the Class B Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class B Notes to be redeemed, together with the Class B Interest Distribution Amount (plus any Class B Defaulted Interest Amount) due on the applicable Redemption Date;
Class C Notes. The redemption price for the Class C Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class C Notes to be redeemed (including any Deferred Interest thereon), together with the Class C Interest Distribution Amount (plus any Class C Defaulted Interest Amount) due on the applicable Redemption Date;
Class D Notes. The redemption price for the Class D Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class D Notes to be redeemed (including any Deferred Interest thereon), together with the Class D Interest Distribution Amount (plus any Class D Defaulted Interest Amount) due on the applicable Redemption Date;
Class E Notes. The redemption price for the Class E Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class E Notes to be redeemed (including any Deferred Interest thereon), together with the Class E Interest Distribution Amount (plus any Class E Defaulted Interest Amount) due on the applicable Redemption Date;
Class F Notes. The redemption price for the Class F Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class F Notes to be redeemed (including any Deferred Interest thereon), together with the Class F
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Interest Distribution Amount (plus any Class F Defaulted Interest Amount) due on the applicable Redemption Date;
Class G Notes. The redemption price for the Class G Notes will be calculated on the related Determination Date and will equal the Aggregate Outstanding Amount of the Class G Notes to be redeemed (including any Deferred Interest thereon), together with the Class G Interest Distribution Amount (plus any Class G Defaulted Interest Amount) due on the applicable Redemption Date; and
Preferred Shares. The redemption price for the Preferred Shares will be calculated on the related Determination Date and will be equal to the sum of all net proceeds from the sale of the Collateral in accordance with Article 12 hereof and Cash (other than the Issuer’s rights, title and interest in the Excepted Property), if any, remaining after payment of all amounts and expenses, including payments made in respect of the other Notes, described under clauses (1) through (20) of Section 11.1(a)(i) and clauses (1) through (19) of Section 11.1(a)(ii); provided that if there are no such net proceeds or Cash remaining, the redemption price for the Preferred Shares shall be equal to $0.
“Reference Time”: With respect to any determination of the Benchmark, (1) if the Benchmark is LIBOR, 11:00 a.m. (London time) on the Benchmark Determination Date and (2) if the Benchmark is not LIBOR, the time determined by the Collateral Manager in accordance with the Benchmark Replacement Conforming Changes.
“Registered”: With respect to any debt obligation, a debt obligation that is issued after July 18, 1984, and that is in registered form for purposes of the Code.
“Regulation S”: Regulation S under the Securities Act.
“Regulation S Global Note”: The meaning specified in Section 2.2(b)(iii) hereof.
“Reimbursement Interest”: Interest accrued on the amount of any Interest Advance made by the Advancing Agent or the Backup Advancing Agent for so long as it is outstanding, at the Reimbursement Rate, which Reimbursement Interest is hereby waived by the Advancing Agent for so long as (i) the Advancing Agent is LCMT or any of its Affiliates and (ii) LCMT or any of its Affiliates owns the Preferred Shares.
“Reimbursement Rate”: A rate per annum equal to the “prime rate” as published in the “Money Rates” section of The Wall Street Journal, as such “prime rate” may change from time to time. If more than one “prime rate” is published in The Wall Street Journal for a day, the average of such “prime rates” will be used, and such average will be rounded up to the nearest one-eighth of one percent (0.125%). If the “prime rate” contained in The Wall Street Journal is not readily ascertainable, the Collateral Manager will select an equivalent publication that publishes such “prime rate,” and if such “prime rates” are no longer generally published or are limited, regulated or administered by a governmental authority or quasigovernmental body, then the Collateral Manager will select, in its reasonable discretion, a comparable interest rate index.
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“Reinvestment Account”: The account established by the Note Administrator pursuant to Section 10.2 hereof.
“Reinvestment Mortgage Asset”: Any Mortgage Loan or Participation that is acquired during the Reinvestment Period (or within 60 days after the Reinvestment Period, in the case of any Committed Reinvestment Mortgage Asset) with Principal Proceeds from the Mortgage Assets (or any cash contributed by the Holder of the Preferred Shares to the Issuer) and that satisfies the Eligibility Criteria.
“Reinvestment Period”: The period beginning on the Closing Date and ending on and including the first to occur of any of the following events or dates: (i) the Determination Date in December 2023; (ii) the end of the Due Period related to the Payment Date on which all of the Securities are redeemed as described under Section 9.1; and (iii) the date on which principal of an accrued and unpaid interest on all of the Notes is accelerated following the occurrence and continuation of an Event of Default.
“REIT”: A “real estate investment trust” under the Code.
“Remittance Date”: The meaning specified in the Servicing Agreement.
“Relevant Governmental Body”: The Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“REO Accounts”: The meaning specified in the Servicing Agreement.
“REO Property”: The meaning specified in the Servicing Agreement.
“Repurchase Request”: The meaning specified in Section 7.17 hereof.
“Request for Release”: The meaning specified in Section 3.3(h) hereof.
“Retail Property”: A real property secured by retail space (including mixed use property) as to which the majority of the underwritten revenue is from retail space.
“Retained Securities”: 100% of the Class F Notes, the Class G Notes and the Preferred Shares.
“Rule 144A”: Rule 144A under the Securities Act.
“Rule 144A Global Note”: The meaning specified in Section 2.2(b)(i) hereof.
“Rule 144A Information”: The meaning specified in Section 7.13 hereof.
“Rule 17g-5”: The meaning specified in Section 14.13(a) hereof.
“Sale”: The meaning specified in Section 5.17(a) hereof.
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“Sale Proceeds”: All proceeds (including accrued interest) received with respect to Mortgage Assets and Eligible Investments as a result of sales of such Mortgage Assets and Eligible Investments in accordance with the Indenture, sales in connection with exercise of a purchase option by a mezzanine lender, and sales in connection with a repurchase for a Material Breach or Material Document Defect, in each case, net of any reasonable out-of-pocket expenses of the Collateral Manager, Servicer, Special Servicer, Note Administrator, Custodian or the Trustee in connection with any such sale.
“SEC”: The Securities and Exchange Commission.
“Secured Parties”: Collectively, the Collateral Manager, the Trustee, the Custodian, the Note Administrator, the Holders of the Offered Notes, the Servicer, the Special Servicer, the Advancing Agent, the Backup Advancing Agent and the Company Administrator, each as their interests appear in applicable Transaction Documents.
“Securities”: Collectively, the Notes and the Preferred Shares.
“Securities Account”: The meaning specified in Section 8-501(a) of the UCC.
“Securities Account Control Agreement”: The meaning specified in Section 3.3(b) hereof.
“Securities Act”: The Securities Act of 1933, as amended.
“Securities Intermediary”: The meaning specified in Section 3.3(b) hereof.
“Securitization Sponsor”: LCMT.
“Security”: Any Note or Preferred Share or, collectively, the Notes and Preferred Shares, as the context may require.
“Security Entitlement”: The meaning specified in Section 8-102(a)(17) of the UCC.
“Segregated Liquidity”: As of any date of determination, an amount equal to the sum of: (i) amounts available to the Future Funding Indemnitor or its Affiliates under a Committed Warehouse Line; (ii) cash or cash equivalents of the Future Funding Indemnitor and its Affiliates that are available to make future advances under the Future Funding Participations held by the Future Funding Holder (or LCMT or an Affiliate, agent or advisor of either) (which will include any amounts on deposit in the Future Funding Reserve Account); (iii) cash or cash equivalents that are projected to be earned and received by the Future Funding Indemnitor or its Affiliates during the subject period and will be available to make future advances under the Future Funding Participations held by the Future Funding Holder (or LCMT or an Affiliate, agent or advisor of either); (iv) amounts that are undrawn and available to draw under any credit facility, repurchase facility, subscription facility or warehouse facility subject only to the satisfaction of general conditions precedent in the related facility documents; and (v) callable
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capital of, or future funding purchase commitments made to, the Future Funding Indemnitor or its Affiliates.
“Self-Storage Property”: A real property secured by self-storage space (including mixed use property) as to which the majority of the underwritten revenue is from self-storage space.
“Seller”: Lument Commercial Mortgage Trust, a Maryland corporation.
“Senior AB Pari Passu Participation”: A participation interest (or an A note) in a Mortgage Loan pursuant to a participation agreement (or intercreditor agreement) in which the interest acquired by the Issuer is senior to one or more Junior Participations but is pari passu with one or more other senior pari passu participation interests that are each Non-Acquired Participations and which each are the senior-most interest in such Mortgage Loan.
“Senior AB Participation”: A participation interest (or an A note) in a Mortgage Loan pursuant to a participation agreement (or intercreditor agreement) in which the interest acquired by the Issuer is senior to one or more Junior Participations.
“Senior Pari Passu Participation”: A participation interest (or an A note) in a Mortgage Loan pursuant to a participation agreement (or intercreditor agreement) in which the interest acquired by the Issuer is pari passu with one or more other senior pari passu participation interests that are each Non-Acquired Participations and which each are the senior-most interest in such Mortgage Loan.
“Senior Participation”: A Senior AB Participation, a Senior AB Pari Passu Participation or a Senior Pari Passu Participation.
“Sensitive Asset”: Means (i) a Mortgage Asset, or a portion thereof, or (ii) a real property or other interest (including, without limitation, an interest in real property) resulting from the conversion, exchange, other modification or exercise of remedies with respect to a Mortgage Asset or portion thereof, in either case, as to which the Collateral Manager has determined, based on an Opinion of Counsel could give rise to a material liability of the Issuer (including liability for taxes) if held directly by the Issuer.
“Servicer”: ORIX Real Estate Capital, LLC dba Lument Capital, a Delaware limited liability company, solely in its capacity as servicer under the Servicing Agreement, together with its permitted successors and assigns or any successor Person that shall have become the servicer pursuant to the appropriate provisions of the Servicing Agreement.
“Servicer Termination Event”: The meaning specified in the Servicing Agreement.
“Servicing Accounts”: The Escrow Accounts, the Collection Account, the Participated Mortgage Loan Collection Account, the REO Accounts and the Cash Collateral Accounts, each as established under and defined in the Servicing Agreement.
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“Servicing Advances”: The meaning specified in the Servicing Agreement.
“Servicing Agreement”: The Servicing Agreement, dated as of the Closing Date, by and among the Issuer, the Trustee, the Collateral Manager, the Note Administrator, the Servicer, the Special Servicer and the Advancing Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms.
“Servicing Standard”: The meaning specified in the Servicing Agreement.
“Share Registrar”: Walkers Fiduciary Limited, unless a successor Person shall have become the Share Registrar pursuant to the applicable provisions of the Preferred Share Paying Agency Agreement, and thereafter “Share Registrar” shall mean such successor Person.
“SOFR”: With respect to any calendar day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator), on the Federal Reserve Bank of New York’s Website.
“Special Servicer”: ORIX Real Estate Capital, LLC dba Lument Capital, a Delaware limited liability company, solely in its capacity as special servicer under the Servicing Agreement, together with its permitted successors and assigns or any successor Person that shall have become the special servicer pursuant to the appropriate provisions of the Servicing Agreement.
“Special Servicing Fee”: The meaning specified in the Servicing Agreement.
“Specially Serviced Mortgage Loan”: The meaning specified in the Servicing Agreement.
“Specified Person”: The meaning specified in Section 2.6 hereof.
“Stated Maturity Date”: The Payment Date in June 2039.
“Student Housing Property”: A Multi-Family Property as to which the majority of the underwritten revenue is from student housing.
“Subsequent REIT”: Any REIT other than LCMT if at any time the Issuer is treated as a Qualified REIT Subsidiary of such REIT or the Issuer is otherwise disregarded as a separate entity from such REIT for U.S. federal income tax purposes.
“Successful Auction”: Either (i) an auction that is conducted in accordance with the provisions specified in the Indenture, which includes the requirement that the aggregate cash purchase price for all the Mortgage Assets, together with the balance of all Eligible Investments and cash in the Payment Account, will be at least equal to the Total Redemption Price or (ii) the purchase of all of the Mortgage Assets by the Preferred Shareholders for a price that, together with the balance of all Eligible Investments and cash in the Payment Account, is equal to the Total Redemption Price.
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“Supermajority”: With respect to (i) any Class of Notes, the Holders of at least 66⅔% of the Aggregate Outstanding Amount of the Notes of such Class and (ii) with respect to the Preferred Shares, the Holders of at least 66⅔% of the aggregate Notional Amount of the Preferred Shares.
“Tax Event”: (i) Any borrower is, or on the next scheduled payment date under any Mortgage Asset, will be, required to deduct or withhold from any payment under any Mortgage Asset to the Issuer for or on account of any tax for whatever reason and such borrower is not required to pay to the Issuer such additional amount as is necessary to ensure that the net amount actually received by the Issuer (free and clear of taxes, whether assessed against such borrower or the Issuer) will equal the full amount that the Issuer would have received had no such deduction or withholding been required, (ii) any jurisdiction imposes net income, profits, or similar tax on the Issuer or (iii) the Issuer fails to maintain its status as a Qualified REIT Subsidiary or other disregarded entity of a REIT and is not a foreign corporation that is not engaged in a trade or business in the United States for U.S. federal income tax purposes.
“Tax Materiality Condition”: The condition that will be satisfied if either (i) as a result of the occurrence of a Tax Event, a tax or taxes are imposed on the Issuer or withheld from payments to the Issuer and with respect to which the Issuer receives less than the full amount that the Issuer would have received had no such deduction occurred and such amount exceeds, in the aggregate, $1,000,000 during any twelve (12)-month period or (ii) the Issuer fails to maintain its status as a Qualified REIT Subsidiary or other disregarded entity of a REIT and is not a foreign corporation that is not engaged in a trade or business in the United States for U.S. federal income tax purposes.
“Tax Redemption”: The meaning specified in Section 9.1(b) hereof.
“Term SOFR”: The forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Total Redemption Price”: The amount equal to funds sufficient to pay (i) all amounts owing to the Servicer and the Special Servicer under the Servicing Agreement, (ii) all fees and expenses of the Trustee and the Note Administrator in connection with an Auction, if applicable, (iii) all amounts and expenses described under clauses (1) through (4) of Section 11.1(a)(i) (without regard to any cap contained therein) and to redeem all Notes at their applicable Redemption Prices.
“Transaction Documents”: This Indenture, the Collateral Management Agreement, the Preferred Share Paying Agency Agreement, the Placement Agreement, the Mortgage Asset Purchase Agreement, the Company Administration Agreement, the Participation Agreements, the Future Funding Agreement, the Securities Account Control Agreement, the Future Funding Account Control Agreement and the Servicing Agreement.
“Transfer Agent”: The Person or Persons, which may be the Issuer, authorized by the Issuer to exchange or register the transfer of Notes in its capacity as Transfer Agent.
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“Treasury Regulations”: Temporary or final regulations promulgated under the Code by the United States Treasury Department.
“Trust Officer”: When used with respect to (i) the Trustee, any officer of the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred because such officer’s knowledge of and familiarity with the particular subject and (ii) the Note Administrator, any officer of the Corporate Trust Services group of the Note Administrator with direct responsibility for the administration of this Indenture and also, with respect to a particular matter, any other officer to whom a particular matter is referred because of such officer’s knowledge of and familiarity with the particular subject.
“Trustee”: Wilmington Trust, National Association, solely in its capacity as trustee hereunder, unless a successor Person shall have become the Trustee pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Person.
“Two Quarter Future Advance Estimate”: As of any date of determination, an estimate of the aggregate amount of future advances that will be required to be made under the Future Funding Participations held by the Future Funding Holder (or LCMT or an Affiliate, agent or advisor of either) during the immediately following two calendar quarters, excluding future advances to be made for: (i) accretive leasing costs (e.g., following the future advance for such leasing costs, the debt yield will be equal to or greater than a required debt yield specified in the Asset Documents of the related Mortgage Loan); (ii) earnouts paid to borrowers upon satisfaction of certain performance metrics set forth in the Asset Documents of the related Mortgage Loan; (iii) advances that the Future Funding Holder believes, in the exercise of its reasonable judgment, will be repaid in full during the period covered by the estimate; and (iv) accretive capital expenditures (e.g., following the future advance for such capital expenditures, the debt yield will be equal to or greater than a required debt yield specified in the Asset Documents of the related Mortgage Loan).
“UCC”: The applicable Uniform Commercial Code.
“Unadjusted Benchmark Replacement”: The Benchmark Replacement, excluding the related Benchmark Replacement Adjustment.
“Underlying Whole Loan”: With respect to any Mortgage Asset that is a Participation, the Whole Loan in which such Participation represents a participation interest.
“Underwritten Stabilized NCF DSCR” or “U/W Stabilized NCF DSCR”: With respect to any Reinvestment Mortgage Asset, the ratio, as calculated by the Collateral Manager in accordance with the Collateral Management Standard, of (a) the “stabilized” annual net cash flow generated from the related property before interest, depreciation and amortization, based on the stabilized underwriting, which may include the completion of certain proposed capital expenditures and the realization of stabilized occupancy and/or rents to (b) the Annual Debt Service. In determining U/W Stabilized NCF DSCR for any Reinvestment Mortgage Asset that
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is a Senior Participation, the calculation of U/W Stabilized NCF DSCR will take into account the Annual Debt Service due on the Senior Participation being acquired by the Issuer and the related Non Acquired Participation(s) (assuming fully-funded) or related note also secured by the related mortgaged property or properties, as applicable, that is senior or pari passu in right to the Senior Participation being acquired by the Issuer but not any Non Acquired Participation(s) or related note also secured by the related mortgaged property or properties, as applicable, that is junior in right to the Senior Participation being acquired by the Issuer. In determining the U/W Stabilized NCF DSCR for any Reinvestment Mortgage Asset that is cross collateralized with one or more other Mortgage Assets, the U/W Stabilized NCF DSCR was calculated with respect to the cross collateralized group in the aggregate.
“United States” and “U.S.”: The United States of America, including any state and any territory or possession administered thereby.
“Unscheduled Principal Payments”: Any proceeds received by the Issuer from an unscheduled prepayment or redemption (in whole but not in part) by the obligor of a Mortgage Loan prior to the stated maturity date of such related Mortgage Asset.
“Unused Proceeds Account”: The meaning specified in Section 10.4(a) hereof.
“Updated Appraisal”: Upon the occurrence of an Appraisal Reduction Event, the Special Servicer will be required to use reasonable efforts to obtain, within 120 days of the event that resulted in such Appraisal Reduction Event, an appraisal (or a letter update for an existing appraisal which is less than two years old) of the Mortgaged Property from an independent appraiser who is a Member of the Appraisal Institute.
“U.S. Person”: The meaning specified in Regulation S.
“Weighted Average Life”: As of any Measurement Date with respect to the Mortgage Assets (other than Defaulted Mortgage Assets), the number obtained by (i) summing the products obtained by multiplying (a) the Average Life at such time of each Mortgage Asset (other than Defaulted Mortgage Assets) by (b) the outstanding Principal Balance of such Mortgage Asset and (ii) dividing such sum by the aggregate Principal Balance at such time of all Mortgage Assets (other than Defaulted Mortgage Assets), where “Average Life” means, on any Measurement Date with respect to any Mortgage Asset (other than a Defaulted Mortgage Asset), the quotient obtained by the Collateral Manager by dividing (i) the sum of the products of (a) the number of years (rounded to the nearest one tenth thereof) from such Measurement Date to the respective dates of each successive expected distribution of principal of such Mortgage Asset and (b) the respective amounts of such expected distributions of principal by (ii) the sum of all successive expected distributions of principal on such Mortgage Asset.
“Weighted Average Spread”: As of any date of determination, the number obtained (rounded up to the next 0.001%), by (i) summing the products obtained by multiplying (a) with respect to any Mortgage Asset (other than (i) any Fixed Rate Mortgage Asset and (ii) any Defaulted Mortgage Asset), the greater of (x) the current stated spread above LIBOR (net of any servicing fees and expenses) at which interest accrues on each such Mortgage Asset and
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(y) if such Mortgage Asset provides for a minimum interest rate payable thereunder, the excess, if any, of the minimum interest rate applicable to such Mortgage Asset (net of any servicing fees and expenses) over LIBOR by (b) the Principal Balance of such Mortgage Asset as of such date, and (ii) dividing such sum by the aggregate Principal Balance of all Mortgage Assets (excluding (i) all Fixed Rate Mortgage Assets and (ii) all Defaulted Mortgage Assets).
“WFS”: Wells Fargo Securities, LLC.
“Whole Loan”: A whole mortgage loan (but not a participation interest in a mortgage loan) secured by commercial or multi-family real estate.
Section I.2Interest Calculation Convention. All calculations of interest hereunder that are made with respect to the Notes shall be made on the basis of the actual number of days during the related Interest Accrual Period divided by three hundred sixty (360). All calculations of the Advancing Agent Fee in respect of any Payment Date shall be made on the basis of the actual number of days during the period from (and including) the immediately preceding Payment Date to (but excluding) such Payment Date, divided by three hundred sixty (360).
Section I.3Rounding Convention. Unless otherwise specified herein, test calculations that are evaluated as a percentage will be rounded to the nearest ten thousandth of a percentage point and test calculations that are evaluated as a number or decimal will be rounded to the nearest one hundredth of a percentage point.
ARTICLE II

THE NOTES
Section II.1Forms Generally. The Notes and the Note Administrator’s certificate of authentication thereon (the “Certificate of Authentication”) shall be in substantially the forms required by this Article 2, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be consistent herewith, determined by the Authorized Officers of the Issuer and Co-Issuer, executing such Notes as evidenced by their execution of such Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.
Section II.2Forms of Notes and Certificate of Authentication.
(a)Form. The form of each Class of the Notes, including the Certificate of Authentication, shall be substantially as set forth in Exhibits A-1, A-2, B-1, B-2, C-1, C-2, D-1, D-2, E-1, E-2, F-1, F-2, G-1, G-2, H-1 and H-2 hereto.
(b)Global Notes and Definitive Notes.   The Notes initially offered and sold in the United States to (or to U.S. Persons who are) QIBs may be represented by one or more
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permanent global notes in definitive, fully registered form without interest coupons with the applicable legend set forth in Exhibits A-1, B-1, C-1, D-1, E-1, F-1, G-1 and H-1 hereto added to the form of such Notes (each, a “Rule 144A Global Note”), which shall be registered in the name of Cede & Co., as the nominee of the Depository and deposited with the Note Administrator, as custodian for the Depository, duly executed by the Issuer and the Co-Issuer and authenticated by the Authenticating Agent as hereinafter provided. The aggregate principal amount of the Rule 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Note Administrator or the Depository or its nominee, as the case may be, as hereinafter provided.
(ii)The Notes initially offered and sold in the United States to (or to U.S. Persons who are) IAIs, and such Notes shall be issued in definitive form, registered in the name of the legal or beneficial owner thereof attached without interest coupons with the applicable legend set forth in Exhibits A-2, B-2, C-2, D-2, E-2, F-2, G-2 and H-2 hereto added to the form of such Notes (each, a “Definitive Note”), which shall be duly executed by the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Non-Offered Notes, and authenticated by the Authenticating Agent as hereinafter provided. The aggregate principal amount of the Definitive Notes may from time to time be increased or decreased by adjustments made on the records of the Note Administrator or the Depository or its nominee, as the case may be, as hereinafter provided.
(iii)The Notes initially sold in offshore transactions in reliance on Regulation S shall be represented by one or more permanent global notes in definitive, fully registered form without interest coupons with the applicable legend set forth in Exhibits A-1, B-1, C-1, D-1, E-1, F-1, G-1 and H-1 hereto added to the form of such Notes (each, a “Regulation S Global Note”), which shall be deposited on behalf of the subscribers for such Notes represented thereby with the Note Administrator as custodian for the Depository and registered in the name of a nominee of the Depository for the respective accounts of Euroclear and Clearstream, Luxembourg or their respective depositories, duly executed by the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Non-Offered Notes, and authenticated by the Authenticating Agent as hereinafter provided. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Note Administrator or the Depository or its nominee, as the case may be, as hereinafter provided.
(c)Book-Entry Provisions. This Section 2.2(c) shall apply only to Global Notes deposited with or on behalf of the Depository.
Each of the Issuer and Co-Issuer shall execute and the Authenticating Agent shall, in accordance with this Section 2.2(c), authenticate and deliver initially one or more Global Notes that shall be (i) registered in the name of the nominee of the Depository for such Global Note or Global Notes and (ii) delivered by the Note Administrator to such Depository or
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pursuant to such Depository’s instructions or held by the Note Administrator’s agent as custodian for the Depository.
Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Note Administrator, as custodian for the Depository or under the Global Note, and the Depository may be treated by the Issuer, the Co-Issuer, the Trustee, the Note Administrator, the Servicer and the Special Servicer and any of their respective agents as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Co-Issuer, the Trustee, the Note Administrator, the Servicer and the Special Servicer or any of their respective agents, from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Global Note.
(d)Delivery of Definitive Notes in Lieu of Global Notes. Except as provided in Section 2.10 hereof, owners of beneficial interests in a Class of Global Notes shall not be entitled to receive physical delivery of a Definitive Note.
(e)CUSIPs. As an administrative convenience, the Co-Issuers or the Co-Issuer’s agent may obtain a separate CUSIP or separate CUSIPs (or similar identifying numbers) for all or a portion of any Class of Notes.
Section II.3Authorized Amount; Stated Maturity Date; and Denominations.
(a)The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited to U.S.$903,750,000, except for (i) Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.5, 2.6 or 8.5 hereof and (ii) any Deferred Interest.
Such Notes shall be divided into eight (8) Classes having designations and original principal amounts as follows:
Designation Original Principal Amount
Class A Senior Secured Floating Rate Notes Due 2039    
U.S.$570,000,000
Class A-S Second Priority Secured Floating Rate Notes Due 2039    
U.S.$42,500,000
Class B Third Priority Secured Floating Rate Notes Due 2039    
U.S.$66,250,000
Class C Fourth Priority Secured Floating Rate Notes Due 2039    
U.S.$71,250,000
Class D Fifth Priority Secured Floating Rate Notes Due 2039    
U.S.$61,250,000
Class E Sixth Priority Floating Rate Notes Due 2039    
U.S.$22,500,000
Class F Seventh Priority Floating Rate Notes Due 2039    
U.S.$42,500,000
Class G Eighth Priority Floating Rate Notes Due 2039    
U.S.$27,500,000
(b)The Notes shall be issuable in minimum denominations of U.S.$100,000 and integral multiples of U.S.$500 in excess thereof (plus any residual amount).
Section II.4Execution, Authentication, Delivery and Dating. The Offered Notes shall be executed on behalf of the Issuer and the Co-Issuer by an Authorized Officer of the
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Issuer and the Co-Issuer, respectively. The Class F Notes and the Class G Notes shall be executed on behalf of the Issuer by an Authorized Officer of the Issuer. The signature of such Authorized Officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were at any time the Authorized Officers of the Issuer and the Co-Issuer shall bind the Issuer or the Co-Issuer, as the case may be, notwithstanding the fact that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of issuance of such Notes.
At any time and from time to time after the execution and delivery of this Indenture, the Issuer and the Co-Issuer may deliver Offered Notes executed by the Issuer and the Co-Issuer, and the Issuer may deliver Class F Notes and Class G Notes executed by the Issuer, to the Note Administrator for authentication and the Note Administrator, upon Issuer Order, shall authenticate and deliver such Notes as provided in this Indenture and not otherwise.
Each Note authenticated and delivered by the Note Administrator upon Issuer Order on the Closing Date shall be dated as of the Closing Date. All other Notes that are authenticated after the Closing Date for any other purpose under this Indenture shall be dated the date of their authentication.
Notes issued upon transfer, exchange or replacement of other Notes shall be issued in authorized denominations reflecting the original aggregate principal amount of the Notes so transferred, exchanged or replaced, but shall represent only the current outstanding principal amount of the Notes so transferred, exchanged or replaced. In the event that any Note is divided into more than one Note in accordance with this Article 2, the original principal amount of such Note shall be proportionately divided among the Notes delivered in exchange therefor and shall be deemed to be the original aggregate principal amount of such subsequently issued Notes.
No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a Certificate of Authentication, substantially in the form provided for herein, executed by the Note Administrator or by the Authenticating Agent by the manual signature of one of their Authorized Officers, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.
Section II.5Registration, Registration of Transfer and Exchange.
(a)The Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, shall cause to be kept a register (the “Notes Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer and the Co-Issuer shall provide for the registration of Notes and the registration of transfers and exchanges of Notes. The Note Administrator is hereby initially appointed “Notes Registrar” for the purpose of maintaining the Notes Registrar and registering Notes and transfers and exchanges of such Notes with respect to the Notes Register kept in the United States as
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herein provided. Upon any resignation or removal of the Notes Registrar, the Issuer and the Co-Issuer shall promptly appoint a successor or, in the absence of such appointment, assume the duties of Notes Registrar.
The name and address of each Noteholder and the principal amounts and stated interest of each such Noteholder in its Notes shall be recorded by the Notes Registrar in the Notes Register. For the avoidance of doubt, the Notes Register is intended to be and shall be maintained so as to cause the Notes to be considered issued in registered form under Treasury Regulations section 5f.103-1(c).
If a Person other than the Note Administrator is appointed by the Issuer and the Co-Issuer as Notes Registrar, the Issuer and the Co-Issuer shall give the Note Administrator prompt written notice of the appointment of a successor Notes Registrar and of the location, and any change in the location, of the Notes Register, and the Note Administrator shall have the right to inspect the Notes Register at all reasonable times and to obtain copies thereof and the Note Administrator shall have the right to rely upon a certificate executed on behalf of the Notes Registrar by an Authorized Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and numbers of such Notes. In addition, the Notes Registrar shall be required, within one (1) Business Day of each Record Date, to provide the Note Administrator with a copy of the Notes Registrar in the format required by, and with all accompanying information regarding the Noteholders as may reasonably be required by the Note Administrator.
Subject to this Section 2.5, upon surrender for registration of transfer of any Notes at the office or agency of the Issuer to be maintained as provided in Section 7.2, the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, shall execute, and the Note Administrator shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination and of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for Notes of like terms, in any authorized denominations and of like aggregate principal amount, upon surrender of the Notes to be exchanged at the office or agency of the Issuer to be maintained as provided in Section 7.2. Whenever any Note is surrendered for exchange, the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, shall execute, and the Note Administrator shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive.
All Notes issued and authenticated upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to
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the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, in each case, the Notes Registrar duly executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Note Administrator may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
None of the Notes Registrar, the Issuer or the Co-Issuer shall be required (i) to issue, register the transfer of or exchange any Note during a period beginning at the opening of business fifteen (15) days before any selection of Notes to be redeemed and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Note so selected for redemption.
(b)No Note may be sold or transferred (including, without limitation, by pledge or hypothecation) unless such sale or transfer is exempt from the registration requirements of the Securities Act and is exempt from the registration requirements under applicable securities laws of any state or other jurisdiction.
(c)No Note may be offered, sold, resold or delivered, within the United States or to, or for the benefit of, U.S. Persons except in accordance with Section 2.5(e) below and in accordance with Rule 144A to QIBs or, solely with respect to Definitive Notes, IAIs or QIBs. The Notes may be offered, sold, resold or delivered, as the case may be, in offshore transactions to non-U.S. Persons in reliance on Regulation S. None of the Issuer, the Co-Issuer the Note Administrator, the Trustee or any other Person may register the Notes under the Securities Act or the securities laws of any state or other jurisdiction.
(d)Upon final payment due on the Stated Maturity Date 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 (outside the United States if then required by applicable law in the case of a Note in definitive form issued in exchange for a beneficial interest in a Regulation S Global Note pursuant to Section 2.10).
(e)Transfers of Global Notes. Notwithstanding any provision to the contrary herein, so long as a Global Note remains outstanding and is held by or on behalf of the Depository, transfers of a Global Note, in whole or in part, shall be made only in accordance with Section 2.2(c) and this Section 2.5(e).
(i)Except as otherwise set forth below, transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to nominees of the Depository or to a successor of the Depository or such successor’s nominee. Transfers of a Global Note to a Definitive Note may only be made in accordance with Section 2.10.
(ii)Regulation S Global Note to Rule 144A Global Note or Definitive Note. If a holder of a beneficial interest in a Regulation S Global Note wishes at any time to exchange its interest in such Regulation S Global Note for an interest in the
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corresponding Rule 144A Global Note or for a Definitive Note or to transfer its interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Rule 144A Global Note or for a Definitive Note, such holder may, subject to the immediately succeeding sentence and the rules and procedures of Euroclear, Clearstream, Luxembourg and/or DTC, as the case may be, exchange or transfer, or cause the exchange or transfer of, such interest for an equivalent beneficial interest in the corresponding Rule 144A Global Note or for a Definitive Note. Upon receipt by the Note Administrator or the Notes Registrar of:
(1)if the transferee is taking a beneficial interest in a Rule 144A Global Note, instructions from Euroclear, Clearstream, Luxembourg and/or DTC, as the case may be, directing the Notes Registrar to cause to be credited a beneficial interest in the corresponding Rule 144A Global Note in an amount equal to the beneficial interest in such Regulation S Global Note, but not less than the minimum denomination applicable to such holder’s Notes to be exchanged or transferred, such instructions to contain information regarding the participant account with DTC to be credited with such increase and a duly completed certificate in the form of Exhibit I-2 attached hereto; or
(2)if the transferee is taking a Definitive Note, a duly completed transfer certificate in substantially the form of Exhibit I-3 hereto, certifying that such transferee is an IAI and a Qualified Purchaser,
then the Notes Registrar shall either (x) if the transferee is taking a beneficial interest in a Rule 144A Global Note, approve the instructions at DTC to reduce, or cause to be reduced, the Regulation S Global Note by the aggregate principal amount of the beneficial interest in the Regulation S Global Note to be transferred or exchanged and the Notes Registrar shall instruct DTC, concurrently with such reduction, to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the corresponding Rule 144A Global Note equal to the reduction in the principal amount of the Regulation S Global Note or (y) if the transferee is taking an interest in a Definitive Note, the Notes Registrar shall record the transfer in the Notes Register in accordance with Section 2.5(a) and, upon execution by the Co-Issuers, the Note Administrator shall authenticate and deliver one or more Definitive Notes, as applicable, registered in the names specified in the instructions described above, in principal amounts designated by the transferee (the aggregate of such principal amounts being equal to the aggregate principal amount of the interest in the Regulation S Global Note transferred by the transferor).
(iii)Definitive Note or Rule 144A Global Note to Regulation S Global Note. If a holder of a beneficial interest in a Rule 144A Global Note or a Holder of a Definitive Note wishes at any time to exchange its interest in such Rule 144A Global Note or Definitive Note for an interest in the corresponding Regulation S Global Note, or to transfer its interest in such Rule 144A Global Note or Definitive Note to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Regulation S Global Note, such holder, provided such holder or, in the case of a transfer,
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the transferee is not a U.S. person and is acquiring such interest in an offshore transaction, may, subject to the immediately succeeding sentence and the rules and procedures of DTC, exchange or transfer, or cause the exchange or transfer of, such interest for an equivalent beneficial interest in the corresponding Regulation S Global Note. Upon receipt by the Note Administrator or the Notes Registrar of:
(1)instructions given in accordance with DTC’s procedures from an Agent Member directing the Note Administrator or the Notes Registrar to credit or cause to be credited a beneficial interest in the corresponding Regulation S Global Note, but not less than the minimum denomination applicable to such holder’s Notes, in an amount equal to the beneficial interest in the Rule 144A Global Note or Definitive Note to be exchanged or transferred, and in the case of a transfer of Definitive Notes, such Holder’s Definitive Notes properly endorsed for assignment to the transferee;
(2)a written order given in accordance with DTC’s procedures containing information regarding the participant account of DTC and the Euroclear or Clearstream, Luxembourg account to be credited with such increase;
(3)in the case of a transfer of Definitive Notes, a Holder’s Definitive Note properly endorsed for assignment to the transferee; and
(4)a duly completed certificate in the form of Exhibit I-1 attached hereto,
then the Note Administrator or the Notes Registrar shall approve the instructions at DTC to reduce the principal amount of the Rule 144A Global Note (or, in the case of a transfer of Definitive Notes, the Note Administrator or the Notes Registrar shall cancel such Definitive Notes) and to increase the principal amount of the Regulation S Global Note by the aggregate principal amount of the beneficial interest in the Rule 144A Global Note or Definitive Note to be exchanged or transferred, and to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the corresponding Regulation S Global Note equal to the reduction in the principal amount of the Rule 144A Global Note (or, in the case of a cancellation of Definitive Notes, equal to the principal amount of Definitive Notes so cancelled).
(iv)Transfer of Rule 144A Global Notes to Definitive Notes. If, in accordance with Section 2.10, a holder of a beneficial interest in a Rule 144A Global Note wishes at any time to exchange its interest in such Rule 144A Global Note for a Definitive Note or to transfer its interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a Definitive Note in accordance with Section 2.10, such holder may, subject to the immediately succeeding sentence and the rules and procedures of DTC, exchange or transfer, or cause the exchange or transfer of, such interest for a Definitive Note. Upon receipt by the Note Administrator or the Notes Registrar of (A) a duly complete certificate substantially in the form of Exhibit I-3 and (B) appropriate instructions from DTC, if required, the Note Administrator or the Notes Registrar shall
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approve the instructions at DTC to reduce, or cause to be reduced, the Rule 144A Global Note by the aggregate principal amount of the beneficial interest in the Rule 144A Global Note to be transferred or exchanged, record the transfer in the Notes Register in accordance with Section 2.5(a) and upon execution by the Co-Issuers, the Note Administrator shall authenticate and deliver one or more Definitive Notes, registered in the names specified in the instructions described in clause (B) above, in principal amounts designated by the transferee (the aggregate of such principal amounts being equal to the aggregate principal amount of the interest in the Rule 144A Global Note transferred by the transferor).
(v)Transfer of Definitive Notes to Rule 144A Global Notes. If a holder of a Definitive Note wishes at any time to exchange its interest in such Definitive Note for a beneficial interest in a Rule 144A Global Note or to transfer such Definitive Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Rule 144A Global Note, such holder may, subject to the immediately succeeding sentence and the rules and procedures of DTC, exchange or transfer, or cause the exchange or transfer of, such Definitive Note for beneficial interest in a Rule 144A Global Note (provided that no IAI may hold an interest in a Rule 144A Global Note). Upon receipt by the Note Administrator or the Notes Registrar of (A) a Holder’s Definitive Note properly endorsed for assignment to the transferee; (B) a duly completed certificate substantially in the form of Exhibit I-2 attached hereto; (C) instructions given in accordance with DTC’s procedures from an Agent Member to instruct DTC to cause to be credited a beneficial interest in the Rule 144A Global Notes in an amount equal to the Definitive Notes to be transferred or exchanged; and (D) a written order given in accordance with DTC’s procedures containing information regarding the participant’s account of DTC to be credited with such increase, the Note Administrator or the Notes Registrar shall cancel such Definitive Note in accordance herewith, record the transfer in the Notes Register in accordance with Section 2.5(a) and approve the instructions at DTC, concurrently with such cancellation, to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the corresponding Rule 144A Global Note equal to the principal amount of the Definitive Note transferred or exchanged.
(vi)Other Exchanges. In the event that, pursuant to Section 2.10 hereof, a Global Note is exchanged for Definitive Notes, such Notes may be exchanged for one another only in accordance with such procedures as are substantially consistent with the provisions above (including certification requirements intended to ensure that such transfers are to a QIB who is also a Qualified Purchaser or are to a non-U.S. Person, or otherwise comply with Rule 144A or Regulation S, as the case may be) and as may be from time to time adopted by the Issuer, the Co-Issuer and the Note Administrator.
(f)Removal of Legend. If Notes are issued upon the transfer, exchange or replacement of Notes bearing the applicable legends set forth in Exhibits A-1, A-2, B-1, B-2, C-1, C-2, D-1, D-2, E-1, E-2, F-1, F-2, G-1, G-2, H-1 and H-2 hereto, and if a request is made to remove such applicable legend on such Notes, the Notes so issued shall bear such applicable
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legend, or such applicable legend shall not be removed, as the case may be, unless there is delivered to the Issuer and the Co-Issuer such satisfactory evidence, which may include an Opinion of Counsel of an attorney at law licensed to practice law in the State of New York (and addressed to the Issuer and the Note Administrator), as may be reasonably required by the Issuer and the Co-Issuer, if applicable, to the effect that neither such applicable legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Regulation S, as applicable, the Investment Company Act or ERISA. So long as the Issuer and the Co-Issuer is relying on an exemption under or promulgated pursuant to the Investment Company Act, the Issuer or the Co-Issuer shall not remove that portion of the legend required to maintain an exemption under or promulgated pursuant to the Investment Company Act. Upon provision of such satisfactory evidence, as confirmed in writing by the Issuer and the Co-Issuer, if applicable, to the Note Administrator, the Note Administrator, at the direction of the Issuer and the Co-Issuer, if applicable, shall authenticate and deliver Notes that do not bear such applicable legend.
(g)Each beneficial owner of Regulation S Global Notes shall be deemed to make the representations and agreements set forth in Exhibit I-1 hereto.
(h)Each beneficial owner of Rule 144A Global Notes shall be deemed to make the representations and agreements set forth in Exhibit I-2 hereto.
(i)Each Holder of Definitive Notes shall make the representations and agreements set forth in the certificate attached as Exhibit I-3 hereto.
(j)Any purported transfer of a Note not in accordance with Section 2.5(a) shall be null and void and shall not be given effect for any purpose hereunder.
(k)Notwithstanding anything contained in this Indenture to the contrary, neither the Note Administrator nor the Notes Registrar (nor any other Transfer Agent) shall be responsible or liable for compliance with applicable federal or state securities laws (including, without limitation, the Securities Act or Rule 144A or Regulation S promulgated thereunder), the Investment Company Act, ERISA or the Code (or any applicable regulations thereunder); provided, however, that if a specified transfer certificate or Opinion of Counsel is required by the express terms of this Section 2.5 to be delivered to the Note Administrator or Notes Registrar prior to registration of transfer of a Note, the Note Administrator and/or Notes Registrar, as applicable, is required to request, as a condition for registering the transfer of the Note, such certificate or Opinion of Counsel and to examine the same to determine whether it conforms on its face to the requirements hereof (and the Note Administrator or Notes Registrar, as the case may be, shall promptly notify the party delivering the same if it determines that such certificate or Opinion of Counsel does not so conform).
(l)If the Note Administrator has actual knowledge or is notified by the Issuer, the Co-Issuer or the Collateral Manager that (i) a transfer or attempted or purported transfer of any interest in any Note was consummated in compliance with the provisions of this Section 2.5 on the basis of a materially incorrect certification from the transferee or purported transferee, (ii) a transferee failed to deliver to the Note Administrator any certification required to be
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delivered hereunder or (iii) the holder of any interest in a Note is in breach of any representation or agreement set forth in any certification or any deemed representation or agreement of such holder, the Note Administrator shall not register such attempted or purported transfer and if a transfer has been registered, such transfer shall be absolutely null and void ab initio and shall vest no rights in the purported transferee (such purported transferee, a “Disqualified Transferee”) and the last preceding holder of such interest in such Note that was not a Disqualified Transferee shall be restored to all rights as a Holder thereof retroactively to the date of transfer of such Note by such Holder.
In addition, the Note Administrator may require that the interest in the Note referred to in (i), (ii) or (iii) in the preceding paragraph be transferred to any Person designated by the Issuer or the Collateral Manager at a price determined by the Issuer or the Collateral Manager, based upon its estimation of the prevailing price of such interest and each Holder, by acceptance of an interest in a Note, authorizes the Note Administrator to take such action. In any case, none of the Issuer, the Collateral Manager and the Note Administrator shall not be held responsible for any losses that may be incurred as a result of any required transfer under this Section 2.5(l).
(m)Each Holder of Notes approves and consents to (i) the purchase of the Mortgage Assets by the Issuer from the Seller on the Closing Date and (ii) any other transaction between the Issuer and the Collateral Manager or its Affiliates that are permitted under the terms of this Indenture or the Mortgage Asset Purchase Agreement.
(n)Each Holder of Notes agrees to comply with the Holder AML Obligations.
(o)As long as any Note is Outstanding, any Retained Securities, repurchased Notes and ordinary shares of the Issuer held by LCMT, LFT Holder or any other disregarded entity of LCMT for U.S. federal income tax purposes may not be transferred (whether by means of an actual transfer or a transfer of beneficial ownership for U.S. federal income tax purposes), pledged or hypothecated to any Person (except to an affiliate that is wholly-owned by LCMT and is disregarded for U.S. federal income tax purposes) unless the Issuer (i) receives a No Entity-Level Tax Opinion with respect to such transfer, pledge or hypothecation or (ii) has previously received 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 or Collateral Manager on behalf of the Issuer.
(p)For the avoidance of doubt, the Indenture Accounts (including income, if any, earned on the investments of funds in such account) will be owned by LCMT, if the Issuer is wholly-owned by LCMT, or a Subsequent REIT that wholly owns the Issuer, for federal income tax purposes. The Issuer shall provide to the Note Administrator (i) an IRS Form W-9 or appropriate IRS Form W-8 no later than the Closing Date, and (ii) any additional IRS forms (or updated versions of any previously submitted IRS forms) or other documentation at such time or times required by applicable law or upon the reasonable request of the Note Administrator as may be necessary (x) to reduce or eliminate the imposition of U.S. withholding taxes and (y) to permit the Note Administrator to fulfill its tax reporting obligations under applicable law with respect to the Indenture Accounts or any amounts paid to the Issuer. If any IRS form or other
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documentation previously delivered becomes obsolete or inaccurate in any respect, Issuer shall timely provide to the Note Administrator accurately updated and complete versions of such IRS forms or other documentation. The Note Administrator shall have no liability to Issuer or any other person in connection with any tax withholding amounts paid or withheld from the Indenture Accounts pursuant to applicable law arising from the Issuer’s failure to timely provide an accurate, correct and complete IRS Form W-9, an appropriate IRS Form W-8 or such other documentation contemplated under this paragraph. For the avoidance of doubt, no funds shall be invested with respect to such Indenture Accounts absent the Note Administrator having first received (i) the requisite written investment direction from the Issuer with respect to the investment of such funds, and (ii) the IRS forms and other documentation required by this paragraph.
Section II.6Mutilated, Defaced, Destroyed, Lost or Stolen Note. If (a) any mutilated or defaced Note is surrendered to a Transfer Agent, or if there shall be delivered to the Issuer, the Co-Issuer, the Trustee, the Note Administrator and the relevant Transfer Agent (each, a “Specified Person”) evidence to their reasonable satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to each Specified Person such security or indemnity as may be required by each Specified Person to save each of them and any agent of any of them harmless, then, in the absence of notice to the Specified Persons that such Note has been acquired by a bona fide purchaser, the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, shall execute and, upon Issuer Request (which Issuer Request shall be deemed to have been given upon receipt by the Note Administrator of a Note that has been signed by the Issuer, and the Co-Issuer, if applicable), the Note Administrator shall authenticate and deliver, in lieu of any such mutilated, defaced, destroyed, lost or stolen Note, a new Note, of like tenor (including the same date of issuance) and equal principal amount, registered in the same manner, dated the date of its authentication, bearing interest from the date to which interest has been paid on the mutilated, defaced, destroyed, lost or stolen Note and bearing a number not contemporaneously outstanding.
If, after delivery of such new Note, a bona fide purchaser of the predecessor Note presents for payment, transfer or exchange such predecessor Note, any Specified Person shall be entitled to recover such new Note from the Person to whom it was delivered or any Person taking therefrom, and each Specified Person shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by such Specified Person in connection therewith.
In case any such mutilated, defaced, destroyed, lost or stolen Note has become due and payable, the Issuer and the Co-Issuer, if applicable, in their discretion may, instead of issuing a new Note, pay such Note without requiring surrender thereof except that any mutilated or defaced Note shall be surrendered.
Upon the issuance of any new Note under this Section 2.6, the Issuer and the Co-Issuer, if applicable, may require the payment by the registered Holder thereof of a sum
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sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.6 in lieu of any mutilated, defaced, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer and the Co-Issuer, if applicable, and such new Note shall be entitled, subject to the second paragraph of this Section 2.6, to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Notes.
Section II.7Payment of Principal and Interest and Other Amounts; Principal and Interest Rights Preserved.   Each Class of Notes shall accrue interest during each Interest Accrual Period at the Note Interest Rate applicable to such Class and such interest will be payable in arrears on each Payment Date on the Aggregate Outstanding Amount thereof on the first day of the related Interest Accrual Period (after giving effect to payments of principal thereof on such date), except as otherwise set forth below. Payment of interest on each Class of Notes will be subordinated to the payment of interest on each related Class of Notes senior thereto. Interest will cease to accrue on each Note, or in the case of a partial repayment, on such repaid part, from the date of repayment or the Stated Maturity Date unless payment of principal is improperly withheld or unless an Event of Default occurs with respect to such payments of principal. To the extent lawful and enforceable, interest on any interest that is not paid when due on the Class A Notes; or, if no Class A Notes are Outstanding, the Notes of the Controlling Class, shall accrue at the Note Interest Rate applicable to such Class until paid as provided herein.
(b)(i) so long as any of the Class A Notes, the Class A-S Notes or the Class B Notes are outstanding, the Class C Deferred Interest will be deferred and added to the Aggregate Outstanding Amount of the Class C Notes and will not be considered “due and payable” until (A) the Payment Date on which funds are available to pay such Class C Deferred Interest in accordance with the Priority of Payments, (B) a Redemption Date or (C) the Stated Maturity Date, (ii) so long as any of the Class A Notes, the Class A-S Notes, the Class B Notes or the Class C Notes are outstanding, the Class D Deferred Interest will be deferred and added to the Aggregate Outstanding Amount of the Class D Notes and will not be considered “due and payable” until (A) the Payment Date on which funds are available to pay such Class D Deferred Interest in accordance with the Priority of Payments, (B) a Redemption Date or (C) the Stated Maturity Date, (iii) so long as any of the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes or the Class D Notes are outstanding, the Class E Deferred Interest will be deferred and added to the Aggregate Outstanding Amount of the Class E Notes and will not be considered “due and payable” until (A) the Payment Date on which funds are available to pay such Class E Deferred Interest in accordance with the Priority of Payments, (B) a Redemption Date or (C) the Stated Maturity Date, (iv) so long as any of the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes or the Class E Notes are
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outstanding, the Class F Deferred Interest will be deferred and added to the Aggregate Outstanding Amount of the Class F Notes and will not be considered “due and payable” until (A) the Payment Date on which funds are available to pay such Class F Deferred Interest in accordance with the Priority of Payments, (B) a Redemption Date or (C) the Stated Maturity Date and (v) so long as any of the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes or the Class F Notes are outstanding, the Class G Deferred Interest will be deferred and added to the Aggregate Outstanding Amount of the Class G Notes and will not be considered “due and payable” until (A) the Payment Date on which funds are available to pay such Class G Deferred Interest in accordance with the Priority of Payments, (B) a Redemption Date or (C) the Stated Maturity Date.
(c)The principal of each Class of Notes matures at par and is due and payable on the Stated Maturity Date for such Class, unless such principal has been previously repaid or unless the unpaid principal of such Note becomes due and payable at an earlier date by declaration of acceleration, call for redemption or otherwise. Notwithstanding the foregoing, the payment of principal of each Class of Notes may only occur pursuant to the Priority of Payments. The payment of principal on any Note (x) may only occur after each Class more senior thereto is no longer Outstanding and (y) is subordinated to the payment on each Payment Date of the principal due and payable on each Class more senior thereto and certain other amounts in accordance with the Priority of Payments. Payments of principal on any Class of Notes that are not paid, in accordance with the Priority of Payments, on any Payment Date (other than the Payment Date which is the Stated Maturity Date (or the earlier date of Maturity) of such Class of Notes or any Redemption Date), because of insufficient funds therefor shall not be considered “due and payable” for purposes of Section 5.1(a) until the Payment Date on which such principal may be paid in accordance with the Priority of Payments or all Classes of Notes most senior thereto with respect to such Class have been paid in full. Payments of principal on the Notes in connection with a Clean-up Call, Tax Redemption, Auction Call Redemption or Optional Redemption will be made in accordance with Section 9.1 and the Priority of Payments.
(d)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)), Form W-8BEN-E (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)), 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
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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 and otherwise as may be necessary or desirable to ensure compliance with all applicable laws. Each Holder and each beneficial owner of Notes agree to provide any certification requested pursuant to this Section 2.7(d) and to update or replace such form or certification in accordance with its terms or its subsequent amendments. Furthermore, the Issuer shall require, as a condition to payment without the imposition of U.S. withholding tax under FATCA, information to comply with FATCA requirements pursuant to clause (xii) of the representations and warranties set forth under the third paragraph of Exhibit I-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 I-2 hereto, as deemed made pursuant to Section 2.5(h) hereto, or pursuant to clause (xi) of the representations and warranties set forth under the third paragraph of Exhibit I-3 hereto, made pursuant to Section 2.5(i) hereto, as applicable. Noteholders shall be required to provide to the Issuer, the Note Administrator or their agents all information, documentation or certifications acceptable to it to permit the Issuer or the Note Administrator to comply with its tax reporting obligations under applicable law, including any applicable cost basis reporting obligations.
(e)Payments in respect of interest on and principal on 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
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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.
(f)Subject to the provisions of Sections 2.7(a) and Section 2.7(e) 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).
(g)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.
(h)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.
(i)Interest accrued with respect to the Notes shall be calculated as described in the applicable form of Note attached hereto.
(j)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.
(k)Notwithstanding anything contained in this Indenture to the contrary, the obligations of the Issuer and the Co-Issuer under the Offered Notes, this Indenture and the other Transaction Documents are from time to time and at any time limited-recourse obligations of the Issuer and non-recourse obligations of the Co-Issuer. The Class F Notes and the Class G Notes are limited recourse obligations of the Issuer. The Notes and the obligations of the Issuer under this Indenture and the other Transaction Documents are from time to time and at any time payable solely from the Collateral available at such time and following realization of the Collateral, all obligations of the Co-Issuers, with respect to the Offered Notes, this Indenture and the other Transaction Documents or the Issuer, with respect to the Class F Notes and the Class G Notes, 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 or this Indenture against any Officer, director, employee, shareholder, limited partner or incorporator of the Issuer, the Co-Issuer or any of their respective successors or assigns. 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
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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.
(l)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.
(m)Notwithstanding any of the foregoing provisions with respect to payments of principal of and interest on the Notes (but subject to Sections 2.7(f) and (i)), 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.
(n)Payments in respect of the Preferred Shares as contemplated by Sections 11.1(a)(i)(22), 11.1(a)(ii)(20) and 11.1(a)(iii)(19) shall be made by the Paying Agent to the Preferred Share Paying Agent.
Section II.8Persons Deemed Owners. The Issuer, the Co-Issuer the Trustee, the Note Administrator, 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 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 Note Administrator shall deliver to the Preferred Share Paying Agent the distributions thereon for distribution to the Preferred Shareholders.
Section II.9Cancellation. 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
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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 II.10Global 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), Section 2.5(e)(iv) or Section 2.5(e)(vi);
(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 I-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 Note Administrator 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, with respect to the Offered Notes, or the Issuer, with respect to the Non-Offered Notes, 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 ninety (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 Note 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 Note Administrator 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
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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 Exhibit A-2, B-2, C-2, D-2, E-2, F-2, G-2 and H-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, with respect to the Offered Notes, or the Issuer, with respect to the Non-Offered Notes, may execute and, upon Issuer Order, the Note Administrator 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, with respect to the Offered Notes, or the Issuer, with respect to the Non-Offered Notes, shall execute, and the Note Administrator 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.
Section II.11U.S. Tax Treatment of Notes and the Issuer.   Each of the Issuer and the Co-Issuer intends that, for U.S. federal income tax purposes, the Notes (unless held by LCMT or a Subsequent REIT or any entity disregarded into LCMT or a Subsequent REIT, as applicable) be treated as debt and that the Issuer be treated as a Qualified REIT Subsidiary
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(unless the Issuer has received a No Entity-Level Tax 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, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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 completed 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(d).
Section II.12Authenticating Agents. Upon the request of the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, the Note Administrator shall, and if the Note Administrator so chooses the Note Administrator may, pursuant to this Indenture, appoint one (1) 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 Person into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any Person 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
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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 II.13Forced Sale on Failure to Comply with Restrictions.   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 a QIB (or, if applicable, an IAI) and 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 (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, provided, however, that with respect to the Paying Agent, only if a Responsible Officer of the Paying Agent has actual knowledge), 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 thirty (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.
(c)If the Issuer (or its agent on its behalf) determines that a Holder has failed for any reason to (i) comply with the Holder AML Obligations (ii) such information or
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documentation is not accurate or complete, or (iii) the Issuer otherwise reasonably determines that such holder’s acquisition, holding or transfer of an interest in any Note would cause the Issuer to be unable to achieve AML Compliance (any such person a “Non-Permitted AML Holder”), then the Issuer (or its agent acting on its behalf) shall promptly after discovery that such Person is a Non-Permitted AML Holder by the Issuer (or its agent on its behalf), send notice (or cause notice to be sent) to such Non-Permitted AML Holder demanding that such Non-Permitted AML Holder transfer its interest to a Person that is not a Non-Permitted AML Holder within thirty (30) days of the date of such notice. If such Non-Permitted AML Holder fails to so transfer its Note or interest therein, the Issuer shall have the right, without further notice to the Non-Permitted AML Holder, to sell such Note or interest therein to a purchaser selected by the Issuer that is not a Non-Permitted AML 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 AML Holder and each other Person in the chain of title from the Holder to the Non-Permitted AML 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 AML Holder. The terms and conditions of any sale under this Section 2.13(c) 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 II.14No 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.
Section II.15Credit Risk Retention. The Securitization Sponsor shall timely deliver (or cause to be timely delivered) to the Trustee any notices contemplated by Section 10.12(a)(iv)(8) of this Indenture.
Section II.16Effect of Benchmark Transition Event.
(a)The Collateral Manager shall determine when a Benchmark Transition Event has occurred and, thereafter, shall determine the applicable Benchmark Replacement. The Collateral Manager shall provide prompt written notice to the Issuer, the Trustee, the Note Administrator, the Servicer, the Special Servicer, the Calculation Agent and the 17g-5 Information Provider (who will be required to promptly post such notice to the 17g-5 Website) of its determination that a Benchmark Transition Event has occurred (other than the Benchmark Transition Event related to the FCA/IBA Announcements). In addition, not less than 30 days prior to any Benchmark Replacement Date, the Collateral Manager shall be required to provide prompt written notice to the Issuer, the Trustee, the Note Administrator, the Servicer, the Special Servicer, the Calculation Agent and the 17g-5 Information Provider (who will be required to
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promptly post such notice to the 17g-5 Website) of the applicable Benchmark Replacement. From and after the designated Benchmark Replacement Date, the then-current Benchmark shall be replaced with the Benchmark Replacement designated by the Collateral Manager. Notwithstanding the occurrence of a Benchmark Transition Event, amounts payable on the Notes shall be determined with respect to the then-current Benchmark (which may be LIBOR as determined in accordance with methods specified in this Indenture) until the occurrence of the related Benchmark Replacement Date.
(b)If a Benchmark Replacement is selected pursuant to clauses (2) – (4) of the definition of “Benchmark Replacement”, then on the first Business Day of each calendar quarter following such selection, the Collateral Manager shall determine whether a redetermination of the Benchmark Replacement by the Collateral Manager on such date would result in the selection of a Benchmark Replacement under clause (1) of the definition of “Benchmark Replacement”, and if such redetermination would result in the selection of a Benchmark Replacement under clause (1) of the definition of “Benchmark Replacement”, the Collateral Manager shall provide written notice of the same and the applicable Benchmark Replacement Conforming Changes, if any, to the Issuer, the Trustee, the Note Administrator, the Servicer, the Special Servicer, the Calculation Agent and the 17g-5 Information Provider (who shall promptly post such notice to the 17g-5 Website), and then (x) the Benchmark Replacement Adjustment shall be redetermined utilizing the Unadjusted Benchmark Replacement corresponding to the Benchmark Replacement under clause (1) of the definition of “Benchmark Replacement” and (y) such redetermined Benchmark Replacement shall become the Benchmark on each Benchmark Determination Date on or after such date. If redetermination of the Benchmark Replacement on such date as described in the preceding sentence would not result in the selection of a Benchmark Replacement under clause (1) of the definition of “Benchmark Replacement”, then the Benchmark shall remain the Benchmark Replacement as previously determined.
(c)In connection with the occurrence of any Benchmark Transition Event (or notice of the redetermination of the Benchmark Replacement to Term SOFR in accordance with Section 2.16(b)) and its related Benchmark Replacement Date, and from time to time thereafter, the Collateral Manager shall direct the parties hereto by Issuer Order to enter into a supplemental indenture in accordance with Section 8.1(b)(iv) to make such Benchmark Replacement Conforming Changes, if any, as the Collateral Manager determines may be necessary or desirable to administer, implement or adopt the applicable Benchmark or the Benchmark Replacement.
(d)Any determination, implementation, adoption, decision, proposal or election that may be made by the Collateral Manager pursuant to this Section 2.16 with respect to any Benchmark Transition Event, Benchmark Replacement Date, Benchmark Replacement, Benchmark Replacement Adjustment or Benchmark Replacement Conforming Changes including any determination with respect to a tenor, observation period, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, shall be conclusive and binding absent manifest error, may be made in the sole discretion of the Collateral Manager and may be relied upon by
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the Issuer, the Co-Issuer, the Note Administrator, the Trustee, the Calculation Agent, the Servicer and the Special Servicer without investigation.
(e)The Collateral Manager may (at the Collateral Manager’s expense) assign to another entity (other than the Trustee or Note Administrator) any or all of the Collateral Manager’s rights to make determinations with respect to the Benchmark Replacement, but only so long as the Collateral Manager has provided advance notice of such assignment to the Issuer, the Co-Issuer, the Advancing Agent, the Servicer, the Special Servicer, the Trustee, the Note Administrator, the Calculation Agent (if different from the Note Administrator), the Noteholders, the Preferred Shareholders and the Rating Agencies. Any out-of-pocket costs and expenses incurred by such assignee in discharging its obligations, and any indemnification amounts or liquidated damages payable to such assignee will be payable as Company Administrative Expenses in accordance with the Priority of Payments. Any fees of such assignee will be payable by the Collateral Manager.
(f)Notwithstanding anything to the contrary in this Indenture, the Collateral Manager may send any notices with respect to any Benchmark Transition Event, Benchmark Replacement Date, Benchmark Replacement, Benchmark Replacement Adjustment, Benchmark Replacement Conforming Changes or any other determination or selection made under this Section 2.16, by email (or other electronic communication).
(g)The Collateral Manager shall not have any liability or responsibility for the determination or selection with respect to any Benchmark Transition Event, Benchmark Replacement Date, Benchmark Replacement, Benchmark Replacement Adjustment, Benchmark Replacement Conforming Changes or any other determination or selection made under this Section 2.16 (including, without limitation, whether the conditions for such determination or selection have been satisfied).
ARTICLE III

