UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of NEW YORK, ) Case No. 10-13800 (SCC) Midland loan Services, a division of PNC bank,. Midland is the special servicer for a certain secured loan in the amount of $825,402,542 plus interest, costs and fees.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of NEW YORK, ) Case No. 10-13800 (SCC) Midland loan Services, a division of PNC bank,. Midland is the special servicer for a certain secured loan in the amount of $825,402,542 plus interest, costs and fees.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of NEW YORK, ) Case No. 10-13800 (SCC) Midland loan Services, a division of PNC bank,. Midland is the special servicer for a certain secured loan in the amount of $825,402,542 plus interest, costs and fees.
1221 Avenue of the Americas, 26th Floor New York, New York 10020 Telephone: (212) 659-7300 Facsimile: (212) 884-8211 Lenard M. Parkins (NY Bar # 4579124) John D. Penn (NY Bar # 4847208) Mark Elmore (admitted pro hac vice) Jonathan Hook (NY Bar # 4187449)
Attorneys for Midland Loan Services, a division of PNC Bank, N.A.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) INNKEEPERS USA TRUST, et al., ) Case No. 10-13800 (SCC) ) Debtors. ) Jointly Administered )
REPLY AND OBJECTION OF MIDLAND LOAN SERVICES TO THE MOTIONS OF (A) APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD. AND (B) LNR SECURITIES HOLDINGS, LLC AND WELLS FARGO BANK, N.A., AS TRUSTEE SEEKING (I) JUDICIAL DETERMINATION OF PARTY IN INTEREST STATUS UNDER SECTION 1109(b) OF THE BANKRUPTCY CODE, OR IN THE ALTERNATIVE (II) GRANTING INTERVENTION PURSUANT TO FEDERAL RULE OF BANKRUPTCY PROCEDURE 2018
Midland Loan Services, a division of PNC Bank, N.A. (Midland), 1 by its undersigned attorneys, files this Reply and Objection (the Objection) 2 to the motions (together, the
1 Midland is the special servicer for that certain secured loan in the amount of not less than $825,402,542 plus interest, costs and fees (the Fixed Rate Mortgage Loan) owed by certain of the above-referenced Debtors (collectively, the Debtors) pursuant to a Pooling and Servicing Agreement, dated as of August 13, 2007 (the C6 Pooling & Servicing Agreement) excerpts of which attached hereto as Exhibit 1 and a Co-Lender Agreement (the Co-Lender Agreement) attached hereto as Exhibit 2 entered into in connection with the Fixed Rate Mortgage Loan. A complete copy of the C6 Pooling & Servicing Agreement was attached as Exhibit A to the Declaration of Daniel A. Fliman in Support of the Motion of CRES Investment No. II, L.P. to Dismiss Complaint [Docket No. 9] in LNR Partners, LLC and LNR 2 Standing Motions) 3 filed by Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P. and Thoroughbred Master Ltd. (collectively, Appaloosa) 4 and LNR Securities Holdings, LLC (LNR Securities) and Wells Fargo Bank, N.A., as trustee for standing to object to the Debtors Motion for Entry of an Order (i) Authorizing the Debtors to Enter into the Commitment Letter with Five Mile Capital II Pooling REIT LLC, Lehman ALI Inc., and Midland Loan Services, (ii) Approving the New Party/Midland Commitment Between the Debtors and Midland Loan Services, (iii) Approving Bidding Procedures, (iv) Approving Bid Protections, (v) Authorizing an Expense Reimbursement to Bidder D, and (vi) Modifying Cash Collateral Order to Increase Expense Reserve (the Bid Procedures Motion) 5 pursuant to
Securities Holdings, LLC v. CRES Investment No. II, LP, Adv. Pro. 10-04237. The Fixed Rate Mortgage Loan has a maturity date of July 9, 2017.
2 The Standing Motions assert different rights to standing with respect to the different capacities claimed to be held by Appaloosa, LNR Securities and LNR Partners, LLC (LNR). As more fully described below, this Objection is first lodged against the relief sought by LNR Securities and Appaloosa in their capacity solely as certificateholders in the C6 and/or C7 Trusts as applicable (as defined below). In the LNR Motion (as defined below), Wells Fargo Bank, N.A. represents that it is acting as trustee for certain securitized trusts which hold approximately $160 million in secured mortgage loans against certain of the Debtors. LNR Motion at 7. Upon information and belief, LNR is the special servicer for those loans. The claim for standing made by LNR, as special servicer for the trusts holding these secured mortgage loans, is vastly different from LNR Securities flawed claim to standing as a certificateholder in the C7 Trust. 3 Memorandum of Law of Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. (the Appaloosa Motion), and Motion of Trusts and LNR Securities Holdings, LLC Seeking Judicial Determination of Party in Interest Status Under Section 1109(b) of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases Pursuant to Federal Rule of Bankruptcy 2018 (the LNR Motion), Docket Nos. 858 and 857, respectively. 4 To date, counsel for Appaloosa has failed to file the requisite statement under Federal Rule of Bankruptcy Procedure 2019 to reflect each of the entities it represents. As set forth in Bankruptcy Rule 2019(b), the Court may refuse to permit that entity . . . to be heard further or to intervene in the [Chapter 11 Cases.]; In re Ionosphere Clubs, Inc., 101 B.R. 844, 852-53 (Bankr. S.D.N.Y. 1989). This failure alone, without even considering the other fatal flaws in Appaloosas position, provides an additional basis to reject Appaloosas request for standing to appear and be heard in these cases. As a point of reference, the initial pleadings filed in these cases were filed in the name of Appaloosa Investments, L.P. I. It is unclear when the other entities acquired the positions they assert in the Appaloosa Motion. 5 Docket No. 820. 3 11 U.S.C. 1109, or, in the alternative, granting intervention in the above-captioned chapter 11 cases (the Chapter 11 Cases) pursuant to Rule 2018 of the Federal Rules of Bankruptcy Procedures (the Bankruptcy Rules). PRELIMINARY STATEMENT 1. LNR Securities and Appaloosa, as mere certificateholders, have no standing to appear and be heard in these Chapter 11 Cases with respect to the Fixed Rate Mortgage Loan. They hold interests in the C6 and C7 Trusts that are the creditors of the Debtors. Their position is akin to being a shareholder of a bank that is a creditor of the Debtors. Shareholders cannot appear and be heard for the bank and neither can a certificateholder be heard for the C6 and C7 Trusts. That role belongs to Midland as special servicer. LNR Securities and Appaloosa have ceded all authority to act for the Fixed Rate Mortgage Loan to Midland, as special servicer, and have not taken any action required of them under the applicable agreements to change that status. 2. The Fixed Rate Mortgage Loan is evidenced by two pari passu notes, the A-1 Note and the A-2 Note. 6 The A-1 Note was assigned to the trustee for the C6 Trust, and the A-2 Note was assigned to the trustee for the C7 Trust. Pursuant to the terms of the C6 Pooling & Servicing Agreement and the Co-Lender Agreement, which, among other things, govern the servicing and administration of the Fixed Rate Mortgage Loan, the special servicer for the C6 Trust (i.e., Midland) is authorized to act on behalf of and is granted the right (by the C6 and C7 Trusts as lenders) to represent the lenders in a bankruptcy case involving the borrowers. 7 See
6 Capitalized terms used but not defined in the Preliminary Statement are defined hereinafter. 7 The Prospectus Supplement dated August 24, 2007 regarding the C6 Trust (the C6 Prospectus Supplement), an excerpt of which is attached as Exhibit 3 provides: The governing document for purposes of forming the issuing entity and issuing the series 2007- C6 certificates will be a pooling and servicing agreement to be dated as of August 13, 2007. The pooling and servicing agreement will also govern the servicing and administration of the mortgage loans (with the two material exceptions described below [unrelated to the Fixed Rate 4 Co-Lender Agreement, Section 3.01 (General Servicing Matters). As such, Midland is the only party with standing to appear and be heard in these cases, on behalf of the C6 & C7 Trusts in connection with the Fixed Rate Mortgage Loan, including, with respect to the Bid Procedures Motion. Appaloosa and LNR Securities, as certificateholders in the C6 and/or C7 Trusts, as applicable, are bound by the provisions of the C6 Pooling & Servicing Agreement, and have no standing to appear and be heard in the Chapter 11 Cases. 3. The Standing Motions are improper attempts to circumvent the express provisions of the C6 Pooling & Servicing Agreement and the Co-Lender Agreement, which grant to Midland the sole and exclusive responsibility of administering the Fixed Rate Mortgage Loan for the C6 & C7 Trusts in these Chapter 11 Cases and with standing to do so. Appaloosa and LNR Securities, as certificateholders in the C6 and/or C7 Trusts, as applicable, have no such authority or standing and therefore are not proper parties in interest with authority to act for the C6 and/or C7 Trusts as applicable with respect to the Bid Procedures Motion or otherwise in these Chapter 11 Cases. To the extent Appaloosa (as a certificateholder in the C6 Trust and/or the C7 Trust) or LNR Securities (as a certificateholder solely in the C7 Trust) believes it has grounds to challenge Midlands actions as special servicer with respect to the Bid Procedures Motion, they must do so in accordance with the express provisions of the pooling and servicing agreements for either the C6 Trust or the C7 Trust, as applicable; not as part of these Chapter 11 Cases. Their efforts to argue to the contrary must be rejected.
Mortgage Loan]) and other assets that back the series 2007-C6 certificates. C6 Prospectus Supplement at S-9. Only excerpts of the C6 Prospectus Supplement have been attached hereto because the full C6 Prospectus Supplement is voluminous; however, copies will be made available upon request to counsel for Midland. Additionally, the full C6 Prospectus Supplement is publicly available at http://www.sec.gov/Archives/edgar/data/1408673/000095013607005971/file1.htm. 5 4. Instead of accepting their lack of standing, Appaloosa and LNR Securities, as certificateholders, improperly attempt to assert standing to air their discontent with Midlands actions in servicing of the Fixed Rate Mortgage Loan and in supporting the Bid Procedures Motion. If LNR Securities and Appaloosa are not satisfied with Midlands conduct as special servicer under the agreements, they can assert those claims (without conceding the validity of those claims or whether the claims are sustainable under the governing documents for the C6 and C7 Trusts) in another forum. Here, in these Chapter 11 Cases, by contract, each ceded standing and any individual right to appear and be heard in these cases when they bought their certificates. Their efforts to directly and indirectly challenge Midlands right to act for, and be the exclusive voice in these cases for the C6 & C7 Trusts with respect to the Fixed Rate Mortgage Loan and the Bid Procedures Motion violate the fundamental documents at the core of those CMBS investments. 5. LNR Securities (as an affiliate of LNR - one of the largest special servicers for securitized loans - and a sophisticated investor in CMBS certificates) and Appaloosa (as a sophisticated investor in CMBS certificates) indisputably know and understand that CMBS investments necessarily require that investors voluntarily cede to the special servicer any individual right to appear and be heard with respect to the mortgages owned in those investment vehicles. In fact, within the past year, LNR successfully and correctly filed papers and argued in other litigation in this district that individual certificateholders lacked standing to intervene in a foreclosure action brought by a special servicer for a CMBS trust (Appaloosa was also the certificateholder in that case). LNR, LNR Securities and Appaloosa cannot feign ignorance of the law, the applicable agreements in these Chapter 11 Cases, or the statements made, pleadings 6 filed, and positions taken in these Chapter 11 Cases and in other cases in this district, which are directly contrary to their standing arguments made to this Court in the Standing Motions. 6. As certificateholders in the C7 Trust, LNR Securities or Appaloosas claim to standing is even more remote. A certificateholder in the C7 Trust cannot invoke the provisions of the C6 Pooling & Servicing Agreement to establish standing, but rather must operate within the bounds of the pooling and servicing agreement for the C7 Trust. 8 The trustee, master servicer and special servicer of the C7 Trust have expressly ceded authority and supervision with respect to the Fixed Rate Mortgage Loan to the special servicer for the C6 Trust (i.e., Midland). 9
Further, like the requirements under the C6 Pooling & Servicing Agreement, a certificateholder of the C7 Trust must first satisfy the requirements under the pooling and servicing agreement for the C7 Trust before it can direct the trustee for the C7 Trust to act with respect to the C7 Trust or act on its own behalf, and neither LNR Securities or Appaloosa have alleged that they have (or
8 A complete copy of the pooling and servicing agreement for the C7 Trust was attached as Exhibit B to the Declaration of Daniel A. Fliman in Support of the Motion of CRES Investment No. II, L.P. to Dismiss Complaint [Docket No. 9] in LNR Partners, LLC and LNR Securities Holdings, LLC v. CRES Investment No. II, LP, Adv. Pro. 10-04237.
9 See Co-Lender Agreement, Section 3.01. Additionally, the Prospectus Supplement dated November 20, 2007 regarding the C7 Trust (the C7 Prospectus Supplement), an excerpt of which is attached hereto as Exhibit 4, put the purchasers of the certificates in the C7 Trust on notice of this arrangement. The C7 Prospectus Supplemented provided, in relevant part:
The series 2007-C6 pooling and servicing agreement initially governs the servicing and administration of the Innkeepers Portfolio Loan Combination and any related REO Property. The series 2007-C6 pooling and servicing agreement is the governing document for the Series 2007-C6 Securitization, which closed prior to the Issue Date. Under the series 2007-C6 pooling and servicing agreement, the master servicer is Wachovia Bank, National Association, the trustee is LaSalle Bank National Association and the initial special servicer is Midland Loan Services, Inc . . . . The master servicer, special servicer and trustee under the series 2007-C7 pooling and servicing agreement will not have any obligation or authority to supervise the series 2007-C6 master servicer, the series 2007- C6 special servicer, the series 2007-C6 trustee . . . .
C7 Prospectus Supplement at S-215. Only excerpts of the C7 Prospectus Supplement have been attached hereto because the full C7 Prospectus Supplement is voluminous; however, copies will be made available upon request to counsel for Midland. Additionally, the full C7 Prospectus Supplement is publicly available at http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm. 7 even can) meet this threshold requirement under the C7 Trust. As such, LNR Securities and Appaloosa (to the extent a certificateholder of the C7 Trust) cannot credibly claim rights to standing, rights to object and be heard with respect to the Bid Procedures Motion or rights to challenge Midlands actions with respect thereto. BACKGROUND I. THE FIXED RATE MORTGAGE LOAN AND THE C6 & C7 TRUSTS 7. On or about June 29, 2007, certain of the Debtors borrowed $825,402,542 in an aggregate principal amount pursuant to that certain loan agreement dated as of June 29, 2007 (as amended, the Fixed Rate Mortgage Loan Agreement). The Fixed Rate Mortgage Loan is collateralized by 45 of the Debtors hotel properties and is evidenced by: (i) a certain Replacement Note A-1 (the A-1 Note); and (ii) a certain Replacement Note A-2 (the A-2 Note), each dated as of August 9, 2007, and each in the original principal amount of $412,701,271. 8. The A-1 Note was assigned to the trustee for a certain CMBS trust (the C6 Trust). The A-2 Note was assigned to the trustee for another CMBS trust (the C7 Trust). Both the C6 Trust and the C7 Trust (together, the C6 & C7 Trusts) contain many other mortgage loans, in the approximate original principal amount of $3 billion each. Appaloosa and LNR Securities each allege that they are among a number of entities that hold certificates evidencing interests in the C6 and/or C7 Trusts, as applicable. 9. Midland was named as special servicer for the C6 Trust under the C6 Pooling & Servicing Agreement. In addition, as set forth in the Co-Lender Agreement which governs the relationship between the trustees for the C6 & C7 Trusts, as the holder of the A-1 Note and the holder of the A-2 Note, respectively, the special servicer for the C6 Trust (i.e., Midland) is the special servicer for the Fixed Rate Mortgage Loan. See Co-Lender Agreement, Section 3.01 8 (General Servicing Matters). As such, Midland has been exclusively enfranchised to act as the special servicer for the entire Fixed Rate Mortgage Loan and has the exclusive standing to appear and be heard in these Chapter 11 Cases regarding such loan. Certificateholders, including LNR Securities and Appaloosa, have not been granted any such position, rights or standing by the contracts to which they are bound. 10. The Co-Lender Agreement expressly provides that [t]he [C6 and C7 Trusts] shall jointly appoint the [Special Servicer] as their agent, and grant to the [Special Servicer] an irrevocable power of attorney coupled with an interest, and their proxy, for the purpose of exercising any and all rights and taking any and all actions available to the [Trusts] in connection with any case by or against the Borrower under the Bankruptcy Code, including the right to vote to accept or reject a plan, to make any election under Section 1111(b) of the Bankruptcy Code with respect to the [Mortgage Loans] and to file a motion to modify the automatic stay with respect to the [Mortgage Loans]. Co-Lender Agreement Section 3.01(d) (emphasis supplied). 11. As set forth in the C6 Pooling & Servicing Agreement, Midland has the sole and exclusive right to service and administer the Fixed Rate Mortgage Loan, subject to certain advice and consent rights of the controlling class representatives under the C6 and C7 Trusts. See C6 Pooling & Servicing Agreement, Sections 3.01 (Administration of the Mortgage Loans) and 6.12 (Certain Matters Regarding the Serviced Loan Combinations). The C6 & C7 Trusts are the creditors of the Debtors, and the C6 & C7 Trusts act with respect to the Fixed Rate Mortgage Loan through the special servicer Midland. Certificateholders, like LNR Securities and Appaloosa, are not creditors of the Debtors. Rather, they are investors in the C6 & C7 Trusts as applicable, and have no standing to appear for the C6 & C7 Trusts in these Chapter 11 Cases, 9 including to appear in these Chapter 11 Cases to challenge Midlands actions taken on behalf of the C6 & C7 Trusts regarding the Bid Procedures Motion. The C6 Pooling & Servicing Agreement provides that [n]o Certificateholder (except as expressly provided for herein) shall have any right to vote or in any manner otherwise control the operation and management of the Trust Fund, or the obligations of the parties hereto . . . . C6 Pooling & Servicing Agreement, Section 11.03(b) (Limitation on Rights of Certificateholders) (emphasis supplied). 10
12. The Co-Lender Agreement further provides that [i]n any case commenced by or against the Borrower under the Bankruptcy Code or any similar provision thereof or any similar federal or state statute (a Reorganization Proceeding), the [C6 and C7 Trusts] hereby agree to grant the Special Servicer, subject to the Servicing Standard, the right to (i) file a proof of claim in respect of the [C6 and C7 Trusts] claims against the Borrower; (ii) have the exclusive right to exercise any voting rights in respect of the claims of the [C6 and C7 Trusts] against the Borrower and (iii) otherwise represent the [C6 and C7 Trusts] in such Reorganization Proceeding. Section 6.08 (Bankruptcy Matters) (emphasis supplied). No provision in the Co-Lender Agreement or any other agreement empowers or grants certificateholders any present standing, right or privity with the Debtors allowing them to appear and to be heard separate and apart from the C6 & C7 Trusts in these Chapter 11 Cases. 13. Notwithstanding the defined advisory and consent rights granted to the Directing Lender (defined therein as the lenders (i.e., C6 & C7 Trusts) acting jointly) in the Co-Lender Agreement, no advice, direction or objection from or by the Directing Lender . . . may (and the [Special] Servicer shall ignore and act without regard to any such advice, direction or objection that the [Special] Servicer has determined, in its reasonable, good faith judgment,
10 A certificateholder in the C7 Trust is bound by a similar provision in the pooling and servicing agreement for the C7 Trust. See Section 11.03(b) of the pooling and servicing agreement for the C7 Trust. 10 will) require, cause or permit the [Special] Servicer to violate any provision of [the Co-Lender] Agreement or the [Pooling &] Servicing Agreement (including the [Special] Servicers obligation to act in accordance with the Servicing Standard), the Loan Documents or applicable law . . . . Co-Lender Agreement, Section 3.02(b) (emphasis supplied). Neither LNR Securities nor Appaloosa are the Directing Lender or are empowered to exercise the rights of the Directing Lender for the Fixed Rate Mortgage Loan. Instead, Midland is empowered to act with respect to the Fixed Rate Mortgage Loan consistent with its duties as special servicer of the C6 Trust under the C6 Pooling & Servicing Agreement. 14. Nevertheless, under the C6 Pooling & Servicing Agreement, a certificateholder, such as Appaloosa, with the support of 25% of the holders of Voting Rights (as defined in the C6 Pooling & Servicing Agreement), can obtain standing to appear and be heard in certain limited circumstances, including where the special servicer is in default under the C6 Pooling & Servicing Agreement. Likewise, to the extent there was a default by the special servicer under the pooling and servicing agreement for the C7 Trust, LNR Securities or Appaloosa would have to first comply with the applicable provisions of the pooling and servicing agreement for the C7 Trust before either could obtain standing. However, neither LNR Securities nor Appaloosa have acted in accordance with the applicable provisions of the pooling and servicing agreements for either the C6 Trust or the C7 Trust to obtain standing, and absent such compliance, they have no authority or standing to be heard individually. 15. Section 11.03(c) of the C6 Pooling & Servicing Agreement, commonly characterized as a no action clause, provides, in pertinent part: No Certificateholder shall have any right by virtue of any provision of [the Pooling & Servicing] Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to [the Pooling & Servicing] Agreement or any Mortgage Loan, unless, with respect to any suit, action or 11 proceeding upon or under or with respect to [the Pooling & Servicing] Agreement, such Person previously shall have given to the Trustee a written notice of default hereunder, and of the continuance thereof, as hereinbefore provided, and unless also (except in the case of a default by the Trustee) the Holders of Certificates entitled to at least 25% of the Voting Rights shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and (except in the case of a default by the Trustee) the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding. It is understood and intended, and expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatsoever by virtue of any provision of [the Pooling & Servicing] Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, which priority or preference is not otherwise provided for herein, or to enforce any right under [the Pooling & Servicing] Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all Certificateholders . . . .
C6 Pooling & Servicing Agreement, Section 11.03 (Limitations on Rights of Certificateholders) (emphasis supplied). 11
16. Under the terms of the C6 Pooling & Servicing Agreement, a C6 certificateholder does not have the right to institute any suit, action or proceeding under the C6 Pooling & Servicing Agreement or relating to any mortgage loan unless (i) it first gives notice to the trustee for the C6 Trust of the ongoing default and (ii) (except in the case of a default by the trustee for the C6 Trust), C6 certificateholders entitled to vote 25% or more of the voting rights make written request on the trustee of C6 Trust to institute such suit, action or proceeding in its own name as trustee under the C6 Pooling & Servicing Agreement (and offer the trustee such reasonable indemnity as it may require against costs, expenses and liabilities to be incurred) and
11 See Section 11.03 of the pooling and servicing agreement for the C7 Trust for a similar provision.
12 (except in the case of a default by the trustee of C6 Trust), for a period of 60 days after receipt of such notice, the trustee of C6 Trust neglects or refuses to institute any such suit, action or proceeding. See C6 Pooling & Servicing Agreement, Section 11.03(c). 12
17. The reported ownership holdings for LNR Securities and Appaloosa fall well short of the requisite 25% needed to trigger the applicable no action process under the pooling and servicing agreements for either the C6 Trust or the C7 Trust, and neither party has made any attempt to trigger such process. LNR Securities and Appaloosa cannot sidestep the mandatory requirements of the applicable pooling and servicing agreement for either the C6 or the C7 Trusts and take action in these Chapter 11 Cases in contravention of the express provisions of the pooling and servicing agreements. Simply stated, under the documents they bound themselves to in making their investments, LNR Securities and Appaloosa have no standing as mere certificateholders to appear and be heard in these Chapter 11 Cases with respect to the Fixed Rate Mortgage Loan or to challenge Midlands actions with respect to the Bid Procedures Motion. II. THE CHAPTER 11 CASES 18. On July 19, 2010 (the Petition Date), each of the Debtors filed a petition under chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code). The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On July 28, 2010, the United States Trustee for the Southern District of New York appointed the official committee of unsecured creditors.
12 Likewise, the pooling and servicing agreement for the C7 Trust contains a similar no action provision that is applicable to the C7 certificateholders, including LNR Securities and Appaloosa. See Section 11.03(c) of the pooling and servicing agreement for the C7 Trust.
13 19. On the Petition Date, the Debtors filed their Motion to Assume the Plan Support Agreement (the PSA Approval Motion). 20. On August 23, 2010, a number of parties including Appaloosa filed objections to the PSA Approval Motion (the Appaloosa PSA Objection). 13 On August 27, 2010, the Debtors filed an omnibus reply to objections to the PSA Approval Motion and argued, at that time, that Appaloosa lacked standing to object to the PSA Approval Motion as a certificateholder of CMBS debt and a de minimis holder of preferred shares. 14
21. On September 1, 2010, the Bankruptcy Court denied the PSA Approval Motion after a lengthy hearing. 22. On December 10, 2010, Midland and Five Mile, with Lehmans support, executed a commitment letter whereby Five Mile agreed to provide equity capital for the restructuring of the Debtors debt and equity through a plan of reorganization (the December 10 Commitment). The December 10 Commitment represented a highly negotiated agreement between Midland and Five Mile. 23. Thereafter, during December, the Debtors, Midland, Five Mile and Lehman engaged in ongoing negotiations regarding the December 10 Commitment. See Bid Procedures Motion at 25-33. 24. On December 23, 2010, the Debtors independent committee of the board of directors and the board of directors as a whole determined in their business judgment that the selection of the Stalking Horse Bid (as described in the Bid Procedures Motion) and the
13 Docket No. 279, filed by Appaloosa Investment L.P. I. 14 Innkeepers USA Trust issued 8.0% Series C Cumulative Preferred Shares (the Preferred Shares) to certain shareholders (the Preferred Shareholders). Docket No. 340 (unsealed at Docket No. 362) at 26- 28. 14 processes described in the Bid Procedures Motion were in the best interests of the Debtors estates. Id. at 42. 25. On January 14, 2011, the Debtors, Midland, Five Mile, and Lehman signed the Commitment. Also on January 14, 2011, the Debtors filed the Bid Procedures Motion. 15
ARGUMENT AND AUTHORITIES I. APPALOOSA AND LNR SECURITIES HAVE NO STANDING AS CERTIFICATEHOLDERS TO APPEAR AND BE HEARD REGARDING THE BID PROCEDURES MOTION 26. As established by the express terms of the C6 Pooling & Servicing Agreement, the Co-Lender Agreement, controlling Second Circuit precedent interpreting such agreements, and statements made and positions taken by Appaloosa and LNR Securities, the requests of Appaloosa and LNR Securities to be granted standing to be heard in connection with the Bid Procedures Motion in their capacity as certificateholders must be denied. A. Overview of Certificateholder Lack of Standing: LNR Securities and Appaloosa are not Creditors of the Debtors and Have no Standing to Appear and be Heard With Respect to the Fixed Rate Mortgage Loan. Midland as Special Servicer has that Exclusive Right and Authority. 27. First and foremost, LNR Securities and Appaloosa, as certificateholders, are not creditors of the Debtors estates, have no privity with the Debtors and have no right to standing to be heard in the Chapter 11 Cases. Rather, the C6 and C7 Trusts are creditors of these estates and the C6 and C7 Trusts act exclusively through Midland as special servicer of the Fixed Rate Mortgage Loan. 28. As an essential part of making an investment in a CMBS vehicle, LNR Securities and Appaloosa have empowered Midland, as special servicer of the C6 Trust, with the rights and power to speak and act for the C6 & C7 Trusts with respect to the Fixed Rate Mortgage Loan.
