Liquidating trust agreement and indemnification
In addition, Holdco made representations confirming that CFI Holdings and the Servicer do not owe Holdco any fiduciary duty with respect to any action taken under the Mortgage Loan Documents and, subject to the limited circumstances set forth above, need not consult with Holdco with respect to any action taken by CFI Holdings or the Servicer in connection with the Mortgage Loan.
In addition, pursuant to the Participation Agreement, Holdco may not sell, assign, transfer, pledge, syndicate, hypothecate, contribute, encumber or otherwise dispose of all or any portion of the Retained Asset without CFI Holding’s (or it successor’s) prior written consent.
Subject to certain customary conditions, CFI Holdings may transfer all or any portion of the Senior Participation without the prior consent of Holdco; provided, however, that any transferee must demonstrate to Holdco’s reasonable satisfaction that such transferee has the ability to fund the Additional Loan (as defined below); provided that any affiliate of CFI Holdings will be deemed to have sufficient ability to fund such Additional Loan.
In the event that Holdco, or an affiliate of Holdco, acquires title to any of the Mortgaged Properties on behalf of itself and CFI Holdings through foreclosure, delivery of a deed in lieu of foreclosure or otherwise, CFI Holdings has agreed to either (i) maintain the existing Mortgage Loan with Holdco or its affiliate (the “New Owner”) as the borrower thereunder and extend the final fully extended maturity date thereunder by an additional two years or (ii) advance (or to cause one or more of its affiliates to advance), subject to satisfaction of to be agreed upon customary closing conditions, a new mortgage loan to the New Owner under substantially similar terms to the existing Mortgage Loan, which such loan being in a principal amount equal to the principal balance of the Senior Participation.
The Indemnifying Parties shall not settle, compromise or consent to the entry of any judgment in any actual or threatened Third Party Claim in respect of which indemnification has been sought by an Indemnified Party hereunder unless such settlement, compromise or judgment (i) includes an unconditional release of such Indemnified Party from all liability arising out of such Third Party Claim, (ii) could not lead to any liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder or which admits any wrongdoing or responsibility for such Third Party Claim on behalf of the Indemnified Party, or (iii) such Indemnified Party otherwise consents thereto.
If the Indemnifying Parties do not elect to assume the defense and control of a Third Party Claim, the Indemnified Party shall have the right to contest, settle or compromise the Third Party Claim in its sole discretion and shall not thereby waive any right to indemnity therefor pursuant to this Agreement.
Notwithstanding the foregoing, CFI Holdings must provide written notice to Holdco and, subject to certain conditions, receive the written approval of Holdco within ten business days, prior to taking any of the following actions:any modification of, or waiver with respect to, the Mortgage Loan (including the Mortgage Loan Documents) that would result in the extension of the maturity date or extended maturity date thereof, a reduction in the interest rate borne thereby or the monthly debt service payment or a deferral or a forgiveness of interest on or principal of the Mortgage Loan or a modification or waiver of any other term of the Mortgage Loan relating to the amount or timing of any payment of principal or interest or any other sums due and/or payable under the Mortgage Loan Documents or a modification or waiver of any material term of the Mortgage Loan, including, but not limited to, provisions that restrict the Borrower or its equity owners from incurring additional indebtedness or incurring any lien on any of the property securing the Mortgage Loan (the “Mortgaged Property”) or the personal property related thereto (other than liens permitted pursuant to the Mortgage Loan); provided that, with respect to each of the foregoing, only to the extent, if any, that the lender has any rights under the Mortgage Loan Documents with respect to such matters;any transfer of the Mortgaged Property or any portion thereof, or any transfer of any direct or indirect ownership interest in the Borrower, except in each case as expressly permitted by the Mortgage Loan Documents;the approval of any material alteration of the Mortgaged Property (if lender approval is required by the Mortgage Loan Documents and, if so, subject to the same standard of approval as is set forth in the applicable Mortgage Loan Documents); or Both CFI Holdings and Holdco made certain customary representations in the Participation Agreement.As disclosed above, on January 31, 2018, Holdco and CFI Holdings entered into the Participation Agreement, pursuant to which CFI Holdings purchased the Senior Participation from Holdco and Holdco retained the Retained Asset.The Retained Asset and Holdco’s right to receive payments of interest, principal and other amounts with respect to the Retained Asset is subordinate to the Senior Participation and the right of CFI Holdings to receive payments of interest, principal and other amounts with respect to the Senior Participation.that (i) the assumption of the defense of any such Third Party Claim by the Indemnifying Parties shall constitute assumption by the Indemnifying Parties of full responsibility for all Losses resulting from any such Third Party Claim and (ii) unless the Indemnified Party gives specific written consent, the Indemnifying Party shall not be able to assume the defense of any Third Party Claim which involves (A) any claim to which the Indemnified Party reasonably believes could be detrimental to or injure the Indemnified Party’s reputation or future business prospects, (B) any non-monetary relief, damages or claims, (C) criminal allegations, or (D) a Third Party Claim, which upon petition by the Indemnified Party, the appropriate court rules that the Indemnifying Party failed or is failing to vigorously prosecute or defend.