CONDITIONS PRECEDENT; PLEDGED MORTGAGE ASSETS
Section III.1General Provisions. The Notes to be issued on the Closing Date shall be executed by the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, upon compliance with Section 3.2 and shall be delivered to the Note Administrator for authentication and thereupon the same shall be authenticated and delivered by the Note Administrator 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, the Servicing Agreement, the Future Funding Agreement, the Placement 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
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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 and (C) the Directors authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon;
(b)an Officer’s Certificate of the Co-Issuer (i) evidencing the authorization by Board Resolution of the execution and delivery of this Indenture 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 and (C) 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 Cadwalader, Wickersham & Taft LLP (which opinion 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)an opinion of Cadwalader, Wickersham & Taft LLP, special counsel to the Co-Issuers, dated the Closing Date, relating to the validity of the Grant hereunder and the perfection of the Trustee’s security interest in the Collateral;
(e)opinions of Cadwalader, Wickersham & Taft LLP, counsel to the Co-Issuers and the Seller, regarding (i) certain true sale and non-consolidation matters with respect to the Issuer and (ii) certain corporate and enforceability matters with respect to the Co-Issuers, LFT Holder, LCMT, LFT REIT, the Collateral Manager, the Servicer, the Special Servicer, OREC Structured Finance Co., LLC dba Lument Structured Finance and ORIX Real Estate Capital Holdings, LLC;
(f)an opinion of Mayer Brown LLP, special counsel to LCMT, dated the Closing Date, regarding its qualification and taxation as a REIT and the Issuer’s qualification as a Qualified REIT Subsidiary or other disregarded entity of LCMT for U.S. federal income tax purposes;
(g)an opinion of Walker’s, Cayman Islands counsel to the Issuer, dated the Closing Date, regarding certain issues of Cayman Islands law;
(h)opinions of Richards, Layton & Finger LLP, special Delaware counsel to the Co-Issuer and LFT Holder, dated the Closing Date, regarding certain issues of Delaware law and regarding authority to file bankruptcy;
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(i)an opinion of Mayer Brown LLP, dated as of the Closing Date, regarding certain corporate matters with respect to LFT REIT and LCMT;
(j)an opinion of Miles & Stockbridge PC, dated as of the Closing Date, regarding certain corporate matters with respect to LFT REIT and LCMT;
(k)an opinion in-house counsel to the Collateral Manager, the Servicer, the Special Servicer, OREC Structured Finance Co., LLC dba Lument Structured Finance and ORIX Real Estate Capital Holdings, LLC, dated as of the Closing Date, regarding certain corporate matters;
(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 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;
(o)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 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;
(p)executed counterparts of the Mortgage Asset Purchase Agreement, the Servicing Agreement, the Collateral Management Agreement, the Advisory Committee Member Agreement, the Participation Agreements, the Future Funding Agreement, the Placement Agreement, the Preferred Share Paying Agency Agreement and the Securities Account Control Agreement;
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(q)an Accountants’ Report on applying agreed-upon procedures with respect to certain information concerning the Mortgage Assets in the data tape, dated May 17, 2021, an Accountants’ Report on applying agreed-upon procedures with respect to certain information concerning the Mortgage Assets in the Preliminary Offering Memorandum of the Co-Issuers, dated May 24, 2021, and the Structural and Collateral Term Sheet dated May 24, 2021, and an Accountant’s Report on applying agreed-upon procedures with respect to certain information concerning the Mortgage Assets in the Offering Memorandum;
(r)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;
(s)an Issuer Order executed by the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, directing the Note Administrator 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
(t)the Future Funding Holder certifications pursuant to Section 12.5(b).
Section III.2Security 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 Mortgage Assets. 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 and the transfer of all Closing Date Mortgage Assets acquired in connection therewith purchased by the Issuer on the Closing Date (as set forth in Schedule A hereto) to the Trustee, without recourse (except as expressly provided in each applicable Mortgage Asset Purchase Agreement), in the manner provided in Section 3.3(a) and the crediting to the Custodial Account by the Securities Intermediary of such Closing Date Mortgage Assets.
(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 Mortgage Asset 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 Mortgage Asset 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 Mortgage Asset in good faith without notice of any adverse claim, except as described in paragraph (i) above;
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(iii)the Issuer has not assigned, pledged or otherwise encumbered any interest in such Closing Date Mortgage Asset (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 Asset Documents with respect to such Closing Date Mortgage Asset do not prohibit the Issuer from Granting a security interest in and assigning and pledging such Closing Date Mortgage Asset to the Trustee;
(v)the information set forth with respect to each such Closing Date Mortgage Asset in Schedule A is true correct;
(vi)the Closing Date Mortgage Assets included in the Collateral satisfy the requirements of Section 3.2(a);
(vii)    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 Closing Date Mortgage Assets pledged to the Trustee for inclusion in the Collateral on the Closing Date; and
(2)upon the delivery of each mortgage note evidencing the obligations of the borrowers under each Mortgage Asset to the Custodian on behalf of the Trustee, at the Custodian’s office in Minneapolis, Minnesota, the Trustee’s security interest in all Mortgage Assets 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’s and/or Co-Issuer’s receipt of a signed letter from the Rating Agencies confirming that (i) the Class A Notes have been issued with a rating of “AAA(sf)” by KBRA and “Aaa(sf)” by Moody’s, (ii) the Class A-S Notes have been issued with a rating of “AAA(sf)” by KBRA, (iii) the Class B Notes have been issued with a rating of at least “AA-(sf)” by KBRA, (iv) the Class C Notes have been issued with a rating of at least “A-(sf)” by KBRA, (v) the Class D Notes have been issued with a rating of at least “BBB(sf)” by KBRA, (vi) the Class E Notes have been issued with a rating of at least “BBB-(sf)” by KBRA, (vii) the Class F Notes have been issued with a rating of at least “BB-(sf)” by KBRA and (viii) the Class G Notes have been issued with a rating of at least “B-(sf)” by KBRA, and that such ratings are in full force and effect on the Closing Date.
(d)Accounts. Evidence of the establishment of the Payment Account, the Preferred Share Distribution Account, the Reinvestment Account, the Custodial Account, the Unused Proceeds Account, the Collection Account, the Future Funding Reserve Account, the Expense Reserve Account and the Participated Mortgage Loan 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.
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(f)Deposit to Unused Proceeds Account. On the Closing Date, the Issuer shall deposit U.S.$313,627,522.03 into the Unused Proceeds Account.
(g)Deposit to Reinvestment Account. On the Closing Date, the Issuer shall deposit U.S.$16,633,299.24 into the Reinvestment Account.
(h)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 LFT Holder.
Section III.3Transfer of Collateral.   Wells Fargo Bank, National Association, acting through its Document Custody division (in such capacity, the “Custodian”), is hereby appointed as Custodian to hold all of the mortgage notes or participation certificates required to be delivered to it by the Issuer on the Closing Date or on the closing date of the acquisition of any other Mortgage Asset, 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 “Baa1” by Moody’s. Subject to the limited right to relocate Collateral set forth in Section 7.5(b), the Custodian shall hold all Asset 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 Wells Fargo Bank, National Association, as “securities intermediary” (within the meaning of Section 8-102(a)(14) of the UCC as in effect in the State of New York) (together with its permitted successors and assigns in the trusts hereunder, the “Securities Intermediary”), 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 Collateral that consists 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
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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 that consists of General Intangibles, 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 Mortgage Asset 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 in the form of Exhibit J attached hereto for such Mortgage Asset provided to the Custodian (with a copy to the Servicer)
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by the Issuer (or the Seller) the following documents (collectively, together with any additional documents required to be added to the Mortgage Asset File, the “Mortgage Asset File”):
(i)if such Mortgage Asset is a Mortgage Loan:
(1)the original mortgage note or promissory note, as applicable, bearing all intervening endorsements, endorsed in blank or endorsed “Pay to the order of LFT CRE 2021-FL1, LTD., an exempted company incorporated in the Cayman Islands with limited liability, without recourse, except as expressly set forth in that certain Mortgage Asset Purchase Agreement, dated as of June 14, 2021” or “Pay to the order of LFT CRE 2021-FL1, LTD., an exempted company incorporated in the Cayman Islands with limited liability, for the benefit of itself, and for the benefit of any companion participation holder(s), without recourse, except as expressly set forth in that certain Mortgage Asset Purchase Agreement, dated as of June 14, 2021, and subject to the rights and obligations of any companion participation holder(s) under any related participation agreement(s)” and signed in the name of the last endorsee by an authorized Person (or, if such original mortgage note or promissory note, as applicable, has been lost, an affidavit to such effect from the originator thereof or another prior holder and a customary indemnity from such originator in favor of the Issuer for any costs, losses or damages arising from the failure to deliver the original mortgage note or promissory note, as applicable, together with a copy of such mortgage note or promissory note, as applicable);
(2)an original blanket assignment of all unrecorded documents with respect to such Mortgage Loan to the Issuer or in the name of the Issuer, in each case in form and substance acceptable for recording;
(3)the original or a copy of any guarantee executed in connection with the promissory note, if any;
(4)the original mortgage with evidence of recording thereon, or a copy thereof together with an Officer’s Certificate of the Issuer (or the Seller) certifying that such represents a true and correct copy of the original and that such original has been submitted or delivered to an escrow agent for recordation in the appropriate governmental recording office of the jurisdiction where the encumbered property is located, in which case, recordation information shall not be required;
(5)the originals of all assumption, modification, consolidation or extension agreements with evidence of recording thereon (or a copy thereof together with an Officer’s Certificate of the Issuer (or the Seller) certifying that such represents a true and correct copy of the original and that such original has been submitted or delivered to an escrow agent for recordation in the appropriate governmental recording office of the jurisdiction where the encumbered property is located, in which case, recordation information shall not be required), together
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with any other recorded document relating to the Mortgage Loan otherwise included in the Mortgage Asset File;
(6)the original assignment of mortgage in blank or in the name of the Issuer, in form and substance acceptable for recording and signed in the name of the last endorsee;
(7)the originals of all intervening assignments of mortgage, if any, with evidence of recording thereon, showing an unbroken chain of title from the originator thereof to the last endorsee, or copies thereof together with an Officer’s Certificate of the Issuer certifying that such represent true and correct copies of the originals and that such originals have each been submitted or delivered to an escrow agent for recordation in the appropriate governmental recording office of the jurisdiction where the encumbered property is located, in which case, recordation information shall not be required;
(8)an original or copy (which may be in the form of an electronically issued title policy) 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)the original or a copy of any security agreement, chattel mortgage or equivalent document executed in connection with the Mortgage Loan, if any;
(10)the original assignment of leases and rents, if any, with evidence of recording thereon, or a copy thereof together with an Officer’s Certificate of the Issuer certifying that such copy represents a true and correct copy of the original that has been submitted or delivered to an escrow agent for recordation in the appropriate governmental recording office of the jurisdiction where the encumbered property is located, in which case, recordation information shall not be required;
(11)the original assignment of any assignment of leases and rents in blank or in the name of the Issuer, in form and substance acceptable for recording;
(12)a filed copy of the UCC-1 financing statements with evidence of filing thereon, and UCC-3 assignments in blank, which UCC-3 assignments shall be in form and substance acceptable for filing;
(13)the original or a copy of any related loan agreement;
(14)the original or a copy of any related guarantee;
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(15)the original or a copy of the environmental indemnity agreement, if any;
(16)the original of any general collateral assignment of all other documents held by the Issuer in connection with the Mortgage Loan;
(17)an original or a copy of any disbursement letter from the collateral obligor to the original mortgagee;
(18)an original or a copy of the survey of the related Mortgaged Properties;
(19)a copy of any property management agreements;
(20)a copy of any ground leases;
(21)a copy of any related environmental insurance policy and environmental report with respect to the related Mortgaged Properties;
(22)with respect to any Mortgage Loan with related mezzanine or other subordinate debt (other than a companion participation), a copy of any related co-lender agreement, intercreditor agreement, subordination agreement or other similar agreement;
(23)[reserved]; and
(24)a copy of any opinion of counsel issued in connection with such Mortgage Loan;
(ii)if such Mortgage Asset is a Participation:
(1)each of the documents specified in (i) above with respect to the related Mortgage Loan (other than a Non-Serviced Mortgage Asset);
(2)an original or a copy of the related Participation Agreement;
(3)an original of any participation certificate if any evidencing such Participation in the name of the Issuer;
(4)a copy of any related companion participation certificate; and
(5)an original assignment of the participation certificate evidencing such Participation endorsed in blank by the Issuer.
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
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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 Custodian shall constitute certification that (i) each original note and participation certificate, if applicable, required to be delivered to the Custodian on behalf of the Trustee by the Issuer (or the Seller) and all allonges thereto, if any, have been received by the Custodian; and (ii) such original note and participation certificate, if applicable, 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 Mortgage Asset. The Custodian agrees to review or cause to be reviewed the Mortgage Asset 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 N 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, the Servicer in electronic format, including Excel-compatible format), (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 Mortgage Asset. The Custodian shall have no responsibility for reviewing the Mortgage Asset 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 one hundred twentieth (120th) day after the Closing Date and quarterly thereafter until the day on which all material exceptions have been removed, 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 Mortgage Asset 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, the Collateral Manager, Servicer or Special Servicer, the Issuer shall deliver (or cause to be delivered) to the Custodian any Asset Document in the possession of the Issuer and not previously delivered hereunder (including originals of Asset Documents not previously required to
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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 Mortgage 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 and the Servicer, on behalf of the Issuer, a Certification in the form of Exhibit K 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 Collateral Manager, the Servicer or the Special Servicer, the Custodian shall, upon delivery by the Collateral Manager, the Servicer or Special Servicer, as applicable, of a request in the form of Exhibit J hereto (a “Request for Release”), release to the Collateral Manager, the Servicer or the Special Servicer, as applicable, such of the Asset Documents then in its custody as the Collateral Manager, the Servicer or Special Servicer, as applicable, reasonably so requests. By submission of any such Request for Release, the Collateral Manager, the Servicer or the Special Servicer, as applicable, shall be deemed to have represented and warranted that it has determined in accordance with the Collateral Management Standard or the Servicing Standard, respectively, set forth in the Collateral Management Agreement or the Servicing Agreement, as the case may be, that the requested release is necessary for the administration of such Mortgage Loan hereunder or under the Collateral Management Agreement or under the Servicing Agreement or for the protection of the security interest of the Trustee under this Indenture. The Collateral Manager, the Servicer or the Special Servicer shall return to the Custodian each Asset Document released from custody pursuant to this clause (iii) within twenty (20) Business Days of receipt thereof (except such Asset 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 Mortgage Asset that is consummated within such twenty (20)day period). Notwithstanding the foregoing provisions of this clause (iii), any note, participation certificate or other instrument evidencing a Pledged Mortgage Asset shall be released only for the purpose of (1) a sale, exchange or other disposition of such Pledged Mortgage Asset that is permitted in accordance with the terms of this Indenture, (2) presentation, collection, renewal or registration of transfer of such Mortgage Asset or (3) in the case of any note, in connection with a payment in full of all amounts owing under such note. The Custodian shall not be responsible for the contents of any Mortgage Asset File while not in the Custodian’s possession pursuant to a Request for Release.
(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:
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(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 (10) 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
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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 Wells Fargo Bank, National Association has agreed 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.
ARTICLE IV

SATISFACTION AND DISCHARGE
Section IV.1Satisfaction 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), the Custodian and the Trustee and the specific obligations set forth below hereunder, (v) the rights, obligations and immunities of the Collateral Manager hereunder, under the Collateral Management and under the Servicing Agreement, 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)    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
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and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 7.3) have been delivered to the Notes Registrar for cancellation; or
(2)all Notes not theretofore delivered to the Notes 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 noncallable 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 Cadwalader, Wickersham & Taft LLP or Mayer Brown 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)    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
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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 Certificate 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 IV.2Application 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 IV.3Repayment 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 IV.4Limitation 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 Mortgage Assets 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.
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ARTICLE V

REMEDIES
Section V.1Events 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, Class A-S Notes or Class B Notes (or, if none of the Class A Notes, Class A-S Notes or Class B Notes are Outstanding, on any other Class of Notes at the time such Class of Notes is 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, Trustee 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, Trustee 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 in excess of $100,000 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, Trustee 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 Investment Company Act;
(e)a default in any material respect 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
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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 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;
(i)the Issuer loses its status as a Qualified REIT Subsidiary or other disregarded entity of LCMT, a Subsequent 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 or taxable mortgage pool) 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
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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 (4) and (20) 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; or
(j)if the aggregate principal balance of (1) all Non-Controlling Participations owned by the Issuer and (2) all other assets that do not qualify as “qualifying interests” in real estate for purposes of Section 3(c)(5)(c) of the Investment Company Act (as described in the related no-action letters and other guidance provided by the SEC) owned by the Issuer is in excess of 45% of the aggregate principal balance of all Mortgage Assets and other assets then owned by the Issuer.
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 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 Note Administrator shall promptly notify, in writing, the Trustee, the Noteholders and the Rating Agencies of the occurrence of such Event of Default.
Section V.2Acceleration of Maturity; Rescission and Annulment.   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 of each Class of Offered Notes voting as a separate Class (excluding any Notes owned by the Collateral Manager or any of its Affiliates), or if no Class of Offered Notes is outstanding, a Majority of the Class F Notes or, if no Class of Offered Notes and no Class F Notes are outstanding, a Majority of the Class G Notes), 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 Offered Notes (voting as a separate Class), or if no Class of Offered Notes is outstanding, a Majority of the Class F Notes and the Class G Notes, other than with respect to an Event of
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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 on 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; and
(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
(ii)the Trustee has received notice that all Events of Default, other than the non-payment of the interest and principal on 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.
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(d)As security for the payment by the Issuer of the compensation and expenses of the Trustee, the Custodian, the Note Administrator, and any sums the Trustee, the Custodian, 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 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 V.3Collection of Indebtedness and Suits for Enforcement by Trustee.   The Issuer covenants that if a Default shall occur in respect of the payment of any interest on any Class A Note, the payment of principal on any Class A Note (but only after interest with respect to the Class A Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of interest on any Class A-S Note (but only after interest and principal with respect to the Class A Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of principal on any Class A-S Note (but only after interest and principal with respect to the Class A Notes and interest with respect to the Class A-S Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of interest on any Class B Note (but only after interest with respect to the Class A Notes and the Class A-S Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of principal on any Class B Note (but only after interest and principal with respect to the Class A Notes and the Class A-S Notes and interest with respect to the Class B Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of interest on any Class C Note (but only after interest with respect to the Class A Notes, the Class A-S Notes and Class B Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of principal on any Class C Note (but only after interest and principal with respect to the Class A Notes, the Class A-S Notes and the Class B Notes and interest with respect to the Class C Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of interest on any Class D Note (but only after interest with respect to the Class A Notes, the Class A-S Notes, the Class B Notes and the Class C Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full) or the payment of principal on any Class D Note (but only after interest and principal with respect to the Class A Notes, the Class A-S Notes, the Class B Notes and the Class C Notes and interest with respect to the Class C Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full), the payment of interest on any Class E Note (but only after interest with respect to the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes and the Class D Notes and any amounts payable pursuant to Section 11.1(a) having a higher priority have been paid in full) or the payment of principal on any Class E Note (but only after interest and principal with respect to the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes and the Class D Notes and interest with respect to the Class D Notes and any amounts payable pursuant to
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Section 11.1(a) having a higher priority have been paid in full) the Issuer and Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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 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
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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.
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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 Trustee 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.
Section V.4Remedies.   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 Mortgage Assets, 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.
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(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 respective 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) and one day 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, winding up, 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
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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) and one day 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 Advancing Agent, 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, winding up, moratorium, liquidation proceeding or other proceedings under federal or State bankruptcy or similar laws of any jurisdiction.
Section V.5Preservation of Collateral.   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 any accrued and unpaid Deferred Interest), and, upon receipt of information from Persons to whom fees and expenses are payable, all other amounts payable prior to payment of principal on 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 (each voting as a separate Class) directs the sale and liquidation of all or a portion of the Collateral; or
(iii)an Event of Default as described in Section 5.1(j) occurs and is continuing, in which case the Collateral Manager shall promptly proceed to liquidate the Collateral (or such portion of the Collateral as is necessary to cure such Event of Default).
In the event of a sale of all or a portion of the Collateral pursuant to clause (ii) above, the Special Servicer on behalf of the Trustee shall be required to sell that portion of the Collateral identified by the requisite Noteholders 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
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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 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 Mortgage Asset from two dealers (Independent of the Collateral Manager and any of its Affiliates) at the time making a market in such Mortgage Assets that, at that time, engage in the trading, origination or securitization of whole loans or participations similar to the Mortgage Assets (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 Mortgage Asset and provide the Trustee and the Note Administrator with the results thereof. For the purposes of determining issues relating to the market value of any Mortgage Asset 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) based solely on the Collateral Manager’s determination made pursuant to this Section 5.5(c).
Section V.6Trustee 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 V.7Application 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.
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Section V.8Limitation 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 this 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 V.9Unconditional Rights of Noteholders to Receive Principal and Interest. Notwithstanding any other provision in this Indenture (except for Section 2.7(e) and 2.7(n)), 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).
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Section V.10Restoration 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 V.11Rights 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 V.12Delay 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 V.13Control 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 shall be performed by the Special Servicer on behalf of the Trustee, and must satisfy the requirements of Section 5.5.
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Section V.14Waiver 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 V.15Undertaking 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 V.16Waiver 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
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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 V.17Sale of Collateral.   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 (3) Business Days after the date of the determination by the Special Servicer pursuant to Section 5.5(a)(i) hereof, such Sale shall not occur unless and until the Special Servicer 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 Mortgage Assets, shall be upon request and delivery of any such instruments by the Special Servicer. In addition, the Special Servicer, with respect to Mortgage Assets, 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.
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(e)Notwithstanding anything herein to the contrary, any sale by the Trustee of any portion of the Collateral shall be executed by the Special Servicer on behalf of the Issuer, and the Trustee shall have no responsibility or liability therefor.
Section V.18Action 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 VI

THE TRUSTEE AND NOTE ADMINISTRATOR
Section VI.1Certain Duties and Responsibilities.   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 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
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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.
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(g)Neither the Trustee nor the Note Administrator shall have any obligation to confirm the compliance by the Issuer, LFT Holder or the Sponsor with the Credit Risk Retention Rules or the EU/UK Risk Retention Letter.
(h)Neither the Trustee nor the Note Administrator shall have any liability or responsibility for the determination or selection of an alternative base rate other than the Benchmark (including, without limitation, whether the conditions for the designation of such rate have been satisfied).
(i)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.
(j)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).
(k)The Note Administrator and the Trustee shall be entitled to rely upon the notices provided by the Collateral Manager facilitating or specifying the Benchmark Replacement, Benchmark Replacement Date, Benchmark Replacement Conforming Changes and such other administrative procedures with respect to the calculation of any Benchmark Replacement. Further, to the extent the Note Administrator in its capacity as Calculation Agent is unable to calculate the Benchmark Replacement based on the methodology chosen by the Collateral Manager, then the Collateral Manger shall provide to the Calculation Agent, on a monthly basis, the rate calculated using the Benchmark Replacement.
(l)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.
Section VI.2Notice of Default. Promptly (and in no event later than three (3) 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
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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 VI.3Certain 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
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attorney shall be conferred with all the same rights, indemnities, and immunities as the Trustee or Note Administrator, as applicable; provided that the appointment of any such agent or attorney shall not relieve the Trustee or Note Administrator, as the case may be, of its obligations hereunder;
(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), 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) to verify or independently determine the content, completeness or 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 Mortgage 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 accountants appointed by the Issuer 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); provided, however, that the Trustee and Note Administrator shall be authorized, upon receipt of an Issuer Order directing the same, to execute any acknowledgement or other agreement with the Independent accountants required for the Trustee and Note Administrator to receive any of the reports or instructions provided for herein, which acknowledgement or agreement may include, among other things, (i) acknowledgement that the Issuer has agreed that the “agreed upon procedures” between the Issuer and the Independent accountants are sufficient for its purposes, (ii) releases by each of the Trustee and Note Administrator (on behalf of itself and the Holders) of claims and acknowledgement of other limitation of liability in favor of the Independent accountants, and (iii) restrictions or prohibitions on the disclosure of information or documents provided to it by
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such firm of Independent accountants (including to the Holders). Notwithstanding the foregoing, in no event shall the Trustee or Note Administrator be required to execute any agreement in respect of the Independent accountants that the Trustee or Note Administrator determines adversely affects it in its individual capacity;
(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, the Servicing 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)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)in no event shall the Trustee or the Note Administrator be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, strikes or work stoppages for any reason, embargo, government action, including any laws, ordinances, regulations or the like which restrict or prohibit the providing of the services contemplated by this Indenture, inability to obtain material, equipment, or communications or computer facilities, or the failure of equipment or interruption of communications or computer facilities, and other causes beyond the Trustee’s or the Note Administrator’s control, as applicable, whether or not of the same class or kind as specifically named above;
(r)neither the Trustee nor the Note Administrator shall be under any obligation to take any action in the performance of its duties hereunder that would be in violation of applicable law; and
(s)except as otherwise expressly set forth in this Agreement, knowledge or information acquired by (i) Wells Fargo Bank, National Association in any of its respective capacities hereunder or under any other document related to this transaction shall not be imputed to Wells Fargo Bank, National Association or any affiliate of Wells Fargo Bank, National Association in any of its other capacities hereunder or under such other documents, and (ii) any
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Affiliate of Wells Fargo Bank, National Association shall not be imputed to Wells Fargo Bank, National Association, in any of its respective capacities hereunder and vice versa.
The rights, protections, and immunities afforded to the Trustee and Note Administrator in this Section 6.3 shall apply mutatis mutandis to the Custodian, the Paying Agent, the Calculation Agent, the Transfer Agent, the Authenticating Agent and the Backup Advancing Agent.
Section VI.4Not 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 VI.5May 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 VI.6Amounts 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 VI.7Compensation and Reimbursement.   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, Custodian and Note Administrator in a timely manner upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee, Custodian 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, Custodian or Note Administrator and their respective Officers, directors, employees and agents for, and to hold them harmless against, any loss, liability, cost or expense (including reasonable attorneys’ fees) incurred without negligence, willful misconduct or bad faith on their respective part, arising out of or in connection with the acceptance or administration of this trust, including the costs
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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, including any costs and expenses (including reasonable attorneys’ fees incurred in connection with the enforcement of any indemnity afforded to the Trustee, the Custodian or the Note Administrator, as applicable, hereunder); 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, reorganization, arrangement, insolvency, winding up, moratorium or liquidation proceedings, or other proceedings under federal or State bankruptcy or similar laws of any jurisdiction, 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 and one day) after the payment in full of all Notes issued under this Indenture. This Section shall survive termination of this Indenture and the resignation or removal of the Trustee or Note Administrator.
(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
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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 VI.8Corporate Trustee Required; Eligibility. There shall at all times be a Trustee and a Note Administrator hereunder which shall be (i) a corporation, national bank, national banking association or trust company, 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 and subject to supervision or examination by federal or State authority or (ii) an institution insured by the Federal Deposit Insurance Corporation, that in the case of (i) or (ii), has long-term senior unsecured debt of at least “Baa1” by Moody’s and a rating by KBRA equivalent to at least a “Baa1” rating by Moody’s; provided that if any such institution is not rated by KBRA, it maintains an equivalent (or higher) rating by any two other NRSROs (which may include Moody’s) (or such other lower rating as may be approved by the Rating Agencies from time to time, as evidenced by a No Downgrade Confirmation) and having an office within the United States. 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 VI.9Resignation and Removal; Appointment of Successor.   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, the Collateral Manager, Trustee or Trustees, together with a copy to each Noteholder, the Servicer, the parties hereto and the Rating
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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 and in the case of such a petition by the Trustee or the Note Administrator, 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. To the extent the Trustee or Note Administrator is removed without cause, the expenses incurred in connection with transferring such party’s responsibilities hereunder shall be reimbursed by the Issuer.
(c)The Note Administrator and Trustee may be removed, upon at least 30 days’ written notice, at any time by Act of a Supermajority of the Notes (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. 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 removal, the removed Trustee or Note Administrator, as the case may be, may, at the expense of the Issuer, petition a court of competent jurisdiction for the appointment of a successor.
(d)If at any time:
(i)the Note Administrator or the Trustee, as applicable, shall fail to duly observe or perform in any material respect any of the covenants or agreements on its part contained in this Indenture, and such failure or breach continues unremedied for a period of thirty (30) days after the date on which written notice of such failure or breach, requiring the same to be remedied, shall have been given to the Note Administrator or the Trustee, as applicable, by the Issuer (or the Collateral Manager acting on behalf of the Issuer) (or such extended period of time approved by the Issuer (or the Collateral Manager on behalf of the Issuer); provided that the Note Administrator or the Trustee, as applicable, is diligently proceeding in good faith to cure such failure or breach);
(ii)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
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(iii)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 outgoing Trustee or Note Administrator, as applicable, may petition any court of competent jurisdiction for the appointment of a successor Trustee or Note Administrator at the expense of the Issuer.
(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.
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(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 VI.10Acceptance 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 and the Co-Issuer or 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 VI.11Merger, Conversion, Consolidation or Succession to Business of Trustee and Note Administrator. Any Person into which the Trustee, the Custodian or the Note Administrator may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee, the Custodian or the Note Administrator, shall be a party, or Person succeeding to all or substantially all of the corporate trust business of the Trustee, the Custodian or the Note Administrator, shall be the successor of the Trustee, the Custodian or the Note Administrator, as applicable, hereunder; provided that with respect to the Trustee, such Person 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
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authenticated with the same effect as if such successor Note Administrator had itself authenticated such Notes.
Section VI.12Co-Trustees and Separate Trustee. At any time or times, including 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 Issuer, the Co-Issuer and the Trustee shall have power to appoint, one or more Persons to act as co-trustee jointly with the Trustee 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-
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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; and
(e)any Act of Securityholders delivered to the Trustee shall be deemed to have been delivered to each co-trustee.
Section VI.13Direction to enter into the Servicing Agreement and Other Documents. The Issuer hereby directs the Trustee and the Note Administrator to enter into each of the applicable Transaction Documents to which it is a party and the Future Funding Agreement and the Future Funding Account Control 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 such documents.
Section VI.14Representations 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
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(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 VI.15Representations 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 VI.16Requests 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 Mortgage Asset (before or after any default) or in the event any action is required to be taken in respect to an Asset Document, the Note Administrator shall promptly forward such notice to the Issuer, the Servicer and the Special
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Servicer. The Special Servicer shall take such action as required under the Servicing Agreement as described in Section 10.10(f) of this Indenture.
Section VI.17Withholding.   If any amount is required to be deducted or withheld from any payment to any Noteholder or 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 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 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 Trustee accurate and complete copies of all documentation received from Noteholders or payee pursuant to Sections 2.7(d) and 2.11(c) of this Indenture. 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.
(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 (including Cayman FATCA legislation); 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.
ARTICLE VII

COVENANTS
Section VII.1Payment of Principal and Interest. The Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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, with respect to the Offered Notes and by the Issuer, with respect to the Class F Notes, the Class G Notes and the Preferred Shares 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
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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 VII.2Maintenance of Office or Agency. The Co-Issuers, with respect to the Offered Notes, and the Issuer, with respect to the Class F Notes and the Class G Notes, 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 Co-Issuer in respect of the Offered Notes or this Indenture, or 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 VII.3Amounts for Note Payments to be Held in Trust.   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, with respect to the Offered Notes, on behalf of the Issuer and the Co-Issuer, or, with respect to the Class F Notes and the Class G Notes, on behalf of the 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, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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
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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, reorganization, arrangement, insolvency, winding up, moratorium or liquidation proceedings, or other proceedings under federal or State bankruptcy or similar laws of any jurisdiction, against the Issuer, the Co-Issuer or any Permitted Subsidiary for the nonpayment 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 and one day) 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 and a short-term debt rating of “P-1” 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 and a short-term debt rating of at least “P-1” 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:
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(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.
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Section VII.4Existence of the Issuer and the Co-Issuer.    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 incorporation 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
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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; and (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
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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 VII.5Protection of Collateral.   The Note Administrator, at the expense of the Issuer and pursuant to 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 shall take such other action as may be necessary or advisable or desirable to secure the rights and remedies of the Holders 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)instruct the Special Servicer with respect to enforcement on any of the Mortgage Assets or enforce on any other instruments or property included in the Collateral;
(v)instruct the Special Servicer to preserve and defend title to the Mortgage Assets 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
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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, within the six-month period preceding the fifth anniversary of the Closing Date and every sixty (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 VII.6Notice 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 VII.7Performance of Obligations.   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 Mortgage Asset in accordance with the provisions hereof and as otherwise required hereby.
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(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 this 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 this 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 Mortgage Asset except upon the sale or other liquidation of such Mortgage Asset 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 VII.8Negative Covenants.   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;
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(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 any 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 of LCMT or a Subsequent REIT for 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 Cadwalader, Wickersham & Taft LLP, Mayer Brown LLP or another nationally-recognized tax counsel experienced in such matters, the Issuer will be treated
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as a Qualified REIT Subsidiary or (B) based on an Opinion of Counsel of Cadwalader, Wickersham & Taft LLP, Mayer Brown 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 in the United States for U.S. federal income tax purposes or other disregarded entity of a REIT other than LCMT or such Subsequent REIT, as applicable;
(xiii)except for any agreements involving the purchase and sale of Mortgage Assets 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 Investment Company 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 the Issuer or a wholly-owned subsidiary of the Issuer.
(e)The Issuer shall not enter into any material new agreements (other than any Mortgage Asset Purchase Agreement or other agreement contemplated by this Indenture or the Collateral Management Agreement) (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 Mortgage Asset Purchase Agreement or other agreement specifically contemplated by this Indenture or the Collateral Management Agreement) 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 Note is Outstanding, the Advancing Agent shall cause LFT Holder to 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 retained or repurchased Notes, the Preferred Shares or ordinary shares of the Issuer to any other Person (except to an Affiliate that is wholly-owned by LCMT or a Subsequent REIT and is disregarded as a separate entity for
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U.S. federal income tax purposes of the REIT that is treated as owning such securities for U.S. federal income tax purposes immediately prior to such transfer, pledge, or hypothecation) unless the Issuer receives a No Entity-Level Tax Opinion or has previously received a No Trade or Business Opinion.
(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 ordinary shares of the Issuer, including a transfer in connection with any exercise of remedies under such financing unless the Issuer receives a No Entity-Level Tax Opinion.
Section VII.9Statement as to Compliance. On or before January 31, in each calendar year, commencing in 2022 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 VII.10Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms.   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 organized 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
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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;
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(vii)the Issuer has received an opinion from Cadwalader, Wickersham & Taft LLP or Mayer Brown 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 U.S. trade or business or otherwise not subject to U.S. federal income tax on a net income tax basis;
(viii)the Issuer has received an opinion from Cadwalader, Wickersham & Taft LLP or Mayer Brown 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 Investment Company 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;
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(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 Investment Company Act.
Section VII.11Successor 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.
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Section VII.12No 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 VII.13Reporting. 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 VII.14Calculation Agent.     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 the Benchmark 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 the Benchmark for each Interest Accrual Period. The Calculation Agent may be removed by the Issuer at any time upon 30 days’ written notice delivered to the Calculation Agent. 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 if the Calculation Agent fails to determine the rate using the Benchmark (unless such failure is due to circumstances beyond the Calculation Agent’s control) or the Interest Distribution Amount for any Class of Notes for any Interest Accrual Period, the Issuer shall promptly appoint as a replacement Calculation Agent a leading bank
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which does not control or is not controlled by or under common control with the Issuer or its affiliates and which, if the Benchmark is LIBOR, is engaged in transactions in Eurodollar deposits in the international Eurodollar market. 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 Preferred Shareholders with regard to the determination that a Benchmark Transition Event has occurred, may petition a court of competent jurisdiction for the appointment of a successor Calculation Agent, and if such petition is commenced by the Calculation Agent, then such petition will be at the expense of the Issuer.
(b)The Calculation Agent shall be required to agree that, as soon as practicable after the Reference Time, but in no event later than 11:00 a.m. (New York time) on the next succeeding Business Day (or the next succeeding London Banking Day if the Benchmark is LIBOR) immediately following each Benchmark Determination Date, the Calculation Agent shall calculate the Benchmark for the related Interest Accrual Period and will communicate such information to the Note Administrator, who shall include such calculation on the next Monthly Report following such Benchmark 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 Benchmark Determination Date if it has not determined and is not in the process of determining the Benchmark 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 to this Indenture and the Noteholders.
Section VII.15REIT Status. LCMT and any Subsequent REIT shall not take any action that results in the Issuer failing to qualify as a Qualified REIT Subsidiary of LCMT or a Subsequent REIT, as applicable, for federal income tax purposes, unless (A) based on an Opinion of Counsel, the Issuer will be treated as a Qualified REIT Subsidiary of a REIT other than LCMT or a Subsequent REIT, as applicable, (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 in the United States for U.S. federal income tax purposes.
(b)Without limiting the generality of this Section 7.15, if the Issuer is no longer a Qualified REIT Subsidiary, prior to the time that:
(i)any Mortgage Asset would cause the Issuer to be treated as engaged in a trade or business in the United States or to become subject to U.S. federal tax on a net income basis;
(ii)the Issuer would acquire or receive any asset in connection with a workout or restructuring of a Mortgage Asset that could cause the Issuer to be treated as engaged in a trade or business in the United States or to become subject to U.S. federal tax on a net income basis;
(iii)the Issuer would acquire the real property underlying any Mortgage Asset pursuant to a foreclosure or deed-in-lieu of foreclosure; or
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(iv)any Mortgage Loan that is a Mortgage Asset or an Underlying Whole Loan is modified in such a manner that could cause the Issuer to be treated as engaged in a trade or business in the United States or to become subject to U.S. federal tax on a net income basis,
the Issuer will either (x) organize one or more Permitted Subsidiaries and contribute the subject property to such Permitted Subsidiary, (y) contribute such Mortgage Asset to an existing Permitted Subsidiary, or (z) sell such Mortgage Asset 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 in 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 Mortgage Loans designed to prevent the Issuer from being treated as engaged in a trade or business in the United States for U.S. federal income tax purposes, (B) to form one or more “grantor trusts” to the hold Mortgage 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 in 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 income 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 in 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 VII.16Permitted 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 or transfer 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.
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(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 VII.17Repurchase 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 Mortgage Asset be repurchased or replaced arising from any Material Breach of a representation or warranty made with respect to such Mortgage Asset 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 Mortgage 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 LFT CRE 2021-FL1, Ltd. and LFT CRE 2021-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, the 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 VII.18Purchase of Ramp-Up Mortgage Assets.   The Issuer (or the Collateral Manager on behalf of the Issuer) shall, prior to the Ramp-Up Completion Date (or
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within 60 days after the Ramp-Up Acquisition Period, in the case of any Committed Ramp-Up Mortgage Asset), use commercially reasonable efforts to apply amounts on deposit in the Unused Proceeds Account to purchase Ramp-Up Mortgage Assets in accordance with Section 10.4(d) (which shall be, and hereby are, Granted to the Trustee pursuant to the Granting Clause of this Indenture) for inclusion in the Collateral upon receipt by the Trustee and the Note Administrator of an Issuer Order or trade confirmation executed by the Issuer (or the Collateral Manager on behalf of the Issuer) with respect thereto directing the Trustee to pay out the amount specified therein against delivery of the Ramp-Up Mortgage Assets specified therein and a certificate of an Authorized Officer of the Issuer (or the Collateral Manager) (which certification shall be deemed to be made upon delivery of a trade confirmation or Issuer Order), dated as of the trade date, and delivered to the Trustee on or prior to the date of such purchase and Grant, to the effect that after giving effect to such purchase and Grant of the Ramp-Up Mortgage Assets, the Eligibility Criteria are met with respect to the Ramp-Up Mortgage Assets purchased. Any Ramp-Up Mortgage Asset acquired during the Ramp-Up Acquisition Period (or within 60 days after the Ramp-Up Acquisition Period, in the case of any Committed Ramp-Up Mortgage Asset) shall satisfy the applicable Eligibility Criteria and may be acquired so long as the Acquisition Criteria are satisfied.
Section VII.19Ramp-Up Completion Date Actions.   The Issuer (or the Collateral Manager on behalf of the Issuer) shall cause to be delivered to the Trustee, Note Administrator and the Rating Agencies on the Ramp-Up Completion Date an amended Schedule A listing all Mortgage Assets granted to the Trustee pursuant to Section 7.18 on or before the Ramp-Up Completion Date and included in the Collateral on the Ramp-Up Completion Date, which schedule shall supersede any prior Schedule A delivered to the Trustee.
(b)After the Ramp-Up Completion Date, the Issuer shall provide, or (at the Issuer’s expense) cause the Collateral Manager to provide, the following documents to the Trustee, the Note Administrator and, with respect to clauses (A) and (B) below, the Rating Agencies within the time periods described below: (A) a report of the Collateral Manager (x) confirming the name of the borrower, the unpaid Principal Balance, the coupon and the maturity date with respect to each Ramp-Up Mortgage Asset owned by the Issuer as of the Ramp-Up Completion Date, and (y) confirming that, as of the Ramp-Up Completion Date, the Note Protection Tests were satisfied (the “Ramp-Up Completion Date Report”), (B) an unqualified certificate of the Collateral Manager on behalf of the Issuer certifying that each Ramp-Up Mortgage Asset satisfied all of the Eligibility Criteria applicable to Ramp-Up Mortgage Assets, and (C) a No Downgrade Confirmation from KBRA with respect to the Closing Date ratings of any Class of Notes (which confirmation may take the form of a press release or other written communication). If (i) the Issuer, or the Collateral Manager on behalf of the Issuer, fails to provide the items described in foregoing clauses (A) and (B) within 45 Business Days after the Ramp-Up Completion Date, (ii) the Moody’s Ramp-Up Condition is not satisfied within such 45-Business Day period, or (iii) KBRA does not provide a No Downgrade Confirmation on or before the later of the end of such 45-Business Day period and the 10th Business Day following the receipt by KBRA of the items described in clauses (A) and (B) above, a “Rating Confirmation Failure” will occur.
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Section VII.20Servicing of Mortgage Loans and Control of Servicing Decisions. The Mortgage Loans that are Mortgage Assets or Underlying Whole Loans will be serviced by the Servicer or, with respect to Specially Serviced Mortgage 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.
Section VII.21ABS Due Diligence Services. 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 Mortgage Assets (any such party, a “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.
ARTICLE VIII

SUPPLEMENTAL INDENTURES
Section VIII.1Supplemental 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 Advancing Agent, the Trustee 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 Advancing Agent, the Note Administrator or the Trustee for the benefit of the Holders of the Notes or the Preferred Shares 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;
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(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 Investment Company Act (including, without limitation, (A) to prevent any Class of Notes from being considered an “ownership interest” under the Section 619 of Dodd-Frank (such statutory provision together with such implementing regulations, 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 (or the 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 in the United States for 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 income tax 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 or 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
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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 Securitization Laws, the UK Securitization Laws, the EU/UK Retention Holder and LFT Holder;
(xiii)to modify, eliminate or add to any of the provisions of this Indenture in the event the Credit Risk Retention Rules, the EU Securitization Laws or UK Securitization Laws, as applicable, or any other regulations applicable to the risk retention requirements for this securitization transaction are amended or repealed, in order to modify or eliminate the risk retention requirements in the event of such amendment or repeal; provided that the Trustee has received an opinion of counsel to the effect the action is consistent with and will not cause a violation of the Credit Risk Retention Rules;
(xiv)reduce the minimum denominations required for transfer of the Notes;
(xv)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 federal income tax purposes, as evidenced by an Opinion of Counsel;
(xvi)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;
(xvii)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 in 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 income basis;
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(xviii)make any change to any other provisions with respect to matters or questions arising under this Indenture; provided that the party requesting the supplemental indenture represents that it believes 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) an Officer’s Certificate of the Collateral Manager.
Neither the Trustee nor the Note Administrator shall enter into any such supplemental indenture unless the Trustee and the Note Administrator have received, in addition to such other requirements under the Indenture, a No Trade or Business Opinion.
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 or satisfaction of the Rating Agency Condition,
(i)the Issuer, the Co-Issuer, when authorized by Board Resolutions of the Co-Issuers, the Trustee 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:
(1)conform this Indenture to the provisions described in the Offering Memorandum (or any supplement thereto);
(2)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; and
(3)to conform this Indenture to any Rating Agency Test Modification; and
(4)to provide for the Notes of each Class to bear interest based on the applicable Benchmark Replacement from and after the related Benchmark Replacement Date and/or at the direction of the Collateral Manager to make Benchmark Replacement Conforming Changes.
(ii)at the direction of the Collateral Manager, the Issuer, the Co-Issuer, the Note Administrator and the Trustee shall enter into supplemental indentures to make Benchmark Replacement Conforming Changes and/or to provide for the Notes of each
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Class to bear interest based on the applicable Benchmark Replacement from and after the related Benchmark Replacement Date.
Section VIII.2Supplemental Indentures with Consent of Securityholders. Except as set forth below, the Note Administrator, the Trustee, the Advancing Agent 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 a Majority in Aggregate Outstanding Amount of the Notes of each Class materially and adversely affected thereby (excluding any Notes owned by the Collateral Manager or any of its Affiliates) and the Holder of the 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. A copy of such notification and the proposed supplemental indenture will be posted on the Note Administrator’s Website, and the Note Administrator will be required to include in the next Monthly Report a statement indicating such notice was posted to the Note Administrator’s Website. 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 33 1/3% in Aggregate Outstanding Amount (excluding any Notes held by the Collateral Manager or its Affiliates or by any accounts managed by them) of the Notes 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
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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 Notes of each Class or the Notional Amount of Preferred Shares whose Holders’ 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 of the security afforded by the lien of this Indenture;
(e)reduce the percentage of the Aggregate Outstanding Amount of Notes of each Class whose Holders’ 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 Holders of Securities to the benefit of any provisions for the redemption of such Securities contained herein;
(i)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 Investment Company Act; or
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(j)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 Holders of Securities would be materially or adversely affected by such change (after giving notice of such change to the Holders of Securities). Such determination shall be conclusive and binding on all present and future Holders of Securities. Neither the Trustee nor the Note Administrator shall be liable for any such determination made in good faith.
Section VIII.3Execution 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 Noteholders 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 Servicer and Special Servicer 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 Servicer or Special Servicer adversely affect the Servicer or Special Servicer, the Servicer or Special Servicer, as applicable, shall not be bound (and the Issuer agrees that it will not permit any such amendment to become effective) 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 or 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 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.
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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 a No Entity-Level Tax Opinion. 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 Holders of Securities would not be materially and adversely affected by such supplemental indenture. Such determination shall be conclusive and binding on all present and future Holders of Securities. 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 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 VIII.4Effect 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 VIII.5Reference 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
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the Note Administrator as to any matter provided for in such supplemental indenture. If the Issuer and the Co-Issuer, with respect to the Offered Notes, or the Issuer, with respect to the Class F Notes and the Class G Notes, 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 IX

REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES
Section IX.1Clean-up Call; Tax Redemption; Optional Redemption; and Auction Call Redemption.   The Notes shall be redeemable by the Issuer and the Co-Issuer, as applicable, in whole but not in part, at the option of and upon written notice by the Collateral Manager (which shall be delivered in accordance with Section 9.3(a)), on any Payment Date on or after the Payment Date on which the Aggregate Outstanding Amount of the Offered Notes has been reduced to 10% or less of the Aggregate Outstanding Amount of the Offered Notes on the Closing Date at a price equal to their applicable Redemption Prices (such redemption, a “Clean-up Call”); provided that the funds available to be used for such Clean-up Call will be sufficient to pay the Total Redemption Price.
(b)The Notes shall be redeemable by the Issuer and the Co-Issuer, as applicable, in whole but not in part, at the option of and upon written notice by a Majority of Preferred Shareholders (which shall be delivered in accordance with Section 9.3(a)), on any Payment Date following the occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a price equal to their applicable Redemption Prices (such redemption, a “Tax Redemption”); provided 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.
(c)The Notes shall be redeemable by the Issuer and the Co-Issuer, as applicable, in whole but not in part, at option of and upon written notice by a Majority of the Preferred Shareholders (which shall be delivered in accordance with Section 9.3(a)), on any Payment Date after the end of the Non-call Period at a price equal to their applicable Redemption Prices (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 Mortgage Asset to any Affiliate other than LFT 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
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to exchange such Notes and the Preferred Shares for all of the remaining Mortgage Assets and other assets of the Issuer, in lieu of the Issuer paying such Holder(s) the Redemption Price for such Securities.
(d)The Notes and the Preferred Shares shall be redeemable by the Issuer and Co-Issuer, as applicable, in whole but not in part, at a price equal to their applicable Redemption Prices, on any Payment Date occurring in January, April, July or October in each year, beginning on the Payment Date occurring in June 2031, upon the occurrence of a Successful Auction and pursuant to the procedures set forth in the Servicing Agreement (such redemption, an “Auction Call Redemption”).
(e)In connection with any redemption pursuant to Section 9.1(a), Section 9.1(b) or Section 9.1(c), if the Holder of the Preferred Shares and/or one or more affiliates thereof own any Notes, such holder(s) may elect to include such Notes as part of the consideration for such redemption and the Total Redemption Price shall be reduced by the outstanding principal balance of such Notes (plus the interest accrued thereon). If such holder(s) own less than 100% of the Notes of any such Class, the Note Administrator shall cooperate with such holder(s) in order to effect such redemption (including, if necessary, converting such Notes into definitive form).
(f)A redemption pursuant to Section 9.1(a), Section 9.1(b) or Section 9.1(c) shall not occur unless at least three (3) Business Days prior to the scheduled Redemption Date, the Collateral Manager certifies to the Trustee and the Note Administrator that:
(i)the Collateral Manager, on behalf of the Issuer, has entered into a binding commitment or agreement (which may be an agreement with an affiliate of the Collateral Manager or an entity managed by the Collateral Manager) to sell (directly, by participation or other arrangement) all or part of the Collateral not later than the Business Day immediately preceding the scheduled Redemption Date or LCMT (or an Affiliate, agent or advisor thereof) has priced but not yet closed another securitization transaction;
(ii)the related Sale Proceeds (in immediately available funds), together with all other available funds (including proceeds from the sale of the Mortgage Assets, Eligible Investments maturing on or prior to the scheduled Redemption Date, all amounts in the Accounts and available Cash), will be an aggregate amount sufficient to pay the Total Redemption Price; and
(iii)all of the other conditions for such redemption, as applicable, have been satisfied.
(g)In connection with an Optional Redemption, a Clean-Up Call, an Auction Call Redemption or a Tax Redemption, the Collateral Manager, on behalf of the Issuer, and acting pursuant to the Collateral Management Agreement, may at any time direct the Trustee in writing by Issuer Order to sell, and the Trustee shall sell in the manner directed by the Collateral Manager, any Mortgage Asset without regard to any of the limitations in Section 12.1(a). Upon any such sale, the Trustee shall release any such Mortgage Asset pursuant to Section 10.12.
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Section IX.2Record Date for Redemption. 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.
Section IX.3Notice of Redemption or Maturity.   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 one (1) Business Day (or promptly thereafter upon receipt of written notice, if later) where the notice of an Optional Redemption, Auction Call Redemption, a Clean-up Call or a Tax Redemption is withdrawn pursuant to Section 9.3(c)) prior to the applicable Redemption Date or Maturity, to the Collateral Manager, the Trustee, the Servicer, the Special Servicer, the Preferred Share Paying Agent, the Rating Agencies, and each Holder of Securities to be redeemed, at its address in the Notes Register.
All notices of redemption shall state:
(i)the applicable Redemption Date;
(ii)the applicable Redemption Price;
(iii)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
(iv)the place or places where any Notes held as Definitive 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.
(b)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.
(c)Any such notice of an Optional Redemption, Auction Call 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 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 Preferred Shareholders (in case of Preferred Shares redemption) and each Holder of Notes to be redeemed, and the Collateral Manager. 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.
(d)The Redemption Price shall be determined no earlier than sixty (60) days prior to the proposed Redemption Date.
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Section IX.4Notes 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 Notes of a Class to be so 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(g).
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. Subject to applicable escheatment law, any funds not distributed to any Noteholder on the Payment Date because of the failure of such Holder or Holders to tender their Notes, shall, on such date, be set aside and held for the benefit of the appropriate non-tendering Holder or Holders.
Section IX.5Mandatory Redemption. On any Payment Date on which the Note Protection Tests are not satisfied as of the related Determination Date, the Offered Notes shall be redeemed (a “Mandatory Redemption”), from Interest Proceeds as set forth in Section 11.1(a)(i)(14) in an amount necessary, and only to the extent necessary, for the Note Protection Tests to be satisfied or if sooner, until the Offered Notes have been paid in full. On or promptly after such Mandatory Redemption, the Issuer shall certify or cause to be certified to the Rating Agencies, the Note Administrator and the Trustee whether the Note Protection Tests have been satisfied.
ARTICLE X

ACCOUNTS, ACCOUNTINGS AND RELEASES
Section X.1Collection of Amounts; Custodial Account.   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,
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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 such account.
(b)The Note Administrator shall credit all Mortgage Assets and Eligible Investments to an Eligible Account in the name of the Issuer for the benefit of the Secured Parties designated as the “Custodial Account.”
Section X.2Reinvestment Account.   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; provided, 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, Section 3.03(a)(viii) or 3.03(d)(vii) of the Servicing Agreement 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. 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. 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 invested in accordance with clause (v) of the definition of “Eligible Investment”.
(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
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applied to the acquisition of Reinvestment Mortgage Assets in accordance with Section 12.2(a) and (iii) the later of (x) the first Business Day after the last day of the Reinvestment Period and (y) if after the last day of the Reinvestment Period, the last settlement date within 60 days of the last day of the Reinvestment Period with respect to any Committed Reinvestment Mortgage Asset. 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 (and up to 60 days thereafter to the extent necessary to acquire any Committed Reinvestment Mortgage Assets using Principal Proceeds received during or after 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 Mortgage Loans and 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 or whether an acquisition is in compliance with the Acquisition Criteria.
(f)At any time during the Reinvestment Period, the Collateral Manager may direct that (i) the Servicer remit Principal Proceeds to the Note Administrator for deposit into the Reinvestment Account (including prior to a Payment Date) and (ii) the Note Administrator deposit such Principal Proceeds into the Reinvestment Account (which, for the avoidance of doubt, may be prior to a Payment Date); provided that the Collateral Manager has certified to the Note Administrator that (I) the Note Protection Tests were satisfied as of the immediately preceding Payment Date and (II) the Collateral Manager reasonably expects the Note Protection Tests to be satisfied on the immediately succeeding Payment Date. Any Principal Proceeds available for distribution in accordance with Section 11.1(a)(ii) on the immediately succeeding Payment Date shall be reduced by the amount of any Principal Proceeds transferred to the Reinvestment Account in accordance with this paragraph.
Section X.3Payment Account.   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 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. All funds received by the Note Administrator from the Servicer on each Remittance Date shall be credited to the Payment Account. 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 Distribution Account for distributions to the Preferred Shareholders, (iii) upon Issuer
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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 X.4Unused Proceeds Account.   The Note Administrator shall, on or prior to the Closing Date, establish a single, segregated trust account which shall be designated as the “Unused Proceeds Account” which shall be held in trust in the name of the Note Administrator for the benefit of the Secured Parties, into which the amount specified in Section 3.2(f) shall be deposited. All amounts credited from time to time to the Unused Proceeds Account pursuant to this Indenture 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 immediate notice if it becomes aware that the Unused Proceeds Account or any funds on deposit therein, or otherwise to the credit of the Unused Proceeds Account, becomes subject to any writ, order, judgment, warrant of attachment, execution or similar process. The Unused Proceeds Account shall remain at all times an Eligible Account.
(c)At the election of the Collateral Manager, the Issuer will be permitted to use up to $5,000,000 of funds remaining in the Unused Proceeds Account on the Ramp-Up Completion Date to acquire Reinvestment Mortgage Assets after the termination of the Ramp-Up Acquisition Period. At the end of the Ramp-Up Acquisition Period, any amounts remaining in the Unused Proceeds Account (excluding (i) during the 60 day period after the Ramp-Up Completion Date, any such amounts that are designated by the Collateral Manager to be held in order to acquire Committed Ramp-Up Mortgage Assets in accordance with Section 7.18 and (ii) at the election of the Collateral Manager, an amount up to $5,000,000 to be held for reinvestment in Reinvestment Mortgage Assets) will be transferred to the Payment Account and applied as Principal Proceeds on the first Payment Date after the Ramp-Up Completion Date in accordance with the Priority of Payments, which prepayment may be pro rata to each Class of Notes.
(d)During the Ramp-Up Acquisition Period (or within 60 days after the Ramp-Up Acquisition Period, in the case of any Committed Ramp-Up Mortgage Asset), the Issuer (or the Collateral Manager on behalf of the Issuer) may by Issuer Order or trade confirmation direct the Note Administrator to, and upon receipt of such Issuer Order or trade confirmation the Note Administrator shall, apply amounts on deposit in the Unused Proceeds Account to acquire Ramp-Up Mortgage Assets selected by the Collateral Manager as permitted under and in accordance with the requirements of Section 7.18(a) and such Issuer Order or trade confirmation.
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(e)To the extent not applied pursuant to Section 7.18(a), 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 Unused Proceeds Account in Eligible Investments designated by the Collateral Manager. All interest and other income from such investments shall be deposited in the Unused Proceeds Account, any gain realized from such investments shall be credited to the Unused Proceeds Account, and any loss resulting from such investments shall be charged to the Unused Proceeds 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 the Unused Proceeds Account resulting from any loss relating to any such investment, except with respect to investments in obligations of the Note Administrator. If the Note Administrator does not receive investment instructions from an Authorized Officer of the Collateral Manager, funds received in the Unused Proceeds Account shall be invested in accordance with clause (v) of the definition of “Eligible Investment”.
Section X.5Expense Reserve Account.   The Note Administrator shall, on or prior to the Closing Date, establish a single, segregated trust account 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 Note Administrator shall be entitled (but not required) without liability on its part, 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. 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 (20) of Section 11.1(a)(i) for deposit into the Expense Reserve Account.
(c)The Note Administrator shall give the Issuer and the Collateral Manager prompt notice if it becomes aware that the Expense Reserve Account or any funds on deposit
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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. 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 invested in accordance with clause (v) of the definition of “Eligible Investment”.
Section X.6[Reserved].
Section X.7Interest Advances.   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 that are available to pay interest on the Class A Notes, the Class A-S Notes and the Class B Notes, 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 Mortgage Assets (or the application of interest received on the Mortgage Assets 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 second (2nd) Business Day preceding such Payment Date, at the following address: Lument Commercial Mortgage Trust, 230 Park Avenue, 20th Floor, New York, NY 10169 Attention: Nicholas Capogrosso, with a copy to: c/o Lument Investment Management, 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215 Attention: General Counsel, Email: general.counsel@lument.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 Business Day preceding 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 in all events to a maximum limit in respect of any Payment Date equal to the lesser of (i) the aggregate
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amount of such Interest Shortfalls that would otherwise occur on the Class A Notes, the Class A-S Notes and the Class B Notes on such Payment Date and (ii) the aggregate amount of the interest payments not received in respect of Mortgage Assets with respect to such Payment Date (including, for such purpose, interest payments received on the Mortgage Assets 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 Mortgage Asset to the extent that the aggregate outstanding amount of all unreimbursed Interest Advances would exceed the Aggregate Outstanding Amount of the Class A Notes, Class A-S Notes and Class B Notes. In addition, in no event will the Advancing Agent or Backup Advancing Agent be required to advance any payments in respect of (i) interest on any Note other than the Class A Notes, the Class A-S Notes and the Class B Notes (ii) principal of any Mortgage Asset. 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 Business Day preceding 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 Business Day preceding the Payment Date upon which distributions are to be made pursuant to Section 11.1(a)(i), the Note Administrator shall remove the Advancing Agent in its capacity as advancing agent hereunder as required under Section 17.5(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 or 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 Special Servicer 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:
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(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 the Notes.
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 Class A Notes, Class A-S Notes and Class B 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.
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(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, Class A-S Notes and 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 (i) interest on any Note other than the Class A Notes, the Class A-S Notes and the Class B Notes or (ii) payments of principal of any Mortgage Asset or any Class of Notes.
(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 LCMT (or any of its Affiliates) (i) is the Advancing Agent and (ii) LFT Holder (or any of its Affiliates) owns all of the Preferred Shares, LCMT hereby agrees, on behalf of itself and the other Affiliates of such REIT, to waive its rights to receive the Advancing Agent Fee and any Reimbursement Interest. If the Advancing Agent fails to make an Interest Advance required by this Indenture with respect to a Payment Date, (x) the Advancing Agent shall be in default of its obligations under this Indenture, (y) the Backup Advancing Agent shall be required to make such Interest Advance and shall be entitled to receive, in consideration thereof, the Advancing Agent Fee in accordance with the Priority of Payments and (z) the Note Administrator shall terminate the Advancing Agent and use commercially reasonable efforts for up to 90 days following such termination to replace the Advancing Agent with a successor advancing agent that satisfies the requirements set forth in this Indenture. If the Advancing Agent is terminated for failing to make an Interest Advance hereunder (as provided in Section 17.5(d)) (or for failing to make a Servicing Advance under the Servicing Agreement) that the Advancing Agent did not determine to be nonrecoverable, 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 applicable subsequent successor advancing agent).
(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 Rating Agencies, 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 X.8Reports by Parties. The Note Administrator shall supply, in a timely fashion, to the Issuer, the Trustee, the Special Servicer, the Servicer and the Collateral Manager any information regularly maintained by the Note Administrator that the Issuer, the Trustee, the Special Servicer, the Servicer or the Collateral Manager may from time to time
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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 X.9Reports; Accountings.   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. (Eastern Time) on the 2nd Business Day prior to each Payment Date, the Note Administrator shall prepare and make available on its website initially located at https://www.ctslink.com, on each Payment Date to Privileged Persons, a report substantially in the form of Exhibit P 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 Mortgage Assets as of the end of the related Due Period;
(v)the number and aggregate principal balance of Mortgage Assets that are (A) delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or more and (D) current but Specially Serviced Mortgage 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 Mortgage Asset 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;
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(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 Mortgage Assets that have been (or are related to Mortgage Loans that have been) extended or modified during the related Due Period on an individual Mortgage Asset 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 Mortgage Asset 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 Mortgage Assets outstanding as of the close of business on the related Determination Date;
(xiv)with respect to any Mortgage Asset 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 Mortgage Asset 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 each of the Expense Reserve Account and the Unused Proceeds Account;
(xvii)the aggregate amount of interest on monthly debt service advances in respect of the Mortgage Assets 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 Mortgage Asset;
(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;
(xxi)the Net Outstanding Portfolio Balance; and
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(xxii)the calculation of the Note Protection Tests for the related Determination Date.
(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 Mortgage Asset 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 Mortgage Asset 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 an Auction Call Redemption, a Clean-up Call, a Tax 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 delivered to the Preferred Shareholder, 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 Distribution Account) and 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 September 30, 2021, the Collateral Manager shall make reasonable efforts to deliver to the Note Administrator a report containing certain updated information about the Mortgage Assets, 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, which reports will be posted to the Note Administrator’s website.
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(f)The Note Administrator shall in no event have any liability for the actions or omissions of the Servicer or the Special Servicer, and shall have no liability for any inaccuracy or error in a Monthly Report prepared by it that results from or is caused by inaccurate, untimely or incomplete information or data received by it from the Issuer, the Servicer or the Special Servicer. The Note Administrator shall not be liable for any failure to perform or delay in performing its specified duties hereunder which results from or is caused by a failure or delay on the part of the Servicer, the Special Servicer or other Person in furnishing necessary, timely and accurate information to the Note Administrator. It is expressly understood and agreed that the application and performance by the Note Administrator of its obligation to prepare the Monthly Report shall, with respect to information relating to the Mortgage Assets, be based upon, and in reliance upon, data and information provided to it by the Servicer and the Special Servicer. The Note Administrator shall be permitted to rely upon data and information provided to it by the Servicer and the Special Servicer, and nothing herein shall impose or imply any duty or obligation on the part of the Note Administrator to verify, investigate or audit any such information or data, or to determine or monitor on an independent basis whether any obligor is in default or in compliance with the documents governing the related Mortgage Asset.
Section X.10Release of Mortgage Assets; Release of Collateral.   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 Mortgage Asset from the lien of this Indenture, by Issuer Order delivered to the Trustee and the Custodian at least (2) Business Days prior to the settlement date for any sale of a Pledged Mortgage Asset, which Issuer Order shall be accompanied by a certification of the Collateral Manager (i) that the Pledged Mortgage Asset has been sold pursuant to and in compliance with Article 12 or (ii) in the case of a redemption pursuant to Section 9.1, that the Pledged Mortgage Asset has been sold in compliance with Section 9.1(f), and, upon receipt of a Request for Release of such Mortgage Asset from the Collateral Manager, the Servicer or the Special Servicer, the Custodian shall deliver any such Pledged Mortgage Asset, 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 Mortgage Asset 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 Mortgage Asset 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 Mortgage Asset 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 Mortgage Asset, an Issuer Order certifying that such Pledged Mortgage Asset 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 Mortgage Asset and the related Mortgage Asset File therefor on or before the date set
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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 Mortgage Asset 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 Mortgage Asset 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 Mortgage Asset 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 Mortgage Asset, or in the event any action is required to be taken in respect to an Asset 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 (except that Administrative Modifications and Criteria-Based Modifications will not be subject to the Servicing Standard). In the case of any modification or amendment that results in the release of the related Mortgage Asset, notwithstanding anything to the contrary in Section 5.5(a), the Custodian, upon receipt of a Request for Release, shall release the related Mortgage Asset File upon the written instruction of the Servicer or the Special Servicer, as applicable.
Section X.11Reports by Independent Accountants.
(a)On or about the Closing Date, the Issuer shall appoint a firm of Independent certified public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture. The Collateral Manager, on behalf of the Issuer, shall have the right to remove such firm or any successor firm. Upon any resignation by or removal of such firm, the Collateral Manager, on behalf of the Issuer, shall promptly appoint, by Issuer Order delivered to the
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Trustee, a successor thereto that shall also be a firm of Independent certified public accountants of recognized national reputation.
Section X.12Information Available Electronically.   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 category 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 memorandum and articles of incorporation;
(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 Mortgage Assets 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;
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(2)appraisals delivered to the Note Administrator under the terms of the Servicing Agreement; and
(3)upon direction of the Issuer, 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(e);
(2)notice of termination of the Servicer or the Special Servicer;
(3)notice of a Servicer Termination Event (with respect to the Servicer or the Special Servicer, as applicable), 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)notice from the Collateral Manager that at least 50% of the Mortgage Assets by Stated Principal Balance have converted to an alternative or substitute index in lieu of LIBOR in accordance with the related Asset Documents and identifying such alternative or substitute index;
(8)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);
(9)any notices from the Collateral Manager with respect to any Benchmark Transition Event, Benchmark Replacement Date, Benchmark Replacement, Benchmark Replacement Adjustment or any supplemental indenture implementing Benchmark Replacement Conforming Changes;
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(10)any notice or documents provided to the Note Administrator by the Collateral Manager or the Servicer directing the Note Administrator to post to the “special notices” tab; and
(11)any notice of a proposed supplement, amendment or modification to this Indenture.
(v)Any notices required pursuant to the EU/UK Risk Retention Letter and provided by the EU/UK Retention Holder, LFT Holder, or the Collateral Manager to the Note Administrator, which will initially be available under a tab or heading designated “EU Risk Retention” (and the Note Administrator shall provide email notification to any Privileged Person (other than market data providers) that has registered to receive access to the Note Administrator’s Website that a notice has been posted under the tab or heading designated “EU Risk Retention”);
(vi)The following notices provided by LFT 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 “U.S. 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 by the Securitization Sponsor with the Credit Risk Retention Rules;
the Note Administrator shall, in addition to posting the applicable notices on the “risk retention special notices” tab, provide email notifications to any Privileged Person (other than market data providers) that has registered to receive access to the Note Administrator’s website that a notice has been posted to the “risk retention special notices” tab;
(vii)the “Investor Q&A Forum” pursuant to Section 10.13; and
(viii)solely to Noteholders and holders of any Preferred Shares, the “Investor Registry” pursuant to Section 10.13.
(b)Privileged Persons who execute Exhibit Q-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.
(c)The Note Administrator’s Website shall initially be located at https://www.ctslink.com. The foregoing information shall be made available by the Note Administrator
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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 or via email at ctslink.customerservice@wellsfargo.com.
Section X.13Investor Q&A Forum; Investor Registry.   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 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 Mortgage Assets, 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 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 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 Asset Documents, 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 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.
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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, Servicer and 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 Asset Documents, 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 Trustee, 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 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 respondent, and shall not be deemed to be answers from any of the Issuer, the Co-Issuer, the Collateral Manager, the Placement Agents or any of their respective Affiliates. None of the Placement Agents, the Issuer, the Co-Issuer, the Seller, the Collateral Manager, the Advancing Agent, the Future Funding Holders, LFT 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 or a beneficial owner of a Note or Holder of the Preferred Shares 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
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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, supplemental notices, and upon request, any notices posted to the Note Administrator’s Website pursuant to Section 10.12(a)(iv)(9), 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 N 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., Markit Group Limited, Interactive Data Corp., BlackRock Financial Management, Inc., CMBS.com, Inc., Moody’s Analytics, Thomson Reuters Corporation and PricingDirect Inc.
(d)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 Servicer, the Special Servicer or the Collateral Manager relating to servicing reports, 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. The Trustee, the Note Administrator, the Servicer, the Special Servicer or the Collateral Manager, as applicable, shall answer each inquiry, unless it determines that (a) answering the inquiry would be in violation of applicable law, the Servicing Standard, the Indenture, 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, the Special Servicer or the Collateral Manager 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 shall 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 X.14Certain 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:
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(i)the “Note Box” on the bottom of the “Security Display” page describing the Rule 144A Global Notes will state: “Iss’d Under 144A/3c7”;
(ii)the “Security Display” page will have the flashing red indicator “See Other Available Information”; and
(iii)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 both (i) qualified institutional buyers (as defined in Rule 144A under the Securities Act) and (ii) qualified purchasers (as defined under Section 3(c)(7) under the Investment Company Act of 1940).
(b)For so long as the Rule 144A Global Securities are registered in the name of DTC or its nominee, the Issuer (or the Collateral Manager on behalf of the Issuer) will instruct DTC to take these or similar steps with respect to the Rule 144A Global Securities:
(i)the DTC 20-character security descriptor and 48-character additional descriptor will indicate with marker “3c7” that sales are limited to (i) QIBs and (ii) Qualified Purchasers;
(ii)where the DTC deliver order ticket sent to purchasers by DTC after settlement is physical, it will have the 20-character security descriptor printed on it, and where the DTC deliver order ticket is electronic, it will have a “3c7” indicator and a related user manual for participants, which will contain a description of the relevant restriction; and
(iii)DTC will send an “Important Notice” outlining the 3(c)(7) restrictions applicable to the Rule 144A Global Securities to all DTC participants in connection with the initial offering of the Offered Notes by the Co-Issuers.
ARTICLE XI