15 Docket No. 820. 15 The C6 & C7 Trusts are creditors of the Debtors. Midland acts on behalf of the C6 & C7 Trusts with respect to the Fixed Rate Mortgage Loan. LNR Securities and Appaloosa have no right to seek to be a party in interest outside of the provisions of the agreements at the heart of the investment vehicle the C6 Pooling & Servicing Agreement and Co-Lender Agreement. 29. Section 1109(b) of the Bankruptcy Code governs whether a party is a party in interest enabling it to be heard with respect a particular issue in a bankruptcy case. See generally 11 U.S.C. 1109(b). The real party in interest is the one who under the applicable substantive law, has the legal right which is sought to be enforced or is the party entitled to bring suit. In re Saint Vincents Catholic Med. Ctrs. of New York, 429 B.R. 139, 149 (Bankr. S.D.N.Y. 2010) (quoting In re Comcoach Corp., 698 F.2d 571, 573 (2d Cir. 1983)). As CMBS investors, LNR Securities and Appaloosa are neither owners of the Fixed Rate Mortgage Loan nor owners of an interest therein. They own interests in the owners of the Fixed Rate Mortgage Loan the C6 and C7 Trusts. Neither Appaloosa nor LNR Securities are the real parties in interest. They cannot re-enfranchise or reinstate standing or other rights they ceded to the special servicer in any manner that is inconsistent with the C6 Pooling & Servicing Agreement and the Co-Lender Agreement. 30. Section 1109(b) of the Bankruptcy Code does not obviate the need to satisfy the constitutional and prudential standing requirements that are essential parts of federal court jurisdiction. In re Motors Liquidation Co., 430 B.R. 65, 92 (S.D.N.Y. 2010) (citing In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992) for the proposition that section 1109 of the Bankruptcy Code was never intended to circumvent standing requirements such as the requirement that the claimant is within the class of intended beneficiaries of the statute that he is relying on for his claim). 16 31. The Bankruptcy Code does not define party in interest. Courts in the Second Circuit, when focused on this issue, have said that a party in interest is reserved to the debtor, or one who is a creditor of the estate or is able to assert an equitable claim against the estate. In re Martin Paint Stores, 199 B.R. 258, 264 (Bankr. S.D.N.Y. 1996) (internal citations omitted), affd, S. Blvd., Inc. v. Martin Paint Stores, 207 B.R. 57, 61 (S.D.N.Y. 1997). Certificateholders like LNR Securities and Appaloosa are none of the above. They have no more privity nor relationship with the Debtors than a banks shareholder has in any loans made or otherwise held by the bank. 32. The Second Circuit has noted that if bankruptcy courts are too lenient in granting standing applications, the reorganization process can be overburdened by allowing numerous parties to interject themselves into the case on every issue, thereby thwarting the goal of a speedy and efficient reorganization. Krys v. v. Official Comm. of Unsecured Creditors (In re Refco, Inc.), 505 F.3d 109, 118 (2d Cir. 2007) (quoting In re Ionosphere Clubs, Inc., 101 B.R. 844, 850 (Bankr. S.D.N.Y. 1989)). 33. Appaloosa and LNR Securities, in their capacity as certificateholders, are not creditors of the Debtors, do not have privity with the Debtors, and have no standing under applicable documents and no right to appear and be heard for the C6 & C7 Trusts in these Chapter 11 Cases or to challenge Midlands actions with respect to the Fixed Rate Mortgage Loan in connection with the Bid Procedures Motion. B. The No Action Clause in the Applicable Pooling & Servicing Agreements Bars Standing for Appaloosa and LNR Securities and Precludes Them from Acting for the C6 & C7 Trusts, Acting on Their Own Account or Challenging Midlands Conduct with Respect to the Bid Procedures Motion
17 34. Neither LNR Securities nor Appaloosa cite any provision of the C6 Pooling & Servicing Agreement, the Co-Lender Agreement or the pooling and servicing agreement for the C7 Trust that would empower a certificateholder to act or appear in this Court for the C6 & C7 Trusts or to act on its own behalf based on its certificateholder status. There is simply no such right to act with respect to ones own certificates. To the contrary, standing is vested (by agreement) in Midland as the special servicer. 35. The C6 Pooling & Servicing Agreement expressly precludes Appaloosa and LNR Securities from having standing in their capacity as certificateholders because Appaloosa and LNR Securities cannot satisfy the strict requirements thereunder. Although both Appaloosa and LNR Securities admit, as they must, that their respective rights as certificateholders are governed by the terms of the C6 Pooling & Servicing Agreement, Co-Lender Agreement and the pooling and servicing agreement for the C7 Trust, the Standing Motions seek to circumvent the constricts of such agreements required of certificateholders before they can act outside of or for the C6 & C7 Trusts. 36. Section 11.03(c) of the C6 Pooling & Servicing Agreement is commonly characterized as a no action clause. 16 Appaloosa and LNR Securities have not and cannot satisfy the conditions precedent to relief from the C6 Pooling & Servicing Agreements no action clause. Even the Controlling Class Representative, which has specific, delineated rights including advising Midland, may not act in contravention of the no action clause. 17
16 No action clauses are to be strictly construed. See, e.g., Continental Casualty Co. v. State of N.Y. Mortgage Agency, 1998 WL 513054, at * 3 (S.D.N.Y. 1998) (citing Cruden v. Bank of N.Y., 957 F.2d 961, 968 (2d Cir. 1992); see also McMahan & Co. v. Wherehouse Entmt, Inc., 65 F.3d 1044, 1050 (2d Cir. 1995) (noting that no action clauses are strictly construed . . . and have been enforced in a variety of contexts in both federal and state courts). A similar provision is found in Section 11.03(c) of the pooling and servicing agreement for the C7 Trust. 17 CRES Investment No. II is the Controlling Class Representative under the pooling and servicing 18 37. The Second Circuits rulings with respect to no action clauses are consistent with other situations where a group of lenders vest sole authority to act in a single agent. See, e.g., In re Chrysler LLC, 405 B.R. 84, 103 (Bankr. S.D.N.Y. 2009), affd, 576 F.3d 108 (2d Cir. 2009), cert. dismissed 130 S.Ct. 41 (2009) (enforcing credit agreement provisions in which lenders vested right to act in agent and noting [r]estricting enforcement to a single agent to engage in unified action for the interests of a group of lenders, based upon a majority vote, avoids chaos and prevents a single lender from being preferred over others); In re Metaldyne Corp., 409 B.R. 671, 677-78 (Bankr. S.D.N.Y. 2009). 38. Courts in the Second Circuit have repeatedly rejected the attempts of parties (like certificateholders Appaloosa and LNR Securities) to act in contravention of no action clauses. See, e.g., Teachers Ins. & Annuity Assn of Am. V. CRIIMI MAE Servs. Ltd. Pship, 681 F. Supp. 2d 501, 505-06 (S.D.N.Y. 2010) (examining the requirements of a no action clause in a pooling and servicing agreement to determine whether they had been satisfied so that a certificateholder could institute litigation in connection with such agreement); McMahan & Co. v. Wherehouse Entmt, Inc., 65 F.3d at 1051 (In this case, plaintiffs failed to comply with the no action clause, and as a result, the district court ruled that their state-law claims were barred.); see also Bank of Am. N.A. v. PCV St. Owner LP, No. 10-civ-1178 (S.D.N.Y. April 20, 2010) (Docket No. 89) 18
agreement for the C7 Trust. As this Court is aware, Five Mile purchased a controlling interest in CRES Investment No. II, LP. While LNR and Appaloosa allege that Five Miles dual roles as the putative Controlling Class Representative and a party to the Commitment as being a conflict of interest, such allegation has no bearing whatsoever on the Courts review of the Debtors exercise of business judgment in connection with the Bid Procedures Motion. In any event, all certificateholders were put on notice (prior to their investment) of the role of the Controlling Class Representative and that its interests may be in conflict with the interests of other certificateholders. See C6 Prospectus Supplement at S-48, attached hereto as Exhibit 5. 18 A copy of the brief filed by the special servicer opposing Appaloosas Intervention and the transcript delineating the courts denial of Appaloosas intervention motion are attached hereto as Exhibit 6 and Exhibit 7 respectively. 19 (denying Appaloosas motion to intervene in a foreclosure action pursued by a special servicer, brought by Appaloosa in its capacity as a certificateholder of the trust at issue). 19
39. The primary purpose of, and the critical need for, enforcing, no action clauses is obvious. No action clauses protect . . . against the exercise of poor judgment by a single bondholder or a small group of bondholders, who might otherwise bring a suit against the issuer that most bondholders would consider not to be in their collective interest. Rossdeutscher v. Viacom, Inc., 768 A.2d 8, 22 (Del. 2001) (applying New York law); see also Friedman v. Chesapeake & Ohio Ry. Co., 261 F. Supp. 728, 731 n.7 (S.D.N.Y. 1966), affd 395 F.2d 663 (2d Cir. 1968) (If in a mortgage securing thousands of bonds every holder of a bond or bonds were free to sue at will for himself and for others similarly situated, the resulting harassment and litigation would not only be burdensome but intolerable.) (emphasis supplied). 40. Contrary to the arguments made in the LNR Standing Motion, LNR has clearly and unequivocally rejected a certificateholders attempts to intervene in an action in which the servicer is acting on behalf of the relevant trust as fatally flawed and legally unsustainable. See generally Brief of Amici Curiarum LNR Partners, Inc. and American Capital, Ltd. In Support of CWCapital Asset Management LLCs Opposition to Motion for Leave to Intervene a as Party- Defendant Filed by Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd., Case No. 10-cv-01178 (AKH), Doc. No. 71 (S.D.N.Y.), March 3, 2010 (the LNR Amici). 20 A copy of LNR Amici is annexed hereto as Exhibit 8.
19 It should be noted that in these Chapter 11 Cases Appaloosa previously all but conceded in its objection to the Debtors assumption of the Plan Support Agreement with Lehman (the Appaloosa PSA Objection) that it does not have standing as a certificateholder. Docket No. 279 at 7 (While this interest [as a Certificateholder] is not direct and, in and of itself, arguably might not afford Appaloosa standing . . . .). 20 Appaloosa likewise would be well aware of LNRs position and the applicable law given that the court denied Appaloosas attempt to intervene in the same way the Court should do so here. 20 41. In the LNR Amici, LNR correctly and convincingly argues (against the same Appaloosa entities that are certificateholders and movants in this case) intervention would allow certificateholders to ignore no-action clauses by which they are contractually bound, to the detriment of other certificateholders. LNR Amici at p. 8. LNR argues further that Individual certificateholders such as Appaloosa have no contractual right to seek to challenge or override the actions of a CMBS special servicer or to second guess through intervention the special servicers exercise of remedies . . . . Nor should an individual certificateholder such as Appaloosa be permitted to intervene . . . when all certificateholders, including those with rights of consultation, have delegated the power to exercise remedies to the special servicer. Allowing Appaloosa to intervene in this action would spawn satellite litigation that will clog the courts and impair recoveries to CMBS bondholders.
Id. at p. 10. 42. LNR Securities current position is diametrically opposed to what LNR wrote in the LNR Amici and voluntarily submitted to the court where no filing was compelled. LNR and its affiliate, LNR Securities, have charged full bore into their own box canyon trap from which there is no escape. LNR Securities has no standing as a certificateholder to appear, be heard, and advance its own agenda with respect to the Bid Procedures Motion in these Chapter 11 Cases. C. Because They Have Not Satisfied the Conditions Precedent to Action Under the Applicable No Action Clauses under the Pooling and Servicing Agreements for Either the C6 or the C7 Trusts as applicable, Appaloosa and LNR Securities Do Not Have Standing as Certificateholders to act in any Capacity to Object to the Bid Procedures Motion
43. The Second Circuit has soundly rejected the standing arguments made by Appaloosa and LNR Securities in the Standing Motions. In In re Refco, the Second Circuit addressed whether investors in a non-debtor investment vehicle could be considered parties in interest entitled to standing under section 1109(b) of the Bankruptcy Code. 505 F.3d 109. In affirming the lower courts denial of standing and holding that the investment vehicle, and not the investors, was the proper party in interest, the Second Circuit opined: 21 Bankruptcy Courts are primarily courts of equity, but they are not empowered to address any equitable claim tangentially related to the bankruptcy proceeding. Bankruptcy court is a forum where creditors and debtors can settle their disputes with each other. Any internal dispute between a creditor and that creditors investors belongs elsewhere.
Id. at 118 (emphasis supplied). 44. The issue that will be before this Court at the hearing on the Bid Procedures Motion is whether the Bid Procedures Motion should be granted. What will not be before the Court when considering the Debtors business judgment with respect to the Bid Procedures Motion is how Midland is performing its role as special servicer. Empowering certificateholders to circumvent the special servicer and to use bankruptcy courts to attack how individual loans, owned by investment vehicles are administered and serviced, would contravene the purpose of section 1109(b) of the Bankruptcy Code. Opening the doors to a disparate slate of views (each arguing that it should be heard) would wreak havoc on debtors ability to negotiate with their creditors and much of the limited court time would be consumed with intramural squabbles. 21
45. Neither LNR Securities nor Appaloosa cite any authority for the proposition that they should have independent standing to be heard on the Bid Procedures Motion in lieu of Midland (or independent of other certificateholders). Instead, both Appaloosa and LNR Securities incorrectly point to a remand opinion in the In re Extended Stay Inc. case. Appaloosa Motion at p. 16; LNR Motion at 18. In In re Extended Stay Inc., one certificateholder (Five Mile Capital) had sued other certificateholders (Cerberus, Centerbridge and GEM) for negotiating restructuring terms in a manner that Five Mile Capital believed violated the
21 In considering Appaloosas and LNR Securities arguments, the Court should consider the impact of opening the door for other certificateholders to appear in these and other cases. A court could easily hear from certificateholders with diametrically opposed objectives that would also be at odds with the strategy pursued by the special servicer. In cases with multiple CMBS financings, that court could devote more time and resources to resolving the intramural disputes within each CMBS investment vehicle than it would in resolving disputes between the debtor and its creditors. 22 prohibition against one certificateholder negotiating a better deal for itself vis--vis the other certificateholders. 418 B.R. 49 (Bankr. S.D.N.Y. 2009), affd, 435 B.R. 139 (S.D.N.Y. 2010). The Court denied remand of the action because it held that restricting a certificateholders negotiations with the debtors was an inherently core matter over which it had jurisdiction. 435 B.R. at 146 (Five Miles efforts to prevent the Debtors from pursuing ongoing post-filing negotiations in their reorganization proceeding clearly implicate the core bankruptcy function of estate administration, particularly plan formulation.). Therefore, the Courts holding in Extended Stay that an attempt to restrict the debtors ability to negotiate with a certificateholder is a core matter has no relevance to the issue at hand. 22
46. The Court in In re Extended Stay never addressed the issue of whether a mere certificateholder has standing to challenge the actions of the special servicer in the Bankruptcy
22 The excerpts of the transcripts from In re Extended Stay Inc. likewise do not support LNR Securities point. See, e.g., LNR Motion at 18. First, as correctly pointed out by LNR Securities itself, the Court was never addressing whether certificateholders had standing in the context of a cash collateral dispute or otherwise. LNR Motion at p. 9, fn. 6. Second, because the special servicer in In re Extended Stay was not appointed until the petition date, concerned certificateholders expressed concern over objectionable relief included in the Debtors first day motion for interim cash collateral. See Objection of Five Mile Capital II SPE ESH LLC to Debtors Motion for Order (A)(i) Authorizing Use of Cash Collateral, (ii) Granting Adequate Protection and (iii) Modifying the Automatic Stay, and (B) Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001, Case No. 09-13764 (Docket No. 27). No certificate holder of the Trust, whether FMC or an ad hoc mortgage lender group, has legal standing in these proceedings, as the trustee of the Trust, acting through its newly appointed special servicer, is as a matter of law the sole party in interest and the only creditor with standing and the right to be heard on behalf of the Trust and its certificate holders. Nevertheless, in view of commencement of these cases just today, and the scheduling of a hearing on the Motion a mere 24 hours or so later, with minimal notice, if any, to creditors and little time for the trustee or its special servicer to prepare, and little time for any of the certificate holders to confer with the trustee or its newly appointed special servicer and to discuss the myriad of issues raised by the Motion, FMC is reluctantly compelled to seek by this objection a limited right to be heard at this point in the proceedings, until such time as the special servicer has qualified, retained counsel and is in a position to fully and adequately represent the interests of the certificate holders. By submitting this objection, FMC does not any way concede that the certificate holders themselves have any standing herein. 23 Court. If that Court had instead dealt with a dispute between a certificateholder and special servicer, the case might have been more instructive. But that was not the issue before the court. II ANY STANDING THAT APPALOOSA AND LNR MAY HAVE IN ANY CAPACITY OTHER THAN CERTIFICATEHOLDER SHOULD BE LIMITED TO ISSUES THAT AFFECT SUCH INTERESTS
47. While Appaloosa and LNR Securities cannot be granted standing to be heard with respect to the Bid Procedures Motion in their capacity as certificateholders, the Standing Motions may have merit to the extent Appaloosa and LNR are proper parties in interest within the meaning of section 1109(b) of the Bankruptcy Code in other capacities. For instance, in its Standing Motion, Appaloosa asserts standing as a Preferred Shareholder. 23 If the Court finds its ownership of Preferred Shares provides Appaloosa with standing, such standing should be restricted to issues that affect Appaloosas interests as a Preferred Shareholder only. 24 The term party in interest is broadly interpreted but not infinitely expansive. See S. Blvd., Inc. v. Martin Paint Stores, 207 B.R. 57, 61 (S.D.N.Y. 1997) (citing 7 COLLIER ON BANKRUPTCY 1109.03 (Lawrence P. King, ed., 15 th ed. rev.)). 48. A number of courts have limited standing under section 1109(b) of the Bankruptcy Code to a party (i) with a legally protected interest affected by the bankruptcy proceeding in question, and (ii) that demonstrates that it is a beneficiary of the bankruptcy
23 The Debtors have noted that Appaloosa bought the 25 preferred shares on the Petition Date for approximately $11.25, presumably to manufacture standing in the Chapter 11 Cases. See Debtors Omnibus Reply in Support of Debtors Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Further Relief and Response to Objections Thereto (Docket No. 362, at p. 26. Appaloosa now represents that it holds 100 Preferred Shares, though it has failed to file a Rule 2019 statement with the information underlying such ownership. See Appaloosa Motion at p. 2. 24 It should be noted that Appaloosa also is a participant in the DIP Loan provided by Five Mile in the Chapter 11 Cases (the Five Mile DIP). Under the Stalking Horse Bid, the Five Mile DIP will be paid in full. In fact, the procedures embodied in the Bid Procedures Motion all but ensure that the Five Mile DIP will be satisfied in an expeditious fashion. It is unclear to Midland what Appaloosa could possibly complain about in its capacity as a DIP lender. 24 provision being invoked. In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (citing, among other cases, In re Caldor, Inc., 193 B.R. 182, 186 (Bankr. S.D.N.Y. 1996)); see also In re Quigley Co., Inc., 391 B.R. 695, 703-06 (Bankr. S.D.N.Y. 2008) (holding that insurers standing to object to plan was limited to the plan provisions that directly affected their interests); In re Saint Vincents Catholic Med. Ctrs. of New York, 429 B.R. 139, 150 (Bankr. S.D.N.Y. 2010) (The Court construes Metro North State Bank, discussed herein, to mean that, when Bankruptcy Code 1109(b) and Fed. R. Bankr. P. 2018(a) are read together, the long list of interested parties set out in 1109 does not guarantee a party on that list the right to object to every motion; rather the party must be directly interested in the motion at hand. Otherwise, the party needs the Courts permission to intervene [before it may be heard].). 49. Appaloosa cannot use its limited standing as a Preferred Shareholder or as a DIP Lender to complain about the actions of Midland and other non-Debtor parties in connection with the Bid Procedures Motion. Likewise, LNR cannot use standing as a special servicer for trusts that hold secured mortgage claims in other collateral owned by various Debtors to complain about Midlands servicing of the Fixed Rate Mortgage Loan in connection with the Bid Procedures Motion. Appaloosa and LNR should be confined to voicing concerns in the context of the Bankruptcy Code provisions and bankruptcy issues that directly affect interests where they have standing. See, e.g., In re Refco, 505 F.3d at 113, 119 (noting, in denying standing to investors in the debtors creditor to challenge a settlement between the estate and the creditor, the bankruptcy court found that the only relevant inquiry in bankruptcy court is whether the debtor acted in good faith to ensure that the [s]ettlement is favorable to the estate, and not to ensure that the creditors representatives are honoring their fiduciary duties) (emphasis supplied); S. Blvd., Inc. v. Martin Paint Stores, 207 B.R. 57, 61 (S.D.N.Y. 1997) (holding that while a creditor 25 of a debtors creditor may be concerned about a bankruptcy proceedings effect on that creditors assets, it is not a party in interest under the Second Circuits view of section 1109 because its legal rights and interests can only be asserted against the debtors creditor, not against the debtor). 50. During this case, LNR and Midland have had a consistent voice concerning any attempt by the Debtors through the cash collateral order or otherwise to effect a substantive consolidation of these Bankruptcy Cases. LNR, as special servicer for its hotels, filed an objection to the Debtors motion for the use of cash collateral arguing that certain of the proposed provisions in the cash collateral order would constitute a substantive consolidation of the Debtors estates (i.e., consolidation of the estates in which LNR is a special servicer with the estates for the Debtors under the Fixed Rate Mortgage Loan). 25 As an objecting party, LNR, along with Midland, was successful in obtaining language in the Final Order that [f]or the avoidance of doubt, nothing contained in this Order shall constitute a substantive consolidation of the Debtors estates. 26 Any argument by LNR that it now has a right (in its capacity as the special servicer on secured mortgage loans for five (5) hotel properties owned by five (5) different Debtors) to object to Midlands actions with respect to the Fixed Rate Mortgage Loan
25 See Objection of Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as Trustee for the Registered Holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 to Debtors Motion for the Entry of a Final Order (A) Authorizing the Debtors to (I) Use the Adequate Protection Parties Cash Collateral and (II) Provide Adequate Protection to the Adequate Protection Parties Pursuant to 11 U.S.C. 361, 362, and 363, and (B) To the Extent Approved in the Final Order, Granting Senior Secured, Priming Liens on Certain Postpetition Intercompany Claims, and (C) To the Extent Approved in the Final Order, Granting Administrative Priority Status to Certain Postpetition Intercompany Claims and Joinder to the Objection of Midland Loan Services, Inc. [Docket No. 255] at p. 11, 16.
26 See Final Order Authorizing the Debtors to (i) Use the Adequate Protection Parties Cash Collateral and (ii) Provide Adequate Protection to the Adequate Protection Parties Pursuant to 11 U.S.C. 361, 362, and 363 entered on September 2, 2010 [Docket Entry #402] at p. 30, fn. 3.
26 would turn LNRs consistent position with respect to substantive consolidation on its head. The Court has not ordered substantive consolidation of the Debtors estates, and as such, LNRs concerns with respect to the Bid Procedures Motion must be limited to Debtors with loans upon the hotel properties in which it is a special servicer and has an economic interest. III APPALOOSA AND LNR SECURITIES REQUESTS FOR INTERVENTION IN THE BANKRUPTCY CASES IS INAPPROPRIATE AND SHOULD BE DENIED
51. Implicitly acknowledging that the C6 Pooling & Servicing Agreements no action clause, the Co-Lender Agreement, the controlling authority in the Second Circuit and Appaloosas and LNR Securities own conduct dictate that they do not have standing to object to the Bid Procedures Motion in their capacity as certificateholders, Appaloosa, 27 and LNR Securities argue nonetheless that they should be permitted to intervene in the Chapter 11 Cases pursuant to Bankruptcy Rule 2018. See LNR Motion at 20-22. 52. To intervene, a party must have a direct and non-contingent claim. As set forth in the district courts decision in Bank of Am. N.A. v. PCV St. Owner LP, No. 10-civ-1178 (S.D.N.Y. April 20, 2010), a certificateholder does not have direct, substantial and legally protectable interests with respect to the Bid Procedures Motion. See Ex. 7 at p. 36, 19:23. Instead, a certificateholders interest is indirect and is contingent upon the occurrence of a sequence of events, namely the negligence or failure of the trustee acting for all of the groups, and it is not the business of this lawsuit. Id. at p. 36, 24:25-37, 1:2. 53. As stated in the LNR Motion, a party seeking to intervene under Bankruptcy Rule 2018 must show cause. In re Ionosphere Clubs, Inc., 101 B.R. 844, 849-53 (Bankr. S.D.N.Y. 1989). While cause can be characterized as an economic or similar interest, permissive
27 While Appaloosa has yet to argue that they should be permitted to intervene in the Chapter 11 Cases pursuant to Bankruptcy Rule 2018, they have expressly reserved their rights to do so. Appaloosa Motion at p. 3, fn. 2. 27 intervention is limited and should not be given if (1) the intervenors interests are already adequately represented and (2) intervention would result in undue delay or prejudice to the original parties. Id. at 853 (internal citations omitted); see also In re Pub. Serv. Co. of New Hampshire, 88 B.R. 546, 554 (Bankr. D.N.H. 1988) (. . . it is equally important that the court take care not to be so liberal in granting such applications as to over-burden the reorganization process by allowing numerous parties to interject themselves into the case on every issue, to the extent that the goal of a speedy and efficient reorganization is hampered.). Before permissive intervention is considered, the Court should consider the likelihood that other certificateholders would seek to intervene as well to assert their individual interests. This Courts resources should not be devoted to resolving disputes within a non-debtor CMBS investment vehicle. 54. Appaloosa, LNR Securities and LNR have failed to satisfy the cause criteria for intervening. Appaloosa and LNR have expressly agreed that Midland shall have the exclusive right to act on behalf of the C6 & C7 Trusts with respect to the Fixed Rate Mortgage Loan. In that context, Midland acts on behalf of all certificateholders. See supra at 7-10. The fact that Appaloosa and LNR Securities may not like Midlands actions does not mean that they are not adequately represented. Moreover, allowing Appaloosa and LNR to conduct discovery, file pleadings, etc., as well as opening the door for every minority certificateholder to come forward, asserting a myriad of disparate positions, would wreak havoc and prejudice the Debtors and creditors to the point that the reorganizations would be near impossible. 55. Appaloosa and LNR Securities should not be able to use intervention under Bankruptcy Rule 2018(a) to circumvent the strictures of section 1109(b) of the Bankruptcy Code. In the case of In re Refco Inc., Judge Drain held that the investors in a non-debtor entity are not parties in interest and may not intervene to object to a deal that they believe is entered into 28 improvidently or improperly by the entity in which they hold interests. See generally Masonic Hall & Asylum Fund v. Official Committee of Unsecured Creditors (In re Refco Inc.), 2006 U.S. Dist. LEXIS 85691 (S.D.N.Y. 2006) (describing Judge Drains decision on appeal). In that case, an entitys investors objected to that entity settling a preference action against it. Id. at *3. The investors complained that the entity simply threw the fight in order to protect its own insiders, and others, from scrutiny and legal exposure and that the entitys investment advisor had an incestuous relationship with the debtor leading to a worse-than-losing settlement. Id. at *4. The investors argued that they had standing to object to the settlement as parties in interest, or in alternative, that they should be allowed to intervene. Id. at *5. In rejecting both of these arguments, Judge Drain explained: [T]he objections . . . all object on the basis that they believe that the entities in which they hold interests . . . have improvidently or improperly entered into it . . . I believe that those objectors do not have standing to be heard on those objections . . . because . . . they were not directly affected by this settlement, but are affected only through their ownership or debtor/creditor interests in the nondebtor settling parties. Consequently, I should not in fact, I may not review the fairness of the settlement as to them. Id. at *8 (quoting from the bankruptcy court transcript). On appeal, the district court held that the bankruptcy court properly determined that the investors did not have standing to object and that the bankruptcy court properly rejected the request to intervene. Id. at *17-19. This ruling was affirmed again on further appeal to the Second Circuit Court of Appeals. See Krys. v. Official Comm. of Unsecured Creditors (In re Refco, Inc.), 505 F.3d 109, 119 n.13 (2d Cir. 2007) (rejecting the non party in interests attempt to intervene under Bankruptcy Rule 2018 and stressing that [i]ntervenor status, no less than party-in-interest status, would permit investors to take a stand . . . requiring the debtor to negotiate with two faces of the same entity). 56. In the same vein, the attempts of Appaloosa and LNR Securities as certificateholders to intervene with respect to the Bid Procedures Motion must be rejected. 29 LOCAL RULE 9013-1(a)
57. This pleading includes citations to the applicable rules and statutory authorities upon which the objections contained herein are predicated and a discussion of their application to this pleading. Accordingly, Midland submits that this pleading satisfies Local Bankruptcy Rule 9013-1(a). CONCLUSION WHEREFORE, Midland respectfully requests that this Court enter an Order: (i) denying the Standing Motions as they relate to Appaloosa and LNR Securities as certificateholders in the C6 and/or C7 Trusts as applicable; (ii) limiting and restricting any standing conferred upon Appaloosa and/or LNR in other capacities as described herein; (iii) denying any motion to intervene filed by LNR Securities or Appaloosa; and (iv) granting such other relief as is necessary or appropriate.