(c) If the Indemnifying Parties elect to assume the defense and control of a Third Party Claim, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such Third Party Claim, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party, except to the extent that (i) the employment of such separate counsel shall have been authorized in writing by the Indemnifying Parties in connection with the defense of such action or claim, (ii) the Indemnifying Parties shall not have delivered written notice of their intent to assume control of the defense of such Third Party Claim prior to the expiration of the thirty (30) day period, or (iii) such Indemnified Party shall have reasonably concluded that there may be defenses available to it which are contrary to, or in conflict with, those available to the Indemnifying Parties, in any of which events such reasonable and documented out-of-pocket fees and expenses of outside counsel for the Indemnified Party shall be borne by the Indemnifying Parties.Until such time as the Indemnifying Parties assume the defense and control of a Third Party Claim as provided in this Indemnified Party’s fees, costs and expenses (including reasonable and documented out-of-pocket fees and expenses of outside counsel) in connection with such defense will be borne by the Indemnifying Parties.
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WHEREAS, the Merger Agreement provides that, prior to consummation of the Merger, the Company will transfer its indirect ownership interests in the Retained Properties (as defined herein) to a limited liability company formed to complete, after the consummation of the transactions contemplated by the Merger Agreement, the development, lease-up, sale and distribution of the proceeds of the sale of the Retained Properties; WHEREAS, the Company has caused the transfer to Holdco of its indirect ownership interests in the Retained Properties and, after certain contributions, distributions and assignments, the Company received a distribution of 100% of Holdco’s common membership interests; WHEREAS, concurrently with the execution of this Agreement, pursuant to a Bill of Sale, Assignment, Acceptance and Assumption Agreement, the Company has transferred the Holdco common membership interests to the Trust and has received 100% of the units of beneficial interest in the Trust; WHEREAS, pursuant to Section 6.1(f) of the Merger Agreement, prior to the distribution of the units of beneficial interest in the Trust to the Company’s stockholders, the Trust and Holdco are required to agree to indemnify and hold harmless the Company, the Company Subsidiaries (other than the Trust, Holdco, and its subsidiaries), and their respective Representatives (other than the Trust, Holdco, and its subsidiaries) against certain claims, expenses, losses, damages, injury, penalties, settlement, award, obligation, Taxes, interest or any other liabilities (collectively, “ NOW, THEREFORE, in consideration of the foregoing and of the covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, and intending to be legally bound hereby, the Parties agree as follows: ” means each real property (including all buildings, structures and other improvements and fixtures located on or under such real property and all easements, rights and other appurtenances to such real property) set forth on ”), jointly and severally, shall indemnify and hold harmless the Company, the Company Subsidiaries (which, for the avoidance of doubt, do not include the Trust, Holdco or its subsidiaries) and their respective Representatives (which, for the avoidance of doubt, do not include the Trust, Holdco or its subsidiaries) (each, an “ ”) against any and all Losses relating to, arising from, or in connection with the Retained Properties, the Excluded Property Transactions and the other transactions contemplated by Section 6.1(f) of the Merger Agreement. Each Indemnifying Party hereby unconditionally, irrevocably and forever releases, acquits and discharges the Indemnified Parties from, and covenants not to sue any of the Indemnified Parties for, any Losses (whether direct or indirect, known or unknown, disclosed or undisclosed, matured or unmatured, accrued or unaccrued, asserted or unasserted, absolute or contingent, determined or conditional, express or implied, fixed or variable and whether vicarious, derivative, joint, several or secondary) relating to the Retained Properties, the Excluded Property Transactions and the other transactions contemplated by Section 6.1(f) of the Merger Agreement which such Indemnifying Party has or had or can, shall or may now or hereafter have against any of the Indemnified Parties.(a) If any Indemnified Party shall receive notice or otherwise learn of a Third-Party Claim with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnified Party pursuant to this Agreement, such Indemnified Party shall give such Indemnifying Party written notice thereof demanding indemnification therefor as soon as reasonably practicable, but no later than 30 days after becoming aware of such Third-Party Claim.