APPLICATION OF FUNDS
Section XI.1Disbursements of Amounts from Payment Account.   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 due to 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:
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(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 Advancing Agent (or 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), 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 this Indenture); and (c) third, to the Advancing Agent and the Backup Advancing Agent, 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, based on their entitlement, to the payment to the Note Administrator (who will pay the Trustee its respective portion thereof) of the accrued and unpaid fees in respect of their services equal to, in the aggregate, U.S.$5,750 per month, (b) second, to the payment of other accrued and unpaid Company Administrative Expenses of the Note Administrator, the Trustee, the Custodian, the Paying Agent and the Preferred Share Paying Agent, the aggregate of all such amounts reimbursed in this clause (b) not to exceed U.S.$250,000 per Expense Year and (c) third, to the payment of any other accrued and unpaid Company Administrative Expenses, the aggregate of all such amounts in this clause (c) per Expense Year (including such amounts paid since the previous Payment Date from the Expense Reserve Account) not to exceed the greater of (i) 0.10% per annum of the Aggregate Outstanding Portfolio Balance and (ii) U.S.$125,000 per annum;
(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;
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(8)to the payment of the Class C Interest Distribution Amount, plus, if no Class A Notes, Class A-S Notes or Class B Notes are outstanding, any Class C Defaulted Interest Amount;
(9)to the payment of any Class C Deferred Interest (in reduction of the Aggregate Outstanding Amount of the Class C Notes);
(10)to the payment of the Class D Interest Distribution Amount, plus, if no Class A Notes, Class A-S Notes, Class B Notes or Class C Notes are outstanding, any Class D Defaulted Interest Amount;
(11)to the payment of any Class D Deferred Interest (in reduction of the Aggregate Outstanding Amount of the Class D Notes);
(12)to the payment of the Class E Interest Distribution Amount, plus, if no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes or Class D are outstanding, any Class E Defaulted Interest Amount;
(13)to the payment of any Class E Deferred Interest (in reduction of the Aggregate Outstanding Amount of the Class E Notes);
(14)if either of the Note Protection Tests is not satisfied as of the Determination Date relating to such Payment Date, to the payment of, (i) first, principal on the Class A Notes, (ii) second, principal on the Class A-S Notes, (iii) third, principal on the Class B Notes, (iv) fourth, principal on the Class C Notes, (v) fifth, principal on the Class D Notes and (vi) sixth, principal on the Class E 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, the Class D Notes and the Class E Notes have been paid in full;
(15)on each Payment Date following the occurrence of a Rating Confirmation Failure, to the payment of principal of each Class of Notes, (i) first, to the Class A Notes, (ii) second, to the Class A-S Notes, (iii) third, to the Class B Notes, (iv) fourth, to the Class C Notes, (v) fifth, to the Class D Notes, (vi) sixth, to the Class E Notes, (vii) seventh, to the Class F Notes and (viii) eighth, to the Class G Notes, in each case until each rating assigned on the Closing Date to each Class of Notes has been reinstated or such Class of Notes has been paid in full;
(16)to the payment of the Class F Interest Distribution Amount, plus, if no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes are outstanding, any Class F Defaulted Interest Amount;
(17)to the payment of any Class F Deferred Interest (in reduction of the Aggregate Outstanding Amount of the Class F Notes);
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(18)to the payment of the Class G Interest Distribution Amount, plus, if no Class A Notes, Class A-S Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes or Class F Notes are outstanding, any Class G Defaulted Interest Amount;
(19)to the payment of any Class G Deferred Interest (in reduction of the Aggregate Outstanding Amount of the Class G Notes);
(20)to the payment of any Company Administrative Expenses not paid pursuant to clause (3) above in the order specified therein;
(21)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
(22)any remaining Interest Proceeds to be released from the lien of this Indenture and paid (upon standing order of the Issuer) to the Preferred Share Paying Agent for deposit into the Preferred Share Distribution 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 due to 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)on each Payment Date following the termination of the Ramp-Up Acquisition Period, to the payment of principal, in an amount equal to all amounts remaining in the Unused Proceeds Account as of the end of the Ramp-Up Acquisition Period (excluding (a) any such amounts that are designated by the Collateral Manager to be held in order to acquire Committed Ramp-Up Mortgage Assets and (b) at the election of the Collateral Manager, an amount up to $5,000,000 to be held for reinvestment in Reinvestment Mortgage Assets) (I) first, to the Class A Notes, (II) second, to the Class A-S Notes, (III) third, to the Class B Notes, (IV) fourth, to the Class C Notes, (V) fifth, to the Class D Notes and (VI) sixth, to the Class E Notes in each case until such Class of Notes has been paid in full;
(3)on each Payment Date following the occurrence of a Rating Confirmation Failure, to the extent that application of Interest Proceeds pursuant to clause (15) of Section 11.1(a)(i) is insufficient to cause the ratings assigned to
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each Class of Notes to be reinstated or to cause any affected Class to be paid in full, to the payment of principal (i) first, to the Class A Notes, (ii) second, to the Class A-S Notes, (iii) third, to the Class B Notes, (iv) fourth, to the Class C Notes, (v) fifth, to the Class D Notes, (vi) sixth, to the Class E Notes, (vii) seventh, to the Class F Notes and (viii) eighth, to the Class G Notes, in each case until each rating assigned on the Closing Date to such Class of Notes has been reinstated or such Class of Notes has been paid in full;
(4)during the Reinvestment Period, so long as the Issuer is permitted to purchase Reinvestment Mortgage Assets under Section 12.2, at the direction of the Collateral Manager, the amount (which amount may, for the avoidance of doubt, be comprised of Principal Proceeds described in clause (3) of the definition thereof) designated by the Collateral Manager during the related Interest Accrual Period to be deposited into the Reinvestment Account to be held for reinvestment in Reinvestment Mortgage Assets or, pursuant to written direction of the Collateral Manager (on behalf of the Issuer) to be applied to pay the purchase price of Reinvestment Mortgage Assets (it being understood that the Collateral Manager will 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);
(5)to the payment of principal of the Class A Notes until the Class A Notes have been paid in full;
(6)to the payment of the Class A-S Interest Distribution Amount, plus, any Class A-S Defaulted Interest Amount, to the extent not paid pursuant to clause (6) of the Priority of Payments—Application of Interest Proceeds;
(7)to the payment of principal of the Class A-S Notes until the Class A-S Notes have been paid in full;
(8)to the payment of the Class B Interest Distribution Amount, plus, any Class B Defaulted Interest Amount, to the extent not paid pursuant to clause (7) of the Priority of Payments—Application of Interest Proceeds;
(9)to the payment of principal of the Class B Notes until the Class B Notes have been paid in full;
(10)to the payment of the Class C Interest Distribution Amount, plus, any Class C Defaulted Interest Amount, to the extent not paid pursuant to clause (8) of the Priority of Payments—Application of Interest Proceeds;
(11)to the payment of principal of the Class C Notes (including any Class C Deferred Interest) until the Class C Notes have been paid in full;
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(12)to the payment of the Class D Interest Distribution Amount, plus, any Class D Defaulted Interest Amount, to the extent not paid pursuant to clause (10) of the Priority of Payments—Application of Interest Proceeds;
(13)to the payment of principal of the Class D Notes (including any Class D Deferred Interest) until the Class D Notes have been paid in full;
(14)to the payment of the Class E Interest Distribution Amount plus any Class E Defaulted Interest Amount, to the extent not paid pursuant to clause (12) of Section 11.1(a)(i) above;
(15)to the payment of principal of the Class E Notes (including any Class E Deferred Interest) until the Class E Notes have been paid in full;
(16)to the payment of the Class F Interest Distribution Amount plus any Class F Defaulted Interest Amount, to the extent not paid pursuant to clause (16) of Section 11.1(a)(i) above;
(17)to the payment of principal of the Class F Notes (including any Class F Deferred Interest) until the Class F Notes have been paid in full;
(18)to the payment of the Class G Interest Distribution Amount plus any Class G Defaulted Interest Amount, to the extent not paid pursuant to clause (18) of Section 11.1(a)(i) above;
(19)to the payment of principal of the Class G Notes (including any Class F Deferred Interest) until the Class G Notes have been paid in full;
(20)any remaining Principal Proceeds to be released from the lien of this Indenture and paid (upon standing order of the Issuer) to the Preferred Share Paying Agent for deposit into the Preferred Share Distribution Account for distribution to the Holders 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 an acceleration of the Notes due to 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, Custodian and Trustee (including legal fees and expenses) incurred in connection with an acceleration of the Notes following an
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Event of Default, including in connection with sale and liquidation of any of the Collateral in connection therewith, to the extent not previously paid or withheld;
(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);
(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);
(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 principal of the Class E Notes (including any Class E Deferred Interest);
(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 principal of the Class F Notes (including any Class F Deferred Interest);
(17)to the payment of the Class G Interest Distribution Amount plus any Class G Defaulted Interest Amount;
(18)to the payment in full of principal of the Class G Notes (including any Class G Deferred Interest); and
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(19)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 Distribution 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 Mortgage Assets, the Servicer or the Special Servicer, as applicable, shall be entitled to retain or withdraw such amounts from the Collection Account and the Participated Mortgage Loan Collection Account pursuant to the terms of the Servicing Agreement.
Section XI.2Securities Accounts. All amounts held by, or deposited with the Note Administrator in the Reinvestment Account, Custodial Account, Unused Proceeds Account and Expense Reserve Account pursuant to the provisions of this Indenture shall be invested in Eligible Investments as directed in writing by the Collateral Manager on behalf of the Issuer and credited to the Reinvestment Account, Custodial Account, Unused Proceeds Account or Expense Reserve Account, as the case may be. 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 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, in each case, such lower rating as the applicable Rating Agency 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.
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ARTICLE XII

SALE OF MORTGAGE ASSETS; REINVESTMENT MORTGAGE ASSETS; FUTURE FUNDING AGREEMENT
Section XII.1Sales of Mortgage Assets.   Except as otherwise expressly permitted or required by this Indenture, the Issuer shall not sell or otherwise dispose of any Mortgage Asset. The Collateral Manager, on behalf of the Issuer, acting pursuant to the Collateral Management Agreement may direct the Trustee in writing to sell at any time:
(i)any Defaulted Mortgage Asset;
(ii)any Credit Risk Mortgage Asset, unless (x) either of 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 will not be cured after giving effect to such sale 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 Mortgage Assets shall be permitted;
(iii)any Reinvestment Mortgage Asset, Ramp-Up Mortgage Asset, Exchange Mortgage Asset, or Contribution Mortgage Asset acquired in violation of the Eligibility Criteria or the Acquisition Criteria, as applicable; and
(iv)any Non-Controlling Participation (other than a Credit Risk Mortgage Asset or a Defaulted Mortgage Asset) at any time that the Collateral Manager determines in good faith that such sale is necessary to cure, or (taking into account expected cash flows from the Issuer’s assets) prevent, the aggregate Principal Balance of all Non-Controlling Participations from exceeding 40.0% of the aggregate Principal Balance of all Mortgage Assets owned by the Issuer.
The Trustee shall sell any Mortgage Asset 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 Mortgage Asset sold and the sale price and shall provide such other information relating to such sale as may be reasonably requested by the Rating Agencies.
(b)In addition, with respect to any Defaulted Mortgage Asset or Credit Risk Mortgage Asset permitted to be sold pursuant to Section 12.1(a), such Defaulted Mortgage Asset or Credit Risk Mortgage Asset may be sold by the Issuer at the direction of the Collateral Manager:
(i)to an entity other than the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager;
(ii)to the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager that is purchasing such Defaulted
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Mortgaged Asset or Credit Risk Mortgage Asset from the Issuer for a cash purchase price that is (x) with respect to any Defaulted Mortgage Asset, equal to or greater than the Par Purchase Price and (y) with respect to any Credit Risk Mortgage Asset:
(A)until the Disposition Limitation Threshold has been met, equal to or greater than the Par Purchase Price; and
(B)after the Disposition Limitation Threshold has been met, following disclosure to, and approval by, the Advisory Committee in accordance with the Collateral Management Agreement, equal to the greater of (A) the Par Purchase Price and (B) the fair market value thereof (any purchase described in this clause (ii), a “Credit Risk/Defaulted Mortgage Asset Cash Purchase”).
In connection with the sale of a Credit Risk Mortgage Asset or a Defaulted Mortgage Asset, the Collateral Manager may cause the Issuer to create one or more junior participation interests in such Defaulted Mortgage Asset or Credit Risk Mortgage Asset and direct the Trustee to sell one or more of such junior participation interests.
The Issuer shall not sell or otherwise dispose of any Mortgage Asset for the primary purpose of recognizing gains or decreasing losses resulting from market value changes.
In the event that a Senior Participation is sold or exchanged as a Credit Risk Mortgage Asset or Defaulted Mortgage Asset, any related Junior Participation owned by the Issuer shall be simultaneously sold or exchanged.
(c)If the Collateral Manager directs the sale of a Mortgage Asset acquired in violation of the Eligibility Criteria or the Acquisition Criteria, the Issuer shall sell such Mortgage Asset to the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager for a cash purchase price that is equal to the Principal Balance thereof plus all accrued and unpaid interest thereon.
(d)With respect to any Non-Controlling Participation permitted to be sold pursuant to Section 12.1(a)(iv), such Non-Controlling Participation may be sold by the Issuer at the direction of the Collateral Manager:
(i)to an entity other than the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager for a cash purchase price that is equal to or greater than the Par Purchase Price; or
(ii)to the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager that is purchasing such Non-Controlling Participation for a cash purchase price that is: (x) until the Disposition Limitation Threshold has been met, equal to or greater than the Par Purchase Price; and (y) after the Disposition Limitation Threshold has been met, following disclosure to, and approval by, the Advisory Committee in accordance with the Collateral Management
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Agreement, equal to the greater of (1) the Par Purchase Price and (2) the fair market value thereof.
(e)Whether any offer constitutes a fair price for any Defaulted Collateral Interest shall be determined by the Special Servicer, if the highest offeror is a person other than an Interested Person, and by the Trustee, if the highest offeror is an Interested Person. If the Trustee is required to determine the fair price for any Defaulted Collateral Interest, Trustee may (at its option and at the expense of the Issuer), and shall be required to, if the purchaser is the Seller or any of its Affiliates, designate 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 mortgage loans similar to the 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 be entitled to conclusively rely upon any such third party determination; provided that no offer from an Interested Person will constitute a fair price for purposes of this Section 12.1 unless (i) it is the highest offer received and (ii) if the Defaulted Collateral Interest has been marketed for sale for a period of less than three (3) months, at least one other offer is received from an independent third party. All reasonable fees and costs of any appraisals, inspection reports, and opinions of value incurred by any such third party shall be covered by, and shall be paid in advance of any determination by the applicable Interested Person; provided that the Trustee may not engage a third party expert whose fees exceed a commercially reasonable amount as determined by the Trustee.
(f)A Defaulted Mortgage Asset or Credit Risk Mortgage Asset 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 Defaulted Mortgage Asset or Credit Risk Mortgage Asset for (1) a substitute Mortgage Loan or Participation owned by the Collateral Manager, LCMT or an Affiliate, agent or advisor of either, or any account managed by the Collateral Manager, that satisfies the Eligibility Criteria (such Mortgage Asset, an “Exchange Mortgage Asset”) or (2) a combination of an Exchange Mortgage Asset and cash (such exchange for a Defaulted Mortgage Asset, a “Defaulted Mortgage Asset Exchange” and such exchange for a Credit Risk Mortgage Asset, a “Credit Risk Mortgage Asset Exchange”); provided that:
(i)with respect to any Defaulted Mortgage Asset Exchange, the sum of (1) the Principal Balance of such Exchange Mortgage Asset plus all accrued and unpaid interest thereon plus (2) the cash amount (if any) to be paid to the Issuer by the Collateral Manager, LCMT or an Affiliate, agent or advisor of either, or any account managed by the Collateral Manager, in connection with such exchange, is equal to or greater than the Par Purchase Price of the Defaulted Mortgage Asset sought to be exchanged; and
(ii)with respect to any Credit Risk Mortgage Asset Exchange:
(1)until the Disposition Limitation Threshold has been met, the sum of (A) the Principal Balance of such Exchange Mortgage Asset plus all accrued and unpaid interest thereon plus (B) the Cash amount (if any) to be paid to the Issuer by the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the
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Collateral Manager in connection with such exchange is equal to or greater than the Par Purchase Price of the Credit Risk Mortgage Asset sought to be exchanged; and
(2)after the Disposition Limitation Threshold has been met, following disclosure to, and approval by, the Advisory Committee in accordance with the Collateral Management Agreement, the sum of (A) the Principal Balance of such Exchange Mortgage Asset plus all accrued and unpaid interest thereon plus (B) the Cash amount (if any) to be paid to the Issuer by the Collateral Manager, LCMT or an Affiliate, agent or advisor of either or any account managed by the Collateral Manager in connection with such exchange is equal to or greater than the greater of (x) the Par Purchase Price of the Credit Risk Mortgage Asset sought to be exchanged and (y) the fair market value of such Credit Risk Mortgage Asset.
(g)In addition to the above, the Majority of Preferred Shareholders shall have the right at any time to purchase (i) any Defaulted Mortgage Asset for a purchase price equal to the Par Purchase Price and (ii) any Credit Risk Mortgage Asset for a purchase price equal to, (x) until the Disposition Limitation Threshold has been met, the Par Purchase Price, and (y) after the Disposition 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.
(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 shall determine whether the proceeds expected to be received on the Mortgage Assets 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 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 Mortgage Assets sufficient to pay the remaining principal amount of and interest on the Notes on or before the Stated Maturity Date. The Mortgage Assets 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 the value of Equity Interests already owned).
(j)Under no circumstances shall the Trustee in its individual capacity be required to acquire any Mortgage Assets or any property related thereto.
(k)Any Mortgage Asset sold pursuant to this Section 12.1 shall be released from the lien of this Indenture.
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Section XII.2Reinvestment Mortgage Assets.   Except as provided in Section 12.3(c), for so long as the Acquisition Criteria are satisfied, during the Reinvestment Period (or within 60 days after the end of the Reinvestment Period, in the case of any Committed Reinvestment Mortgage Asset), amounts (or Eligible Investments) credited to the Reinvestment Account may, but are not required to, be reinvested in Reinvestment Mortgage Assets (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, 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 Mortgage Assets.
(b)Notwithstanding the foregoing provisions, (i) Cash on deposit in the Reinvestment Account may be invested in Eligible Investments pending investment in Reinvestment Mortgage Assets and (ii)  if an Event of Default shall have occurred and be continuing, no Reinvestment Mortgage Asset 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 LFT Holder or an Affiliate that is wholly-owned by LCMT or a Subsequent REIT and is a disregarded entity for U.S. federal income tax purposes of such REIT holds 100% of the Preferred Shares, it may contribute additional Cash, Eligible Investments and/or Mortgage Assets to the Issuer so long as, in the case of Mortgage Assets, any such Mortgage Assets 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 Participations, pursuant to and in accordance with the terms of the related Participation Agreement. Cash or Eligible Investments contributed to the Issuer by LFT Holder (during the Reinvestment Period) shall be credited to the Reinvestment Account (unless LFT Holder directs otherwise) and may be reinvested by the Issuer in Reinvestment Mortgage Assets so long as no Event of Default has occurred and is continuing.
Section XII.3Conditions Applicable to all Transactions Involving Sale or Grant.   Any transaction effected after the Closing Date under this Article 12 or Section 10.12 shall be conducted in accordance with the requirements of the Collateral Management Agreement; provided that (1) the Collateral Manager shall not direct the Trustee to acquire any Mortgage Asset for inclusion in the Collateral from the Collateral Manager or any of its Affiliates as principal or to sell any Mortgage Asset 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 Trustee to acquire any Mortgage Asset for inclusion in the Collateral from any account or portfolio for which the Collateral Manager serves as investment adviser or direct the Trustee to sell any Mortgage Asset 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 Trustee 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 Mortgage Asset or Securities shall be Granted to the Trustee pursuant to this
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Indenture, such Mortgage Asset or Securities shall be registered in the name of the Issuer, and, if applicable, the Trustee (or the Custodian on its behalf) shall receive such Pledged Mortgage Asset or Securities. The Trustee also shall receive, not later than the date of delivery of any Mortgage Asset delivered after the Closing Date, an Officer’s Certificate of the Collateral Manager certifying that, as of the date of such Grant, such Grant complies with the applicable conditions of and is permitted by this Article 12 (and setting forth, to the extent appropriate, calculations in reasonable detail necessary to determine such compliance).
(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).
Section XII.4Modifications 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 any of the 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 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 XII.5Future Funding Agreement.   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 LCMT will agree to pledge certain collateral described therein, and such funds will be available to satisfy the obligations of OREC Structured Finance Co., LLC dba Lument Structured Finance to fund future advances under the Participation Agreements 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
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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 direct the use of funds on deposit in the Future Funding Reserve Account in accordance with written instructions delivered 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 Reserve Account that are required to be deposited therein pursuant to the Future Funding Agreement.
(b)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 Future Funding Holder that is delivered to it in accordance with the Future Funding Agreement.
ARTICLE XIII

NOTEHOLDERS’ RELATIONS
Section XIII.1Subordination.   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 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, Class F Notes and Class G 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, Class F Notes and the Class G 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, Class F Notes and the Class G 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
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rights of the Holders of the Class C Notes, Class D Notes, Class E Notes, Class F Notes and the Class G 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, Class F Notes and the Class G 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, Class F Notes and the Class G 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, Class F Notes and the Class G 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, Class F Notes and the Class G 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 any of the Class E Notes, Class F Notes and the Class G 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 and the Class G 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
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of any of the Class F Notes and the Class G Notes to the extent and in the manner provided in Section 11.1(a)(iii).
(g)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 F Notes, that the rights of the Holders of the Class G Notes shall be subordinate and junior to the Class F 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 F 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 F Notes consent, other than in Cash, before any further payment or distribution is made on account of any of the Class G Notes to the extent and in the manner provided in Section 11.1(a)(iii).
(h)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.
(i)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.
(j)The Holders of each Class of Notes are deemed to agree, for the benefit of all Holders of the Notes, 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, insolvency, winding up, 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 and one day, have elapsed since the final payments to the Holders of the Notes.
Section XIII.2Standard 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
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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 XIV

MISCELLANEOUS
Section XIV.1Form 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 Servicer 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
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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 XIV.2Acts of Securityholders.   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 XIV.3Notices, 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 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
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addressed to it at Wilmington Trust, National Association, 1100 North Market Street, Wilmington, Delaware 19890, Attention: CMBS Trustee – LFT 2021-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 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 – LFT 2021-FL1, with a copy by email to: trustadministrationgroup@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, by email or by facsimile in legible form, to the Issuer addressed to it at LFT CRE 2021-FL1, Ltd., c/o Walkers Fiduciary Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9008, Cayman Islands, Attention: The Directors, email: fiduciary@walkersglobal.com, Facsimile number: +1 345 949 7886, with a copy to: c/o Lument Investment Management, 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215 Attention: General Counsel, Email: general.counsel@lument.com, and with a copy to Cadwalader, Wickersham & Taft LLP, 200 Liberty Street, New York, New York 10281, Attention: Jeffrey Rotblat, email: Jeffrey.rotblat@cwt.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, by email or by facsimile in legible form, to the Co-Issuer addressed to it at LFT CRE 2021-FL1, LLC, c/o Lument Investment Management, 230 Park Avenue, 20th Floor, New York, NY 10169 Attention: Nicholas Capogrosso, with a copy to: c/o Lument Investment Management, 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215 Attention: General Counsel, Email: general.counsel@lument.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 or 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, by email or by facsimile in legible form, to the Advancing Agent addressed to it at Lument Commercial Mortgage Trust, 230 Park Avenue, 20th Floor, New York, NY 10169 Attention: Nicholas Capogrosso, with a copy to: c/o Lument
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Investment Management, 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215 Attention: General Counsel, Email: general.counsel@lument.com, with copies to Cadwalader, Wickersham & Taft LLP, 200 Liberty Street, New York, New York 10281, Attention: Jeffrey Rotblat, email: Jeffrey.rotblat@cwt.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 and 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, hand delivered, sent by overnight courier service, by email or by facsimile in legible form, to the Servicer or Special Servicer addressed to it at ORIX Real Estate Capital, LLC dba Lument Capital, 2001 Ross Avenue, Suite 1900, Dallas, Texas 75201, with a copy to 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215, Attention: General Counsel, Email: general.counsel@lument.com or at any other address previously furnished in writing to the Issuer, the Co-Issuer, the Note Administrator and the Trustee;
(h)the Rating Agencies, by the Issuer, the Co-Issuer, the Collateral Manager, the 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, by email or by facsimile in legible form, to the Rating Agencies addressed to them at (i) 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) and (ii) Kroll Bond Rating Agency, Inc., 805 Third Avenue, New York, New York 10022, Attention: CMBS Surveillance (or by electronic mail at cmbssurveillance@kbra.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 (“17g-5 Information”) shall be given in accordance with, and subject to, the provisions of Section 14.13 hereof;
(i)Wells Fargo Securities, 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 Wells Fargo Securities, LLC, 30 Hudson Yards, New York, New York 10001, Attention: A.J. Sfarra, Email: Anthony.sfarra@wellsfargo.com, with a copy to Troy Stoddard, Wells Fargo Legal Department,
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550 S Tryon Street, 34th Floor, Charlotte, North Carolina 28202, MAC D1086-341, Email: Troy.Stoddard@wellsfargo.com, or at any other address furnished in writing to the Issuer, the Co-Issuer, the Note Administrator and the Trustee;
(j)J.P. Morgan Securities 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, by email or by facsimile in legible form to J.P. Morgan Securities LLC, 383 Madison Avenue, 8th Floor, New York, New York 10179, Attention: SPG Syndicate, e-mail: ABS_Synd@jpmorgan.com, with copies to J.P. Morgan Securities LLC, 4 New York Plaza, 21st Floor, New York, New York 10004-2413, Attention: SPG Legal, email: US_CMBS_Notice@jpmorgan.com, or at any other address furnished in writing to the Issuer, the Note Administrator and the Trustee;
(k)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, by email or by facsimile in legible form, to the Collateral Manager addressed to it at OREC Investment Management dba Lument Investment Management, 230 Park Avenue, 20th Floor, New York, NY 10169 Attention: Michele Halickman with a copy to: c/o Lument Investment Management, 10 W. Broad Street, 8th Floor, Columbus, Ohio 43215 Attention: General Counsel, Email: general.counsel@lument.com, with copies to Cadwalader, Wickersham & Taft LLP, 200 Liberty Street, New York, New York 10281, Attention: Jeffrey Rotblat, or at any other address furnished in writing to the Issuer, the Co-Issuer, the Note Administrator and the Trustee; and
(l)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 or by facsimile in legible form to the Corporate Trust Office of the Note Administrator.
Section XIV.4Notices 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.
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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 XIV.5Effect 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 XIV.6Successors 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 XIV.7Severability. 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 XIV.8Benefits 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 and the Noteholders (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 XIV.9Governing 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
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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 XIV.10Submission 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 XIV.11Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument, and the words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Agreement or in any other certificate, agreement or document related to this transaction shall include, in addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned or photocopied manual signature, or other electronic signature, of any other party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. The Trustee and Note Administrator shall have no duty to inquire into or investigate the authenticity or authorization of any such electronic signature and shall be entitled to conclusively rely on any such electronic signature without any liability with respect thereto.
Section XIV.12Liability 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
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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 XIV.1317g-5 Information.   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 to 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 any Rating Agency 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 “LFT 2021-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.
(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 “17g-5 – LFT CRE 2021-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; provided that such information is not locked or corrupted and is otherwise received in a readable and uploadable format:
(i)any statements as to compliance and related Officer’s Certificates delivered under Section 7.9;
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(ii)any information requested by the Issuer or the Rating Agencies (it being understood the 17g-5 Information Provider shall not disclose on the Note Administrator’s Website which Rating Agencies requested such information as provided in Section 14.13);
(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(d).
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 N 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.
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(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) two (2) Business Days after 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 Mortgage Assets (“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 XIV.14Rating 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 to in accordance with the instructions for notices set forth in Section 14.3 hereof.
Section XIV.15Patriot 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 and Note Administrator 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. The Issuer and Company Administrator are subject to laws in the Cayman
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Islands, which impose similar obligations to the Applicable Laws, including with regard to verifying the identity and source of funds of investors.
ARTICLE XV

ASSIGNMENT OF THE MORTGAGE ASSET PURCHASE AGREEMENTS
Section XV.1Assignment of Mortgage Asset Purchase Agreement.   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 Mortgage Asset 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,
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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 Mortgage Asset Purchase Agreement and the Collateral Manager in the Collateral Management Agreement, as applicable, 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 Mortgage Asset 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
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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 OREC Investment Management dba Lument Investment Management, 230 Park Avenue, 20th Floor, New York, NY 10169, Attention: Michele Halickman. 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 XVI

CURE RIGHTS; PURCHASE RIGHTS
Section XVI.1[Reserved]
Section XVI.2Mortgage Asset Purchase Agreements. Following the Closing Date, unless a Mortgage Asset Purchase Agreement is necessary to comply with the provisions of this Indenture, the Issuer may acquire Mortgage Assets 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 Mortgage Asset, all Asset Documents with respect to each Mortgage Asset that govern, directly or indirectly, the rights and obligations of the owner of the Mortgage Asset with respect to the Mortgage Asset and any certificate evidencing the Mortgage Asset.
Section XVI.3Representations and Warranties Related to Ramp-Up Mortgage Assets and Reinvestment Mortgage Assets.   Upon the acquisition of any Ramp-Up Mortgage Asset or Reinvestment Mortgage Asset by the Issuer, the related seller shall be required to make representations and warranties substantially in the form attached as Exhibit B to the Mortgage Asset Purchase Agreement.
(b)The representations and warranties in Section 16.3(a) with respect to the acquisition of any Ramp-Up Mortgage Asset or Reinvestment Mortgage Asset 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 Ramp-Up Mortgage Asset or Reinvestment Mortgage Asset during the period covered by the Monthly Report, which report may contain explanations by the Collateral Manager as to its determinations.
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(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 16.3(a) that such Person shall repurchase the related Mortgage Asset if any such representation or warranty is breached (but only after the expiration of any permitted cure periods and failure to cure such breach). The purchase price for any Mortgage Asset 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 Mortgage Asset, discounted based on the percentage amount of any discount that was applied when such Mortgage Asset was purchased by the Issuer, plus (ii) accrued and unpaid interest on such Mortgage Asset, plus (iii) any unreimbursed advances made under the Indenture or the Servicing Agreement on the Mortgage Asset, plus (iv) accrued and unpaid interest on advances made under the Indenture or the Servicing Agreement on the Mortgage Asset, 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 Mortgage Asset by the Seller.
Section XVI.4Operating Advisor. If the Issuer, as holder of a Participation has the right pursuant to the related Asset Documents to appoint the operating advisor, directing holder or Person serving a similar function under the Asset 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.
Section XVI.5Purchase Right; Holder of a Majority of the Preferred Shares. If the Issuer, as holder of an Owned Participation, has the right pursuant to the related Asset Documents to purchase any other interest in the same Underlying Whole Loan as the Participation (an “Other Tranche”), the Issuer shall, if directed by the Majority of the Preferred Shares, exercise such right, if the Collateral Manager determines, in accordance with the Collateral Management Standard, that the exercise of the option would be in the best interest of the Noteholders, but shall not exercise such right if the Collateral Manager determines otherwise. The Collateral Manager shall deliver to the Trustee an Officer’s Certificate certifying such determination, accompanied by an Act of the Majority of the Preferred Shares directing the Issuer to exercise such right. In connection with the purchase of any such Other Tranche(s), the Issuer shall assign to the Majority of the Preferred Shares or its designee all of its right, title and interest in such Other Tranche(s) in exchange for a purchase price (such price and any other associated expense of such exercise to be paid by the Majority of the Preferred Shares) of the Other Tranche(s) (or, if the Asset Documents permit, the Issuer may assign the purchase right to the Majority of the Preferred Shares or its designee; otherwise the Majority of the Preferred Shares or its designee shall fund the purchase by the Issuer, which shall then assign the Other Tranche(s) to the Majority of the Preferred Shares or its designee), which amount shall be delivered by such Holder or its designee from its own funds to or upon the instruction of the Collateral Manager in accordance with terms of the Asset Documents related to the acquisition of such Other Tranche(s). The Issuer shall execute and deliver at the direction of such Majority of the Preferred Shares such instruments of transfer or assignment prepared by such Holder, in each case without recourse, as shall be necessary to transfer title to such Majority of Preferred
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Shares or its designee of the Other Tranche(s) and the Trustee shall have no responsibility with regard to such Other Tranche(s). Notwithstanding anything to the contrary herein, any Other Tranche purchased hereunder by the Issuer shall not be subject to the Grant to the Trustee under the Granting Clauses.
ARTICLE XVII

ADVANCING AGENT
Section XVII.1Liability 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 XVII.2Merger or Consolidation of the Advancing Agent.   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 XVII.3Limitation 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
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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 XVII.4Representations 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 17.4(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
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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 XVII.5Resignation and Removal; Appointment of Successor.   No resignation or removal of the Advancing Agent and no appointment of a successor Advancing Agent pursuant to this Article 17 shall become effective until the acceptance of appointment by the successor Advancing Agent under Section 17.6.
(b)The Advancing Agent may, subject to Section 17.5(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 Note Administrator shall terminate such Advancing Agent and replace such Advancing Agent with a successor Advancing Agent, subject to the satisfaction of the Rating Agency Condition. Following the termination of the Advancing Agent, the Backup Advancing Agent shall make Interest Advances until a successor advancing agent is appointed.
(e)Subject to Section 17.5(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
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Agencies, the Trustee, the Note Administrator, and to the Holders of the Notes as their names and addresses appear in the Notes Register.
Section XVII.6Acceptance of Appointment by Successor Advancing Agent.   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 XVII.7Removal 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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Indenture as of the day and year first above written.
LFT CRE 2021-FL1, LTD., as Issuer
By:     /s/ Nicholas Capogrosso     
Name: Nicholas Capogrosso
Title: Director

    LFT CRE 2021-FL1 - Indenture

LFT CRE 2021-FL1, LLC, as Co-Issuer
By:     /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer

    LFT CRE 2021-FL1 - Indenture

LUMENT COMMERCIAL MORTGAGE TRUST, as Advancing Agent
By:     /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer


    LFT CRE 2021-FL1 - Indenture

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Note Administrator
By:    /s/Amy Mofsenson    
Name: Amy Mofsenson
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
By:    /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Custodian
By:    /s/Amy Mofsenson    
Name: Amy Mofsenson
Title: Vice President
    LFT CRE 2021-FL1 - Indenture

SCHEDULE A

MORTGAGE ASSET SCHEDULE
Mortgage Asset Mortgage Asset Type
The Woods at Countryside Participation
Mayflower Apartments Participation
CRA Student Housing Portfolio Participation
The Estates at Pikesville Participation
Ashford Walk Participation
Greenfair Apartments Whole Loan
La Brea Gardens Whole Loan
San Antonio Lynd Portfolio Participation
Woodland Ridge Apartments Whole Loan
Rise at Signal Mountain Participation
Cypress Gardens Whole Loan
Canopy Creek Apartments Participation
Cubesmart Self Storage - Seattle Participation
The Linc Participation
Whitestone Crossing Participation
Extra Space Pompano Beach Self Storage Participation
4th and Grant Apartments Participation
Manitoba Apartments Participation
1033 West Van Buren Participation
Sunny Brook Apartments Participation
Village Green Apartments Participation
Crystal Peaks Self Storage Participation
River Lofts Participation
Urban Park Participation
Wysong Village Apartments Whole Loan
Winchester Lakes Apartments Whole Loan
Blue Tide Apartments Participation
Timberfalls Apartments Whole Loan
Privilege Apartments Participation
Glen Arbor Participation
West Campus Lofts Whole Loan
Royal Palms Apartments & Professional Participation
Ridgmar Mall Self Storage Participation
Rio Nuevo Participation
Autumn Brook Apartments Participation
Commerce Plaza Participation
Sunset Heights Participation
Miller Square Apartments Participation
5009 Ashland Avenue Participation
Spring Park Place Apartments Participation
Brix at Terrell Hills Participation
USActive 56213557.7Sch. A-1

Daytona Multifamily Portfolio Participation
North Ingleside Townhomes Whole Loan
Belton Woods Whole Loan
Barton Ridge Participation
Area Self Storage Whole Loan


USActive 56213557.7Sch. A-2

SCHEDULE B

BENCHMARK
Calculation of Benchmark
For purposes of calculating the Benchmark (which shall initially be LIBOR), the Issuer and the Co-Issuer shall initially appoint the Note Administrator as calculation agent (in such capacity, the “Calculation Agent”).
Calculation of LIBOR
LIBOR with respect to any Interest Accrual Period shall be determined by the Calculation Agent in accordance with the following provisions:
1.On each Benchmark 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 the Reference Time. “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 such rate does not appear on Reuters Screen LIBOR01 (or its equivalent), as of the Reference Time, the Calculation Agent shall request the principal London office of any four major reference banks in the London interbank market selected by the Calculation Agent to provide quotations of such reference bank’s offered quotations to prime banks in the London interbank market for deposits in U.S. Dollars for a period of one month, as of the Reference Time, in a principal amount of not less than $1,000,000 that is representative for a single transaction in the relevant market at the relevant time. If at least two such rates are so provided, then LIBOR shall be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, the Calculation Agent shall be required to request any three major banks in New York City selected by the Calculation Agent to provide such banks’ rates for loans in U.S. Dollars to leading European banks for a one-month period as of 11:00 a.m., New York City time, as of the applicable Benchmark Determination Date, in a principal amount not less than $1,000,000 that is representative for a single transaction in the relevant market at the relevant time. If at least two such rates are so provided, then LIBOR shall be the arithmetic mean of such quotations. If fewer than two rates are so provided, then LIBOR shall be the LIBOR rate used for the immediately preceding Interest Accrual Period.
3.In respect of the initial Interest Accrual Period, LIBOR shall be determined on the second London Banking Day preceding the Closing Date.
4.In no event will LIBOR be less than zero.
In making the above calculations, all percentages resulting from the calculation shall be rounded, if necessary, to the nearest one thousandth of a percentage point (0.001%).
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10
USActive 56213557.7Sch. B-2

SCHEDULE C

LIST OF AUTHORIZED OFFICERS OF COLLATERAL MANAGER

Name Title
Robert T. Kirkwood Chief Financial Officer and Senior Managing Director
James J. Henson General Counsel, Senior Managing Director and Secretary
Michele Halickman Chief Compliance Officer
Kevin J. Mainelli Senior Managing Director
Scott E. Griffin Treasurer and Senior Managing Director
Jennifer L.E. Bierlein Senior Managing Counsel, Senior Director
Precilla Torres Senior Managing Director
Sean M. Quinn Controller and Director
Bibi David Vice President
Judith Kim Vice President
Nicole Root Assistant Secretary
Raj Nagarajan Vice President
Joan Fischer Assistant Secretary
Adriane Shelhart Assistant Secretary

USActive 56213557.7Sch. C-1
Exhibit 10.2
COLLATERAL MANAGEMENT AGREEMENT
This Collateral Management Agreement, dated as of June 14, 2021 (this “Agreement”), is entered into by and between LFT CRE 2021-FL1, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (together with successors and assigns permitted hereunder, the “Issuer”) and OREC Investment Management, LLC dba Lument Investment Management, a Delaware limited liability company (together with its successors and assigns, the “Collateral Manager”). Capitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed thereto in the Indenture, dated as of the date hereof (the “Indenture”), by and among the Issuer, LFT CRE 2021-FL1, LLC, as co-issuer (the “CoIssuer”), Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”), Wells Fargo Bank, National Association, as note administrator, paying agent, calculation agent, transfer agent, indenture securities intermediary, backup advancing agent, notes registrar (in all such capacities, the “Note Administrator”) and custodian, and Lument Commercial Mortgage Trust (“LCMT”), as advancing agent.
WHEREAS, the Issuer desires to engage the Collateral Manager to provide the services described herein and the Collateral Manager desires to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto hereby agree as follows:
1.Management Services. The Collateral Manager is hereby appointed as the Issuer’s exclusive agent to provide the Issuer with certain services in relation to the Collateral specified herein and in the Indenture. The Collateral Manager hereby accepts such appointment and shall provide the Issuer with the following services (in accordance with all applicable requirements of the Indenture, the Servicing Agreement and this Agreement, including, without limitation, the Collateral Management Standard):
(a)determining specific Mortgage Assets (including Ramp-Up Mortgage Assets and Reinvestment Mortgage Assets) to be purchased or otherwise acquired and the timing of such purchases or acquisitions, as permitted by the Indenture;
(b)determining specific Eligible Investments to be purchased or sold and the timing of such purchases and sales, in each case, as permitted by the Indenture;
(c)effecting or directing the purchase of Mortgage Assets and Eligible Investments, effecting or directing the sale of Mortgage Assets and Eligible Investments and effecting or directing the investment or reinvestment of proceeds therefrom in Reinvestment Mortgage Assets and directing the use of amounts in the Unused Proceeds Account to acquire Ramp-Up Mortgage Assets, in each case as permitted by the Indenture;
(d)negotiating with issuers of Mortgage Assets as to proposed modifications or waivers of the documentation governing such Mortgage Assets;
(e)taking action, or advising the Trustee with respect to actions to be taken, with respect to the Issuer’s exercise of any rights (including, without limitation, voting rights, tender rights and rights arising in connection with the bankruptcy or insolvency of an issuer of a Mortgage Asset or the consensual or non-judicial restructuring of the debt or equity of
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an issuer of a Mortgage Asset) or remedies in connection with Mortgage Assets and Eligible Investments, as provided in the related Asset Documents, and participating in the committees or other groups formed by creditors of an issuer of any Mortgage Asset, or taking any other action with respect to Mortgage Assets and Eligible Investments which the Collateral Manager reasonably determines, in accordance with the Collateral Management Standard (and subject to the applicable provisions of the Servicing Agreement), is in the best interests of all of the Noteholders in accordance with and as permitted by the terms of the Indenture;
(f)consulting with each Rating Agency at such times as may be reasonably requested by any Rating Agency in compliance with Section 19 of this Agreement and providing each Rating Agency with any information reasonably requested in connection with such Rating Agency’s maintenance of its ratings of the Notes and their assigning credit indicators to prospective Mortgage Assets, if applicable, and estimating the ratings that such Rating Agency would assign to prospective Mortgage Assets, as permitted or required under the Indenture;
(g)determining whether specific Mortgage Assets (or, for Participations, the related Participated Mortgage Loans) are Credit Risk Mortgage Loans or Defaulted Mortgage Loans and determining whether such Mortgage Assets, and any other Mortgage Assets that are permitted or required to be sold pursuant to the Indenture, should be sold, and directing the Trustee to effect a disposition of any such Mortgage Assets, subject to, and in accordance with the Indenture; and if a Mortgage Asset that is a Defaulted Mortgage Asset is not sold or otherwise disposed of by the Issuer within three years of such Mortgage Asset becoming a Defaulted Mortgage Asset, using commercially reasonable efforts to cause the Issuer to sell or otherwise dispose of such Mortgage Asset as soon as commercially practicable thereafter;
(h)monitoring the Mortgage Assets on an ongoing basis and providing or causing to be provided to the Issuer and/or the other parties specified in the Indenture all reports, schedules and certificates that relate to the Mortgage Assets and that the Issuer is required to prepare and deliver under the Indenture, that are not prepared and delivered by the Note Administrator on behalf of the Issuer under the Indenture, in the form and containing all information required thereby (including, in the case of the Monthly Reports and the Redemption Date Statement, providing the information to the Note Administrator as specified in Section 10.11 of the Indenture in sufficient time for the Note Administrator to prepare the Monthly Report and the Redemption Date Statement) and, if applicable, in sufficient time for the Issuer to review such required reports and schedules and to deliver them to the parties entitled thereto under the Indenture;
(i)managing the Issuer’s investments in accordance with the Indenture, including the limitations relating to the Acquisition Criteria, the Eligibility Criteria, the Note Protection Test and the other requirements of the Indenture and taking action that the Collateral Manager deems appropriate and consistent with the Indenture, the Collateral Management Standard, the applicable provisions of the Servicing Agreement and the standard of care set forth herein with respect to any portion of the Collateral that does not constitute Mortgage Assets or Eligible Investments, which may include directing the Special Servicer to enter into Administrative Modifications and Criteria-Based Modifications (as defined in the Servicing Agreement);
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(j)providing notification, in writing, to the Trustee, the Note Administrator and the Issuer upon receiving actual notice that a Mortgage Asset (or, for a Participation, the related Participated Mortgage Loan) has become a Defaulted Mortgage Loan or a Credit Risk Mortgage Loan or has suffered an appraisal reduction;
(k)providing notification, in writing, to the Trustee, the Note Administrator and the Holders of the Notes, the Rating Agencies and the Issuer upon becoming actually aware of a Default or an Event of Default under the Indenture;
(l)determining (in its sole discretion but subject to the Indenture) whether, in light of the composition of Mortgage Assets, general market conditions and other factors considered pertinent by the Collateral Manager, investments in Reinvestment Mortgage Assets would, at any time during the Reinvestment Period, either be impractical or not beneficial to the Holders of the Preferred Shares;
(m)taking reasonable action on behalf of the Issuer to effect any Optional Redemption, any Tax Redemption, any Auction Call Redemption or any Clean-up Call in accordance with the Indenture;
(n)monitoring the ratings of the Mortgage Assets and the Issuer’s compliance with the covenants by the Issuer in the Indenture;
(o)making such determinations, exercising such rights and taking such actions, on behalf of the Issuer, as the Collateral Manager is authorized to do under the Indenture, the Servicing Agreement or this Agreement;
(p)complying with the Investment Advisers Act of 1940, as amended (the “Advisers Act”), with respect to the Issuer;
(q)in order to render the Securities eligible for resale pursuant to Rule 144A under the Securities Act, while any of such Securities remain outstanding, making available, upon request, to any Holder or prospective purchaser of such Securities, additional information regarding the Issuer and the Collateral if such information is reasonably available to the Collateral Manager and constitutes Rule 144A Information required to be furnished by the Issuer pursuant to Section 7.13 of the Indenture, unless the Issuer furnishes information to the United States Securities and Exchange Commission (the “Commission”) pursuant to Section 13 or Section 15(d) of the Exchange Act;
(r)the Collateral Manager may, subject to and in accordance with the Indenture and this Agreement, in its capacity as the Collateral Manager, direct the Issuer to establish a Permitted Subsidiary and such Permitted Subsidiary may acquire, retain, sell or otherwise dispose of (including as a contribution) any Sensitive Asset in accordance with the Indenture and this Agreement;
(s)upon reasonable written request, assisting the Trustee, the Note Administrator or the Issuer with respect to such actions to be taken after the Closing Date, as is necessary to maintain the clearing and transfer of the Notes through DTC; and
(t)in accordance with the Collateral Management Standard (but subject to the applicable provisions of the Servicing Agreement), enforcing the rights of the Issuer as
USActive 56230836.6    3

holder of the Mortgage Assets, including, without limitation, taking such action as is necessary to enforce the Issuer’s rights with respect to remedies related to breaches of representations, warranties or covenants in the Asset Documents for the benefit of the Issuer.
In furtherance of the foregoing, the Issuer hereby appoints the Collateral Manager as the Issuer’s true and lawful agent and attorney-in-fact, with full power of substitution and full authority in the Issuer’s name, place and stead and without any necessary further approval of the Issuer, in connection with the performance of the Collateral Manager’s duties provided for in this Agreement, including the following powers: (i) to buy, sell, exchange, and convert Mortgage Assets (including Ramp-Up Mortgage Assets and Reinvestment Mortgage Assets) and Eligible Investments, and (ii) to execute (under hand, under seal or as a deed) and deliver all necessary and appropriate documents and instruments on behalf of the Issuer to the extent reasonably necessary, appropriate and customary to perform the services referred to in (a) through (t) above of this Section 1 and under the Indenture. The foregoing power of attorney is a continuing power, coupled with an interest, and shall remain in full force and effect until revoked by the Issuer in writing by virtue of the termination of this Agreement pursuant to Section 12 hereof or an assignment of this Agreement pursuant to Section 17 hereof; provided that any such revocation shall not affect any transaction initiated prior to such revocation. Nevertheless, if so requested by the Collateral Manager or a purchaser of a Mortgage Asset or Eligible Investment, the Issuer shall ratify and confirm any such sale or other disposition by executing and delivering to the Collateral Manager or such purchaser all proper bills of sale, assignments, releases and other instruments as may be designated in any such request.
In performing its duties hereunder, the Collateral Manager shall use commercially reasonable efforts, subject to the provisions of this Agreement and the Indenture, to manage the Collateral in a manner that it reasonably expects will (i) permit a timely performance of all payment obligations of the Issuer under the Indenture and (ii) subject to such objective, optimize the returns to the Holders of the Preferred Shares. The Collateral Manager does not hereby guarantee that sufficient funds will be available on each Payment Date to satisfy any such payment obligations. The Collateral Manager agrees that it shall perform its obligations hereunder and under the Indenture in accordance with reasonable care and in good faith, using a degree of skill and attention no less than that which it (i) exercises with respect to comparable assets that it manages for itself and (ii) exercises with respect to comparable assets that it manages for others, and in a manner consistent with the practices and procedures then in effect followed by reasonable and prudent institutional managers of national standing relating to assets of the nature and character of the Collateral, except as expressly provided in this Agreement or in the Indenture and without regard to any conflicts of interest to which it may be subject (the “Collateral Management Standard”). In addition, the Collateral Manager shall use its best efforts to ensure that (i) inquiries are made, to the extent practicable, from sources normally available to it, with respect to the occurrence of any default or event of default in respect of any Mortgage Asset under any Asset Document and (ii) commitments to purchase Mortgage Assets and Eligible Investments are made by the Collateral Manager only if, in the Collateral Manager’s best judgment at the time of such commitment, payment at settlement in respect of any such purchase could be made without any breach or violation of, or default under, the terms of the Indenture or this Agreement. The Collateral Manager shall comply with and perform all the duties and functions that have been specifically delegated to the Collateral Manager under the Indenture (including those duties and functions described in Section 2.16 and Section 5.5(a)(iii) of the Indenture). The Collateral Manager shall be bound
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to follow any amendment, supplement or modification to the Indenture of which it has received written notice at least 10 Business Days prior to the execution and delivery thereof by the parties thereto; provided, however, that with respect to any amendment, supplement, modification or waiver to the Indenture which may affect the Collateral Manager, the Collateral Manager shall not be bound thereby (and the Issuer agrees that it will not permit any such amendment, supplement, modification or waiver to become effective) unless the Collateral Manager has been given prior written notice thereof and has given its written consent thereto (which consent shall not be unreasonably withheld) to the Trustee and the Issuer prior to the effectiveness thereof.
The Collateral Manager shall take all actions reasonably requested by the Trustee to facilitate the perfection of the Trustee’s security interest in the Collateral pursuant to the Indenture.
2.Delegation of Duties. The Collateral Manager may assign its rights or delegate its obligations as Collateral Manager to another person; provided that no such assignment is permitted pursuant to this Agreement unless the Collateral Manager Replacement Conditions are satisfied. In addition the Collateral Manager may enter into arrangements pursuant to which the Collateral Manager’s Affiliates or third parties may perform certain services on behalf of the Collateral Manager; provided that (i) such arrangements shall not relieve the Collateral Manager from any of its duties or obligations hereunder as a result of such delegation to or employment of third parties and (ii) the Collateral Manager shall be solely responsible for the fees and expenses payable to any such third party, except as set forth in Section 6 hereof.
3.Purchase and Sale Transactions; Brokerage.
(a)The Collateral Manager shall use reasonable efforts to obtain the best prices and executions for all orders placed with respect to the Collateral, considering all reasonable circumstances, including, if applicable, the conditions or terms of early redemption of the Securities, it being understood that the Collateral Manager has no obligation to obtain the best prices available. Subject to the objective of obtaining best prices and executions, the Collateral Manager may take into consideration all factors the Collateral Manager reasonably determines to be relevant, including, without limitation, timing, general relevant trends and research and other brokerage services and support equipment and services related thereto furnished to the Collateral Manager or its Affiliates by brokers and dealers in compliance with Section 28(e) of the Exchange Act or, if Section 28(e) of the Exchange Act is not applicable, in accordance with the provisions set forth herein. Such services may be used in connection with the other advisory activities or investment operations of the Collateral Manager and/or its Affiliates. In addition, subject to the objective of obtaining best prices and executions, the Collateral Manager may take into account available prices, rates of brokerage commissions and size and difficulty of the order, in addition to other relevant factors (such as, without limitation, execution capabilities, reliability (based on total trading rather than individual trading), integrity, financial condition in general, execution and operational capabilities of competing brokers and/or dealers, and the value of the ongoing relationship with such brokers and/or dealers), without having to demonstrate that such factors are of a direct benefit to the Issuer in any specific transaction. The Issuer acknowledges that the determination by the Collateral Manager of any benefit to the Issuer is subjective and represents the Collateral Manager’s evaluation at the time that the Issuer
USActive 56230836.6    5