Dated: February 1, 2011 New York, New York
HAYNES AND BOONE, LLP
/s/ John D. Penn Lenard M. Parkins (NY Bar #4579124) John D. Penn, Esq. (NY Bar # 4847208) Mark Elmore (admitted pro hac vice) Jonathan Hook (NY Bar # 4187449) 1221 Avenue of the Americas, 26th Floor New York, NY 10020-1007 Telephone No.: (212) 659-7300 Facsimile No.: (212) 884-8211
ATTORNEYS FOR MIDLAND LOAN SERVICES, a division of PNC Bank, N.A. [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM
STRUCTURED ASSET SECURITIES CORPORATION II, Depositor and WACHOVIA BANK, NATIONAL ASSOCIATION as Master Servicer and MIDLAND LOAN SERVICES, INC., as Special Servicer and LASALLE BANK NATIONAL ASSOCIATION, as Trustee
POOLING AND SERVICING AGREEMENT Dated as of August 13, 2007 ______________________________ $2,978,936,714 LB-UBS Commercial Mortgage Trust 2007-C6 Commercial Mortgage Pass-Through Certificates, Series 2007-C6
-i- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM TABLE OF CONTENTS Page ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES; CERTAIN ADJUSTMENTS TO THE PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES SECTION 1.01. Defined Terms. ........................................................................................................7 SECTION 1.02. General Interpretive Principles. ...........................................................................117 SECTION 1.03. Certain Adjustments to the Principal Distributions on the Certificates. ..............117 SECTION 1.04. Calculation of LIBOR..........................................................................................120 ARTICLE II
CONVEYANCE OF TRUST MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES; ORIGINAL ISSUANCE OF CERTIFICATES SECTION 2.01. Creation of Trust; Conveyance of Trust Mortgage Loans. ..................................121 SECTION 2.02. Acceptance of Trust Fund by Trustee. .................................................................125 SECTION 2.03. Repurchase of Trust Mortgage Loans for Document Defects and Breaches of Representations and Warranties. ..................................................................127 SECTION 2.04. Representations, Warranties and Covenants of the Depositor.............................139 SECTION 2.05. Acceptance of Grantor Trust Assets by Trustee; Issuance of the Class V Certificates and the Floating Rate Certificates. ................................................141 SECTION 2.06. Acceptance of Loan REMICs by Trustee; Execution, Authentication and Delivery of Class R-LR Certificates; Creation of Loan REMIC Regular Interests. ............................................................................................................142 SECTION 2.07. Conveyance of Loan REMIC Regular Interests. .................................................142 SECTION 2.08. Execution, Authentication and Delivery of Class R-I Certificates; Creation of REMIC I Regular Interests. ..........................................................................142 SECTION 2.09. Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by Trustee...............................................................................................................143 SECTION 2.10. Execution, Authentication and Delivery of Class R-II Certificates; Creation of REMIC II Regular Interests. ..........................................................143 SECTION 2.11. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by Trustee...............................................................................................................143 SECTION 2.12. Execution, Authentication and Delivery of REMIC III Certificates. ..................144 SECTION 2.13. Acceptance of Loss of Value Reserve Fund by Trustee. .....................................144 ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND SECTION 3.01. Administration of the Mortgage Loans................................................................145 SECTION 3.02. Collection of Mortgage Loan Payments. .............................................................148
-ii- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM SECTION 3.03. Collection of Taxes, Assessments and Similar Items; Servicing Accounts; Reserve Accounts..............................................................................................151 SECTION 3.04. Pool Custodial Account, Defeasance Deposit Account, Collection Account, Interest Reserve Account, Excess Liquidation Proceeds Account, Loss of Value Reserve Fund, Floating Rate Accounts and Swap Collateral Accounts.................................................................................153 SECTION 3.05. Permitted Withdrawals From the Pool Custodial Account, the Collection Account, the Interest Reserve Account and the Excess Liquidation Proceeds Account..............................................................................................163 SECTION 3.06. Investment of Funds in the Collection Account, the Servicing Accounts, the Reserve Accounts, the Defeasance Deposit Account, the Custodial Accounts, the REO Accounts, the Interest Reserve Account, the Excess Liquidation Proceeds Account and the Floating Rate Accounts. .....................181 SECTION 3.07. Maintenance of Insurance Policies; Errors and Omissions and Fidelity Coverage; Environmental Insurance.................................................................183 SECTION 3.08. Enforcement of Alienation Clauses. ....................................................................188 SECTION 3.09. Realization Upon Defaulted Mortgage Loans; Required Appraisals; Appraisal Reduction Calculation. .....................................................................194 SECTION 3.10. Trustee and Custodian to Cooperate; Release of Mortgage Files........................199 SECTION 3.11. Servicing Compensation; Payment of Expenses; Certain Matters Regarding Servicing Advances.........................................................................201 SECTION 3.12. Property Inspections; Collection of Financial Statements; Delivery of Certain Reports. ................................................................................................208 SECTION 3.13. Annual Statement as to Compliance. ...................................................................213 SECTION 3.14. Reports on Assessment of Compliance with Servicing Criteria; Registered Public Accounting Firm Attestation Reports. ...................................................215 SECTION 3.15. Access to Certain Information. ............................................................................218 SECTION 3.16. Title to REO Property; REO Accounts. ...............................................................220 SECTION 3.17. Management of REO Property.............................................................................222 SECTION 3.18. Sale of Trust Mortgage Loans and Administered REO Properties......................225 SECTION 3.19. Additional Obligations of the Master Servicer and Special Servicer; Obligations to Notify Ground Lessors and Hospitality Franchisors; the Special Servicers Right to Request the Master Servicer to Make Servicing Advance. ...........................................................................................230 SECTION 3.20. Modifications, Waivers, Amendments and Consents; Defeasance. ....................234 SECTION 3.21. Transfer of Servicing Between Master Servicer and Special Servicer; Record Keeping. ...............................................................................................246 SECTION 3.22. Sub-Servicing Agreements. .................................................................................247 SECTION 3.23. Representations and Warranties of the Master Servicer. .....................................251 SECTION 3.24. Representations and Warranties of the Special Servicer. ....................................252 SECTION 3.25. Certain Matters Regarding the Purchase of the Trust Mortgage Loan in a Loan Combination. ...........................................................................................254 SECTION 3.26. Application of Default Charges. ..........................................................................254 SECTION 3.27. Certain Matters Regarding Serviced Loan Combinations. ..................................258 SECTION 3.28. Deliveries in Connection with Securitization of a Serviced Non-Trust Mortgage Loan..................................................................................................260 SECTION 3.29. The Swap Agreements. ........................................................................................260
-iii- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS; REPORTS TO CERTIFICATEHOLDERS SECTION 4.01. Distributions.........................................................................................................264 SECTION 4.02. Statements to Certificateholders and Others........................................................275 SECTION 4.03. P&I Advances With Respect to the Mortgage Pool.............................................284 SECTION 4.04. Allocations of Realized Losses and Additional Trust Fund Expenses ................290 SECTION 4.05. Various Reinstatement Amounts. ........................................................................292 SECTION 4.06. Calculations..........................................................................................................294 ARTICLE V
THE CERTIFICATES SECTION 5.01. The Certificates. ...................................................................................................295 SECTION 5.02. Registration of Transfer and Exchange of Certificates........................................295 SECTION 5.03. Book-Entry Certificates. ......................................................................................303 SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates. ..............................................305 SECTION 5.05. Persons Deemed Owners. ....................................................................................305 ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER, THE SPECIAL SERVICER AND THE CONTROLLING CLASS REPRESENTATIVE SECTION 6.01. Liability of Depositor, Master Servicer and Special Servicer. ............................306 SECTION 6.02. Continued Qualification and Compliance of Master Servicer; Merger, Consolidation or Conversion of Depositor, Master Servicer or Special Servicer. ............................................................................................................306 SECTION 6.03. Limitation on Liability of Depositor, Master Servicer and Special Servicer. ............................................................................................................307 SECTION 6.04. Resignation of Master Servicer and the Special Servicer. ...................................308 SECTION 6.05. Rights of Depositor, Trustee and Serviced Non-Trust Mortgage Loan Noteholders in Respect of the Master Servicer and the Special Servicer.........309 SECTION 6.06. Depositor, Master Servicer and Special Servicer to Cooperate with Trustee...............................................................................................................309 SECTION 6.07. Depositor, Special Servicer and Trustee to Cooperate with Master Servicer. ............................................................................................................309 SECTION 6.08. Depositor, Master Servicer and Trustee to Cooperate with Special Servicer. ............................................................................................................310 SECTION 6.09. Designation of Special Servicer and Controlling Class Representative; Replacement of Special Servicer by the Controlling Class and Others............310 SECTION 6.10. Master Servicer or Special Servicer as Owner of a Certificate. ..........................314 SECTION 6.11. Certain Powers of the Controlling Class Representative. ....................................315 SECTION 6.12. Certain Matters Regarding the Serviced Loan Combinations. ............................318
-iv- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM ARTICLE VII
DEFAULT SECTION 7.01. Events of Default and Outside Servicer Defaults. ...............................................323 SECTION 7.02. Trustee to Act; Appointment of Successor. .........................................................331 SECTION 7.03. Notification to Certificateholders and Others. .....................................................332 SECTION 7.04. Waiver of Events of Default and Outside Servicer Defaults. ..............................333 SECTION 7.05. Additional Remedies of Trustee Upon Event of Default or Outside Servicer Default. ...............................................................................................333 ARTICLE VIII
CONCERNING THE TRUSTEE SECTION 8.01. Duties of Trustee..................................................................................................335 SECTION 8.02. Certain Matters Affecting Trustee. ......................................................................336 SECTION 8.03. Trustee and Fiscal Agent Not Liable for Validity or Sufficiency of Certificates or Mortgage Loans. .......................................................................337 SECTION 8.04. Trustee and Fiscal Agent May Own Certificates. ................................................337 SECTION 8.05. Fees and Expenses of Trustee; Indemnification of and by Trustee. ....................338 SECTION 8.06. Eligibility Requirements for Trustee. ..................................................................339 SECTION 8.07. Resignation and Removal of Trustee. ..................................................................339 SECTION 8.08. Successor Trustee.................................................................................................341 SECTION 8.09. Merger or Consolidation of Trustee and Fiscal Agent.........................................342 SECTION 8.10. Appointment of Co-Trustee or Separate Trustee. ................................................342 SECTION 8.11. Appointment of Custodians. ................................................................................343 SECTION 8.12. Appointment of Authenticating Agents. ..............................................................344 SECTION 8.13. Appointment of Tax Administrators. ...................................................................344 SECTION 8.14. Access to Certain Information. ............................................................................345 SECTION 8.15. Reports to the Securities and Exchange Commission and Related Reports. .......347 SECTION 8.16. Representations and Warranties of Trustee. ........................................................357 SECTION 8.17. Appointment of a Fiscal Agent. ...........................................................................359 SECTION 8.18. Representations and Warranties of Fiscal Agent. ................................................360 ARTICLE IX
TERMINATION SECTION 9.01. Termination Upon Repurchase or Liquidation of All Trust Mortgage Loans.................................................................................................................362 SECTION 9.02. Additional Termination Requirements. ...............................................................365 SECTION 9.03. Outside Administered REO Properties. ...............................................................366
-v- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM ARTICLE X
MISCELLANEOUS PROVISIONS SECTION 11.01. Amendment..........................................................................................................373 SECTION 11.02. Recordation of Agreement; Counterparts. ...........................................................375 SECTION 11.03. Limitation on Rights of Certificateholders. .........................................................375 SECTION 11.04. Governing Law; Consent to Jurisdiction. ............................................................376 SECTION 11.05. Notices. ................................................................................................................377 SECTION 11.06. Severability of Provisions. ...................................................................................377 SECTION 11.07. Grant of a Security Interest. .................................................................................378 SECTION 11.08. Streit Act. .............................................................................................................378 SECTION 11.09. Successors and Assigns; Beneficiaries. ...............................................................379 SECTION 11.10. Article and Section Headings...............................................................................379 SECTION 11.11. Notices to Rating Agencies..................................................................................379 SECTION 11.12. Complete Agreement. ..........................................................................................381
-vi- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM SCHEDULES AND EXHIBITS Schedule No. Schedule Description I Trust Mortgage Loan Schedule II Representations and Warranties of the Depositor III Exceptions to the Representations and Warranties of the Depositor IV Schedule of Environmentally Insured Mortgage Loans V Schedule of Initial Deposit Mortgage Loans VI Schedule of Mortgage Loans Secured by a Hospitality Property or Nursing Facility VII Schedule of Early Defeasance Mortgage Loans VIII Schedule of Additional Mortgage Loan Origination Documents IX Schedule of Additional Section 2.03 Documents X [RESERVED] XI Schedule of Class A-AB Planned Principal Balances XII Schedule of Significant Obligor Financial Statement Recipients
Exhibit No. Exhibit Description A-1 Form of Class [A-1] [A-2] [A-3] [A-AB] [A-4] [A-1A] Certificate A-2 Form of Class X Certificate A-3 Form of Class [A-M] [A-J] [B] [C] [D] [E] [F] Certificate A-4 Form of Class [A-2FL] [A-MFL] [G] [H] [J] [K] [L] [M] [N] [P] [Q] [S] [T] Certificate A-5 Form of Class [R-I] [R-II] [R-III] [R-LR] Certificate A-6 Form of Class V Certificate B Form of Distribution Date Statement C Form of Custodial Certification D-1 Form of Master Servicer Request for Release D-2 Form of Special Servicer Request for Release E Form of Loan Payoff Notification Report F-1 Form of Transferor Certificate for Transfers of Definitive Non-Registered Certificates F-2A Form I of Transferee Certificate for Transfers of Definitive Non-Registered Certificates F-2B Form II of Transferee Certificate for Transfers of Definitive Non-Registered Certificates F-2C Form of Transferee Certificate for Transfers of Interests in Rule 144A Global Certificates F-2D Form of Transferee Certificate for Transfers of Interests in Regulation S Global Certificates G-1 Form I of Transferee Certificate in Connection with ERISA (Definitive Non-Registered Certificates) G-2 Form II of Transferee Certificate in Connection with ERISA (Book-Entry Non-Registered Certificates) H-1 Form of Transfer Affidavit and Agreement regarding Residual Interest Certificates H-2 Form of Transferor Certificate regarding Residual Interest Certificates I-1 Form of Notice and Acknowledgment I-2 Form of Acknowledgment of Proposed Special Servicer J Form of UCC-1 Financing Statement Schedule K Sub-Servicers in respect of which Sub-Servicing Agreements are in effect or being negotiated as of the Closing Date L-1 Form of Information Request/Investor Certification for Website Access from Certificate [Holder] [Owner]
-vii- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM Exhibit No. Exhibit Description L-2 Form of Information Request/Investor Certification for Website Access from Prospective Investor M Form of Defeasance Certification N Form of Seller/Depositor Notification O Form of Controlling Class Representative Confidentiality Agreement P Form of Trustee Backup Certification Q Form of Master Servicer Backup Certification R Form of Special Servicer Backup Certification S Form of Outside Master Servicer/Outside Trustee Notice T Relevant Servicing Criteria Matrix U Form of Exchange Act Reportable Event Notification V Form of Master Servicer Certification
-145- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND SECTION 3.01. Administration of the Mortgage Loans. (a) All of the Serviced Mortgage Loans and Administered REO Properties are to be serviced and administered by the Master Servicer and/or the Special Servicer hereunder. Each of the Master Servicer and the Special Servicer shall service and administer the Serviced Mortgage Loans and Administered REO Properties that it is obligated to service and administer pursuant to this Agreement on behalf of the Trustee, for the benefit of the Certificateholders (or, in the case of a Serviced Loan Combination, for the benefit of the Certificateholders and the related Serviced Non-Trust Mortgage Loan Noteholder(s)), as determined in the good faith and reasonable judgment of the Master Servicer or the Special Servicer, as the case may be, in accordance with: (i) any and all applicable laws; (ii) the express terms of this Agreement; (iii) the express terms of the respective Serviced Mortgage Loans and any and all related intercreditor, co-lender or similar agreements (including with respect to performing the duties of the holders of the respective Serviced Mortgage Loans thereunder (to the extent not inconsistent with this Agreement and to the extent consistent with the Servicing Standard)); and (iv) to the extent consistent with the foregoing, the Servicing Standard. The Master Servicer or the Special Servicer, as applicable in accordance with this Agreement, shall service and administer each Cross- Collateralized Group as a single Serviced Mortgage Loan as and when necessary and appropriate consistent with the Servicing Standard. Without limiting the foregoing and subject to Section 3.21, (i) the Master Servicer shall service and administer all of the Performing Serviced Mortgage Loans and shall render such services with respect to the Specially Serviced Mortgage Loans as are specifically provided for herein, and (ii) the Special Servicer shall service and administer each Specially Serviced Mortgage Loan and Administered REO Property and shall render such services with respect to Performing Serviced Mortgage Loans as are specifically provided for herein. All references herein to the respective duties of the Master Servicer and the Special Servicer, and to the areas in which they may exercise discretion, shall be subject to Section 3.21. (b) Subject to Sections 3.01(a), 3.20, 6.11 and 6.12, the Master Servicer and the Special Servicer shall each have full power and authority, acting alone (or, to the extent contemplated by Section 3.22 of this Agreement, through subservicers), to do or cause to be done any and all things in connection with the servicing and administration contemplated by Section 3.01(a) that it may deem necessary or desirable. Without limiting the generality of the foregoing, each of the Master Servicer and the Special Servicer, in its own name, with respect to each of the Serviced Mortgage Loans it is obligated to service hereunder, is authorized and empowered by the Trustee and, to the extent provided in the related Co-Lender Agreement, each related Serviced Non-Trust Mortgage Loan Noteholder (if any) to execute and deliver, on behalf of the Certificateholders, the Trustee and such Serviced Non-Trust Mortgage Loan Noteholder or any of them, (i) any and all financing statements, continuation statements and other documents or instruments necessary to maintain the lien created by any Mortgage or other security document in the related Mortgage File on the related Mortgaged Property and related collateral; (ii) in accordance with the Servicing Standard and subject to Sections 3.01(a), 3.20, 6.11 and 6.12, any and all modifications, extensions, waivers, amendments or consents to or with respect to any documents contained in the related Mortgage File; (iii) any and all instruments of satisfaction or cancellation, or of partial or full release or discharge or of assignment, and all other comparable instruments; and (iv) any
-146- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM and all instruments that such party may be required to execute on behalf of the Trustee in connection with the defeasance of a Serviced Mortgage Loan as contemplated in this Agreement. Subject to Section 3.10, the Trustee shall, at the written request of the Master Servicer or the Special Servicer, promptly execute any limited powers of attorney and other documents furnished by the Master Servicer or the Special Servicer that are necessary or appropriate to enable them to carry out their servicing and administrative duties hereunder; provided, however, that the Trustee shall not be held liable for any misuse of any such power of attorney by the Master Servicer or the Special Servicer. Notwithstanding anything contained herein to the contrary, neither the Master Servicer nor the Special Servicer shall, without the Trustees written consent: (i) initiate any action, suit or proceeding solely under the Trustees name without indicating the Master Servicers or Special Servicers, as applicable, representative capacity; or (ii) take any action with the intent to cause, and that actually causes, the Trustee to be registered to do business in any state. (c) The parties hereto acknowledge that each Loan Combination is subject to the terms and conditions of the related Co-Lender Agreement; and, with respect to each Loan Combination, the parties hereto further recognize the respective rights and obligations of the Trust, as holder of the related Combination Trust Mortgage Loan, and of the related Non-Trust Mortgage Loan Noteholder(s) under the related Co-Lender Agreement. (d) With respect to any Serviced Loan Combination, in the event that neither the related Trust Mortgage Loan nor the related REO Property (or any interest therein) is an asset of the Trust Fund and, except as contemplated in the second paragraph of this Section 3.01(d), in accordance with the related Co-Lender Agreement, the servicing and administration of such Serviced Loan Combination and any related REO Property are to be governed by a separate servicing agreement and not by this Agreement, then (either (i) with the consent or at the request of the holders of each Mortgage Loan comprising such Serviced Loan Combination or (ii) if expressly provided for in the related Co- Lender Agreement) the Master Servicer and, if such Serviced Loan Combination is then being specially serviced hereunder or the related Mortgaged Property has become an REO Property, the Special Servicer, shall continue to act in such capacities under such separate servicing agreement; provided that such separate servicing agreement shall be reasonably acceptable to the Master Servicer and/or the Special Servicer, as the case may be, and shall contain servicing and administration, limitation of liability, indemnification and servicing compensation provisions substantially similar to the corresponding provisions of this Agreement, except for the fact that such Serviced Loan Combination and the related Mortgaged Property shall be the sole assets serviced and administered thereunder and the sole source of funds thereunder. Further, with respect to any Serviced Loan Combination, if at any time neither the related Trust Mortgage Loan nor any related REO Property (or any interest therein) is an asset of the Trust Fund, and if a separate servicing agreement with respect to such Serviced Loan Combination or any related REO Property, as applicable, has not been entered into as contemplated by the related Co-Lender Agreement and the prior paragraph (for whatever reason, including the failure to obtain any rating agency confirmation required in connection therewith pursuant to the related Co-Lender Agreement), and notwithstanding that neither the related Trust Mortgage Loan nor any related REO Property (or any interest therein) is an asset of the Trust Fund, then, unless directed otherwise by the then current holders of the Mortgage Notes comprising such Serviced Loan Combination, the Master Servicer and, if applicable, the Special Servicer shall continue to service and administer such Serviced Loan Combination and/or any related REO Property, for the benefit of the respective holders of such Serviced
-147- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM Loan Combination, under this Agreement as if such Serviced Loan Combination or any related REO Property were the sole assets subject hereto, with certain references in this Agreement applicable to the Trust, the Trustee, the Certificates, the Certificateholders (or any subgroup thereof) or any representative of any such Certificateholders, all being construed to refer to such similar terms as are applicable to the then current holder of the Mortgage Note for the related Serviced Combination Trust Mortgage Loan. (e) The Master Servicer shall use efforts consistent with the Servicing Standard to have prepared, executed (with the cooperation of the Depositor, in the case of a Lehman Trust Mortgage Loan, and the related Unaffiliated Mortgage Loan Seller, in the case of a Non-Lehman Trust Mortgage Loan, in obtaining requisite signatures, if applicable) and delivered by the applicable party (and included in the Servicing File), not later than the later of (i) 30 days following the Master Servicers receipt of the subject franchisor comfort letter, guaranty of payment or letter of credit and (ii) the expiration of the period that may be required for such transfer or assignment pursuant to the terms of the applicable franchisor comfort letter, guaranty of payment or letter of credit, if any, (A) with respect to any Serviced Mortgage Loan secured by a hospitality property (as identified on Schedule VI hereto) (and with respect to which a franchise agreement constitutes part of the related Mortgage File on the Closing Date), any original transfer or assignment documents necessary to transfer or assign to the Trustee any rights under the related franchisor comfort letter; and (B) with respect to any Serviced Mortgage Loan that has a related guaranty or letter of credit that constitutes part of the related Mortgage File on the Closing Date, any original transfer or assignment documents necessary to transfer or assign to the Trustee any rights under the related guaranty of payment or letter of credit. In the event, with respect to a Serviced Trust Mortgage Loan with a related letter of credit, it is determined by the Master Servicer that a draw under such letter of credit has become necessary under the terms thereof prior to the assignment under clause (B) of the preceding sentence having been effected, the Master Servicer shall direct (in writing) the Depositor (in the case of a Lehman Trust Mortgage Loan) or the related Unaffiliated Mortgage Loan Seller (in the case of a Non-Lehman Trust Mortgage Loan) to make such draw or to cause such draw to be made on behalf of the Trustee, and, the Depositor will, and each Unaffiliated Mortgage Loan Seller will be obligated under the related Mortgage Loan Purchase Agreement to, use its best efforts to cause such draw to be made; provided that neither the Depositor nor any Unaffiliated Mortgage Loan Seller shall have any liability in connection with the determination to make, or the making of, such draw (other than to remit the proceeds of such draw to the Master Servicer). (f) The relationship of each of the Master Servicer and the Special Servicer to the Trustee, to the Serviced Non-Trust Mortgage Loan Noteholders and to each other under this Agreement is intended by the parties to be that of an independent contractor and not that of a joint venturer, partner or, except as set forth in this Agreement, agent. (g) The parties hereto acknowledge that each Outside Serviced Trust Mortgage Loan and the related Outside Serviced Non-Trust Mortgage Loan(s) will primarily be serviced and administered in accordance with the related Outside Servicing Agreement, and the servicing and administrative duties of the parties hereto with respect to each Outside Serviced Trust Mortgage Loan, any successor REO Trust Mortgage Loan with respect thereto and any related Outside Administered REO Property shall be limited to those expressly set forth herein.
-318- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM required by the Potomac Mills Co-Lender Agreement; and (ii) pursuant to Section 2(k) of the Och-Ziff Retail Portfolio Co-Lender Agreement, any decision to be made with respect to the Och-Ziff Retail Portfolio Loan Combination which requires the approval of the controlling class of the securitization relating to the Och-Ziff Retail Portfolio Non-Trust Mortgage Loan must be made by the Controlling Class Representative, on behalf of Majority Controlling Class Certificateholder(s), after consultation with such Person(s) as may be required by the Och-Ziff Retail Portfolio Co-Lender Agreement. (d) The Controlling Class Representative will have no liability to the Certificateholders for any action taken, or for refraining from the taking of any action, pursuant to this Agreement (whether pursuant to this Section 6.11 or otherwise), or for errors in judgment; provided, however, that the Controlling Class Representative will not be protected against any liability to any Controlling Class Certificateholder that would otherwise be imposed by reason of willful misfeasance or bad faith in the performance of duties or by reason of reckless disregard of obligations or duties. Each Certificateholder acknowledges and agrees, by its acceptance of its Certificates, that: (i) the Controlling Class Representative may, and is permitted hereunder to, have special relationships and interests that conflict with those of Holders of one or more Classes of Certificates; (ii) the Controlling Class Representative may, and is permitted hereunder to, act solely in the interests of the Holders of the Controlling Class of Certificates; (iii) the Controlling Class Representative does not have any duties or liability to the Holders of any Class of Certificates other than the Controlling Class of Certificates; (iv) the Controlling Class Representative may, and is permitted hereunder to, take actions that favor interests of the Holders of the Controlling Class of Certificates over the interests of the Holders of one or more other Classes of Certificates; (v) the Controlling Class Representative shall not be deemed to have been negligent or reckless, or to have acted in bad faith or engaged in willful misconduct, by reason of its having acted solely in the interests of the Holders of the Controlling Class of Certificates; and (vi) the Controlling Class Representative shall have no liability whatsoever for having acted solely in the interests of the Holders of the Controlling Class of Certificates, and no Certificateholder may take any action whatsoever against the Controlling Class Representative, any Holder of the Controlling Class of Certificates or any director, officer, employee, agent or principal thereof for having so acted. SECTION 6.12. Certain Matters Regarding the Serviced Loan Combinations. (a) Each of the Master Servicer and the Special Servicer, as applicable, shall notify (in writing and, if applicable, in accordance with the related Co-Lender Agreement) the Controlling Class Representative, the related Non-Trust Mortgage Loan Noteholder(s) and, if different, the related Serviced Loan Combination Controlling Party of its intention to take any Specially Designated Servicing Action with respect to any Serviced Loan Combination or related REO Property and shall provide each such party with all reasonably requested information with respect thereto. Subject to Section 6.12(b), and further subject to Section 3.01(b), Section 3.01(c) and Section 3.02(b) of the related Co-Lender Agreement, the applicable Serviced Loan Combination Controlling Party will be entitled to advise the Special Servicer (in the event the Special Servicer is authorized under this Agreement to take the subject action) or the Master Servicer (in the event the Master Servicer is authorized under this Agreement to take the subject action), as applicable, with respect to any and all Specially Designated Servicing Actions with respect to a Serviced Loan Combination or any related REO Property; and, further subject to Section 6.12(b) of this Agreement and Section 3.02(b) of the related Co-Lender Agreement, neither the Master Servicer nor the Special Servicer shall be permitted to take (or, in the case of the Special Servicer, if and when appropriate hereunder, to consent to the Master Servicers taking) any of the related Specially Designated Servicing Actions with respect to a Serviced Loan
-319- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM Combination or any related REO Property if the applicable Serviced Loan Combination Controlling Party has objected in writing within the applicable time period specified in Section 3.02(a) of the related Co-Lender Agreement following the applicable Serviced Loan Combination Controlling Party having been notified in writing thereof in compliance with the related Co-Lender Agreement and having been provided with all reasonably requested information with respect thereto (it being understood and agreed that if such written objection to the subject action on the part of the applicable Serviced Loan Combination Controlling Party has not been received by the Master Servicer or the Special Servicer, as applicable, within such time period, then the applicable Serviced Loan Combination Controlling Party will be deemed to have approved of the subject action); provided that, if the Special Servicer or the Master Servicer, as applicable, determines that immediate action is necessary to protect the interests of the Certificateholders and the related Serviced Non-Trust Mortgage Loan Noteholder(s) (as a collective whole), then the Special Servicer or the Master Servicer, as the case may be, may take (or, in the case of the Special Servicer, if and when appropriate hereunder, may consent to the Master Servicers taking) any such action without waiting for the applicable Serviced Loan Combination Controlling Partys response; and provided, further, that, under circumstances where the Controlling Class Representative is not, and is not part of, the applicable Serviced Loan Combination Controlling Party, nothing herein shall be intended to limit the right of the Controlling Class Representative to consult with the Master Servicer or the Special Servicer, as applicable, regarding any Serviced Loan Combination or related REO Property, and during the time period referred to above (or such shorter period as is contemplated by the immediately preceding proviso), the Master Servicer or the Special Servicer, as applicable, shall consult with the Controlling Class Representative regarding its views as to the proposed action (but may, in its sole discretion, reject any advice, objection or direction from the Controlling Class Representative) and, upon reasonable request, the Master Servicer or the Special Servicer, as applicable, shall provide the Controlling Class Representative with any information in such servicers possession with respect to such matters, including its reasons for determining to take a proposed action. In addition, subject to Section 6.12(b), and further subject to Section 3.01(b), Section 3.01(c) and Section 3.02(b) of the related Co-Lender Agreement, if and to the extent provided for under the subject Co-Lender Agreement, the applicable Serviced Loan Combination Controlling Party may direct the Special Servicer or the Master Servicer, as appropriate based on their respective duties hereunder, to take, or to refrain from taking, such actions with respect to each Serviced Loan Combination or any related REO Property as the applicable Serviced Loan Combination Controlling Party may deem consistent with the related Co-Lender Agreement or as to which provision is otherwise made in the related Co-Lender Agreement. Upon reasonable request, the Special Servicer or the Master Servicer, as appropriate based on their respective duties hereunder, shall, with respect to each Serviced Loan Combination or any related REO Property, provide the applicable Serviced Loan Combination Controlling Party with any information in such servicers possession with respect to such matters, including its reasons for determining to take a proposed action; provided that such information shall also be provided, in a written format, to the Trustee who shall make it available for review pursuant to Section 8.14(b). Promptly following the Special Servicer or the Master Servicer receiving any direction with respect to a Serviced Loan Combination or any related REO Property from the applicable Serviced Loan Combination Controlling Party as contemplated by this paragraph, and in any event prior to acting on such direction, such servicer shall notify the Trustee, the Controlling Class Representative (if it is not, and is not part of, the applicable Serviced Loan Combination Controlling Party) and each related Serviced Non-Trust Mortgage Loan Noteholder (if neither it nor its designee is, or is part of, the applicable Serviced Loan Combination Controlling Party).
-320- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM Each of the Master Servicer (with respect to Performing Serviced Mortgage Loans) and the Special Servicer (with respect to Specially Serviced Mortgage Loans), as applicable, shall notify the related Serviced Non-Trust Mortgage Loan Noteholder, the Controlling Class Representative and any other Person that may be the applicable Serviced Loan Combination Controlling Party of any release or substitution of collateral for a Serviced Loan Combination even if such release or substitution is required by the terms of such Serviced Loan Combination. (b) Notwithstanding anything herein to the contrary, no advice, direction or objection with respect to any Serviced Loan Combination or related REO Property from or by the applicable Serviced Loan Combination Controlling Party, as contemplated by Section 6.12(a), may (and the Special Servicer and the Master Servicer shall each ignore and act without regard to any such advice, direction or objection that the Special Servicer or the Master Servicer, as applicable, has determined, in its reasonable, good faith judgment, will) require, cause or permit such servicer to violate any provision of the related Co-Lender Agreement or this Agreement (exclusive of Section 6.12(a)) (including such servicers obligation to act in accordance with the Servicing Standard), the related loan documents or applicable law or result in an Adverse REMIC Event or an Adverse Grantor Trust Event, subject it to liability or materially expand the scope of its obligations under this Agreement. Furthermore, neither the Special Servicer nor the Master Servicer shall be obligated to seek approval from the applicable Serviced Loan Combination Controlling Party for any actions to be taken by such servicer with respect to the workout or liquidation of any Serviced Loan Combination if: (i) such servicer has, as provided in Section 6.12(a), notified the applicable Serviced Loan Combination Controlling Party, in writing of various actions that such servicer proposes to take with respect to the workout or liquidation of such Serviced Loan Combination; and (ii) for 60 days following the first such notice, the applicable Serviced Loan Combination Controlling Party has objected to all of those proposed actions and has failed to suggest any alternative actions that such servicer considers to be consistent with the Servicing Standard. Also notwithstanding the foregoing, in the case of any Serviced Pari Passu Loan Combination, if the holder(s) of the promissory notes evidencing the related Pari Passu Non-Trust Mortgage Loan(s) (or their respective representatives) and the Trust, as holder of the Mortgage Note for the related Pari Passu Trust Mortgage Loan, are together acting as the related Serviced Loan Combination Controlling Party, and if those noteholders or their respective representatives have not, within the requisite time period provided for in the related Co-Lender Agreement, executed a mutual consent with respect to any advice, consent or direction regarding a specified servicing action, the Special Servicer or Master Servicer, as applicable, will implement the servicing action that it deems to be in accordance with the Servicing Standard, and the decision of the Special Servicer or the Master Servicer, as applicable, will be binding on all such parties. (c) The Serviced Loan Combination Controlling Party for a Serviced Loan Combination will not have any liability to the Trust or the Certificateholders, in the case of a related Serviced Non-Trust Mortgage Loan Noteholder or its designee acting in such capacity, or to the related Serviced Non-Trust Mortgage Loan Noteholder(s), in the case of the Controlling Class Representative acting in such capacity, for any action taken, or for refraining from the taking of any action, in good faith pursuant to this Agreement or the related Co-Lender Agreement, or for errors in judgment; provided, however, that such Serviced Loan Combination Controlling Party will not be protected against 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 or duties.