will be benefited by relatively better purchase or sale prices, lower brokerage commissions and beneficial timing of transactions or a combination of these and other factors.
The Collateral Manager may aggregate sales and purchase orders of financial assets placed for the Issuer with similar orders being made simultaneously for other accounts managed by the Collateral Manager or with accounts of the Affiliates of the Collateral Manager if, in the Collateral Manager’s reasonable judgment, such aggregation will not have an adverse effect on the Issuer. When any aggregate sales or purchase orders occur, the objective of the Collateral Manager (and any of its Affiliates involved in such transactions) shall be to allocate the executions among the accounts in a fair and equitable manner and generally to seek to allocate financial assets available for investment to all such accounts pro rata in proportion to the optimum amount sought by the Collateral Manager for each respective account. Investment opportunities and the purchases or sales of instruments shall be allocated in a manner believed by the Collateral Manager to be fair and equitable, taking into consideration, among other relevant factors, the differing investment objectives of the Issuer and the Collateral Manager’s other clients, the amount of capital available, the Acquisition Criteria and the Eligibility Criteria set forth in the Indenture and any eligibility criteria in any governing documents or management or advisory agreements relating to the Collateral Manager’s other clients, the maturity of the account and the exposure to similar or offsetting positions. The Collateral Manager, whenever possible, will average the prices paid or received by all such clients (including the Issuer) whenever particular positions are acquired or disposed of at the same time. Circumstances may arise, however, in which such an allocation could have adverse effects upon the Issuer or the other clients of the Collateral Manager with respect to the price or size of positions obtainable or saleable.
All purchases and sales of Eligible Investments and Mortgage Assets by the Collateral Manager on behalf of the Issuer shall be conducted in compliance with all applicable laws (including, without limitation, Section 206(3) of the Advisers Act) and the terms of the Indenture. After (and excluding) the Closing Date, the Collateral Manager shall cause any purchase or sale of any Mortgage Asset or Eligible Investment to be conducted on an arm’s- length basis or, if applicable, in compliance with Section 3(b) hereof. The parties hereto acknowledge and agree that all purchases of Eligible Investments and Mortgage Assets by the Collateral Manager on behalf of the Issuer on the Closing Date (including, without limitation, all such purchases from Affiliates of the Collateral Manager) in a manner contemplated by the Offering Memorandum, dated May 26, 2021, related to the Notes (or any supplement thereto) are hereby approved.
Notwithstanding the foregoing or anything to the contrary contained herein or in the Indenture, in no event shall the Collateral Manager purchase or sell an Eligible Investment or a Mortgage Asset for the primary purpose of recognizing gains or decreasing losses resulting from market value changes.
(b)The Collateral Manager, subject to and in accordance with the Indenture, may effect direct trades between the Issuer and the Collateral Manager, LCMT or an Affiliate of either, or any account managed by the Collateral Manager, in each case acting as principal or agent (any such transaction, a “Restricted Transaction”); provided, however, that a Restricted Transaction after (and excluding) the Closing Date, other than sales of Collateral in connection with a redemption of the Notes pursuant to Article 9 of the Indenture, may be effected only upon disclosure to and with the prior consent of an advisory committee
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containing at least one member independent from the Collateral Manager (whose affirmative vote will be required to grant such consent) that has been appointed from time to time as needed by the Issuer (the “Advisory Committee”) and based on the Advisory Committee’s determination that (i) such transaction is on terms substantially as favorable to the Issuer as would be the case if a such transaction were not a Restricted Transaction and (ii) the purchase price in respect of any Mortgage Asset acquired by the Issuer pursuant to such a direct trade is equal to the fair market value of such Mortgage Asset. The Advisory Committee, if any, shall be formed in accordance with, and subject to, the Advisory Committee Guidelines attached hereto as Exhibit A (the “Advisory Committee Guidelines”). The Issuer consents and agrees that, if any transaction relating to the Issuer, including any transaction effected between the Issuer and the Collateral Manager or its Affiliates, shall be subject to the disclosure and consent requirements of Section 206(3) of the Advisers Act, such requirements shall be satisfied with respect to the Issuer and all Holders of the Securities if disclosure shall be given to, and consent obtained from, the Advisory Committee. For avoidance of doubt, it is hereby understood and agreed by the parties hereto that no disclosure to, or consent of, the Advisory Committee shall be required with respect to (x) Credit Risk/Defaulted Mortgage Asset Cash Purchases and (y) sales of Collateral in connection with a redemption of the Notes pursuant to Article 9 of the Indenture.
4.Representations and Warranties of the Issuer. The Issuer represents and warrants to the Collateral Manager that:
(a)the Issuer (i) has been duly incorporated as an exempted company and is validly existing under the laws of the Cayman Islands; (ii) has full power and authority to own the Issuer’s assets and the financial assets proposed to be owned by the Issuer and included among the Collateral and to transact the business for which the Issuer was incorporated; (iii) is duly qualified under the laws of each jurisdiction where the Issuer’s ownership or lease of property or the conduct of the Issuer’s business requires or the performance of the Issuer’s obligations under this Agreement and the 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, assets or financial condition of the Issuer or the ability of the Issuer to perform its obligations under, or on the validity or enforceability of, this Agreement and the Indenture; and (iv) has full power and authority to execute, deliver and perform the Issuer’s obligations hereunder and thereunder;
(b)this Agreement and the Indenture have been duly authorized, executed and delivered by the Issuer and constitute legal, valid and binding agreements enforceable against the Issuer in accordance with their terms except that the enforceability thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship 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)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 Issuer of its duties hereunder or under the provisions of the Indenture applicable to the Collateral Manager, except those that may be required under state securities or “blue sky” laws or the applicable laws of any jurisdiction outside of the United States, and such as have been duly made or obtained;
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(d)neither the execution, delivery and performance of this Agreement or the provisions of the Indenture applicable to the Collateral Manager nor the performance by the Issuer of its duties hereunder or under the provisions of the Indenture applicable to the Collateral Manager (i) conflicts with or will violate or result in a default under the Issuer’s Governing Documents or any material contract or agreement to which the Issuer is a party or by which it or its assets may be bound, or any law, decree, order, rule, or regulation applicable to the Issuer of any court or regulatory, administrative or governmental agency, body or authority or arbitrator having jurisdiction over the Issuer or its properties, or (other than as contemplated or permitted by the Indenture) will result in a lien on any of the property of the Issuer and (ii) would have a material adverse effect upon the ability of the Issuer to perform its duties under this Agreement or the provisions of the Indenture applicable to the Collateral Manager;
(e)the Issuer and its Affiliates are not in violation of any federal, state or Cayman Islands laws or regulations, and there is no charge, investigation, action, suit or proceeding before or by any court or regulatory agency pending or, to the best knowledge of the Issuer, threatened that, in any case, would have a material adverse effect upon the ability of the Issuer to perform its duties under this Agreement or the provisions of the Indenture applicable to the Collateral Manager;
(f)the Issuer is not an “investment company” under the Investment Company Act; and
(g)the assets of the Issuer do not and will not at any time constitute the assets of any plan subject to the fiduciary responsibility provisions of ERISA or of any plan subject to Section 4975 of the Code.
5.Representations and Warranties of the Collateral Manager. The Collateral Manager represents and warrants to the Issuer that:
(a)the Collateral Manager (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 Collateral Manager’s assets and to transact the business in which it is currently engaged; (iii) is duly qualified and in good standing under the laws of each jurisdiction where the Collateral Manager’s ownership or lease of property or the conduct of the Collateral Manager’s business requires, or the performance of this Agreement and the 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, assets or financial condition of the Collateral Manager or the ability of the Collateral Manager to perform its obligations under, or on the validity or enforceability of, this Agreement and the provisions of the Indenture applicable to the Collateral Manager; and (iv) has full power and authority to execute, deliver and perform this Agreement and the Collateral Manager’s obligations hereunder and the provisions of the Indenture applicable to the Collateral Manager;
(b)this Agreement has been duly authorized, executed and delivered by the Collateral Manager and constitutes a legal, valid and binding agreement of the Collateral Manager, enforceable against it in accordance with the terms hereof, except that the enforceability hereof may be subject to (i) bankruptcy, insolvency, reorganization,
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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 Collateral Manager nor any of its Affiliates is in violation of any federal or state securities law or regulation promulgated thereunder that would have a material adverse effect upon the ability of the Collateral Manager to perform its duties under this Agreement and the provisions of the Indenture applicable to the Collateral Manager, and there is no charge, investigation, action, suit or proceeding before or by any court or regulatory agency pending or, to the best knowledge of the Collateral Manager, threatened which could reasonably be expected to have a material adverse effect upon the ability of the Collateral Manager to perform its duties under this Agreement or the provisions of the Indenture applicable to the Collateral Manager;
(d)neither the execution and delivery of this Agreement nor the performance by the Collateral Manager of its duties hereunder or under the provisions of the Indenture applicable to the Collateral Manager 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 limited liability company agreement of the Collateral Manager, (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 Collateral Manager is a party or is bound, (iii) any law, decree, order, rule or regulation applicable to the Collateral Manager of any court or regulatory, administrative or governmental agency, body or authority or arbitrator having jurisdiction over the Collateral Manager or its properties, and which would have, in the case of any of (i), (ii) or (iii) of this Section 5(d), either individually or in the aggregate, a material adverse effect on the business, operations, assets or financial condition of the Collateral Manager or the ability of the Collateral Manager to perform its obligations under this Agreement or the provisions of the Indenture applicable to the Collateral Manager;
(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 Collateral Manager of its duties hereunder and under the Indenture, except such as have been duly made or obtained;
(f)the Section entitled “The Collateral Manager” in the Offering Memorandum, as of the date thereof (including as of the date of any supplement thereto) and as of the Closing Date, does not contain any untrue statement of a material fact and does not omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(g)the Collateral Manager is a registered investment adviser under the Advisers Act.
6.Expenses. Both parties hereto acknowledge and agree that a portion of the gross proceeds received from the issuance and sale of the Securities will be used to pay certain organizational and structuring fees and expenses of the Co-Issuers, including the legal fees and expenses of counsel to the Collateral Manager. The Collateral Manager shall pay all expenses and costs incurred by it in the course of performing its obligations under this
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Agreement; provided, however, that the Collateral Manager shall not be liable for, and (subject to the Priority of Payments set forth in the Indenture and to the extent funds are available therefor) the Issuer shall be responsible for the payment of, reasonable expenses and costs of (i) independent accountants, consultants and other advisers, including legal advisers, retained by the Issuer or by the Collateral Manager on behalf of the Issuer in connection with the services provided by the Collateral Manager under this Agreement and (ii) reasonable travel expenses (airfare, meals, lodging and other transportation) undertaken in connection with the performance by the Collateral Manager of its duties pursuant to this Agreement or pursuant to the Indenture and for an allocable share of the cost of certain credit databases used by the Collateral Manager in providing services to the Issuer under this Agreement.
7.Fees.
(a)The Collateral Manager, acting in its sole discretion, hereby waives any and all Collateral Manager Fees payable to it or any of its Affiliates for so long as OREC Investment Management, LLC dba Lument Investment Management or an Affiliate is the Collateral Manager and also the manager of Lument Finance Trust, Inc. (“LFT REIT”). Such waiver shall be automatically rescinded if otherwise.
(b)Any successor Collateral Manager may determine to waive, reduce or defer the Collateral Manager Fees payable to it (without interest thereon) by written notice to the Trustee and the Note Administrator on or prior to the Determination Date in which such waiver, reduction or deferral applies. Any Collateral Manager Fees (x) so reduced or waived, shall be reduced or waived permanently and (y) so deferred, shall not accrue interest.
(c)The Collateral Manager shall receive as compensation for the performance of its obligations as Collateral Manager hereunder and under the Indenture, to the extent not waived pursuant to clauses (a) or (b) above, a fee, payable monthly in arrears on each Payment Date in accordance with the Priority of Payments, equal to 0.10% per annum of the Net Outstanding Portfolio Balance as of such Payment Date (the “Collateral Manager Fee”). Each Collateral Manager Fee will be calculated for each Interest Accrual Period assuming a 360-day year with 12 thirty-day months. The Collateral Manager Fee, if any, will be calculated based on the Net Outstanding Portfolio Balance for such Payment Date to the extent funds are available as of the first day of the applicable Interest Accrual Period. If on any Payment Date there are insufficient funds to pay such fees (and/or any other amounts due and payable to the Collateral Manager) in full, in accordance with the Priority of Payments, the amount not so paid shall be deferred and such amounts shall be payable on such later Payment Date on which funds are available therefor as provided in the Priority of Payments set forth in the Indenture. Any accrued and unpaid Collateral Manager Fee that is deferred due to the operation of the Priority of Payments shall accrue interest at a per annum rate equal to the Benchmark in effect for the applicable Interest Accrual Period computed on an actual/360-day basis and shall be paid as a Company Administrative Expense. The Collateral Manager hereby agrees not to cause the filing of a petition in bankruptcy against the Issuer for the nonpayment to the Collateral Manager of any amounts due it hereunder except in accordance with Section 18 hereof and, subject to the provisions of Section 12, to continue to serve as Collateral Manager. If this Agreement is terminated pursuant to Section 12 hereof or otherwise, the accrued fees payable to the Collateral Manager, if any, shall be prorated for any partial periods between the Payment Dates during which this
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Agreement was in effect and shall be due and payable on the first Payment Date following the date of such termination, together with all expenses payable to the Collateral Manager in accordance with Section 6 hereof, and subject to the provisions of the Indenture and the Priority of Payments.
8.Non-Exclusivity. Nothing herein shall prevent the Collateral Manager or any of its Affiliates from engaging in any other businesses or providing investment management, advisory or other types of services to any Persons, including the Issuer, the Trustee and the Noteholders; provided, however, that the Collateral Manager may not take any of the foregoing actions which the Collateral Manager knows or reasonably should know (a) would require the Issuer or the Collateral to register as an “investment company” under the Investment Company Act or (b) would with respect to the Issuer violate any provisions of federal or state law applicable to the Collateral Manager or any law, rule or regulation of any governmental body or agency having jurisdiction over the Issuer, which, in the case of clause (b), would have a material adverse effect on the ability of the Issuer to perform its duties under this Agreement or the Indenture.
9.Conflicts of Interest.
(a)After (but excluding) the Closing Date and the sale by LCMT of Mortgage Assets to the Issuer on the Closing Date (and except in the case of sales of Collateral in connection with a redemption of the Notes pursuant to Article 9 of the Indenture), the Collateral Manager will not cause the Issuer to enter into any transaction with the Collateral Manager, LCMT or an Affiliate of either, or any account managed by the Collateral Manager, as principal unless the applicable terms and conditions set forth in Section 3(b) are complied with.
(b)The Collateral Manager shall perform its obligations hereunder in accordance with the requirements of the Advisers Act and the Indenture. The Issuer acknowledges (i) that an indirect wholly-owned subsidiary of LFT REIT, an entity externally managed by the Collateral Manager, will acquire on the Closing Date 100% of the Preferred Shares and the Ordinary Shares, (ii) that an indirect wholly-owned subsidiary of LFT REIT, an entity externally managed by the Collateral Manager, will sell Mortgage Assets to the Issuer on the Closing Date and may sell certain Mortgage Assets to the Issuer after the Closing Date, and (iii) that the Collateral Manager, its Affiliates and funds or accounts for which the Collateral Manager or any of its Affiliates acts as investment adviser, including LFT REIT and its Affiliates (collectively, the “Collateral Manager Related Parties”) may at times own Notes of one or more Classes. After the Closing Date, the Collateral Manager agrees to provide the Trustee with written notice upon the acquisition or transfer (after, but excluding, the Closing Date) of any Securities held by the Collateral Manager Related Parties.
(c)Nothing herein shall prevent the Collateral Manager or any of its Affiliates or any of their respective directors, officers, employees or agents from engaging in other businesses, or from rendering services of any kind to the Issuer and its Affiliates, the Trustee, the Holders or any other Person. Without prejudice to the generality of the foregoing, the Collateral Manager or any of its Affiliates or any of their respective directors, officers, employees or agents may, subject to the Indenture, among other things:
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(i)serve as directors (whether supervisory or managing), officers, employees, partners, members, managers, agents, nominees or signatories for the Issuer or any Affiliate thereof, or for any obligor in respect of any of the Mortgage Assets or Eligible Investments, or any of their respective Affiliates, except to the extent prohibited by their respective Asset Documents, as from time to time amended; provided that (x) in the reasonable judgment of the Collateral Manager, such activity will not have an adverse effect on the ability of the Issuer or the Trustee to enforce its respective rights with respect to any Collateral and (y) nothing in this paragraph shall be deemed to limit the duties of the Collateral Manager set forth in Section 1 hereof;
(ii)serve as the Servicer or Special Servicer pursuant to the Servicing Agreement or as sub-servicer or as Advancing Agent pursuant to the Indenture;
(iii)receive fees for services of whatever nature rendered to an obligor in respect of any of the Mortgage Assets or Eligible Investments, including acting as master servicer, sub-servicer or special servicer with respect to any commercial mortgage loan or senior participation interest therein constituting or underlying any Mortgage Asset; provided that, (i) in the reasonable judgment of the Collateral Manager, such activity will not have a material adverse effect on the ability of the Issuer or the Trustee to enforce its respective rights with respect to any of the Collateral and (ii) in the reasonable judgment of the Collateral Manager, such activity by any Affiliate of the Collateral Manager as to which the Collateral Manager has actual knowledge, will not have a material adverse effect on the ability of the Issuer or the Trustee to enforce its respective rights with respect to any of the Collateral;
(iv)be retained to provide services unrelated to this Agreement to the Issuer or its Affiliates and be paid therefor;
(v)be a secured or unsecured creditor of, or hold an equity interest in the Issuer, its Affiliates or any obligor of any Mortgage Asset or Eligible Investment; provided, however, that the Collateral Manager may not be such a creditor or hold any of such interests if, in the opinion of counsel to the Issuer, the existence of such interest would require (A) registration of the Issuer or the pool of Mortgage Assets and Eligible Investments as an “investment company” under the Investment Company Act or (B) violate any provisions of federal or applicable state law or any law, rule or regulation of any governmental body or agency having jurisdiction over the Issuer, which, in the case of clause (B), would have a material adverse effect on the ability of the Issuer to perform its duties under this Agreement or the Indenture;
(vi)except as otherwise provided in this Section 9, sell any Mortgage Asset or Eligible Investment to, or purchase any Mortgage Asset from, the Issuer while acting in the capacity of principal or agent; and
(vii)subject to its obligations in Section 1 hereof to protect the Holder of the Preferred Shares, serve as a member of any “creditors’ board” with respect to any Defaulted Mortgage Loan, Eligible Investment or with respect to any commercial mortgage loan underlying or constituting any Mortgage Asset or the respective borrower for any such commercial mortgage loan.
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It is understood that the Collateral Manager and any of its Affiliates may engage in any other business and furnish investment management and advisory services to others, including Persons that may have investment policies similar to those followed by the Collateral Manager with respect to the Collateral and that may own instruments of the same class, or of the same type, as the Mortgage Assets or other instruments of the issuers of Mortgage Assets and may manage portfolios similar to the Collateral. The Collateral Manager and its Affiliates shall be free, in their sole discretion, to make recommendations to others, or effect transactions on behalf of themselves or for others, which may be the same as or different from those the Collateral Manager causes the Issuer to effect with respect to the Collateral.
The Collateral Manager and its Affiliates may cause or advise their respective clients to invest in instruments that would be appropriate as security for the Notes. Such investments may be different from those made on behalf of the Issuer. The Collateral Manager, its Affiliates and their respective clients may have ongoing relationships with Persons whose instruments are pledged to secure the Notes and may own instruments issued by, or loans to, issuers of the Mortgage Assets or to any borrower or Affiliate of any borrower on any commercial mortgage loans underlying or constituting the Mortgage Assets or the Eligible Investments. The Collateral Manager and its Affiliates may cause or advise their respective clients to invest in instruments that are senior to, or have interests different from or adverse to, the instruments that are pledged to secure the Notes.
Nothing contained in this Agreement shall prevent the Collateral Manager or any of its Affiliates from recommending to or directing any other account to buy or sell, at any time, financial assets of the same kind or class, or financial assets of a different kind or class of the same issuer, as those directed by the Collateral Manager to be purchased or sold hereunder. It is understood that, to the extent permitted by applicable law, the Collateral Manager, its Affiliates, and any member, manager, officer, director, stockholder or employee of the Collateral Manager or any such Affiliate or any member of their families or a Person advised by the Collateral Manager may have an interest in a particular transaction or in financial assets of the same kind or class, or financial assets of a different kind or class of the same issuer, as those purchased or sold by the Collateral Manager hereunder. When the Collateral Manager is considering purchases or sales for the Issuer and one or more of such other accounts at the same time, the Collateral Manager shall allocate available investments or opportunities for sales in its discretion and make investment recommendations and decisions that may be the same as or different from those made with respect to the Issuer’s investments, in accordance with applicable law.
Subject to the Indenture and the provisions of this Agreement, the Collateral Manager shall not be obligated to pursue any specific investment strategy or opportunity that may arise with respect to the Collateral.
The Issuer hereby consents to the various potential and actual conflicts of interest that may exist with respect to the Collateral Manager as described above; provided, however, that nothing contained in this Section 9 shall be construed as altering or limiting the duties of the Collateral Manager set forth in this Agreement or in the Indenture nor the requirement of any law, rule or regulation applicable to the Collateral Manager.
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10.Records; Confidentiality. The Collateral Manager shall maintain appropriate books of account and records relating to services performed hereunder, and such books of account and records shall be accessible for inspection by an authorized representative of the Issuer, the Trustee and the Independent accountants appointed by the Issuer pursuant to the Indenture at a mutually agreed-upon time during normal business hours and upon reasonable prior written notice; provided that the Collateral Manager shall not be obligated to provide access to any non-public information if the Collateral Manager in good faith or on the advice of legal counsel determines that the disclosure of such information would violate any applicable law, regulation or contractual arrangement. The Collateral Manager shall follow its customary procedures to keep confidential all information obtained in connection with the services rendered hereunder and shall not disclose any such information except (i) with the prior written consent of the Issuer (which consent shall not be unreasonably withheld), (ii) such information as the Rating Agencies shall reasonably request in connection with its rating or evaluation of the Notes and/or the Collateral Manager, as applicable, (iii) as required by law, regulation, court order or the rules, regulations, or request of any regulatory or self-regulating organization, body or official (including any securities exchange on which the Notes may be listed from time to time) having jurisdiction over the Collateral Manager or as otherwise required by law or judicial process, (iv) such information as shall have been publicly disclosed other than in violation of this Agreement, (v) to its members, officers, directors, and employees, and to its attorneys, accountants and other professional advisers in conjunction with the transactions described herein, (vi) such information as may be necessary or desirable in order for the Collateral Manager to prepare, publish and distribute to any Person any information relating to the investment performance of the Collateral, (vii) in connection with the enforcement of the Collateral Manager’s rights hereunder or in any dispute or proceeding related hereto, (viii) to the Trustee and (ix) to Holders and potential purchasers of any of the Securities.
11.Term. This Agreement shall become effective on the Closing Date and shall continue in full force and effect until the first of the following occurs: (a) the payment in full of the Notes and the termination of the Indenture in accordance with its terms, (b) the liquidation of the Collateral and the final distribution of the proceeds of such liquidation to the Holders of the Securities and the Issuer, or (c) the termination of this Agreement pursuant to Section 12 hereof.
12.Termination.  The Collateral Manager may be removed upon at least 30 days’ prior written notice upon the occurrence of a Collateral Manager Event of Default, by the Issuer or the Trustee, if the Holders of at least 66-2/3% in Aggregate Outstanding Amount of each Class of Notes then outstanding give written notice to the Collateral Manager, the Issuer and the Trustee directing such removal. Notice of any such removal shall be delivered by the Trustee on behalf of the Issuer to the Rating Agencies and the Holders of each Class of Notes and the Preferred Shares. The Collateral Manager cannot be removed without cause. None of the Collateral Manager Related Parties are entitled to vote the Preferred Shares or Notes held by any of the Collateral Manager Related Parties with respect to the removal of the Collateral Manager (or waiver of any event or circumstance constituting grounds for removal), appointment of a successor Collateral Manager following removal that is an Affiliate of the Collateral Manager or termination or assignment of this Agreement. However, at any given time, the Collateral Manager Related Parties may vote the Preferred Shares and Notes (if any) held by them with respect to all other matters in accordance with the applicable documents.
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(b)In no event will the Trustee be required to determine whether or not a Collateral Manager Event of Default has occurred for the removal of the Collateral Manager. For this purposes of this Agreement, a “Collateral Manager Event of Default” means any of the following events:
(i)the Collateral Manager willfully breaches, or takes any action that it knows violates, any provision of this Agreement or any term of the Indenture applicable to the Collateral Manager (not including a willful breach or knowing violation that results from a good faith dispute regarding alternative courses of action or interpretation of instructions);
(ii)other than as provided under clause (i) above, the Collateral Manager breaches any material provision of this Agreement or any material terms of the Indenture applicable to the Collateral Manager and fails to cure such breach within 45 days after the first to occur of (A) written notice of such failure is given to the Collateral Manager or (B) the Collateral Manager has actual knowledge of such breach;
(iii)the Collateral Manager (A) ceases to be able to, or admits in writing the Collateral Manager’s inability to, pay the Collateral Manager’s debts when and as they become due, (B) files, or consents by answer or otherwise to the filing against the Collateral Manager of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or takes advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (C) makes an assignment for the benefit of the Collateral Manager’s creditors, (D) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Collateral Manager or with respect to any substantial part of the Collateral Manager’s property, or (E) is adjudicated as insolvent or to be liquidated;
(iv)the occurrence of an act by the Collateral Manager or any of its Affiliates that constitutes fraud or criminal activity in the performance of its obligations under this Agreement or the Collateral Manager or any of its respective officers or directors is indicted for a criminal offense involving an investment or investment-related business, fraud, false statements or omissions, wrongful taking of property, bribery, forgery, counterfeiting or extortion;
(v)the failure of any representation, warranty, certificate or statement of the Collateral Manager in or pursuant to this Agreement or the provisions of the Indenture applicable to the Collateral Manager to be correct in any material respect and (A) such failure has (or could reasonably be expected to have) a material adverse effect on the Noteholders, the Issuer or the Co-Issuer and (B) if such failure can be cured, no correction is made for 45 days after the Collateral Manager becomes aware of such failure or receives written notice thereof from the Trustee;
(vi)the occurrence and continuation of any of the Events of Default described in Section 5.1(a) or 5.1(b) of the Indenture; or
(vii)the Collateral Manager consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another Person and at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee Person either (A) fails to or cannot assume all the obligations of the Collateral Manager under
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this Agreement or (B) lacks the legal capacity to perform the obligations of the Collateral Manager hereunder and under the Indenture.
The Collateral Manager shall notify the Trustee, the Rating Agencies and the Issuer in writing promptly upon becoming aware of any event that constitutes a Collateral Manager Event of Default under this Section 12(b).
(c)The Collateral Manager may resign, upon 45 days’ prior written notice (or such shorter notice as is acceptable to the Issuer and the Trustee) to the Issuer, the Co-Issuer, the Trustee and the Rating Agencies; provided that the Collateral Manager shall have the right to resign without prior notice if, due to a change in any applicable law or regulation or interpretation thereof, the performance by the Collateral Manager of its duties under this Agreement would (i) adversely affect the status of LCMT as a REIT or the status of the Issuer as a Qualified REIT Subsidiary or another disregarded entity of LCMT for U.S. federal income tax purposes (unless the Issuer has received a No Trade or Business Opinion) or (ii) constitute a violation of such applicable law or regulation.
(d)No removal, termination or resignation of the Collateral Manager or termination of this Agreement shall be effective unless the Collateral Manager Replacement Conditions are satisfied. “Collateral Manager Replacement Conditions” means all of the following:
(i)written notice of such removal, termination or resignation or assignment is provided to the Noteholders and the holders of the Preferred Shares;
(ii)the Rating Agency Condition is satisfied;
(iii)a replacement collateral manager (a “Replacement Collateral Manager”) has been appointed by the Issuer and has agreed in writing to assume all of the Collateral Manager’s duties and obligations pursuant to this Agreement;
(iv)the Replacement Collateral Manager has demonstrated an ability to professionally and competently perform duties similar to those imposed upon the Collateral Manager;
(v)the Replacement Collateral Manager is legally qualified and has the capacity to act as Collateral Manager;
(vi)the appointment of the Replacement Collateral Manager will not cause or result in the Issuer or Co-Issuer becoming an “investment company” under the Investment Company Act;
(vii)the appointment of the Replacement Collateral Manager will not cause the Issuer, the Co-Issuer or the pool of Collateral to become subject to income or withholding tax that would not have been imposed but for such appointment;
(viii)if the proposed Replacement Collateral Manager is an Affiliate of the Collateral Manager, either (A) such assignment would not constitute an “assignment” under the Advisers Act or (B) the Issuer has provided the Noteholders and the Holders of the Preferred Shares notice of such proposed appointment and the Holders of at least a majority
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of the Aggregate Outstanding Amount of each class of Notes (excluding any Notes held by Collateral Manager Related Parties) do not disapprove of such proposed Replacement Collateral Manager in writing within 30 days of notice of such appointment; and
(ix)if the proposed Replacement Collateral Manager is not an Affiliate of the Collateral Manager, the Issuer has provided the Noteholders and the Holders of the Preferred Shares notice of such proposed appointment and the Holders of at least a majority of the Aggregate Outstanding Amount of each class of Notes (excluding any Notes held by Collateral Manager Related Parties to the extent the Collateral Manager has been removed after the occurrence of a Collateral Manager Event of Default) do not disapprove of such proposed Replacement Collateral Manager in writing within 30 days of notice of such appointment.
(e)Upon the resignation or removal of the Collateral Manager while any of the Notes are Outstanding, the Holders of a Majority of Preferred Shares (excluding any Preferred Shares held by Collateral Manager Related Parties to the extent the Replacement Collateral Manager is an Affiliate of the Collateral Manager or the Collateral Manager has been removed upon the occurrence of a Collateral Manager Event of Default) will have the right to instruct the Issuer to appoint an institution identified by such Holders as Replacement Collateral Manager; provided that in the event that 100% of the aggregate outstanding Preferred Shares are held by Collateral Manager Related Parties and the proposed Replacement Collateral Manager is an Affiliate of the Collateral Manager, the Holders of at least a Majority of the Aggregate Outstanding Amount of the most junior Class of Notes not 100% owned by Collateral Manager Related Parties (excluding any Notes held by Collateral Manager Related Parties if the Replacement Collateral Manager is an Affiliate of the Collateral Manager or the Collateral Manager has been removed upon the occurrence of a Collateral Manager Event of Default) may direct the Issuer to appoint an institution identified by such Holders as replacement Collateral Manager.
(f)In the event that the Collateral Manager resigns pursuant to Section 12(c) or is terminated pursuant to Section 12(a) or (b) hereof and the Collateral Manager and the Issuer have not appointed a Replacement Collateral Manager prior to the day following the termination (or resignation) date specified in such notice, the Collateral Manager will be entitled to appoint a Replacement Collateral Manager within 60 days thereafter, subject to the requirements set forth in Section 12(d)(ii) through (viii). In the event a proposed Replacement Collateral Manager is not approved by the Holders of a Majority of each Class of Notes within 30 days of the notice of such appointment, the resigning or removed Collateral Manager may petition any court of competent jurisdiction for the appointment of a Replacement Collateral Manager, which appointment will not require the consent of, or be subject to the disapproval of, the Issuer, any Noteholder or any Holder of the Preferred Shares. Upon expiration of the applicable notice periods with respect to resignation, removal or termination specified in Section 12(a), (b) or (c) hereof, and upon acceptance of such appointment by a Replacement Collateral Manager, all authority and power of the Collateral Manager under this Agreement and the Indenture, whether with respect to the Collateral or otherwise, shall automatically and without further action by any person or entity pass to and be vested in the Replacement Collateral Manager upon the appointment thereof.
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Notwithstanding any provision contained in this Agreement, the Indenture or otherwise, so long as the Collateral Manager continues to perform its obligations hereunder, the Collateral Manager Fee, to the extent not waived, shall continue to accrue for the benefit of the Collateral Manager until termination of this Agreement under this Section 12 shall become effective as set forth herein. In addition, the Collateral Manager shall, subject to Section 6, be entitled to reimbursement of out-of-pocket expenses incurred in cooperating with the Replacement Collateral Manager, including in connection with the delivery of any documents or property. In the event that the Collateral Manager is removed or resigns and a Replacement Collateral Manager is appointed, such former Collateral Manager nonetheless shall be entitled to receive payment of all unpaid Collateral Manager Fees that have accrued through the effective date of the removal or resignation, to the extent that such fees have not been waived and funds are available for that purpose in accordance with the Priority of Payments, and such payments shall rank in the Priority of Payments pari passu with the Collateral Manager Fees due to the Replacement Collateral Manager.
(g)Upon the effective date of termination of this Agreement, the Collateral Manager shall as soon as practicable:
(i)deliver to the Issuer, or as the Issuer directs, all property and documents of the Trustee, the Note Administrator or the Issuer or otherwise relating to the Collateral then in the custody of the Collateral Manager (although the Collateral Manager may keep copies of such documents for its records); and
(ii)deliver to the Trustee and the Note Administrator an accounting with respect to the books and records delivered to the Issuer or the Replacement Collateral Manager appointed pursuant to this Section 12 hereof.
The Collateral Manager shall reasonably assist and cooperate with the Trustee, the Note Administrator and the Issuer (as reasonably requested by the Trustee, the Note Administrator or the Issuer) in the assumption of the Collateral Manager’s duties by any Replacement Collateral Manager as provided for in this Agreement, as applicable. Notwithstanding such termination, the Collateral Manager shall remain liable to the extent set forth herein (but subject to Section 13 hereof) for the Collateral Manager’s acts or omissions hereunder arising prior to its termination as Collateral Manager hereunder and for any expenses, losses, damages, liabilities, demands, charges and claims (including reasonable attorneys’ fees) in respect of or arising out of a breach of the representations and warranties made by it in Section 5 hereof or from any failure of the Collateral Manager to comply with the provisions of this Section 12(g).
(h)The Collateral Manager agrees that, notwithstanding any termination, the Collateral Manager shall reasonably cooperate in any Proceeding arising in connection with this Agreement, the Indenture or any of the Collateral (excluding any such Proceeding in which claims are asserted against the Collateral Manager or any Affiliate of the Collateral Manager) so long as the Collateral Manager shall have been offered (in its judgment) reasonable security, indemnity or other provision against the cost, expenses and liabilities that might be incurred in connection therewith, but, in any event, shall not be required to make any admission or to take any action against the Collateral Manager’s own interests or the interests of other funds and accounts advised by the Collateral Manager.
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(i)If this Agreement is terminated pursuant to Section 12(a), (b) or (c) hereof, such termination shall be without any further liability or obligation of the Issuer or the Collateral Manager to the other, except as provided in Sections 6, 7, 12 and 13 and the last sentence of Section 10 hereof.
13.Liability of Collateral Manager.  The Collateral Manager assumes no responsibility under this Agreement other than to render the services called for from the Collateral Manager hereunder and under the Indenture in the manner prescribed herein and therein. The Collateral Manager and its Affiliates, and each of their respective partners, shareholders, members, managers, officers, directors, employees, agents, accountants and attorneys (the Collateral Manager and such other Persons collectively, the “Collateral Manager Indemnified Parties”) shall have no liability to the Noteholders, the Trustee, the Note Administrator, the Issuer, the Co-Issuer, the Placement Agents or any of their respective Affiliates, partners, shareholders, officers, directors, employees, agents, accountants and attorneys, for any error of judgment, mistake of law, or for any claim, loss, liability, damage, settlement, costs, or other expenses (including reasonable attorneys’ fees and court costs) of any nature whatsoever (collectively “Liabilities”) that arise out of or in connection with any act or omissions of the Collateral Manager in the performance of its duties under this Agreement or the provisions of the Indenture applicable to the Collateral Manager or for any decrease in the value of the Mortgage Assets or Eligible Investments, except (i) by reason of acts or omissions constituting bad faith, willful misconduct or gross negligence in the performance of, or grossly negligent or wanton disregard of, the duties of the Collateral Manager hereunder and under the terms of the Indenture and (ii) with respect to the information concerning the Collateral Manager under the heading “The Collateral Manager” in the Offering Memorandum containing any untrue statement of material fact or omitting to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Issuer agrees that the Collateral Manager shall not be liable for any consequential, special, exemplary or punitive damages hereunder. The breaches described in this Section 13(a)(i) and (ii) are collectively referred to for purposes of this Section 13 as “Collateral Manager Breaches.”
(b)The Collateral Manager shall reimburse, indemnify, defend and hold harmless the Issuer and each of its partners, shareholders, members, managers, officers, directors, employees, agents, accountants and attorneys (each, an “Issuer Indemnified Party”) from and against any Liabilities that are incurred as a direct consequence of the Collateral Manager Breaches, except for liability to which such Issuer Indemnified Party would be subject by reason of willful misconduct, bad faith, gross negligence in the performance of, or grossly negligent or wanton disregard of the obligations of the Issuer hereunder and under the terms of the Indenture.
(c)The Issuer shall reimburse, indemnify, defend and hold harmless each of the Collateral Manager Indemnified Parties from any and all Liabilities, as are incurred in investigating, preparing, pursuing or defending any claim, action, proceeding or investigation (whether or not such Collateral Manager Indemnified Party is a party) caused by, or arising out of or in connection with this Agreement, the Indenture and the transactions contemplated hereby and thereby, including the issuance of the Notes, or any acts or omissions of any Collateral Manager Indemnified Parties except those that are the direct result of Collateral Manager Breaches and then only to the extent thereof. Any amounts
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payable by the Issuer under this Section 13(c) shall be payable only subject to the Priority of Payments set forth in the Indenture and to the extent Collateral are available therefor.
(d)With respect to any claim made or threatened against an Issuer Indemnified Party or a Collateral Manager Indemnified Party (each an “Indemnified Party”), or compulsory process or request or other notice of any Liability served upon an Indemnified Party, for which such Indemnified Party is or may be entitled to indemnification under this Section 13, such Indemnified Party shall (or, with respect to Indemnified Parties that are directors, managers, officers, stockholders, members, managers, agents or employees of the Issuer or the Collateral Manager, the Issuer or the Collateral Manager, as the case may be, shall cause such Indemnified Party to):
(i)give written notice to the indemnifying party of such claim within ten Business Days after such Indemnified Party’s receipt of actual notice that such claim is made or threatened, which notice to the indemnifying party shall specify in reasonable detail the nature of the claim and the amount (or an estimate of the amount) of the claim; provided, however, that the failure of any Indemnified Party to provide such notice to the indemnifying party shall not relieve the indemnifying party of its obligations under this Section 13 unless the rights or defenses available to the indemnifying party are materially prejudiced or otherwise forfeited by reason of such failure;
(ii)at the indemnifying party’s expense, provide the indemnifying party such information and cooperation with respect to such claim as the indemnifying party may reasonably require, including making appropriate personnel available to the indemnifying party at such reasonable times as the indemnifying party may request;
(iii)at the indemnifying party’s expense, cooperate and take all such steps as the indemnifying party may reasonably request to preserve and protect any defense to such claim;
(iv)in the event suit is brought with respect to such claim, upon reasonable prior notice, afford to the indemnifying party the right, which the indemnifying party may exercise in its sole discretion and at its expense, to participate in the investigation, defense and settlement of such claim;
(v)neither incur any material expense to defend against nor release or settle any such claim or make any admission with respect thereto (other than routine or incontestable admissions or factual admissions the failure to make of which would expose such Indemnified Party to unindemnified liability) nor permit a default or consent to the entry of any judgment in respect thereof, in each case without the prior written consent of the indemnifying party; and
(vi)upon reasonable prior notice, afford to the indemnifying party the right, in such party’s sole discretion and at such party’s sole expense, to assume the defense of such claim, including the right to designate counsel reasonably acceptable to the Indemnified Party and to control all negotiations, litigation, arbitration, settlements, compromises and appeals of such claim; provided that, if the indemnifying party assumes the defense of such claim, it shall not be liable for any fees and expenses of counsel for any Indemnified Party incurred thereafter in connection with such claim except that, if such
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Indemnified Party reasonably determines that counsel designated by the indemnifying party has a conflict of interest, such indemnifying party shall pay the reasonable fees and disbursements of one counsel (in addition to any local counsel) separate from such indemnifying party’s own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances; and provided, further, that the indemnifying party shall not have the right, without the Indemnified Party’s written consent, to settle any such claim if, in a case where the Issuer is the indemnifying party, the Issuer does not make available (in accordance with the Priority of Payments), in a segregated account available only for this purpose, the full amount required to pay any amounts due from the Indemnified Party under such settlement or, in any case, such settlement (A) arises from or is part of any criminal action, suit or proceeding, (B) contains a stipulation to, confession of judgment with respect to, or admission or acknowledgement of, any liability or wrongdoing on the part of the Indemnified Party, (C) relates to any federal, state or local tax matters or (D) provides for injunctive relief, or other relief other than damages, which is binding on the Indemnified Party.
(e)In the event that any Indemnified Party waives its right to indemnification hereunder, the indemnifying party shall not be entitled to appoint counsel to represent such Indemnified Party nor shall the indemnifying party reimburse such Indemnified Party for any costs of counsel to such Indemnified Party.
(f)Nothing herein shall in any way constitute a waiver or limitation of any rights that the Issuer or the Collateral Manager may have under any United States federal or state securities laws or that the Collateral Manager may have under its management agreement with LFT REIT.
14.Obligations of Collateral Manager.  Unless otherwise required by a provision of the Indenture or this Agreement or by applicable law, the Collateral Manager shall use commercially reasonable efforts to ensure that no action is taken by it, and shall not intentionally or with negligent disregard take any action, which the Collateral Manager knows or reasonably should know (i) could reasonably be expected to materially adversely affect the Issuer or the Co-Issuer for purposes of Cayman Islands law, Delaware law, United States federal or state law or any other law known to the Collateral Manager to be applicable to the Issuer or the Co-Issuer, (ii) would not be permitted under the Issuer or the Co-Issuer’s Governing Documents, (iii) would require registration of the Issuer or the Co-Issuer or the Collateral as an “investment company” under the Investment Company Act, (iv) would cause the Issuer or the Co-Issuer to materially violate the terms of the Indenture or any other agreement, representation or certification contemplated by or provided pursuant to the Indenture, (v) would cause the Issuer to fail to qualify as a Qualified REIT Subsidiary unless the Issuer has received an opinion of Cadwalader, Wickersham & Taft LLP or another nationally recognized tax counsel experienced in such matters that the Issuer will be treated as a foreign corporation that will not be treated as engaged in a trade or business within the United States for U.S. federal income tax purposes, (vi) would have a materially adverse United States federal or state income tax effect on the Issuer or (vii) would result in the Issuer entering into any “reportable transactions” in connection with the U.S. Internal Revenue Service tax shelter rules unless the Collateral Manager notifies the Issuer immediately after entering into any such reportable transactions.
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The Collateral Manager shall not take any action that would cause the Issuer to be required to register as or become subject to regulatory supervision or other legal requirements under the laws of any country or political subdivision thereof as a bank, insurance company or finance company. The Collateral Manager shall not take any action that would cause the Issuer to be treated as a bank, insurance company or finance company for purposes of (i) any tax, securities law or other filing or submission made to any governmental authority, (ii) any application made to a rating agency or (iii) qualification for any exemption from tax, securities law or any other legal requirements. The Collateral Manager shall not cause the Issuer to hold itself out to the public as a bank, insurance company or finance company. The Collateral Manager shall not have any liability under this Section 14 for any action taken by the Collateral Manager in good faith in reliance on information provided by the Issuers or the Trustee.
(b)Notwithstanding anything to the contrary herein, the Collateral Manager or any of its Affiliates may take any action that is not specifically prohibited by the Indenture, this Agreement or applicable law that the Collateral Manager or any Affiliate of the Collateral Manager deems to be in its (or in its portfolio’s) best interest regardless of its impact on the Mortgage Assets.
15.No Partnership or Joint Venture. The Issuer and the Collateral Manager are not partners or joint venturers with each other, and nothing herein shall be construed to make them such partners or joint venturers or impose any liability as such on either of them. The Collateral Manager’s relation to the Issuer shall be that of an independent contractor and not a general agent. Except as expressly provided in this Agreement and in the Indenture, the Collateral Manager shall not have authority to act for or represent the Issuer in any way and shall not otherwise be deemed to be the Issuer’s agent.
16.Notices. Any notice from a party under this Agreement shall be in writing and addressed and delivered or sent by certified mail, postage prepaid, return receipt requested, or by overnight or second day delivery by a nationally recognized courier, such as FedEx or UPS, to the other party at such address as such other party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Issuer for this purpose shall be:
LFT CRE 2021-FL1, Ltd.
c/o Walkers Fiduciary Limited
190 Elgin Avenue
George Town, Grand Cayman, KY1-9008
Cayman Islands
with a copy to the Collateral Manager (as addressed below).
The address of the Collateral Manager for this purpose shall be:
OREC Investment Management, LLC dba Lument Investment Management
230 Park Avenue, 20th Floor
New York, NY 10169
Attention: Michele Halickman

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with a copy to:

c/o Lument Investment Management
10 W. Broad Street, 8th Floor
Columbus, Ohio 43215
Attention: General Counsel
Email: general.counsel@lument.com
17.Succession; Assignment. This Agreement shall inure to the benefit of, and be binding upon the successors to, the parties hereto. Any assignment of this Agreement by operation of law or otherwise to any Person, in whole or in part, by the Collateral Manager shall be deemed null and void unless the Collateral Manager Replacement Conditions are satisfied. Any assignment consented to by the Issuer in accordance with Article 15 of the Indenture shall bind the assignee hereunder in the same manner as the Collateral Manager is bound. In addition, the assignee shall execute and deliver to the Issuer, the Note Administrator and the Trustee a counterpart of this Agreement naming such assignee as Collateral Manager. Upon the execution and delivery of such a counterpart by the assignee, the Collateral Manager shall be released from further obligations pursuant to this Agreement, except with respect to the Collateral Manager’s obligations arising under Section 13 of this Agreement prior to such assignment and except with respect to the Collateral Manager’s obligations under the last sentence of Section 10 and Sections 7 and 12 hereof. This Agreement shall not be assigned by the Issuer without the prior written consent of the Collateral Manager, the Note Administrator and the Trustee (subject to the satisfaction of the Rating Agency Condition), except in the case of assignment by the Issuer to (i) an entity that is a successor to the Issuer permitted under the Indenture, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Issuer is bound hereunder and thereunder or (ii) the Trustee as contemplated by the Indenture (and, in connection therewith, the Collateral Manager agrees to be bound by Article 15 of the Indenture). In the event of any assignment by the Issuer, the Issuer shall use its best efforts to cause its successor to execute and deliver to the Collateral Manager such documents as the Collateral Manager shall consider reasonably necessary to effect fully such assignment. The Collateral Manager hereby consents to the assignment and other matters set forth in Article 15 of the Indenture.
18.No Bankruptcy Petition/Limited Recourse. The Collateral Manager covenants and agrees that, prior to the date that is one year and one day (or, if longer, the applicable preference period then in effect and one day) after the payment in full of all Notes issued by the Issuer under the Indenture, the Collateral Manager will not institute against, or join any other Person in instituting against, the Issuer (or any Permitted Subsidiary) or the Co-Issuer any bankruptcy, reorganization, arrangement, insolvency, winding up or liquidation proceedings or other proceedings under any bankruptcy, insolvency, reorganization or similar law of any jurisdiction; provided, however, that nothing in this provision shall preclude, or be deemed to stop, the Collateral Manager 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 and one day) in (x) any case or proceeding voluntarily filed or commenced by the Issuer or the Co-Issuer, as the case may be, or (y) any involuntary insolvency proceeding filed or commenced against the Issuer or the Co-Issuer, as the case may be, by a Person other than the Collateral Manager. The Collateral Manager hereby acknowledges and agrees that
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the Issuer’s obligations hereunder will be solely the corporate obligations of the Issuer, and the Collateral Manager will not have recourse to any of the directors, officers, employees, shareholders or Affiliates of the Issuer, or any members of the Advisory Committee, with respect to any claims, losses, damages, liabilities, indemnities or other obligations hereunder or in connection with any transaction contemplated hereby. Notwithstanding any provision hereof, all obligations of the Issuer and any claims arising from this Agreement or any transactions contemplated by this Agreement, in each case from time to time and at any time, shall be limited solely to the Mortgage Assets and the other Collateral available at such time and payable in accordance with the Priority of Payments. If payments on any such claims from the Collateral are insufficient, no other assets shall be available for payment of the deficiency and, following liquidation of all the Collateral, all claims against the Issuer and the obligations of the Issuer to pay such deficiencies shall be extinguished and shall not thereafter revive. The Issuer hereby acknowledges and agrees that the Collateral Manager’s obligations hereunder shall be solely the limited liability company obligations of the Collateral Manager, and the Issuer shall not have any recourse to any of the members, managers, directors, officers, employees, shareholders or Affiliates of the Collateral Manager with respect to any claims, losses, damages, liabilities, indemnities or other obligations in connection with any transactions contemplated hereby. The provisions of this Section 18 shall survive the termination of this Agreement for any reason whatsoever.
19.Rating Agency Information. All information and notices required to be delivered to the Rating Agencies pursuant to this Agreement or requested by the Rating Agencies in connection herewith, shall first be provided in electronic format to the 17g-5 Information Provider in compliance with the terms of the Indenture (who shall post such information to the 17g-5 Website in accordance with Section 14.13 of the Indenture).
Each party hereto, insofar as it may communicate with any Rating Agency pursuant to any provision of this Agreement, each other party to this Agreement, agrees to comply (and to cause each and every sub-servicer, subcontractor, vendor or agent for such Person and each of its officers, directors and employees to comply) with the provisions relating to communications with the Rating Agencies set forth in this Section 19 and shall not deliver to any Rating Agency any report, statement, request or other information relating to the Notes or the Mortgage Assets other than in compliance with such provisions.
None of the foregoing restrictions in this Section 19 prohibit or restrict oral or written communications, or providing information, between the Collateral Manager, on the one hand, and any Rating Agency, on the other hand, with regard to (i) such Rating Agency’s review of the ratings, if any, it assigns to such party, (ii) such Rating Agency’s approval, if any, of such party as a commercial mortgage master, special or primary servicer or (iii) such Rating Agency’s evaluation of such party’s servicing operations in general; provided, however, that such party shall not provide any information relating to the Notes or the Mortgage Assets to any Rating Agency in connection with any such review and evaluation by such Rating Agency unless (x) borrower, property or deal specific identifiers are redacted; or (y) such information has already been provided to the 17g-5 Information Provider and has been uploaded onto the 17g-5 Website.
20.Miscellaneous.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflict of laws principles thereof. With respect to any suit, action or proceedings relating to this
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Agreement (“Proceedings”), each party irrevocably (i) submits to the nonexclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City and (ii) waives any objection that such party may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction, nor shall the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. The Collateral Manager 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 in accordance with Section 16 above to the Collateral Manager at the office of the Collateral Manager, 230 Park Avenue, 20th Floor, New York, NY 10169, Attention: Michele Halickman, or such other address as the Collateral Manager may advise the Issuer in writing. The Issuer 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 Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (and any successor entity), as its authorized agent to receive and forward on its behalf service of any and all process which may be served in any such suit, action or proceeding in any such court and agrees that service of process upon Corporation Service Company shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and shall be taken and held to be valid personal service upon it. Each party hereto 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.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b)The captions in this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(c)In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
(d)This Agreement (including Exhibit A attached hereto) may be modified without the prior written consent of the Trustee or Noteholders to correct any inconsistency or cure any ambiguity or mistake or to provide for any other modification that does not materially and adversely affect the rights of any Noteholder or holder of the Preferred Shares. Any other amendment of this Agreement (including Exhibit A attached hereto) shall require the prior written consent of a Majority of each Class of Notes, a Majority of the Preferred Shares and the Majority of the Preferred Shareholders that would be materially and adversely affected by such proposed amendment.
(e)This Agreement constitutes the entire understanding and agreement between the parties hereto and supersedes all other prior and contemporaneous understandings and
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agreements, whether written or oral, between the parties hereto concerning this subject matter (other than the Indenture).
(f)The Collateral Manager hereby agrees and consents to the terms of Section 15.1(f) of the Indenture applicable to the Collateral Manager and shall perform any provisions of the Indenture made applicable to the Collateral Manager by the Indenture as required by Section 15.1(f) of the Indenture. The Collateral Manager agrees that all of the representations, covenants and agreements made by the Collateral Manager herein are also for the benefit of the Trustee, the Note Administrator, the Noteholders and the Holders of the Preferred Shares.
(g)This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument, and the words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Agreement or in any other certificate, agreement or document related to this transaction shall include, in addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
(h)The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to.”
(i)Subject to the last sentence of the penultimate paragraph of Section 1 hereof, in the event of a conflict between the terms of this Agreement and the Indenture, including with respect to the obligations of the Collateral Manager hereunder and thereunder, the terms of this Agreement shall be controlling.
(j)No failure or delay on the part of any party hereto to exercise any right or remedy under this Agreement shall operate as a waiver thereof, and no waiver shall be effective unless it is in writing and signed by the party granting such waiver.
(k)This Agreement is made solely for the benefit of the Issuer, the Collateral Manager, the Note Administrator and the Trustee, on behalf of the Noteholders and the Holders of the Preferred Shares, their successors and assigns, and no other person shall have any right, benefit or interest under or because of this Agreement.
(l)The Collateral Manager hereby irrevocably waives any rights it may have to set off against the Collateral.
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(m)No Noteholder or Holder of any Preferred Share is a third party beneficiary under this Agreement for any purpose or has any independent rights hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized representatives as of the day and year first above written.
LFT CRE 2021-FL1, LTD., as Issuer
By:     /s/ Nicholas Capogrosso     
Name: Nicholas Capogrosso
Title: Director
OREC INVESTMENT MANAGEMENT, LLC DBA LUMENT INVESTMENT MANAGEMENT, as Collateral Manager
By:     /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer
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EXHIBIT A
Advisory Committee Guidelines
1.General.
If, at any time after and excluding the Closing Date, the Collateral Manager desires to direct a Restricted Transaction, before effecting such trade, it shall first present such Restricted Transaction to the Advisory Committee for (1) review and prior approval and (2) a determination by the Advisory Committee that (i) such Restricted Transaction is on terms substantially as favorable to the Issuer as would be the case if such transaction were not a Restricted Transaction and (ii) the purchase price in respect of any Mortgage Asset acquired by the Issuer pursuant to such trade is equal to the fair market value of such Mortgage Asset.
2.Composition of the Advisory Committee.
The Advisory Committee must be comprised of at least one person (which may be an individual or an entity), who is not an Affiliate of the Collateral Manager (each such person, an “Independent Member”).
The Advisory Committee also may have one or more members appointed by the Collateral Manager and employed by the Collateral Manager or an Affiliate thereof (each such person, an “Affiliated Member”).
3.Requisite Experience.
Each member of the Advisory Committee must at the time of appointment and at all relevant times thereafter have Requisite Experience.
The Collateral Manager and the Issuer will have the right to accept a representation and warranty from a member regarding its Requisite Experience, in the absence of actual knowledge by a responsible officer of the Collateral Manager to the contrary.
“Requisite Experience” means experience as a sophisticated investor, including, without limitation, in fixed income investing (directly and/or through investment vehicles) and/or substantial experience and knowledge in and of the commercial real estate loan market and related investment arenas, such that the relevant Advisory Committee member believes that it is capable of determining whether or not to participate in Advisory Committee decisions on the basis of the provisions described herein. Such person need not be a professional loan investor or loan originator.
4.Appointment of Initial Members of the Advisory Committee.
Initially, the Advisory Committee will consist of 3 members, the independent member of which will be Donald Puglisi, and the other two members will be James Flynn and Michael Larsen, each a representative of the Collateral Manager.
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5.Removal of Independent Members of the Advisory Committee; Replacement of Independent Members of the Advisory Committee.
A Majority of the Controlling Class (excluding any Notes held by the Collateral Manager, any of its Affiliates or any funds (other than the Issuer) managed by the Collateral Manager or its Affiliates) shall have the right to remove any member of the Advisory Committee.
Any replacement Independent Member shall be selected by the Collateral Manager and must be approved by a Majority of the Controlling Class.
Any replacement Affiliated Member shall be appointed by the Collateral Manager.
The Collateral Manager will have the right to remove an Independent Member for “cause,” but such removal will be subject to the appointment of a successor Independent Member. For this purpose, “cause” will be defined narrowly (in an agreement to be entered into among each member of the Advisory Committee, the Collateral Manager and the Issuer) to mean failure to comply with the terms governing the Advisory Committee, subject to any applicable grace and cure periods.
The Collateral Manager will have the right to remove any Affiliated Member at any time and in its sole discretion (with or without cause), and such removal will not be subject to the appointment of any successor Affiliated Member.
6.Term; Resignation of Members of the Advisory Committee.
Each member of the Advisory Committee will serve until it resigns, dies or is removed or until all of the Mortgage Assets have been sold and the lien of the Indenture in respect thereto has been released, in each case as more particularly described in an agreement to be entered into between each member of the Advisory Committee and the Issuer.
Each member of the Advisory Committee will have the right to resign without penalty at any time, and such resignation will not be subject to the appointment of a replacement member.
7.Approval Process.
If the Collateral Manager wants the Issuer to consider a Restricted Transaction, the Collateral Manager will give notice of the proposed Restricted Transaction to the members of the Advisory Committee. The notice will contain the request by the Collateral Manager for the Advisory Committee’s consent to the Restricted Transaction. The notice will be accompanied by:
•an investment memorandum; and
•an underwriting analysis, in form and substance as the Collateral Manager or its affiliates would use in connection with its underwriting and approval of a loan similar to the Mortgage Assets, including any analysis, reports or documents delivered to the related credit committee (the “Review Materials”).
The investment memorandum (a) will be a reasonably detailed (anticipated to be approximately two pages) description of the proposed investment, the issuer thereof and
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related information and (b) will include information about the identity of any Affiliated Person involved in the proposed investment and the capacity in which it will be acting and a narrative about why, in the judgment of the Collateral Manager, the investment is appropriate to be purchased or sold by the Issuer, as the case may be. The notice will contain the Collateral Manager’s offer to provide additional information as requested to the Advisory Committee.
8.Unanimous Written Consent.
Regardless of the composition of the Advisory Committee, each Restricted Transaction must be approved in writing by each member of the Advisory Committee.
The Advisory Committee will have no less than 10 Business Days after receipt of the Review Materials and any other information requested by the Advisory Committee to review such Restricted Transaction.
The members of the Advisory Committee are under no obligation to consent to a Restricted Transaction.
•If all of the members of the Advisory Committee approve a Restricted Transaction in writing, the Issuer will effect it at the option of the Collateral Manager.
•If the members of the Advisory Committee notify the Collateral Manager that the Advisory Committee will not approve the Restricted Transaction, the Issuer will not effect the Restricted Transaction.
If at any time the Advisory Committee does not have at least one Independent Member or any member does not have Requisite Experience, the Collateral Manager will not be permitted to use the Advisory Committee to approve any Restricted Transaction.
9.Indemnification; Compensation.
Each Independent Member shall receive arm’s length compensation by the Issuer for serving on the Advisory Committee as agreed between such member and the Issuer. Any such payment shall be payable by the Issuer as part of its expenses in accordance with the Priority of Payments (or, in the case of any amounts due on the Closing Date, from the gross proceeds of the sale of the Notes).
Pursuant to an agreement to be entered into between each member of the Advisory Committee and the Issuer, each member of the Advisory Committee will be entitled to indemnification from the Issuer and broad exculpation provisions, i.e., no liability except for such member’s willful misconduct or fraud.
10.Amendment.
These Advisory Committee Guidelines may not be amended without the prior written consent of the Independent Member.
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Exhibit 10.3
SERVICING AGREEMENT
dated as of June 14, 2021
by and among
LFT CRE 2021-FL1, LTD.,
as Issuer
OREC INVESTMENT MANAGEMENT, LLC DBA LUMENT INVESTMENT MANAGEMENT,
as Collateral Manager
ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL,
as Servicer
ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL,
as Special Servicer
LUMENT COMMERCIAL MORTGAGE TRUST,
as Advancing Agent
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Note Administrator

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TABLE OF CONTENTS
Page
ARTICLE I

DEFINITIONS
Section 1.01    Defined Terms
1
ARTICLE II

RETENTION AND AUTHORITY OF SERVICER
Section 2.01    Engagement; Servicing Standard.
23
Section 2.02    Subservicing
25
Section 2.03    Authority of the Servicer or the Special Servicer
26
Section 2.04    Certain Calculations
28
ARTICLE III

SERVICES TO BE PERFORMED
Section 3.01    Servicing; Special Servicing
28
Section 3.02    Escrow Accounts; Collection of Taxes, Assessments and Similar Items
31
Section 3.03    Collection Account and Participated Mortgage Loan Collection Account
32
Section 3.04    Permitted Investments
36
Section 3.05    Maintenance of Insurance Policies
36
Section 3.06    Delivery and Possession of Servicing Files
38
Section 3.07    Inspections; Financial Statements
38
Section 3.08    Exercise of Remedies upon Mortgage Loan Defaults
39
Section 3.09    Enforcement of Due-On-Sale Clauses; Due-On-Encumbrance Clauses; Assumption Agreements; Defeasance Provisions
39
Section 3.10    Appraisals; Realization upon Defaulted Mortgage Assets
42
Section 3.11    Annual Statement as to Compliance
45
Section 3.12    Annual Independent Public Accountants’ Servicing Report
45
Section 3.13    Title and Management of REO Properties and REO Accounts
46
Section 3.14    Cash Collateral Accounts
48
Section 3.15    Modification, Waiver, Amendment and Consents
48
Section 3.16    Transfer of Servicing Between Servicer and Special Servicer; Record Keeping; Asset Status Report
51
Section 3.17    [Reserved].
54
Section 3.18    Sale of Mortgage Assets Pursuant to Indenture; Auction Call Redemption.
55
Section 3.19    Repurchase Requests
56
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Section 3.20    Investor Q&A Forum and Rating Agency Q&A Forum and Servicer Document Request Tool
57
Section 3.21    Duties under Indenture; Miscellaneous
58
Section 3.22    [Reserved].
58
Section 3.23    [Reserved].
58
Section 3.24    Certain Matters Related to the Participated Mortgage Loans
58
Section 3.25    Ongoing Future Advance Estimates
60
ARTICLE IV

STATEMENTS AND REPORTS
Section 4.01    Reporting by the Servicer and the Special Servicer
62
ARTICLE V

SERVICER AND SPECIAL SERVICER COMPENSATION AND EXPENSES
Section 5.01    Servicing Compensation
64
Section 5.02    Servicing Advances; Servicer Expenses
65
Section 5.03    Special Servicing Compensation
69
ARTICLE VI

THE SERVICER AND THE ISSUER
Section 6.01    No Assignment; Merger or Consolidation
71
Section 6.02    Liability and Indemnification
71
Section 6.03    Eligibility; Successor, the Servicer or the Special Servicer
72
ARTICLE VII

REPRESENTATIONS AND WARRANTIES; TERMINATION EVENTS
Section 7.01    Representations and Warranties
74
Section 7.02    Servicer Termination Event
79
Section 7.03    Termination of the Special Servicer by the Collateral Manager
82
Section 7.04    [Reserved].
82
Section 7.05    Note Administrator/Trustee Termination Event
82
Section 7.06    Trustee to Act; Appointment of Successor
84
Section 7.07    Collateral Manager Termination Event
84
ARTICLE VIII

TERMINATION; TRANSFER OF MORTGAGE ASSETS
Section 8.01    Termination of Agreement
86
Section 8.02    Transfer of Mortgage Assets
87
ARTICLE IX

MISCELLANEOUS PROVISIONS
Section 9.01    Amendment; Waiver
87
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Section 9.02    Governing Law
88
Section 9.03    Notices
88
Section 9.04    Severability of Provisions
91
Section 9.05    Inspection and Audit Rights
91
Section 9.06    Submission to Jurisdiction; Waiver of Jury Trial
91
Section 9.07    Binding Effect; No Partnership; Counterparts
91
Section 9.08    Protection of Confidential Information
92
Section 9.09    General Interpretive Principles
92
Section 9.10    Further Agreements
93
Section 9.11    Rating Agency Notices
93
Section 9.12    Limited Recourse and Non-Petition
94
Section 9.13    Capacity of Trustee and Note Administrator
94
EXHIBIT A    Mortgage Asset Schedule
EXHIBIT B    Applicable Servicing Criteria in Item 1122 of Regulation AB
EXHIBIT C    Initial Companion Participation Holder Register
EXHIBIT D    Form of Special Servicer’s Two Quarter Future Advance Estimate

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This SERVICING AGREEMENT, dated as of June 14, 2021, by and among LFT CRE 2021-FL1, LTD., an exempted company incorporated under the laws of the Cayman Islands (the “Issuer”), OREC INVESTMENT MANAGEMENT, LLC DBA LUMENT INVESTMENT MANAGEMENT, a limited liability company organized under the laws of the State of Delaware (the “Collateral Manager”), ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL, as servicer (the “Servicer”) and as special servicer (the “Special Servicer”), LUMENT COMMERCIAL MORTGAGE TRUST, as advancing agent (the “Advancing Agent”), WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as note administrator (the “Note Administrator”).
PRELIMINARY STATEMENTS
The Issuer desires to engage the Collateral Manager, the Servicer, the Special Servicer, the Advancing Agent, the Trustee and the Note Administrator, and the Servicer, the Special Servicer, the Advancing Agent, the Trustee and the Note Administrator, desire to accept the Issuer’s engagement, to perform their respective duties with respect to the Mortgage Loans in accordance with the provisions of this Agreement.
This Agreement shall become effective with respect to each Mortgage Loan upon the related Servicing Transfer Date.
NOW, THEREFORE, in consideration of the recitals in this Preliminary Statement which are made a contractual part hereof, and of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I

DEFINITIONS
Section I.01Defined Terms. Any capitalized term used herein without definition shall have the meaning ascribed to such term in the Indenture. In addition, whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
“15Ga-1 Notice”: As defined in Section 3.19.
“17g-5 Information Provider”: As defined in the Indenture.
“17g-5 Website”: As defined in the Indenture.
“Accounts”: The Escrow Accounts, the Collection Account, the Participated Mortgage Loan Collection Account, the REO Accounts and the Cash Collateral Accounts.
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“Additional Servicing Compensation”: (i) With respect to the Servicer, the amounts set forth in Section 5.01(b) as Additional Servicing Compensation payable to the Servicer, (ii) with respect to the Special Servicer, the amounts set forth in Section 5.03(c) as Additional Servicing Compensation payable to the Special Servicer and (iii) if the context does not specify, the amounts set forth in clauses (i) and (ii) above.
“Administrative Modification”: A modification, waiver or amendment directed by the Collateral Manager that relates exclusively to (i) with respect to any Mortgage Loan, in the case of a mismatch between the Benchmark Replacement and the Benchmark Replacement Adjustment on the Notes and the benchmark replacement and the benchmark replacement adjustment (if any) applicable to such Mortgage Loan, (x) any alternative rate index and alternative rate spread that the Collateral Manager determines are reasonably necessary to reduce or eliminate such mismatch and (y) any corresponding changes to such Mortgage Loan to match the applicable Benchmark Replacement Conforming Changes and/or to make any Loan-Level Benchmark Replacement Conforming Changes, or (ii) with respect to any Mortgage Loan other than a Mortgage Loan related to a Credit Risk Mortgage Asset, Specially Serviced Mortgage Loan or Defaulted Mortgage Loan, exit fees, extension fees, default interest, financial covenants relating (directly or indirectly) to debt yield, debt service coverage or loan-to-value, property performance covenants (including cash management triggers), prepayment fees, yield or spread maintenance provisions, substitution of a guarantor, adding or modifying provisions related to reserve account minimum balance amounts and purposes or a one-time extension of the maturity date for up to 90 days in the event the related borrower is diligently seeking a refinancing commitment or a sale of the related Mortgaged Property.
“Advance Rate”: A per annum rate equal to the “Prime Rate” (as published from time to time in the “Money Rates” section of The Wall Street Journal).
“Advancing Agent”: Lument Commercial Mortgage Trust, or its successors or assigns pursuant to the Indenture.
“Affiliate”: With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided that neither the Company Administrator nor the directors of the Issuer appointed thereby shall be deemed to be an Affiliate of the Issuer.
“Aggregate Outstanding Amount”: As defined in the Indenture.
“Agreement”: This Servicing Agreement, as the same may be modified, supplemented or amended from time to time.
“Appraisal”: An appraisal prepared by an Appraiser and certified by such Appraiser as having been prepared in accordance with the requirements of the Standards of
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Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, as well as FIRREA.
“Appraisal Reduction Event”: As defined in the Indenture.
“Appraiser”: An Independent appraiser, selected by the Special Servicer with the prior consent of the Issuer (or the Collateral Manager acting on behalf of the Issuer), which is a member in good standing of the Appraisal Institute, and is certified or licensed in the state in which the relevant related Mortgaged Property is located, and that has a minimum of five (5) years of experience in the appraisal of comparable properties.
“Asset Documents”: As defined in the Indenture.
“Asset Status Report”: As defined in Section 3.16(f).
“Auction”: As defined in the Section 3.18(b).
“Auction Payment Date”: As defined in the Section 3.18(b).
“Balloon Mortgage Loan”: Any Mortgage Loan that requires a payment of principal on the maturity date in excess of its constant Monthly Payment.
“Balloon Payment”: With respect to each Balloon Mortgage Loan, the scheduled payment of principal due on the maturity date (less principal included in the applicable amortization schedule or scheduled Monthly Payment).
“Business Day”: Any day other than (i) a Saturday or Sunday or (ii) a day on which commercial banks are authorized or required by applicable law, regulation or executive order to close in New York, New York, in the States of Texas or Ohio or the location of the Corporate Trust Office of the Note Administrator or the Trustee, or (iii) days when the New York Stock Exchange or the Federal Reserve Bank of New York are closed.
“Cash”: As defined in the Indenture.
“Cash Collateral”: As defined in Section 3.14.
“Cash Collateral Account”: As defined in Section 3.14.
“Closing Date”: June 14 2021.
“Co-Issuer”: LFT CRE 2021-FL1, LLC, a Delaware limited liability company.
“Co-Issuers”: The Issuer and the Co-Issuer.
“Code”: As defined in the Indenture.
“Collateral Manager”: As defined in the preamble hereto.
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“Collateral Management Agreement”: The Collateral Management Agreement, dated June 14, 2021, between the Issuer and the Collateral Manager.
“Collateral Manager Termination Event”: As defined in Section 7.07.
“Collection Account”: As defined in Section 3.03 hereof.
“Committed Warehouse Line”: A warehouse facility, repurchase facility or other similar financing facility pursuant to which the related lender has approved advances (at a 60% or greater advance rate) to fund future advance requirements under the Future Funding Participations, subject only to the satisfaction of general conditions precedent in the related facility documents.
“Company Administrator”: Walkers Fiduciary Limited.
“Companion Participation Holder”: The holder of any Funded Companion Participation or Future Funding Participation.
“Companion Participation Holder Register”: As defined in Section 3.24(b).
“Corporate Trust Office”: The corporate trust office of (a) the Trustee currently located at 1100 North Market Street, Wilmington, Delaware 19890, Attention: CMBS Trustee – LFT 2021-FL1, (b) the Note Administrator currently located at: (i) with respect to Note transfers and surrenders, at for Note transfer purposes and presentment of the Notes for final payment thereon, 600 South Fourth Street, 7th Floor, MAC N9300-070, Minneapolis, Minnesota 55415, Attention: Corporate Trust Services – LFT CRE 2021-FL1; (ii) for the delivery of the Asset Documents, 1055 10th Avenue SE, Minneapolis, Minnesota, 55414, Attention: Document Custody Group – LFT CRE 2021-FL1, and (iii) for all other purposes, 9062 Old Annapolis Road, Columbia, Maryland 21045-1951, Attention: Corporate Trust Services – LFT CRE 2021-FL1, or such other address as the Note Administrator or the Trustee, as applicable, may designate from time to time by notice to the Noteholders, the Holders of the Preferred Shares, the Rating Agencies, and the parties hereto.
“Corrected Mortgage Loan”: Any Specially Serviced Mortgage Loan that has become current and remained current for three (3) consecutive Monthly Payments (for such purposes taking into account any modification or amendment of such Mortgage Loan, whether by a consensual modification or in connection with a bankruptcy, insolvency or similar proceeding involving the Obligor), and (provided, that no additional default is foreseeable in the reasonable judgment of the Special Servicer and no other event or circumstance exists that causes such Mortgage Loan to otherwise constitute a Specially Serviced Mortgage Loan) the servicing of which the Special Servicer has returned to the Servicer pursuant to Section 3.16(b).
“Credit Risk Mortgage Asset”: As defined in the Indenture.
“CREFC®”: CRE Finance Council, formerly known as Commercial Mortgage Securities Association, or any association or organization that is a successor thereto.
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“CREFC® Comparative Financial Status Report”: The report substantially in the form of, and containing the information called for in, the downloadable form of the “Comparative Financial Status Report” available as of the Closing Date on the CREFC® Website, or such other final form for the presentation of such information and containing such additional information as may from time to time be promulgated as recommended by the CREFC® for commercial mortgage-backed securities transactions generally; provided that, to the extent that such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer, the Special Servicer and the Note Administrator.
“CREFC® Investor Reporting Packet”: The reporting packet substantially in the form of, and containing the information called for in, the downloadable form of the “CREFC® Investor Reporting Packet” available as of the Closing Date on the CREFC® Website, or such other final form for the presentation of such information and containing such additional information as may from time to time be promulgated as recommended by CREFC® for commercial mortgage securities transactions generally; provided that, to the extent that such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer.
“CREFC® Loan Periodic Update File”: The monthly data file substantially in the form of, and containing the information called for in, the downloadable form of the “Loan Periodic Update File” available as of the Closing Date on the CREFC® Website, or such other final form for the presentation of such information and containing such additional information as may from time to time be recommended by the CREFC® for commercial mortgage-backed securities transactions generally; provided that, to the extent that such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer, the Special Servicer and the Note Administrator. Notwithstanding any provision hereof, neither the CREFC® Loan Periodic Update File, nor any other report or accounting prepared or performed by the Servicer, is required to include any allocation among the Mortgage Assets of the fee payable to the Note Administrator or the fee payable to the Trustee.
“CREFC® NOI Adjustment Worksheet”: An annual report substantially in the form of, and containing the information called for in, the downloadable form of the “NOI Adjustment Worksheet” available as of the Closing Date on the CREFC® Website, or such other final form for the presentation of such information and containing such additional information as may from time to time be promulgated as recommended by the CREFC® for commercial mortgage-backed securities transactions generally; provided that, to the extent that such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer, the Special Servicer and the Note Administrator.
“CREFC® Operating Statement Analysis Report”: The report substantially in the form of, and containing the information called for in, the downloadable form of the “Operating Statement Analysis Report” available as of the Closing Date on the CREFC® Website or in such other final form for the presentation of such information and containing such additional information as may from time to time be promulgated as recommended by the CREFC® for commercial mortgage-backed securities transactions generally; provided that, to the extent that
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such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer, the Special Servicer and the Note Administrator.
“CREFC® Special Servicer Loan File”: The report substantially in the form of, and containing the information called for in, the downloadable form of the “CREFC® Special Servicer Loan File” available as of the Closing Date on the CREFC® Website, or such other final form for the presentation of such information and containing such additional information as may from time to time be promulgated as recommended by the CREFC® for commercial mortgage securities transactions generally; provided that, to the extent that such other form contemplates such additional information, such other form must be reasonably acceptable to the Servicer, the Special Servicer and the Note Administrator.
“CREFC® Website”: The website located at “www.crefc.org” or such other primary website as CREFC® may establish for dissemination of its report forms.
“Criteria-Based Modification”: with respect to any Mortgage Loan other than a Mortgage Loan that is, or is related to, a Credit Risk Mortgage Asset, Specially Serviced Mortgage Loan or Defaulted Mortgage Loan, a modification, waiver or amendment directed by the Collateral Manager that would result in (i) a change in interest rate (other than any Loan-Level Benchmark Replacement Conforming Changes), (ii) a material delay in the required timing of any payment of principal for any amortization or other principal reduction, (iii) an increase in the principal balance of such Mortgage Loan that will be allocated solely to the related Companion Participations, (iv) the indirect owners of the related borrower incurring additional indebtedness in the form of a mezzanine loan or preferred equity or (v) a change of maturity date or extended maturity date under such Mortgage Loan.
“Criteria-Based Modification Conditions”: A Criteria-Based Modification will be permitted only if, immediately after giving effect to a Criteria-Based Modification: (i) the aggregate Principal Balance of all Mortgage Assets subject to Criteria-Based Modifications after the Reinvestment Period is not more than 10.0% of the Aggregate Outstanding Portfolio Balance; (ii) with respect to any Criteria-Based Modification entered into after the Reinvestment Period, such Criteria-Based Modification does not include an increase in the principal balance of such Mortgage Loan; (iii) no Event of Default has occurred and is continuing, (iv) the Note Protection Tests are satisfied; (v) the related Mortgage Asset complies with the Eligibility Criteria (for this purpose, assuming the related Mortgage Asset was treated as a Reinvestment Mortgage Asset acquired on the date of the modification), as adjusted by the EC Modification Adjustments (as defined below); and (vi) an Updated Appraisal is obtained with respect to the Mortgage Asset (if an appraisal was not otherwise already obtained in connection with such modification); provided that multiple simultaneous modifications to a single Mortgage Asset will be treated as a single Criteria-Based Modification.
“Custodian”: Wells Fargo Bank, National Association, a national banking association appointed as Custodian under the Indenture, or its successor under the Indenture (including any affiliates or agents, as applicable, utilized by it).
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“Defaulted Mortgage Asset”: Any Mortgage Asset for which the related Mortgage Loan is a Defaulted Mortgage Loan.
“Defaulted Mortgage Loan”: As defined in the Indenture.
“Directly Operate”: With respect to any REO Property, the furnishing or rendering of services to the tenants thereof that are not customarily provided to tenants in connection with the rental of space “for occupancy only” within the meaning of Treasury Regulations Section 1.512(b)-1(c)(5), the management or operation of such REO Property, the holding of such REO Property primarily for sale to customers, the use of such REO Property in a trade or business conducted by the Issuer or the performance of any construction work on the REO Property (other than the completion of a building or improvement, where more than 10% of the construction of such building or improvement was completed before default became imminent), other than through an Independent Contractor; provided, however, that an REO Property shall not be considered to be Directly Operated solely because the Trustee (or the Special Servicer on behalf of the Trustee) establishes rental terms, chooses tenants, enters into or renews leases, deals with taxes and insurance or makes decisions as to repairs or capital expenditures with respect to such REO Property or takes other actions consistent with Treasury Regulations Section 1.856-4(b)(5)(ii).
“EC Modification Adjustments” With respect to any Criteria-Based Modification, adjustments to the Eligibility Criteria having the effects of (i) if such Criteria-Based Modification does not involve an increase in principal of the related Mortgage Loan, no requirement to obtain a No Downgrade Confirmation from KBRA or re-obtain a rating from Moody’s, (ii) clauses (cc), (dd), (ee), (ff), (ii) and (jj) of the Eligibility Criteria not being applicable, and (iii) references in clause (gg) to “acquisition” being deemed to instead be references to “modification.”
“Eligible Account”: As defined in the Indenture.
“Eligible Bidders”: As defined in the Section 3.18(b).
“Eligible Investments”: As defined in the Indenture.
“Escrow Account”: As defined in Section 3.02.
“Escrow Payment”: Any amounts received by the Servicer or Special Servicer for the account of an Obligor for application toward the payment of taxes, insurance premiums, assessments, ground rents, deferred maintenance, environmental remediation, rehabilitation costs, capital expenditures, lease-up expenses and similar items in respect of the related Mortgaged Property.
“Event of Default”: As defined in the Indenture.
“Failed Auction”: As defined in the Section 3.18(b).
“FIRREA”: The Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended.
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“Funded Companion Participation”: With respect to each Mortgage Asset that is a Participation with a fully funded companion participation, each related fully funded companion participation which (unless it is acquired after the Closing Date in accordance with the terms of the Indenture) is not an asset of the Issuer and is not part of the Collateral.
“Funded Participation Interest”: As defined in the Indenture.
“Future Funding Account Control Agreement”: As defined in the Indenture.
“Future Funding Agreement”: The Future Funding Agreement, dated as of June 14, 2021, by and among Lument Structured Finance, as obligor, the Future Funding Indemnitor, LCMT, as pledgor, the Trustee, as trustee on behalf of the Noteholders and the Holders of the Preferred Shares, as secured party, the Note Administrator, and the Bank (as defined in the Future Funding Agreement) as the same may be amended, supplemented or replaced from time to time.
“Future Funding Indemnitor”: ORIX Real Estate Capital Holdings, LLC, and its successors in interest.
“Future Funding Participation”: With respect to each Mortgage Asset that is a Funded Participation Interest, each related future funding companion participation which (unless it is acquired after the Closing Date in accordance with the terms of the Indenture) is not an asset of the Issuer and is not part of the Collateral.
“Future Funding Reserve Account”: The account required to be maintained by LCMT pursuant to the Future Funding Agreement.
“Holder”: As defined in the Indenture.
“Indenture”: The Indenture, dated as of June 14, 2021, among the Issuer, the Co-Issuer, the Advancing Agent, the Trustee, the Note Administrator and the Custodian.
“Independent”: As defined in the Indenture.
“Independent Contractor”: Any Person that would be an “Independent Contractor” with respect to LCMT (or any subsequent REIT) within the meaning of Section 856(d)(3) of the Code.
“Inquiry”: As defined in the Indenture.
“Insurance and Condemnation Proceeds”: All proceeds paid under any Insurance Policy or in connection with the full or partial condemnation of a Mortgaged Property, as applicable, in either case, to the extent such proceeds are not applied to the restoration of the related Mortgaged Property, as applicable, or released to the Obligor or any tenants or ground lessors, in either case, in accordance with the Servicing Standard.
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“Insurance Policy”: With respect to any Mortgage Loan, any hazard insurance policy, flood insurance policy, title insurance policy or other insurance policy that is maintained from time to time in respect of such Mortgage Loan or the related Mortgaged Property, as applicable.
“Investor Q&A Forum”: As defined in the Indenture.
“Issuer”: As defined in the preamble hereto.
“KBRA”: Kroll Bond Rating Agency, LLC, or its successor in interest.
“Largest One Quarter Future Advance Estimate”: As of any date of determination, an estimate of the largest aggregate amount of future advances that will be required to be made under the Future Funding Participations held by the Future Funding Holder, LCMT or an affiliate of either during any calendar quarter, subject to the same exclusions as the calculation of the Two Quarter Future Advance Estimate.
“LCMT”: Lument Commercial Mortgage Trust, a Maryland real estate investment trust.
“Liquidation Event”: An REO Property (and the related REO Loan) or a Mortgage Loan is liquidated for a full or discounted amount and the Special Servicer has determined that all amounts which it expects to recover from or on account of such Mortgage Loan or REO Property, as applicable, have been recovered.
“Liquidation Fee”: A fee payable to the Special Servicer with respect to each Specially Serviced Mortgage Loan or related REO Property, as applicable, as to which the Special Servicer receives a full or discounted payoff (or an unscheduled partial payment to the extent such prepayment is required by the Special Servicer as a condition to a workout) with respect thereto from the related Obligor or any Liquidation Proceeds or Insurance and Condemnation Proceeds with respect to the related Mortgage Loan or REO Property, as applicable (in any case, other than amounts for which a Workout Fee has been paid, or will be payable), equal to the product of the Liquidation Fee Rate and the proceeds of such full or discounted payoff or other partial payment or the Liquidation Proceeds or Insurance and Condemnation Proceeds related to such liquidated Specially Serviced Mortgage Loan or REO Property, as applicable, as the case may be; provided, however, that no Liquidation Fee shall be payable with respect to any event described in clause (iii) of the definition of “Liquidation Proceeds” or clause (iv) of the definition of “Liquidation Proceeds” if such repurchase occurs within the time parameters (including any applicable extension period) set forth in the Mortgage Asset Purchase Agreement.
“Liquidation Fee Rate”: With respect to each Specially Serviced Mortgage Loan, a rate equal to 0.5%.
“Liquidation Proceeds”: Cash amounts received by or paid to the Servicer or the Special Servicer, as applicable, in connection with: (i) the liquidation (including a payment in
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full) of a Mortgaged Property or other collateral constituting security for a Defaulted Mortgage Loan, through a trustee’s sale, foreclosure sale, sale of a REO Property or otherwise, exclusive of any portion thereof required to be released to the related Obligor in accordance with applicable law and the terms and conditions of the related Asset Documents; (ii) the realization upon any deficiency judgment obtained against an Obligor; (iii) (A) the purchase of a Defaulted Mortgage Loan or Credit Risk Mortgage Asset by the Collateral Manager pursuant to Section 12.1(b) of the Indenture; (B) the sale of Mortgage Assets pursuant to Section 12.1(c) of the Indenture, or (C) any other sale of a Mortgage Loan pursuant to Section 12.1 of the Indenture; (iv) the repurchase of a Mortgage Asset by the applicable Seller pursuant to the related Mortgage Asset Purchase Agreement; or (v) the purchase of a Specially Serviced Mortgage Loan or REO Property by any lender pursuant to any purchase option set forth in the related intercreditor or participation agreement.
“Loan-Level Benchmark Replacement”:  With respect to any Serviced Mortgage Loan, the alternate, substitute, successor or replacement index designated by the Collateral Manager upon the occurrence of a Loan-Level Benchmark Transition Event pursuant to applicable Asset Documents.
“Loan-Level Benchmark Replacement Conforming Changes”:  With respect to any Mortgage Loan, any technical, administrative or operational changes (including, but not limited to, changes to the definition of “interest accrual period” under the applicable Asset Documents setting an applicable determination date for the Loan-Level Benchmark Replacement, reference time, the timing and frequency of determining rates, the method for determining the Loan-Level Benchmark Replacement and other administrative matters) that the Collateral Manager determines, in its sole discretion, may be appropriate to reflect the adoption of a Loan-Level Benchmark Replacement or to eliminate a mismatch between the Benchmark Replacement and the Benchmark Replacement Adjustment on the Notes and the Loan-Level Benchmark Replacement and the spread adjustment (if any) applicable to such Mortgage Loan.
“Loan-Level Benchmark Transition Event”:  With respect to any Serviced Mortgage Loan, any determination by the Collateral Manager that a trigger event under the related Asset Documents has occurred that will result in the conversion of the applicable interest rate index for such Mortgage Loan from LIBOR (as defined in the related Asset Documents) to an alternate, substitute, successor or replacement index.
“Lument Structured Finance”: OREC Structured Finance Co., LLC dba Lument Structured Finance, a Delaware limited liability company.
1“Major Decisions”: Any of the following:
(a)any modification of, or waiver with respect to, a Mortgage Asset or underlying Mortgage Loan that would result in the extension of the maturity date or extended maturity date thereof (however the maturity date of such Mortgage Loan may not be extended beyond the date that is five years prior to the Stated Maturity Date of the Notes), a reduction in the interest rate borne thereby or the monthly debt service payment or prepayment, if any, payable thereon or a deferral or a forgiveness of interest on or
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principal of the Mortgage Asset or underlying Mortgage Loan or a modification or waiver of any other monetary term of the Mortgage Asset or the underlying Mortgage Loan relating to the timing or amount of any payment of principal or interest (other than default interest) or any other material sums due and payable under the Mortgage Loan or underlying Asset Documents or a modification or waiver of any provision of the Mortgage Loan that restricts the Obligor or its equity owners from incurring additional indebtedness;
(b)any modification of, or waiver with respect to, a Mortgage Asset or underlying Mortgage Loan that would result in a discounted pay-off of the Mortgage Loan;
(c)any foreclosure upon or comparable conversion of the ownership of a Mortgaged Property or any acquisition of a Mortgaged Property by deed-in-lieu of foreclosure;
(d)any sale of a Mortgaged Property or any material portion thereof or, except, as specifically permitted in the Asset Documents, the transfer of any direct or indirect interest in the Obligor;
(e)any action to bring a Mortgaged Property or REO Property into compliance with any laws relating to hazardous materials;
(f)any substitution or release of collateral for a Mortgage Asset (other than in accordance with the terms of, or upon satisfaction of, the Asset Documents);
(g)any release of the Obligor or any guarantor from liability with respect to the Mortgage Loan (other than in accordance with the terms of, or upon satisfaction of, the Asset Documents);
(h)any waiver of or determination not to enforce a “due-on-sale” or “due-on-encumbrance” clause (unless such clause is not exercisable under applicable law or such exercise is reasonably likely to result in successful legal action by the Obligor);
(i)any material changes to or waivers of any of the insurance requirements in the Asset Documents;
(j)any incurrence of additional debt by the Obligor to the extent such incurrence requires the consent of the lender under the Asset Documents; and
(k)any consent to any lease to the extent the entering into such requires the consent of the lender under the Asset Documents.
“Measurement Date”: Any of the following: (i) the Closing Date, (ii) the date of acquisition or disposition of any Mortgage Asset, (iii) any date on which any Mortgage Asset becomes a Defaulted Mortgage Asset, (iv) each Determination Date and (v) with reasonable notice to the Issuer, the Collateral Manager and the Note Administrator, any other Business Day
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that the Rating Agencies or the Holders of at least 66-2/3% of the outstanding principal amount of any Class of Notes requests be a “Measurement Date”; provided that if any such date would otherwise fall on a day that is not a Business Day, the relevant Measurement Date will be the immediately preceding Business Day.
“Monthly Payment”: With respect to any Mortgage Asset, the scheduled monthly payment of interest or the scheduled monthly payment of principal and interest, as the case may be, on such Mortgage Asset which is payable by the related Obligor on the due date under the related Mortgage Loan.
“Monthly Report”: As defined in the Indenture.
“Moody’s”: Moody’s Investors Service, Inc., or its successor in interest.
“Mortgage”: With respect to each Mortgage Asset, the mortgage, deed of trust or other instrument securing the related Underlying Note, which creates a lien on the Real Property securing such Underlying Note.
“Mortgage Asset File”: As defined in the Indenture.
“Mortgage Asset Purchase Agreement”: As defined in the Indenture.
“Mortgage Asset Schedule”: A schedule of the Mortgage Assets beneficially owned by the Issuer which sets forth information with respect to such Mortgage Assets and which may be amended from time to time by the parties hereto (without the consent or approval of any other Person) to add or delete Mortgage Assets therefrom. An initial Mortgage Asset Schedule shall be attached as Exhibit A hereto.
“Mortgage Assets”: As defined in the Indenture.
“Mortgage Loan”: A Whole Loan or any Participated Mortgage Loan, as applicable and as the context may require.
“Mortgaged Property”: With respect to any Mortgage Loan, the real property and improvements thereon securing such Mortgage Loan.
“New Lease”: Any lease of all or any part of an REO Property entered into on behalf of the Issuer, including any lease renewed or extended on behalf of the Issuer if the Issuer has the right to renegotiate the terms of such lease.
“Non-Serviced Mortgage Loans”: Any Mortgage Asset acquired by the Issuer during the Ramp-Up Acquisition Period or Reinvestment Period which is serviced and administered (or whose Underlying Whole Loan is serviced and administered) pursuant to a servicing agreement other than this Agreement.
2“Nonrecoverable Servicing Advance”: Any Servicing Advance previously made or proposed to be made in respect of a Serviced Mortgage Loan or REO Property which, in
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the reasonable judgment of the Advancing Agent, the Special Servicer or the Servicer, as the case may be, will not be ultimately recoverable, together with any accrued and unpaid interest thereon, at the Advance Rate, from late collections or any other recovery on or in respect of such Mortgage Loan or REO Property. In making such recoverability determination, such Person will be entitled to consider (in the case of the Servicer or the Special Servicer, in accordance with the Servicing Standard), among other things,
(a)the obligations of the Obligor under the terms of the related Asset Documents as they may have been modified,
(b)the related Mortgaged Properties or REO Properties in their “as-is” or then current conditions and occupancies, as modified by such party’s assumptions regarding the possibility and effects of future adverse change with respect to such Mortgaged Properties or REO Properties,
(c)future expenses as estimated by such Person,
(d)the timing of recoveries as estimated by such Person, and
(e)the existence of any Nonrecoverable Servicing Advance with respect to other Mortgaged Properties or REO Properties in light of the fact that proceeds on the related Mortgaged Property are not only a source of recovery for the Servicing Advance under consideration, but also a potential source of recovery for such Nonrecoverable Servicing Advance.
In addition, any such Person may (consistent with the Servicing Standard in the case of the Servicer or the Special Servicer) update or change its recoverability determinations at any time (but, except as provided below, may not reverse any other Person’s determination that a Servicing Advance is a Nonrecoverable Servicing Advance). Any such Person may obtain promptly upon request, from the Special Servicer, any reasonably required analysis, Appraisals or market value estimates or other information in the Special Servicer’s possession for making a recoverability determination.
Any such determination by any such Person, or any updated or changed recoverability determination, shall be evidenced by an Officer’s Certificate delivered by any of the Servicer, the Special Servicer or Advancing Agent to the other and to the Issuer, the Special Servicer, the Trustee, the Note Administrator and the Collateral Manager. The Advancing Agent, when making an independent determination, whether or not a proposed Servicing Advance would be a Nonrecoverable Servicing Advance, shall be subject to the standards applicable to the Special Servicer hereunder.
Any Officer’s Certificate described above shall set forth such determination of nonrecoverability and the considerations of the Advancing Agent, the Servicer or the Special Servicer, as the case may be, forming the basis of such determination (which shall be accompanied by, to the extent available, information such as related income and expense statements, rent rolls, occupancy status and property inspections, and shall include an Appraisal
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of the related Mortgaged Property or REO Property, as applicable). The Servicer shall promptly furnish any party required to make Servicing Advances with any information in its possession regarding Mortgage Loans (other than those that are Specially Serviced Mortgage Loans) and the Special Servicer shall promptly furnish any party required to make Servicing Advances with any information in its possession regarding the Specially Serviced Mortgage Loans as such party required to make Servicing Advances may reasonably request for purposes of making recoverability determinations.
In the case of a cross-collateralized Mortgage Asset, such recoverability determination shall take into account the cross-collateralization of the related cross-collateralized Mortgage Asset.
“Note Administrator”: As defined in the preamble hereto.
“Note Administrator/Trustee Termination Event”: As defined in Section 7.05.
“Noteholder”: With respect to any Note, the Person in whose name such Note is registered in the note register maintained pursuant to the Indenture.
“Notes”: The Notes issued under, and as defined in, the Indenture.
“Obligor”: Any Person obligated to make payments of principal, interest, fees or other amounts or distributions of earnings or other amounts under any Mortgage Loan.
“Officer’s Certificate”: With respect to the Servicer, Special Servicer or Advancing Agent, any certificate executed by a Responsible Officer thereof.
“Participated Mortgage Loan”: Any mortgage loan of which a Participation represents an interest.
“Participated Mortgage Loan Collection Account”: As defined in Section 3.03.
“Participation”: As defined in the Indenture.
“Participation Agreement”: As defined in the Indenture.
“Performing Mortgage Loan”: Any Serviced Mortgage Loan that is not a Specially Serviced Mortgage Loan.
“Permitted Investments”: Shall have the meaning ascribed to the term “Eligible Investments” in the Indenture.
“Permitted Subsidiary”: As defined in the Indenture.
“Person”: Any individual, corporation, limited liability company, partnership, joint venture, estate, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
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“Preferred Shareholder”: With respect to any Preferred Share, the Person in whose name such Preferred Share is registered in the register of members of the Issuer.
“Preferred Shares”: As defined in the Indenture.
“Principal Prepayment”: Shall mean any voluntary payment of principal made by the Obligor on a Mortgage Loan that is received in advance of its scheduled due date and that is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.
“Qualified Affiliate”: Any Person (a) that is organized and doing business under the laws of any state of the United States or the District of Columbia, (b) that is in the business of performing the duties of a servicer of Mortgage Loans, and (c) as to which 51% or greater of its outstanding voting stock or equity ownership interest are directly or indirectly owned by the Servicer or the Special Servicer, as the case may be, or by any Person or Persons who directly or indirectly own equity ownership interests in the Servicer or the Special Servicer, as the case may be.
“Qualified Insurer”: An insurance company or security or bonding company qualified to write the related insurance policy in the relevant jurisdiction, which (i) shall have a claims paying ability rated at least (a) “A3” by Moody’s by Moody’s and (b) if rated by KBRA, a rating by KBRA equivalent to at least an “A3” rating by Moody’s, or (ii) in the case of fidelity bond and errors and omissions insurance policy required to be maintained by the Servicer and Special Servicer and any successor servicer pursuant to Section 3.05, shall have a claims paying ability rated by each Rating Agency no lower than two ratings categories (without regard to pluses or minuses) lower than the highest rating of any outstanding Class of Notes from time to time, but in no event lower than (a) “A3” by Moody’s and (b) if rated by KBRA, a rating by KBRA equivalent to at least an “A3” rating by Moody’s, unless the applicable Rating Agency has confirmed in writing that an insurance company with a lower claims paying ability shall not result, in and of itself, in a withdrawal or downgrading of the rating then assigned by such Rating Agency to any class of Notes, and if not rated by such Rating Agency, then otherwise approved by such Rating Agency.
“Qualified Note Administrator”: An entity meeting the eligibility requirements of Section 6.8 of the Indenture.
“Qualified REIT Subsidiary”: A corporation that, for U.S. federal income tax purposes, is wholly owned by a real estate investment trust under Section 856(i)(2) of the Internal Revenue Code of 1986, as amended.
“Qualified Servicer”: A commercial mortgage servicer (a) that has acted as servicer or special servicer, as applicable, for a commercial mortgage-backed securities transaction rated by KBRA in the prior twelve (12) months and as to which KBRA has not, in the past twelve (12) months, cited servicing concerns with respect to such servicer as the sole or material factor in any qualification, downgrade or withdrawal of the ratings (or placement on “watch status” in contemplation of a ratings downgrade or withdrawal, which placement on
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“watch status” has not been withdrawn within 60 days without any ratings downgrade or withdrawal) of securities in such commercial mortgage-backed securities transaction serviced by the applicable servicer prior to the time of determination, and (b) that has acted as servicer or special servicer, as applicable, for a commercial mortgage-backed securities transaction rated by Moody’s in the prior twelve (12) months and as to which Moody’s has not, in the past twelve (12) months, cited servicing concerns with respect to such servicer as the sole or material factor in any qualification, downgrade or withdrawal of the ratings (or placement on “watch status” in contemplation of a ratings downgrade or withdrawal, which placement on “watch status” has not been withdrawn within 60 days without any ratings downgrade or withdrawal) of securities in such commercial mortgage-backed securities transaction serviced by the applicable servicer prior to the time of determination.
“Qualified Trustee”: An entity meeting the eligibility requirements of Section 6.8 of the Indenture.
“Rating Agency”: Each of Moody’s and KBRA, or any successor thereto.
“Rating Agency Condition”: As defined in the Indenture.
“Real Property”: Land or improvements thereon such as buildings or other inherently permanent structures thereon (including items that are structural components of the buildings or structures).
“Regulation AB”: Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§ 229.1100-229.1125, as such may be amended from time to time, and subject to such clarification and interpretation as have been or may hereafter be from time to time provided by the SEC or by the staff of the SEC, in each case as effective from time to time as of the compliance dates specified therein.
“Relevant Parties in Interest”: With respect to any Mortgage Loan that is a (i) Whole Loan, the Noteholders and the Preferred Shareholders (as a collective whole as if such Noteholders and the Preferred Shareholders constituted a single lender) or (ii) Participated Mortgage Loan, the Noteholders, the Preferred Shareholders and the related Companion Participation Holders (as a collective whole as if such Noteholders, the Preferred Shareholders, the related Companion Participation Holders constituted a single lender and taking into account the relative priority rights of such parties set forth in the related Participation Agreement). Notwithstanding the foregoing, in connection with any sale of a Mortgage Asset that is not sold together with any Funded Companion Participation(s) and/or Future Funding Participation(s), the Relevant Parties in Interest shall be the Noteholders and the Preferred Shareholders (as a collective whole as if such Noteholders and the Preferred Shareholders constituted a single lender).
“Remittance Date”: With respect to each Payment Date under the Indenture, the Business Day immediately preceding such Payment Date.
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3“Rents from Real Property”: With respect to any REO Property, gross income of the character described in Section 856(d) of the Code, which income, subject to the terms and conditions of that Section of the Code in its present form, does not include:
(a)except as provided in Section 856(d)(4) or (6) of the Code, any amount received or accrued, directly or indirectly, with respect to such REO Property, if the determination of such amount depends in whole or in part on the income or profits derived by any Person from such property (unless such amount is a fixed percentage or percentages of receipts or sales and otherwise constitutes Rents from Real Property);
(b)any amount received or accrued, directly or indirectly, from any Person if any Co-Issuer owns directly or indirectly (including by attribution) a ten percent (10%) or greater interest in such Person determined in accordance with Sections 856(d)(2)(B) and (d)(5) of the Code;
(c)any amount received or accrued, directly or indirectly, with respect to such REO Property if any Person directly operates such REO Property;
(d)any amount charged for services that are not customarily furnished in connection with the rental of property to tenants in buildings of a similar class in the same geographic market as such REO Property within the meaning of Treasury Regulations Section 1.856-4(b)(1) (whether or not such charges are separately stated); and
(e)rent attributable to personal property unless such personal property is leased under, or in connection with, the lease of such REO Property and, for any taxable year of the Co-Issuers, such rent is no greater than fifteen percent (15%) of the total rent received or accrued under, or in connection with, the lease.
“REO Accounts”: As defined in Section 3.13(c).
“REO Loan”: The Mortgage Loan deemed for purposes hereof to be outstanding with respect to each REO Property. Each REO Loan shall be deemed to be outstanding for so long as the related REO Property remains part of the assets of the Issuer and provides for assumed scheduled payments on each due date therefor, and otherwise has the same terms and conditions as its predecessor Mortgage Loan including, without limitation, with respect to the calculation of the interest rate in effect from time to time. Each REO Loan shall be deemed to have an initial outstanding principal balance and stated principal balance equal to the outstanding principal balance and stated principal balance, respectively, of its predecessor Mortgage Loan as of the date of the acquisition of the related REO Property. All amounts due and owing in respect to the predecessor Mortgage Loan as of the date of the acquisition of the related REO Property including, without limitation, accrued and unpaid interest, shall continue to be due and owing in respect of an REO Loan. All amounts payable or reimbursable to the Servicer or the Special Servicer, as applicable, in respect of the predecessor Mortgage Loan as of the date of the acquisition of the related REO Loan, including, without limitation, any unpaid Special Servicing Fees, Servicing Fees and any unreimbursed Servicing Advances or Servicing Expenses, together
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with any interest accrued and payable to the Servicer or the Special Servicer, as the case may be, in respect of such Servicing Advances or Servicing Expenses shall continue to be payable or reimbursable to the Collateral Manager, the Servicer or the Special Servicer, as the case may be, in respect of an REO Loan.
“REO Proceeds”: Any payments received by the Servicer or the Special Servicer, the Issuer, the Trustee, the Note Administrator or otherwise with respect to an REO Property.
“REO Property”: A Mortgaged Property acquired by a U.S. corporation (or a limited liability company treated as a corporation for U.S. federal income tax purposes) or acquired directly or indirectly by the Special Servicer for the benefit of the Secured Parties and the Companion Participation Holders, if any, (and also including, with respect to a Non-Serviced Mortgage Loan, the Issuer’s beneficial interest in a Mortgaged Property acquired by the applicable special servicer on behalf of, and in the name of, the applicable trustee or a nominee thereof for the benefit of the certificateholders under the servicing agreement related to such Non-Serviced Mortgage Loan) through foreclosure, acceptance of a deed-in-lieu of foreclosure or otherwise in accordance with applicable law in connection with the default or imminent default of a Serviced Mortgage Loan.
“Reporting Person”: As defined in Section 3.11.
“Repurchase Request”: As defined in the Indenture.
“Repurchase Request Recipient”: As defined in Section 3.19.
“Responsible Officer”: With respect to the Servicer, the Special Servicer or the Advancing Agent, as the case may be, any officer or employee involved in or responsible for the administration, supervision or management of such Person’s obligations under this Agreement and whose name and specimen signature appear on a list prepared by each party and delivered to the other party, as such list may be amended from time to time by either party. With respect to the Issuer or the Co-Issuer, any Authorized Officer, as such term is defined in the Indenture. With respect to the Trustee and the Note Administrator, any Trust Officer, as such term is defined in the Indenture.
“Retained Interest”: As defined in the Mortgage Asset Purchase Agreement.
“SEC”: The Securities and Exchange Commission.
“Secured Parties”: As defined in the Indenture.
“Segregated Liquidity”: As of any date of determination, an amount that equals the sum of (i) amounts available to the Future Funding Indemnitor or its affiliates under a Committed Warehouse Line; (ii) Cash or Cash equivalents of the Future Funding Indemnitor and its Affiliates that are available to make future advances under the Future Funding Participations held by Lument Structured Finance, LCMT or an Affiliate of either (which will include any amounts on deposit in the Future Funding Reserve Account); (iii) Cash or Cash equivalents that
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are projected to be earned and received by the Future Funding Indemnitor or its Affiliates during the subject period and will be available to make future advances under the Future Funding Participations held by Lument Structured Finance, LCMT (or an Affiliate of either); (iv) amounts that are undrawn and available to draw under any credit facility, repurchase facility, subscription facility or warehouse facility subject only to the satisfaction of general conditions precedent in the related facility documents; and (v) callable capital of the Future Funding Indemnitor or its Affiliates.
“Seller”: Lument Commercial Mortgage Trust, and its successors in interest, as Seller under a Mortgage Asset Purchase Agreement or any other seller of Mortgage Assets acquired by the Issuer after the Closing Date.
“Serviced Mortgage Loans”: All of the Mortgage Loans except for any Mortgage Loans that are serviced and administered pursuant to a servicing agreement other than this Agreement.
“Servicer”: ORIX Real Estate Capital, LLC dba Lument Capital, a Delaware limited liability company, or any successor servicer as herein provided.
“Servicer Termination Event”: As defined in Section 7.02.
“Servicing”: As defined in Section 3.01(a).
“Servicing Advances”: All Servicing Expenses related to Serviced Mortgage Loans, related Mortgaged Properties or REO Properties and all other customary, reasonable and necessary “out of pocket” costs and expenses (including attorneys’ fees and expenses and fees of real estate brokers) incurred by the Advancing Agent, the Servicer or the Special Servicer, as applicable, in connection with the servicing and administering of (a) a Serviced Mortgage Loan in respect of which a default, delinquency or other unanticipated event has occurred or as to which a default is reasonably foreseeable or (b) an REO Property, including (in the case of each of such clause (a) and (b)), but not limited to, (x) the cost of (i) compliance with the Servicer’s obligations set forth in Section 3.02, (ii) the preservation, restoration and protection of a Mortgaged Property, (iii) obtaining any Insurance and Condemnation Proceeds or any Liquidation Proceeds, (iv) any enforcement or judicial proceedings with respect to a Mortgaged Property including foreclosures, (v) the operation, leasing, management, maintenance and liquidation of any REO Property and (vi) any amount specifically designated herein to be paid as a “Servicing Advance.” Notwithstanding anything to the contrary, “Servicing Advances” shall not include allocable overhead of the Special Servicer, the Advancing Agent or the Servicer, as applicable, such as costs for office space, office equipment, supplies and related expenses, employee salaries and related expenses and similar internal costs and expenses or costs and expenses incurred by any such party in connection with its purchase of a Serviced Mortgage Loan or REO Property.
“Servicing Determination Date”: The 11th calendar day of each month or, if such date is not a Business Day, the immediately succeeding Business Day, commencing on the Servicing Determination Date in July 2021.
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4“Servicing Expenses”: All customary, reasonable and necessary out-of-pocket costs and expenses paid or incurred in accordance with the Servicing Standard in connection with the obligations of the Collateral Manager, the Servicer or the Special Servicer, as the case may be (other than legal fees or expenses associated with contracting with a subservicer or payment of any subservicing fee), including without limitation:
(a)real estate taxes, assessments and similar charges that are or may become a lien on a Mortgaged Property;
(b)insurance premiums if and to the extent funds collected from the related Obligor are insufficient to pay such premiums when due;
(c)ground rents, if applicable;
(d)any cost or expense necessary in order to prevent or cure any violation of applicable laws, regulations, codes, ordinances, rules, orders, judgments, decrees, injunctions or restrictive covenants;
(e)any cost or expense necessary in order to maintain or release the lien of any Mortgage Loan on each Mortgaged Property, including any mortgage registration taxes, release fees, or recording or filing fees;
(f)customary costs or expenses for the collection, enforcement or foreclosure of the Mortgage Loans and the collection of deficiency judgments against Obligors and guarantors (including but not limited to the fees and expenses of any trustee under a deed of trust, foreclosure title searches and other lien searches);
(g)costs and expenses of any appraisals, valuations, inspections, environmental assessments (including but not limited to the fees and expenses of environmental consultants), audits or consultations, engineers, architects, accountants, on-site property managers, market studies, title and survey work and financial investigating services;
(h)customary costs or expenses for liquidation, restructuring, modification or loan workouts, such as sales brokerage expenses and other costs of conveyance;
(i)costs and expenses related to travel and lodging with respect to property inspections (except to the extent expressly provided otherwise herein);
(j)any other reasonable costs and expenses, including without limitation, legal fees and expenses, incurred by the Collateral Manager, the Special Servicer or the Servicer under this Agreement in connection with the enforcement, collection, foreclosure, disposition, condemnation or destruction of any Mortgage Loan and the performance of Servicing by the Servicer or the Special Servicer, as the case may be, under this Agreement;
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(k)costs and expenses related to legal opinions obtained in connection with performing the duties and responsibilities of the Servicer or the Special Servicer, as the case may be, hereunder;
(l)costs and expenses of inspections; and
(m)any bank charges related to any account required to be maintained by the Servicer or the Special Servicer under this Agreement.
“Servicing Fee”: With respect to each Serviced Mortgage Loan (including without limitation a Specially Serviced Mortgage Loan or REO Loan), an amount equal to the product of (a) the Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage Loan, as calculated in accordance with Section 5.01 of this Agreement.
“Servicing Fee Rate”: With respect to each Serviced Mortgage Loan, 0.05% per annum.
“Servicing File”: With respect to each Mortgage Loan, all documents, information and records relating to the Mortgage Loan that are necessary to enable the Servicer to perform its duties and service the Mortgage Loan and the Special Servicer to perform its duties and service each Specially Serviced Mortgage Loan in compliance with the terms of this Agreement, and any additional documents or information related thereto maintained or created by the Servicer.
“Servicing Standard”: As defined in Section 2.01(b).
“Servicing Transfer Date”: With respect to each Mortgage Asset currently listed on the Mortgage Asset Schedule attached as Exhibit A, and any related Mortgage Loan, the Closing Date. With respect to any Mortgage Asset added to the Mortgage Asset Schedule after the Closing Date, and any related Mortgage Loan, the date on which the conditions relating to the acquisition of such Mortgage Asset set forth in the Indenture have been satisfied.
“Special Servicer”: ORIX Real Estate Capital, LLC dba Lument Capital, a Delaware limited liability company, or any successor special servicer as herein provided.
“Special Servicing”: As defined in Section 3.01(b).
“Special Servicing Fee”: With respect to each Specially Serviced Mortgage Loan, an amount equal to the product of (a) the Special Servicing Fee Rate and (b) the outstanding principal balance of such Specially Serviced Mortgage Loan, as calculated in accordance with Section 5.03(b) of this Agreement.
“Special Servicing Fee Rate”: With respect to each Specially Serviced Mortgage Loan, a rate equal to 0.25% per annum.
5“Special Servicing Transfer Event”: With respect to any Serviced Mortgage Loan, the occurrence of any of the following events:
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(i)a payment default shall have occurred at the original maturity date, or, if the original maturity date of such Mortgage Loan has been extended, a payment default shall have occurred at such extended maturity date; provided, however if (A) the related Obligor is diligently seeking a refinancing commitment (and delivers a statement to that effect to the Servicer within 30 days after the default, who will promptly deliver a copy to the Special Servicer and the Collateral Manager) and (B) the Collateral Manager consents, a Special Servicing Transfer Event will not occur until 90 days beyond the related maturity date, unless extended by the Special Servicer in accordance with the Transaction Documents, the Indenture or this Agreement; and provided, further, if the related Obligor has delivered to the Servicer, who shall have promptly delivered a copy to the Special Servicer and the Collateral Manager, on or before the 90th day after the related maturity date, a refinancing commitment or other similar document reasonably acceptable to the Special Servicer, and the Obligor continues to make its assumed scheduled payments, a Special Servicing Transfer Event will not occur until the earlier of (a) 120 days beyond the related maturity date (or extended maturity date) and (b) the termination of the refinancing commitment; or
(ii)any Monthly Payment (other than a Balloon Payment) is more than sixty (60) days delinquent; or
(iii)the Servicer makes a judgment, or receives a written determination of the Special Servicer, that a payment default is imminent and is not likely to be cured by the related Obligor within sixty (60) days; or
(iv)a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law, or the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, is entered against the related Obligor; provided, that if such decree or order is discharged or stayed within sixty (60) days of being entered, or if, as to a bankruptcy, the automatic stay is lifted within sixty (60) days of a filing for relief or the case is dismissed, upon such discharge, stay, lifting or dismissal such Mortgage Loan shall no longer be a Specially Serviced Mortgage Loan (and no Special Servicing Fees, Workout Fees or Liquidation Fees will be payable with respect thereto and any such fees actually paid shall be reimbursed by the Special Servicer); or
(v)the related Obligor shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to such Obligor or of or relating to all or substantially all of its property; or
(vi)the related Obligor shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any
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applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vii)a default (other than a failure by the related Obligor to pay principal or interest) of which the Servicer has notice and which the Servicer determines in accordance with the Servicing Standard may materially and adversely affect the interests of the Relevant Parties in Interest has occurred and remained unremedied for the applicable grace period specified in the related Asset Documents (or if no grace period is specified for those defaults which are capable of cure, sixty (60) days); or
(viii)the Servicer or the Special Servicer has received notice of the foreclosure or proposed foreclosure of any other lien on the related Mortgaged Property.
“Specially Serviced Mortgage Loan”: Any Serviced Mortgage Loan for which a Special Servicing Transfer Event has occurred and such Specially Serviced Mortgage Loan has not become a Corrected Mortgage Loan.
“Successful Auction”: As defined in the Section 3.18(b).
“Successor”: As defined in Section 6.03(b).
“Transaction Documents”: As defined in the Indenture.
“Total Redemption Price”: As defined in the Indenture.
“Trustee”: As defined in the preamble hereto.
“Two Quarter Future Advance Estimate”: As of any date of determination, an estimate of the aggregate amount of future advances that will be required to be made under the Future Funding Participations held by the Future Funding Holder, LCMT or an affiliate of either during the immediately following two quarters, excluding future advances to be made for: (i) accretive leasing costs (e.g., following the future advance for such leasing costs, the debt yield will be equal to or greater than a required debt yield specified in the Asset Documents of the related Mortgage Loan); (ii) earnouts paid to borrowers upon satisfaction of certain performance metrics set forth in the Asset Documents of the related Mortgage Loan; (iii) advances that Lument Structured Finance, LCMT or an affiliate of either believes, in the exercise of its reasonable judgment, will be repaid in full during the period covered by the estimate; and (iv) accretive capital expenditures (e.g., following the future advance for such capital expenditures, the debt yield will be equal to or greater than a required debt yield specified in the Asset Documents of the related Mortgage Loan).
“Underlying Note”: With respect to any Mortgage Loan, the promissory note or other evidence of indebtedness or agreements evidencing the indebtedness of an Obligor under such Mortgage Loan.
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“Updated Appraisal”: As defined in Section 3.10(a).
“Voting Rights”: At all times during the term of the Indenture and Servicing Agreement, 100% of the voting rights for the Notes that are allocated among the holders of the respective Classes of Notes in proportion with the Aggregate Outstanding Amount of the Notes. Voting rights allocated to a Class of Noteholders is allocated among such Noteholders in proportion to the percentage interest in such Class evidenced by their respective Notes. Notes owned by the Issuer, the Co-Issuer, the Special Servicer or any affiliate thereof will not be deemed to be outstanding for purposes of voting on removal or replacement of the Special Servicer.
“Whole Loan”: Any Mortgage Asset acquired by the Issuer on or after the Closing Date that is a whole mortgage loan (and not a participation interest in a mortgage loan) secured by commercial or multifamily real estate.
“Workout Fee”: With respect to each Corrected Mortgage Loan, an amount equal to the product of (a) the Workout Fee Rate and (b) each collection of interest and principal (other than penalty charges, excess interest and any amount for which a Liquidation Fee would be paid), including (i) Monthly Payments, (ii) Balloon Payments, (iii) Principal Prepayments and (iv) payments (other than those included in clause (i) or (ii) of this definition) at maturity, received on each Corrected Mortgage Loan for so long as it remains a Corrected Mortgage Loan.
“Workout Fee Rate”: With respect to each Corrected Mortgage Loan, a rate equal to 0.5%.
ARTICLE II

RETENTION AND AUTHORITY OF SERVICER
Section II.01Engagement; Servicing Standard. As of the Servicing Transfer Date, the Issuer hereby engages the Servicer and Special Servicer, as the case may be, to perform, and the Servicer or the Special Servicer, as the case may be, hereby agrees to perform, Servicing and Special Servicing, as applicable, with respect to each of the Serviced Mortgage Loans for the benefit of the Relevant Parties in Interest throughout the term of this Agreement, upon and subject to the terms, covenants and provisions hereof.
(b)Each of the Servicer and the Special Servicer shall diligently service and administer the Serviced Mortgage Loans and REO Properties it is obligated to service or special service, as the case may be, pursuant to this Agreement on behalf of the Issuer and Trustee in the best interests of and for the benefit of the Relevant Parties in Interest (as determined by the Servicer or the Special Servicer, as the case may be, in its reasonable judgment), in accordance with applicable law, the terms of this Agreement and the Asset Documents. To the extent consistent with the foregoing, the Servicer and the Special Servicer shall service and special service, as applicable, the Serviced Mortgage Loans:
(i)in accordance with the higher of the following standards of care:
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(A)with the same care, skill, prudence and diligence with which the Servicer or the Special Servicer, as the case may be, services and administers comparable mortgage loans with similar borrowers and comparable REO Properties for other third party portfolios (giving due consideration to the customary and usual standards of practice of prudent institutional commercial mortgage lenders servicing their own mortgage loans and REO Properties); and
(B)with the same care, skill, prudence and diligence with which the Servicer or the Special Servicer, as the case may be, services and administers comparable mortgage loans and REO Properties owned by the Servicer or the Special Servicer, as the case may be;
and in either case, exercising reasonable business judgment and acting in accordance with applicable law, the terms of this Agreement and the terms of the respective Mortgage Loan (and any related Participation Agreements);
(ii)with respect to the Special Servicer only, in the case of (1) a Specially Serviced Mortgage Loan or (2) a Mortgage Loan as to which the related Mortgaged Property is an REO Property, the maximization of recovery on the Mortgage Loan to the Relevant Parties in Interest of principal and interest, on a present value basis; and
(iii)without regard to any potential conflict of interest arising from (A) any relationship, including as lender on any other debt, that the Servicer or the Special Servicer, as the case may be, or any Affiliate thereof, may have with any of the related borrowers or any Affiliate thereof, or any other party to this Agreement; (B) the ownership of any Note by the Servicer or the Special Servicer, as the case may be, or any Affiliate thereof; (C) the right of the Servicer or the Special Servicer, as the case may be, or any Affiliate thereof, to receive compensation or reimbursement of costs hereunder generally or with respect to any particular transaction; (D) the ownership, servicing or management for others of any other mortgage loan or real property not subject to this Agreement by the Servicer or the Special Servicer, as the case may be, or any Affiliate thereof and (E) any obligation of the Special Servicer or any Affiliate to repurchase any Mortgage Loan or pay an indemnity in respect thereof.
The servicing practices described in the preceding sentence are herein referred to as the “Servicing Standard.”
(c)Without limiting the foregoing, subject to Section 3.16, (i) the Servicer shall be obligated to service and administer all Serviced Mortgage Loans that are not Specially Serviced Mortgage Loans and (ii) the Special Servicer shall be obligated (A) to service and administer (x) any Specially Serviced Mortgage Loan and (y) any REO Properties (other than an REO Property related to any Non-Serviced Mortgage Loan) and (B) to process any Administrative Modifications or Criteria-Based Modifications; provided, that the Servicer shall continue to receive payments and make all calculations, and prepare, or cause to be prepared, all reports, required hereunder with respect to the Specially Serviced Mortgage Loans, except for the reports specified herein as prepared by the Special Servicer, as if no Special Servicing Transfer
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Event had occurred and with respect to any REO Properties (and the related REO Loans) as if no acquisition of such REO Properties had occurred, and to render such services with respect to such Specially Serviced Mortgage Loans and REO Properties as are specifically provided for herein; provided, further, however, that the Servicer shall not be liable for failure to comply with such duties insofar as such failure results from a failure of the Special Servicer to provide sufficient information to the Servicer to comply with such duties or failure by the Special Servicer to otherwise comply with its obligations hereunder. Each Mortgage Loan that becomes a Specially Serviced Mortgage Loan shall continue as such until satisfaction of the conditions specified in Section 3.16. The Special Servicer shall make the inspections, use its reasonable efforts to collect the statements and forward to the Servicer reports in respect of the related Mortgaged Properties or REO Properties with respect to Specially Serviced Mortgage Loans in accordance with, and to the extent required by, Section 3.12. After notification to the Servicer, the Special Servicer may (but shall not be required to) contact the related Obligor of any Performing Mortgage Loan if efforts by the Servicer to collect required financial information have been unsuccessful or any other issues remain unresolved. Such contact shall be coordinated through and with the cooperation of the Servicer. No provision herein contained shall be construed as an express or implied guarantee by the Servicer or the Special Servicer, as the case may be, of the collectability or recoverability of payments on the Mortgage Loans or shall be construed to impair or adversely affect any rights or benefits provided by this Agreement to the Servicer or the Special Servicer, as the case may be (including with respect to Servicing Fees, Special Servicing Fees or, in the case of the Servicer, the right to be reimbursed for Servicing Advances and interest accrued thereon). Any provision in this Agreement for any Servicing Advances by the Advancing Agent or the Servicer or any Servicing Expenses by the Collateral Manager, the Servicer or Special Servicer, is intended solely to provide liquidity for the benefit of Relevant Parties in Interest and not as credit support or otherwise to impose on any such Person the risk of loss with respect to one or more of the Mortgage Loans. No provision hereof shall be construed to impose liability on the Advancing Agent, the Servicer or the Special Servicer for the reason that any recovery to the Issuer, the Noteholders, the Preferred Shareholders or any Companion Participation Holder in respect of a Mortgage Loan at any time after a determination of present value recovery is less than the amount reflected in such determination.
Section II.02Subservicing. The Servicer or Special Servicer, as the case may be, may delegate any of its obligations hereunder to a sub-servicer (so long as such Person is a Qualified Servicer); provided, however, that the Servicer or Special Servicer, as the case may be, shall provide oversight and supervision with regard to the performance of all subcontracted services and (i) any subservicing agreement shall be consistent with and subject to the provisions of this Agreement and (ii) no sub-servicer retained shall foreclose on the Mortgage Loan or grant any modification, waiver, or amendment to the Asset Documents without the approval of the Servicer or the Special Servicer, as the case may be. Neither the existence of any subservicing agreement nor any of the provisions of this Agreement relating to subservicing shall relieve the Servicer or Special Servicer, as the case may be, of its obligations to the Issuer hereunder. Notwithstanding any such subservicing agreement, the Servicer or Special Servicer, as the case may be, shall be obligated to the same extent and under the same terms and conditions as if the Servicer or the Special Servicer, as the case may be, alone was servicing the related Mortgage
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Loans in accordance with the terms of this Agreement. The Servicer or Special Servicer, as the case may be, shall be solely liable for all fees owed by it to any subservicer, regardless of whether the compensation hereunder of the Servicer or Special Servicer, as the case may be, is sufficient to pay such fees.
(b)Each sub-servicer shall be (i) authorized to transact business in the applicable state(s), if, and to the extent, required by applicable law to enable the sub-servicer to perform its obligations hereunder and under the applicable sub-servicing agreement, and (ii) qualified to service investments comparable to the Mortgage Loans.
(c)Any sub-servicing agreement entered into by the Servicer or Special Servicer, as the case may be, shall provide that it may be assumed or terminated by (i) the Servicer or the Special Servicer, as the case may be, (ii) the Trustee, if the Trustee has assumed the duties of the Servicer or Special Servicer, as the case may be, or if the Servicer or Special Servicer, as the case may be, is otherwise terminated pursuant to the terms of this Agreement, or (iii) a successor servicer if such successor servicer has assumed the duties of the Servicer or Special Servicer, as the case may be, in each case without cause and without cost or obligation to the Trustee, the successor servicer or the successor special servicer. In no event shall the Trustee be responsible for the payment of any termination fee in connection with any sub-servicing agreement entered into by the Servicer or Special Servicer or any successor servicer. In no event shall any sub-servicing agreement give a sub-servicer direct rights against the assets of the Issuer.
Any subservicing agreement and any other transactions or services relating to the Mortgage Loans involving a sub-servicer shall be deemed to be between the sub-servicer and the Servicer or Special Servicer, as the case may be, alone and the Trustee shall not be deemed a party thereto and shall have no claims, rights, obligations, duties or liabilities with respect to any sub-servicer except as set forth in Section 2.01(c).
The Trustee shall not be (a) liable for any acts or omissions of any Servicer, (b) obligated to make any Servicing Advance, (c) responsible for expenses of the Servicer or the Special Servicer, (d) liable for any amount necessary to induce any successor servicer to act as successor servicer or any successor special servicer to act as special servicer hereunder.
(d)Notwithstanding any contrary provisions of the foregoing subsections of this Section 2.02, the appointment by the Servicer or the Special Servicer of one or more third-party contractors for the purpose of performing discrete, ministerial functions shall not constitute the appointment of sub-servicers and shall not be subject to the provisions of this Section 2.02; provided, that (a) the Servicer or the Special Servicer, as the case may be, shall remain responsible for the actions of such third-party contractors as if it were alone performing such functions and shall pay all fees and expenses of such third-party contractors; and (b) such appointment imposes no additional duty on any other party to this Agreement, any successor hereunder to the Servicer or the Special Servicer, as the case may be.
Section II.03Authority of the Servicer or the Special Servicer. In performing its Servicing or Special Servicing obligations hereunder, the Servicer or Special Servicer, as the
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case may be, shall, except as otherwise provided herein and subject to the terms of this Agreement, have full power and authority, acting alone or through others, to take any and all actions in connection with such Servicing or Special Servicing, as applicable, that it deems necessary or appropriate in accordance with the Servicing Standard. Without limiting the generality of the foregoing, each of the Servicer or Special Servicer, as the case may be, is hereby authorized and empowered by the Issuer when the Servicer or Special Servicer, as the case may be, deems it appropriate in accordance with the Servicing Standard and subject to the terms of this Agreement, including, without limitation, Section 2.03(c), to execute and deliver, on behalf of the Issuer, (i) any and all financing statements, continuation statements and other documents or instruments necessary to maintain the lien of each Mortgage or other relevant Asset Documents on the related Mortgaged Property; (ii) any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments with respect to each of the Mortgage Loans and (iii) in the case of the Special Servicer, to execute such instruments of assignment and sale on behalf of the Issuer in accordance with the terms of the Indenture; provided, however, that the Servicer or Special Servicer, as the case may be, shall notify the Issuer and the Collateral Manager in writing in the event that the Servicer or Special Servicer, as the case may be, intends to execute and deliver any such instrument referred to in clause (ii) above (other than in connection with a payment in full of a Mortgage Loan or a partial release of a Mortgage Property in accordance with the related Asset Documents) and, except in connection with any payment in full of any Mortgage Loan, shall proceed with such course of action only upon receipt of the written approval thereof by the Issuer (or the Collateral Manager acting on behalf of the Issuer). The Issuer agrees to cooperate with the Servicer or the Special Servicer, as the case may be, by either executing and delivering to the Servicer or the Special Servicer, as the case may be, from time to time (i) powers of attorney evidencing the authority and power under this Section of the Servicer or the Special Servicer, as the case may be, or (ii) such documents or instruments deemed necessary or appropriate by the Servicer or the Special Servicer, as the case may be, to enable the Servicer or the Special Servicer, as the case may be, to carry out its Servicing or Special Servicing obligations hereunder.
(b)In the performance of its Servicing or Special Servicing obligations, the Servicer or the Special Servicer, as the case may be, shall take any action or refrain from taking any action that the Issuer (or the Collateral Manager acting on behalf of the Issuer) directs shall be taken or not taken, as the case may be, which relates to the Servicing or Special Servicing obligations under this Agreement; provided, however, that the Servicer or the Special Servicer, as the case may be, shall not take or refrain from taking any action that the Issuer (or the Collateral Manager acting on behalf of the Issuer) requests that the Servicer or the Special Servicer, as the case may be, take or refrain from taking to the extent that the Servicer or the Special Servicer, as the case may be, determines in accordance with the Servicing Standard that such action or inaction, as the case may be: (i) may cause a violation of applicable laws, regulations, codes, ordinances, court orders or restrictive covenants with respect to any Mortgage Loan, related Obligor or Mortgaged Property, (ii) may cause a violation of any provision of an Asset Document or (iii) may cause a violation of the Servicing Standard (except that the processing of Administrative Modifications or Criteria-Based Modifications by the Special Servicer at the direction of the Collateral Manager will not be subject to the Servicing Standard). Notwithstanding anything herein to the contrary, neither the Servicer nor the Special Servicer
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will be in violation of the Servicing Standard if servicing a Mortgage Loan that was previously the subject of an Administrative Modification or a Criteria-Based Modification in accordance with the terms of the Asset Documents as modified by such Administrative Modification or Criteria-Based Modification, so long as it is otherwise performing the servicing of such Mortgage Loan in accordance with the Servicing Standard.
(c)The Collateral Manager shall have the right to make any decision which is a Major Decision hereunder (subject to any rights of any Companion Participation Holders). The Servicer or the Special Servicer, as applicable, (i) shall send the Collateral Manager a copy of any written request by an Obligor for a decision which is a Major Decision or any written notification of the occurrence of an event or circumstance which shall require the making of a Major Decision within five (5) Business Days of receipt thereof, and (ii) may request that the Collateral Manager make a Major Decision at any time that the Servicer or the Special Servicer, as applicable, determines that such Major Decision should be considered. The Collateral Manager shall send the Servicer and the Special Servicer, as applicable, a copy of any written request by an Obligor for a decision which is a Major Decision within five (5) Business Days of receipt thereof. The Collateral Manager shall make such Major Decision and notify the Servicer or the Special Servicer, as applicable, of the actions to be taken with respect thereto within five (5) Business Days of receipt of a written request therefor by an Obligor, the Servicer or the Special Servicer, as applicable. In the event that the Servicer or the Special Servicer, as applicable, determines that the Collateral Manager’s decision is in accordance with the Servicing Standard, then the Servicer or the Special Servicer, as applicable, shall take such actions as directed by the Collateral Manager. In the event that the Servicer or the Special Servicer, as applicable, determines that the Collateral Manager’s decision is not in accordance with the Servicing Standard, or if the Collateral Manager fails to give notice of the actions to be taken within such five (5) Business Day period, then the Servicer or the Special Servicer, as applicable, shall not be bound by the Collateral Manager’s determination with respect to such Major Decision and shall have the right to take such actions with respect thereto as the Servicer or the Special Servicer, as applicable, determines is in accordance with the Servicing Standard.
Section II.04Certain Calculations. All net present value calculations and determinations made under this Agreement with respect to any Mortgage Loan or REO Property shall be made using a discount rate (with respect to the selection of which the Special Servicer will be required to consult, on a non-binding basis, with the Collateral Manager) appropriate for the type of cash flows being discounted; namely (i) for principal and interest payments on the Mortgage Loan or sale of the Mortgage Loan if it is a Defaulted Mortgage Loan by the Special Servicer, the higher of (1) the rate determined by the Special Servicer, that approximates the market rate that would be obtainable by the related Obligor on similar debt of such Obligor as of such date of determination and (2) the interest rate on such Mortgage Loan based on its outstanding principal balance and (ii) for all other cash flows, including property cash flow, the “discount rate” set forth in the most recent Appraisal (or update of such Appraisal).
(b)Allocations of payments among Participations in a Participated Mortgage Loan shall be made in accordance with the related Participation Agreement.
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ARTICLE III