-321- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM (d) Upon the occurrence and continuance of a Serviced Loan Combination Change of Control Event (if applicable) with respect to a Serviced Loan Combination or related REO Property, and/or if and for so long as the Trust, as holder of the Serviced Combination Trust Mortgage Loan in such Serviced Loan Combination (or any successor REO Trust Mortgage Loan with respect thereto), is or may be part of, as applicable, the applicable Serviced Loan Combination Directing Lender, then the Controlling Class Representative (i) is hereby designated as the representative of the Trust for purposes of or in connection with exercising the rights and powers of the applicable Serviced Loan Combination Directing Lender or Serviced Loan Combination Controlling Party, as applicable, under Section 3.02 of the related Co-Lender Agreement and (ii) shall be or may be part of, as applicable, the applicable Serviced Loan Combination Controlling Party hereunder. The Trustee shall take such actions as are necessary or appropriate to make such designation effective in accordance with the related Co-Lender Agreement, including providing notices to the related Serviced Non-Trust Mortgage Loan Noteholder(s). The Master Servicer, or, if it becomes aware of such event with respect to a Loan Combination that consists of one or more Specially Serviced Mortgage Loans, the Special Servicer, shall provide the parties to this Agreement with notice of the occurrence of a Serviced Loan Combination Change of Control Event (if applicable) with respect to any Serviced Loan Combination or related REO Property, promptly upon becoming aware thereof. (e) Each related Serviced Non-Trust Mortgage Loan Noteholder shall be entitled to receive, upon request, a copy of any notice or report required to be delivered (upon request or otherwise) to the Trustee with respect to a Serviced Loan Combination or any related REO Property by any other party hereto. Subject to the related Co-Lender Agreement, any such other party shall be permitted to require payment of a sum sufficient to cover the reasonable costs and expenses of providing such copies in accordance with this Section 6.12(e). (f) Notwithstanding anything herein to the contrary, any appointment of a successor Special Servicer hereunder, insofar as it affects any Serviced Loan Combination or any related REO Property, will be subject to any consultation or consent rights of the related Serviced Non-Trust Mortgage Loan Noteholder(s) expressly provided for under the related Co-Lender Agreement. (g) If and to the extent that the Co-Lender Agreement with respect to any Serviced Senior/Subordinate Loan Combination provides that a related Serviced Subordinate Non-Trust Mortgage Loan Noteholder may avoid a related Serviced Loan Combination Change of Control Event by delivering Reserve Collateral, then: (i) the Special Servicer shall hold all such Reserve Collateral (in an Eligible Account, in the case of cash) in accordance with the terms of this Agreement and such Co- Lender Agreement and in a manner that clearly identifies that such Reserve Collateral is being held for the benefit of the Certificateholders but, for federal income tax purposes, is beneficially owned by the subject Serviced Subordinate Non-Trust Mortgage Loan Noteholder; and (ii) the Special Servicer shall take all actions reasonably necessary to maintain any perfected security interest on the part of the Trust in and to such Reserve Collateral. If any letters of credit are furnished as Reserve Collateral with respect to a Serviced Senior/Subordinate Loan Combination, and (i) if the subject Serviced Subordinate Non-Trust Mortgage Loan Noteholder has not provided a replacement letter of credit at least 30 days before the expiration of the delivered letter of credit or (ii) the long-term or short-term unsecured debt ratings of the issuer of such letter of credit fall below any applicable minimum rating requirements specified in such Co-Lender Agreement, then the Special Servicer shall provide written notice of such event to the Serviced Subordinate Non-Trust Mortgage Loan Noteholder, and unless the Serviced Subordinate Non-Trust Mortgage Loan Noteholder shall have replaced such letter of credit with a letter
-322- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM of credit in form and substance satisfactory to the Special Servicer and the Rating Agencies within the period of time specified in such Co-Lender Agreement, the Special Servicer shall draw upon such letter of credit and hold the proceeds thereof as related Reserve Collateral. Upon a Final Recovery Determination with respect to a Serviced Senior/Subordinate Loan Combination, any related Reserve Collateral held by the Special Servicer shall be available to reimburse the Trust for any realized loss of principal and/or interest incurred with respect to the related Serviced Senior Trust Mortgage Loan (or any successor REO Trust Mortgage Loan with respect thereto), up to the maximum amount permitted under the related Co-Lender Agreement, together with all other amounts (including, without limitation, Additional Trust Fund Expenses related to the subject Serviced Senior/Subordinate Loan Combination or any related REO Property) reimbursable under such Co-Lender Agreement and this Agreement. To the extent necessary to effect such reimbursement, the Special Servicer shall draw down upon or otherwise liquidate all applicable Reserve Collateral (if any) and shall forward the reimbursement payment to the Master Servicer for deposit in the Pool Custodial Account. Such reimbursement of payment shall, except for purposes of Section 3.11(c) hereof, constitute Liquidation Proceeds. The Special Servicer may not release any Reserve Collateral to the Serviced Subordinate Non-Trust Mortgage Loan Noteholder that delivered such Reserve Collateral, except as expressly required under the related Co-Lender Agreement (including, in connection with a Final Recovery Determination with respect to the related Serviced Senior/Subordinate Loan Combination, following the reimbursement of the Trust as contemplated above in this Section 6.12(g). Any arrangement by which any Reserve Collateral may be held shall constitute an outside reserve fund within the meaning of Treasury regulations section 1.860G-2(h) and such property (and the right to reimbursement of any amounts with respect thereto) shall be beneficially owned by the Serviced Subordinate Non-Trust Mortgage Loan Noteholder that delivered such Reserve Collateral, who shall be taxed on all income with respect thereto. As compensation for maintaining any Reserve Collateral, the Special Servicer will be entitled to any interest or other income earned, and will be responsible for any losses on investments, with respect to such Reserve Collateral in the same manner as it is entitled to investment income, and is responsible for losses incurred, with respect to investments of funds in an REO Account.
-375- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM (g) The cost of any Opinion of Counsel to be delivered pursuant to Section 11.01(a) or (c) shall be borne by the Person seeking the related amendment, except that if the Master Servicer, the Special Servicer or the Trustee requests any amendment of this Agreement that protects or is in furtherance of the rights and interests of Certificateholders, the cost of any Opinion of Counsel required in connection therewith pursuant to Section 11.01(a) or (c) shall be payable out of the Pool Custodial Account, in the case of the Master Servicer and the Special Servicer, pursuant to Section 3.05(a), or out of the Collection Account, in the case of the Trustee, pursuant to Section 3.05(b). (h) Notwithstanding anything to the contrary contained in this Section 11.01, the parties hereto agree that (i) this Agreement may not be amended except upon 10 days prior written notice to the Swap Counterparties and (ii) this Agreement may not be amended in any manner that has a material adverse effect on any Swap Counterparty without first obtaining the written consent of such Swap Counterparty, such consent not to be unreasonably withheld, conditioned or delayed, where such consent is required herein. The Trustee may obtain and rely upon an Opinion of Counsel provided to it at the expense of the party seeking the amendment to the effect that such action will not adversely affect in any material respect the interests of any Swap Counterparty (or at the expense of the Trust if the Trustee is the party seeking such amendment and such amendment benefits the Certificateholders). SECTION 11.02. Recordation of Agreement; Counterparts. (a) To the extent permitted by applicable law, this Agreement is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the properties subject to the Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Master Servicer at the expense of the Trust Fund or, to the extent that it benefits them, the Serviced Non-Trust Mortgage Loan Noteholders, but only upon direction accompanied by an Opinion of Counsel (the cost of which may be paid out of the Pool Custodial Account pursuant to Section 3.05(a) or, to the extent that it benefits the Serviced Non-Trust Mortgage Loan Noteholders, out of the Loan Combination Custodial Accounts pursuant to Section 3.05A), to the effect that such recordation materially and beneficially affects the interests of the Certificateholders and/or the Serviced Non-Trust Mortgage Loan Noteholders; provided, however, that neither the Master Servicer nor the Trustee shall have any obligation or responsibility to determine whether any such recordation of this Agreement is required. (b) For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. SECTION 11.03. Limitation on Rights of Certificateholders. (a) The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust Fund, nor entitle such Certificateholders legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust Fund, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. (b) No Certificateholder (except as expressly provided for herein) shall have any right to vote or in any manner otherwise control the operation and management of the Trust Fund, or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the
-376- [TPW: NYLEGAL:707059.11] 20995-00020 10/02/2007 05:00 PM Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third party by reason of any action taken by the parties to this Agreement pursuant to any provision hereof. (c) No Certificateholder shall have any right by virtue of any provision of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement or any Mortgage Loan, unless, with respect to any suit, action or proceeding upon or under or with respect to this Agreement, such Person previously shall have given to the Trustee a written notice of default hereunder, and of the continuance thereof, as hereinbefore provided, and unless also (except in the case of a default by the Trustee) the Holders of Certificates entitled to at least 25% of the Voting Rights shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and (except in the case of a default by the Trustee) the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding. It is understood and intended, and expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatsoever by virtue of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, which priority or preference is not otherwise provided for herein, or to enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all Certificateholders. For the protection and enforcement of the provisions of this section, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 11.04. Governing Law; Consent to Jurisdiction. This Agreement will be governed by and construed in accordance with the laws of the State of New York, applicable to agreements negotiated, made and to be performed entirely in said state. To the fullest extent permitted under applicable law, the Depositor, the Master Servicer, the Special Servicer, the Trustee and any Fiscal Agent each hereby irrevocably (i) submits to the jurisdiction of any New York State and federal courts sitting in New York City, to the exclusion of all other courts, with respect to matters arising out of or relating to this Agreement, other than matters to be settled by mediation or arbitration in accordance with Section 2.03(i); (ii) agrees that all claims with respect to such action or proceeding shall be heard and determined in such New York State or federal courts, to the exclusion of all other courts; (iii) waives the defense of an inconvenient forum in connection with such action or proceeding commenced in such New York State or federal courts; and (iv) 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; provided that, if Section 2.03(i) is inapplicable, and if both a New York State and a federal court sitting in New York in which an action or proceeding has been duly and properly commenced by any party to this Agreement regarding a matter arising out of or relating to this Agreement have refused to accept jurisdiction over or otherwise have not accepted such action or proceeding within, in the case of each such court, 60 days of the commencement or filing thereof, then the words to the exclusion of all other courts in clause (i) and clause (ii) of this sentence shall not apply with regard to such action or proceeding and the reference to shall in clause (ii) of this paragraph shall be deemed to be may. CO-LENDER AGREEMENT Dated as of August 13,2006 by and between LEHMAN BROTHERS HOLDINGS INC. (Initial Note A-1 Lender) and LEHMAN BROTHERS HOLDINGS INC. (Initial Note A-2 Lender) $825,402,542 Original Principal Amount of Commercial Mortgage Loans secured by the Innkeepers Portfolio consisting of liens on the fee simple interests in a portfolio of 45 hotels located in sixteen states across the United States EXECUTION COPY TABLE OF CONTENTS ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES Section 1.01. Defined Terms ......................................................................................................... 4 Section 1.02. General Interpretive Principles .............................................................................. 15 Section 1.03. Interpreting this Agreement and the Loan Agreement. ......................................... 15 ARTICLE II RETENTION OF LOAN DOCUMENTS; REPRESENTATIONS AND WARRANTIES Section2.01. Relative Rights ofthe Lenders ............................................................................... 17 Section 2.02. Delivery and Retention ofNote A-2; Delivery and Retention of Mortgage File (Exclusive ofNote A-2); Record Title ........................................................... 17 Section 2.03. Delivery of Servicing File, Escrow Payments and Reserve Funds to the Master Servicer ...................................................................................................... 18 Section 2.04. Representations, Warranties and Covenants of the Lenders .................................. 18 Section 2.05. Independent Analysis of Each Lender. .................................................................. 20 Section 2.06. Notes Not Securities .............................................................................................. 20 ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS Section 3.01. General Seryicing Matters .................................................................................... .21 Section 3.02. Certain Powers of the Directing Lender ............................................................... .25 ARTICLE IV PAYMENTS TO LENDERS Section 4.01. Application of Payments; Allocation of Collections; Remittances ...................... .29 Section 4.02. [RESERVED] ........................................................................................................ 31 Section4.03 .. Advances ................................................................................................................ 31 Section 4.04. Sharing of Certain Expenses .................................................................................. 32 ARTICLEV TERMINATION Section 5.01. Termination ............................................................................................................ 33 TABLE OF CONTENTS (Continued) ARTICLE VI MISCELLANEOUS PROVISIONS Section 6.01. Modification, Extension, Amendment or Waiver in Writing ................................ 34 Section 6.02. Recordation of Agreement; Counterparts ............................................................. .34 Section 6.03. Governing Law ...................................................................................................... 34 Section 6.04. Notices ................................................................................................................... 34 Section 6.05. Severability of Provisions ...................................................................................... 35 Section 6.06. Successors and Assigns; Beneficiaries .................................................................. 35 Section 6.07. Specific Performance ............................................................................................. 35 Section 6.08. Bankruptcy Matters ................................................................................................ 35 Section 6.09. Assignments and Securitizations ........................................................................... 36 Section 6.1 0. Article and Section Headings .......................... , ...................................................... 36 Section 6.11. Notices to Rating Agencies .................................................................................... 36 Section 6.12. No Joint Venture, Not a Security .......................................................................... .36 Section 6.13. Cooperation ............................................................................................................ 37 Section 6.14. Entire Agreement. .................................................................................................. 38 Section 6.15. Bifurcation ofNote A-1 or Note A-2 ..................................................................... 38 704230-3 EXHIBITS Exhibit No. I TABLE OF CONTENTS (Continued) Exhibit Description Mortgage Loan Schedule 111 This Co-Lender Agreement (this "Agreement") is dated and effective as of August 13,2006, between LEHMAN BROTHERS HOLDINGS INC. as Initial Note A-1 Lender and LEHMAN BROTHERS HOLDINGS INC. as Initial Note A-2 Lender. PRELIMINARY STATEMENT: A mortgage loan (the "Original Mortgage Loan") was made by LEHMAN ALI INC. ("Lehman ALI") or an affiliate thereof, as lender (in such capacity, the "Original Lender") to Grand Prix Belmont LLC, Grand Prix Campbell/San Jose LLC, Grand Prix El Segundo LLC, Grand Prix Fremont LLC, Grand Prix Mountain View, LLC, Grand Prix San Jose, LLC, Grand Prix San Mateo, LLC, Grand Prix Sili I LLC, Grand Prix Sili II LLC, Grand Prix Denver LLC, Grand Prix Englewood/Denver South LLC, Grand Prix Shelton LLC, Grand Prix Windsor LLC, Grand Prix Altamonte LLC, Grand Prix Ft. Lauderdale LLC, Grand Prix Naples LLC, Grand . Prix Atlanta LLC, Grand Prix Atlanta (Peachtree Comers) LLC, Grand Prix Lombard LLC, Grand Prix Chicago LLC, Grand Prix Schaumburg LLC, Grand Prix Westchester LLC, Grand Prix Lexington LLC, Grand Prix Louisville (RI) LLC, Grand Prix Columbia LLC, Grand Prix Gaithersburg LLC, Grand Prix Germantown LLC, Grand Prix Portland LLC, Grand Prix Livonia LLC, Grand Prix Cherry Hill LLC, Grand Prix Mt. Laurel LLC, Grand Prix Saddle River LLC, Grand Prix Islandia LLC, Grand Prix Binghamton LLC, Grand Prix Horsham LLC, Grand Prix Willow Grove LLC, Grand Prix Addison (RI) LLC, Grand Prix Arlington LLC, Grand Prix Los Colinas LLC, Grand Prix Richmond LLC, Grand Prix Richmond (Northwest) LLC, Grand Prix Bellevue LLC, Grand Prix Bothell LLC, Grand Prix Lynnwood LLC, Grand Prix Tukwila LLC Gointly and severally, together with their successors and permitted assigns as borrower under the Loan Documents (as defined herein), the "Borrower 1 '), on June 29, 2007, and was represented by one (1) promissory note (the "Original Note") in the aggregate principal amount of $825,402,542. On or about the execution and delivery of this Agreement, Lehman ALI restructured the original Mortgage Loan and the Borrower executed and delivered Replacement Promissory Note A-1 and Replacement Promissory Note A-2 (each as defined below), which Replacement Promissory Note A-1 and Replacement Promissory Note A-2 have an aggregate principal balance and possess the aggregate rights (other than as set forth in this Agreement) of the Original Notes. Replacement Promissory Note A-1 and Replacement Promissory Note A-2 will represent, respectively, two mortgage loans having an aggregate principal balance and possessing the aggregate rights (other than as set forth in this Agreement) of the Original Mortgage Loan. Those two mortgage loans made by Lehman as lender to the Borrower are as follows: 1. the mortgage loan (the "Note A-1 Mortgage Loan") evidenced by that certain Replacement Promissory Note A-1 dated August 9, 2007 (as such may be extended, renewed, replaced, restated or modified from time to time, "Note A-1 "), with a principal amount as of the date hereof of$412,701,271; and 2. the mortgage loan (the "Note A-2 Mortgage Loan") evidenced by that certain Replacement Promissory Note A-2 dated August 9, 2007 (as such may be extended, renewed, replaced, restated or modified from time to time, "Note A-2"), with a principal amount as of the date hereof of$412,701,271. The Note A-1 Mortgage Loan and the Note A-2 Mortgage Loan, with an aggregate principal amount as of the date hereof of $825,402,542, are referred to herein, collectively, as the "Mortgage Loans" and each, as a "Mortgage Loan". Each of Note A-1 and Note A-2 are referred to individually herein as a "Note" and together as the "Notes". The terms and conditions of the Notes are further specified in a loan agreement dated as of June 29, 2007 (as amended by the first amendment to the loan agreement dated August 9, 2007 and as such may have been further amended or restated to the date hereof and may hereafter be further amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), between Lehman ALI as lender and the Borrower. Payment of the Notes is secured by, among other things, that certain collateral assignment of security agreement dated as of June 29, 2007 (as such may have been amended or restated to the date hereof and may hereafter be further amended, restated, supplemented or otherwise modified from time to time, the "Mortgage"), encumbering the Borrower's fee simple interest and leasehold interest in the properties identified in the Series 2007-C6 Pooling and Servicing Agreement as the Innkeepers Portfolio (the "Innkeepers Portfolio"), whereby the Borrower grants a security interest in its interest under the leases at the Mortgaged Property as further collateral. If the Original Lender is not Lehman Brothers Holdings Inc. ("LBHI"), then prior to the execution and delivery of this Agreement, the Original Lender transferred the Mortgage Loans to LBHI pursuant to one or more agreements and/or instruments between the Original Lender and LBHI. As of the time at which this Agreement is being executed and delivered, LBHI is the sole owner ofNote A-1 and Note A-2. It is anticipated with respect to the Mortgage Loans that, simultaneously with or shortly after the execution and delivery of this Agreement, the Note A-1 Mortgage Loan will be transferred to LaSalle Bank National Association ("LaSalle"), as trustee (in such capacity, the "Series 2007-C6 Trustee") for a securitization involving the issuance of the LB-UBS Commercial Mortgage Trust 2007 -C6, . Commercial Mortgage Pass-Through Certificates, Series 2007-C6 (such securitization, the "Note A-1 Securitization") and the Series 2007-C6 Trustee, in its capacity as holder of Note A-1, together with its successors and assigns, is referred to in this Agreement as the ''Note A-1 Lender". The Note A-2 Mortgage Loan will initially be retained by LBHI. It is anticipated that, subject to Section 6.15, each Note may be further subdivided and, in such event, will be split and reissued as one or more replacement notes that, in the case of such subdivided Note, have an aggregate principal balance and possess the aggregate rights (other than as set forth in this Agreement) of such subdivided Note on the date of the reissuance. It is further contemplated that Note A-2, whether in its current form or as multiple replacement promissory notes, will, subsequent to the date hereof, be securitized in one or more transactions (each such securitization transaction, a "Note A-2 Securitization"). Each holder of a Note from time to time (or, whenever there are multiple holders thereof, all such holders collectively) will constitute a "Lender"; and the holders of the Notes from time to time will collectively constitute the "Lenders". 704230-3 Among other things, the parties hereto desire to define the relative rights and powers of the Lenders with respect to the Mortgage Loans and to provide for servicing and administration of the Mortgage Loans and/or the Mortgaged Property under specific circumstances identified herein. In consideration of the mutual agreements herein contained, the parties hereto agree as follows: 704230-3 ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES Section 1.01. Defined Terms. Whenever used in this Agreement, including in the Preliminary Statement, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article. Capitalized terms used but not defined in this Agreement have the respective meanings assigned thereto in the Applicable Servicing Agreement. "Advance" shall mean, from and after the Securitization Date, any P &I Advance or Servicing Advance. "Advance Interest" shall mean, with respect to any Advance, all interest paid or payable, as the context may require, to any Servicer or any other party under any Servicing Agreement or Securitization Agreement with respect to Advances made by such Servicer or other party. "Adverse Grantor Trust Event" shall mean, with respect to any Related Grantor Trust, any impairment of the status of such Related Grantor Trust as a Grantor Trust or any imposition of a tax on such Related Grantor Trust or any of its assets or transactions. "Adverse Rating Event" shall mean the qualification, downgrade or withdrawal of any rating then assigned by any Rating Agency to any class of Related MBS. "Adverse REMIC Event" shall mean, with respect to any Related REMIC Pool, any endangerment of the status of such Related REMIC Pool as a REMIC under the REMIC Provisions or, except as may be expressly permitted by the Applicable Servicing Agreement, any imposition of a tax on such Related REMIC Pool or any of its assets or transactions (including the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax on prohibited contributions set forth in Section 860G(d) ofthe Code). ~ ~ "Mfiliate" shall mean, 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," when used with respect to any specified Person means the power to direct the management and policies of such 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. "Agreement" shall mean this Co-Lender Agreement, together with all amendments hereof and supplements hereto. "Allocable Share" shall mean, with respect to either Mortgage Loan or either Lender, the applicable following percentage: (i) in the case of each of the Note A-1 Mortgage Loan and the Note A-1 Lender, 50%; and (ii) in the case of each of the Note A-2 Mortgage Loan and the Note A-2 Lender, 50%. 704230-3 "Applicable Interest Rate" shall mean, with respect to either Mortgage Loan or any Note A Portion, the per annum rate at which interest is scheduled (in the absence of default) to accrue on such Mortgage Loan or Note A Portion, as the case may be, :from time to time in accordance with (i) the terms of the related Note and the Loan Agreement (as such terms may be modified at any time following the Closing Date) and (ii) applicable law. "Applicable Servicer" shall mean, with respect to any particular servicing or other relevant action to be taken in respect of either Mortgage Loan or any successor REO Property, the particular Servicer responsible for performing such servicing or other relevant action, pursuant to the Applicable Servicing Agreement. "Applicable Servicing Agreement" shall mean, with respect to any particular servicing or other relevant action to be taken in respect of either Mortgage Loan or any REO Property, the particular Servicing Agreement governing the performance of such servicing or other relevant action for the benefit of the Lenders, which initially shall be the Series 2007-C6 Pooling and Servicing Agreement. "Appraisal Reduction Amount" shall have the meaning assigned thereto in the Applicable Servicing Agreement. "Approved Servicer" shall have the meaning assigned thereto in the definition of "Institutional Lender/Owner." "Balloon Payment" shall mean, with respect to either Mortgage Loan, as of any date of determination, the payment, other than any regularly scheduled monthly payment, due with respect to such Mortgage Loan at maturity. "Bankruptcy Code" shall mean the federal Bankruptcy Code, as amended :from time to time (Title 11 of the United States Code). "Borrower" shall have the meaning assigned thereto in the Preliminary Statement. "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, or in each of the cities in which the corporate trust office of the trustee, if any, under the Applicable Servicing Agreement and the Primary Servicing Offices of the Servicer(s) are located, are authorized or obligated by law or executive order to remain closed. "CDO" shall have the meaning assigned thereto in the definition of "Institutional Lender/Owner." "CDO Asset Manager" shall mean, with respect to any Securitization Vehicle that is a CDO, the entity that is responsible for managing or administering the subject Mortgage Loan as an underlying asset of such Securitization Vehicle or, if applicable, as an asset of any Intervening Trust Vehicle (including, without limitation, the right to exercise any consent and control rights available to the Directing Lender). "Closing Date" shall mean August 30, 2007. 704230-3 "CMSA" shall mean the Commercial Mortgage Securities Association, or any association or organization that is a successor thereto. If neither such association nor any successor remains in existence, "CMSA" shall be deemed to refer to such other association or organization as may exist whose principal membership consists of servicers, trustees, issuers, placement agents and underwriters generally involved in the commercial mortgage loan securitization industry, which is the principal such association or organization in the commercial mortgage loan securitization industry and one of whose principal purposes is the establishment of industry standards for reporting transaction-specific information relating to commercial mortgage pass-through certificates and commercial mortgage-backed bonds and the commercial mortgage loans and foreclosed properties underlying or backing them to investors holding or owning such certificates or bonds, and any successor to such other association or organization. If an organization or association described in one of the preceding sentences of this definition does not exist, "CMSA" shall be deemed to refer to such other association or organization as shall be selected by the Master Servicer and reasonably acceptable to the Series 2007 -C6 Trustee and the Special Servicer or, if Note A-1 is no longer included in the Note A-1 Securitization, reasonably acceptable to the Lenders. "Code" shall mean the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, including temporary regulations and proposed regulations to the extent that, by reason of their proposed effective date, could, as of the date of any determination or opinion as to the tax consequences of any action or proposed action or transaction, be applied to any Related MBS. "Default Interest" shall mean with respect to either Mortgage Loan, any amounts collected thereon, other than late payment charges and Prepayment Premiums, that represent penalty interest (arising out of a default) in excess of interest accrued on the principal balance of such Mortgage Loan at the related Applicable Interest Rate. "Depositor" shall mean Structured Asset Securities Corporation II and its successors. "Determination Date" shall mean the Due Date or, if the Due Date is not a Business Day, the Business Day immediately succeeding the Due Date. "Directing Lender" shall mean the Lenders (or their designees appointed m accordance with Section 3.02) acting jointly. "Due Date" shall mean the 9th day of each calendar month or, if such 9th day is not a business day (within the meaning of the Loan Documents), the immediately succeeding business day. "Enforcement Action" shall mean the commencement of the exercise of any remedies against the Borrower or the Mortgaged Property by reason of a default under the Loan Documents, including the commencement of any litigation or proceeding, including the commencement of any foreclosure proceeding, the exercise of any power of sale, the sale by advertisement, the taking of a deed or assignment in lieu of foreclosure, the obtaining of a 704230-3 receiver or the taking of any other enforcement action against, or the taking possession or control of, any of the Mortgaged Property. "Escrow Payment" shall mean any payment received by the Applicable Servicer for the account of the Borrower for application toward the payment of real estate taxes, assessments, insurance premiums, ground rents (if applicable) and other items for which an escrow has been created in respect of the Mortgaged Property. "Excess Interest" means, as of any date of determination: (i) with respect to the Replacement A-1 Notes, any interest accrued on the aggregate unpaid principal balance of the Replacement A-1 Notes at the Excess Interest Rate; and (ii) with respect to the Replacement A-2 Notes, any interest accrued on the aggregate unpaid principal balance of the Replacement A-2 Notes at the Excess Interest Rate. "Excess Interest Rate" means, as of any date of determination: (i) with respect to the Replacement A-1 Notes, the excess (if any) of (x) the then weighted average interest rate on the Replacement A-1 Notes over (y) the Applicable Interest Rate ofNote A-1 immediately prior to the reissuance of any Replacement A-1 Notes; and (ii) with respect to the Replacement A-2 Notes, the excess (if any) of (x) the then weighted average interest rate on the Replacement A-2 Notes over (y) the Applicable Interest Rate of Note A-2 immediately prior to the reissuance of any Replacement A-2 Notes. Any determination in this definition of a weighted average interest rate shall be calculated based on the relative principal balances of the subject Replacement Notes. "Exchange Act" shall have the meaning assigned to such term in Section 6.12. "Grantor Trust" shall mean any "grantor trust" within the meaning of Subpart E of Subchapter J of the Code, including Treasury regulations section 301.770 1-4( c )(2). "Hazardous Materials" shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; toxic mold and fungi; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on the Mortgaged Property is prohibited by any environmental law; and any other material or substance now or in the future defined as a "hazardous substance," "hazardous material," "hazardous waste," "toxic substance," "toxic pollutant," "contaminant," "pollutant" or other words of similar import within the meaning of any environmental law. "Insolvency Proceeding" shall mean any proceeding under the Bankruptcy Code or any other insolvency, liquidation, reorganization or other similar proceeding concerning the Borrower, any action for the dissolution of the Borrower, any proceeding Gudicial or otherwise) concerning the application of the assets of the Borrower, for the benefit of its creditors, the appointment of or any proceeding seeking the appointment of a trustee, receiver or other similar custodian for all or any substantial part of the assets of the Borrower or any other action concerning the adjustment of the debts of the Borrower, the cessation of business by the 704230-3 Borrower, except following a sale, transfer or other disposition of all or substantially all of the assets of the Borrower in a transaction permitted under the Loan Documents. "Institutional Lender/Owner" shall mean any of the following: (a) (i) a bank, banking association, savings and loan association, investment bank, insurance company, real estate investment trust, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan that (A) has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital surplus, statutory surplus or shareholder's equity of at least $200,000,000, and (B) is regularly engaged in the business of making or owning commercial loans, (ii) an investment company, money management firm or "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, that (A) has total assets in excess of $600,000,000 and capital surplus, statutory surplus or shareholders' equity of at least $200,000,000 and (B) is regularly engaged in the business of making or owning loans of similar types to the Mortgage Loans, (iii) a Qualified Trustee (or in the case of a CDO (as defined below), a single purpose bankruptcy-remote entity which contemporaneously pledges its interest in the subject Mortgage Loan to a Qualified Trustee) in connection with (A) a securitization of, (B) the creation of collateralized debt obligations ("CDO") secured by, or (C) a financing through an "owner trust" of, any Mortgage Loan (any of the foregoing, a "Securitization Vehicle"), provided that (1) one or more classes of securities issued by such Securitization Vehicle is initially rated at least investment grade by either Moody's and Fitch or by S&P and one other nationally-recognized statistical rating agency (which may include Moody's or Fitch), (2) in the case of a Securitization Vehicle that is not a CDO, the special servicer for the Securitization Vehicle has the Required Special Servicer Rating (such entity, an "Approved Servicer") and such Approved Servicer is required to service and administer such Mortgage Loan in accordance with servicing arrangements for the assets held by the Securitization Vehicle which require that such Approved Servicer act in accordance with a servicing standard notwithstanding any contrary direction or instruction from any other Person, or (3) in the case of a Securitization Vehicle that is a CDO, the CDO Asset Manager and, if applicable, each Intervening Trust Vehicle that is not administered and managed by a CDO Asset Manager which is an Institutional Lender/Owner, are each an Institutional Lender/Owner under clauses (a)(i), .