SERVICES TO BE PERFORMED
Section III.01Servicing; Special Servicing. The Servicer hereby agrees to serve as the servicer with respect to each of the Serviced Mortgage Loans and to perform servicing as described below and as otherwise provided herein, upon and subject to the terms of this Agreement. Subject to any limitation of authority under Section 2.03, “Servicing” shall mean those services pertaining to the Serviced Mortgage Loans which, applying the Servicing Standard, are required hereunder to be performed by the Servicer, and which shall include:
(i)reviewing all documents in its possession or otherwise reasonably available to it pertaining to such Mortgage Loans, administering and maintaining the Servicing Files, and inputting all necessary and appropriate information into the Servicer’s loan servicing computer system all to the extent and when necessary to perform its obligations hereunder;
(ii)preparing and filing or recording all continuation statements and other documents or instruments necessary to cause the continuation of any UCC financing statements filed with respect to the related Mortgaged Property and taking such other actions necessary to maintain the lien of any Mortgage or other relevant Asset Documents on the related Mortgaged Property, but only to the extent such other actions are within the control of the Servicer;
(iii)in accordance with and to the extent required by Section 3.05, monitoring each Obligor’s maintenance of insurance coverage on the related Mortgaged Property, as required by the related Asset Documents, and causing to be maintained adequate insurance coverage on the related Mortgaged Property in accordance with Section 3.05;
(iv)in accordance with and to the extent required by Section 3.02, monitoring the status of real estate taxes, assessments and other similar items and verifying the payment of such items for the related Mortgaged Property;
(v)preparing and delivering all reports and information required to be prepared or delivered by the Servicer hereunder;
(vi)performing payment processing, record keeping, administration of escrow and other accounts, interest rate adjustment, and other routine customer service functions;
(vii)in accordance with the Servicing Standard monitoring any casualty losses or condemnation proceedings and administering any proceeds related thereto in accordance with the related Asset Documents; and
(viii)notifying the related Obligors of the appropriate place for communications and payments, and collecting and monitoring all payments made with respect to such Mortgage Loans.
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(b)The Special Servicer hereby agrees to (i) serve as the special servicer with respect to each Specially Serviced Mortgage Loan and REO Loan as provided herein in accordance with the Servicing Standard and (ii) to process all Administrative Modifications and Criteria-Based Modifications (“Special Servicing”).
(c)In the event the Issuer is no longer a Qualified REIT Subsidiary, but instead has received an opinion of counsel that it is a foreign corporation that is not engaged in a trade or business in the United States, the Servicer and Special Servicer each acknowledge that the Issuer may deliver to the Servicer and the Special Servicer written restrictions relating to the Issuer’s ability to acquire, dispose of or modify Mortgage Loans (and the related Participations), as may be required to ensure that the Issuer is at no time treated as engaged in a trade or business in the United States. In this regard, the Servicer and Special Servicer, as applicable, acknowledge that its actions on behalf of the Issuer under this Agreement shall be subject to such written restrictions and that such restrictions will be incorporated into the Servicer’s and Special Servicer’s duties under this Agreement. In the event the Issuer is no longer a Qualified REIT Subsidiary, the Issuer shall so inform the Trustee, the Note Administrator, the Servicer and the Special Servicer in writing.
(d)With respect to each Non-Serviced Mortgage Loan, the Servicer agrees to perform the following limited functions with respect to the related Mortgage Asset and such Non-Serviced Mortgage Loan:
(i)deposit in the Collection Account all payments of interest, principal and all other amounts received by the Servicer with respect to such Mortgage Asset in accordance with Section 3.03 hereof;
(ii)receive and promptly provide any and all reports, budgets, material notices and related deliverables to which the holder of such Mortgage Asset is entitled and that the Servicer actually receives pursuant to the terms of the related Asset Documents to the Trustee, the Note Administrator, the Collateral Manager and the Rating Agencies, in the same manner and form as, and to the extent that, any reports, budgets, notices and related deliverables that are required to be provided hereunder with respect to the Serviced Mortgage Loans; and
(iii)promptly provide written notice to the Trustee, the Collateral Manager, the Note Administrator and the Rating Agencies upon the receipt of notice that there has been any termination or replacement of the then-current servicer or special servicer, or any material change with respect to the servicing agreement governing the servicing and administration of such Non-Serviced Mortgage Loan.
(e)With respect to each Non-Serviced Mortgage Loan, the Special Servicer agrees to perform the following limited functions with respect to the related Mortgage Asset and such Non-Serviced Mortgage Loan:
(i)enforce all rights and remedies reserved for the holder of such Mortgage Asset pursuant to the terms of the related Participation Agreement and Asset Documents;
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(ii)exercise all consent, consultation, voting and related rights reserved for the holder of such Mortgage Asset pursuant to the terms of the related Participation Agreement, in all such cases, in the best interests of the Issuer and Noteholders, in their respective capacities as beneficial holders of such Mortgage Asset;
(iii)receive, review and promptly provide any and all reports, budgets, material notices and related deliverables to which the holder of such Mortgage Asset is entitled and the Special Servicer actually receives pursuant to the terms of the related Asset Documents to the Trustee, the Collateral Manager, the Note Administrator and the Rating Agencies, in the same manner and form as, and to the extent that, any reports, budgets, notices and related deliverables that are required to be provided hereunder with respect to the Serviced Mortgage Loans; and
(iv)promptly provide written notice to the Trustee, the Collateral Manager, the Note Administrator and the Rating Agencies upon the receipt of notice that there has been any termination or replacement of the then-current servicer or special servicer, or any material change with respect to the servicing agreement governing the servicing and administration of such Non-Serviced Mortgage Loan.
(f)With respect to each Non-Serviced Mortgage Loan, the parties to this Agreement shall have no obligation or authority to supervise the respective parties to the servicing agreement governing the servicing and administration of such Non-Serviced Mortgage Loan (but this statement shall not relieve them of liabilities they may otherwise have in their capacities as parties to the such other servicing agreement) or to make Servicing Advances with respect to any such Non-Serviced Mortgage Loan. Any obligation of the Servicer or Special Servicer, as applicable, to provide information and collections to the Trustee, the Note Administrator, the Issuer, the Noteholders or the Rating Agencies with respect to any Non-Serviced Mortgage Loan shall be dependent on its receipt of the corresponding information and collections from the servicer or the special servicer under the servicing agreement governing the servicing and administration of such Non-Serviced Mortgage Loan.
(g)With respect to any Non-Serviced Mortgage Loan, the Servicer shall not agree to any amendment, modification or waiver with respect to the servicing agreement pursuant to which such Non-Serviced Mortgage Loan is serviced that adversely affects in any material respect the interest of the related Participation, unless the Noteholder consent requirements that would be necessary for the same amendment under the terms of this Agreement have been satisfied.
Section III.02Escrow Accounts; Collection of Taxes, Assessments and Similar Items. Subject to and as required by the terms of the related Asset Documents, the Servicer shall, on behalf of the Trustee, establish and maintain one or more Eligible Accounts as to which the “bank’s jurisdiction” for purposes of Article 9 of the Uniform Commercial Code is the State of New York (each, an “Escrow Account”) into which all Escrow Payments shall be deposited promptly after receipt and identification. Escrow Accounts shall be denominated “ORIX Real Estate Capital, LLC, as Servicer, for the benefit of Wilmington Trust, National Association, as trustee, for the benefit of the Holders of the LFT CRE 2021-FL1 Notes, the other Secured Parties
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and the related Companion Participation Holders” or in such other manner as the Issuer (or the Collateral Manager on behalf of the Issuer) and the Servicer agree. The parties hereto agree that the Trustee shall be the “customer” (as defined in Section 4-104 of the Uniform Commercial Code) with respect to each Escrow Account. Upon request, the Servicer shall notify the Issuer, the Collateral Manager, the Special Servicer, the Note Administrator and the Trustee in writing of the location and account number of each Escrow Account it establishes and shall notify the Issuer, the Collateral Manager, the Special Servicer, the Note Administrator and the Trustee promptly after any change thereof. Except as provided herein (including without limitation, the withdrawals described in the following sentence, which may be made without Issuer or Special Servicer consent), withdrawals of amounts from an Escrow Account may be made only following notice to, and consent of, the Issuer (or the Special Servicer on behalf of the Issuer). Subject to any express provisions to the contrary herein, to applicable laws, and to the terms of the related Asset Documents governing the use of the Escrow Payments, withdrawals of amounts from an Escrow Account may only be made: (i) to effect payment of taxes, assessments and insurance premiums; (ii) to effect payment of ground rents and other items required or permitted to be paid from escrow; (iii) to refund to the related Obligors any sums determined to be in excess of the amounts required to be deposited therein; (iv) to pay interest, if required under the Asset Documents, to the Obligors on balances in the Escrow Accounts; (v) to pay to the Servicer from time to time any interest or investment income earned on funds deposited therein pursuant to Section 3.04; (vi) to apply funds to the indebtedness of the Mortgage Loan in accordance with the terms thereof; (vii) to reimburse the Servicer, the Special Servicer, the Collateral Manager or the Advancing Agent, as the case may be, for any Servicing Advance or Servicing Expense, as the case may be, for which Escrow Payments should have been made by the Obligors, but only from amounts received on the Mortgage Loan which represent late collections of Escrow Payments thereunder; (viii) to withdraw any amount deposited in the Escrow Accounts which was not required to be deposited therein; or (ix) to clear and terminate the Escrow Accounts at the termination of this Agreement.
(b)The Servicer shall maintain accurate records with respect to each Mortgaged Property securing a Serviced Mortgage Loan, reflecting the status of taxes, assessments and other similar items that are or may become a lien thereon and the status of insurance premiums payable with respect thereto as well as the payment of ground rents with respect to each ground lease (to the extent such information is reasonably available). To the extent that the related Asset Documents require Escrow Payments to be made by an Obligor under a Serviced Mortgage Loan, the Servicer shall use reasonable efforts to obtain, from time to time, all bills for the payment of such items, and shall effect payment prior to the applicable penalty or termination date, employing for such purpose Escrow Payments paid by such Obligor pursuant to the terms of the Asset Documents and deposited in the related Escrow Account by the Servicer. To the extent that the Asset Documents do not require an Obligor under a Serviced Mortgage Loan to make Escrow Payments (and no other loan secured by the Mortgaged Property requires escrows or reserves for such amounts), the Servicer shall use its reasonable efforts to require that any tax, insurance or other payment referenced in the definition of Escrow Payment be made by such Obligors prior to the applicable penalty or termination date (to the extent that the holder of the related Mortgage Loan has the right to so require). Subject to Section 3.05 with respect to the payment of insurance premiums, if an Obligor under a Serviced Mortgage Loan
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fails to make payment on a timely basis or collections from such Obligor are insufficient to pay any such item when due and the holder of the related Mortgage Loan has the right to pay such premiums on behalf of such Obligor pursuant to the terms of the related Asset Documents, the amount of any shortfall shall be paid by the Advancing Agent, subject to Section 5.02, as a Servicing Advance.
Section III.03Collection Account and Participated Mortgage Loan Collection Account. The Servicer shall , on behalf of the Trustee, establish and maintain an Eligible Account as to which the “bank’s jurisdiction” for purposes of Article 9 of the Uniform Commercial Code is the State of New York (the “Collection Account”) for the purposes set forth herein. The Collection Account shall be denominated “ORIX Real Estate Capital, LLC, as Servicer, for the benefit of Wilmington Trust, National Association, as Trustee, for the benefit of the Holders of the LFT CRE 2021-FL1 Notes and the other Secured Parties” or in such other manner as the Issuer (or the Collateral Manager on behalf of the Issuer) and the Servicer agree. The parties hereto agree that the Trustee shall be the “customer” (as defined in Section 4-104 of the Uniform Commercial Code) with respect to the Collection Account. The Servicer shall deposit into the Collection Account (1) within two (2) Business Days after receipt of properly identified funds all payments and collections received by it on or after the date hereof with respect to the Mortgage Loans and REO Properties (unless such payments and collections are required to be deposited into the Participated Mortgage Loan Collection Account), other than (x) Escrow Payments, (y) payments in the nature of Additional Servicing Compensation or (z) scheduled payments of principal and interest due on or before the Closing Date and collected on or after the Closing Date, which amounts described in this clause (z) shall be remitted to the Seller, and (2) amounts from the Participated Mortgage Loan Collection Account pursuant to Section 3.03(d)(vii)(A).
(b)The Servicer shall make withdrawals from the Collection Account only as follows (the order set forth below not constituting an order of priority for such withdrawals):
(i)to withdraw any amount deposited in the Collection Account which was not required to be deposited therein;
(ii)pursuant to Section 5.01, to pay itself unpaid Servicing Fees, if applicable, and any unpaid Additional Servicing Compensation on each Remittance Date;
(iii)pursuant to Section 5.03(a) and (b), but subject to the waiver in Section 5.03(c), to pay to the Special Servicer the Special Servicing Fee, Liquidation Fee, Workout Fee and any unpaid Additional Servicing Compensation on each Remittance Date;
(iv)(A) to reimburse itself and the Advancing Agent, as applicable (in that order), for unreimbursed Servicing Advances, together with interest thereon at the Advance Rate, the respective rights of each such Person to receive payment pursuant to this clause (A) with respect to any Mortgage Loan, Mortgaged Property or REO Property being limited to, as applicable, related payments by the applicable Obligor with respect to such Servicing Advance and Liquidation Proceeds, Insurance and Condemnation
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Proceeds and REO Proceeds of the Mortgage Loan, Mortgaged Property or REO Property for which such Servicing Advance was made, and (B) to pay or reimburse the Issuer, the Collateral Manager and the Servicer for any unreimbursed Servicing Expenses related to the Mortgage Loans, Mortgaged Properties or REO Properties (provided that, with respect to any Participated Mortgage Loan, such Servicing Expenses shall be paid first from the Participated Mortgage Loan Collection Account), together with interest thereon at the Advance Rate, within five (5) days of incurring same;
(v)to reimburse itself and the Advancing Agent, as applicable (in that order), for Nonrecoverable Servicing Advances, together with interest thereon at the Advance Rate, first, out of REO Proceeds, Liquidation Proceeds and Insurance and Condemnation Proceeds received on the related Mortgage Loan or REO Property, then, out of the interest portion of general collections on the Mortgage Loans and REO Properties, then, to the extent the interest portion of general collections is insufficient and with respect to such excess only, out of other collections on the Mortgage Loans and REO Properties;
(vi)to pay to itself, as the case may be, from time to time any interest or investment income earned on funds deposited in the Collection Account to the extent it is entitled thereto pursuant to Section 3.04;
(vii)to remit to the Seller any collections representing Retained Interest under, and as defined in, the Mortgage Asset Purchase Agreement;
(viii)on the second Business Day after the later of the date of receipt of any Principal Proceeds (net of the amounts specified in clause (b) of the definition thereof) and the date the Servicer receives a request for such transfer from the Collateral Manager, to remit to the Note Administrator for deposit into the Reinvestment Account the portion of such Principal Proceeds requested by the Collateral Manager to be so transferred; provided that the Collateral Manager shall have certified in such request that the Note Protection Tests were satisfied as of the immediately preceding Payment Date and that the Collateral Manager reasonably expects the Note Protection Tests to be satisfied on the immediately succeeding Payment Date;
(ix)on each Remittance Date, to remit to the Note Administrator for deposit into the Payment Account, all amounts on deposit in the Collection Account (that represent good and available funds) as of the close of business on the related Servicing Determination Date, net of any withdrawals from the Collection Account pursuant to this Section; and
(x)to clear and terminate the Collection Account upon the termination of this Agreement.
(c)With respect to the Participated Mortgage Loans that are Serviced Mortgage Loans, the Servicer shall, on behalf of the Trustee, establish and maintain an Eligible Account or a sub-account of an Eligible Account, in each case as to which the “bank’s jurisdiction” for purposes of Article 9 of the Uniform Commercial Code is the State of New
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York (the “Participated Mortgage Loan Collection Account”), for the purposes set forth herein. The Participated Mortgage Loan Collection Account may be a sub-account of a single account, including of the Collection Account. The Participated Mortgage Loan Collection Account shall be denominated “ORIX Real Estate Capital, LLC, as Servicer, for the benefit of Wilmington Trust, National Association, as Trustee, for the benefit of the Holders of the LFT CRE 2021-FL1 Notes, other Secured Parties and the Companion Participation Holders.” The parties hereto agree that the Trustee shall be the “customer” (as defined in Section 4-104 of the Uniform Commercial Code) with respect to the Participated Mortgage Loan Collection Account. The Servicer shall deposit into the Participated Mortgage Loan Collection Account within two (2) Business Days after receipt of properly identified funds all payments and collections received by it on or after the date hereof with respect to the Participated Mortgage Loans that are Serviced Mortgage Loans and related REO Properties (and the related Participation) and any proceeds received from the disposition of Participated Mortgage Loans that are Serviced Mortgage Loans and related REO Properties (and the related Participation), other than (x) Escrow Payments, (y) payments in the nature of Additional Servicing Compensation or (z) scheduled payments of principal and interest due on or before the Closing Date and collected on or after the Closing Date, which amounts described in this clause (z) shall be remitted to the Seller. Amounts in the Participated Mortgage Loan Collection Account allocable to any Future Funding Participation shall not be assets of the Issuer, but instead shall be held by the Servicer on behalf of the related Companion Participation Holder.
(d)The Servicer shall make withdrawals from the Participated Mortgage Loan Collection Account only as follows (the order set forth below not constituting an order of priority for such withdrawals):
(i)to withdraw any amount deposited in the Participated Mortgage Loan Collection Account which was not required to be deposited therein;
(ii)to pay to itself any unpaid Servicing Fees and Additional Servicing Compensation to which it is entitled pursuant to Section 5.01, but only to the extent earned on the Participated Mortgage Loans that are Serviced Mortgage Loans or related REO Property;
(iii)to pay to the Special Servicer any unpaid Special Servicing Fees, Liquidation Fees, Workout Fees and Additional Servicing Compensation to which the Special Servicer is entitled pursuant to Section 5.03, but only to the extent earned on the Participated Mortgage Loans that are Serviced Mortgage Loans or related REO Property;
(iv)(A) to reimburse itself and the Advancing Agent, as applicable (in that order), for unreimbursed Servicing Advances with respect to any Participated Mortgage Loans that are Serviced Mortgage Loans or related REO Property, together with interest thereon at the Advance Rate, the respective rights of each such Person to receive payment pursuant to this clause (A) being limited to, as applicable, related payments by the applicable Obligor with respect to such Servicing Advance and Liquidation Proceeds, Insurance and Condemnation Proceeds and REO Proceeds of the Mortgage Loan or REO Property for which such Servicing Advance was made, and (B) to pay or reimburse the
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Issuer, the Special Servicer and the Servicer for any unreimbursed Servicing Expenses with respect to the related Participated Mortgage Loan or REO Property, together with interest thereon at the Advance Rate, within five (5) days of incurring same;
(v)to reimburse itself and the Advancing Agent, as applicable (in that order), for Nonrecoverable Servicing Advances with respect to any Participated Mortgage Loans that are Serviced Mortgage Loans or related REO Property, together with interest thereon at the Advance Rate, the respective rights of each such Person to receive payment pursuant to this clause (v) being limited to, as applicable, Liquidation Proceeds, Insurance and Condemnation Proceeds and REO Proceeds and other collections on the Mortgage Loan or REO Property for which such Nonrecoverable Servicing Advances were made;
(vi)to pay to itself from time to time any interest or investment income earned on funds deposited in such Participated Mortgage Loan Collection Account to the extent it is entitled thereto pursuant to Section 3.04;
(vii)on the second Business Day after the later of the date of receipt of any Principal Proceeds (net of the amounts specified in clause (b) of the definition thereof) that are allocable to the Participations owned by the Issuer pursuant to the related Participation Agreement and the date the Servicer receives a request for such transfer from the Collateral Manager, to remit to the Note Administrator for deposit into the Reinvestment Account the portion of such Principal Proceeds requested by the Collateral Manager to be so transferred; provided that the Collateral Manager shall have certified in such request that the Note Protection Tests were satisfied as of the immediately preceding Payment Date and that the Collateral Manager reasonably expects the Note Protection Tests to be satisfied on the immediately succeeding Payment Date;
(viii) (A) on each Remittance Date, to remit to the Collection Account, all amounts on deposit in such Participated Mortgage Loan Collection Account (that represent good and available funds) that are allocable to the Participations owned by the Issuer pursuant to the related Participation Agreement and (B) on each Remittance Date (or such later date as may be set forth in the related Participation Agreement) after receipt thereof, to each related Companion Participation Holder, all amounts on deposit in such Participated Mortgage Loan Collection Account (that represent good and available funds) that are payable pursuant to the related Participation Agreement to such Companion Participation Holder (taking into account other amounts due under such Participation Agreement); and
(ix)to clear and terminate the Participated Mortgage Loan Collection Account upon the termination of this Agreement.
Section III.04Permitted Investments. The Servicer or the Special Servicer, as the case may be, may direct any depository institution or trust company in which the Accounts are maintained to invest the funds held therein in one or more Permitted Investments; provided, however, that (a) any amounts held in the Collection Account or the Participated Mortgage Loan Collection Account that are invested shall be (x) invested only in short-term Permitted
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Investments and (y) sold no later than two Business Days prior to each Remittance Date, and (b) in all cases, such funds shall be either (i) immediately available or (ii) available in accordance with a schedule which will permit the Servicer to meet its payment obligations hereunder. The Servicer or the Special Servicer, as the case may be, shall be entitled to all income and gain realized from the investment of funds deposited in the Accounts as Additional Servicing Compensation. The Servicer or the Special Servicer, as the case may be, shall deposit from its own funds in the applicable Account the amount of any loss incurred in respect of any such investment of funds immediately upon the realization of such loss; provided, that neither the Servicer nor the Special Servicer shall be required to deposit any loss on an investment of funds if such loss is incurred solely as a result of the insolvency of the federal or state chartered depository institution or trust company that holds such Account, so long as such depository institution or trust company satisfied the qualifications set forth in the definition of Eligible Account in the month in which the loss occurred and at the time such investment was made. Notwithstanding the foregoing, the Servicer or the Special Servicer, as the case may be, shall not (other than in the case of sub-clause (2) below) direct the investment of funds held in any Escrow Account and shall not retain the income and gain realized therefrom if the related Asset Documents or applicable law permit the Obligor to be entitled to the income and gain realized from the investment of funds deposited therein. In such event, the Servicer or the Special Servicer, as the case may be, shall direct the depository institution or trust company in which such Escrow Accounts are maintained to invest the funds held therein (1) in accordance with the Obligor’s written investment instructions, if the Asset Documents or applicable law require such funds to be invested in accordance with the Obligor’s direction; and (2) in accordance with the written investment instructions of the Special Servicer to invest such funds in a Permitted Investment, if the Asset Documents and applicable law do not permit the related Obligor to direct the investment of such funds; provided, however, that in either event (i) such funds shall be either (y) immediately available or (z) available in accordance with a schedule which will permit the Servicer or the Special Servicer, as the case may be, to meet the payment obligations for which the Escrow Account was established, and (ii) the Servicer or the Special Servicer, as the case may be, shall have no liability for any loss in investments of such funds that are invested pursuant to such written instructions.
Section III.05Maintenance of Insurance Policies. The Special Servicer (only with respect to Specially Serviced Mortgage Loans and REO Properties) or the Servicer (with respect to Performing Mortgage Loans) shall use efforts consistent with the Servicing Standard to cause the related Obligor of each Serviced Mortgage Loan to maintain for each such Serviced Mortgage Loan such insurance as is required to be maintained pursuant to the related Asset Documents. If the related Obligor fails to maintain such insurance, the Servicer or the Special Servicer, as applicable, shall notify the Issuer of such breach, and shall, to the extent available at commercially reasonable rates and that the Issuer has an insurable interest, cause such insurance to be maintained. To the extent provided in the applicable Asset Documents, all such policies shall be endorsed with standard mortgagee clauses (if applicable) with loss payable to the Issuer, and shall be in an amount sufficient to avoid the application of any co-insurance clause. The costs of maintaining the insurance policies which the Servicer or the Special Servicer, as the case may be, is required to maintain pursuant to this Section shall be a Servicing Expense or, if the amount in the Collection Account or the Participated Mortgage Loan Collection Account, as
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applicable, is insufficient to pay such costs, such costs shall be paid by the Advancing Agent as a Servicing Advance.
(b)The Servicer or the Special Servicer, as the case may be, may fulfill its obligation to maintain insurance, as provided in Section 3.05(a), through a master force placed insurance policy with a Qualified Insurer, the cost of which shall be a Servicing Expense or, if the amount in the Collection Account or the Participated Mortgage Loan Collection Account, as applicable, is insufficient to pay such costs, such costs shall be paid by the Advancing Agent as a Servicing Advance; provided that such cost is limited to the incremental cost of such policy allocable to such Mortgaged Property or REO Property (i.e., other than any minimum or standby premium payable for such policy whether or not such Mortgaged Property or REO Property is then covered thereby, which shall be paid by the Advancing Agent at the direction of the Servicer or the Special Servicer, as the case may be). Such master force placed insurance policy may contain a deductible clause, in which case the Advancing Agent, the Servicer or the Special Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property or REO Property a policy otherwise complying with the provisions of Section 3.05(a), and there shall have been one or more losses which would have been covered by such a policy had it been maintained, immediately deposit into the related Account from its own funds the amount not otherwise payable under the master force placed insurance policy because of such deductible to the extent that such deductible exceeds the deductible limitation required under the related Asset Documents, or, in the absence of such deductible limitation, the deductible limitation which is consistent with the Servicing Standard.
(c)Each of the Servicer and the Special Servicer shall obtain and maintain at its own expense, and keep in full force and effect throughout the term of this Agreement, a blanket fidelity bond and an errors and omissions insurance policy covering the Servicer’s or the Special Servicer’s, as applicable, directors, officers and employees, in connection with its activities under this Agreement. The form and amount of coverage shall be consistent with the Servicing Standard. In the event that any such bond or policy ceases to be in effect, the Servicer or the Special Servicer, as applicable, shall obtain a comparable replacement bond or policy. Any fidelity bond and errors and omissions insurance policy required under this Section 3.05(c) shall be obtained from a Qualified Insurer. Notwithstanding the foregoing, so long as the unsecured obligations of the Servicer or Special Servicer (or their respective corporate parent), as applicable, has been rated at least “A3” by Moody’s and the equivalent by KBRA, the Servicer or the Special Servicer, as applicable, shall be entitled to provide self-insurance directly or through its parent (so long as such parent is obligated to pay the related claims), as applicable, with respect to its obligation to maintain a blanket fidelity bond and an errors and omissions insurance policy.
No provision of this Section requiring such fidelity bond and errors and omissions insurance shall diminish or relieve the Servicer or Special Servicer, as applicable, from its duties and obligations as set forth in this Agreement. The Servicer and Special Servicer, as applicable, shall deliver or cause to be delivered to the Trustee and the Note Administrator, upon request, a certificate of insurance from the surety and insurer certifying that such insurance is in full force and effect.
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Section III.06Delivery and Possession of Servicing Files. On or before the Servicing Transfer Date, the Issuer (or the Collateral Manager acting on behalf of the Issuer) shall deliver or cause to be delivered to the Servicer (i) a Servicing File with respect to each Serviced Mortgage Loan; and (ii) the amounts, if any, received by the Issuer representing Escrow Payments previously made by the Obligors. The Servicer shall promptly acknowledge receipt of the Servicing File and Escrow Payments and shall promptly deposit such Escrow Payments in the Escrow Accounts established pursuant to this Agreement. The contents of each Servicing File delivered to the Servicer are and shall be held in trust by the Servicer on behalf of the Issuer for the benefit of the Relevant Parties in Interest. The Servicer’s possession of the contents of each Servicing File so delivered shall be for the sole purpose of servicing the related Mortgage Loan and such possession by the Servicer shall be in a custodial capacity only. The Servicer shall release its custody of the contents of any Servicing File only in accordance with written instructions from the Issuer (or the Collateral Manager acting on behalf of the Issuer), and upon request of the Issuer (or the Collateral Manager acting on behalf of the Issuer), the Servicer shall deliver to the Issuer, or its nominee, the Servicing File or a copy of any document contained therein; provided, however, that if the Servicer is unable to perform its Servicing obligations with respect to the related Mortgage Loan as a result of any such release or delivery of the Servicing File, then the Servicer shall not be liable, while the related Servicing File is not in the Servicer’s possession, for any failure to perform any obligation hereunder with respect to the related Mortgage Loan.
Section III.07Inspections; Financial Statements. With respect to each Performing Mortgage Loan, the Servicer shall perform, or cause to be performed, a physical inspection of the related Mortgaged Property at least annually, beginning in 2022 and, in addition, if at any time (i) the Issuer (or the Collateral Manager acting on behalf of the Issuer) requests such an inspection, or (ii) the Servicer, with the approval of the Issuer (or the Collateral Manager acting on behalf of the Issuer), determines that it is prudent to conduct such an inspection. The Servicer shall prepare a written report of each such inspection and shall promptly deliver a copy of such report to the Issuer, the Special Servicer and the Collateral Manager. The reasonable out-of-pocket expenses incurred by the Servicer and a reasonable fee due the Servicer in connection with any such inspections (including any out-of-pocket expenses related to travel and lodging and any charges incurred through the use of a qualified third party to perform such services) shall be paid by the Advancing Agent as a Servicing Advance.
(b)With respect to a Specially Serviced Mortgage Loan that is secured directly or indirectly by real property and with respect to REO Property related to a Serviced Mortgage Loan, the Special Servicer shall perform a physical inspection of each such Mortgaged Property (i) as soon as possible after a Special Servicing Transfer Event and thereafter at least annually, and, in addition (ii) if at any time (x) the Issuer (or the Collateral Manager acting on behalf of the Issuer) requests such an inspection, or (y) the Special Servicer, determines that it is prudent to conduct such an inspection. The Special Servicer shall prepare a written report of each such inspection and shall promptly deliver a copy of such report to the Issuer, the Servicer, and the Collateral Manager. The reasonable out-of-pocket expenses incurred by the Special Servicer and a reasonable fee due the Special Servicer in connection with any such inspections (including any out-of-pocket expenses related to travel and lodging and any charges incurred
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through the use of a qualified third party to perform such services) shall be paid by the Advancing Agent as a Servicing Advance.
(c)Commencing with respect to the calendar year ending December 31, 2021 (as to annual information) and the calendar quarter ending on March 31, 2022 (as to quarterly information), the Servicer, in the case of any Performing Mortgage Loans described in Section 3.07(a), and the Special Servicer, in the case of any Specially Serviced Mortgage Loans and REO Property related to a Serviced Mortgage Loan, shall (i) make reasonable efforts to collect promptly from the related Obligor quarterly and annual operating statements and rent rolls of the related real property, financial statements of such Obligor and any other documents or reports required to be delivered under the terms of the related Asset Documents, if delivery of such items is required pursuant to the terms of the related Asset Documents and (ii) promptly (A) review and analyze such items as may be collected; (B) prepare or update, on a quarterly and annual basis, CREFC® NOI Adjustment Worksheets, CREFC® Operating Statement Analysis Reports and CREFC® Comparative Financial Status Reports based on such analysis; and (C) in the case of the Servicer, upon request, deliver or otherwise make available copies of such prepared written reports and collected operating statements and rent rolls to the Special Servicer.
Section III.08Exercise of Remedies upon Mortgage Loan Defaults. Upon the failure of any Obligor under a Serviced Mortgage Loan to make any required payment of principal, interest or other amounts due under such Serviced Mortgage Loan, or otherwise to perform fully any material obligations under any of the related Asset Documents, in either case within any applicable grace period, the Servicer shall, upon discovery of such failure, promptly notify the Special Servicer, the Advancing Agent, the Collateral Manager and the Issuer in writing. As directed in writing by the Issuer (or the Collateral Manager acting on behalf of the Issuer) in each instance, the Servicer shall issue notices of default, declare events of default, declare due the entire outstanding principal balance, and otherwise take all reasonable actions consistent with the Servicing Standard under the related Mortgage Loan in preparation for the Special Servicer to realize upon the related Underlying Note.
Section III.09Enforcement of Due-On-Sale Clauses; Due-On-Encumbrance Clauses; Assumption Agreements; Defeasance Provisions. Subject to the terms of Section 2.03(c) hereof, if any Serviced Mortgage Loan contains a provision in the nature of a “due-on-sale” clause (including, without limitation, sales or transfers of related Mortgaged Properties (in full or part) or the sale or transfer of direct or indirect interests in the related Obligor, its subsidiaries or its owners), which by its terms:
(i)provides that such Mortgage Loan will (or may at the lender’s option) become due and payable upon the sale or other transfer of an interest in the related Mortgaged Property or ownership interests in the Obligor,
(ii)provides that such Mortgage Loan may not be assumed without the consent of the related lender in connection with any such sale or other transfer, or
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(iii)provides that such Mortgage Loan may be assumed or transferred without the consent of the lender, provided certain conditions set forth in the Asset Documents are satisfied,
then, for so long as the related Mortgage Asset is owned by the Issuer (and subject to the rights, if any, of the Issuer exercisable by the Collateral Manager, the Trustee or, to the extent required by the Indenture, the Controlling Class), the Special Servicer on behalf of the Issuer shall take such action as directed by the Collateral Manager pursuant to Section 2.03(c); provided that the Special Servicer shall not waive, without first satisfying the Rating Agency Condition, any “due-on-sale” clause under any Mortgage Loan for which the related Mortgage Asset (A) represents 5% or more of the principal balance of all the Mortgage Assets owned by the Issuer, (B) has a principal balance of over $35,000,000, or (C) is one of the 10 largest Mortgage Assets (based on principal balance) owned by the Issuer; provided, further, that the Special Servicer shall not be required to enforce any such due-on-sale clauses and in connection therewith shall not be required to (x) accelerate the payments thereon or (y) withhold its consent to such an assumption if the Special Servicer determines, in accordance with the Servicing Standard (1) that such provision is not enforceable under applicable law or the enforcement of such provision is reasonably likely to result in meritorious legal action by the related Obligor or (2) that granting such consent would be likely to result in a greater recovery, on a net present value basis (discounting at the related mortgage rate), than would enforcement of such clause.
If, notwithstanding any directions to the contrary from the Collateral Manager, the Special Servicer determines in accordance with the Servicing Standard that (A) granting such consent would be likely to result in a greater recovery, (B) such provision is not legally enforceable, or (C) that the conditions described in clause (iii) above relating to the assumption or transfer of the Mortgage Loan have been satisfied, the Special Servicer is authorized to take or enter into an assumption agreement from or with the Person to whom the related Mortgage Loan has been or is about to be conveyed, and to release the original Obligor from liability upon the Mortgage Loan and substitute the new Obligor as obligor thereon, provided that the credit status of the prospective new Obligor is in compliance with the Servicing Standard and criteria and the terms of the related Asset Documents. In connection with each such assumption or substitution entered into by the Special Servicer, the Special Servicer shall give prior notice thereof to the Servicer. The Special Servicer shall notify the Co-Issuers, the Servicer and the Collateral Manager that any such assumption or substitution agreement has been completed by forwarding to the Issuer (with a copy to the Servicer and the Collateral Manager) the original copy of such agreement, which copies shall be added to the related Mortgage Asset File and shall, for all purposes, be considered a part of such Mortgage Asset File to the same extent as all other documents and instruments constituting a part thereof. To the extent not precluded by the Asset Documents, the Special Servicer shall not approve an assumption or substitution without requiring the related Obligor to pay any fees owed to the Rating Agencies associated with the approval of such assumption or substitution. However, in the event that the related Obligor is required but fails to pay such fees, such fees shall be treated as a Servicing Expense. The Special Servicer shall provide copies of any waivers of any due-on-sale clause to the Servicer and the 17g-5 Information Provider for posting on the 17g-5 Website.
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(b)Subject to the terms of Section 2.03(c) hereof, if any Serviced Mortgage Loan contains a provision in the nature of a “due-on-encumbrance” clause (including, without limitation, any mezzanine financing of the related Obligor or the related Mortgaged Property), which by its terms:
(i)provides that such Mortgage Loan shall (or may at the lender’s option) become due and payable upon the creation of any lien or other encumbrance on the related Mortgaged Property,
(ii)requires the consent of the related lender to the creation of any such lien or other encumbrance on the related Mortgaged Property or underlying Real Property, or
(iii)provides that such Mortgaged Property may be further encumbered without the consent of the lender, provided certain conditions set forth in the Asset Documents are satisfied,
then, for so long as the related Mortgage Asset is owned by the Issuer (and subject to the rights, if any, of the Issuer exercisable by the Collateral Manager, the Trustee or, to the extent required by the Indenture, the Controlling Class), the Special Servicer on behalf of the Issuer shall take such action as directed by the Collateral Manager pursuant to Section 2.03(c); provided that the Special Servicer shall not waive, without first satisfying the Rating Agency Condition, any “due-on-encumbrance” clause (which the Special Servicer shall interpret, if the related Asset Documents allow such interpretation, to include requests for approval of mezzanine financing or preferred equity), with regard to any Mortgage Loan for which the related Mortgage Asset (A) represents 2% or more of the principal balance of all the Mortgage Assets owned by the Issuer, (B) has a principal balance of over $20,000,000, (C) is one of the 10 largest Mortgage Assets (based on principal balance) owned by the Issuer, (D) has an aggregate loan-to-value ratio (including existing and proposed additional debt) that is equal to or greater than 85%, or (E) has an aggregate debt service coverage ratio (including the debt service on the existing and proposed additional debt) that is less than 1.2x to 1.0x; provided, further, that the Special Servicer shall not be required to enforce any such due-on-encumbrance clauses and in connection therewith shall not be required to (x) accelerate the payments thereon or (y) withhold its consent to such encumbrance if the Special Servicer determines, in accordance with the Servicing Standard (1) that such provision is not enforceable under applicable law or the enforcement of such provision is reasonably likely to result in meritorious legal action by the related Obligor or (2) that granting such consent would be likely to result in a greater recovery, on a net present value basis (discounting at the related mortgage rate), than would enforcement of such clause.
If, notwithstanding any directions to the contrary from the Collateral Manager, the Special Servicer determines in accordance with the Servicing Standard that (A) granting such consent would be likely to result in a greater recovery, (B) such provision is not legally enforceable, or (C) that the conditions described in clause (iii) above relating to the further encumbrance have been satisfied, the Special Servicer is authorized to grant such consent. To the extent not precluded by the Asset Documents, the Special Servicer shall not approve an additional encumbrance without requiring the related Obligor to pay any fees owed to the Rating Agencies associated with the approval of such lien or encumbrance. However, in the event that
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the related Obligor is required but fails to pay such fees, such fees shall reimbursable as a Servicing Expense. The Special Servicer shall provide copies of any waivers of any due on encumbrance clause to the Servicer and the 17g-5 Information Provider for posting on the 17g-5 Website.
(c)If the Servicer receives any request for any assumption, transfer, further encumbrance or other action contemplated by this Section 3.09, the Servicer shall forward such request to the Special Servicer for analysis and processing and the Servicer shall have no further liability or duty with respect thereto.
(d)Nothing in this Section 3.09 shall constitute a waiver of the Issuer’s rights, as the lender of record, to receive notice of any assumption of a Mortgage Loan, any sale or other transfer of the related Mortgage Loan or the creation of any lien or other encumbrance with respect to such Mortgage Loan.
(e)In connection with the taking of, or the failure to take, any action pursuant to this Section 3.09, the Special Servicer shall not agree to modify, waive or amend, and no assumption or substitution agreement entered into pursuant to Section 3.09(a) shall contain any terms that are different from, any term of any Mortgage Loan, other than pursuant to Section 3.15 hereof.
Section III.10Appraisals; Realization upon Defaulted Mortgage Assets.  Promptly following any acquisition by the Special Servicer of an REO Property on behalf of the Issuer for the benefit of the Relevant Parties in Interest or upon the occurrence of an Appraisal Reduction Event the Special Servicer shall (i) notify the Servicer thereof, and (ii) within 120 days, obtain an updated Appraisal or a letter update for an existing Appraisal (an “Updated Appraisal”) if such existing Appraisal is less than twenty-four (24) months old, in order to determine the fair market value of such REO Property and shall notify the Issuer, the Servicer and the Collateral Manager of the results of such Appraisal; provided that the Special Servicer shall not be required to obtain an Updated Appraisal of any Mortgaged Property with respect to which there exists an Appraisal that is less than twelve (12) months old and the Special Servicer is not aware of any material change in the market for, or the condition or value of the Mortgaged Property. Any such Appraisal shall be conducted by an Appraiser and the cost thereof shall be a Servicing Advance. For so long as the related Mortgage Loan is a Specially Serviced Mortgage Loan, the Special Servicer shall update each Updated Appraisal every 12 months and recalculate the Appraisal Reduction Amount (as defined in the Indenture) with respect to each Mortgage Loan.
(b)The Special Servicer shall monitor each Specially Serviced Mortgage Loan, evaluate whether the causes of the Special Servicing Transfer Event can be corrected over a reasonable period without significant impairment of the value of the Mortgage Loan, initiate corrective action in cooperation with the Obligor if, in the Special Servicer’s judgment, cure is likely, and take such other actions (including without limitation, negotiating and accepting a discounted payoff of a Mortgage Loan) as are consistent with the Servicing Standard. If, in the Special Servicer’s judgment, such corrective action has been unsuccessful, no satisfactory arrangement can be made for collection of delinquent payments, and the Specially Serviced
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Mortgage Loan has not been released from the Issuer pursuant to any provision hereof, and except as otherwise specifically provided in Section 3.09(a) and 3.09(b), the Special Servicer may, to the extent consistent with the Asset Status Report (and with the consent of the Issuer (or the Collateral Manager acting on behalf of the Issuer)) and with the Servicing Standard, accelerate such Specially Serviced Mortgage Loan and commence a foreclosure or other acquisition with respect to the related Mortgage Loan, provided that the Special Servicer determines in accordance with the Servicing Standard that such acceleration and foreclosure are more likely to produce a greater recovery to the Relevant Parties in Interest on a present value basis (discounting at the related interest rate) than would a waiver of such default or an extension or modification. The Special Servicer shall notify the Advancing Agent of the need to advance the costs and expenses of any such proceedings.
(c)If the Special Servicer elects to proceed with a non-judicial foreclosure or other similar proceeding related to personal property in accordance with the laws of the state where a Mortgaged Property is located, the Special Servicer shall not be required to pursue a deficiency judgment against the related Obligor or any other liable party if the laws of the state do not permit such a deficiency judgment after a non-judicial foreclosure or other similar proceeding related to personal property or if the Special Servicer determines, in accordance with the Servicing Standard, that the likely recovery if a deficiency judgment is obtained will not be sufficient to warrant the cost, time, expense and/or exposure of pursuing the deficiency judgment and such determination is evidenced by an Officer’s Certificate delivered to the Issuer and the Collateral Manager.
(d)In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be issued to the Issuer, a Permitted Subsidiary or a nominee of the Issuer (which shall not include the Servicer or the Special Servicer). Notwithstanding any such acquisition of title and cancellation of the related Mortgage Loan, such Mortgage Loan shall be considered to be an REO Loan until such time as the related REO Property is sold by the Issuer for the benefit of the Relevant Parties in Interest and shall be reduced only by collections net of expenses. Consistent with the foregoing, for purposes of all calculations hereunder, so long as such REO Loan shall be considered to be an outstanding:
(i)it shall be assumed that, notwithstanding that the indebtedness evidenced by the related Underlying Note shall have been discharged, such Underlying Note and, for purposes of determining the stated principal balance thereof, the related amortization schedule in effect at the time of any such acquisition of title shall remain in effect; and
(ii)net REO Proceeds received in any month shall be applied to amounts that would have been payable under the related Underlying Note(s) in accordance with the terms of such Underlying Note(s). In the absence of such terms, net REO Proceeds shall be deemed to have been received first, in reimbursement of Servicing Advances related to such Mortgage Loan; second, in payment of Special Servicing Fees, Liquidation Fees and Workout Fees related to such Mortgage Loan; third, in payment of the unpaid accrued interest on such Mortgage Loan; fourth, in payment of outstanding principal of such
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Mortgage Loan; and thereafter, net proceeds received in any month shall be applied to the payment of installments of principal and accrued interest deemed to be due and payable in accordance with the terms of such Underlying Note(s) or related Asset Documents, net of any withholding taxes, and such amortization schedule until such principal has been paid in full and then to other amounts due under such Mortgage Loan. If such net REO Proceeds exceed the Monthly Payment then payable, the excess shall be treated as a Principal Prepayment received in respect of such REO Loan.
(e)Notwithstanding any provision to the contrary contained in this Agreement, the Special Servicer shall not, on behalf of the Issuer, for the benefit of the Noteholders and the Preferred Shareholders, obtain title to any Mortgaged Property as a result of or in lieu of foreclosure or otherwise, obtain title to any direct or indirect equity interest in any Obligor pledged pursuant to a pledge agreement and thereby be the beneficial owner of the related Mortgaged Property, have a receiver of rents appointed with respect to, and shall not otherwise acquire possession of, or take any other action with respect to, any Mortgaged Property if, as a result of any such action, the Issuer, would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of, such Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless the Special Servicer has previously determined in accordance with the Servicing Standard, based on an updated environmental assessment report prepared by an Independent environmental consultant who regularly conducts environmental audits, that:
(i)such Mortgaged Property is in compliance with applicable environmental laws or, if not, after consultation with an environmental consultant, that it would be in the best economic interest of the Issuer to take such actions as are necessary to bring such Mortgaged Property in compliance therewith, and
(ii)there are no circumstances present at such Mortgaged Property relating to the use, management or disposal of any hazardous materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any currently effective federal, state or local law or regulation, or that, if any such hazardous materials are present for which such action could be required, after consultation with an environmental consultant, it would be in the best economic interest of the Issuer to take such actions with respect to the affected Mortgaged Property.
In the event that the environmental assessment first obtained by the Special Servicer with respect to the Mortgaged Property indicates that such Mortgaged Property may not be in compliance with applicable environmental laws or that hazardous materials may be present but does not definitively establish such fact, the Special Servicer shall cause such further environmental tests to be conducted by an Independent environmental consultant who regularly conducts such tests as the Special Servicer shall deem prudent to protect the interests of the Relevant Parties in Interest. Any such tests shall be deemed part of the environmental assessment obtained by the Special Servicer for purposes of this Section 3.10.
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(f)The environmental assessment contemplated by Section 3.10(e) shall be prepared within three (3) months (or as soon thereafter as practicable) of the determination that such assessment is required by an Independent environmental consultant who regularly conducts environmental audits for purchasers of commercial property where the Mortgage Loan is located, as determined by the Special Servicer in a manner consistent with the Servicing Standard. The Special Servicer shall request (with a copy to the Servicer) that the Advancing Agent to advance the cost of preparation of such environmental assessments.
(g)The Special Servicer shall take such action with respect to a Mortgaged Property that is not in compliance with applicable environmental laws as is directed by the Collateral Manager; provided, however, that if the Special Servicer determines pursuant to Section 3.10(e)(i) that any Mortgaged Property is not in compliance with applicable environmental laws but that it is in the best economic interest of the Issuer to take such actions as are necessary to bring such Mortgaged Property in compliance therewith, or if the Special Servicer determines pursuant to Section 3.10(e)(ii) that the circumstances referred to therein relating to hazardous materials are present but that it is in the best economic interest of the Issuer to take such action with respect to the containment, clean-up or remediation of hazardous materials affecting such Mortgaged Property as is required by law or regulation, the Special Servicer shall take such action as it deems to be in the best economic interest of the Issuer, but only if the Issuer (or the Note Administrator) has mailed notice to the Noteholders of such proposed action, which notice shall be prepared by the Special Servicer, and only if the Issuer (or the Note Administrator) does not receive, within 30 days of such notification, instructions from the Noteholders entitled to a majority of the Voting Rights directing the Special Servicer not to take such action. Notwithstanding the foregoing, if the Special Servicer reasonably determines that it is likely that within such 30-day period irreparable environmental harm to such Mortgaged Property would result from the presence of such hazardous materials and provides a prior written statement to the Issuer setting forth the basis for such determination, then the Special Servicer may take such action to remedy such condition as may be consistent with the Servicing Standard. Neither the Issuer nor the Special Servicer shall be obligated to take any action or not take any action pursuant to this Section 3.10(g) at the direction of the Noteholders or the related Companion Participation Holder, unless the Noteholders or such Companion Participation Holder agree to indemnify the Issuer and the Special Servicer with respect to such action or inaction. The Special Servicer shall notify the Advancing Agent of the need to advance the costs of any such compliance, containment, clean-up or remediation as a Servicing Advance.
(h)The Special Servicer shall notify the Servicer of any Mortgaged Property securing a Serviced Mortgage Loan which is abandoned or foreclosed that requires reporting to the IRS and shall provide the Servicer with all information regarding forgiveness of indebtedness and required to be reported with respect to any such Mortgaged Property which is abandoned or foreclosed, and the Servicer shall report to the IRS and the related Obligor, in the manner required by applicable law, such information, and the Servicer shall report, via Form 1099C, all forgiveness of indebtedness to the extent such information has been provided to the Servicer by the Special Servicer. The Servicer shall deliver a copy of any such report to the Issuer and the Collateral Manager.
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(i)The costs of any updated Appraisal obtained pursuant to this Section 3.10 shall be paid by the Advancing Agent as a Servicing Advance.
Section III.11Annual Statement as to Compliance. The Servicer and the Special Servicer (each a “Reporting Person”) shall each deliver to the Issuer, the Note Administrator, the Trustee, the Collateral Manager and the 17g-5 Information Provider on or before April 30 of each year, beginning with April 30, 2022 an Officer’s Certificate stating, as to each signatory thereof, (i) that a review of the activities of the Reporting Person during the preceding calendar year and of its performance under this Agreement has been made under such Officer’s supervision, and (ii) that, to the best of such Officer’s knowledge, based on such review, the Reporting Person has fulfilled all of its obligations under this Agreement in all material respects throughout such year or, if there has been a default in the fulfillment of any such obligation in any material respect, specifying each such default known to such officer, the nature and status thereof and what action it proposes to take with respect thereto.
Section III.12Annual Independent Public Accountants’ Servicing Report.  On or before April 30 of each year, beginning with April 30, 2022, each Reporting Person, at such Reporting Person’s expense, shall cause a registered public accounting firm (which may also render other services to such Reporting Person) that is a member of the American Institute of Certified Public Accountants to furnish a report to the Issuer, the Note Administrator, the Trustee, the Collateral Manager and the 17g-5 Information Provider, regarding the Reporting Person’s compliance during the prior calendar year with (a) the applicable servicing criteria in Item 1122 of Regulation AB set forth on Exhibit B hereto or (b) the minimum servicing standards identified in the Uniform Single Attestation Program for Mortgage Bankers.
Section III.13Title and Management of REO Properties and REO Accounts.  In the event that title to any Mortgaged Property (other than a Mortgaged Property securing a Non-Serviced Mortgage Loan) is acquired on behalf of the Relevant Parties in Interest in foreclosure, by deed in lieu of foreclosure or upon abandonment or reclamation from bankruptcy, the deed or certificate of sale shall be taken in the name of a U.S. corporation (or a limited liability company treated as a corporation for U.S. federal income tax purposes) wholly owned by the Issuer. The Special Servicer, on behalf of the Relevant Parties in Interest, shall dispose of any REO Property held by the Issuer as soon after acquiring it as is practicable and feasible in a manner consistent with the Servicing Standard and as so advised by the Collateral Manager in accordance with the REIT provisions of the Code. The Special Servicer shall manage, conserve, protect and operate each such REO Property for the Relevant Parties in Interest solely for the purpose of its prompt disposition and sale.
(b)The Special Servicer shall have full power and authority, subject only to the Servicing Standard and the specific requirements and prohibitions of this Agreement, to do any and all things in connection with any REO Property held by the Issuer, all on such terms and for such period as the Special Servicer deems to be in the best interests of the Relevant Parties in Interest and, in connection therewith, the Special Servicer shall agree to the payment of property management fees that are consistent with general market standards. The Special Servicer shall request the Advancing Agent to pay such fees as a Servicing Advance.
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(c)The Special Servicer shall segregate and hold all revenues received by it with respect to any REO Property separate and apart from its own funds and general assets and shall establish and maintain on behalf of the Trustee with respect to any REO Property a segregated custodial account as to which the “bank’s jurisdiction” for purposes of Article 9 of the Uniform Commercial Code is the State of New York (a “REO Account”), which shall be an Eligible Account and shall be entitled “ORIX Real Estate Capital, LLC, as special servicer, for the benefit of Wilmington Trust, National Association, as trustee, for the benefit of the Holders of the LFT CRE 2021-FL1 Notes – REO Account”, or in such other manner as the Issuer (or the Collateral Manager acting on behalf of the Issuer) prescribes, to be held for the benefit of the Noteholders, the Preferred Shareholders, the related Companion Participation Holder. The parties hereto agree that the Trustee shall be the “customer” (as defined in Section 4-104 of the Uniform Commercial Code) with respect to each REO Account. The Special Servicer shall be entitled to withdraw for its account any interest or investment income earned on funds deposited in the REO Account to the extent provided in Section 3.04. The Special Servicer shall deposit or cause to be deposited REO Proceeds in the REO Account within two (2) Business Days after receipt of such REO Proceeds, and shall withdraw therefrom funds necessary for the proper operation, management and maintenance of such REO Property and for other Servicing Advances with respect to such REO Property, including:
(i)all insurance premiums due and payable in respect of any REO Property;
(ii)all real estate taxes and assessments in respect of any REO Property that may result in the imposition of a lien thereon and all U.S. federal, state and local income taxes payable by the owner of the REO Property; and
(iii)all costs and expenses reasonable and necessary to protect, maintain, manage, operate, repair and restore any REO Property including, if applicable, the payments of any ground rents in respect of such REO Property.
To the extent that such REO Proceeds are insufficient for the purposes set forth in clauses (i) through (iii) above (other than income taxes), the Special Servicer shall request the Advancing Agent to pay such amounts as Servicing Advances. The Special Servicer may retain in each REO Account reasonable reserves for repairs, replacements and necessary capital improvements and other related expenses. The Special Servicer shall withdraw from each REO Account and remit to the Servicer for deposit into the Collection Account, on a monthly basis on or prior to the first Business Day following each Servicing Determination Date, the aggregate of all amounts received in respect of each REO Property as of such Servicing Determination Date that are then on deposit in such REO Account, provided, however, the Special Servicer may retain in each REO Account reasonable reserves for repairs, replacements and necessary capital improvements and other related expenses.
The Special Servicer shall be entitled to enter into an agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder. Such agreement shall provide: (A) for indemnification of the Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification; and (B) that the Independent Contractor’s fees be reasonable. The Special
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Servicer shall provide oversight and supervision with regard to the performance of all contracted services and any Independent Contractor agreement shall be consistent with and subject to the provisions of this Agreement. Neither the existence of any Independent Contractor agreement nor any of the provisions of this Agreement relating to the Independent Contractor shall relieve the Servicer or Special Servicer, as the case may be, of its obligations to the Issuer hereunder, including without limitation, the Special Servicer’s obligation to service such REO Property in accordance with the Servicing Standard.
(d)When and as necessary, the Special Servicer shall send to the Servicer and the Issuer a statement prepared by the Special Servicer setting forth the amount of net income or net loss, as determined for U.S. federal income tax purposes, resulting from the REO Property. To perform its obligations hereunder, the Special Servicer shall be entitled to retain an Independent accountant or property manager on behalf of the Issuer for the benefit of the Relevant Parties in Interest to prepare such statements and the cost of which shall be paid by and reimbursed to the Advancing Agent as a Servicing Advance.
(e)The parties hereto acknowledge that for so long as the Issuer maintains its status as a Qualified REIT Subsidiary or other disregarded entity of LCMT, and unless otherwise directed by LCMT (or any subsequent REIT), the Special Servicer intends to conduct its activities such that any REO Property will qualify as “foreclosure property” within the meaning of Section 856(e) of the Code with respect to LCMT. In connection with the foregoing, and unless otherwise directed by LCMT (or any subsequent REIT), the Special Servicer shall not:
(i)enter into, renew or extend any New Lease, if such New Lease by its terms will give rise to any income that does not constitute Rents from Real Property;
(ii)permit any amount to be received or accrued under any New Lease, other than amounts that will constitute Rents from Real Property;
(iii)authorize or permit any construction on any REO Property, other than the completion of a building or other improvement thereon, and then only if more than ten percent of the construction of such building or other improvement was completed before default on the related Mortgage Loan became imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or
(iv)Directly Operate or allow any Person to Directly Operate any REO Property on any date more than 90 days after the acquisition thereof unless such Person is an Independent Contractor.
Section III.14Cash Collateral Accounts. In the event that any Asset Documents (other than with respect to a Non-Serviced Mortgage Loan) permit or require the related Obligor to deliver additional or substitute collateral in the form of cash (“Cash Collateral”) to the holder of such Mortgage Loan and such Obligor deposits such Cash Collateral with the Servicer, the Servicer shall segregate and hold such Cash Collateral separate and apart from its own funds and general assets and shall, on behalf of the Trustee, establish and maintain with respect to such Cash Collateral a segregated custodial account as to which the “bank’s jurisdiction” for purposes
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of Article 9 of the Uniform Commercial Code is the State of New York, which may be a sub-account of the Collection Account, to be held for the benefit of the Relevant Parties in Interest (each, a “Cash Collateral Account”), each of which shall be an Eligible Account or a sub-account of an Eligible Account and shall be entitled “ORIX Real Estate Capital, LLC, as Servicer, for the benefit of Wilmington Trust, National Association, as trustee, for the benefit of the Holders of the LFT CRE 2021-FL1 Notes, other Secured Parties and the related Companion Participation Holder - Cash Collateral Account” or in such other manner as the Issuer (or the Collateral Manager on behalf of the Issuer) prescribes or such other name as may be required pursuant to the terms of the related Asset Documents. The parties hereto agree that the Trustee shall be the “customer” (as defined in Section 4-104 of the Uniform Commercial Code) with respect to each Cash Collateral Account. The Servicer shall deposit or cause to be deposited any such Cash Collateral in the Cash Collateral Account within two (2) Business Days after receipt of properly identified funds such Cash Collateral, and shall hold and disburse such Cash Collateral in accordance with the terms of the related Asset Documents.
Section III.15Modification, Waiver, Amendment and Consents. All modifications, waivers (other than waivers of late payment charges and default interest on Mortgage Loans that are not Specially Serviced Mortgage Loans (which may be processed by the Servicer)), consents (including, without limitation, Administrative Modifications and Criteria-Based Modifications) with respect to the Serviced Mortgage Loans shall be processed by the Special Servicer; provided that, the right to approve future funding under any Future Funding Participation shall be held by Lument Structured Finance or a related Companion Participation Holder. If the Servicer receives any request for such modification, waiver (other than waivers of late payment charges and default interest on Mortgage Loans that are not Specially Serviced Mortgage Loans) or consent, the Servicer shall forward such request to the Special Servicer for analysis and processing and the Servicer shall have no further liability or duty with respect thereto. Subject to the terms of Section 2.03(c) hereof and Section 10.10(f) of the Indenture, and in accordance with the Servicing Standard, the Special Servicer may agree to any modification, waiver or amendment of any term of, forgive or defer interest on and principal of, capitalize interest on, permit the release, addition or substitution of collateral securing any such Mortgage Loan (but with respect to substitution of collateral securing any such Mortgage Loan, subject to satisfaction of the Rating Agency Condition), convert or exchange such Mortgage Loan for any other type of consideration, and/or permit the release of the related Obligor on or any guarantor of any such Mortgage Loan and/or permit any change in the management company or franchise with respect to any such Mortgage Loan without the consent of the Co-Issuers, the Trustee, any Noteholder or any Companion Participation Holder, subject, however, other than with respect to an Administrative Modification or a Criteria-Based Modification, to each of the following limitations, conditions and restrictions:
(i)the Special Servicer shall not permit any Obligor to add or substitute any collateral for an outstanding Mortgage Loan, which collateral constitutes real property, unless the Special Servicer shall have first determined, in its reasonable and good faith judgment, in accordance with the Servicing Standard, based upon a Phase I environmental assessment (and such additional environmental testing as the Special Servicer deems necessary and appropriate) prepared by an Independent environmental
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consultant who regularly conducts environmental assessments (and such additional environmental testing), at the expense of the related Obligor, that such new real property is in compliance with applicable environmental laws and regulations and that there are no circumstances or conditions present with respect to such new real property relating to the use, management or disposal of any hazardous materials for which investigation, testing, monitoring, containment, clean-up or remediation would be required under any then-applicable environmental laws and regulations;
(ii)unless a release or substitution is permissible under the related Asset Document without the consent or approval of the lender, the Special Servicer shall not release or substitute any Mortgaged Property securing an outstanding Performing Mortgage Loan except in the case of a release where (A) the loss of the use of the Mortgaged Property to be released will not, in the Special Servicer’s good faith and reasonable judgment, materially and adversely affect the net operating income being generated by or the use of the related Mortgaged Property, (B) except in the case of the release of non-material parcels, there is a corresponding principal paydown of the related Mortgage Loan in an amount at least equal to the appraised value of the Mortgaged Property to be released and (C) the remaining Mortgaged Property and any substitute mortgaged property is, in the Special Servicer’s good faith and reasonable judgment, adequate security for the related Mortgage Loan; and
(iii)the Special Servicer may not modify a Mortgage Loan to extend its maturity date beyond the date that is five years prior to the Stated Maturity Date;
provided that notwithstanding clauses (i) through (iii) above, neither the Servicer nor the Special Servicer shall be required to oppose the confirmation of a plan in any bankruptcy or similar proceeding involving an Obligor if in its reasonable and good faith judgment such opposition would not ultimately prevent the confirmation of such plan or one substantially similar.
(b)The Special Servicer shall not have any liability to the Issuer, the Noteholders, any Companion Participation Holder or any other Person if its analysis and determination that the modification, waiver, amendment or other action contemplated in Section 3.15(a) is reasonably likely to produce a greater recovery to the Issuer, the Noteholders, the Preferred Shareholders and, if applicable, the related Companion Participation Holder on a net present value basis than would liquidation, should prove to be wrong or incorrect, so long as the analysis and determination were made on a reasonable basis in good faith and in accordance with the Servicing Standard by the Special Servicer and the Special Servicer was not negligent in ascertaining the pertinent facts.
(c)The Collateral Manager may, but is not required to, direct and require the Special Servicer to enter into (and, upon such direction by the Collateral Manager, the Special Servicer is required to enter into) any Administrative Modification or Criteria-Based Modification; provided, however, that a Criteria-Based Modification is only permissible if the Criteria-Based Modification Conditions are satisfied immediately after giving effect to such Criteria-Based Modification. No Administrative Modification or Criteria-Based Modification
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shall constitute a Major Decision or be subject to consent and/or consultation rights under this Agreement.
(d)Any payment of interest that is deferred pursuant to any modification, waiver or amendment permitted hereunder, shall not, for purposes hereof (including, without limitation, calculating monthly distributions to Noteholders, Preferred Shareholders and Companion Participation Holders), be added to the unpaid principal balance of the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan or such modification, waiver or amendment so permit.
(e)All material modifications, waivers and amendments of the Mortgage Loan entered into pursuant to this Section 3.15 shall be in writing.
(f)The Special Servicer shall notify the Issuer, the Servicer, the Trustee, the Note Administrator, the Collateral Manager and the 17g-5 Information Provider, in writing (and to the 17g-5 Information Provider by email, which email shall contain the information in the form of an electronic document suitable for posting on the 17g-5 Information Provider’s website), of any modification, waiver, material consent or amendment of any term of any Mortgage Loan and the date thereof (and such notice shall indicate whether such modification, waiver, material consent or amendment is in connection with an Administrative Modification or a Criteria-Based Modification), and shall deliver to the Custodian, on behalf of the Trustee for deposit in the related Mortgage Asset File, an original counterpart of the agreement relating to such modification, waiver, material consent or amendment, promptly (and in any event within ten (10) Business Days) following the execution thereof.
(g)The Servicer or the Special Servicer, as applicable, may (subject to the Servicing Standard), as a condition to granting any request by an Obligor for consent, modification, waiver or indulgence or any other matter or thing, the granting of which is within its discretion pursuant to the terms of the Asset Documents evidencing or securing the related Mortgage Loan and is permitted by the terms of this Agreement and applicable law, require that such Obligor pay to it, to the extent consistent with applicable law and the Asset Documents, (i) a reasonable and customary fee for the additional services performed in connection with such request (which fee shall be deposited in the Collection Account), and (ii) any related costs and expenses incurred by it.
(h)Any modification, waiver or amendment of or consents or approvals relating to any Serviced Mortgage Loan shall be performed by the Special Servicer and not the Servicer.
(i)If the Collateral Manager determines that a Loan-Level Benchmark Transition Event has occurred with respect to any Serviced Commercial Mortgage Loan, the Collateral Manager shall (i) designate the Loan-Level Benchmark Replacement in accordance with the related Asset Documents, (ii) determine, in its sole discretion, whether any Loan-Level Benchmark Replacement Conforming Changes are necessary, (iii) direct the Servicer to, and the Servicer shall, enter into any necessary Loan-Level Benchmark Replacement Conforming Changes and (iv) provide written notice of such Loan-Level Benchmark Transition Event, the
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related Loan-Level Benchmark Replacement and any related Loan-Level Benchmark Replacement Conforming Changes to the Servicer. Upon receipt of written notice from the Collateral Manager to the Servicer of a Loan-Level Benchmark Transition Event and the related Loan-Level Benchmark Replacement, the Servicer shall implement the Loan-Level Benchmark Replacement and, to the extent commercially reasonable, calculate the interest rate applicable to the related Serviced Mortgage Loan. Any such conforming changes will not be subject to the Servicing Standard.
(j)Notwithstanding the foregoing or any other provision herein, the Special Servicer may take any action with respect to any Mortgage Loan requiring the consent, direction or approval of the Issuer, the Collateral Manager, the Note Administrator or the Trustee at any other time without such consent, direction or approval if the Special Servicer determines in accordance with the Servicing Standard, that such action is required by the Servicing Standard in order to avoid a material adverse effect on the Relevant Parties in Interest or is in the nature of an emergency.
Section III.16Transfer of Servicing Between Servicer and Special Servicer; Record Keeping; Asset Status Report. Upon the occurrence of a Special Servicing Transfer Event with respect to any Serviced Mortgage Loan of which the Servicer has notice, the Servicer (or the Special Servicer, if such Special Servicing Transfer Event occurs due to the Special Servicer’s receipt of notice pursuant to clause (viii) under the definition thereof) shall promptly give notice thereof to the Special Servicer (or Servicer, as applicable), the Issuer, the Trustee, the Note Administrator, the Seller, the Collateral Manager and the Servicer shall use its reasonable efforts to provide the Special Servicer with all information, documents (but excluding the original documents constituting the Mortgage Asset File) and records (including records stored electronically on computer tapes, magnetic discs and the like) relating to such Mortgage Loan, as applicable, and reasonably requested by the Special Servicer to enable it to assume its duties hereunder with respect thereto without acting through a sub-servicer. The Servicer shall use its reasonable efforts to comply with the preceding sentence within five (5) Business Days of the date such Mortgage Loan becomes a Specially Serviced Mortgage Loan and in any event shall continue to act as Servicer and administrator of such Mortgage Loan until the Special Servicer has commenced the servicing of such Mortgage Loan, which shall occur upon the receipt by the Special Servicer of the information, documents and records referred to in the preceding sentence. With respect to each such Mortgage Loan, the Servicer shall instruct the related Obligor to continue to remit all payments in respect of such Mortgage Loan to the Servicer.
(b)Upon determining that a Specially Serviced Mortgage Loan has become a Corrected Mortgage Loan, the Special Servicer shall immediately give notice thereof to the Servicer, the Issuer, the Collateral Manager and the Seller, and upon delivery of such notice to the Servicer, such Mortgage Loan shall cease to be a Specially Serviced Mortgage Loan in accordance with the definition of Specially Serviced Mortgage Loan, the Special Servicer’s obligation to service such Mortgage Loan shall terminate and the obligations of the Servicer to service and administer such Mortgage Loan as a Performing Mortgage Loan shall resume.
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(c)In servicing any Specially Serviced Mortgage Loan, the Special Servicer shall provide to the Custodian on behalf of the Trustee originals of any documents executed by the Special Servicer that are included within the definition of “Mortgage Asset File” for inclusion in the related Mortgage Asset File (to the extent such documents are in the possession of the Special Servicer) and shall provide to the Servicer, copies of any additional related Mortgage Loan information, including correspondence with the related Obligor, as well as copies of any analysis or internal review prepared by or for the benefit of the Special Servicer.
(d)Not later than two (2) Business Days preceding each date on which the Servicer is required to furnish reports under Section 4.01 to the Issuer and the Note Administrator, the Special Servicer shall deliver to the Servicer, with a copy to the Issuer and the Collateral Manager, (i) the CREFC® Special Servicer Loan File and (ii) such additional information relating to the Specially Serviced Mortgage Loans as the Servicer or the Issuer (or the Collateral Manager acting on behalf of the Issuer) reasonably requests to enable it to perform its duties under this Agreement. Such statement and information shall be furnished to the Servicer in writing and/or in such electronic media as is acceptable to the Servicer.
(e)Notwithstanding the provisions of the preceding Section 3.16(d), the Servicer shall maintain ongoing payment records with respect to each of the Specially Serviced Mortgage Loans and shall provide the Special Servicer with any information in its possession reasonably required by the Special Servicer to perform its duties under this Agreement. The Special Servicer shall provide the Servicer with any information reasonably required by the Servicer to perform its duties under this Agreement.
(f)No later than sixty (60) days after a Serviced Mortgage Loan becomes a Specially Serviced Mortgage Loan, the Special Servicer shall deliver to the 17g-5 Information Provider, the Servicer, the Issuer, the Collateral Manager, the Note Administrator and the Trustee, a report (the “Asset Status Report”) with respect to such Mortgage Loan. Such Asset Status Report shall set forth the following information to the extent reasonably determinable:
(i)the date of transfer of servicing of such Mortgage Loan to the Special Servicer;
(ii)a summary of the status of such Specially Serviced Mortgage Loan and any negotiations with the related Obligor;
(iii)a discussion of the legal and environmental considerations reasonably known to the Special Servicer, consistent with the Servicing Standard, that are applicable to the exercise of remedies as aforesaid and to the enforcement of any related guaranties or other collateral for the related Mortgage Loan and whether outside legal counsel has been retained;
(iv)the most current rent roll and income or operating statement available for the related Mortgaged Property or the related underlying real property, as applicable;
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(v)the Special Servicer’s recommendations on how such Specially Serviced Mortgage Loan might be returned to performing status (including the modification of a monetary term, and any work-out, restructure or debt forgiveness) and returned to the Servicer for regular servicing or foreclosed or otherwise realized upon (including any proposed sale of a Specially Serviced Mortgage Loan or REO Property;
(vi)a copy of the last obtained Appraisal of the Mortgaged Property;
(vii)the status of any foreclosure actions or other proceedings undertaken with respect thereto, any proposed workouts with respect thereto and the status of any negotiations with respect to such workouts, and an assessment of the likelihood of additional events of default;
(viii)a summary of any proposed actions and an analysis of whether or not taking such action is reasonably likely to produce a greater recovery on a present value basis than not taking such action, setting forth the basis on which Special Servicer made such determination; and
(ix)such other information as the Special Servicer deems relevant in light of the Servicing Standard.
If within ten (10) Business Days of receiving an Asset Status Report, the Issuer (or the Collateral Manager acting on behalf of the Issuer) does not disapprove of such Asset Status Report in writing, the Special Servicer shall implement the recommended action as outlined in such Asset Status Report; provided, however, that such Special Servicer may not take any action that is contrary to applicable law, this Agreement, the Servicing Standard (taking into consideration the best interests of the Issuer, the Noteholders and the Preferred Shareholders (as a collective whole)) or the terms of the applicable Asset Documents. If the Issuer (or the Collateral Manager acting on behalf of the Issuer) disapproves such Asset Status Report within such ten (10) Business Day period, the Special Servicer will revise such Asset Status Report and deliver to the Issuer, the 17g-5 Information Provider, the Collateral Manager, the Trustee, the Note Administrator and the Servicer a new Asset Status Report as soon as practicable, but in no event later than twenty (20) Business Days after such disapproval. The Special Servicer shall revise such Asset Status Report until the Issuer (or the Collateral Manager acting on behalf of the Issuer) fails to disapprove such revised Asset Status Report in writing within ten (10) Business Days of receiving such revised Asset Status Report or until the Special Servicer makes a determination consistent with the Servicing Standard, that such objection is not in the best interests of the Relevant Parties in Interest.
The Special Servicer may, from time to time, modify any Asset Status Report it has previously delivered and implement such report, provided such report shall have been prepared, reviewed and not rejected pursuant to the terms of this Section, and in particular, shall modify and resubmit such Asset Status Report to the Issuer and the Collateral Manager if (i) the estimated sales proceeds, foreclosure proceeds, work-out or restructure terms or anticipated debt forgiveness varies materially from the amount on which the original report was based or (ii) the related Obligor becomes the subject of bankruptcy proceedings.
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Notwithstanding the foregoing, the Special Servicer (i) may, following the occurrence of an extraordinary event with respect to the related Mortgage Loan, take any action set forth in such Asset Status Report before the expiration of a sixty (60) Business Day period if the Special Servicer has reasonably determined that failure to take such action would materially and adversely affect the interests of the Relevant Parties in Interest and it has made a reasonable effort to contact the Issuer (or the Collateral Manager acting on behalf of the Issuer), and (ii) in any case, shall determine whether such affirmative disapproval is not in the best interests of the Relevant Parties in Interest pursuant to the Servicing Standard, and, upon making such determination, shall implement the recommended action outlined in the Asset Status Report. The Asset Status Report is not intended to replace or satisfy any specific consent or approval right which the Issuer (or the Collateral Manager acting on behalf of the Issuer) may have.
The Special Servicer shall have the authority to meet with the Obligor for any Specially Serviced Mortgage Loan and take such actions consistent with the Servicing Standard and the related Asset Status Report. The Special Servicer shall not take any action inconsistent with the related Asset Status Report, unless such action would be required in order to act in accordance with the Servicing Standard, this Agreement, applicable law or the related Asset Documents.
No direction of the Issuer (or the Collateral Manager acting on behalf of the Issuer) shall (a) require, permit or cause the Special Servicer to violate the terms of a Specially Serviced Mortgage Loan, the Servicing Standard, applicable law or any provision of this Agreement or (b) materially expand the scope of the Special Servicer’s, Issuer’s or the Servicer’s responsibilities under this Agreement.
Section III.17[Reserved].
Section III.18Sale of Mortgage Assets Pursuant to Indenture; Auction Call Redemption.
(a)In connection with any sale of Mortgage Assets pursuant to Article 5 or Article 9 of the Indenture, the Collateral Manager shall obtain bid prices with respect to each Mortgage Asset in the manner set forth in Section 5.5(c) of the Indenture.
(b)In connection with any Auction Call Redemption in connection with Article 9 of the Indenture, fifteen (15) Business Days prior to each Payment Date occurring in the months of January, April, July or October of each year, starting with the Payment Date occurring in June 2031 (each such Payment Date, an “Auction Payment Date”), the Collateral Manager will (a) conduct an auction (the “Auction”) of all (but not less than all) of the Mortgage Assets and (b) calculate the Total Redemption Price in respect of the related Auction Payment Date. The Collateral Manager will solicit bids for all of the Mortgage Assets from at least three Eligible Bidders other than the initial Preferred Shareholder and its Affiliates for sale of each of the Mortgage Assets (or, if the Collateral Manager cannot obtain bids from three such Eligible Bidders, then at least two Eligible Bidders other than the initial Preferred Shareholder and its Affiliates or, if the Collateral Manager cannot obtain bids from two such Eligible Bidders, then at least one Eligible Bidder who is not the initial Preferred Shareholder and its Affiliates; provided
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that, if the Collateral Manager cannot obtain any bids from Eligible Bidders other than the initial Preferred Shareholder or its Affiliates in connection with any Auction, the requirement to obtain bids from such Eligible Bidders shall not apply for such Auction), which sales, in each case, shall all settle on or prior to the second Business Day prior to the related Auction Payment Date. If the Collateral Manager receives bids for the sale of the Mortgage Assets from one or more Eligible Bidders, which bids are, collectively in the aggregate, equal to or greater than the Total Redemption Price, and for which all sales to Eligible Bidders are scheduled to settle in immediately available funds on or before the second Business Day prior to the related Auction Payment Date, then the Collateral Manager will sell all (but not less than all) of the Mortgage Assets to the applicable Eligible Bidders, with settlement to occur no later than the second Business Day prior to the related Auction Payment Date. In addition, the holder of the Preferred Shares or any of its affiliates, although it may not have been the highest bidder in a Successful Auction of Mortgage Assets, will have the option to purchase any Mortgage Asset for a purchase price equal to the highest bid therefor. Not later than three Business Days after the completion of an Auction, the Collateral Manager shall (x) instruct the Note Administrator to deliver a notice of redemption to the Noteholders and the Holder of the Preferred Shares pursuant to Section 9.3 of the Indenture and (y) notify the Note Administrator, the Trustee, the Servicer, the Special Servicer, the Preferred Share Paying Agent, the Rating Agencies and the 17g-5 Information Provider in writing of the aggregate bid amount so received in connection with such Auction and whether (i) the aggregate cash purchase price for all the Mortgage Assets by the Eligible Bidders, together with the balance of all Eligible Investments and cash in the Payment Account, is at least equal to the Total Redemption Price or (ii) the Preferred Shareholder has committed to purchase all of the Mortgage Assets for a price that, together with the balance of all Eligible Investments and cash in the Payment Account, is equal to the Total Redemption Price (a “Successful Auction”). If a Successful Auction has occurred, the Collateral Manager shall (i) instruct the Note Administrator to deliver a notice of redemption to the Noteholders and the Holder of the Preferred Shares pursuant to Section 9.3 of the Indenture and (ii) sell all of the Mortgage Assets to the applicable winning Eligible Bidders and transfer all of the sale proceeds received in connection with such Auction to the Payment Account under the Indenture no later than the second Business Day prior to the related Auction Payment Date. The Note Administrator will apply all proceeds of a Successful Auction on the related Auction Payment Date to the payment of: (a) all amounts owing to the Servicer and the Special Servicer under this Agreement, (b) all fees and expenses of the Trustee and the Note Administrator in connection with the related Auction, (c) all amounts owing under clauses (1) through (4) of Section 11.1(a)(i) of the Indenture without regard to any cap, (d) the Total Redemption Price of each Class of Notes then outstanding and (e) if there is any remainder after making the payments set forth pursuant to clauses (a) through (d), the Preferred Shares by transferring any such remainder to the Preferred Share Paying Agent for payment to the Preferred Shareholders pursuant to the Preferred Share Paying Agency Agreement, and the Trustee shall redeem the Notes pursuant to the Indenture.
If any single bid, or the aggregate amount of multiple bids, does not equal or exceed the Total Redemption Price, or if there is a failure to settle any sale of any Mortgage Asset on or prior to the second Business Day prior to the related Auction Payment Date (a “Failed Auction”), then no such sale of any Mortgage Asset will occur and no redemption of the Notes on the related Auction Payment Date will occur. Following each Failed Auction, a new
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Auction will be conducted in advance of the following Auction Payment Date pursuant to the procedures set forth above until a Successful Auction has occurred and all of the Notes have been redeemed. Notices delivered to the Note Administrator pursuant to this section shall be sent via email to cts.cmbs.bond.admin@wellsfargo.com with a copy to trustadminstrationgroup@wellsfargo.com.
In addition, the holder of the Preferred Shares or any of its affiliates will have the option to purchase any Mortgage Asset for a purchase price equal to the highest bid therefor.
For purposes of this Section 3.18(b):
“Eligible Bidders” means the Seller, the Servicer, the Special Servicer, the Advancing Agent or any of their respective Affiliates, any Holder of the Notes or Preferred Shares or any of their respective affiliates, or any third party prospective purchaser that, as part of its business, engages in the buying and selling of commercial mortgage loans of a type similar to the Mortgage Assets.
Section III.19Repurchase Requests. If the Servicer or the Special Servicer (i) receives a Repurchase Request, or such a Repurchase Request is forwarded to the Servicer or Special Servicer by a party to the Indenture in accordance with Section 7.17 of the Indenture (the Servicer or the Special Servicer, as applicable, to the extent it receives a Repurchase Request, the “Repurchase Request Recipient” with respect to such Repurchase Request); or (ii) receives any withdrawal of a Repurchase Request by the Person making such Repurchase Request, then the Repurchase Request Recipient shall deliver a notice (which may be by electronic format so long as a “backup” hard copy of such notice is also delivered on or prior to the next Business Day) of such Repurchase Request or withdrawal of a Repurchase Request (each, a “15Ga-1 Notice”) to the Issuer and the Seller, in each case within ten (10) Business Days from such Repurchase Request Recipient’s receipt thereof.
Each 15Ga-1 Notice shall include (i) the identity of the related Mortgage Asset, (ii) the date the Repurchase Request is received by the Repurchase Request Recipient or the date any withdrawal of the Repurchase Request is received by the Repurchase Request Recipient, as applicable, (iii) if known by the Repurchase Request Recipient, the basis for the Repurchase Request (as asserted in the Repurchase Request) and (iv) a statement from the Repurchase Request Recipient as to whether it currently plans to pursue such Repurchase Request.
A Repurchase Request Recipient shall not be required to provide any information in a 15Ga-1 Notice protected by the attorney client privilege or attorney work product doctrines. The Mortgage Asset Purchase Agreement will provide that (i) any 15Ga-1 Notice provided pursuant to this Section 3.19 is so provided only to assist the Seller and Issuer or their respective Affiliates to comply with Rule 15Ga-1 under the Exchange Act, Items 1104 and 1121 of Regulation AB and any other requirement of law or regulation and (ii) (A) no action taken by, or inaction of, a Repurchase Request Recipient and (B) no information provided pursuant to this Section 3.19 by a Repurchase Request Recipient, shall be deemed to constitute a waiver or defense to the exercise of any legal right the Repurchase Request Recipient may have with
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respect to the Mortgage Asset Purchase Agreement, including with respect to any Repurchase Request that is the subject of a 15Ga-1 Notice.
Section III.20Investor Q&A Forum and Rating Agency Q&A Forum and Servicer Document Request Tool. Following receipt of an inquiry submitted to the Investor Q&A Forum and forwarded by the Note Administrator to the Servicer or the Special Servicer, as applicable (based on whether such Inquiry falls within the scope of such party’s responsibilities hereunder), unless such party determines not to answer such Inquiry as provided below, such party shall reply to the inquiry, which reply of the Servicer or the Special Servicer, as applicable, shall be delivered to the Note Administrator by electronic mail. If the Servicer or the Special Servicer determines, in its respective sole discretion, that (i) the Inquiry is not of a type described in Section 10.13(a) of the Indenture, (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 applicable Asset Documents or the Transaction Documents, (iv) answering any Inquiry would materially increase the duties of, or result in significant additional cost or expense to, the Note Administrator, the Servicer or the Special Servicer, as applicable, (v) answering any Inquiry would reasonably be expected to result in the waiver of an attorney-client privilege or the disclosure of attorney work product, or (vi) answering any Inquiry is otherwise, not advisable, it shall not be required to answer such Inquiry and shall promptly notify the Note Administrator of such determination.
Following receipt of an inquiry submitted to the Rating Agency Q&A Forum and Servicing Document Request Tool, and forwarded by the 17g-5 Information Provider to the Servicer or the Special Servicer, as applicable (based on whether such Inquiry falls within the scope of such party’s responsibilities hereunder), unless such party determines not to answer such Inquiry as provided below, such party shall reply to the inquiry, which reply of the Servicer, or the Special Servicer, as applicable, shall be delivered to the Note Administrator by electronic mail. If the Servicer or the Special Servicer determines, in its respective sole discretion, that (i) answering the inquiry would be in violation of applicable law, the Servicing Standard, the Indenture, this Agreement or the applicable Asset Documents, (ii) 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 (iii) 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 this Agreement, as applicable, it shall not be required to answer such Inquiry and shall promptly notify the Note Administrator of such determination.
Section III.21Duties under Indenture; Miscellaneous. Each of the Servicer and the Special Servicer hereby acknowledge that the terms of the Indenture reference certain duties and functions to be performed by each of them. To the extent not inconsistent with the express terms of this Agreement, each of the Servicer and the Special Servicer hereby agree to perform the duties referenced for them in the Indenture. For the avoidance of doubt, any notices required to be given by the Servicer or Special Servicer under Section 10.10(f) of the Indenture may be given by electronic notice pursuant to this Agreement.
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(b)The Servicer (based on its own information and information received from the Special Servicer with respect to any Specially Serviced Mortgage Loans) shall promptly upon request forward to the Note Administrator any information in its possession or reasonably available to it concerning the Mortgage Assets to enable the Note Administrator to prepare any report or perform any duty or function on its part to be performed under the terms of the Indenture.
(c)The Servicer or the Special Servicer shall return to the Custodian each Asset Document released from custody pursuant to Section 3.3(h)(iii) of the Indenture when its need for such documents is finished (except such Asset Documents as are released in connection with a sale, exchange or other disposition, in each case only as permitted under the Indenture, of the related Mortgage Asset).
Section III.22[Reserved].
Section III.23[Reserved].
Section III.24Certain Matters Related to the Participated Mortgage Loans
(a)Allocation of Servicing Advances, Servicing Expenses, and Indemnification Amounts. Any Servicing Advance, Servicing Expense or indemnification amount with respect to a Participated Mortgage Loan shall be reimbursed, subject to the related Participation Agreement, on a pro rata and pari passu basis (based on the outstanding principal balance thereof) from amounts allocable to each related Participation. To the extent that the Issuer bears more than its allocable share of Servicing Advances, Servicing Expenses or indemnification amounts with respect to any Participated Mortgage Loan, the Servicer shall (i) promptly notify the related Companion Participation Holder and (ii) use commercially reasonable efforts in accordance with the Servicing Standard to exercise on behalf of the Issuer any rights under the related Participation Agreement to obtain reimbursement from each related Companion Participation Holder for the portion of such amount allocable to such holder’s Funded Companion Participation or Future Funding Participation. Notwithstanding the foregoing, any Servicing Advance, Servicing Expense or indemnification amount that the Servicer or the Special Servicer determines in its reasonable judgment to only relate to the Owned Participation and not to any Funded Companion Participation or Future Funding Participation, shall not be allocated to such Funded Companion Participation or Future Funding Participation.
(b)Companion Participation Holder Register. The Servicer shall maintain a register (the “Companion Participation Holder Register”) on which the Servicer shall record the names and contact information (including addresses, email addresses and telephone numbers) of the Companion Participation Holders (other than with respect to a Non-Serviced Mortgage Loan) and wire transfer instructions for such Companion Participation Holders from time to time, to the extent such information is provided in writing to the Servicer by the Seller or any Companion Participation Holder. A copy of the initial Companion Participation Holder Register as of the Closing Date is attached hereto as Exhibit C. The Servicer shall update the Companion Participation Holder Register with any change of a Companion Participation Holder (including
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name, contact information and wire transfer instructions) that it receives from the Seller or the Companion Participation Holder of record on the Companion Participation Holder Register. Each Companion Participation Holder has agreed to inform the Servicer of its name, address, taxpayer identification number and wiring instructions (to the extent the foregoing information is not already contained in the related Participation Agreement) and of any transfer thereof (together with any instruments of transfer). Lument Structured Finance shall inform the Servicer and the Collateral Manager of any future funding with respect to a Future Funding Participation.
In no event shall the Servicer be obligated to pay any party the amounts payable to a Companion Participation Holder hereunder other than the Person listed as the applicable Companion Participation Holder on the Companion Participation Holder Register. In the event that a Companion Participation Holder transfers any Funded Companion Participation or Future Funding Participation without notice to the Servicer, the Servicer shall have no liability whatsoever for any misdirected payment on such Funded Companion Participation or Future Funding Participation and shall have no obligation to recover and redirect such payment.
The Companion Participation Holder Register shall be made available by the Servicer to the Note Administrator, the Trustee and the Seller upon request by any such Person. The Servicer shall promptly provide the names and addresses of any Companion Participation Holder to any party hereto, any related Companion Participation Holder or any successor thereto upon written request, and any such party or successor may, without further investigation, conclusively rely upon such information. The Servicer shall have no liability to any Person for the provision of any such names and addresses.
(c)Payments to Companion Participation Holders. With respect to each Funded Companion Participation, Future Funding Participation, amounts payable to the related Companion Participation Holder pursuant to Section 3.03(d)(vii)(B) shall be remitted to such Companion Participation Holder by wire transfer in immediately available funds to the account appearing in the Companion Participation Holder Register on the date of such remittance.
(d)The Special Servicer (with respect to any Specially Serviced Mortgage Loan or REO Loan and with respect to matters it is processing with respect to any Performing Mortgage Loan) or the Servicer (with respect to any Performing Mortgage Loan other than matters being processed by the Special Servicer), as applicable, shall take all actions relating to the servicing and/or administration of, the preparation and delivery of reports and other information with respect to, the Mortgage Loan or any related REO Property required to be performed by the Issuer (as holder of a Participation) or contemplated to be performed by a servicer, in any case pursuant to and as contemplated by the related Participation Agreement and/or any related mezzanine intercreditor agreement. In addition, notwithstanding anything herein to the contrary, the following considerations shall apply with respect to the servicing of a Participated Mortgage Loan that is a Serviced Mortgage Loan:
(i)none of the Servicer, the Special Servicer, the Collateral Manager, the Trustee, the Note Administrator or the Advancing Agent shall make any Interest Advance with respect to any Funded Companion Participation or Future Funding Participation; and
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(ii)the Servicer and the Special Servicer (other than in the case of an Administrative Modification or a Criteria-Based Modification) shall each consult with and obtain the consent of the related Companion Participation Holder to the extent required by the related Participation Agreement.
The Special Servicer (with respect to any Specially Serviced Mortgage Loan or REO Loan and with respect to matters it is processing with respect to any Performing Mortgage Loan) or the Servicer (with respect to any Performing Mortgage Loan other than matters being processed by the Special Servicer), as applicable, shall timely provide to each applicable Companion Participation Holder any reports or notices required to be delivered to such Companion Participation Holder pursuant to the related Participation Agreement, and the Special Servicer shall cooperate with the Servicer in preparing/delivering any such report or notice with respect to special servicing matters.
The parties hereto recognize and acknowledge the respective rights of each Companion Participation Holder under the related Participation Agreement.
Any reference to servicing any of the Mortgage Loans in accordance with any of the related Asset Documents shall also mean in accordance with the related Participation Agreement.
(e)Notwithstanding anything herein to the contrary, with respect to any Participated Mortgage Loan, the Companion Participation Holder shall be entitled to exercise any of its rights to the extent expressly set forth in the applicable Participation Agreement, in accordance with the terms of such Participation Agreement and this Agreement.
Section III.25Ongoing Future Advance Estimates. Pursuant to the Indenture, the Note Administrator and the Trustee, on behalf of the Noteholders and the Preferred Shareholders, will be directed by the Issuer to (i) enter into the Future Funding Agreement and the Future Funding Account Control Agreement, pursuant to which LCMT will agree to pledge certain collateral described therein in order to secure certain future funding obligations of Lument Structured Finance as holder of Future Funding 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 will be required, pursuant to the direction of the Issuer or the Special Servicer on its behalf, to direct the use of funds on deposit in the Future Funding Reserve Account pursuant to the terms of the Future Funding Agreement. Neither the Trustee nor the Note Administrator will have any obligation to ensure that LCMT is depositing or causing to be deposited all amounts into the Future Funding 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, the Future Funding Indemnitor shall deliver to the Servicer, the Special Servicer, the Collateral Manager, the Note Administrator and the 17g-5 Information Provider a certification of a
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responsible financial officer that it has Segregated Liquidity at least equal to the Largest One Quarter Future Advance Estimate. Thereafter, for so long as Lument Structured Finance, LCMT or one of their respective Affiliates is the holder of any Future Funding Participation and so long as any future advance obligations remain outstanding under such Future Funding 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 Servicer, the Special Servicer, the Collateral Manager, the Note Administrator and the 17g-5 Information Provider a certification of a responsible financial officer that it has Segregated Liquidity at least 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 the Lument Structured Finance, LCMT or one of their respective Affiliates is the holder of any Future Funding Participation and so long as any future advance obligations remain outstanding under such Future Funding Participation and, except as otherwise provided in clause (e) below, no later than the fifth (5th) day of the calendar month preceding the beginning of each calendar quarter, Lument Structured Finance shall deliver to the Servicer, the Special Servicer, the Collateral Manager, the Note Administrator and the Future Funding Indemnitor (i) a Two Quarter Future Advance Estimate 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 Servicer shall, within ten (10) days after receipt of the Two Quarter Future Advance Estimate and supporting documentation from Lument Structured Finance, (A) review Lument Structured Finance’s Two Quarter Future Advance Estimate and such supporting documentation and other information provided by Lument Structured Finance in connection therewith, (B) consult with Lument Structured Finance with respect thereto and make such inquiry, and request such additional information (and Lument Structured Finance 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 subclause (C), and (C) by written notice to the Note Administrator, Lument Structured Finance and the Future Funding Indemnitor substantially in the form of Exhibit D hereto, either (1) confirm that nothing has come to the attention of the Servicer in the documentation provided by Lument Structured Finance 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 Lument Structured Finance’s Two Quarter Future Advance Estimate for such period and shall state that Lument Structured Finance’s Two Quarter Future Advance Estimate shall control or (2) deliver its own Two Quarter Future Advance Estimate. If the Servicer’s Two Quarter Future Advance Estimate is at least 25% higher than Lument Structured Finance’s Two Quarter Future Advance Estimate, then the Servicer’s Two Quarter Future Advance Estimate; otherwise, Lument Structured Finance’s Two Quarter Future Advance Estimate shall control.
(d)Lument Structured Finance shall provide the Special Servicer with the current operating budget for the Mortgaged Property securing each Participated Mortgage Loan within thirty (30) days following the Closing Date, and shall provide the Servicer with copies of any updates to such budgets, and shall provide the Servicer with any other documentation and
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information reasonably requested by the Servicer with respect to a Future Funding Participation from time to time.
The Servicer may conclusively rely on any and all documents provided to the Servicer with respect to any Future Funding Participation, including the supporting documentation and additional information provided by the Future Funding Indemnitor pursuant to this Section 3.25, without any further investigation or inquiry obligation (except for any investigation or inquiry in subclause (B) of clause (c) above necessary to perform its obligations under subclause (C) of clause (c) above). The Servicer shall not, under any circumstances, be required or permitted (w) to perform site inspections, (x) consult with parties other than Lument Structured Finance (including, any borrowers or property managers), (y) confirm or otherwise investigate any accretive costs, expenditures or other similar amounts provided by Lument Structured Finance or (z) request information not reasonably available to Lument Structured Finance.
(e)No Two Quarter Future Advance Estimate will be required to be made by Lument Structured Finance or the Servicer for a calendar month if, by the fifth (5th) day of such calendar quarter (or if such day is not a Business Day, the next succeeding Business Day), the Future Funding Indemnitor delivers (which may be by email) to the Servicer, the Special Servicer, the Collateral Manager, 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 Participations held by Lument Structured Finance, LCMT or their respective Affiliates or (ii) no future funding obligations remain outstanding under the Future Funding Participations held by Lument Structured Finance (or its Affiliates). All certifications regarding Segregated Liquidity, any Two Quarter Future Advance Estimates, or any notices from the Servicer described in clauses (b) and (c) above shall be emailed to the Note Administrator at trustadministrationgroup@wellsfargo.com with a copy to cts.cmbs.bond.admin@wellsfargo.com or such other email address as provided by the Note Administrator.
(f)Notwithstanding the provisions of Section 9.03, all estimates, certifications, documents and other information to be provided to the Servicer pursuant to this Section 3.25, shall be provided to the Servicer electronically by email addressed to LFT_FL1_Servicing@lument.com with a subject reference to “LFT CRE 2021-FL1” (or similar reference). Further, any budgets, calculations or other numeric information delivered to the Servicer shall be delivered in Microsoft Excel format or in a format as the parties may agree upon from time to time.
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ARTICLE IV

STATEMENTS AND REPORTS
Section IV.01Reporting by the Servicer and the Special Servicer.  On or before 2:00 p.m. (Eastern Time), one (1) Business Day before each Remittance Date, the Servicer shall deliver to the Issuer, the Collateral Manager and the Note Administrator the CREFC® Loan Periodic Update File; provided that the Issuer and the Collateral Manager shall not rely on such report to the extent any information differs from the information in the corresponding report of the Note Administrator using information in such CREFC® Loan Periodic Update File.
(b)The Servicer shall provide the Issuer and the Collateral Manager with access to all investor information required to be collected or reported by it with respect to the Mortgage Loans through the Servicer’s website or any successor facility or system, as applicable, subject to such reasonable policies, procedures and limitations as the parties may agree upon from time to time.
(c)Each year, beginning in the calendar year of this Agreement, to the extent the Servicer has the information necessary to prepare such reports and returns, the Servicer shall prepare and file the reports of foreclosures and abandonments of any Mortgaged Property and the annual information returns with respect to each Obligor’s debt service payments under the Mortgage Loans as required by Sections 6050J and 6050H, respectively, of the Internal Revenue Code and the rules and regulations promulgated thereunder, as amended.
(d)One (1) Business Day after each Servicing Determination Date, the Special Servicer shall provide the Servicer with the CREFC® Special Servicer Loan File, and, on or before 2:00 p.m. on each Remittance Date, the Servicer shall forward such file to the Note Administrator and the Collateral Manager together with the reports and files in the CREFC® Investor Reporting Packet (other than the CREFC® Comparative Financial Status Report, CREFC® NOI Adjustment Worksheet and CREFC® Operating Statement Analysis Report) customarily prepared by a servicer; provided that the Collateral Manager shall not rely on such report to the extent any information differs from the information in the corresponding report of the Note Administrator using information in such reports delivered by the Servicer.
(e)The Servicer shall prepare and maintain a CREFC® Operating Statement Analysis Report and a CREFC® NOI Adjustment Worksheet with respect to each Mortgaged Property that secures a Performing Mortgage Loan and the Special Servicer shall prepare and maintain a CREFC® Operating Statement Analysis Report and a CREFC® NOI Adjustment Worksheet with respect to each Specially Serviced Mortgage Loan and REO Property, in each case in accordance with the provisions described below. As to quarterly (that is, not annual) periods, within 105 calendar days after the end of each of the first three calendar quarters (in each year) for the trailing or quarterly information received, commencing with respect to the quarter ending on September 30, 2021, the Servicer (in the case of Mortgaged Properties that secure Performing Mortgage Loans) or the Special Servicer (in the case of Mortgaged Properties securing Specially Serviced Mortgage Loans and REO Properties) shall, based upon the operating statements or rent rolls received (if and to the extent received) and covering such
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calendar quarter, prepare (or, if previously prepared, update) the CREFC® Operating Statement Analysis Report and the CREFC® Comparative Financial Status Report for each related Mortgaged Property and/or REO Property, using the normalized quarterly and normalized yearend operating statements and rent rolls received from the related Obligor; provided, however, that the analysis with respect to the first calendar quarter of each year will not be required to the extent provided in the then-current applicable CREFC® guidelines (it being understood that as of the date hereof, the applicable CREFC® guidelines provide that the analysis with respect to the first calendar quarter (in each year) is not required for a Mortgaged Property unless such Mortgaged Property is analyzed on a trailing 12-month basis, or if the related Mortgage Loan is on the CREFC® Servicer Watch List). As to annual (that is, not quarterly) periods, not later than the second Business Day following the Determination Date occurring in June of each year (beginning in 2022 for year end 2021), the Servicer (in the case of Mortgaged Properties securing Performing Mortgage Loans) or the Special Servicer (in the case of Mortgaged Properties securing Specially Serviced Mortgage Loans and REO Properties) shall, based upon the most recently available normalized year-end financial statements and most recently available rent rolls received (if and to the extent received) not less than thirty (30) days prior to such second Business Day, prepare (or, if previously prepared, update) the CREFC® Operating Statement Analysis Report, the CREFC® Comparative Financial Status Report and a CREFC® NOI Adjustment Worksheet for each related Mortgaged Property and/or REO Property.
The Servicer and the Special Servicer shall each remit electronically an image of each CREFC® Operating Statement Analysis Report and/or each CREFC® NOI Adjustment Worksheet prepared or updated by it (promptly following initial preparation and each update thereof), together with, upon request, the underlying operating statements and rent rolls to the Note Administrator. The Note Administrator shall, to the extent such items have been delivered to the Note Administrator by the Servicer or the Special Servicer, make such report (and any underlying operating statements and rent rolls) available to Noteholders pursuant to Section 10.12(a) of the Indenture.
If, with respect to any Specially Serviced Mortgage Loan, the Special Servicer has any questions for the related Obligor based upon the information delivered to the Special
Servicer pursuant to Section 3.07(c) or this Section 4.01(e), the Servicer shall, in this regard and without otherwise changing or modifying its duties hereunder, reasonably cooperate with the Special Servicer in assisting the Special Servicer in the Special Servicer’s efforts to contact and solicit information from such Obligor.
(f)[Reserved].
(g)Except as provided in this Section 4.01 or elsewhere in this Agreement, neither the Servicer nor the Special Servicer, as the case may be, shall be required to provide any other report without its prior written consent, which will not be unreasonably withheld.
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ARTICLE V

SERVICER AND SPECIAL SERVICER COMPENSATION AND EXPENSES
Section V.01Servicing Compensation. As consideration for servicing the Mortgage Loans subject to this Agreement, the Servicer shall be entitled to a Servicing Fee for each Serviced Mortgage Loan (including any Specially Serviced Mortgage Loan or REO Loan) remaining subject to this Agreement during any calendar month or part thereof; provided that any Servicing Fee allocable to a Funded Companion Participation or Future Funding Participation shall be paid only from amounts allocated to such Funded Companion Participation, Future Funding Participation. The Servicing Fee shall be payable monthly on the Remittance Date of each month and shall be computed on the basis of the same outstanding principal balance and for the period with respect to which any related interest payment on the related Mortgage Loan or distribution on the related Mortgage Loan is computed. The Servicer may pay itself the Servicing Fee on the Remittance Date of each month from amounts on deposit in the Collection Account or the Participated Mortgage Loan Collection Account, as applicable. To the extent that amounts on deposit in the Collection Account or the Participated Mortgage Loan Collection Account on the Remittance Date are insufficient to pay the Servicing Fee allocated to any Serviced Mortgage Loan or REO Loan, the Issuer shall pay any such shortfall to the Servicer within ten (10) Business Days after the Issuer’s receipt of an itemized invoice therefor. The right to receive the Servicing Fee may not be transferred in whole or in part except in connection with the transfer of all of the Servicer’s responsibilities and obligations under this Agreement.
(b)As further compensation for its activities hereunder, the Servicer shall be entitled to retain in the nature of Additional Servicing Compensation, and shall not be required to deposit in the Collection Account or the Participated Mortgage Loan Collection Account pursuant to Section 3.03, (i) 100% of all modification, waiver, assumption, transfer, processing, consent fees and other similar fees if the consent of the Special Servicer is not required to take such action, and 50% of all such fees for Performing Mortgage Loans for which the Special Servicer's consent or approval is required, (ii) 100% of all defeasance fees and application fees received on Performing Mortgage Loans and all assumption, waiver and consent fees pursuant to Section 3.09(a) and 3.09(b) on the Performing Mortgage Loans, to the extent that such fees are paid by the Obligor and for which the Special Servicer's consent or approval is not required on the Performing Mortgage Loans and only to the extent that all amounts then due and payable with respect to the related Mortgage Loan have been paid, and 50% of all such fees for Performing Mortgage Loans for which the Special Servicer's consent or approval is required, (iii) any charges for processing Obligor requests, beneficiary statements or demands, reasonable and customary consent fees, fees in connection with defeasance, if any, and other customary charges, and amounts collected for checks returned for insufficient funds, in each case only to the extent actually paid by the related Obligor, (iv) all income and gain realized from the investment of funds deposited in the Accounts to which it is entitled pursuant to Section 3.04 and (v) Additional Servicing Compensation payable to the Servicer pursuant to Section 3.15(f). Notwithstanding the foregoing, collections representing Retained Interest shall not be included in Additional Servicing Compensation and shall be remitted to the Seller pursuant to Section 3.03(b)(vii).
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(c)The Servicer shall be required to pay all expenses related to the Servicer’s internal costs, consisting of overhead and employee costs and expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement thereof except as specifically provided for herein.
Section V.02Servicing Advances; Servicer Expenses. The Special Servicer or the Servicer shall, in the first instance, have the right to determine, in accordance with the Servicing Standard, the necessity for all Servicing Advances. With respect to the Serviced Mortgage Loans only, the Advancing Agent at the direction of the Special Servicer or the Servicer, as applicable, shall advance all such funds as are necessary for the purpose of effecting the payment of (i) real estate taxes, assessments and other similar items that are or may become a lien on a Mortgaged Property or REO Property, (ii) ground rents (if applicable), (iii) premiums on Insurance Policies, in each instance if and to the extent Escrow Payments collected from the related Obligor (or related REO Proceeds, if applicable) are insufficient to pay such item when due and the related Obligor has failed to pay such item on a timely basis and (iv) all other customary, reasonable and necessary out-of-pocket expenses paid or incurred by the Servicer or the Special Servicer in connection with the servicing (or special servicing, as applicable) and administering of the Serviced Mortgage Loans; and provided, however, that the particular advance would not, if made, constitute a Nonrecoverable Servicing Advance; and provided, further, however, that with respect to the payment of real estate taxes, assessments and similar items, the Advancing Agent shall not be required to make such advance until the later of (x) five (5) Business Days after the Special Servicer or the Servicer has received confirmation that such item has not been paid or (y) the date prior to the date after which any penalty or interest would accrue in respect of such taxes or assessments.
(b)The Special Servicer shall give the Advancing Agent, the Servicer, the Issuer and the Collateral Manager no less than five (5) Business Days’ written (facsimile or electronic) notice before the date on which the Advancing Agent is requested to make any Servicing Advance with respect to a given Specially Serviced Mortgage Loan; provided, however, that only two (2) Business Days’ written (facsimile or electronic) notice shall be required in respect of Servicing Advances required to be made on an emergency or urgent basis; provided, further, that the Special Servicer shall not be entitled to make such a request (other than for Servicing Advances required to be made on an urgent or emergency basis) more frequently than twice per calendar month (although such request may relate to more than one Servicing Advance). The Advancing Agent or the Servicer, as applicable, may pay to the Special Servicer the aggregate amount of such Servicing Advances listed on a monthly request, in which case the Special Servicer shall provide the Servicer with such information in its possession as the Servicer may reasonably request to enable the Servicer to determine whether a requested Servicing Advance would constitute a Nonrecoverable Servicing Advance. Any request by the Special Servicer that the Advancing Agent or the Servicer make a Servicing Advance shall be deemed to be a determination by the Special Servicer that such requested Servicing Advance is not a Nonrecoverable Servicing Advance, and the Advancing Agent and the Servicer shall be entitled to conclusively rely on such determination; provided, that the determination that such requested Servicing Advance is not a Nonrecoverable Servicing Advance shall not be binding on the Servicer and the Special Servicer’s determination that a Servicing
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Advance is required to be made in accordance with the Servicing Standard shall not be binding on the Advancing Agent.
The Servicer shall give the Advancing Agent, the Issuer and the Collateral Manager no less than five (5) Business Days’ written (facsimile or electronic) notice before the date on which the Advancing Agent is requested to make any Servicing Advance with respect to a given Performing Mortgage Loan; provided, however, that only two (2) Business Days’ written (facsimile or electronic) notice shall be required in respect of Servicing Advances required to be made on an emergency or urgent basis; provided, further, that the Servicer shall not be entitled to make such a request (other than for Servicing Advances required to be made on an urgent or emergency basis) more frequently than twice per calendar month (although such request may relate to more than one Servicing Advance). The Advancing Agent may pay to the Servicer the aggregate amount of such Servicing Advances listed on a monthly request, in which case the Servicer shall provide the Advancing Agent with such information in its possession as the Advancing Agent may reasonably request to enable the Advancing Agent to determine whether a requested Servicing Advance would constitute a Nonrecoverable Servicing Advance. Any request by the Servicer that the Advancing Agent make a Servicing Advance shall be deemed to be a determination by the Servicer that such requested Servicing Advance is not a Nonrecoverable Servicing Advance, and the Advancing Agent shall be entitled to conclusively rely on such determination; provided, that the determination that such requested Servicing Advance is not a Nonrecoverable Servicing Advance shall not be binding on the Advancing Agent but the Servicer’s determination that a Servicing Advance is required to be made in accordance with the Servicing Standard is binding on the Advancing Agent.
(c)Notwithstanding anything to the contrary contained in this Agreement, in the event that the Advancing Agent fails to make in a timely manner any Servicing Advance that the Servicer or the Special Servicer has determined is required in accordance with the Servicing Standard, and the Advancing Agent has not determined that such Servicing Advance would be a Nonrecoverable Servicing Advance:
(i)the Note Administrator shall (x) terminate the Advancing Agent hereunder and under the Indenture and (y) use commercially reasonable efforts for 90 days after such termination to replace the Advancing Agent hereunder and under the Indenture in accordance with the applicable procedures set forth in the Indenture, subject to satisfaction of the Rating Agency Condition (but, for the avoidance of doubt, neither the Trustee nor the Note Administrator shall be responsible for making any Servicing Advances); and
(ii)within five (5) Business Days of the Servicer’s actual knowledge of the Advancing Agent’s failure to make a required Servicing Advance that the Advancing Agent has not determined to be a Nonrecoverable Servicing Advance, the Servicer shall promptly make such Servicing Advance, but subject to the Servicer’s determination that such Servicing Advance is not a Nonrecoverable Servicing Advance and shall notify the Note Administrator of the failure of the Advancing Agent’s failure to make the Servicing Advance; provided that the Servicer shall be required to make Servicing Advances
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pursuant to this Section 5.02(c)(ii) only until a successor Advancing Agent is appointed, subject to satisfaction of the Rating Agency Condition. After the Advancing Agent has been removed pursuant to this Section 5.02(c), the Servicer shall be primarily responsible for making Servicing Advances hereunder, in the manner set forth in this Section 5.02 until a successor Advancing Agent is appointed, subject to satisfaction of the Rating Agency Condition. Any successor Advancing Agent’s long-term unsecured debt shall be rated at least “A2” by Moody’s and, if rated by KBRA, a rating by KBRA equivalent to at least an “A2” rating by Moody’s, and whose short-term unsecured debt rating is at least “P-1” from Moody’s.
(d)The Advancing Agent or the Servicer, as applicable, each at its own option and in its sole discretion, as applicable, instead of obtaining reimbursement for any Nonrecoverable Servicing Advance immediately, may elect to refrain from obtaining such reimbursement for such portion of the Nonrecoverable Servicing Advance during the period ending on the then-current Servicing Determination Date for successive one-month periods for a total period not to exceed 12 months (with the consent of the Collateral Manager, for any deferral in excess of 6 months). If the Advancing Agent or Servicer, as applicable, makes such an election at its sole option to defer reimbursement with respect to all or a portion of a Nonrecoverable Servicing Advance (and interest thereon), then such Nonrecoverable Servicing Advance (and interest thereon) or portion thereof shall continue to be fully reimbursable in any subsequent one-month period.
(e)On the first Business Day after the Servicing Determination Date for the related Remittance Date, the Advancing Agent or the Special Servicer shall report to the Servicer if the Advancing Agent or the Special Servicer determines that any Servicing Advance previously made by the Advancing Agent or the Servicer is a Nonrecoverable Servicing Advance. The Servicer shall be entitled to conclusively rely on such a determination, and such determination shall be binding upon the Servicer, but shall in no way limit the ability of the Servicer in the absence of such determination to make its own determination that any Servicing Advance is a Nonrecoverable Servicing Advance. All such Servicing Advances shall be reimbursable in the first instance from related collections from the Obligors and further as provided in Section 3.03(b) and Section 3.03(d).
(f)Notwithstanding anything herein to the contrary, no Servicing Advance shall be required hereunder if such Servicing Advance would, if made, constitute a Nonrecoverable Servicing Advance. Except as set forth in Section 5.02(c)(ii), the Servicer shall have no obligation under this Agreement to make any Servicing Advances. Notwithstanding anything to the contrary contained in this Section 5.02, the Servicer may in its reasonable judgment elect (but shall not be required) to make a payment from amounts on deposit in the Collection Account or the Participated Mortgage Loan Collection Account (which shall be deemed first made from amounts distributable as interest collections and then from all other amounts comprising principal collections) to pay for certain expenses set forth below notwithstanding that the Servicer (or Special Servicer, as applicable) has determined that a Servicing Advance with respect to such expenditure would be a Nonrecoverable Servicing Advance (unless, with respect to Specially Serviced Mortgage Loans or REO Loans, the Special
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Servicer has notified the Servicer to not make such expenditure), where making such expenditure would prevent (i) the related Mortgaged Property (or REO Property) from being uninsured or being sold at a tax sale or (ii) any event that would cause a loss of the priority of the lien of the related Mortgage or security instrument, or the loss of any security for the related Mortgage Loan; provided that in each instance, the Servicer or the Special Servicer, as applicable, determines in accordance with the Servicing Standard (as evidenced by an Officer’s Certificate delivered to the Issuer) that making such expenditure is in the best interest of the Relevant Parties in Interest.
(g)At such time as it is reimbursed for any Servicing Advance out of the Collection Account pursuant to Section 3.03(b) or the Participated Mortgage Loan Collection Account pursuant to Section 3.03(d), the Advancing Agent and the Servicer, as the case may be, shall be entitled to receive, out of any amounts then on deposit in the Collection Account or such Participated Mortgage Loan Collection Account in accordance with the provisions of Section 3.03(b) or Section 3.03(d), as applicable, interest at the Advance Rate in effect from time to time, accrued on the amount of such Servicing Advance from the date made to, but not including, the date of reimbursement. The Servicer shall reimburse the Advancing Agent or itself, as the case may be, for any outstanding Servicing Advance as soon as practically possible after receipt of payments from the related Obligor that represent reimbursement of such Servicing Advances, Liquidation Proceeds, Insurance and Condemnation Proceeds and REO Proceeds of the Mortgage Loan, Mortgaged Property or REO Property for which such Servicing Advance was made or if such Servicing Advance has been determined to be a Nonrecoverable Servicing Advance, from general collections in respect of all of the Mortgage Loans as reimbursement for such Servicing Advance.
(h)Neither the Servicer nor the Advancing Agent shall have any liability to the Issuer, the Noteholders, any Companion Participation Holder or any other Person if its determination that a Servicing Advance made or to be made is a Nonrecoverable Servicing Advance should prove to be wrong or incorrect, so long as such determination in the case of the Advancing Agent was made on a reasonable basis in good faith or, in the case of the Servicer was made in accordance with the Servicing Standard.
Section V.03Special Servicing Compensation. As compensation for its activities hereunder, the Special Servicer shall be entitled to receive the Special Servicing Fee with respect to each Specially Serviced Mortgage Loan and REO Loan; provided that any Special Servicing Fee allocable to a Funded Companion Participation or Future Funding Participation shall be paid only from amounts allocated to such Funded Companion Participation or Future Funding Participation in accordance with the related Participation Agreement. As to each Specially Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from time to time at the Special Servicing Fee Rate and shall be computed on the basis of the stated principal balance of such Specially Serviced Mortgage Loan and in the same manner as interest is calculated on the Specially Serviced Mortgage Loans and, in connection with any partial month interest payment, for the same period respecting which any related interest payment due on such Specially Serviced Mortgage Loan or deemed to be due on such REO Loan is computed. The Special Servicing Fee with respect to any Specially Serviced Mortgage Loan
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or REO Loan shall cease to accrue if a Liquidation Event occurs in respect thereof. The Special Servicing Fee shall be payable monthly, on an asset-by-asset basis, in accordance with the provisions of Section 3.03(b). The right to receive the Special Servicing Fee may not be transferred in whole or in part except in connection with the transfer of all of the Special Servicer’s responsibilities and obligations under this Agreement. The Special Servicer shall be required to pay all expenses related to the Special Servicer’s internal costs consisting as overhead and employees expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement thereof except as specifically provided for herein.
(b)The Special Servicer shall be entitled to a Workout Fee with respect to each Corrected Mortgage Loan at the Workout Fee Rate on such Mortgage Loan for so long as it remains a Corrected Mortgage Loan; provided that any Workout Fee allocable to a Funded Companion Participation or Future Funding Participation shall be paid only from amounts allocated to such Funded Companion Participation or Future Funding Participation in accordance with the related Participation Agreement. The Workout Fee with respect to any Corrected Mortgage Loan will cease to be payable if such Mortgage Loan again becomes a Specially Serviced Mortgage Loan; provided that a new Workout Fee will become payable if and when such Specially Serviced Mortgage Loan again becomes a Corrected Mortgage Loan. If the Special Servicer is terminated or resigns, it shall retain the right to receive any and all Workout Fees payable in respect of Mortgage Loans that became Corrected Mortgage Loans prior to the time of such termination or resignation, except the Workout Fees will no longer be payable if the Mortgage Loan subsequently becomes a Specially Serviced Mortgage Loan. If the Special Servicer resigns or is terminated (other than for cause), it will receive any Workout Fees payable on Specially Serviced Mortgage Loans for which the resigning or terminated Special Servicer had cured the event of default through a modification, restructuring or workout negotiated by the Special Servicer and evidenced by a signed writing with respect to which one (1) scheduled payment has been made, but which had not as of the time the Special Servicer resigned or was terminated become a Corrected Mortgage Loan solely because the Obligor had not had sufficient time to make three (3) consecutive timely Monthly Payments and which subsequently becomes a Corrected Mortgage Loan as a result of the Obligor making such three (3) consecutive timely Monthly Payments. The successor Special Servicer will not be entitled to any portion of such Workout Fees to which the predecessor Special Servicer is entitled pursuant to the preceding sentence. The Special Servicer shall be entitled to a Liquidation Fee with respect to each Specially Serviced Mortgage Loan as to which the Special Servicer receives any Liquidation Proceeds or Insurance and Condemnation Proceeds subject to the exceptions set forth in the definition of Liquidation Fee (such Liquidation Fee to be paid out of such Liquidation Proceeds, Insurance and Condemnation Proceeds); provided that any Liquidation Fee allocable to a Funded Companion Participation or Future Funding Participation shall be paid only from amounts allocated to such Funded Companion Participation or Future Funding Participation in accordance with the related Participation Agreement. Notwithstanding anything to the contrary described above, no Liquidation Fee will be payable based on, or out of, Liquidation Proceeds received in connection with (w) the repurchase of any Mortgage Loan by the Seller for a breach of representation or warranty or for defective or deficient Mortgage Loan documentation so long as such repurchase is completed within the period (including any extension thereof) provided for such repurchase in the related Mortgage Asset Purchase Agreement (x) the purchase of any
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Defaulted Mortgage Loan or Credit Risk Mortgage Asset by the Collateral Manager pursuant to Section 12.1(b) of the Indenture, (y) the sale of Mortgage Loans pursuant to Section 12.1(c) of the Indenture, or (z) the purchase of a Specially Serviced Mortgage Loan or REO Property by any lender or Companion Participation Holder pursuant to any purchase option. If, however, Liquidation Proceeds or Insurance and Condemnation Proceeds are received with respect to any Corrected Mortgage Loan and the Special Servicer is properly entitled to a Workout Fee, such Workout Fee will be payable based on and out of the portion of such Liquidation Proceeds and Insurance and Condemnation Proceeds that constitute principal and/or interest on such Mortgage Loan. Notwithstanding anything herein to the contrary, the Special Servicer shall be entitled to receive only a Liquidation Fee or a Workout Fee, but not both, with respect to proceeds on any Mortgage Loan.
(c)As further compensation for its activities hereunder, the Special Servicer shall be entitled to retain in the nature of Additional Servicing Compensation, and shall not be required to deposit such amounts in the Collection Account or the Participated Mortgage Loan Collection Account pursuant to Section 3.03, (i) 100% of all fees with respect to application, assumption, extension, modification, waiver, consent, earnout and defeasance fees, in each case, received on any Specially Serviced Mortgage Loans, and 50% of all such fees for Performing Mortgage Loans for which the Special Servicer's consent or approval is required and (ii) all income and gain realized from the investment of funds deposited in the Accounts to which it is entitled pursuant to Section 3.04. Collections representing Retained Interest shall not be included in Additional Servicing Compensation and shall be remitted to the Seller pursuant to Section 3.03(b)(vii).
ARTICLE VI

THE SERVICER AND THE ISSUER
Section VI.01No Assignment; Merger or Consolidation. Except as otherwise provided for in this Section or in Section 2.02 or 6.03(c), neither the Servicer nor the Special Servicer may assign this Agreement or any of its rights, powers, duties or obligations hereunder; provided, however, that the Servicer or the Special Servicer may assign this Agreement to a Qualified Affiliate upon satisfaction of the Rating Agency Condition and upon the written consent of the Issuer (or the Collateral Manager acting on behalf of the Issuer).
The Servicer or the Special Servicer may be merged or consolidated with or into any Person, or transfer all or substantially all of its assets to any Person, in which case any Person resulting from any merger or consolidation to which it shall be a party, or any Person succeeding to its business, shall be the successor of the Servicer or the Special Servicer hereunder, and shall be deemed to have assumed all of the liabilities of the Servicer or the Special Servicer hereunder.
Section VI.02Liability and Indemnification. Neither the Servicer, the Special Servicer, the Trustee, the Note Administrator nor their Affiliates nor any of the managers, members, directors, officers, employees or agents thereof shall be under any liability to either the
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Issuer or any third party (including the Noteholders) for taking or refraining from taking any action, in good faith pursuant to or in connection with this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Servicer, the Special Servicer, the Note Administrator or the Trustee or any such Person against any liability which would otherwise be imposed on the Servicer, the Special Servicer, the Note Administrator or the Trustee or any such Person, respectively, by reason of the willful misfeasance, bad faith or negligence in the performance of the Servicer’s, the Special Servicer’s, the Note Administrator’s or the Trustee’s, respectively, duties hereunder. The Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, and any partners, shareholders, members, managers, officers, directors, employees, agents, accountants and attorneys thereof may rely in good faith on any document of any kind which, prima facie, is properly executed and submitted by any appropriate Person respecting any matters arising hereunder. The Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, and any partners, shareholders, members, managers, officers, directors, employees, agents, accountants and attorneys thereof shall be indemnified and held harmless by the Issuer against any loss, liability or expense incurred, including reasonable attorneys’ fees, and including any fees or expenses related to the enforcement of this indemnity, in connection with any claim, legal action, investigation or proceeding relating to this Agreement, the performance hereunder by, or any specific action which the Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator or the Trustee authorized, requested or advised the Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, to perform pursuant to this Agreement, as such are incurred, except for any loss, liability or expense incurred by reason of the willful misfeasance, bad faith, or negligence in the performance of the duties of the Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, or breach of the Servicer’s, the Special Servicer’s, the Note Administrator’s or the Trustee’s, as the case may be, representations and warranties set forth in Section 7.01. Any such indemnification shall be payable only pursuant to the Priority of Payments under the Indenture and not from any amounts on deposit in the Collection Account.
In the event that the Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, sustains any loss, liability or expense which results from any overcharges to Obligors under the Mortgage Loans, to the extent that such overcharges were collected by the Servicer or the Special Servicer, as the case may be, and remitted to the Issuer, the Issuer (or the Collateral Manager acting on behalf of the Issuer) shall promptly remit such overcharge to the related Obligor or other Obligors after the Issuer’s receipt of written notice from the Servicer or the Special Servicer, as the case may be, regarding such overcharge.
The Issuer and any director, officer, employee or agent thereof shall be indemnified and held harmless by the Servicer, the Special Servicer, the Note Administrator or the Trustee, as the case may be, against any loss, liability or expense incurred, including reasonable attorneys’ fees, by reason of (i) the willful misfeasance, bad faith or negligence in the performance of the duties of the Servicer, the Special Servicer, the Note Administrator or the Trustee, as applicable, hereunder or (ii) a breach of the representations and warranties of the Servicer or the Special Servicer set forth in Section 7.01.
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Each of the Servicer and the Special Servicer, severally and not jointly, shall indemnify and hold harmless each of the Trustee and the Note Administrator from and against any claims, losses, damages, penalties, fines, forfeitures, reasonable legal fees and expenses and related costs, judgments and other costs and expenses incurred by the Trustee or the Note Administrator, as the case may be, that arise out of or are based upon the negligence, bad faith, fraud or willful misconduct on the part of the Servicer or the Special Servicer, as the case may be, in the performance of its obligations under this Agreement or its negligent disregard of its obligations and duties under this Agreement.
Each of the Trustee and the Note Administrator, severally and not jointly, shall indemnify and hold harmless each of the Servicer and the Special Servicer from and against any claims, losses, damages, penalties, fines, forfeitures, reasonable legal fees and expenses (including the costs of enforcing this indemnity) and related costs, judgments and other costs and expenses incurred by the Servicer or the Special Servicer, as the case may be, that arise out of or are based upon the negligence, bad faith, fraud or willful misconduct on the part of the Trustee or the Note Administrator, as the case may be, in the performance of its obligations under this Agreement or the Indenture or its negligent disregard of its obligations and duties under this Agreement or the Indenture.
Each of the Servicer and the Special Servicer shall be entitled to the same rights, protections, immunities and indemnities afforded to each herein in connection with any matter contained in the Indenture.
The provisions of this Section shall survive any termination of the rights and obligations of the Servicer, the Special Servicer, the Note Administrator or the Trustee hereunder.
Section VI.03Eligibility; Successor, the Servicer or the Special Servicer. The Issuer, the Collateral Manager, the Servicer and the Special Servicer shall each be liable in accordance herewith only to the extent of the obligations specifically and respectively imposed upon and undertaken by the Issuer, the Collateral Manager, the Servicer and the Special Servicer herein.
(b)(i) Subject to the provisions of Section 7.06, within thirty (30) days of the Servicer or the Special Servicer receiving a notice of termination pursuant to Section 7.02, the Issuer (or the Collateral Manager acting on behalf of the Issuer) shall retain a successor servicer or special servicer, as applicable (subject to the satisfaction of the Rating Agency Condition), or (ii) on or after the date the Issuer receives the resignation of the Servicer or the Special Servicer in accordance with Section 8.01(a), the resigning Servicer or Special Servicer, as the case may be, shall retain a successor servicer or special servicer who shall assume the Servicer’s or Special Servicer’s duties pursuant to Section 6.03(c), subject to satisfaction of the Rating Agency Condition. Such successor servicer or special servicer, as the case may be, shall be collectively referred to herein as “Successor.” The Successor shall be the successor in all respects to the Servicer or Special Servicer, as the case may be, in its capacity as Servicer or Special Servicer under this Agreement and the transactions set forth or provided for herein and shall have all the rights and powers and be subject to all the responsibilities, duties and liabilities relating thereto
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placed on the Servicer or Special Servicer, as the case may be, accruing after such termination or resignation; provided, however, that any failure to perform such duties or responsibilities caused by the Servicer’s or Special Servicer’s failure to comply with Section 7.01 shall not be considered a default by the Successor hereunder. In its capacity as Successor, the Successor shall have the same limitation of liability herein granted to the Servicer or Special Servicer, as the case may be. In connection with any such appointment and assumption, the Issuer (or the Collateral Manager acting on behalf of the Issuer) may make such arrangements for the compensation of such Successor as it and such Successor shall agree; provided, however, that no compensation shall be in excess of that permitted the Servicer or Special Servicer, as the case may be, hereunder. If no Successor servicer or special servicer, as the case may be, shall have been so appointed and have accepted appointment within thirty (30) days after the Servicer or Special Servicer receives notice of termination in accordance with Section 8.01, the Issuer (or the Collateral Manager acting on behalf of the Issuer) may petition any court of competent jurisdiction for the appointment of a Successor servicer or special servicer, as the case may be. Except as provided in Section 6.03(c) herein, until the Successor is appointed and has accepted such appointment, the Servicer or the Special Servicer shall continue to serve as Servicer or Special Servicer hereunder, as applicable, and shall have all the rights, benefits and powers and be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer or Special Servicer, as the case may be, hereunder. Once appointed, the Servicer or the Special Servicer, as the case may be, shall cooperate with the Successor to take such reasonable action, consistent with this Agreement, to effectuate any such succession.
(c)Subject to the provisions of Section 6.01, neither the Servicer nor the Special Servicer shall resign from the obligations and duties hereby imposed on it, except in the event that (i) its duties hereunder are no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it or (ii) a successor servicer or special servicer that is a Qualified Servicer, as applicable, has assumed the Servicer’s or the Special Servicer’s, as applicable, responsibilities and obligations, and the Rating Agency Condition has been satisfied with respect to appointment of a successor servicer or special servicer. Any determination under clause (i) of the immediately preceding sentence permitting the resignation of the Servicer shall be evidenced by an opinion of counsel to such effect delivered to the Issuer, the Note Administrator and the Trustee and the 17g-5 Information Provider. Except for a resignation described above in Section 6.03(c)(i), no resignation by the Servicer or the Special Servicer under this Agreement shall become effective until the Successor, in accordance with Section 6.03(b), shall have assumed the Servicer’s or Special Servicer’s, as the case may be, responsibilities and obligations. Resignation under Section 6.03(c)(i) shall be effective within thirty (30) days of such notice.
ARTICLE VII