@)ill) or liD of this definition; or (iv) an institution substantially similar to any of the foregoing described in clauses (a)Ci) or .@)ill) of this definition which has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder's equity of $200,000,000; or (b) any entity controlled by any ofthe entities described in clause Ca)(i) above; clause (c) below; or (c) LBHI or Structured Asset Securities Corporation II. For purposes of this definition only, "control" means the ownership, directly or indirectly, in the aggregate of more than 50% of the beneficial ownership interests of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through the ability to exercise voting power, by contract or otherwise. "Controlled" has the meaning correlative thereto. "Intervening Trust Vehicle" shall mean, with respect to any Securitization Vehicle that is a CDO, a trust vehicle or entity that holds a Mortgage Loan or any Note A Portion as collateral securing (in whole or in part) any obligation or security held by such Securitization Vehicle as collateral for the CDO. 704230-3 "LaSalle" shall have the meaning assigned thereto in the Preliminary Statement. "LBHI" shall have the meaning assigned thereto in the Preliminary Statement. "Lehman ALI" shall have the meaning assigned thereto in the Preliminary Statement. "Lender" and "Lenders" shall have the respective meanings assigned thereto in the Preliminary Statement. "Loan Agreement" shall have the meaning assigned thereto in the Preliminary Statement. "Loan Documents" shall mean, collectively, the Notes, the Loan Agreement, the Mortgage and all other documents evidencing or securing any or all ofthe Mortgage Loans. "Master Servicer"shall mean: (a) for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with the Series 2007 -C6 Pooling and Servicing Agreement, the Series 2007-C6 Master Servicer; and (b) if and for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with any successor Servicing Agreement, the master servicer under such successor Servicing Agreement. "Master Servicing Fee" shall mean, with respect to each Mortgage Loan, the monthly fee payable to (a) the Master Servicer pursuant to the Servicing Agreement(s) then in effect and (b) if so provided under the Securitization Agreement for the Related Securitization Trust, the master servicer for such trust. "Maturity Date" shall have the meaning assigned thereto in the Loan Agreement. "Monthly Payment" shall mean, as of any Due Date, the scheduled payment of principal and/or interest due on the Mortgage Loans or a particular Mortgage Loan, as the context may require, in accordance with the Loan Documents (as such amount may be changed or modified in connection with a bankruptcy or similar proceeding involving the Borrower or by reason of a modification, extension, waiver or amendment granted or agreed to by the Applicable Servicer pursuant to the Servicing Agreement then in effect and in accordance with the terms and provisions this Agreement), including the Balloon Payment' payable on such Due Date; provided that the Monthly Payment shall not include Default Interest. "Mortgage" shall have the meaning assigned thereto in the Preliminary Statement. "Mortgage File" shall have the meaning assigned thereto in the Series 2007 -C6 Pooling and Servicing Agreement (as in effect on the Closing Date). "Mortgage Loan" and "Mortgage Loans" shall have the respective meanings assigned thereto in the Preliminary Statement and are further identified on the Mortgage Loan Schedule. As used herein, the term "Mortgage Loan" includes the Loan Documents. 704230-3 "Mortgage Loan Schedule" shall mean the list attached hereto as Exhibit I, which sets forth the following information with respect to the Mortgage Loans as of the date hereof (unless another date is referenced): (i) the Borrower's name; (ii) the principal balance of each Mortgage Loan as of the date hereof; (iv) the Applicable Interest Rate for each Mortgage Loan; and (v) the Maturity Date. "Mortgaged Property" shall mean the real property (together with all improvements and fixtures thereon) subject to the lien of the Mortgage. ''Note" and "Notes" shall have the meaning assigned thereto in the Preliminary Statement. "Note A Portion" shall mean a Note A-1 Portion or a Note A-2 Portion. "Note A-1" shall have the meaning assigned thereto in the Preliminary Statement. "Note A -1 Interest Rate" shall mean the interest rate set forth in the Mortgage Loan Schedule for the Note A-1 Mortgage Loan. "Note A-1 Lender" shall mean the holder ofNote A-1. "Note A-1 Mortgage Loan" shall have the meaning assigned thereto m the Preliminary Statement. "Note A-1 Portion" shall have the meaning assigned thereto in Section 6.15. "Note A-1 Principal Balance" shall mean, at any time of determination, the initial Note A-1 Principal Balance as set forth in the Mortgage Loan Schedule, less (i) any payments of principal thereon received by the Note A-1 Lender and (ii) any reductions in such amount subsequent to the Closing Date in accordance with Section 3.01Cc). "Note A-1 Securitization" shall have the meaning assigned to such term in the Preliminary Statement. "Note A-2" shall have the meaning assigned thereto in the Preliminary Statement. "Note A-2 Lender" shall mean the holder ofNote A-2. \ "Note A-2 Mortgage Loan" shall have the meaning assigned thereto m the Preliminary Statement. "Note A-2 Portion" shall have the meaning assigned thereto in Section 6.15. 704230-3 "Note A-2 Securitization" shall have the meaning assigned thereto ill the Preliminary Statement. "Original Lender" shall have the meaning assigned thereto in the Preliminary Statement. "Original Mortgage Loan" shall have the meaning assigned thereto ill the Preliminary Statement. "Original Note" shall have the meaning assigned thereto ill the Preliminary Statement. "P&I Advance" shall mean any advance of delinquent payments of principal and/or interest made with respect to either Mortgage Loan or any REO Property by, and reimbursable to, any Servicer or any other party under a Servicing Agreement or a Securitization Agreement. "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepayment Premium" shall mean any premium, fee or charge paid or payable, as the context requires, by the Borrower under the Loan Documents in connection with a voluntary or involuntary principal prepayment. "Pro Rata and Pari Passu Basis" shall mean, with respect to the Mortgage Loans and the Lenders, the allocation of any particular payment, collection, cost, expense, liability or other amount among such Mortgage Loans or such Lenders, as the case may be, without any priority of either such Mortgage Loan or either such Lender over the other Mortgage Loan or the other Lender, as the case may be, and in any event such that each of the Mortgage Loans or the Lenders, as the case may be, is allocated its Allocable Share of such particular payment, collection, cost, expense, liability or other amount. "Primary Servicing Office" shall mean the offices of any Servicer that are primarily responsible for such party's servicing obligations under the Servicing Agreement then in effect. "Qualified Trustee" shall mean either (i) a corporation, national bank, national banking association or a trust company, organized and doing business under the laws of any state or the United States of America, authorized under such laws to exercise corporate trust powers and to accept the trust conferred, having a combined capital and surplus of at least $100,000,000 and subject to supervision or examination by federal or state authority, (ii) an institution insured by the Federal Deposit Insurance Corporation or (iii) an institution whose long-term senior unsecured debt is rated in either of the then in effect top two rating categories of each of the Rating Agencies. "Rating Agency" shall mean S&P or any other nationally recognized statistical rating organization that has assigned a rating to any Related MBS. 704230-3 "Regulation AB" shall mean Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. 229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Securities and Exchange Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506-1,631 (Jan. 7, 2005)) or by the staff of the Securities and Exchange Commission, or as may be provided by the Securities and Exchange Commission or its staff from time to time. "Reinstatement Distribution" shall have the meaning assigned thereto m Section 6.08. "Related Grantor Trust" shall mean any Grantor Trust that holds either Mortgage Loan (or any portion thereof or any specified collections thereon) or, after it has become REO Property, the Mortgaged Property or any interest therein. "Related MBS" shall mean any mortgage-backed securities that are backed or secured, in whole or in part, by either Mortgage Loan or any Note A Portion or by the Mortgaged Property or any interest therein after the Mortgaged Property has become REO Property. "Related REMIC Pool" shall mean any REMIC that holds either Mortgage Loan (or any portion thereof or any specific collections thereon) or, after it has become REO Property, the Mortgaged Property or any interest therein, as an asset. "Related Securitization Trust" shall mean any trust (including a common law trust or a statutory trust) that holds either Mortgage Loan (or any portion thereof or any specified collections thereon) or, after it has become REO Property, the Mortgaged Property or any interest therein, as an asset in connection with the issuance of a series of Related MBS. "REMIC" shall mean a "real estate mortgage investment conduit" as defined in Section 860D of the Code. "REMIC Provisions" shall mean the provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed, temporary and fmal Treasury regulations and any published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time. "Remittance Date" shall mean, with respect to each Mortgage Loan, the date during each calendar month, commencing in September 2007, on which, among other things, the Master Servicer is required to make remittances to or at the direction of the related Lender, pursuant to Section 4.01, which date shall be the first Business Day following the Determination Date in such calendar month. "REO Property" shall mean a status attributed to the Mortgaged Property if it is acquired on behalf and in the name of the Lenders or their designee 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 the Mortgage Loans. 704230-3 "Reorganization Proceeding" shall have the meaning assigned thereto m Section 6.08. "Re12lacement A-1 Notes" shall have the meaning assigned thereto in Section 6.15. "Re12lacement A-2 Notes" shall have the meaning assigned thereto m Section 6.15. "Re12lacement Note" shall mean any Replacement A-1 Note or Replacement A-2 Note. "Required S12ecial Servicer Rating"/shall mean (i) in the case of Fitch, Inc., a rating of "CSS3", (ii) in the case of S&P, such special servicer is on S&P's Select Servicer List as a U.S. commercial mortgage special servicer, and (iii) in the case of Moody's, such special servicer is acting as special servicer in a commercial mortgage loan securitization that was rated by Moody's within the twelve (12) month period prior to the date of determination, and Moody's has not downgraded or withdrawn the then-current rating on any class of commercial mortgage securities or placed any class of commercial mortgage securities on watch citing the continuation of such special servicer as special servicer of such commercial mortgage securities. "Reserve Funds" shall mean any amounts delivered by the Borrower to be held by or on behalf of the Lenders representing reserves for repairs, capital improvements and/or environmental remediation in respect of the Mortgaged Property. "S&P" shall mean Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors. "Securitization" shall mean a Note A-1 Securitization or a Note A-2 Securitization, as applicable. "Securitization Agreement" shall mean the agreement or, collectively, the agreements pursuant to which either or both of the Mortgage Loans are included as part of a Securitization. "Securitization Date" shall mean the date on which a Securitization IS consummated. "Securities Act" shall have the meaning assigned to such term in Section 6.13. "Series 2007 -C6 Master Servicer" shall mean Wachovia Bank, National Association or any successor master servicer appointed as provided in the Series 2007 -C6 Pooling and Servicing Agreement. "Series 2007-C6 Pooling and Servicing Agreement" shall mean that certain Pooling and Servicing Agreement dated as of August 13, 2007, between the Depositor, the Series 2007-C6 Trustee, the Series 2007-C6 Master Servicer and the Series 2007-C6 Special 704230-3 Servicer, relating to the LB-UBS Commercial Mortgage Trust 2007-C6, Commercial Mortgage Pass-Through Certificates, Series 2007 -C6. "Series 2007 -C6 Special Servicer" shall mean Midland Loan Services Inc., or any successor special servicer appointed with respect to the Mortgage Loans or the Mortgaged Property if it becomes an REO Property as provided in the Series 2007-C6 Pooling and Servicing Agreement. "Series 2007 -C6 Trustee" shall have the meaning assigned thereto in the Preliminary Statement, and shall included any successor trustee appointed as provided in the Series 2007-C6 Pooling and Servicing Agreement. "Servicer" shall mean, as of any date of determination, any Master Servicer or Special Servicer then responsible for the servicing and administration of the Mortgage Loans or any REO Property, for the benefit of the Lenders, pursuant to the Applicable Servicing Agreement. "Servicing Advances" shall mean any servicing advance or property protection advance with respect to either Mortgage Loan or any successor REO Property by, and reimbursable to, any Servicer or any other party under the Applicable Servicing Agreement or hereunder, including; without limitation, any "Servicing Advance", as such term is defined under any Applicable Servicing Agreement. "Servicing shall mean, as of any date of determination, any agreement then governing the servicing and administration of the Mortgage Loans and any REO Property for the benefit of the Lenders. "Servicing File" shall mean, collectively, any and all documents (other than documents required to be part of the Mortgage File, except as provided in this definition) in the possession of the Servicer(s) and relating to the origination and servicing of the Mortgage Loans, including, without limitation, any original letter of credit (together with any transfer or assignment documents related thereto), appraisals, surveys, engineering reports, environmental reports, opinions of counsel to the Borrower, escrow agreements, property management agreements and copies of either Note that does not constitute part of the Mortgage File. "Servicing Standard" shall mean the standard of care that is to be applied by any Applicable Servicer in servicing and administering the Mortgage Loans, the Mortgaged Property and any REO Property, as set forth in the Applicable Servicing Agreement. "Special Servicer" shall mean: (a) for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with the Series 2007-C6 Pooling and Servicing Agreement, the Series 2007-C6 Special Servicer; and (b) if and for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with any successor Servicing Agreement, the special servicer under such successor Servicing Agreement, which servicer shall be the party responsible under the Applicable Servicing Agreement for servicing and administering the Mortgage Loans following, among other things, the occurrence of a material default and for ad;ministering the Mortgaged Property if it becomes an REO Property. 704230-3 "Specially Serviced Mortgage Loan" shall mean a status attributed to each Mortgage Loan when, in accordance with the Applicable Servicing Agreement, it is to be serviced and administered by the Special Servicer instead of the Master Servicer. "Trustee" shall mean: (a) for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with the Series 2007 -C6 Pooling and Servicing Agreement, the Series 2007-C6 Trustee; and (b) if and for so long as the Mortgage Loans or any REO Property are serviced and administered in accordance with any successor Servicing Agreement, the trustee, if any, under such successor Servicing Agreement. "Workout Action" shall mean any amendment, waiver, modification or forbearance granted or agreed to, or other action taken, by or on behalf of a Lender with a view towards recovering delinquent amounts due in respect of, or otherwise resolving a default under, either Mortgage Loan, exclusive of an Enforcement Action. Section 1.02. General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (i) the terms defined in this Agreement include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (ii) accounting terms not otherwise defmed herein have the meanings assigned to them in accordance with generally accepted accounting principles; (iii) references herein to "Articles", "Sections", "Subsections", "Paragraphs" and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement; (iv) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; (v) the words "herein" "hereof' "hereunder" "hereto" "hereby" and ' ' ' ' other words of similar import refer to this Agreement as a whole and not to any particular provision; and (vi) the terms "include" or "including" shall mean without limitation by reason of enumeration. Section 1.03. Interpreting this Agreement and the Loan Agreement. (a) Loan Agreement. The Mortgage Loans shall collectively constitute the "Loan" under the 704230-3 (b) Note A-1 and Note A-2 shall collectively constitute the ''Note" under Section 2.1.3 of the Loan Agreement. 704230-3 ARTICLE II RETENTION OF LOAN DOCUMENTS; REPRESENTATIONS AND WARRANTIES Section 2.01. Relative Rights of the Lenders This Agreement shall govern the relative rights of the Lenders to receive payments and otherwise take action with respect to their respective Mortgage Loans. Neither Lender shall in any way be responsible or liable to the other Lender with respect to any amounts received by such Lender in respect of its Mortgage Loan in accordance with this Agreement. Section 2.02. Delivery and Retention of Note A-2; Delivery and Retention of Mortgage File (Exclusive ofNote A-2); Record T i t l ~ . (a) The Note A-2 Lender hereby acknowledges possession of an original of its related Note A-2. The Note A-2 Lender shall retain its Note, but such Lender shall make its Note available to the Applicable Servicer, upon request, for purposes of servicing the related Mortgage Loan. (b) The Note A-1 Lender hereby acknowledges possession of the Mortgage File (exclusive of the original of Note A-2). The Note A-1 Lender shall, subject to the terms of this Agreement and the Applicable Servicing Agreement, segregate and maintain continuous custody of all documents with respect to the Mortgage Loans constituting the Mortgage File (exclusive of the original of Note A-2); provided that the Note A-1 Lender may make any or all such documents with respect to the Mortgage Loans available to the Applicable Servicer, upon request, for purposes of servicing the Mortgage Loans; and provided, further, that the Note A-1 Lender may otherwise release custody of the Mortgage File and any such documents with respect to the Mortgage Loan to the extent that it deems it necessary or appropriate to do so in order to protect the rights or interests of either Lender; and provided, further, that the Note A-1 Lender may, at its expense, appoint a third-party custodian to retain, on behalf of and in trust for the Lenders, the Mortgage File and any such documents with respect to the Mortgage Loans. Any such custodian so appointed by the Note A -1 Lender shall be a depository institution supervised and regulated by a federal or state banking authority and shall have combined capital and surplus of at least $10,000,000. The Note A-1 Lender shall ensure that the related custodial agreement prohibits the release of any documents held by a custodian appointed by it with respect to the Mortgage Loans, except: (i) in accordance with, or consistent with, the Applicable Servicing Agreement; (ii) with the consent of each Lender; (iii) under the same circumstances that the Note A-1 Lender would be permitted to release custody of such documents; (iv) to the Note A-1 Lender following the resignation or termination of such custodian; and (v) in connection with the Note A-1 Securitization. (c) The Note A-1 Lender will not, except as and to the extent contemplated by the agreements governing the Note A-1 Securitization, be under any duty or obligation to inspect, review or examine any of the documents, instruments, certificates or other papers relating to the Mortgage Loans delivered to it to determine that the same are valid, legal, effective, genuine, binding, enforceable, sufficient or appropriate for the represented purpose or that they are other than what they purport to be on their face. Furthermore, the Note A-1 Lender 704230-3 will not, except as and to the extent contemplated by the agreements governing the Note A-1 Securitization, have any responsibility for determining whether the text of any assignment or endorsement is in proper or recordable form, whether the requisite recording of any document is in accordance with the requirements of any applicable jurisdiction, or whether a blanket assignment is permitted in any applicable jurisdiction. (d) Upon the transfer of the Note A-1 Mortgage Loan (or the applicable Note A-1 Portion) in connection with the Note A-1 Securitization, the Series 2007-C6 Trustee shall be vested with all of the specific rights and obligations of "Note A-1 Lender" hereunder. Lehman, as original lender, shall execute and deliver any and all assignments and other transfer documents (in recordable form, if applicable) that are necessary to transfer the Loan Documents (exclusive of the original of Note A-2) to the Series 2007-C6 Trustee or that are otherwise required under the related mortgage loan purchase agreement, the Servicing Agreement(s) and/or the SecUritization Agreement for the Note A-1 Securitization. Thereafter, the Note A-1 Lender shall be the mortgagee of record on behalf of the Lenders and shall not, in its capacity as mortgagee of record, take any action not expressly permitted hereunder that would impair the rights of the other Lender. Each successor Note A-1 Lender may, at its option: (i) complete any and all assignments and other transfer documents delivered to it by the predecessor Note A-1 Lender in such manner as to reflect that it is the mortgagee/beneficiary under the Loan Documents (exclusive of the Notes) on behalf of the Lenders; and (ii) record or file, as applicable, any such assignments and/or transfer documents that are appropriate to be recorded or filed, as the case may be, in the appropriate public office for such purposes. Section 2.03. Delivery of Servicing File, Escrow Payments and Reserve Funds to the Master Servicer. Each Lender shall deliver to the Master Servicer or such other Person as may be directed by the Master Servicer (at each Lender's own expense) on or before the date hereof, to be held by the Master Servicer in trust for the benefit of the Lenders, such other relevant documents and records that: (A) relate to the administration or servicing of such Mortgage Loan, (B) are reasonably necessary for the ongoing administration and/or servicing of the Mortgage Loans by the Master Servicer in connection with its duties under the Applicable Servicing Agreement, and (C) are in the possession or under the control of such Lender, together with all unapplied Escrow Payments and Reserve Funds in the possession of such Lender that relate to the Mortgage Loans; provided that neither Lender shall be required to deliver any draft documents, privileged or other communications, credit underwriting or due diligence analyses, credit committee briefs or memoranda or other internal approval documents or data or internal worksheets, memoranda, communications or evaluations. Section 2.04. Representations, Warranties and Covenants of the Lenders. (a) Each Lender hereby represents, warrants and covenants to the other party hereto, as of the date hereof, that: (i) Such Lender is duly organized, validly existing and m good standing under the laws of the jurisdiction of its organization. 704230-3 (ii) The execution and delivery of this Agreement by such Lender, and the performance and compliance with the terms of this Agreement by such Lender, will not violate such Lender's organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which such Lender is a party or which is applicable to it or any of its assets. (iii) Such Lender has the full power and authority to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement. (iv) This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of such Lender, enforceable against such Lender in accordance with the terms hereof, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights generally, and (B) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law. (v) Such Lender is not in violation of, and its execution and delivery of this Agreement and its performance and compliance with the terms of this Agreement will not constitute a violation of, any law, any order or decree of any court or arbiter, or, to such Lender's knowledge, any order, regulation or demand of any federal, state or local governmental or regulatory authority, which violation, in such Lender's good faith and reasonable judgment, is likely to affect materially and adversely either the ability of such Lender to perform its obligations under this Agreement or the financial condition of such Lender. (vi) No litigation is pending or, to the best of such Lender's knowledge, threatened against such Lender that, if determined adversely to such Lender, would prohibit such Lender from entering into this Agreement or that, in such Lender's good faith and reasonable judgment, is likely to materially and adversely affect either the ability of such Lender to perform its obligations under this Agreement or the financial condition of such Lender. (vii) . Any consent, approval, authorization or order of any court or governmental agency or body required under federal or state law for the execution, delivery and performance by such Lender of or compliance by such Lender with this Agreement or the consummation of the transactions contemplated by this Agreement has been obtained and is effective except where the lack of consent, approval, authorization or order would not have a material adverse effect on the performance by such Lender under this Agreement. (viii) Such Lender is not an Affiliate ofthe Borrower. 704230-3 (ix) Such Lender has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in connection with the purchase of its Note from Lehman. (b) The representations, warranties and covenants of each Lender set forth in Section 2.04(a) shall survive the execution and delivery of this Agreement and shall inure to the benefit of the other Lender for so long as this Agreement remains in effect. Each successor Lender, upon becoming a Lender, shall be deemed to have made the representations, warranties and covenants set forth in Section 2.04Ca). Upon discovery by either Lender of any breach of any of such representations, warranties and covenants, the Lender discovering such breach shall give prompt written notice thereof to the other Lender. Section 2.05. Independent Analysis of Each Lender. Each Lender acknowledges that it has, independently and without reliance upon representations made or information furnished by the other Lender, and based on such documents and information as such Lender has deemed appropriate, made its own credit analysis and decision to make or purchase its Mortgage Loan. Each Lender acknowledges that the other Lender has not made any representations or warranties with respect to the Mortgage Loans, the Mortgaged Property or the Borrower, and that neither of the Lenders shall have any responsibility for (i) the collectability of the Mortgage Loans, (ii) the validity, enforceability or legal effect of any of the Loan Documents or the title insurance policy or policies or any survey furnished or to be furnished to the originators in connection with the origination of the Mortgage Loans, (iii) the validity, sufficiency or effectiveness of the lien created or to be created by the Loan Documents, or (iv) the financial condition of the Borrower. Subject to the provisions of Article IV, each Lender assumes all risk of loss in connection with its Mortgage Loan from the failure or refusal of the Borrower to pay interest, principal or other amounts due under the Mortgage Loans, defaults by the Borrower under the Loan Documents or the unenforceability of any of the Loan Documents, for reasons other than negligence, willful misconduct or breach of this Agreement by the other Lender. Section 2.06. Notes Not Securities. Each Lender acknowledges and agrees that the Notes are not securities for purposes of federal and state securities laws. 704230-3 ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS Section 3.01. General Servicing Matters. (a) The Note A-1 Lender, on behalf of both Lenders, is authorized to, and shall, engage one or more Servicers, pursuant to one or more Servicing Agreements, for purposes of servicing and administering the Mortgage Loans and any REO Property from time to time; provided, that (1) the Series 2007-C6 Pooling and Servicing Agreement shall be the initial Applicable Servicing Agreement and (2) the Series 2007 -C6 Master Servicer and the Series 2007 -C6 Special Servicer shall be the initial Servicers with respect to the Mortgage Loans; and provided, further, that, if the Series 2007 -C6 Pooling and Servicing Agreement is terminated and no longer constitutes the Applicable Servicing Agreement (including because neither any portion of the Note A-1 Mortgage Loan nor any REO Property is an asset of a Related Securitization Trust in respect of a Note A-1 Securitization), then, unless the Note A-2 Lender otherwise consents in writing, which consent shall not be unreasonably withheld, any new Servicing Agreement(s) negotiated by the Note A-1 Lender shall: (i) not be materially inconsistent with this Agreement, (ii) require the Servicer(s) thereunder to service and administer the Mortgage Loans and any REO Property in accordance with (A) any and all applicable laws, (B) the express terms of this Agreement (and any other related intercreditor agreement), the Applicable Servicing Agreement and the respective Mortgage Loans, and (C) to the extent consistent with the foregoing, a Servicing Standard that (x) is substantially the same as the "Servicing Standard" under the Series 2007-C6 Pooling and Servicing Agreement and (y) provides that, following default, such servicing and administration of the Mortgage Loans shall be with a view to the maximization of recovery on the Mortgage Loans to the Lenders (as a collective whole) of principal and interest, including the Balloon Payment, on a present value basis, (iii) provide for the establishment of accounts in respect of the Mortgage Loans and the Mortgaged Property substantially the same as those provided for in the Series 2007-C6 Pooling and Servicing Agreement and for the making of deposits to and withdrawals from such accounts consistent with the provisions of the Series 2007 -C6 Pooling and Servicing Agreement, (iv) provide for standard CMSA reporting, (v) provide for "events of default" on the part of the subject Servicer(s), and for rights on the part of the Lenders in .respect thereof, substantially similar to those provided for in the Series 2007-C6 Pooling and Servicing Agreement, (vi) contain requirements regarding when and what type of appraisals are to be obtained with respect to the Mortgaged Property and provisions regarding the calculation of Appraisal Reduction Amounts that are substantially similar to the corresponding requirements and provisions in the Series 2007-C6 Pooling and Servicing Agreement, (vii) provide for the making and reimbursement (with interest) of Advances with respect to the Mortgage Loans and/or any REO Property in a manner substantially similar to the making and reimbursement (with interest) of Advances with respect thereto in the Series 2007-C6 Pooling and Servicing Agreement so long as either Mortgage Loan is included in a securitization, (viii) provide for the Mortgage Loans to be Specially Serviced Mortgage Loans under circumstances substantially similar to those set forth in the Series 2007-C6 Pooling and Servicing Agreement, (ix) otherwise recognize the respective rights and obligations of the Lenders hereunder, including with respect to the making of payments to the Lenders in accordance with Article IV, the rights of the Directing Lender pursuant to Section 3.02(a), (x) if any of the Mortgage Loans or any REO Property is 704230-3 held by a REMIC, provide for the servicing and administration of the Mortgage Loans and any REO Property in a manner, and contain such prohibitions on the Master Servicer's and Special Servicer's respective actions, as would avoid an Adverse REMIC Event, and (xi) designate the Note A-2 Lender as a third-party beneficiary thereunder; and provided, further, that, prior to entering into any Servicing Agreement(s) (other than the Series 2007-C6 Pooling and Servicing Agreement) with respect to the Mortgage Loans and/or any REO Property, the Note A-1 Lender shall obtain and provide to the Note A-2 Lender written confirmation from each applicable Rating Agency that the servicing and administration of the Mortgage Loans and/or any REO Property under such new Servicing Agreement(s) will not result in an Adverse Rating Event with respect to any Related MBS, except that such confirmation shall not be required from any particular Rating Agency with respect to a new Servicing Agreement entered into with respect to the Note A-1 Securitization if one or more classes of the securities issued in connection with such Note A-1 Securitization is (are) rated by such Rating Agency. The servicing agreement(s) for the Note A-1 Securitization shall provide that, if at any time neither any portion of the Note A-1 Mortgage Loan nor any REO Property or interest therein is an asset of a Related Securitization Trust in respect of such Note A-1 Securitization, and if a separate Servicing Agreement with respect to the Mortgage Loans or any REO Property, as applicable, has not been entered into in accordance with the preceding paragraph (including by reason of the Note A-1 Lender's failure to obtain any rating confirmation required pursuant to the third proviso of the second preceding paragraph), then, until such time as a separate Servicing Agreement is entered into in accordance with the second preceding paragraph, and notwithstanding that neither the Note A-1 Mortgage Loan (in whole or in part) nor any REO Property or interest therein is an asset of such Related Securitization Trust, the Lenders hereby acknowledge and agree that the master servicer and, if applicable, the special servicer for such Note A-1 Securitization shall continue to service and administer the Mortgage Loans and/or any REO Property, for the benefit of the Lenders, under the servicing agreement(s) for such Note A-1 Securitization as if the Mortgage Loans or any REO Property were the sole assets subject thereto, with any references in such servicing agreement(s) to (i) the Related Securitization Trust in respect of such Note A-1 Securitization, (ii) the trustee for such Related Securitization Trust, (iii) the Related MBS in respect of such Note A-1 Securitization, (iv) the holders of such Related MBS (or any sub-group thereof), or (v) any representative of such holders (or any sub-group thereof), all being construed to refer to the Note A-1 Lender. Notwithstanding anything herein to the contrary, if at any time neither the Note A-1 Mortgage Loan (in whole or in part) nor any REO Property or interest therein is an asset of the Related Securitization Trust for the Note A-1 Securitization, the Note A-1 Lender will not be obligated to make backup Servicing Advances if any Servicer fails to make such Servicing Advances under the Applicable Servicing Agreement. (b) The Lenders hereby acknowledge that all serv1crng rights and responsibilities with respect to the Mortgage Loans and any REO Property shall be governed by the Servicing Agreement(s) in effect from time to time. Neither Lender may directly service and administer the Mortgage Loans or any REO Property, including the taking of any Enforcement Action or Workout Action or exercising rights in any Insolvency Proceeding, unless (consistent with this Agreement) it is acting as the Applicable Servicer under the Applicable Servicing Agreement then in effect, or unless such Lender has obtained the written consent of the other Lender. Neither Lender shall take or institute any action that would, directly or indirectly, 704230-3 interfere with or delay the performance of any Servicer of its duties and obligations with respect to the Mortgage Loans and/or any REO Property under a Servicing Agreement. Without limiting the generality of the foregoing, in the event of a bankruptcy or insolvency of the Borrower, neither Lender shall object to or oppose any efforts by the Applicable Servicer to obtain relief from the automatic stay under Section 362 of the Bankruptcy Code or to seek to cause the Borrower's bankruptcy estate to abandon the Mortgaged Property (or any portion thereof) that is subject to the Mortgage. (c) The Lenders hereby agree that neither Lender shall cause or permit, except as provided in the Applicable Servicing Agreement, any Servicer to modify or amend any of the Loan Documents if the effect of such modification or amendment would: (i) Mortgage Loan; (ii) increase the interest rate payable on amounts due pursuant to either increase the original principal amount of either Mortgage Loan; or (iii) change the maturity of either Mortgage Loan, without a corresponding change in maturity of the other Mortgage Loans; provided that, (x) where there is more than one Note A-1 Portion representing in the aggregate Note A-1, the reference to "interest rate" in clause (i) of this sentence shall mean, with respect to the Note A-1 Mortgage Loan, a weighted average interest rate equal to the weighted average of the interest rates on all of the Note A-1 Portions, and the reference to "maturity" in clause (iii) of this sentence means the latest maturity on the Note A-1 Portions, and (y) where there is more than one Note A-2 Portion representing in the aggregate Note A-2, the reference to "interest rate" in clause (i) of this sentence shall mean, with respect to the Note A-2 Mortgage Loan, a weighted average interest rate equal to the weighted average of the interest rates on all of the Note A-2 Portions, and the reference to "maturity" in clause (iii) of this sentence means the latest maturity on the Note A-2 Portions. Furthermore, the Lenders agree that neither Lender shall cause or permit, and no Servicing Agreement shall allow, any Servicer to modify, amend or waive any of the payment terms of the Mortgage Loans unless such modification, waiver or amendment is structured so as to be consistent with the allocation and payment priorities set forth in the Loan Documents and this Agreement, such that neither Lender shall gain a priority over the other Lender with respect to any payment which priority is not, as of the date of this Agreement, reflected in the Loan Documents and this Agreement. In connection with the foregoing, the Lenders agree that, to the extent consistent with the Servicing Standard, any waiver, reduction, deferral or other change of any particular amounts due under the Mortgage Loans, any reduction or other change of the Applicable Interest Rate, shall be effected as between the Lenders on a Pro Rata and Pari Passu Basis as regards the economic effects thereto. Notwithstanding anything to the contrary contained herein, in the event that, consistent with the foregoing, there is a modification, extension, waiver or amendment of the payment terms of either Mortgage Loan (in accordance with the Applicable Servicing Agreement and this Agreement and in connection with a default or a reasonably foreseeable default) such that: (i) the principal balance of such Mortgage Loan is reduced, (ii) the Applicable Interest Rate of the Notes is reduced, (iii) payments of interest or 704230-3 principal on the Notes are waived, reduced or deferred, or (iv) any other adjustment is made to any of the payment terms of either such Mortgage Loan, all payments (reflecting the terms of any such reduction, waiver, deferral or other adjustment referred to in clauses (i) through (iv) above) to the Lenders, constituting principal of, interest at the Applicable Interest Rate on, or Prepayment Premiums on, the Mortgage Loans shall continue to be made in accordance with the allocation and payment priorities set forth in the Loan Documents and this Agreement as in effect on the date hereof. Notwithstanding anything contained herein to the contrary, any of the actions referred to in the immediately preceding clauses (i) through (iv) shall be effected as between the Lenders on a Pro Rata and Pari Passu Basis as regards the economic effects thereto. (d) The Lenders further acknowledge that, in any Insolvency Proceeding, the Applicable Servicer shall (i) file a proof of claim in respect of the Lenders' claims against the Borrower, (ii) have the exclusive right to exercise any voting rights in respect of the claims of the Lenders against the Borrower and (iii) otherwise represent the Lenders in such Insolvency Proceeding. Neither Lender shall (except through the Applicable Servicer and pursuant to the Applicable Servicing Agreement) acquiesce, petition or otherwise invoke or cause any other Person to invoke an Insolvency Proceeding with respect to the Borrower or seek to appoint a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official with respect to the Borrower or all or any part of its property or assets or ordering the winding-up or liquidation of the affairs of the Borrower. In addition, neither Lender shall (except through the Applicable Servicer and pursuant to the Applicable Servicing Agreement) make any election, give any consent, commence any action or file any motion or take any other action in any case by or against the Borrower under the Bankruptcy Code. The Lenders shall jointly appoint the Special Servicer as their agent, and grant to the Special Servicer an irrevocable power of attorney coupled with an interest, and their proxy, for the purpose of exercising any and all rights and taking any and all actions available to the Lenders in connection with any case by or against the Borrower under the Bankruptcy Code, including the right to vote to accept or reject a plan, to make any election under Section 1111 (b) of the Bankruptcy Code with respect to the Mortgage Loans and to file a motion to modify the automatic stay with respect to the Mortgage Loans. (e) Notwithstanding anything contained herein to the contrary, neither Lender shall cause the Applicable Servicer to, without the other applicable Lender's written consent: (i) initiate . any action, suit or proceeding solely under such other Lender's name without indicating the Applicable Servicer's representative capacity; or (ii) take any action with the intent to cause, and that actually causes, such other Lender to be registered to do business in any state. The Lenders shall execute, acknowledge and deliver to the Applicable Servicer all such further deeds, conveyances and instruments as may be reasonably necessary for the better assuring and evidencing of the foregoing appointment and grant. (f) If either Mortgage Loan or any portion thereof or any particular payments thereon are included in a REMIC or a Grantor Trust, then neither Lender shall knowingly cause or permit any Servicer to take any action that would result in an Adverse REMIC Event or an Adverse Grantor Trust Event, as the case may be. (g) The Lenders hereby agree to furnish to each Applicable Servicer such reports, certifications and information as are reasonably requested by such Applicable Servicer to enable it to perform its duties under the Applicable Servicing Agreement. 704230-3 (h) Each Lender agrees that any Securitization Agreement related to a Securitization involving a Mortgage Loan and/or a Note A Portion shall provide that the Master Servicer and Special Servicer shall have the right to be reimbursed from general collections of the Related Securitization Trust for any Servicing Advance and related Advance Interest made with respect to the Mortgage Loans or the Mortgaged Property that is determined to be nomecoverable out of collections on the Mortgage Loans and/or any REO Property. Furthermore, each such Securitization Agreement shall provide that the Master Servicer and the Special Servicer are each a third-party beneficiary. Section 3.02. Certain Powers of the Directing Lender. (a) Subject to Section 3.01(b), Section 3.01(c) and Section 3.02(b), the Directing Lender will be entitled to advise the Applicable Servicer with respect to the following actions of the Applicable Servicer; and, further subject to Section 3.02Cb), the Applicable Servicing Agreement shall not permit the Applicable Servicer to take (or, in the case of the Special Servicer, if and when appropriate under the Applicable Servicing Agreement, to consent to the Master Servicer's taking) any of the following actions unless and until it has notified each Lender in writing and the Directing Lender has not objected in writing within 30 days of the Lenders having been notified thereof and having been provided with all reasonably requested information with respect thereto (it being understood and agreed that if such written objection has not been received by the Applicable Servicer within such 30 day period, then the Directing Lender's approval will be deemed to have been given): (i) any foreclosure upon or comparable conversion (which may include acquisition as REO Property) of the ownership of the Mortgaged Property securing a Specially Serviced Mortgage Loan; (ii) any modification, extension, amendment or waiver of a monetary term (including the timing of payments, but excluding the waiver of default charges) or any material non-monetary term (including any material term relating to insurance) of a Specially Serviced Mortgage Loan; (iii) any proposed sale of a Mortgaged Property after it becomes an REO Property for less than the then unpaid principal balance of the Mortgage Loans, together with all accrued and unpaid interest thereon, plus any other amounts then due and owing under the Mortgage Loan and the Applicable Servicing Agreement; (iv) any acceptance of a discounted payoff with respect to a Specially Serviced Mortgage Loan; (v) any determination to bring the Mortgaged Property if it secures a Specially Serviced Mortgage Loan or the Mortgaged Property after it becomes an REO Property into compliance with applicable environmental laws or to otherwise address Hazardous Materials located at such Mortgaged Property; (vi) any release of collateral for a Specially Serviced Mortgage Loan other than in accordance with the terms of, or upon satisfaction of, such Mortgage Loan; 704230-3 (vii) any acceptance of substitute or additional collateral for a Specially Serviced Mortgage Loan (other than in accordance with the terms of such Specially Serviced Mortgage Loan); (viii) any waiver of a "due-on-sale" or "due-on-encumbrance" clause with respect to a Mortgage Loan; (ix) any acceptance of an assumption agreement releasing a Borrower from liability under a Mortgage Loan, and (x) acceptance of a change in the property management company with respect to a Mortgage Loan; provided that, in the event that the Applicable Servicer determines that immediate action is necessary to protect the interests of the Lenders (as a collective whole), the Applicable Servicer may take (or, in the case of the Special Servicer, if and when appropriate under the Applicable Servicing Agreement, may consent to the Master Servicer's taking) any such action without waiting for the Directing Lender's response. The Lenders hereby acknowledge that, if the Directing Lenders (or their designees) have not executed a mutual written consent to a course of action that satisfies Section 3.01(b), Section 3.01(c) and Section 3.02(b) of this Agreement with respect to one of the foregoing servicing actions within 30 days (or such shorter period as may be required by the Loan Documents to the extent the lender's approval is required) of the Lenders having been notified of the proposed action or inaction and having been provided with all reasonably requested information with respect thereto, then the Master Servicer or the Special Servicer, as applicable, shall implement such servicing action or inaction (subject to Section 3.01(c) and Section 3.02(b) of this Agreement) that it deems to be in accordance with the Servicing Standard and, in such event, the decision of the Master Servicer or the Special Servicer, as applicable, shall be binding on all of the Lenders. Each Lender further agrees that each other Lender may consult separately with the Master Servicer or the Special Servicer, as applicable, with regard to one of the foregoing servicing actions in this Section 3.02(a). The Lenders further acknowledge that any agreement, consent or advice by or from the Directing Lenders pursuant to this Section 3.02 shall be evidenced solely by a written instrument executed by a responsible officer of each Lender that constitutes one of the Directing Lenders, and the Master Servicer or Special Servicer, as applicable, shall be entitled to rely on such written instrument and, in the absence of such written consent or agreement (regarding a course of action that satisfies Section 3.01(b), Section 3.01(c) and Section 3.02(b)) within the time period specified therefor, shall be permitted to implement such servicing action or inaction (subject to Section 3.01(c) and Section 3.02(b) of this Agreement) that it deems to be in accordance with the Servicing Standard. The Lenders further acknowledge that pursuant to the Applicable Servicing Agreement, the Note A-1 Lender or its designee shall have the right to appoint and replace the Special Servicer; provided, that the Applicable Servicing Agreement shall provide that, prior to the replacement of the Special Servicer by the Note A-1 Lender or its designee pursuant to the Applicable Servicing Agreement, the Note A-1 Lender or its designee desiring to effect such replacement shall obtain written confirmation from each applicable Rating Agency that the 704230-3 replacement of the Special Servicer with the applicable proposed special servicer will not result in an Adverse Rating Event with respect to any Related MBS backed or secured by a Mortgage Loan. The Lenders further acknowledge that, in addition to the Note A-1 Lender's rights set forth in the preceding paragraph of this Section 3.02(a): (1) the Note A-2 Lender may terminate the existing Special Servicer, with respect to and solely with respect to the Mortgage Loans, with or without cause, and appoint a successor to any Special Servicer, with respect to and solely with respect to, the Mortgage Loans, that has resigned or been terminated, and (2) the Note A-1 Lender or its designee cannot terminate a Special Servicer appointed by the Note A-2 Lender with respect to the Mortgage Loans, without cause; provided that any such replacement of the Special Servicer by the Note A-2 Lender or its designee shall be subject to the terms and conditions of the Applicable Servicing Agreement, including, without limitation, the requirement that the Note A-2 Lender or its designee desiring to effect such replacement deliver to the Trustee (i) written confirmation from each applicable Rating Agency that the replacement of the Special Servicer with the applicable proposed Special Servicer will not result in an Adverse Rating Event with respect to any Related MBS backed or secured by a Mortgage Loan, (ii) the written agreement of the proposed Special Servicer to be bound by the terms and conditions of the Applicable Servicing Agreement, and (iii) an opinion of counsel regarding, among other things, the enforceability of the Applicable Servicing Agreement against the proposed Special Servicer. In addition, subject to Section 3.01(b), Section 3.01Cc) and Section 3.02(b), upon notice to the other Lender, the Directing Lender may direct the Applicable Servicer to take, or to refrain from taking, such actions as the Directing Lender may deem consistent with this Agreement or as to which provision is otherwise made herein. The Applicable Servicer shall be required to provide the Directing Lender, upon reasonable request, with any information in the Applicable Servicer's possession with respect to such matters, including, without limitation, its reasons for determining to take a proposed action. (b) Notwithstanding anything herein to the contrary, no advice, direction or objection from or by the Directing Lender, as contemplated by Section 3.02(a), may (and the Applicable Servicer shall ignore and act without regard to any such advice, direction or objection that the Applicable Servicer has determined, in its reasonable, good faith judgment, will) cause or permit the Applicable Servicer to violate any provision of this Agreement or the Applicable Servicing Agreement (including the Applicable Servicer's. obligation to act in accordance with the Servicing Standard), the Loan Documents or applicable law or result in an Adverse REMIC Event or an Adverse Grantor Trust Event. Furthermore, the Applicable Servicer shall not be obligated to seek approval from the Directing Lender for any actions to be taken by the Applicable Servicer with respect to the workout or liquidation of the Mortgage Loans if: (i) the Applicable Servicer has, as provided in Section 3.02(a), notified the Directing Lender in writing of various actions that the Applicable Servicer proposes to take with respect to the workout or liquidation of the Directing Lender's Mortgage Loan; and 704230-3 (ii) for 60 days following the first such notice, the Directing Lender has objected to all of those proposed actions and has failed to suggest any alternative actions that the Applicable Servicer considers to be consistent with the Servicing Standard. (c) The Directing Lender will have no liability to the other Lender(s) for any action taken, or for refraining from the taking of any action, in good faith pursuant to this Agreement and the Applicable Servicing Agreement, or for errors in judgment; provided, however, that the Directing Lender will not be protected against 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 or duties. (d) Each Lender may designate, in writing, a representative, including itself, to exercise its rights and powers under this Section 3.02.or otherwise under this Agreement and the Applicable Servicing Agreement (copies of such writing to be delivered to the other party hereto and each of the parties to the Applicable Servicing Agreement). Such designation shall remain in effect until it is revoked by the applicable Lender by a writing delivered to the other Lender and each of the parties to the Applicable Servicing Agreement. (e) The Note A -1 Lender shall be deemed to have satisfied its obligations under Section 3.02(a) if: (i) the Special Servicer and the Master Servicer are each obligated to take the actions on the part of such Servicer contemplated by such sections under the Applicable Servicing Agreement (regardless of whether such Servicer complies with such obligations); and (ii) the other Lender is a third-party beneficiary of the Applicable Servicing Agreement. 704230-3 ARTICLE IV PAYMENTS TO LENDERS Section 4.01. Application of Payments; Allocation of Collections; Remittances. (a) The Lenders hereby acknowledge and agree that each Lender's Note and related Mortgage Loan shall be of equal priority with each other Lender's Note and related Mortgage Loan, and no portion of either Mortgage Loan shall have priority or preference over any portion of any other Mortgage Loan or security therefor. Any payment (whether principal or interest) or prepayment under the Notes (including reimbursement of expenses from the Borrower and proceeds from sales of collateral) shall be applied to the Mortgage Loans on a Pro Rata and Pari Passu Basis. In addition, the net proceeds of the collateral securing the Mortgage Loans, the net proceeds of casualty and title insurance policies and awards from condemnation shall be applied to the Mortgage Loans on a Pro Rata and Pari Passu Basis. If a Lender, the Master Servicer, the Special Servicer, the Trustee or any nominee thereof acquires title to the Mortgaged Property, then all amounts derived from the operation and disposition of the Mortgaged Property shall be allocable between the Lenders on a Pro Rata and Pari Passu Basis. Notwithstanding the foregoing, the rights of each Lender to distributions of any nature with respect to its Mortgage Loan under the Applicable Servicing Agreement shall be subject to the rights of the Master Servicer, the Special Servicer, the Depositor, the Trustee and any related sub-servicer to payments and reimbursements pursuant to and in accordance with the terms of the Applicable Servicing Agreement and this Agreement, and shall be further subject to Section 4.01Ci). Amounts applied to any particular Mortgage Loan or allocated to any particular Lender in accordance with this Section 4.01Ca) will be applied to interest, principal and other amounts due in respect of the subject Mortgage Loan in accordance with the Applicable Servicing Agreement. (b) All Servicing Advances made, and all liquidation expenses and other servicing-type expenses incurred, by the Master Servicer, the Special Servicer, the Trustee and/or the Depositor under the Applicable Servicing Agreement with respect to the Mortgage Loans and/or any related REO Property shall be deemed made or incurred, as applicable, on behalf of both Lenders and shall be deemed allocated between the Lenders on a Pro Rata and Pari Passu Basis. To the extent so allocable to any particular Lender, at the time any such Servicing Advances or Advance Interest thereon is to be reimbursed pursuant to the Applicable Servicing Agreement such Servicing Advances shall first be reimbursed (together with interest thereon pursuant to the Applicable Servicing Agreement), and such liquidation expenses and other servicing-type expenses shall first be paid, out of amounts allocable to such Lender or its Mortgage Loan in accordance with Section 4.01Ca) hereof prior to any distribution being made to such Lender. (c) If the Master Servicer, the Special Servicer, the Trustee, the Depositor or any related person or entity is entitled to indemnification under the Applicable Servicing Agreement for any loss, liability, damages, cost or expense that is attributable to the Mortgage Loans and/or any related REO Property, then the obligation to make any such indemnity payment shall be allocated between the Lenders on a Pro Rata and Pari Passu Basis. To the 704230-3 extent so allocable to any particular Lender, such indemnity payment shall first be made out of amounts allocable to such Lender on its Mortgage Loan in accordance with Section 4.01Ca) hereof prior to any distribution being made to such Lender. (d) Any extraordinary expense incurred by the Master Servicer, the Special Servicer, the Trustee, the Depositor or any related person or entity under the Applicable Servicing Agreement in relation to the Mortgage Loans and/or any related REO Property, which is nototherwise covered by this Article IV, shall be deemed made or incurred, as applicable, on behalf of both Lenders and shall be deemed allocated between the Lenders on a Pro Rata and Pari Passu Basis. To the extent so allocable to any particular Lender, such extraordinary expense shall first be reimbursed (together with interest thereon if so provided pursuant to the Applicable Servicing Agreement) out of amounts allocable to such Lender or its Mortgage Loan m accordance with Section 4.01Ca) hereof prior to any distribution being made to such Lender. (e) Any compensation payable to the Master Servicer with respect to each Mortgage Loan under the Pooling and Servicing Agreement shall be c(;llculated and payable on a loan-by-loan basis, with the master servicing compensation in respect of either Mortgage Loan to be paid solely out of amounts allocable to that Mortgage Loan or the related Lender. No Lender shall be responsible for the payment of master servicing compensation in respect of the other Lender's Mortgage Loan. Any compensation payable to the Special Servicer under the Applicable Servicing Agreement (including, without limitation, special servicing fees, liquidation fees and workout fees) with respect to the Mortgage Loans and/or any related REO Property shall be deemed made or incurred, as applicable, on behalf both Lenders and shall be deemed allocated between the Lenders on a Pro Rata and Pari Passu Basis. To the extent so allocable to any particular Lender, at the time any such compensation described in the foregoing two sentences (including, without limitation, special servicing fees, liquidation fees and workout fees) is to be paid to the Master Servicer or the Special Servicer pursuant to the Applicable Servicing Agreement, such compensation shall first be paid, out of amounts allocable to such Lender or its Mortgage Loan in accordance with Section 4.01Ca) hereof prior to any distribution being made to such Lender. (f) Notwithstanding anything to the contrary in this Section 4.01, Default Interest and late payment charges shall be allocated between the Mortgage Loans and between the Lenders in accordance with the Applicable Servicing Agreement. (g) P&I Advances and Advance Interest with respect to P&I Advances payable with respect to either Mortgage Loan shall not be reimbursed or paid, as the case may be, out of the amounts payable in respect of the other Mortgage Loan pursuant to Section 4.01Ca). P&I Advances made by the Master Servicer or the Trustee with respect to the Note A-1 Mortgage Loan under the Applicable Servicing Agreement shall be reimbursed, and Advance Interest shall be paid thereon, solely out of amounts allocable to the Note A-1 Mortgage Loan or the Note A-1 Lender and/or, to the extent permitted by the Applicable Servicing Agreement, out of other amounts in the securitization trust for the Series 2007-C6 Securitization, and the Note A-2 Lender shall not be responsible for the payment or reimbursement thereof. P&I Advances made by a master servicer, trustee or other party under a Securitization Agreement related to the Note A-2 Mortgage Loan shall be reimbursed, and interest shall be paid thereon, solely out of amounts allocable to the Note A-2 Mortgage Loan or the Note A-2 Lender 704230-3 and/or, to the extent permitted by such Securitization Agreement, out of other amounts in the securitization trust for the related Note A-2 Securitization, and the Note A-1 Lender shall not be responsible for the payment or reimbursement thereof. (h) The rights of the Lenders to receive payments in respect of their respective Mortgage Loans, and all rights and interests of the Lenders in and to such payments, shall be as set forth in this Agreement, and neither Lender shall challenge, by legal action or otherwise, such rights and interests of the other Lender. Neither Lender nor any other party shall in any way be responsible or liable to the other Lender in respect of amounts properly previously paid to the Lenders in accordance with this Section 4.01. (i) Notwithstanding anything herein to the contrary, if any Replacement Notes are reissued with respect to either Mortgage Loan, and if any Excess Interest accrues on such Replacement Notes, then: (i) the related Lender shall be entitled to receive payment of such Excess Interest only after the Lenders have received all principal, interest (other than Default Interest and Excess Interest) and prepayment premiums payable thereto under their respective Notes, but before the Lenders receive any other amounts due under their respective Notes; (ii) where Excess Interest has accrued with respect to both Mortgage Loans, it shall be payable to the respective Lenders on a pro rata basis, in accordance with the respective amounts of such Excess Interest; and (iii) except as otherwise contemplated by clauses (i) and .(ill above, collections on the Mortgage Loans or any related REO Property shall be allocated between the Lenders as provided in Section 4.01(a). G) On each Remittance Date, the Applicable Servicer shall remit to each Lender (by such method of payment as such Lender reasonably requests, including, without limitation, wire transfer of immediately available funds) all payments, prepayments and other collections received by the Applicable Servicer as of the close of business on the related Determination Date and allocable to such Lender and/or its Mortgage Loan in accordance with this Section 4.01, net of any amounts payable therefrom pursuant to this Section 4.01; provided that each such Lender provide the Master Servicer with written instructions detailing the information necessary to make such remittances (other than the amounts thereof). Section 4.02. [RESERVED] Section 4.03. Advances. (a) From and after the Securitization Date, the Applicable Servicer and/or the Trustee under the Applicable Servicing Agreement may be obligated to make a Servicing Advance to the extent that such Applicable Servicer or Trustee, as applicable, has determined that such Servicing Advance, together with Advance Interest thereon, would not constitute a Nonrecoverable Advance (as defmed in the Applicable Servicing Agreement) if made. The right of such Applicable Servicer and Trustee to reimbursement for either Lender's allocable share of such Servicing Advances and Advance Interest thereon (such Servicing Advances and Advance Interest thereon to be allocated between the Lenders on a Pro Rata and Pari Passu Basis) is prior to the right of each such Lender to receive any distributions or amounts recovered with respect to such Lender's Mortgage Loan or the Mortgaged Property to the extent provided in this 704230-3 Agreement and the Applicable Servicing Agreement. Servicing Advances shall be made in accordance with the Applicable Servicing Agreement. (b) Each Lender shall arrange for the making of P &I Advances with respect to its respective Mortgage Loan (and, if applicable, with respect to any portion thereof), pursuant to any applicable Securitization Agreement relating to the subject Mortgage Loan. Notwithstanding any other provisions contained herein or in the Applicable Servicing Agreement, neither Lender shall have any obligation to make P&I Advances with respect to the other Lender's Mortgage Loan. (c) The Master Servicer and any comparable party with respect to the securitization of a Mortgage Loan shall each independently make its own decision as to whether P&I Advances made by it with respect to such Mortgage Loan will ultimately be recoverable out of amounts allocable as interest (at the Applicable Interest Rate) and/or principal on the subject Mortgage Loan. Each Lender shall cause any Securitization Agreement relating to a Related Securitization Trust that holds its Mortgage Loan to provide that the primary party responsible for making P&I Advances with respect to such Mortgage Loari shall promptly notify the other Lender in writing of any determination that a P&I Advance made or to be made with respect to such Mortgage Loan will not ultimately be recoverable out of amounts allocable as interest (at the Applicable Interest Rate) and/or principal on the subject Mortgage Loan, which writing shall be accompanied by the supporting evidence for such determination, and shall further provide for the primary party responsible for making P &I Advances with respect to such Mortgage Loan to promptly notify the other Lender in writing of any change in such determination. Section 4.04. Sharing of Certain Expenses. If and to the extent that any sel"Vicer, trustee, fiscal agent or any other third party to a Securitization is, pursuant to the Applicable Servicing Agreement, reimbursed for any Servicing Advance, or paid Advance Interest with respect to any Servicing Advance, relating to the Mortgage Loans and/or the Mortgaged Property out of amounts otherwise payable to the Lenders or out of any other funds of the Lenders (including, if either Lender is a Related Securitization Trust, out of amounts received on other loans in that trust), the Lenders shall be required to bear their respective Allocable Shares of such reimbursement or payment. In connection with the foregoing, if either Lender bears more than its Allocable Share of any such reimbursement or payment, then such Lender shall be entitled to contribution from the other Lender (promptly upon demand), until the contributing Lender has borne its Allocable Share of such reimbursement or payment. If either Mortgage Loan or portion thereof is subject to a Securitization, then the related Securitization Agreement shall provide for payments to be made out ofthe assets of the Related Securitization Trust. 