REPRESENTATIONS AND WARRANTIES; TERMINATION EVENTS
Section VII.01Representations and Warranties. The Servicer hereby makes the following representations and warranties to each of the other parties hereto:
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(i)Due Organization, Qualification and Authority. The Servicer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to transact business as a foreign limited liability company, in good standing and licensed in each state to the extent necessary to ensure the enforceability of each Mortgage Loan and to perform its duties and obligations under this Agreement in accordance with the terms of this Agreement; the Servicer has the full power, authority and legal right to execute and deliver this Agreement and to perform in accordance herewith; the Servicer has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement; this Agreement constitutes the valid, legal, binding obligation of the Servicer, except as enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law);
(ii)No Conflicts. Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions of this Agreement by the Servicer, (v) conflicts with or results in a breach of any of the terms, conditions or provisions of the Servicer’s certificate of formation, as amended, or limited liability company agreement; (w) conflicts with or results in a breach of any agreement or instrument to which the Servicer is now a party or by which it (or any of its properties) is bound, or constitutes a default or results in an acceleration under any of the foregoing if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Servicer to perform its obligations under this Agreement in accordance with the terms hereof; (x) conflicts with or results in a breach of any legal restriction if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Servicer to perform its obligations under this Agreement in accordance with the terms hereof; (y) results in the violation of any law, rule, regulation, order, judgment or decree to which the Servicer or its property is subject if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Servicer to perform its obligations under this Agreement in accordance with the terms hereof; or (z) results in the creation or imposition of any lien, charge or encumbrance that would have a material adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument, or materially impairs the ability of (1) the Issuer and the Companion Participation Holder to realize on the Mortgage Loans, or (2) the Servicer to perform its obligations hereunder in the case of each of clauses (w), (x), (y) and (z) to the extent that it would have a material adverse effect on the ability of the Servicer to perform its obligations under this Agreement;
(iii)No Litigation Pending. There is no action, suit, or proceeding pending or, to Servicer’s knowledge, threatened against the Servicer which, either in any one instance or in the aggregate, would draw into question the validity of this Agreement or the Mortgage Loans, or would be likely to impair materially the ability of the Servicer to perform its duties and obligations under the terms of this Agreement;
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(iv)No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over the Servicer is required for (x) the Servicer’s execution and delivery of this Agreement, or (y) the consummation of the transactions of the Servicer contemplated by this Agreement, or, to the extent required, such consent, approval, authorization, order, registration, filing or notice has been obtained, made or given (as applicable), except that the Servicer may not be duly qualified to transact business as a foreign limited liability company or licensed in one or more states if such qualification or licensing is not necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Servicer to perform its obligations under this Agreement in accordance with the terms hereof;
(v)No Default/Violation. The Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which, in the judgment of the Servicer, will have consequences that would materially and adversely affect the financial condition or operations of the Servicer or its properties taken as a whole or its performance hereunder;
(vi)E&O Insurance. The Servicer currently maintains a fidelity bond and errors and omissions insurance or self-insures, in either case meeting the requirements of Section 3.05(c); and
(vii)Offering Memorandum. The Section entitled “The Servicer and the Special Servicer” in the Offering Memorandum, as of the date thereof (including as of the date of any supplement thereto) and as of the Closing Date, with respect to the Servicer, does not contain any untrue statement of a material fact and does not omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b)The Special Servicer hereby makes the following representations and warranties to the each of the other parties hereto:
(i)Due Organization, Qualification and Authority. The Special Servicer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to transact business as a foreign limited liability company, in good standing and licensed in each state to the extent necessary to ensure the enforceability of each Mortgage Loan and to perform its duties and obligations under this Agreement in accordance with the terms of this Agreement; the Special Servicer has the full power, authority and legal right to execute and deliver this Agreement and to perform in accordance herewith; the Special Servicer has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement; this Agreement constitutes the valid, legal, binding obligation of the Special Servicer, except as enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity
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(regardless of whether such enforcement is considered in a proceeding in equity or at law);
(ii)No Conflicts. Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions of this Agreement by the Special Servicer, (v) conflicts with or results in a breach of any of the terms, conditions or provisions of the Special Servicer’s certificate of formation, as amended, or limited liability company agreement; (w) conflicts with or results in a breach of any agreement or instrument to which the Special Servicer is now a party or by which it (or any of its properties) is bound, or constitutes a default or results in an acceleration under any of the foregoing if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Special Servicer to perform its obligations under this Agreement in accordance with the terms hereof; (x) conflicts with or results in a breach of any legal restriction if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Special Servicer to perform its obligations under this Agreement in accordance with the terms hereof; (y) results in the violation of any law, rule, regulation, order, judgment or decree to which the Special Servicer or its property is subject if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Special Servicer to perform its obligations under this Agreement in accordance with the terms hereof; or (z) results in the creation or imposition of any lien, charge or encumbrance that would have a material adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument, or materially impairs the ability of (1) the Issuer and the Companion Participation Holder to realize on the Mortgage Loans, or (2) the Special Servicer to perform its obligations hereunder;
(iii)No Litigation Pending. There is no action, suit, or proceeding pending or, to Special Servicer’s knowledge, threatened against the Special Servicer which, either in any one instance or in the aggregate, would draw into question the validity of this Agreement or the Mortgage Loans, or would be likely to impair materially the ability of the Special Servicer to perform its duties and obligations under the terms of this Agreement;
(iv)No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over the Special Servicer is required for (x) the Special Servicer’s execution and delivery of this Agreement, or (y) the consummation of the transactions of the Special Servicer contemplated by this Agreement, or, to the extent required, such consent, approval, authorization, order, registration, filing or notice has been obtained, made or given (as applicable), except that the Special Servicer may not be duly qualified to transact business as a foreign limited liability company or licensed in one or more states if such qualification or licensing is not necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Special Servicer to perform its obligations under this Agreement in accordance with the terms hereof.
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(v)No Default/Violation. The Special Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which, in the judgment of the Special Servicer, will have consequences that would materially and adversely affect the financial condition or operations of the Special Servicer or its properties taken as a whole or its performance hereunder;
(vi)E&O Insurance. The Special Servicer currently maintains a fidelity bond and errors and omissions insurance or self-insures, in either case meeting the requirements of Section 3.05(c) hereof; and
(vii)Offering Memorandum. The Section entitled “The Servicer and the Special Servicer” in the Offering Memorandum, as of the date thereof (including as of the date of any supplement thereto) and as of the Closing Date, with respect to the Special Servicer, does not contain any untrue statement of a material fact and does not omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(c)The Issuer hereby makes the following representations and warranties to the each of the other parties hereto:
(i)Due Authority. The Issuer has the full power, authority and legal right to execute and deliver this Agreement and to perform in accordance herewith; the Issuer has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement; the Issuer has the right to authorize the Servicer to perform the actions contemplated herein; this Agreement constitutes the valid, legal, binding obligation of the Issuer, except as enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).
(ii)Ownership of Mortgage Assets. The Issuer is the beneficial owner of the Mortgage Assets and has the right to perform the actions contemplated herein.
(iii)No Conflicts. Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions of this Agreement by the Issuer: (v) conflicts with or results in a breach of any of the terms, conditions or provisions of the Issuer’s Governing Documents; (w) conflicts with or results in a breach of any agreement or instrument to which the Issuer is now a party or by which it (or any of its properties) is bound, or constitutes a default or results in an acceleration under any of the foregoing if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Issuer to perform its obligations under this Agreement in accordance with the terms hereof; (x) conflicts with or results in a breach of any legal restriction if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Issuer to perform its obligations under this Agreement in accordance with the terms hereof; (y) results in the violation of any law, rule, regulation,
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order, judgment or decree to which the Issuer or its property is subject if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Issuer to perform its obligations under this Agreement in accordance with the terms hereof; or (z) results in the creation or imposition of any lien, charge or encumbrance that would have a material adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument, or materially impairs the ability of (1) the Issuer and the Companion Participation Holder to realize on the Mortgage Loans, or (2) the Issuer to perform its obligations hereunder.
(iv)No Litigation Pending. There is no action, suit, or proceeding pending or, to Issuer’s knowledge, threatened against the Issuer which, either in any one instance or in the aggregate, would draw into question the validity of this Agreement or the Mortgage Loans, or would be likely to impair materially the ability of the Issuer to perform its duties and obligations under the terms of this Agreement.
(v)No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over the Issuer is required for (x) the Issuer’s execution and delivery of this Agreement, or (y) the consummation of the transactions of the Issuer contemplated by this Agreement, or, to the extent required, such consent, approval, authorization, order, registration, filing or notice has been obtained, made or given (as applicable), except that the Issuer may not be duly qualified to transact business as a foreign company or licensed in one or more states if such qualification or licensing is not necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Issuer to perform its obligations under this Agreement in accordance with the terms hereof.
(vi)No Default/Violation. The Issuer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default would materially and adversely affect the ability of the Issuer to perform its obligations hereunder.
(vii)Commercial or Multifamily Loans. The Mortgage Loans relate to or are comprised of only commercial or multifamily loans, the proceeds of which loans were used primarily for commercial or multifamily purposes and not for personal, single family or single household purposes.
(d)The Collateral Manager hereby makes the following representations and warranties to each of the other parties hereto:
(i)Due Organization and Authority. The Collateral Manager is a limited liability company, duly organized validly existing and in good standing under the laws of the State of Delaware. The Collateral Manager has the full power, authority and legal right to execute and deliver this Agreement and to perform in accordance herewith; the Collateral Manager has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement; this Agreement constitutes the valid, legal, binding obligation of the Collateral Manager, except as
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enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).
(ii)No Conflicts. Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions of this Agreement by the Collateral Manager, (a) conflicts with or results in a breach of any of the terms, conditions or provisions of the Collateral Manager’s certificate of formation, as amended, or limited liability company agreement; (b) conflicts with or results in a breach of any agreement or instrument to which the Collateral Manager is now a party or by which it (or any of its properties) is bound, or constitutes a default or results in an acceleration under any of the foregoing if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Collateral Manager to perform its obligations under this Agreement in accordance with the terms hereof; (c) conflicts with or results in a breach of any legal restriction if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Collateral Manager to perform its obligations under this Agreement in accordance with the terms hereof; (d) results in the violation of any law, rule, regulation, order, judgment or decree to which the Collateral Manager or its property is subject if compliance therewith is necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for the Collateral Manager to perform its obligations under this Agreement in accordance with the terms hereof; or (e) results in the creation or imposition of any lien, charge or encumbrance that would have a material adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument, or materially impairs the ability of (1) the Issuer to realize on the Mortgage Loans, or (2) the Collateral Manager to perform its obligations hereunder.
(iii)No Litigation Pending. There is no action, suit, or proceeding pending or, to Collateral Manager’s knowledge, threatened against the Collateral Manager which, either in any one instance or in the aggregate, would draw into question the validity of this Agreement or the Mortgage Loans, or would be likely to impair materially the ability of the Collateral Manager to perform its duties and obligations under the terms of this Agreement.
(iv)No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over the Collateral Manager is required for (x) the Collateral Manager’s execution and delivery of this Agreement, or (y) the consummation of the transactions of the Collateral Manager contemplated by this Agreement, or, to the extent required, such consent, approval, authorization, order, registration, filing or notice has been obtained, made or given (as applicable), except that the Collateral Manager may not be duly qualified to transact business as a foreign limited liability company or licensed in one or more states if such qualification or licensing is not necessary (1) to
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ensure the enforceability of any Mortgage Loan, or (2) for the Collateral Manager to perform its obligations under this Agreement in accordance with the terms hereof.
(v)No Default/Violation. The Collateral Manager is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default would materially and adversely affect the ability of the Collateral Manager to perform its obligations hereunder.
(e)The representations and warranties of the Servicer, the Special Servicer, the Issuer and the Collateral Manager set forth in this Section 7.01 shall survive until the termination of this Agreement.
Section VII.02Servicer Termination Event. Any one of the following events shall be a “Servicer Termination Event”:
(a)any failure (i) by the Servicer to remit to the Note Administrator the amount required to be so remitted by the Servicer on any Remittance Date pursuant to Section 3.03(b)(viii) of this Agreement, which continues unremedied by the Servicer by 11:00 a.m. on the following Business Day, (ii) by the Special Servicer to remit to the Issuer or its nominee any payment required to be so remitted by the Servicer or the Special Servicer, as the case may be, under the terms of this Agreement, when and as due which continues unremedied by the Servicer or the Special Servicer, as the case may be, for a period of two (2) Business Days after the date on which such remittance was due, or (iii) by the Servicer to remit to the Seller, Lument Structured Finance or a Companion Participation Holder any payment required to be so remitted by the Servicer under the terms of this Agreement, when and as due which continues unremedied by the Servicer for a period of two (2) Business Days after the date on which such remittance was due; or
(b)any failure by the Advancing Agent to make a Servicing Advance in a circumstance that Section 5.02(c) of this Agreement requires termination of the Special Servicer;
(c)any failure on the part of the Servicer or the Special Servicer, as the case may be, duly to observe or perform in any material respect any other of the covenants or agreements on the part of the Servicer or the Special Servicer, as the case may be, contained in this Agreement, or any representation or warranty set forth by the Servicer or the Special Servicer, as the case may be, in Section 7.01 shall be untrue or incorrect in any material respect, and, in either case, such failure or breach materially and adversely affects the value of any Mortgage Loan or the priority of the lien on any Mortgage Loans or the interest of the Issuer therein, which in either case continues unremedied for a period of thirty (30) days after the date on which written notice of such failure or breach, requiring the same to be remedied, shall have been given to the Servicer or the Special Servicer, as the case may be, by the Issuer (or the Collateral Manager acting on behalf of the Issuer) (or such extended period of time approved by the Issuer (or the Collateral Manager acting on behalf of the Issuer) provided that the Servicer or the Special Servicer, as the case may be, is diligently proceeding in good faith to cure such failure or breach); or
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(d)a decree or order of a court or agency or supervisory authority having jurisdiction in respect of the Servicer or the Special Servicer, as the case may be, for the commencement of an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law, for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs shall have been entered against the Servicer or the Special Servicer, as the case may be, and such decree or order shall remain in force undischarged or unstayed for a period of sixty (60) days; or
(e)the Servicer or the Special Servicer, as the case may be, shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Servicer or the Special Servicer, as the case may be, or relating to all or substantially all of such entity’s property; or
(f)the Servicer or the Special Servicer, as the case may be, shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable federal or state bankruptcy, insolvency or similar law, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or
(g)the Servicer or the Special Servicer, as the case may be, receives actual knowledge that either Rating Agency has (A) qualified, downgraded or withdrawn its rating or ratings of one or more classes of Notes, or (B) placed one or more classes of Notes on “watch status” in contemplation of a rating downgrade or withdrawal (and such qualification, downgrade, withdrawal, or “watch status” placement has not been withdrawn by such Rating Agency within sixty (60) days of the date that the Servicer or the Special Servicer, as the case may be, obtained such actual knowledge) and, in the case of either of clauses (A) or (B) above, citing servicing concerns with the Servicer or the Special Servicer, as the case may be, as the sole or material factor in such rating action; or
(h)the Servicer or, following removal or resignation of the Special Servicer, any successor to the Special Servicer, ceases to be a Qualified Servicer.
then, and in each and every case, so long as the applicable Servicer Termination Event has not been remedied, the Issuer (or the Collateral Manager acting on behalf of the Issuer) may, or in the case of a Servicer Termination Event with respect to the Special Servicer under clause (b) above, the Note Administrator shall, by notice in writing to the Servicer (if such Servicer Termination Event is with respect to the Servicer) or the Special Servicer (if such Servicer Termination Event is with respect to the Special Servicer), as the case may be, in addition to whatever rights the Issuer may have at law or in equity, including injunctive relief and specific performance, terminate all of the rights and obligations of the Servicer or the Special Servicer, as the case may be, under this Agreement and in and to the Mortgage Loans and the proceeds thereof, without the Issuer (or the Collateral Manager acting on behalf of the Issuer) incurring any penalty or fee of any kind whatsoever in connection therewith; provided, however, that such termination shall be without prejudice to any rights of the Servicer or the Special Servicer, as the case may be, relating to the payment of its Servicing Fees, Special Servicing Fees, Additional
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Servicing Compensation and the reimbursement of any Servicing Advance or Servicing Expense or other amounts owed to it under this Agreement, which have been made by it under the terms of this Agreement through and including the date of such termination. Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default. On or after the receipt by the Servicer or the Special Servicer, as the case may be, of such written notice of termination from the Issuer (or the Collateral Manager acting on behalf of the Issuer), all authority and power of the Servicer or the Special Servicer, as the case may be, under this Agreement, whether with respect to the Mortgage Loans, any Participations or otherwise, shall pass to and be vested in the Trustee, and the Servicer or the Special Servicer, as applicable, agrees to cooperate with the Trustee in effecting the termination of the responsibilities and rights hereunder of the Servicer or the Special Servicer, including, without limitation, the transfer of the Servicing Files and the funds held in the Accounts as set forth in Section 8.01.
The Issuer (or the Collateral Manager acting on behalf of the Issuer) may waive any Servicer Termination Event (other than a Servicer Termination Event under clause (b), (g), or (h) above), as the case may be, in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Termination Event arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.
Section VII.03Termination of the Special Servicer by the Collateral Manager. The Collateral Manager shall be entitled to terminate the rights and obligations of the Special Servicer with respect to the Serviced Mortgage Loans, with or without cause (except with respect to any Senior Participations where the holder of the related Junior Participation has such rights, so long as no control appraisal period or other similar period is in effect), upon ten (10) Business Days’ notice to the Issuer, Special Servicer, the Servicer, the Note Administrator and the Trustee; provided that (a) such removal is subject to Section 5.03 and Section 6.02 hereof, (b) all applicable costs and expenses of any such termination made by the Collateral Manager without cause shall be paid by the Collateral Manager, (c) all applicable accrued and unpaid Special Servicing Fees or Additional Servicing Compensation and Servicing Expenses owed to the Special Servicer are paid in full, (d) the terminated Special Servicer shall retain the right to receive any applicable Liquidation Fees or Workout Fees earned by it and payable to it in accordance with the terms hereof and (e) satisfaction of the Rating Agency Condition with respect to the appointment of any successor thereto; provided, however, that, if a Mortgage Loan was being administered by the Special Servicer at the time of termination, the terminated Special Servicer and the successor Special Servicer shall agree to apportion the applicable Liquidation Fee, if any, between themselves in a manner that reflects their relative contributions in earning the fee.
Section VII.04[Reserved].
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Section VII.05Note Administrator/Trustee Termination Event. As used herein, a “Note Administrator/Trustee Termination Event” means any one of the following:
(a)any failure on the part of the Note Administrator or the Trustee, as applicable, duly to observe or perform in any material respect any of the covenants or agreements on the part of the Note Administrator or Trustee, as applicable, contained in this Agreement, and such failure or breach materially and adversely affects the value of any Mortgage Loan or the priority of the lien on any Mortgage Loans or the interest of the Issuer therein, which in either case continues unremedied for a period of thirty (30) days after the date on which written notice of such failure or breach, requiring the same to be remedied, shall have been given to the Note Administrator or the Trustee, as applicable, by the Issuer (or the Collateral Manager acting on behalf of the Issuer) (or such extended period of time approved by the Issuer (or the Collateral Manager on behalf of the Issuer); provided that the Note Administrator or the Trustee, as applicable, is diligently proceeding in good faith to cure such failure or breach); or
(b)a decree or order of a court or agency or supervisory authority having jurisdiction in respect of the Note Administrator or the Trustee, as applicable, for the commencement of an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law, for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs shall have been entered against the Note Administrator or the Trustee, as applicable, and such decree or order shall remain in force undischarged or unstayed for a period of sixty (60) days; or
(c)the Note Administrator or the Trustee, as applicable, shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Note Administrator or the Trustee, as applicable, or relating to all or substantially all of its property; or
(d)the Note Administrator or the Trustee, as applicable, shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable federal or state bankruptcy, insolvency or similar law, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or
(e)the Trustee no longer qualifies as a Qualified Trustee or the Note Administrator no longer qualifies as a Qualified Note Administrator.
then, and in each and every case, so long as a Note Administrator/Trustee Termination Event with respect to the Note Administrator or the Trustee, as applicable, shall not have been remedied, the Issuer (or the Collateral Manager acting on behalf of the Issuer) may, by notice in writing to the Note Administrator or the Trustee, as applicable, in addition to whatever rights the Issuer may have at law or in equity, including injunctive relief and specific performance, terminate all of the rights and obligations of the Note Administrator or the Trustee, as applicable, under this Agreement and in and to the Mortgage Loans and the proceeds thereof, without the Issuer (or the Collateral Manager acting on behalf of the Issuer) incurring any penalty or fee of
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any kind whatsoever in connection therewith; provided, however, that such termination shall be without prejudice to any rights of the Note Administrator or the Trustee, as applicable, relating to the payment of any compensation due hereunder or the reimbursement of any Servicing Advance or Servicing Expense which have been made by it under the terms of this Agreement through and including the date of such termination. Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default. On or after the receipt by the Note Administrator or the Trustee, as applicable, of such written notice of termination from the Issuer (or the Collateral Manager acting on behalf of the Issuer), all authority and power of the Note Administrator or the Trustee, as applicable, under this Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the Issuer, and the Note Administrator or the Trustee, as applicable, agrees to cooperate with the Issuer (or the Collateral Manager acting on behalf of the Issuer) in effecting the termination of the responsibilities and rights hereunder of the Note Administrator or the Trustee, as applicable.
The Issuer (or the Collateral Manager acting on behalf of the Issuer) may waive any Note Administrator/Trustee Termination Event. Upon any such waiver of a past default, such default shall cease to exist, and any Note Administrator/Trustee Termination Event arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.
Section VII.06Trustee to Act; Appointment of Successor. On and after the time the Servicer or the Special Servicer resigns pursuant to this Agreement or receives a notice of termination pursuant to Section 7.02 or Section 8.01, the Trustee shall unless prohibited by law immediately become the successor in all respects to the Servicer or the Special Servicer, as the case may be, in its capacity as such under this Agreement and the transactions set forth or provided for herein and shall have all of the rights and powers, and be subject to all the responsibilities, duties, limitations on liability, indemnities and liabilities relating thereto and arising thereafter placed on the Servicer or the Special Servicer, as the case may be, by the terms and provisions hereof, including, without limitation, the Servicer’s obligation to make Servicing Advances pursuant to Section 5.02(c)(ii); provided that (i) the Trustee shall have no responsibilities, duties or obligations with respect to any act or omission of the Servicer or the Special Servicer, as the case may be, and (ii) any failure to perform such duties or responsibilities caused by the Servicer’s or the Special Servicer’s failure to deliver to the Trustee the information or funds required under Section 7.02 shall not be considered a default by the Trustee hereunder. The Trustee shall not be liable for any of the representations and warranties of the Servicer or the Special Servicer or for any losses incurred by the Servicer or the Special Servicer pursuant to Section 3.04 hereunder which shall have accrued prior to the Trustee’s assuming such duties. As compensation therefor, the Trustee shall be entitled to the applicable Servicing Fee and/or Special Servicing Fee, as applicable, and all funds (other than any Workout Fee owed pursuant to Section 5.03(b)) that the Servicer or the Special Servicer would have been
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entitled to charge to the Collection Account or Participated Mortgage Loan Collection Account if the Servicer or the Special Servicer had continued to act hereunder.
(b)Notwithstanding anything herein to the contrary, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act or if the Noteholders entitled to a majority of the Voting Rights so request in writing to the Trustee or if the Trustee is not a Qualified Servicer, promptly appoint a Qualified Servicer as the successor to the Servicer or Special Servicer, as the case may be, of all of the responsibilities, duties and liabilities of the Servicer or the Special Servicer, as the case may be, hereunder. Pending appointment of a successor to the Servicer or the Special Servicer, as the case may be, hereunder, unless the Trustee shall be prohibited by law from so acting or is unable to act, the Trustee shall act in such capacity as hereinabove provided. In connection with any such appointment and assumption described herein, the Trustee may make such arrangements for the compensation of such successor out of payments on the Mortgage Loans or otherwise as it and such successor shall agree; provided, however, the Trustee is hereby authorized to make arrangements for payment of increased compensation (including in the event that the Trustee or an affiliate of the Trustee is the successor Servicer or Special Servicer) at whatever market rate is reasonably necessary to identify and retain an acceptable successor Servicer or Special Servicer, as the case may be. Any such increased compensation shall be an expense of the Issuer.
Section VII.07Collateral Manager Termination Event. As used herein, a “Collateral Manager Termination Event” means any one of the following:
(a)any failure by the Collateral Manager to timely make any payment or reimbursement, as the case may be, under the terms of this Agreement when and as due, which continues unremedied by the Collateral Manager for a period of two (2) Business Days after the date on which such payment or reimbursement was due.
(b)any failure on the part of the Collateral Manager duly to observe or perform in any material respect any of the covenants or agreements on the part of the Collateral Manager contained in this Agreement, or any representation or warranty set forth by the Collateral Manager in Section 7.01 shall be untrue or incorrect in any material respect, and, in either case, such failure or breach materially and adversely affects the value of any Mortgage Loan or the priority of the lien on any Mortgage Loans or the interest of the Issuer therein, which in either case continues unremedied for a period of thirty (30) days after the date on which written notice of such failure or breach, requiring the same to be remedied, shall have been given to the Collateral Manager by the Issuer (or such extended period of time approved by the Issuer; provided that the Collateral Manager is diligently proceeding in good faith to cure such failure or breach); or
(c)a decree or order of a court or agency or supervisory authority having jurisdiction in respect of the Collateral Manager for the commencement of an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law, for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of
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its affairs shall have been entered against Collateral Manager and such decree or order shall remain in force undischarged or unstayed for a period of sixty (60) days; or
(d)the Collateral Manager shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Collateral Manager or relating to all or substantially all of its property; or
(e)the Collateral Manager shall admit in writing its inability to pay its debts generally as they become due, files a petition to take advantage of any applicable federal or state bankruptcy, insolvency or similar law, make an assignment for the benefit of its creditors or voluntarily suspends payment of its obligations,
(f)the Collateral Manager receives actual knowledge that any Rating Agency has (A) qualified, downgraded or withdrawn its rating or ratings of one or more classes of Notes, or (B) placed one or more classes of Notes on “watch status” in contemplation of a rating downgrade or withdrawal (and such “watch status” placement has not been withdrawn by such Rating Agency within sixty days of the date that the Collateral Manager obtained such actual knowledge) and, in the case of either of clauses (A) or (B) above, citing servicing concerns with the Collateral Manager or the Collateral Manager, as the case may be, as the sole or material factor in such rating action,
then, and in each and every case, so long as a Collateral Manager Termination Event shall not have been remedied, the Issuer may, by notice in writing to the Collateral Manager in addition to whatever rights the Issuer may have at law or in equity, including injunctive relief and specific performance, terminate all of the rights and obligations of the Collateral Manager under this Agreement and in and to the Mortgage Loans and the proceeds thereof, without the Issuer incurring any penalty or fee of any kind whatsoever in connection therewith; provided, however, that such termination shall be without prejudice to any rights of the Collateral Manager relating to the reimbursement of any Servicing Expense which have been made by it under the terms of this Agreement through and including the date of such termination. Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default. On or after the receipt by the Collateral Manager of such written notice of termination from the Issuer, all authority and power of the Collateral Manager under this Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the Issuer, and the Collateral Manager agrees to cooperate with the Issuer in effecting the termination of the responsibilities and rights hereunder of the Collateral Manager.
The Issuer may waive any Collateral Manager Termination Event. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.
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ARTICLE VIII

TERMINATION; TRANSFER OF MORTGAGE ASSETS
Section VIII.01Termination of Agreement. Subject to the appointment of a Successor and the acceptance of such appointment by such Successor pursuant to Section 6.03(b), this Agreement may be terminated by the Issuer, at the direction of the Collateral Manager, with respect to any or all of the Mortgage Loans, without cause, upon sixty (60) days written notice to the Servicer or the Special Servicer, as applicable. Subject to the appointment of a Successor and the acceptance of such appointment by such Successor pursuant to Section 6.03(c), the Servicer or the Special Servicer, as the case may be, may resign from its duties and obligations hereunder with respect to any Mortgage Loans, without cause, upon sixty (60) days written notice to the Issuer.
(b)Termination pursuant to this Section or as otherwise provided herein shall be without prejudice to any rights of the Issuer, the Note Administrator, the Trustee, the Servicer or the Special Servicer, as the case may be, which may have accrued through the date of termination hereunder. Upon such termination, the Servicer shall (i) remit all funds in the related Accounts to the Issuer or such other Person designated by the Issuer, net of accrued Servicing Fees, Additional Servicing Compensation, Special Servicing Fees, Workout Fees or Liquidation Fees and Servicing Advances or Servicing Expenses through the termination date to which the Servicer and/or Special Servicer would be entitled to payment or reimbursement hereunder; (ii) deliver all related Servicing Files to the Issuer or to Persons designated by the Trustee; and (iii) fully cooperate with the Trustee, the Note Administrator and any new servicer or special servicer to effectuate an orderly transition of Servicing or Special Servicing of the related Mortgage Loans. Upon such termination, any Servicing Fees, Special Servicing Fees, Workout Fees, Liquidation Fees, Additional Servicing Compensation, Servicing Advances (with interest thereon at the Advance Rate), Servicing Expenses (with interest thereon at the Advance Rate) which remain unpaid or unreimbursed after the Servicer or the Special Servicer, as the case may be, has netted out such amounts pursuant to the preceding sentence, shall be remitted by the Issuer to the Servicer or the Special Servicer, as the case may be, within ten (10) Business Days after the Issuer’s receipt of an itemized invoice therefor to the extent the Servicer or the Special Servicer is terminated without cause.
Section VIII.02Transfer of Mortgage Assets The Servicer or the Special Servicer, as the case may be, acknowledges that any or all of the Mortgage Assets may be sold, transferred, assigned or otherwise conveyed by the Issuer to any third party pursuant to the terms and conditions of this Agreement and the Indenture without the consent or approval of the Servicer or the Special Servicer, as the case may be. Any such transfer shall constitute a termination of this Agreement with respect to such Mortgage Loan and any Funded Companion Participation and Future Funding Participation, subject to the Issuer’s notice requirements under Section 8.01(a). The Issuer acknowledges that the Servicer or the Special Servicer, as the case may be, shall not be obligated to perform Servicing or Special Servicing, as applicable, with respect to such transferred Mortgage Assets (or the related Mortgage Loans) for any such third party unless and until the Servicer or the Special Servicer, as applicable, and such third party
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execute a servicing agreement having terms which are mutually agreeable to the Servicer or the Special Servicer, as applicable, and such third party; provided, however, no such third party shall be obligated to engage the Servicer or the Special Servicer, as the case may be, to perform Servicing or Special Servicing with respect to the transferred Mortgage Assets (or the related Mortgage Loans) (or be liable for any of the obligations of Issuer hereunder).
(b)Until the Servicer or the Special Servicer, as the case may be, receives written notice from the Issuer of the sale, transfer, assignment or conveyance of one or more Mortgage Assets, the Issuer shall be presumed to be the owner and holder of such Mortgage Assets, the Servicer or the Special Servicer, as the case may be, shall continue to earn Servicing Fees, Special Servicing Fees, Workout Fees or Liquidation Fees, Additional Servicing Compensation and any other compensation hereunder with respect to such Mortgage Assets (or any Funded Companion Participation or Future Funding Participation) and the Servicer shall continue to remit payments and other collections in respect of such Mortgage Assets to the Issuer or the Note Administrator, as applicable, pursuant to the terms and provisions hereof.
ARTICLE IX

MISCELLANEOUS PROVISIONS
Section IX.01Amendment; Waiver. This Agreement contains the entire agreement between the parties relating to the subject matter hereof, and no term or provision hereof may be amended or waived except from time to time by:
(a)The mutual agreement of the Issuer, the Collateral Manager, the Note Administrator, the Trustee, the Advancing Agent, the Servicer and the Special Servicer, without the consent of any of the Noteholders or the Rating Agencies, (i) to cure any ambiguity, (ii) to correct or supplement any provision herein which may be inconsistent with any other provision herein or in the offering memorandum, (iii) to add any other provisions with respect to matters or questions arising under this Agreement or (iv) for any other purpose provided, that such action shall not adversely affect in any material respect the interests of any Noteholder without the consent of such Noteholder.
(b)The Issuer, the Collateral Manager, the Note Administrator, the Trustee, the Servicer and the Special Servicer, and with the written consent of the Noteholders evidencing, in the aggregate, not less than a majority of the Voting Rights of the Noteholders for the purpose of adding any provisions to or changing in any manner or eliminating any provisions of this Agreement that materially and adversely affect the rights of the Noteholders; provided, however, that no such amendment shall (i) reduce in any manner the amount of, delay the timing of or change the manner in which payments received on or with respect to the Mortgage Loans are required to be distributed with respect to any Underlying Note without the consent of the Noteholders, (ii) adversely affect in any material respect the interests of the holders of a Class of Notes in a manner other than as set forth in (i) above without the consent of the holders of such Class of Notes evidencing, in the aggregate, not less than 51% of the Voting Rights of such Class of Notes; (iii) reduce the aforesaid percentages of Voting Rights of the Notes, the holders of
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which are required to consent to any such amendment without the consent of 51% of the holders of any affected Class of Notes of then outstanding or, (iv) alter the obligations of the Issuer to make an advance or to alter the Servicing Standard set forth herein.
(c)It shall not be necessary for the consent of Noteholders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Noteholders shall be subject to such reasonable regulations as the Issuer may prescribe.
(d)In connection with any proposed amendment hereto, the Trustee and the Note Administrator (i) shall each be entitled to receive such opinions and officer’s certificates as required for amendments to and pursuant to the Indenture, and (ii) shall not be required to enter into any amendment that affects its obligations, rights, or indemnities hereunder.
(e)No amendment of this Agreement shall adversely affect in any material respect the interests of any Companion Participation Holder without the consent of such Companion Participation Holder.
(f)Promptly after the execution of any amendment to this Agreement, the Issuer or the Note Administrator shall furnish a copy of such amendment to each Noteholder and the 17g-5 Information Provider pursuant to the terms of the Indenture.
Section IX.02Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws, without giving effect to principles of conflicts of laws.
Section IX.03Notices. All demands, notices and communications hereunder shall be in writing (provided that all such demands, notices and communications may be by electronic format so long as a “backup” hard copy of such notice is also delivered on or prior to the next Business Day and, provided, further, that any notices, communications and deliveries that are to be provided pursuant to each of Sections 2.03, 3.02, 3.05, 3.07, 3.08 (with the exception of any notices that are to be provided to any Obligor, which shall be provided in accordance with the related Asset Documents), 3.09, 3.10 (with the exception of 3.10(g)), 3.15(e), 3.16 (with the exception of any notices that are to be provided to any Obligor under 3.16(a), which shall be provided in accordance with the related Asset Documents), 3.20, 3.24, 4.01, 5.02, 6.02 and 9.05 hereunder may solely be by electronic format) and addressed in each case as follows:
(a)if to the Issuer, at:
LFT CRE 2021-FL1, Ltd.
c/o Walkers Fiduciary Limited
190 Elgin Avenue
George Town, Grand Cayman
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KY1-9008
Cayman Islands
Email: fiduciary@walkersglobal.com

with a copy to:

c/o Lument Investment Management
10 W. Broad Street, 8th Floor
Columbus, Ohio 43215
Attention: General Counsel
Email: general.counsel@lument.com
(b)if to the Servicer or the Special Servicer, at:

ORIX Real Estate Capital, LLC dba Lument Capital
2001 Ross Avenue, Suite 1900
Dallas, Texas 75201

with a copy to:

c/o Lument Capital
10 W. Broad Street, 8th Floor
Columbus, Ohio 43215
Attention: General Counsel
Email: general.counsel@lument.com

and a copy to:

Cadwalader, Wickersham & Taft LLP
200 Liberty Street
New York, New York 10281
Attention: Jeffrey Rotblat
(c)if to the Collateral Manager, at:

OREC Investment Management dba Lument Investment Management
230 Park Avenue, 20th Floor
New York, NY 10169
Attention: Michele Halickman

with a copy to:

c/o Lument Investment Management
10 W. Broad Street, 8th Floor
Columbus, Ohio 43215
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Attention: General Counsel
Email: general.counsel@lument.com

and a copy to:

Cadwalader, Wickersham & Taft LLP
200 Liberty Street
New York, New York 10281
Attention: Jeffrey Rotblat
(d)if to the Note Administrator, at:
Wells Fargo Bank, National Association
Corporate Trust Services
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services – LFT CRE 2021-FL1, Ltd.
Email: trustadministrationgroup@wellsfargo.com;     cts.cmbs.bond.admin@wellsfargo.com
(e)if to the Trustee, at:
Wilmington Trust, National Association
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Services – LFT CRE 2021-FL1, Ltd.
Email: cmbstrustee@wilmingtontrust.com
(f)if to the Advancing Agent, at:

Lument Commercial Mortgage Trust
230 Park Avenue, 20th Floor
New York, NY 10169
Attention: Nicholas Capogrosso

with a copy to:

c/o Lument Investment Management
10 W. Broad Street, 8th Floor
Columbus, Ohio 43215
Attention: General Counsel
Email: general.counsel@lument.com

and a copy to:

Cadwalader, Wickersham & Taft LLP
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200 Liberty Street
New York, New York 10281
Attention: Jeffrey Rotblat
Any of the above-referenced Persons may change its address for notices hereunder by giving notice of such change to the other Persons. All notices and demands shall be deemed to have been given at the time of the delivery at the address of such Person for notices hereunder if personally delivered, mailed by certified or registered mail, postage prepaid, return receipt requested, or sent by overnight courier or telecopy; provided, however, that any notice delivered after normal business hours of the recipient or on a day which is not a Business Day shall be deemed to have been given on the next succeeding Business Day. All communications with the 17g-5 Information Provider shall be conducted in the manner required by the Indenture.
To the extent that any demand, notice or communication hereunder is given to the Servicer or the Special Servicer, as the case may be, by a Responsible Officer of the Issuer, such Responsible Officer shall be deemed to have the requisite power and authority to bind the Issuer with respect to such communication, and the Servicer or the Special Servicer, as the case may be, may conclusively rely upon and shall be protected in acting or refraining from acting upon any such communication. To the extent that any demand, notice or communication hereunder is given to the Issuer by a Responsible Officer of the Servicer, the Special Servicer, the Trustee or the Note Administrator, as the case may be, such Responsible Officer shall be deemed to have the requisite power and authority to bind such party with respect to such communication, and the Issuer may conclusively rely upon and shall be protected in acting or refraining from acting upon any such communication.
Section IX.04Severability of Provisions. If one or more of the provisions of this Agreement shall be for any reason whatever held invalid or unenforceable, such provisions shall be deemed severable from the remaining covenants, agreements and provisions of this Agreement and such invalidity or unenforceability shall in no way affect the validity or enforceability of such remaining provisions or the rights of any parties thereunder. To the extent permitted by law, the parties hereto hereby waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect.
Section IX.05Inspection and Audit Rights. The Servicer and the Special Servicer, as the case may be, agree that, on reasonable prior notice, it will permit any agent or representative of the Issuer, during the normal business hours, to examine all the books of account, records, reports and other papers of the Servicer and the Special Servicer, as the case may be, relating to the Mortgage Loans, to make copies and extracts therefrom, to cause such books to be audited by accountants selected by the Issuer, and to discuss matters relating to the Mortgage Loans with the officers, employees and accountants of the Servicer and the Special Servicer (and by this provision the Servicer and the Special Servicer hereby authorize such accountants to discuss with such agents or representatives such matters), all at such reasonable times and as often as may be reasonably requested. Any expense incident to the exercise by the Issuer of any right under this Section shall be borne by the Issuer.
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Section IX.06Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto 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 this Agreement, and each of the parties hereto 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 parties hereto 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 parties hereto hereby waive all rights to a trial by jury in any action or proceeding relating to this Agreement. Each of the parties hereto 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 IX.07Binding Effect; No Partnership; Counterparts. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between the parties hereto and the services of the parties hereto other than the Issuer shall be rendered as an Independent Contractor for the Issuer. For the purpose of facilitating the execution of this Agreement as herein provided and for other purposes, this Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument, and the words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Agreement or in any other certificate, agreement or document related to this transaction shall include, in addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
Section IX.08Protection of Confidential Information. The Servicer and the Special Servicer shall keep confidential and shall not divulge to any party, without the Issuer’s prior written consent, any information pertaining to the Mortgage Loans or the Obligors except to the extent that (a) it is appropriate for the Servicer and the Special Servicer to do so (i) in working with legal counsel, auditors, other advisors, taxing authorities, regulators or other governmental agencies or in connection with performing its obligations hereunder, (ii) in accordance with the Servicing Standard or (iii) when required by any law, regulation, ordinance, administrative proceeding, governmental agency, court order or subpoena or (b) the Servicer or the Special Servicer, as the case may be, is disseminating general statistical information relating
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to the assets (including the Mortgage Loans) being serviced by the Servicer or the Special Servicer, as the case may be, so long as the Servicer or the Special Servicer does not identify the Obligors. Unless prohibited by law, statute, rule or court order, Servicer or the Special Servicer, as the case may be, shall promptly notify Issuer of any such disclosure pursuant to clause (iii); provided, however, the Servicer or the Special Servicer, as the case may be, shall still make such disclosure absent a court order directing it to stop or terminate such disclosure.
Section IX.09General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a)the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;
(b)accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c)references herein to an “Article,” “Section,” or other subdivision without reference to a document are to the designated Article, Section or other applicable subdivision of this Agreement;
(d)reference to a Section, subsection, paragraph or other subdivision without further reference to a specific Section is a reference to such Section, subsection, paragraph or other subdivision, as the case may be, as contained in the same Section in which the reference appears;
(e)the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;
(f)the term “include” or “including” shall mean without limitation by reason of enumeration; and
(g)the Article, Section and subsection headings herein are for convenience of reference only, and shall not limit or otherwise affect the meaning of the provisions contained therein.
Section IX.10Further Agreements. Each party hereto agrees:
(a)to execute and deliver to the other such additional documents, instruments or agreements as may be reasonably requested by the other parties hereto and as may be necessary or appropriate to effectuate the purposes of this Agreement;
(b)that neither the Servicer nor the Special Servicer, as the case may be, shall be responsible for any federal, state or local securities reporting requirements related to servicing for the Mortgage Loans; and
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(c)that neither the Servicer nor the Special Servicer, as the case may be, shall be (and cannot be) performing any broker-dealer activities.
Section IX.11Rating Agency Notices. The Issuer (or the Collateral Manager in respect to clauses (a), (b), (c), (d) and (f) or the Servicer or Special Servicer in respect to clauses (e) and (g) acting on behalf of the Issuer) shall deliver written notice of the following events to (i)  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) and (ii) Kroll Bond Rating Agency, Inc., 805 Third Avenue, New York, New York 10022, Attention: CMBS Surveillance (or by electronic mail at cmbssurveillance@kbra.com), or such other address that either Rating Agency shall designate in the future, promptly following the occurrence thereof: (a) any amendment to this Agreement or any other documents included in the Indenture; (b) any Event of Default; (c) the removal of the Servicer or the Special Servicer or any successor servicer as Servicer or successor special servicer as Special Servicer; (d) any change in or the termination of the Collateral Manager; (e) any inspection results received in writing (whether structural, environmental or otherwise) of any Mortgaged Property; or (f) final payment to the Noteholders. In addition, the Monthly Reports, the CREFC® Investor Reporting Packet and the CREFC® Special Servicer Loan File and such other reports provided for hereunder or under the Indenture shall be made available to each Rating Agency at the time such documents are required to be delivered pursuant to the Indenture. The Servicer or the Special Servicer and the Issuer also shall furnish such other information regarding the Mortgage Loans as may be reasonably requested by the Rating Agencies to the extent such party has or can obtain such information without unreasonable effort or expense. Notwithstanding the foregoing, the failure to deliver such notices or copies shall not constitute a Servicer Termination Event under this Agreement.
(b)All information and notices required to be delivered to the Rating Agencies pursuant to this Agreement or requested by the Rating Agencies in connection herewith, shall first be provided in electronic format to the 17g-5 Information Provider in compliance with the terms of the Indenture (who shall post such information to the 17g-5 Website in accordance with Section 14.13 of the Indenture). The Servicer may (but is not required to) provide information and notices directly to the Rating Agencies the earlier of (a) upon notice that the information is posted to the 17g-5 Website and (b) two (2) Business Days after the information or notice was provided to the 17g-5 Information Provider in accordance with the procedures in Section 14.13 of the Indenture.
(c)Each party hereto, insofar as it may communicate with any Rating Agency pursuant to any provision of this Agreement, each other party to this Agreement, agrees to comply (and to cause each and every sub-servicer, subcontractor, vendor or agent for such Person and each of its officers, directors and employees to comply) with the provisions relating to communications with the Rating Agencies set forth in this Section 9.11 and shall not deliver to any Rating Agency any report, statement, request or other information relating to the Notes or the Mortgage Loans other than in compliance with such provisions.
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(d)The Collateral Manager, the Servicer and the Special Servicer shall be permitted (but not obligated) to orally communicate with the Rating Agencies regarding any of the Asset Documents and any other matters related to the Mortgage Loans, the Mortgaged Properties, the Obligors and any matters relating to this Agreement; provided that such party summarizes the information provided to the Rating Agencies in such communication in writing and provides the 17g-5 Information Provider with such written summary in accordance with the procedures set forth herein the same day such communication takes place; provided, further, that the summary of such oral communications shall not identity which Rating Agency the communication was with. The 17g-5 Information Provider shall post such written summary on the 17g-5 Information Provider’s Website in accordance with the procedures set forth in the Indenture.
(e)None of the foregoing restrictions in this Section 9.11 prohibit or restrict oral or written communications, or providing information, between the Servicer or Special Servicer, on the one hand, and any Rating Agency, on the other hand, with regard to (i) such Rating Agency’s review of the ratings, if any, it assigns to such party, (ii) such Rating Agency’s approval, if any, of such party as a commercial mortgage master, special or primary servicer or (iii) such Rating Agency’s evaluation of such party’s servicing operations in general; provided, however, that such party shall not provide any information relating to the Notes or the Mortgage Loans to any Rating Agency in connection with any such review and evaluation by such Rating Agency unless (x) borrower, property or deal specific identifiers are redacted; or (y) such information has already been provided to the 17g-5 Information Provider and has been uploaded onto the 17g-5 Website.
Section IX.12Limited Recourse and Non-Petition. Notwithstanding any other provision of this Agreement, the Servicer, the Special Servicer, the Collateral Manager, the Note Administrator, the Advancing Agent and the Trustee hereby agree and acknowledge that the obligations of the Issuer under this Agreement from time to time and at any time are limited recourse obligations of the Issuer payable solely from the Collateral available at such time as contemplated hereby and in accordance with the Priority of Payments (as defined in the Indenture), and, following realization of all of the Collateral, all obligations of the Issuer and all claims of Servicer, the Special Servicer, the Collateral Manager, the Note Administrator, the Advancing Agent and the Trustee against the Issuer under this Agreement shall be extinguished and shall not thereafter revive. Each of the Servicer, the Special Servicer, the Collateral Manager, the Note Administrator, the Advancing Agent and the Trustee hereby agrees and acknowledges that the Issuer’s obligations hereunder will be solely the corporate obligations of the Issuer, and that none of the Servicer, the Special Servicer, the Collateral Manager, the Advancing Agent, the Note Administrator or the Trustee will have any recourse to any of the directors, officers, employees, shareholders, incorporator or Affiliates of the Issuer with respect to any claims, losses, damages, liabilities, indemnities or other obligations in connection with any transaction contemplated hereby.
(b)Notwithstanding any other provision of this Agreement, the Servicer, the Special Servicer, the Collateral Manager, the Advancing Agent, the Note Administrator and the Trustee hereby agree not to file, cause the filing of or join in any petition in bankruptcy,
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reorganization, arrangement, insolvency, winding up, moratorium or liquidation proceedings, or other proceedings under federal or State bankruptcy or similar laws of any jurisdiction, against the Issuer for the non-payment to the Servicer, the Special Servicer, the Collateral Manager, the Advancing Agent, the Note Administrator or the Trustee of any amounts due pursuant to this Agreement until at least 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) and one day, after the payment in full of all Notes.
(c)The provisions of this Section 9.12 shall survive the termination of this Agreement for any reason whatsoever.
Section IX.13Capacity of Trustee and Note Administrator. It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by each of the Trustee and the Note Administrator, not individually or personally, but solely in its respective capacity as trustee and note administrator on behalf of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Indenture for the Issuer, and pursuant to the direction of the Issuer, (ii) each of the representations, undertakings and agreements by the Trustee and the Note Administrator, as applicable, is made and intended for the purpose of binding only the Issuer and there shall be no recourse against any of the Trustee or the Note Administrator in its individual capacity hereunder, (iii) nothing herein contained shall be construed as creating any liability for the Trustee or the Note Administrator, individually or personally, to perform any covenant (either express or implied) contained herein, and all such liability, if any, is hereby expressly waived by the parties hereto, and such waiver shall bind any third party making a claim by or through one of the parties hereto, (iv) under no circumstances shall the Trustee or Note Administrator be liable for the payment of any indebtedness or expenses of the Issuer, or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or any other agreement including the Indenture for the Issuer or any related document; and (v) the Trustee and the Note Administrator shall not have any obligations or duties under this Agreement except as expressly set forth herein, no implied duties on the part of the Trustee or the Note Administrator shall be read into this Agreement, and nothing herein shall be construed to be an assumption by the Trustee or the Note Administrator of any duties or obligations of any party to this Agreement, the Indenture or any related document, the duties of the Trustee and the Note Administrator being solely those set forth in the related Servicing Agreement and/or Indenture, as applicable.
Each of the Trustee and the Note Administrator shall be entitled to all the rights, protections, immunities, and indemnities under the Indenture as if specifically set forth herein.
[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the Issuer, the Collateral Manager, the Servicer, the Special Servicer, the Note Administrator, the Trustee, the Custodian and the Advancing Agent have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the date first above written.
With respect to the Issuer only, executed as a Deed by
LFT CRE 2021-FL1, LTD., as Issuer
By:    /s/ Nicholas Capogrosso
Name: Nicholas Capogrosso
Title:    Director

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OREC INVESTMENT MANAGEMENT, LLC DBA LUMENT INVESTMENT MANAGEMENT, as Collateral Manager
By:    /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Cheif Operating Officer


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ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL, as Servicer
By:    /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer

ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL, as Special Servicer
By:    /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer


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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Note Administrator
By:     /s/ Amy Mofsenson     
Name: Amy Mofsenson
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
By:     /s/ Drew H. Davis    
Name: Drew H. Davis
Title: Vice President


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LUMENT COMMERCIAL MORTGAGE TRUST, as Advancing Agent
By:    /s/ Michael P. Larsen     
Name: Michael P. Larsen
Title: Chief Operating Officer

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EXHIBIT A
MORTGAGE ASSET SCHEDULE

Exh. A-1
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# Mortgage Asset Name Mortgage Asset Cut-off Date Balance ($) Mortgage Asset Type
1.
The Woods at Countryside 39,454,344 Participation
1.
Mayflower Apartments 36,781,588 Participation
1.
CRA Student Housing Portfolio 36,719,999 Participation
1.
The Estates at Pikesville 33,752,111 Participation
1.
Ashford Walk 31,115,334 Participation
1.
Greenfair Apartments 28,000,000 Whole Loan
1.
La Brea Gardens 27,750,000 Whole Loan
1.
San Antonio Lynd Portfolio 27,411,724 Participation
1.
Woodland Ridge Apartments 26,864,200 Whole Loan
1.
Rise at Signal Mountain 25,094,805 Participation
1.
Cypress Gardens 24,320,000 Whole Loan
1.
Canopy Creek Apartments 22,000,000 Participation
1.
Cubesmart Self Storage - Seattle 19,648,818 Participation
1.
The Linc 17,172,623 Participation
1.
Whitestone Crossing 15,000,000 Participation
1.
Extra Space Pompano Beach Self Storage 14,500,000 Participation
1.
4th and Grant Apartments 14,280,165 Participation
1.
Manitoba Apartments 13,671,010 Participation
1.
1033 West Van Buren 13,148,199 Participation
1.
Sunny Brook Apartments 12,375,000 Participation
1.
Village Green Apartments 11,857,066 Participation
1.
Crystal Peaks Self Storage 10,676,822 Participation
1.
River Lofts 10,497,000 Participation
1.
Urban Park 10,357,255 Participation
1.
Wysong Village Apartments 9,623,000 Whole Loan
1.
Winchester Lakes Apartments 9,527,000 Whole Loan
1.
Blue Tide Apartments 8,620,367 Participation
1.
Timberfalls Apartments 8,484,120 Whole Loan
1.
Privilege Apartments 8,037,399 Participation
1.
Glen Arbor 7,963,794 Participation
1.
West Campus Lofts 7,912,000 Whole Loan
1.
Royal Palms Apartments & Professional 7,513,000 Participation
1.
Ridgmar Mall Self Storage 6,959,953 Participation
1.
Rio Nuevo 6,893,000 Participation
1.
Autumn Brook Apartments 6,888,915 Participation
1.
Commerce Plaza 6,488,831 Participation
1.
Sunset Heights 6,344,748 Participation
1.
Miller Square Apartments 6,054,427 Participation
1.
5009 Ashland Avenue 5,900,550 Participation
1.
Spring Park Place Apartments 5,632,870 Participation
1.
Brix at Terrell Hills 5,295,605 Participation
1.
Daytona Multifamily Portfolio 5,285,500 Participation
1.
North Ingleside Townhomes 4,920,000 Whole Loan
1.
Belton Woods 4,446,000 Whole Loan
1.
Barton Ridge 4,275,035 Participation
1.
Area Self Storage 4,225,000 Whole Loan


Exh. A-2
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EXHIBIT B
APPLICABLE SERVICING CRITERIA IN ITEM 1122 OF REGULATION AB
The assessment of compliance to be delivered shall address, at a minimum, the criteria identified below as “Applicable Servicing Criteria” (with each Applicable Party(ies) deemed to be responsible for the items applicable to the functions it is performing). In addition, this Exhibit B shall not be construed to impose on any Person any servicing duty that is not otherwise imposed on such Person under the main body of the Servicing Agreement of which this Exhibit B forms a part or to require an assessment of the criterion that is not encompassed by the servicing duties of the applicable party that are set forth in the main body of the Servicing Agreement.
Applicable Servicing Criteria Applicable Party(ies)
Reference Criteria
General Servicing Considerations
1122(d)(1)(i)
Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.
Servicer
Special
Servicer
1122(d)(1)(ii)
If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.
Servicer
Special
Servicer
1122(d)(1)(iii)
Any requirements in the transaction agreements to maintain a back-up servicer for the mortgage loans are maintained. N/A
1122(d)(1)(iv)
A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.
Servicer
Special
Servicer
1122(d)(1)(v)
Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.
Servicer
Special
Servicer
Cash Collection and Administration
1122(d)(2)(i)
Payments on mortgage loans are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.
Servicer
Special
Servicer
1122(d)(2)(ii)
Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel. N/A
Exh. B-1
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1122(d)(2)(iii)
Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.
Servicer
Special
Servicer
1122(d)(2)(iv)
The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.
Servicer
Special
Servicer
1122(d)(2)(v)
Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
Servicer
Special
Servicer
1122(d)(2)(vi)
Unissued checks are safeguarded so as to prevent unauthorized access.
Servicer
Special
Servicer
1122(d)(2)(vii)
Reconciliations are prepared on a monthly basis for all asset- backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations (A) are mathematically accurate; (B) are prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) are reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.
Servicer
Special
Servicer
Investor Remittances and Reporting
1122(d)(3)(i)
Reports to investors, including those to be filed with the SEC, are maintained in accordance with the transaction agreements and applicable SEC requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the SEC as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of mortgage loans serviced by the servicer. N/A
Exh. B-2
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1122(d)(3)(ii)
Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements. N/A
1122(d)(3)(iii)
Disbursements made to an investor are posted within two business days to the servicer’s investor records, or such other number of days specified in the transaction agreements. N/A
1122(d)(3)(iv)
Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements. N/A
Mortgage Loan Administration
1122(d)(4)(i)
Collateral or security on mortgage loans is maintained as required by the transaction agreements or related mortgage loan documents.
Servicer
Special
Servicer
1122(d)(4)(ii)
Mortgage loan and related documents are safeguarded as required by the transaction agreements. N/A
1122(d)(4)(iii)
Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.
Servicer
Special
Servicer
1122(d)(4)(iv)
Payments on mortgage loans, including any payoffs, made in accordance with the related mortgage loan documents are posted to the servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related mortgage loan documents. Servicer
1122(d)(4)(v)
The servicer’s records regarding the mortgage loans agree with the servicer’s records with respect to an obligor’s unpaid principal balance. Servicer
1122(d)(4)(vi)
Changes with respect to the terms or status of an obligor’s mortgage loans (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.
Special
Servicer
1122(d)(4)(vii)
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.
Special
Servicer
Exh. B-3
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1122(d)(4)(viii)
Records documenting collection efforts are maintained during the period a mortgage loan is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent mortgage loans including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).
Servicer
Special
Servicer
1122(d)(4)(ix)
Adjustments to interest rates or rates of return for mortgage loans with variable rates are computed based on the related mortgage loan documents. Servicer
1122(d)(4)(x)
Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s mortgage loan documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable mortgage loan documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related mortgage loans, or such other number of days specified in the transaction agreements. Servicer
1122(d)(4)(xi)
Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.
Servicer
1122(d)(4)(xii)
Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission. Servicer
1122(d)(4)(xiii)
Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements. Servicer
1122(d)(4)(xiv)
Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements. Servicer
1122(d)(4)(xv)
Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements. N/A
Exh. B-4
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Exh. B-5
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EXHIBIT C
INITIAL COMPANION PARTICIPATION HOLDER REGISTER

Companion Participation Holder Wire Instructions
OREC Structured Finance Co., LLC dba Lument Structured Finance
230 Park Avenue, 20th Floor
New York, NY 10169
Attention: Nicholas Capogrosso
Email: Nicholas.capogrosso@lument.com
Bank: Bank of America
City & State: New York, NY
ABA# 026-009-593
FAO: OREC Structured Finance Co., LLC
Acct#: 4632417258
Reference: LFT 2021-FL1
NexBank SSB
2515 McKinney Ave, Suite 1100
Dallas, TX 75201
Bank: NEXBANK SSB
City & State: Dallas, TX
ABA#: 311973208
Acct#: 140150
Reference: NEXBANK SSB – Loan Clearing


Exh. C-1
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EXHIBIT D
FORM OF SERVICER’S TWO QUARTER FUTURE ADVANCE ESTIMATE
[Date]

Note Administrator:
trustadministrationgroup@wellsfargo.com;
cts.cmbs.bond.admin@wellsfargo.com
Seller: general.counsel@lument.com
Future Funding Indemnitor: general.counsel@lument.com
Re:1LFT CRE 2021-FL1 – Two Quarter Future Advance Estimate
Ladies and Gentlemen: Servicer, the Special Servicer, the Collateral Manager, the Note Administrator and the 17g-5 Information Provider
This notification is delivered pursuant to Section 3.25 of the Servicing Agreement entered into in connection with the above referenced transaction. Capitalized terms used but not defined herein have the respective meanings set forth in the Servicing Agreement. The period covered by this notification is from ________ to ________ (the “Relevant Period”).
Check One:
________ Nothing has come to the attention of the Servicer in the documentation provided by OREC Structured Finance Co., LLC dba Lument Structured Finance that in the reasonable opinion of the Servicer would support a determination of a Two Quarter Future Advance Estimate for the Relevant Period that is at least 25% higher than OREC Structured Finance Co., LLC dba Lument Structured Finance’s Two Quarter Future Advance Estimate for the Relevant Period. In accordance with Section 3.25 of the Servicing Agreement, OREC Structured Finance Co., LLC dba Lument Structured Finance’s Two Quarter Future Advance Estimate is the controlling estimate for the Relevant Period.
________ The Servicer’s Two Quarter Future Advance Estimate for the Relevant Period is $ _____________. In accordance with Section 3.25 of the Servicing Agreement, the Servicer’s Two Quarter Future Advance Estimate is the controlling estimate for the Relevant Period.
Exh. D-1
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ORIX REAL ESTATE CAPITAL, LLC DBA LUMENT CAPITAL, as Servicer
By:        
Name:
Title:
Exh. D-2
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Exhibit 10.4
THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is dated as of April 21, 2021 and is entered into by and among, on the one hand, the lenders identified on the signature pages hereof (the “Lenders”) which Lenders constitutes the Required Lenders under the Credit Agreement, Cortland Capital Market Services LLC, as the administrative agent for the Lenders (in such capacity, together with its successors and permitted assigns in such capacity, “Administrative Agent”) and as the collateral agent for the Secured Parties (in such capacity, together with its successors and permitted assigns in such capacity, “Collateral Agent” and, together with the Administrative Agent, the “Agents”), and, on the other hand, Lument Finance Trust, Inc. (formerly known as Hunt Companies Finance Trust, Inc.), a Maryland corporation (“Borrower”), and is made with reference to that certain Credit and Guaranty Agreement, dated January 15, 2019 (as amended by that certain First Amendment to Credit and Guaranty Agreement, dated as of February 13, 2019, and by that certain Second Amendment to Credit and Guaranty Agreement, dated as of July 9, 2020, and as further amended, restated, supplemented, waived or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), by and among the Borrower, the Guarantors, the lenders and the other persons party thereto. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement after giving effect to this Amendment (the “Amended Agreement”).
RECITALS
WHEREAS, pursuant to Section 11.2 of the Credit Agreement, the Borrower, the Administrative Agent and the Lenders party hereto, which constitute the Required Lenders, wish to amend the Credit Agreement on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:
SECTION I. AMENDMENTS TO CREDIT AGREEMENT
A.The following definitions are hereby added to Section 1.1 of the Credit Agreement in their appropriate places in alphabetical order:
““First Incremental Term Loans” has the meaning set forth in the Third Amendment to this Agreement dated as of April 21, 2021.”
““Third Amendment Effective Date” has the meaning set forth in the Third Amendment to this Agreement dated as of April 21, 2021.”
B.The definition of “Anticipated Repayment Date” is hereby amended and restated in its entirety as follows:
““Anticipated Repayment Date” means February 14, 2025.”
740587760 21672042

C.Subclauses (i) and (vi) of clause (b) of the definition of “Borrowing Base Eligibility Criteria” are hereby amended and restated as follows:
“(i) no more than 10% of the Borrowing Base Eligible Assets (by Assigned Value) shall be secured by non-mall retail properties;”
“(vi)    no more than 15% of the Borrowing Base Eligible Assets (by Assigned Value) shall constitute student housing, assisted living and other health care assets;”
D.The definition of “Term Loan Maturity Date” is hereby amended and restated in its entirety as follows:
““Term Loan Maturity Date” means (a) with respect to the Initial Term Loans and the First Incremental Term Loans, the Maturity Date and (b) with respect to any other Incremental Term Loans, the final maturity date as specified in the applicable Incremental Amendment; provided that, if any such day is not a Business Day, the applicable Term Loan Maturity Date shall be the Business Day immediately succeeding such day.”
E.The definition of “Yield Maintenance Date” is hereby amended and restated in its entirety as follows:
““Yield Maintenance Date” means February 14, 2024.”
F.The definition of “Yield Maintenance Premium” is hereby amended by adding the following additional proviso at the end of the first sentence of such definition:
“; provided, however, that the Yield Maintenance Premium with respect to any Loan prepaid on or after February 14, 2023 and prior to the Yield Maintenance Date shall be 2.5% of the principal amount of the Loans so prepaid.”
G.Section 2.8(a) of the Credit Agreement is amended by adding the following sentence at the end thereof:
“For the avoidance of doubt, no Yield Maintenance Premium or other premium or penalty shall be payable in connection with any prepayment of the Loans, in whole or in part, made on or after February 14, 2024.”
H.Section 2.17(b) of the Credit Agreement is amended and restated in its entirety as follows:
“(b)    Except for prepayments contemplated by Section 2.8(d)(y), each repayment by the Borrower in respect of principal or interest on the Initial Term Loans and the First Incremental Term Loans and each payment in respect of fees or expenses payable hereunder shall be applied to the amounts of such obligations owing to the Lenders entitled thereto in accordance with their respective Pro Rata Share. Each voluntary prepayment by the Borrower of Initial Term Loans and the First Incremental
    2
740587760 21672042

Term Loans shall be applied to the amounts of such obligations owing to the Lenders in accordance with their respective Pro Rata Share (unless such payment is made in accordance with Section 9.1(f), in which case it shall be made in accordance with such Section).”
I.Section 3.3 of the Credit Agreement is amended and restated in its entirety as follows:
“3.3    Maturity Date.
(a)    This Agreement shall continue in full force and effect for a term ending on the earlier of (the “Maturity Date”): (a) February 14, 2026 and (b) such earlier date on which the Loans shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents.”
J.Section 6.12 of the Credit Agreement is amended and restated in its entirety as follows:
“6.12     Financial Covenants. The Borrower shall not:
(a)    Minimum Asset Coverage Ratio. Permit the Asset Coverage Ratio on the last day of each Test Period ending after the Third Amendment Effective Date, to be less than 150%.
(b)    Minimum Unencumbered Asset Ratio. Permit the Unencumbered Asset Ratio on the last day of each Test Period ending after the Third Amendment Effective Date, to be less than 170%.
(c)    Maximum Total Net Leverage Ratio. Permit the Total Net Leverage Ratio on the last day of each Test Period ending after the Third Amendment Effective Date, to exceed 6.00:1.00; provided that, after any equity offering of the Borrower following the preferred stock offering consummated on the Third Amendment Effective Date, the Total Net Leverage Ratio shall step down to a ratio no greater than 120% of the ratio immediately after the Capital Event, with a floor of 4.50:1.00.
(d)    Minimum Tangible Net Worth. Permit the Tangible Net Worth on the last day of each Test Period ending after the Third Amendment Effective Date, to be less than the amount equal to the sum of (i) eighty percent (80%) of the Borrower’s and its Subsidiaries’ Tangible Net Worth as of the Third Amendment Effective Date plus (ii) eighty percent (80%) of the net proceeds (after deducting transaction costs) that the Borrower and its Subsidiaries receive from subsequent equity issuances following the Third Amendment Effective Date.
(e)    Minimum Interest Coverage Ratio. Commencing with the fiscal quarter ending March 31, 2019, permit the Interest Coverage Ratio on the last day of each Test Period ending after the Third Amendment Effective Date, to be less than 1.6x.
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(f)    Loan Concentration.
(i)    Permit less than 65.0% of loans held for investment (as defined in the consolidated balance sheet of the Borrower) by the Borrower to be comprised of Senior Commercial Real Estate Loans, as measured by the average daily outstanding principal balance of all loans held for investment (as defined in the consolidated balance sheet of the Borrower) during a fiscal quarter and as adjusted for non-controlling interests for which none of the Borrower or its Affiliates or the Borrower’s external manager or its Affiliates holds majority lender status or similar voting control for the subject loan.
(ii)    Permit more than 25% of total assets (by unpaid principal balance or if unpaid principal balance is not available, by book value (which in the case of MSRs, shall be the value provided by the Valuation Agent) owned by the Borrower to be comprised of non-multi-family assets during a fiscal quarter.
(iii)    Permit more than 25% of the Borrowing Base Eligible Assets (by unpaid principal balance or if unpaid principal balance is not available, by book value (which in the case of MSRs, shall be the value provided by the Valuation Agent) to be comprised of non-multi-family assets during a fiscal quarter.”
K.Exhibit P-1 to the Credit Agreement is amended and restated in its entirety in the form attached to this Amendment as Exhibit P-1.
SECTION II.     FIRST INCREMENTAL TERM LOANS
Each Lender agrees, severally and not jointly, to make on the Third Amendment Effective Date an Incremental Term Loan to the Borrower in the principal amount set forth on Schedule II hereto for such Lender (the “First Incremental Term Loans”). The First Incremental Term Loans shall shall constitute Loans under the Credit Agreement as amended by this Amendment and shall have the same terms as to interest rate, repayments and prepayments as do the Initial Term Loans under the Credit Agreement as amended by this Amendment. The Incremental Facility Closing Date for the First Incremental Term Loans shall be the Third Amendment Effective Date, and accordingly, the conditions precedent to the making of the First Incremental Term Loans are set forth in Section III (in lieu of the conditions set forth in Section 2.15(d) of the Credit Agreement). This Amendment constitutes the Incremental Amendment for the First Incremental Term Loans.
SECTION III. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective as of the date hereof only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “Third Amendment Effective Date”):
A.Executed Counterparts. The Agents shall have received this Amendment, duly executed and delivered by each party thereto;
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B.Fees and Expenses. The Borrower shall have paid to each Lender an amendment fee in the amount of 0.25% of the outstanding principal amount of such Lender’s Loans on the Third Amendment Effective Date (not including the First Incremental Term Loans being made on the Third Amendment Effective Date) and the Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Amendment for which the Borrower received an invoice at least one (1) Business Day prior to the Third Amendment Effective Date;
C.Representations and Warranties. The representations and warranties of the Borrower contained in this Amendment and the other Loan Documents shall be true and correct on the Third Amendment Effective Date in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty to the extent that such representation or warranty is qualified or modified by materiality) on and as of the Third Amendment Effective Date as though made on and as of such date (except to the extent that such representations and warranties solely relate to an earlier date);
D.No Event of Default or Default. No Event of Default or Default shall have occurred and be continuing on the Third Amendment Effective Date, nor shall either result from the effectiveness of this Amendment on the Third Amendment Effective Date, the borrowing of the First Incremental Term Loans or the consummation of the other transactions contemplated by this Amendment; and the Borrower is in compliance with all the financial covenants set forth in Section 6.12 of the Amended Agreement before and after giving effect to the First Incremental Term Loans;
E.Preferred Stock Offering. The preferred stock offering of the Borrower contemplated by the Form S-11 filing of the Borrower made with the SEC on March 29, 2021 shall have been consummated; and
F.Amendment Closing Deliveries. The Agents shall have received customary legal opinions and officers’ certificates reasonably requested by the Agents.
SECTION IV. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Administrative Agent, the Collateral Agent and the Lenders that all of the representations and warranties of the Borrowers set forth in each of the Amended Agreement and the other Loan Documents are true and correct in all material respects (or in all respects to the extent such representation or warranty is limited by materiality except that such materiality qualifier shall not be applicable to any representation or warranty to the extent that such representation or warranty is qualified or modified by materiality) as of the Third Amendment Effective Date (except to the extent that such representations and warranties solely relate to an earlier date).
SECTION V. MISCELLANEOUS
A.Reference to and Effect on the Credit Agreement and the Other Loan Documents.
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(i)This Amendment shall constitute a Loan Document for purposes of each of the Credit Agreement, this Amendment and the other Loan Documents and on and after the Third Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement.
(ii)Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.
(iii)The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent, the Collateral Agent, the Lenders or any other secured party under the Credit Agreement or any of the other Loan Documents.
B.Reaffirmation.
(i)The Borrower hereby (a) agrees that, notwithstanding the occurrence of the Third Amendment Effective Date, each of the guarantees, the Security Agreement and each of the Negative Pledge Agreement and the Borrower DACA continue to be in full force and effect and are not impaired or adversely affected in any manner whatsoever, (b) confirms its guarantee of the Obligations and its grant of a security interest in its assets as Collateral therefor, all as provided in the Loan Documents as originally executed and (c) acknowledges that such guarantee and grant continues in full force and effect in respect of, and to secure, the Obligations under the Amended Agreement and the other Loan Documents.
(ii)The Guarantors hereby (a) agree that, notwithstanding the occurrence of the Third Amendment Effective Date, each of the guarantees, the Security Agreement and each of the Negative Pledge Agreement and the Mezz DACAs continue to be in full force and effect and are not impaired or adversely affected in any manner whatsoever, (b) confirms its guarantee of the Obligations and its grant of a security interest in its assets as Collateral therefor, all as provided in the Loan Documents as originally executed and (c) acknowledges that such guarantee and grant continues in full force and effect in respect of, and to secure, the Obligations under the Amended Agreement and the other Loan Documents.
C.Headings. Section headings used in this Amendment are for convenience of reference only and are not to affect the construction hereof or to be taken in consideration in the interpretation hereof.
D.GOVERNING LAW. EXCEPT AS SPECIFICALLY SET FORTH IN ANY OTHER LOAN DOCUMENT: (A) THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK; AND (B) THE VALIDITY OF THIS AMENDMENT, AND THE CONSTRUCTION, INTERPRETATION, AND
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ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
E.JURISDICTION AND VENUE. TO THE EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO AGREE THAT ALL ACTIONS, SUITS, OR PROCEEDINGS ARISING BETWEEN ANY MEMBER OF THE LENDER GROUP OR THE BORROWER AND ITS SUBSIDIARIES IN CONNECTION WITH THIS AMENDMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED HOWEVER THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT AT ANY AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE ANY AGENT ELECTS TO BRING SUCH ACTION TO THE EXTENT SUCH COURTS HAVE IN PERSONAM JURISDICTION OVER THE RELEVANT OBLIGOR OR IN REM JURISDICTION OVER SUCH COLLATERAL OR OTHER PROPERTY. THE BORROWER AND ITS SUBSIDIARIES AND EACH MEMBER OF THE LENDER GROUP, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION AND STIPULATE THAT THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PERSON FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AMENDMENT. TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST BORROWER OR ANY MEMBER OF THE LENDER GROUP MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED ON EXHIBIT 11.3 OF THE INDENTURE.
F.WAIVER OF TRIAL BY JURY. THE BORROWER AND ITS SUBSIDIARIES AND EACH MEMBER OF THE LENDER GROUP, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AMENDMENT, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AMENDMENT, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, THE BORROWER AND ITS SUBSIDIARIES AND EACH MEMBER OF THE LENDER GROUP HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE
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DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
G.Severability. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
H.Counterparts; Electronic Execution.
(i)This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Amendment or any document or instrument delivered in connection herewith by facsimile transmission or electronic image scan transmission (e.g., PDF) shall be effective as delivery of a manually executed counterpart of this Amendment or such other document or instrument, as applicable.
(ii)The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
[Remainder of Page Intentionally Blank; Signature Pages Follow]


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.
LUMENT FINANCE TRUST, INC., a Maryland corporation, as Borrower


By: /s/ James A. Briggs    
Name: James A. Briggs    
Title: Chief Financial Officer    


FIVE OAKS ACQUISITION CORP., a Delaware corporation, as Guarantor


By: /s/ James A. Briggs    
Name: James A. Briggs    
Title: Chief Financial Officer    


HUNT CMT EQUITY, LLC, a Delaware limited liability company, as Guarantor


By: /s/ James A. Briggs    
Name: James A. Briggs    
Title: Cheif Financial Officer    

    S-1    Third Amendment Signature Page
740587760 21672042

CORTLAND CAPITAL MARKET SERVICES LLC, as Administrative Agent and Collateral Agent


By: /s/ Matthew Trybula    
Name: Matthre Trybula    
Title: Associate Counsel    

    S-2    Third Amendment Signature Page
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LENDERS:

JPMORGAN GLOBAL BOND OPPORTUNITIES FUND

By:    J.P. Morgan Investment Management Inc., its Investor Advisor


By: /s/ Kent R. Weber    
Name: Kent R. Weber    
Title: Managing Director    

JPMORGAN INCOME FUND

By:    J.P. Morgan Investment Management Inc., its Investor Advisor


By: /s/ Kent R. Weber    
Name: Kent R. Weber    
Title: Managing Director    

JPMORGAN CORE PLUS BOND FUND

By:    J.P. Morgan Investment Management Inc., its Investor Advisor


By: /s/ Kent R. Weber    
Name: Kent R. Weber    
Title: Managing Director    

COMMINGLED PENSION TRUST FUND (CORE PLUS BOND) OF JPMORGAN CHASE BANK, N.A.

By:    J.P. Morgan Investment Management Inc., its Investor Advisor


By: /s/ Kent R. Weber    
Name: Kent R. Weber    
Title: Managing Director    
    S-3    Third Amendment Signature Page
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SCHEDULE II
Lender First Incremental Term Loan
JPMorgan Global Bond Opportunities Fund To be allocated among the Lenders as determined by the Lenders
JPMorgan Income Fund
JPMorgan Core Plus Bond Fund
Commingled Pension Trust Fund (Core Plus Bond) of JPMorgan Chase Bank, N.A.
Total $7,500,000.00

    Schedule II-1
740587760 21672042

Exhibit 31.1
 
Certification of Principal Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
 
I, James P. Flynn, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Lument Finance Trust, Inc.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over the financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 9, 2021
/s/ James P. Flynn
  James P. Flynn
  Chief Executive Officer (principal executive officer)



Exhibit 31.2
 
Certification of Principal Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
 
I, James A. Briggs, certify that:
 
1.I have reviewed this Quarterly Report on Form 10-Q of Lument Finance Trust, Inc.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over the financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 9, 2021
/s/ James A. Briggs
  James A. Briggs
  Chief Financial Officer (principal financial officer and principal accounting officer)



Exhibit 32.1
 
CERTIFICATION PURSUANT TO
17 CFR 240.15d-14(b) AND
18 U.S.C. SECTION 1350

 
In connection with the Quarterly Report on Form 10-Q of Lument Finance Trust, Inc. (the “Company”) for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James P. Flynn, as Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 17 CFR 240.15d-14(b) and 18 U.S.C. Section 1350, that, to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: August 9, 2021
/s/ James P. Flynn
  James P. Flynn
  Chief Executive Officer (principal executive officer)
 
A signed original of this written statement required by Section 906 has been provided to Lument Finance Trust, Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.



Exhibit 32.2
 
CERTIFICATION PURSUANT TO
17 CFR 240.15d-14(b) AND
18 U.S.C. SECTION 1350

 
In connection with the Quarterly Report on Form 10-Q of Lument Finance Trust, Inc. (the “Company”) for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James A. Briggs, as Chief Financial Officer (principal financial officer and principal accounting officer) of the Company, certify, pursuant to 17 CFR 240.15d-14(b) and 18 U.S.C. Section 1350, that, to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: August 9, 2021
/s/ James A. Briggs
  James A. Briggs
  Chief Financial Officer (principal financial officer and principal accounting officer)
 
A signed original of this written statement required by Section 906 has been provided to Lument Finance Trust, Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.