704230-3 ARTICLEV TERMINATION Section 5.01. Termination. This Agreement and the respective obligations and responsibilities under this Agreement of the parties hereto shall terminate upon: (a) mutual agreement by the parties hereto, evidenced in writing; (b) 90 days after the Mortgage Loans are paid in full; or (c) 90 days after payment (or provision for payment) to the Lenders of all amounts held by or on behalf of the Applicable Servicer and required under the Servicing Agreement then in effect, to be so paid on the last Remittance Date following the final payment or other liquidation (or any advance with respect thereto) of the Mortgage Loans or the Mortgaged Property; provided, however, that in no event shall the arrangement created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the United States to the Court of St. James, living on the date hereof. 704230-3 ARTICLE VI MISCELLANEOUS PROVISIONS Section 6.01. Modification, Extension, Amendment or Waiver in Writing. This Agreement may be amended by the mutual consent of the parties hereto; provided that the parties hereto have obtained written confirmation from each Rating Agency then rating any class of Related MBS that such amendment will not result in an Adverse Rating Event with respect to any class of Related MBS. The costs incurred in connection with obtaining the written confirmation in the preceding sentence shall be borne by the party requesting such amendment. Notwithstanding the foregoing, no modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing signed by the party against whop:1 enforcement is sought. Section 6.02. Recordation of Agreement; Counterparts. (a) To the extent permitted by applicable law, this Agreement is subject to recordation in all appropriate public offices for real property records in the county or other jurisdiction in which the Mortgaged Property is situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected only at the direction of the Note A-1 Lender. The cost of any such recordation shall be borne by the Lenders on a pro rata basis in accordance with the relative outstanding principal balances of their respective Mortgage Loans; provided, however, that the Note A-1 Lender shall have no obligation or responsibility to determine whether any such recordation of this Agreement is required. (b) For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. Section 6.03. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York applicable to agreements negotiated, made and to be performed entirely in said state, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Section 6.04. Notices. Any communications provided for or permitted hereunder shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given when delivered to, in the case of each Lender, Lehman Brothers Holdings Inc., 399 Park Avenue, New York, New York 10022 Attention: Charles Manna, Facsimile No.: (646) 758-5366, with a copy to Lehman Brothers Holdings Inc., 399 Park Avenue, New York, New York 10022 Attention: Scott Lechner, Facsimile No.: (646) 758-4203; after the Note A-1 Securitization, in the case of the Series 2007-C6 Trustee, LaSalle Bank National Association, 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60603 Attention: Global Securities and Trust Services-LB-UBS 704230-3 Commercial Mortgage Trust 2007-C6, facsimile number: (312) 904-2084; or, as to each Lender, such other address as may hereafter be furnished by such Person to the parties hereto in writing. Section 6.05. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the rights of the parties hereto. Section 6.06. Successors and Assigns; Beneficiaries. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective successors and permitted assigns. No other person, including, without limitation, the Borrower, shall be entitled to any benefit or equitable right, remedy or claim under this Agreement. Section 6.07. Specific Performance. Each Lender is hereby authorized to demand specific performance of this Agreement on the part of the other Lender, and each Lender hereby irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy or specific performance. Section 6.08. Bankruptcy Matters. (a) In any case commenced by or against the Borrower under the Bankruptcy Code or any similar provision thereof or any similar federal or state statute (a "Reorganization Proceeding"), the Lenders hereby agree to grant the Special Servicer, subject to the Servicing Standard, the right to (i) file a proof of claim in respect of the Lenders' claims against the Borrower, (ii) have the exclusive right to exercise any voting rights in respect of the claims of the Lenders against the Borrower and (iii) otherwise represent the Lenders in such Reorganization Proceeding. (b) In the event that either Lender is required under any bankruptcy or other law to return to the Borrower, the estate in bankruptcy thereof, any third party or any trustee, receiver or other similar representative of the Borrower, any payment or distribution of assets, whether in cash, property or securities, including the Mortgaged Property or any proceeds of the Mortgaged Property previously received by such Lender on account of such Lender's Mortgage Loan (a "Reinstatement Distribution"), then to the maximum extent permitted by law, this Agreement and the payment priorities established hereby shall be reinstated with respect to any such Reinstatement Distribution. The affected Lender shall not be required to contest its obligation to return such Reinstatement Distribution. 704230-3 Section 6.09. Assignments and Securitizations. Upon notice to the other Lender, each Lender may at any time or :from time to time assign its interests in its Mortgage Loan and shall, in connection with any such assignment, also assign all of its right, title and interest in, to and under this Agreement to the new holder of the transferred Mortgage Loan; provided that neither Lender may assign its Mortgage Loan to the Borrower or any Affiliate of the Borrower; and provided, further, that, if any assignee of a Mortgage Loan (other than with respect to the Note A-1 Securitization) is not an Institutional Lender/Owner, then the Lender desiring to effect such transfer shall obtain (i) the consent of the other Lender (which consent may be given or withheld by such other Lender in its sole discretion) and (ii) written confirmation :from any Rating Agency that has assigned a rating to any Related MBS backed or secured by the other Mortgage Loan to the effect that such assignment will not result irian Adverse Rating Event with respect to such Related MBS (the costs incurred in connection with obtaining such written confirmation :from any Rating Agency to be borne by the party desiring to effect such transfer). Subject to the prior sentence, each Lender shall be entitled to cause its Mortgage Loan to be securitized, and nothing contained herein shall limit its ability to do so, provided that any Person to whom it endorses its Note in connection with the subject securitization shall succeed to its right, title and interest hereunder; provided, further, that the costs incurred by either Lender in connection with the securitization of its Mortgage Loan shall be borne solely by such Lender (except that this proviso shall not apply to any costs and expenses to be borne by the Lenders pursuant to this Agreement and/or the Applicable Servicing Agreement (without taking into account this proviso) that relate to the servicing and administration of the Mortgage Loans and any REO Property from time to time). Each Lender shall require any assignee of its Mortgage Loan to execute a written instrument whereby such assignee, for the benefit of the other Lender, assumes all of such Lender's obligations hereunder and agrees to be bound by the terms hereof, and such Lender shall deliver a copy of such executed instrument to the other Lender. Any transfer of a Mortgage Loan by a Lender, including in connection with a securitization thereof, must be made subject to the terms hereof. Section 6.1 0. Article and Section Headings. The article and section headings herein are for c.onvenience of reference only, and shall not limit or otherwise affect the meaning hereof. Section 6.11. Notices to Rating Agencies. The Note A-1 Lender shall promptly provide notice to each Rating Agency with respect to each of the following of which it has actual knowledge: (i) any material change or amendment to this Agreement; and (ii) any sale or disposition of either Mortgage Loan by a Lender. Section 6.12. No Joint Venture, Not a Security. Neither the execution of this Agreement or (in the case of the Note A -1 Lender) the Applicable Servicing Agreement, nor any of the arrangements provided for herein including 704230-3 any agreement to engage a joint master servicer and special servicer or to share in payments or losses as provided herein, is intended to be, nor shall it be construed to be, the formation of a partnership or joint venture between the parties to this Agreement. The Notes shall not be deemed to be securities within the meaning of the Securities Act, or the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Each Note represents a separate debt obligation of the Borrower. Section 6.13. Cooperation. Each of the Lenders agrees to take such other reasonable actions, and furnish (or cause to be furnished) such certificates and other documents, as may be reasonably requested by any other Lender in order to effectuate the purposes of this Agreement and to facilitate compliance with applicable laws and regulations and the terms of this Agreement. Further, each Lender agrees that it shall use reasonable efforts to cooperate with tP.e other in effectuating any changes required by the Rating Agencies to this Agreement or to the Applicable Servicing Agreement; provided that such Lender shall not be required to consent to any such changes if such change would have a material adverse effect on (x) any of the rights, remedies or protections granted to it hereunder or thereunder or (y) the obligations to be incurred by such Lender as holder of its respective Note. In connection with any Securitization, each party agrees to provide for inclusion in any disclosure document relating to the related Securitization such information concerning itself as the Note A-1 Lender or Note A-2 Lender, as applicable, reasonably determines to be necessary or appropriate; provided that no such Person shall be responsible for providing information as to any such other Person. Each party covenants and agrees that in the event either Note or any Note A Portion is to be included as an asset of a Securitization, each party hereto shall, at the requesting party's sole expense, (a) gather any information reasonably required by the Rating Agencies in connection with such Securitization and (b) cooperate with the reasonable requests of each Rating Agency and such requesting party in connection with all of the foregoing, as well as in connection with all other matters and the preparation of any offering documents thereof. Notwithstanding the foregoing, after the Securitization of either Note, the related Lender shall not be obligated to provide any information pursuant to this Section 6.13. Each party acknowledges that the information provided by such party to the Note A -1 Lender or the Note A-2 Lender, as applicable, may be incorporated into the offering documents for a Securitization. The Note A-1 Lender or the Note A-2 Lender, as applicable, and each Rating Agency shall be entitled to rely on the information supplied by, or on behalf of, such party. In addition, in the event that Note A-2 becomes subject to a Securitization, on or before March 15th of each year during which a Form 10-K is required to be filed by the trustee of the Securitization related to Note A-2, the Series 2007-C6 Pooling and Servicing Agreement shall require each of the Master Servicer, Special Servicer and Trustee to, upon 30 days' written request, provide (and to cause any applicable sub-servicers, sub-contractors, agents and vendors to timely provide) to the Person who executes the Sarbanes-Oxley certification with respect to the Securitization of Note A-2, in each case upon which such Person can rely, (i) any Sarbanes-Oxley backup certification as is reasonably required in the market and pursuant to the Series 2007-C6 Pooling and Servicing Agreement, (ii) all disclosure information required to be 704230-3 included in any offering document under Items 1108, 1109, 1117, 1119 of Regulation AB and any other applicable Items of Regulation AB under the Securities Act, and required to be included in any report required under the Exchange Act related to the Note A-2 Securitization and (iii) the assessment and attestation of servicing compliance as required under Item 1122 and the servicer compliance statement as required under Item 1123 of Regulation AB. Notwithstanding the foregoing each of the Master Servicer, Special Servicer and Trustee (and any applicable primary servicer) shall be required to provide (a) all necessary information, certificates, attestations, letters and other materials and/or (b) all reasonable cooperation necessary to enable the Lender with respect to Note A-2 to comply with the reporting requirements relating to servicing disclosure under the Exchange Act and/or the Securities Act (including without limitation, if applicable Regulation AB), as the case may be, at such times as the Related Securitization Trust is subject to such requirements. Section 6.14. Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter contained in this Agreement and supersedes all prior understandings and negotiations between the parties. Section 6.15. Bifurcation ofNote A-1 or Note A-2. (a) The Note A-1 Lender may at any time cause Note A-1 to be split and reissued as no more than five replacement notes (each, a "Replacement A-1 Note" and, collectively, the "Replacement A-1 Notes") that have an aggregate principal balance equal to that of Note A-1 on the date of reissuance and entitle the respective holders thereof to the same aggregate rights as the Note A-1 Lender. Any Replacement A-1 Notes may have different amortization terms, different principal balances and different interest rates; provided that, unless the Note A-2 otherwise consents in writing, (x) the Replacement A-1 Notes must in the aggregate provide for no more than the same total payments over time as Note A-1 (except for any Excess Interest resulting from or arising out of the application of payments in accordance with any senior/subordinate payment priority in connection with a default or reasonably foreseeable default under the Note A-1 Mortgage Loan, including any such Excess Interest accruing after any remediation of the default), (y) the weighted average interest rate for the Replacement A-1 Notes (without regard to the default rate of interest) may not exceed the Applicable Interest Rate with respect to Note A-1 immediately prior to the creation of such Replacement A-1 Notes, and (z) the terms and provisions of the Replacement A-1 Notes shall otherwise comply with the terms and conditions of the Loan Agreement; and provided, further, that, if and to the extent that the Note A-2 Mortgage Loan has been included in a Securitization, the Note A-2 Lender's consent shall be deemed given for purposes of the foregoing proviso if each applicable Rating Agency provides written confirmation that the failure to comply with the requirements of clauses (x), (y) and (z) of the preceding proviso would not result in an Adverse Rating Event with respect to the Related MBS. If any Replacement A-1 Notes are issued, then (unless the context otherwise clearly requires) the term "Note A-1" shall be deemed to refer to the Replacement A-1 Notes in the aggregate, the term "Note A-1 Mortgage Loan" shall be deemed to refer to the respective debt obligations (each, a "Note A-1 Portion" and, collectively, the "Note A-1 Portions") evidenced by the various Replacement A-1 Notes in the aggregate, and the term ''Note A-1 Lender" shall be deemed to refer to the respective holders of the 704230-3 Replacement A-1 Notes in the aggregate; provided that any and all rights of the Note A-1 Lender acting (together with the Note A-2 Lender) as Directing Lender shall be exercisedby the holders of Replacement A-1 Notes representing more than 50% of the aggregate unpaid principal balance of all the Replacement A -1 Notes or a designee thereof. The Note A-2 Lender may at any time cause Note A-2 to be split and reissued as no more than five replacement notes (each, a "Replacement A-2 Note" and, collectively, the "Replacement A-2 Notes") that have an aggregate principal balance equal to that of Note A-2 on the date of reissuance and entitle the respective holders thereof to the same aggregate rights as the Note A-2 Lender. Any Replacement A-2 Notes may have different amortization terms, different principal balances and different interest rates; provided that, unless the Note A -1 Lender otherwise consents in writing, (x) the Replacement A-2 Notes must in the aggregate provide for no more than the same total payments over time as Note A-2 (except for any Excess Interest resulting from or arising out of the application of payments in accordance with any senior/subordinate payment priority in connection with a default or reasonably foreseeable default under the Note A-2 Mortgage Loan, including any such Excess Interest accruing after any remediation of the default), (y) the weighted average interest rate for the Replacement A-2 Notes (without regard to the default rate of interest) may not exceed the Applicable Interest Rate with respect to Note A-2 immediately prior to the creation of such Replacement A-2 Notes, and (z) the terms and provisions of the Replacement A-2 Notes shall otherwise comply with the terms and conditions of the Loan Agreement; and provided, further, that, if and to the extent that the Note A-1 Mortgage Loan has been included in a Securitization, the Note A-1 Lender's consent shall be deemed given for purposes of the foregoing proviso if each applicable Rating Agency provides written confirmation that the failure to comply with the requirements of clauses (x), (y) and (z) of the preceding proviso would not result in an Adverse Rating Event with respect to the Related MBS. If any Replacement A-2 Notes are issued, then (unless the context otherwise clearly requires) the term "Note A-2" shall be deemed to refer to the Replacement A-2 Notes in the aggregate, the term "Note A-2 Mortgage Loan" shall be deemed to refer to the respective debt obligations (each, a "Note A-2 Portion" and, collectively, the "Note A-2 Portions") evidenced by the various Replacement A-2 Notes in the aggregate, and the term ''Note A-2 Lender" shall be deemed to refer to the respective holders of the Replacement A-2 Notes in the aggregate; provided that any and all rights of the Note A-2 Lender acting (together with the Note A-1 Lender) as Directing Lender shall be exercised by the holders of Replacement A-2 Notes representing more than 50% of the aggregate unpaid principal balance of all the Replacement A-2 Notes or a designee thereof. (b) If any Replacement A-1 Notes are issued, then (unless 100% of the holders thereof provide contrary written instructions to the Note A-2 Lender and the Master Servicer) any and all payments, collections, costs, expenses, losses, liabilities or other amounts allocated to Note A-1 or the Note A.:.1 Lender pursuant to any other provisions of this Agreement shall, in turn, be allocated to the related Replacement A-1 Notes, the holders thereof or the _ related Note A-1 Portions, as the case may be, on a pro rata basis (in accordance with the respective unpaid principal balances thereof or of the Note A-1 Portions held thereby, as the case may be). Furthermore, if any Replacement A-1 Notes are issued, then (unless 100% of the holders thereof provide contrary written instructions to the Note A-2 Lender and the Master Servicer) any matters having a negative economic effect with respect to the holders of such Replacement A -1 Notes shall be addressed such that each such holder shall bear a pro rata share 704230-3 of such negative economic effect based upon the unpaid principal balance of its Note A-1 Portion relative to the aggregate unpaid principal balance of all the Note A-1 Portions. However, 100% of the holders of the Replacement A-1 Notes may, pursuant to a separate written agreement among themselves and written instructions to the Note A-2 Lender and the Master Servicer, provide for alternative allocations to those set forth in the preceding two sentences provided that, except as provided in Section 4.01Ci) with respect to Excess Interest, no such alternative allocation may materially and adversely affect payments with respect to Note A-2 without the consent of the Note A-2 Lender (or, if Note A-2 or any Replacement A-2 Note is included in a commercial mortgage securitization, without written confirmation from each applicable Rating Agency that such alternative allocation will not result in an Adverse Rating Event with respect to the Related MBS backed by Note A-2 or such Replacement A-2 Note, as the case may be). If any Replacement A-2 Notes are issued,_ ~ h e n (unless 100% of the holders thereof provide contrary written instructions to the Note A-1 Lender and the Master Servicer) any and all payments, collections, costs, expenses, losses, liabilities or other amounts allocated to Note A-2 or the Note A-2 Lender pursuant to any other provisions of this Agreement shall, in turn, be allocated to the Replacement A-2 Notes, the holders thereof or the Note A-2 Portions, as the case may be, on a pro rata basis (in accordance with the respective unpaid principal balances thereof or of the Note A-2 Portions held thereby, as the case may be). Furthermore, if any Replacement A-2 Notes are issued, then (unless 100% of the holders thereof provide contrary written instructions to the Note A-1 Lender and the Master Servicer) any matters having a negative economic effect with respect to the holders of such Replacement A-2 Notes shall be addressed such that each such holder shall bear a pro rata share of such negative economic effect based upon the unpaid principal balance of its Note A-2 Portion relative to the aggregate unpaid principal balance of all the Note A-2 Portions. However, 100% of the holders of the Replacement A-2 Notes may, pursuant to a separate written agreement among themselves and written instructions to the Note A-1 Lender and the Master Servicer, provide for alternative allocations to those set forth in the preceding two sentences provided that, except as provided in Section 4.01Ci) with respect to Excess Interest, no such alternative allocation may materially and adversely affect payments with respect to Note A-1 without the consent of the Note A-1 Lender (or, if Note A-1 or any Replacement A-1 Note is included in a commercial mortgage securitization, without written confirmation from each applicable Rating Agency that such alternative ailocation will not result in an Adverse Rating Event with respect to the Related MBS backed by Note A-1 or such Replacement A-1 Note, as the case may be). (c) Notwithstanding anything to the contrary in the immediately preceding subsections (a) and (b), a Replacement A-1 Note and/or Replacement A-2 Note may be designated as and executed by the Borrower in the form of a B note or, if and to the extent permitted under the Loan Documents, a mezzanine debt note and, notwithstanding any such designation, the provisions under this Agreement relating to a Replacement A-1 Note or a Replacement A-2 Note, as the case may be, shall also refer to and apply with equal force and effect to any such B note; provided that no mezzanine lender shall have any rights hereunder; and provided, further, that, if any mezzanine debt is created and if and to the extent that any Mortgage Loan is included in a Securitization, then the Lenders and the related mezzanine lender must enter into an intercreditor agreement that would not, as evidenced by written confirmation from each applicable Rating Agency, result in an Adverse Rating Event with respect to any 704230-3 Related MBS. Further notwithstanding anything to the contrary in the immediately preceding subsections (a) and .(hl, then (except as provided in Section 4.01(i)) the issuance of Replacement A-1 Notes and/or Replacement A-2 Notes shall in no event change the relative rights, liabilities and other obligations of the holders ofNote A-1 or any Replacement A-1 Notes in the aggregate, on the one hand, and the holders ofNote A-2 or any Replacement A-2 Notes in the aggregate, on the other hand. If the Note A-1 Lender has any affirmative obligations hereunder (other than the payment of money, which will be allocated among the respective holders of any Replacement A-1 Notes in accordance with the immediately preceding subsection (b)), then such obligations shall apply to each and every holder of a Replacement A-1 Note. If the Note A-2 Lender has any affirmative obligations hereunder (other than the payment of money, which will be allocated among the respective holders of any Replacement A-2 Notes in accordance with the immediately preceding subsection (b)), then such obligations shall apply to each and every holder of a Replacement A-2 Note. Likewise, any prohibitions herein with respect to the Note A-1 Lender shall apply to each and every holder of a Replacement A-1 Note and any prohibitions herein with respect to the Note A-2 Lender shall apply to each and every holder of a Replacement A-2 Note. 704230-3 IN WITNESS WHEREOF, Initial A-1 Lender and Initial A-2 Lender have caused this Agreement to be duly executed as of the day and year :frrst above written. LEHMAN BROTHERS HOLDINGS INC., doing business as LEHMAN CAPITAL, a division of LEHMAN BROTHERS HOLDINGS INC., as Initial A-1 Lender By: Ch (l Charlene Thomas Title: Authorized Signatory LEHMAN BROTHERS HOLDINGS INC., doing business as LEHMAN CAPITAL, a division of LEHMAN BROTHERS HOLDINGS INC., as Initial A-2 Lender By: _ Name: Title: LB-UBS 2007-C6 Innkeepers Co-Lender Agreement EXHIBIT I MORTGAGE LOAN SCHEDULE Closing Date Closing Date Principal Principal Balance Balance (NoteA-1 (NoteA-2 Mortgage Mortgage Maturity Borrower Name Loan) Loan) Date Grand Prix Belmont LLC, Grand $412,701,271 $412,701,271 July9, Prix Campbell/San Jose LLC, Grand 2017 Prix El Segundo LLC, Grand Prix Fremont LLC, Grand Prix Mountain View, LLC, Grand Prix San Jose, LLC, Grand Prix San Mateo, LLC, Grand Prix Sili I LLC, Grand Prix Sili II LLC, Grand Prix Denver LLC, Grand Prix Englewood/Denver South LLC, Grand Prix Shelton LLC, Grand Prix Windsor LLC, Grand Prix Altamonte LLC, Grand Prix Ft. Lauderdale LLC, Grand Prix Naples LLC, Grand Prix Atlanta LLC, Grand Prix Atlanta (Peachtree Comers) LLC, Grand Prix Lombard LLC, Grand Prix Chicago LLC, Grand Prix Schaumburg LLC, Grand Prix Westchester LLC, Grand Prix Lexington LLC, Grand Prix Louisville (RI) LLC, Grand Prix Columbia LLC, Grand Prix Gaithersburg LLC, Grand Prix Germantown LLC, Grand Prix Portland LLC, Grand Prix Livonia LLC, Grand Prix Cherry Hill LLC, Grand Prix Mt. Laurel LLC, Grand Prix Saddle River LLC, Grand Prix Islandia LLC, Grand Prix Binghamton LLC, Grand Prix Horsham LLC, Grand Prix Willow Grove LLC, Grand Prix Addison (RI) LLC, Grand Prix Arlington LLC, Grand Prix Los Colinas LLC, Grand Prix Richmond LLC, Grand Prix Richmond (Northwest) LLC, Grand Prix Bellevue LLC, Grand Prix Bothell LLC, Grand Prix Lynnwood LLC, Grand Prix Tukwila LLC Exh. I-1 Original Original Applicable Applicable Interest Interest Rate Rate for for NoteA-1 NoteA-2 Mortgage Mortgage Loan Loan 6.7125% 6.7125%
.: . - 5/3/2010 http://www.sec.gov/Archives/edgar/dat... 42485 1 file1.htm FORM 42485 Table of Contents AS FILED PURSUANT TO RULE 4248(5) REGISTRATION STATEMENT NO.: 333-141638 PROSPECTUS SUPPLEMENT (to Prospectus dated August 16, 2007) LEHMAN BROTHERS *UBS STRUCTURED ASSET SECURITIES CORPORATION II Depositor COMMERCIAL MORTGAGE TRUST 2007-CS Issuing Entity Investment Bank Commercial Mortgage Pass-Through Certificates, Series 2007-CS Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4, Class A-1A, Class A-M, Class A-J, Class 8, Class C, Class D, Class E, Class F and Class X Approximate Total Principal Balance at Initial Issuance: $2,593,385,000 We are Structured Asset Securities Corporation II, the.depositorwith respect to the securitization transaction that is the subject of this prospectus supplement This prospectus supplement relates to, and is accompanied by, our base prospectus dated August 16,2007. This prospectus supplement and the accompanying base prospectus are intended to offer and relate only to the classes of commercial mortgage pass-through certificates identified above, and not to the other classes of certificates that will be issued by the issuing entity, which is above. The offered certificates are not listed on any national securities exchange or any automated quotation system of any registered securities associations, such as NASDAQ. The. sponsors of the subject securitization transaction are Lehman Brothers Holdings Inc. and UBS Real Estate Securities Inc. The offered certificates will represent interests only in the issuing entity and do not represent obligations of or interests in the sponsor, the depositor or any of their respective affiliates. The assets of the issuing entity will hold will include a pool of multifamily and commercial mortgage loans having the characteristics described in this prospectus supplement No governmental agency or instrumentality or private insurer has insured or guaranteed payment on the offered certificates or any of the rnor:tgage lqans that back them. The securitization will also iiwolve multiple interest rate swap agreements that relate to certain classes of series 2007- C6 certificates that are not offered by this prospectus supplement The holders of each class of offered certificates will be entitled to receive, to the extent of available funds, monthly distributions principal or both, commencing on the distribution date in September 2007. The table on page S-7 oithis prospectus supplement contains a list of the respective classeS of offered certificates and states,the oriQin_al principal balance or notional initicll interest rate, interest rate description, and other select characteristics of each of those classes. Credit enhancement is being provided to the offered certificates through the subordination of various otherclasses,-including multiple non-offered classes, series 2007-CB That same table on page S-7 of this prospectus supplement also contains a list of the non-offered classes of the series 2007-C6 certificates. You should fully consider the risk factors beginning on page S-46 in this prospectus supplement and on page 18 in the accompanying base prospectus prior to inveSting in the offered certificates. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the base prospectus. Any representation to the contrary is a crimi'1al ?ffense. Lehman Brothers Inc., UBS Securities LLC and Bane of America Securities LLC are the underwriters with respect to the offered certificates. They will purchase their respective allocations, in each case if any, of the offered certificates from us, subject to the satisfaction of specified, conditions. Our proceeds from the sale of. the offered certificates will equal $2,674,650,000, plus accrued interest on all the offered certificates from August 11' 2007, before deducting payable by us. The underwriters currently intend to sell the offered certificates at prices to be detennined at the time of sale. Not every underwriter will have an obligation to purchase offered from us. See "Method of Distribution" in this prospectus supplement , \Mth respect to this offering, Lehman Brothers Inc. is acting as co-lead manager and co-bookrunner, UBS Securities LLC is acting as co-lead manager and co-bookrunner and Bane of America Securities LLC is acting as co-manager. LEHMAN BROTHERS UBS SECURITIES LLC Co-Lead Manager Co-Lead Manager BANC OF AMERICA SECURITIES LLC Co-Manager The date of this prospectus suppement is August 24, 2007 sec.gov/ Archives/edgar/data/ .. Jfile 1.htm 1/404 5/3/2010 http://www.sec.gov/Archives/edgar/dat... L B - U B ~ Commercial Mortgage Trust 2007-C6 Commercial Mortgage Pass-Through Certificates, Series 2007-CG sec.gov/Archives/edgar/data/ .. Jfile1.htm ..........,..l ,,.---.. . .. ,_ .... . ! ~ I
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TABLE OF CONTENTS IMRJRTANT NOTICE ABoUT IN lHIS ffiOSFCT\JS S ACCOM>ANYNG BASEPR 8-5 NOTICE TO RESIDENTS OF KOREA NOTICE TO RESIDENTS OF GERM'\ NY 8-5 NOTICE TO NON-U.S. NVESTORS 8-6 EUROFI'AN ECONOMK: AREA 8-6 SUMW.RY OF PROSFCTUS SUPFU3\IENT :I RISK FACTORS 8-46 The Class 'A-M A-J. B. C. D Eand F Certificates Are Subordinate to, and Are Therefore Riskier than. the Class A-1. A-2, A-3. A-AS. A-4 and A-1A Certificates S-46 The Offered Certificate-s Have uncertain Yiek:ls to Maturny : The Performance of Your Offered Certificates May Vary rvtaterialtv and Adversely from Your Expectations Because the Rate of A"epavrrents and Other Unscheduled Collections of Principal on the Underlying Mortgage loans Is Faster or Slower than You Anticipated S-47 The IntereSts of the Series 20072ca ControUing Class Certificateholders M3y Be in Con fUel with the Interests of the Offered Certificateholders S-48 The Absence or Inadequacy of Insurance Coverage on the M>rtgaged Properties rv1ay Adversely Affect Payrrents on Your Certificates Repayrrent of the Underlying 1\fortgage Loans Depends on the Operationof the 1\fortgaged Real Properties Risks Associated w Hh Condoninium Ownership The trortgaged Real Property Will Be the Sole Asset A val able to Satisfy,the Armunts Owing Under an Underlying M:lrtgage Loan in the Event of DefauH In Serre Cases. Payrrents on an Ltldertying tutirtgage Loan Are Dependent on a Single Tenant or on One or a Few Major Tenants at the Related Mlrtgaged Real A-operty Properties Are Subject to Rollover Risk tn Certain cases Ten'ant Estoppels. Subordination Non. Disturbance and Attornrrent Agreerrent5, and Related Oocurrentation Have Not Been Obtained Five Percent or 1\fore Of the Initial Mortgage Pool Balance \NiU Be Secured by M:lrtgage Liens on the rrow er's Interests in Each of the s-so 8-51 sec.gov/ Archives/edgar/data/ .. Jfile 1.htm r/dat... 3/404 5/3/2010 Ten Percent or f./ore of the .,itial Mlrtgage Pool Balance Wll Be Secured by M:lrtgage Liens on Real Properties Located in Each of California. Virginia, York and Texas and FIVe Percent or lvbre of the Initial M:lrtgaqe Fbol Balance VVilt Be Secured by M:>rtgage Liens on Real Properties Located in Rorida The Wortgage FOol Will Include Material Concentrations of BaUoon Loans . The Wortqage Pool Will Include Serre Disproportionately Large f.lortgage Loans The M:lrtgage Fbol Will Include Leasehold lvbrtgage Loans and Lending on a Leasehold Interest in Real Property is Riskier Than Lending on the Fee hterest in That
Many of the Mlrtgaged Real Properties Are Legal Nonconforning Uses or Legal Nonconforning structures Serre of the Mortgaged Real Properties May Not Corrply with All Applicable Zoning Laws andtor Local Buik:iing Codes or w ith the A rrericans w ith Disabilities Act of 1990 M.IHiple Mortgaged Real Properties Are ON ned by the Sarre Borrower. Affiliated Borrowers or Borrowers with Related Principals or Are OCcupie<t in Wlole or in Part, by the Sarre Tenant or Affitiated Tenants. VVhich Presents a Greater Risk to the Trust Fund in the Event of the Bankruptcy or Insolvency of Any Such :g :g
S-53 S-53 S-54 Borrow er or Tenant S-55 Sorre of the MJrtgaged Real Properties Are or May Be Blcurrbered by Additional Debt and the ON nership Interests in Sorre Borrowers Have Been or fJay Be Aedged to Secure Debt and Sorre Borrowers Have Incurred, or are Pernitted to hcur, Other Additional Debt. VVhich in Either Case. Way Reduce the Cash Flow Available to the Subject M>rtgaged Real Property S-55 certain Borrower Covenants May Affect That Borrower's Available Cash Flow S-57 Sorre Borrowers Ulder the Underlying Wortgage Loans VVill Not Be Special A.Jrpose Entities S-57 Teriancies in Corrrron Way Hinder Recovery S-58 Operating or flJiaster Leases rvtly l-linder Recovery :2. Changes in M:lrtgage Pool Corrposition Can Change the Nature of Y:our Investment Lending on lncorre-Producing Real Properties Bltails 81vironrrental Risks Lending on hcorre-Producing Properties Bltans Risks Related to Property Condition 5-68 There May be Restrictions on the Ablity of a Borrower, a Lender or Any Transferee Thereof to Terrrinate or Renegotiate Property Managerrent Agreerrents That are in Existence Wth Respect to Sorre of the M::lrtgaged Real Properties :!! VVith Respect to 5 r.A:lrtgage Loans (lncludilg.3 of the Ten (10) Largest rvbrtgage Loans) That We htend to hclude in the Trust, the M::lrtgaged Real Property or Properties that Secure the Subject f.Jortgage Loan in the Trust Also Secure One or More Related M:>rtgage Loans That Are Not in the Trust; The Interests of the Hok1ers of Those Non-Trust rvbrtgaqe Loans May Conflict with Your Interests The Series 2007-C6 Gertificateholders M3y Have a United Ability to Control the Servicing of the Subject Loan Contlinations Conflicts of (lterest May Exist in Connection w ilh Certain Previous or Existing Relationships of a Mortgage Loan SeDer or an Affiliate Thereof to certain of the Underlying r.A:lrtgage Loans. Related Borrowers or Related Mortgaged Real Properties Lirritations on Enforceabffity of Cross-Collateralization f\fay Reduce Is Benefls Investors May Want to Consider Prior Bankruptcies Litigation May Adversely Affect Property Perforrmnce CA.PITALIZEDTffiMS USED INlHIS FROSFClUS SUFH.EIIf2NT STA19.NTS DESCRPilON OF 11-iE MJRTGAGE R:lOl Cross-CoDateraUzed M:>rtgage Loans. M.Jiti-A"opertv M>rtgage Loans and Loans Wth Affiliated Borrowers Partial Releases Terrrs and Conditions of the LJndertvilg rvbrtgage Loans A"epayrrent Provisions Mortgage Pool Characteristics Significant Underlying M:>rtgage Loans Loan Corrbinations Additional Loan and Property Information Assessrrents of Property Condition AssiQnrrent of the undertving trortgage Loans Representations and Warranties CUres and Repurchases Changes in rvklrtgage Pool Characteristics 'TRANSACTION PARTlCIPANTS The Ssuing Entity The Deposit or The Sponsors M:>rtgage Loan Sellers The servicers The Trustees CERTAIN REI.A TONSHPS At-.0 RElA 1E) 'TRANSACTIONS 11-iE SERES 2007-CS FOOLING AND SERVICING sec.gov/Archives/edgar/data/ .. Jfile1.htm http://www.sec.gov/Archives/edgar/dat... -
S-3
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5/3/2010 Overview of Servicing Sub-SefviCers Servicing.Corroensation and Payrrent of Expenses Trustee Cortpensatioil lhe series.2007-C6 Controlling Class Representative and the Serviced Non-Trust Loan Noteholders Replilcerrent of ttie'Special serVicei- Erlforcerrent Of and Due-on-Blcurrbrance Provisions WaiVers. Ariendrrents andConsents certain Matters Relating to Clairrs and Litigation ReguirEid App'i'aiSals Maintenance of hsurance Fair Value Option Realizcition Uponoerautted fvbrtgage Loans REO A"opeYties lnspections;'Collection ofOperating lnforrn3tion EvidenCe aS tO cOITpnanCe Accounts
Rights Upon Event of. Default Non-TruSt loan SecUritieS AdrrinistratiOn of the Outside Serviced Trust fvbrtgage Loans Thtrd-'Party Beneficiaies Sffii/K:ING OF lHE FOTOMAC MLLS LOAN COMlNA "nON SERVK:ING OF lHE OCH-ZIFF RETAIL'FORTFOLIO lOAN COMEINAIDN DESCRPTlON OF lHE OFFERED CERWICA TES General Re'CjiStratiml and Denolrinati6ns Payments. Tfei'B.trrent of REO A"operties: Reductions.of Ceftificate.A"inCiPal Balances irl.Connection with Realized Losses:arld'AdditionBI TrUst Fund Expenses Fees,and Expenses Reports to GertifiCB.teholderS Avciilable lrlrorrrBtion Voting Rights Terrrinatioil
YitH:t Consk:ferati6ns Yiek:i we9hted A \..-eraae Lives USE OF FROCEIDS FSJERAL INCOME TAX'CONSEQUENCES Discount andPrerriurn Preipayment Consideration CharacteriZation OUwestrTents in'Offer.ed certificates ConstrUCtive Sales of Class X certificates Prohibited Transactions Tax and Other Taxes ERISA CONSIDERA IDNS LEGA LINVESTMENT , MElHOD OF DISTRIBUTlON LEGAL MA TIERS RATINGS GLOSSARY A'NNEX'M-CERTAN CHARACTERISllCS OF INDrviDUAL UNDERLYING IJIORfGAGELOANS ANNEXA-2-CERTAN CHARACTERISTK:S OF lHE IJIORfGAGE FOOL ANNEXA-3-CERTAN CHARACTERISTK:S OF LOAN GROUP1 ANNEX A-4-CERTAN CHARACTERISllCS OF LOAN GROLP2 ANNEi<A-5-CERTAIN MONETARY TERMS OFlHE UNOERL YING IJIORfGAGE LOANS ANNEXA-6-CERTAN tJFORMAIDN REGARDNG RESERVES' INFORMi.. "nON REGARDING WL TFAMitY FROFRTIES ANNEX C-1,--PRK:E/YIEiDTABLES ANNEX C-2 DECRBICNTTABLES ANNEX D-FORM OF DISlRJBUTlON 0.<\ TESTA T8VIENT ANNEX E-CLASS A-AB TARGETED FRINCIPAL BALANCE ANNEX F--GLOBAL CLEARANCE SETlLEMENT A/10 TAX DOCUJIENTA IDN PROC8JURES Table of Contents http://www.sec.gov/Archives/edgar/daL s-180 .:1g s-183 :12 S'187 S-190 S-195 S-196 :1i?. s-200 s-200 s-201 S-202 s-204 s-205 s-206
s-270 A-1-1 A-2-1 A-3-1 &1::1 61 A-6-1 .:! C-1-1 C-2-1 D-1 :1 !'.:.1 S-4 IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING BASE Information about the offered certificates is contained in two separate documents: this prospectus supplement, which describes specific terms of the offered,certificates; and the accompanying base prospectus, which general information, some of which may not apply to the offered certificates, You should read both this prospectus supplement and the accompanying base prospectus in full to obtain material information concerning the offered certificates. The annexes attached to this prospectus supplement are hereby incorporated into and made,a part of this prospectus supplement. This prospectus supplement and the accompanying base prospectus do not constitute an offer to, sell or a solicitation of an offer to buy any' security other than the offered certificates, nor do they constitute an offer to sell or a solicitation ol an offer to buy any of the offered certificates to any person in any jurisdiction in which it is unlawful to make such an offer or sec.gov/ Arcliives/edgar/dataUfile 1. htm 5/404 5/3/2010 http://www. sec.gov/ Archives/edga r/dat... In this prospectus supplement, the tenms "depositor," "we," "us" and "our" refer to Structured Asset Securities Corporation II. NOTICE TO RESIDENTS OF KOREA The securities to which these materials relate (the "Subject Securities") ha>e not been and will not be registered under the Securities and Exchange Act of Korea and none of the Subject Securities may be offered or sold, directly or indirectly, in Korea or to any resident of Korea or to any persons for the reoffering or resale, directly or indirectly, in Korea or to any resident of Korea, except pursuant to applicable laws and regulations of Korea. None of Lehman Brothers Inc., UBS Securities LLC, Bane of America Secunties LLC or any of their respecti>e affliates makes any representation with respect to the eligibility of any recipients of these materials or of. the Subject Securities to acquire the Subject Securities under the laws of Korea, including, without limitation, the Foreign Exchange Transaction Regulations of Korea. In addition, any recipient or purchaser of the Subject Securities represents that it is purchasing or acquiring,the Subject Securities as principal for its own account. For a period of one year from the issue date of the Subject Securities, neither the holder of the Subject Securities nor any resident of Korea may transfer the Subject Securities in Korea or to any resident of Korea unless such transfer imol>es all of the Subject Securities held by it. Also, 'for a period of one year from the issue date of the Subject Securities, the face amount of each certificate representing the Subject Securities held by a resident of Korea shall not be subdi;;ded into more than one such certificate representing the Subject Securities. Furthenmore, the purchaser of the Subject Securities shall comply with all applicable regulatory requirements (including but not limited to requirements under the Foreign Exchange Transaction laws) in connection with the purchase of the Subject Securities. For the avoidance of doubt, it is the sole responsibility of the recipient or purchaser of. the' Subject Securities' to detenmine whether such recipient or purchaser is. eligible for the acquisition of the Subject Securities under applicable laws and regulations of Korea, and whether such recipient or purchaser will ha>e complied with all applicable Korean legal and regulatory requirements in connection with the purchase of the Subject Securities. NOTICE TO RESIDENTS OF GERMANY Each of the underwriters has confinmed that it is aware that no Genman' sales prospectus (Verl<aufsprospekt) has been or will be published in respect of the offering of the series 2007 ..C6 certificates, and each of the underwriters has represented and agreed that it will comply with the Genman Securities Sales Prospactus Act (Wertpapier-Verl<aufsprospektgesetz) and any other laws applicable in Genmany go>eming the issue, offering and sale of the series 2007 ..CS certificates. In particular, each of the underwriters has undertaken not to engage in a public offering (Qffentliches Angebot) in Genmany with respect to any of the series 2007-CS certificates otherwise than:in accordance with the Genman Securities Sales Prospectus Act and any other act replacing or supplementing it and all other applicable laws and regulations. Any series 2007-CS certificates purchased by any person which it wishes to offer for sale or resale may not be offered in any jurisdiction in circumstances which would result in the depositor being obliged to register any further prospectus or corresponding document relating to the series 2007 ..C6 certificates in such jurisdiction. S-5 Table of Contents NOTICE TO NON-U.S.INVESTORS The distribution of this prospectus supplement and the accompanying base prospectus and the offer or sale of the offered certificates may be restricted by law in certain jurisdictions outside the United States. Persons into whose possession this prospectus supplement and the accompanying base prospectus or any of the offered certificates come must infonm themsel>es about, and obsen.e, any such restrictions. Each prospecti>e purchaser of the offered certificates must comply with all applicable laws and regulations in force in any jurisdiction :in which it purchases, offers or sells the offered certificates.or possesses or distributes this prospectus supplement and the accompanying base prospectusand must obtain any consent, approval or permission required by it for the purchase, offer oi sale by it of the offered certificates 'under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and neither we nor any of the underwriters ha>e any responsibility therefor. EUROPEAN ECOI-:IOMIC AREA Each underwriter has agreed with us that it will abide by certain selling restrictions with respect to offers of series 2007- CS ceriificates to the public in the European Economic Area. See "Method of Distribution" in this prospectus supplement. S-6 Table of Contents SUMMARY OF PROSPECTUS SUPPLEMENT This summary contains selected infonmation regarding the offering being made by this prospectus supplement. It does not contain all of the infonmation you need to consider in making your in>estment decision. To understand all of the tenms of the offering of the offered certificates, you should read carefully this prospectus supplement and the accompanying base prospectus in full. Introduction to the Transaction The offered certificates will be part of a series of commercial mortgage pass-through certificates designated as the Series 2007-CS Commercial Mortgage Pass-Through Certificates and consisting of multiple classes. The table below identifies the respecti>e classes of'that series, specifies of each of those classes and indicates which of those classes are offered by this prospectus supplement and which arenot offered by this prospectus supplement. "TBD" means "to be detenmined;" "N/A" means "not applicable;, and "NR;,, means "not rated." Approx. Total Approx.% Balance or Approx.% Total Notional of Initial Credit Weighted Ratings Amount at Mortgage Support Pass-Through Initial Average S&P/ Initial Pool at Initial Rate Pass-Through Life Principal Rtch/ Class - Issuance .Balance(4). lssuance(S) _ Description_ __ Rate(11) __ _(Years I _Window - _Moody's Offered Certificates A-1 $ 2(6iio,ooo- 0.7% 30.000/o(6) 3.47 09/0l: -AAA/AAA/Aaa 04/12 sec.gov/Archives/edgar/data/ .. Jfile1.htm
6.45050% 9.88 07/17-- AA/ AA.:/Aa3 07/17 E 29,789,000 1.0% 10.250% WAC(9) 6.45050% 9.88 07/17- A+/A+/A1 07/17 F $ 29:79o.oiio - 1.0% 9.250%. WAC(ii) 6.45056% 07/17- AiAIA2 08/17 X $2,978,936,714(3) Variable 10(10) ____ 0.51616% ___ N/A__ AAA/AAA/Aaa_ Non-Offered (1) .. - A-2FL(2) $ . 40,000,000 1.3% . Aoating LIBOR+0.57%(12) . .. Aoatilg-.-- ---- LIBOR + 0.71%(12) ___ FW\ _______ --- G $ 33,513,000 1.1% WAC(9) 6.45050% H $ $ 40,961,000 1.4% N'A WAC(9) 6.45050% N'A K $ 29,789,000 1.0% L . $ 44,684,000 1.5% Foced _ 5.11400% N'A _____ _______ N $ 11,171,000 0.4% N'A FIXed 5.11400% . N/A P-------$ 3,723,000 0.1% ............ "'f#: ....... _ .. FIXed-------5.11400%---- ____ N/A-- Q $ 7,448,000 0.3% N'A FIXed 5.11400% N/A N/A s --s- 7:7:ooo---- r:ii. ... Foced. 5.11400% ---wp; ...... NIA -------NIA T ..... ., ..... ....... .. --.....li'L---Foced ______ 5.11400o/o ..................... NIA (1) (2) Not offered by this offering circular. The non-offered classes of the series 2007 -C6 certificates will also include multiple of REMIC residual certificates, each of which classes e-<dences the sole class of residual interests in a real estate mortgage in\estment conduit or REMIC. The series 2007-CS REMIC residual certificates do not ha\e principal balances, notional amounts or pass-through rates. The series 2007 -C6 securitization will im.ol\e multiple interest rate swap agreements that relate to the A-2FL and A- MFL classE!s, resPE>cti\ely, and are held in grantor tnusts for the benefit of the applicable series 2007 ,.C6 certificateholders. Each of those classes will represent undi-<ded interests in, among other things: (1) a REMIC regular interest that has the same alphabetic or alphanumeric class designation as the subject class; and (2) the rights and obligations under the swap agreement. For so long as it is in effect, the swap_ agreement related to each of those classes will pro-< de, among other things, that the amounts payable by the issuing entity as interest at the applicable S-7 Table of Contents rate per annum (as described below in this footnote) with respect to the REMIC regular interest corresponding to. the subject class will be exchanged for floating amounts payable as if interest by the swap pro-<der under the related swap agreement, with regularly scheduled payments for each of those classes to be made between the issuing entity and the swap counterparty on a net basis. Amounts payable as if interest by.the swap pro-<der under each swap agreement will accrue at a LIBOR-based rate on a notional amount equal to the total-principal balance of the applicable.class of series -2007-C6 certificates outstimding from time to time. Accordingly, the class A-2FL and A- MFL certificates constitute the floating rate classes of the series 2007-C6 certificates: The total principal' balance of each floating rate class of series 2007 -C6 certificates at any time will equal the total principal balance of the correspondil)Q REMIC regulai interest of such floating rate class. The REMIC regular interest corresponding to each floating rate class of series 2007-C6 certificates will accrue interest at: (a) in the caseof the class A-2FL REMIC regular interest, 5.845% per annum; and (b) in the case of the class A-MFL REMIC regular interest, the lesser of (i) 6.114% per annum and (ii) the weighted a\erage from time to time of certain net interest rates on the mortgage loans, which net interest rates will be con\erted, in some months, to a 30i360 equivalent annual rate for those underlying mortgage loans that accnue interest on an actuaU360 basis. ff the funds allocated to payments of interest distributions with respect to the REMIC regular interest corresponding to any floating rate class of series 2007 -C6 certificates are insufficient to make all required payments of interest thereon (prior to allocation of net aggregate prepayment interest shortfalls), then there will be a corresponding dollar-for-dollar reduction in the interest payments made.by the swap counterparty to the issuing entity under the related swap agreement and, accordingly, in the amount of interest payable on the applicable floating rate class of series 2007 -C6 certificates, thereby resulting in an interest shortfall for such class. (3) Notional amount. (4) The initial mortgage pool balance will be approximately $2,978,936,714. References in this prospectus supplement to the initial mortgage pool balance are to the aggregate principal balance of the underlying mortgage loans as of the cut-off date referred to under "---Relevant Dates and Periods" below, after application of all scheduled payments of principal due with respect to the underlying mortgage loans on or before that date, whether or not recei\ed. (5) Structural credit enhancement is pro-<ded for the more senior classes of offered certificates through the subordination of more junior classes---or of REM IC regular interests corresponding to more junior classes---of offered and non- offered certificates, as described under "-Introduction to the Transaction-Total Credit Support at Initial Issuance" below in this prospectus supplement. The REMIC regular interests corresponding to the floating rate classes of the series 2007-C6 certificate are of equal payment priority with, or senior to, various classes of the offered certificates. The class A-2FL REMIC regular interest has the same credit support and payment priority as the class A-2 certificates; and the class A-MFL REMIC regular interest has the same credit support and payment priority as the class A-M certificates . (6) Presented on an aggregate basis for the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates and the class A-2FL REMIC regular interest. (7) Presented on an aggregate basis for the class A-M certificates and the class A-MFL REMIC regular interest. sec.gov/ Archives/edgar/data/ .. Jfile 1 . htm 7/404 5/3/2010 http://www.sec.gov/Archives/edgar/dat... class. with respect to any applicable interest accrual period, if the weighted a;erage of certain net interest rates on the underlying mortgage loans is below the identified initial pass-through rate for the class A-4, A-1A or A-M certificates, as the case may be, then the pass-through rate for the subject class of series 2007-C3 certificates during that interest accrual period will be that weighted a;erage net interest rate. The net interest rates referred to in this footnote will be con;erted, in some months, to a 30/360 equivalent annual rate for those underlying mortgage loans that accrue interest on an actual/360 basis. See "Description of the Offered Certificates-Payments- Calculation of Pass-Through Rates" in this prospectus supplement. (9) The pass-through rates of the class B, C, D, E, F, G, H, J and K certificates will, in the case of each of those classes, for any applicable interest accrual period, be a rate per annum equal to the weighted a;erage finom time to time of certain net interest rates on the underlying mortgage loans, which net interest rates will be con;erted, in some months, S-8 Table of Contents .(10) (11). (12) to a 30/360 equivalent annual rate for those underlying mortgage loans that accrue interest on an actual/360 basis. The pass-through rate of the class A-J certificates will, for any applicable interest accrual period, be a rate per annum equal to the weighted a;erage net interest rate described in the prior sentence of this footnote, minus 0.026%. See "Description of the Offered Certificates-Payments-Calculation of Pass-Through Rates" in this prospectus supplement. The pass-through rate of the class X certificates will, for any interest accrual period, equal the weighted a;erage of the respecti;e strip rates at which interest then accrues on the respecti;e of the total notional amount of Jhe class X certificates outstanding immediately prior to the related distribution date. See "Description of the Offered of Pass-Through Rates" in this prospectus supplement. The initial pass-through rate shown in the foregoing table for any interest-bearing class of series 2007-C6 certificates with.one of the following pass-through rate descriptions is approximate: WAC, WAC-Jf'/o and Variable 10 . . nie initial value of UBOR will be calculated on the second LIB OR business day prior to the date of initial issuance of the series 2007 -C6 certificates. The go;eming document for purposes of forming the issuing entity and issuing the series 2007-C6 certificates will be a pooling imd sen.<cing agreement to be dated as of August 13, 2007. The pooling and sen.<cing agreement will also go;em the sen.<cinganci administration of the mortgage loans (with the two material exceptions described below) and oiher assets that back ttie siiries 2oo7-C6 certificates. The underiying mortgage loan secured by the mortgaged real property identified on Annex A-1 to this prospectus supplement as Potomac Mills, which mortgage loan represents 8.3% of the initial mortgage pooi'balance, and the u'nderlying mortgage loan secured by the mortgaged real properties the identified on Annex A-1 to this prospectus supplement as Och-Ziff Retail Portfolio, which mortgage loan represents 4.8% of the initial mortgage pool balance, are riot being seryiced under the series 2007 -C6 pooling and sen.<cing agreement. Each of the Potomac Mills underlying mortgage loan 'and the Och-Ziff Retail Portfolio underlying mortgage loan (a) is part of a separate loan combination that also includes one or more additional mortgage loans that will not be transferred to the issuing entity and (b) will be sen.<ced pursuantto the sen.<cing arrangements for the securitization of one of those related non-trust mortgage loans that are part of the.subjectloan combination. The Potomac Mills underlying mortgage loan and the Och-Ziff Retail Portfolio under1yin.g mortgage loan are sometimes referred to in this prospectus suppleffient as the outside serviced underlying mortgage loans: The parties to the series 2007 -C6 pooling and sen.<cing agreement will include us, a trustee, a master sen.<cer and a special ser:;icer. A copy of the series 2007-CS pooling and sen.<cingag'reement, including the exhibits thereto, will be filed with the SEC as :an.exhibit to a current report on Form 8-K under the Securities Exchange Act of 1934, as amended, 'following the initial issuance of the offered certificates. In addition, if and to the extent that any material terms of the series 2007'C6 pooling and 'sen.<cing agreement or the exhibits thereto ha;e not' been disclosed in this prospectus supplement, then the series 2007-CS pooling and sen.1cing agreement, together with such exhibits, will ba filed with the SEC as an exhibit to a current report on ,Form 8-K on the date of initial issuance of the offered certificates. The SEC will make those current reports.on Form.8-K and its exhibits available to the public for inspection. See "Available Information" in the accompanying base prospectus 'A. Totat'Prlncipal Balance or Notl(niaiAmount at Initial Issuance Table of Contents The class A-1, A-2, A-2FL, A-3, A-AB, A-4, A-1A, A-M, A-MFL, A-J, B, C, D; E, F, G, H, J, K, L, M, N, P, 0, SandT certificates will be the series 2007- CB certificates with principal balances and are sometimes referred to as the series 2007 -C6 principal balance certificates. The table on page S-7 of this prospectus supplement identifies for each class. of series 2007-CS principal balance certificates the approximate total principal balance of that class at initial issuance. The actual total principal balance of any class of series 2007 -C6 principal balance certificates at initial issuance may be)arger or smaller than the amount shown in the table on page S-7 of this prospectus supplement, depending on, among other things, the actual size of the initial mortgage pool balance. The actual size of the initial mortgage pool S-9 balance may be as much as 5% larger or smaller than the amount presented in this prospectus supplement. The total principal balance of each floating rate class of series 2007 -C6 certificates will equal the total principal balance of the corresponding REMIC regular interest. The class X certificates will not ha;e principal balances and are sometimes referred to as the series 2007-CB interest only certificates. For purposes of calculating the amount of accrued interest, the class X certificates will ha;e a total notional amount. The total notional amount of the class X certificates will equal the total principal balance of the series 2007 -C6 principal balance certificates outstanding from time to time. The approximate total notional amount of the class X certificates at initial issuance is shown in the table on page S-7 of supplement, although it may be as much as 5% larger or sec.gov/ Archives/edgar/data/ .. Jfile 1.htm
8/404 424B5 1 file1.htm 424B5 Table of Contents Filed Pursuant to Rule 424(b)(5) Registration No. 333-141638 PROSPECTUS SUPPLEMENT (to prospectus dated November 12, 2007) STRUCTURED ASSET SECURITIES CORPORATION II Depositor LB-UBS COMMERCIAL MORTGAGE TRUST 2007-C7 Issuing Entity Commercial Mortgage Pass-Through Certificates, Series 2007-C7 Class A-1, Class A-2, Class A-AB, Class A-3, Class A-1A, Class A-M, Class A-J, Class B, Class C, Class D, Class E, Class F, Class X-CP and Class X-W Approximate Total Principal Balance at Initial Issuance: $2,956,253,000 We are Structured Asset Securities Corporation II, the depositor with respect to the securitization transaction that is the subject of this prospectus supplement. This prospectus supplement relates to, and is accompanied by, our base prospectus dated November 12, 2007. This prospectus supplement and the accompanying base prospectus are intended to offer and relate only to the classes of commercial mortgage pass- through certificates identified above, and not to the other classes of certificates that will be issued by the issuing entity, which is also identified above. The offered certificates are not listed on any national securities exchange or any automated quotation system of any registered securities associations, such as NASDAQ. The sponsors of the subject securitization transaction are Lehman Brothers Holdings Inc., UBS Real Estate Securities Inc. and KeyBank National Association. The offered certificates will represent interests only in the issuing entity and do not represent obligations of or interests in the sponsor, the depositor or any of their respective affiliates. The assets of the issuing entity will include a pool of multifamily and commercial mortgage loans having the characteristics described in this prospectus supplement. No governmental agency or instrumentality or private insurer has insured or guaranteed payment on the offered certificates or any of the mortgage loans that back them. The holders of each class of offered certificates will be entitled to receive, to the extent of available funds, monthly distributions of interest, principal or both, commencing on the distribution date in December 2007. The table on page S-7 of this prospectus supplement contains a list of the respective classes of offered certificates and states the original principal balance or notional amount, initial interest rate, interest rate description, and other select characteristics of each of those classes. Credit enhancement is being provided to the offered certificates through the subordination of various other classes, including multiple non-offered classes, of the series 2007-C7 certificates. That same table on page S-7 of this prospectus supplement also contains a list of the non-offered classes of the series 2007-C7 certificates. You should fully consider the risk factors beginning on page S-45 in this prospectus supplement and on page 18 in the accompanying base prospectus prior to investing in the offered certificates. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying base prospectus. Any representation to the contrary is a criminal offense. Lehman Brothers Inc., UBS Securities LLC and Wachovia Capital Markets, LLC are the underwriters with respect to the offered certificates. They will purchase their respective allocations, in each case if any, of the offered certificates from us, subject to the satisfaction of specified conditions. Our proceeds from the sale of the offered certificates will equal approximately $3,023,000,000, plus accrued interest on all the offered certificates from November 11, 2007, before deducting expenses payable by us. The underwriters currently intend to sell the offered certificates at varying prices to be determined at the time of sale. Not every underwriter will have an obligation to purchase offered certificates from us. See Method of Distribution in this prospectus supplement. Lehman Brothers Inc. and UBS Securities LLC are acting as co-lead managers and co-bookrunners in the following manner: Lehman Brothers Inc. is acting as sole bookrunning manager with respect to 60.4% of each class of offered certificates and UBS Securities LLC is acting as sole bookrunning manager with respect to the remaining portion of each class of offered certificates. Wachovia Capital Markets, LLC is acting as co- manager. UBS SECURITIES LLC LEHMAN BROTHERS Co-Lead Manager Co-Lead Manager WACHOVIA SECURITIES Co-Manager The date of this prospectus supplement is November 20, 2007. Page 1 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-215 series 2007-C7 controlling class representative or the holders of series 2007-C7 certificates entitled to 25% of the series 2007-C7 voting rights, will be required to) pursue such rights, if any, as the holder of the subject Outside Serviced Trust Mortgage Loan may have pursuant to the applicable servicing agreement. No series 2007-C7 certificateholder will have the right under the series 2007-C7 pooling and servicing agreement to institute any suit, action or proceeding with respect to that agreement or any underlying mortgage loan unless that holder previously has given to the trustee written notice of default, except in the case of a default by the trustee, series 2007-C7 certificateholders entitled to not less than 25% of the series 2007-C7 voting rights have made written request to the trustee to institute that suit, action or proceeding in its own name as trustee under the series 2007-C7 pooling and servicing agreement and have offered to the trustee such reasonable indemnity as it may require, and except in the case of a default by the trustee, the trustee for 60 days has neglected or refused to institute that suit, action or proceeding. See Description of the Governing DocumentsRights, Protection, Indemnities and Immunities of the Trustee for a description of certain limitations regarding the trustees duties with respect to the foregoing matters. Administration of the Outside Serviced Trust Mortgage Loans The Outside Serviced Trust Mortgage Loans and any related REO Property will be serviced and administered in accordance with the governing servicing agreement for the related Loan Combination. If the trustee is requested to take any action in its capacity as holder of an Outside Serviced Trust Mortgage Loan, pursuant to that governing servicing agreement, or if a responsible officer of the trustee becomes aware of a default or event of default on the part of any party under that governing servicing agreement, then (subject to any more specific discussion within this prospectus supplement, including under Rights Upon Event of Default above, with respect to the matter in question) the trustee will notify, and act in accordance with the instructions of, the series 2007-C7 controlling class representative. Third-Party Beneficiaries The mortgage loan sellers will be third-party beneficiaries of the series 2007-C7 pooling and servicing agreement to the extent set forth therein. Accordingly, the series 2007-C7 pooling and servicing agreement cannot be modified in any manner that is material and adverse to any of those parties without its consent. SERVICING OF THE LOAN COMBINATIONS The series 2007-C6 pooling and servicing agreement initially governs the servicing and administration of the Innkeepers Portfolio Loan Combination and any related REO Property. The series 2007-C6 pooling and servicing agreement is the governing document for the Series 2007-C6 Securitization, which closed prior to the Issue Date. Under the series 2007-C6 pooling and servicing agreement, the master servicer is Wachovia Bank, National Association, the trustee is LaSalle Bank National Association and the initial special servicer is Midland Loan Services, Inc. The series 2007-C2 pooling and servicing agreement initially governs the servicing and administration of the Sears Tower Loan Combination and any related REO Property. The series 2007-C2 pooling and servicing agreement is the governing document for the Series 2007-C2 Securitization, which closed prior to the Issue Date. Under the series 2007-C2 pooling and servicing agreement, the master servicer is Wachovia Bank, National Association, the trustee is LaSalle Bank National Association and the initial special servicer is LNR Partners, Inc. The master servicer, special servicer and trustee under the series 2007-C7 pooling and servicing agreement will not have any obligation or authority to supervise the series 2007-C6 master servicer, the series 2007-C6 special servicer, the series 2007-C6 trustee, the series 2007-C2 master servicer, the series 2007-C2 special servicer or the series 2007-C2 trustee or to make servicing advances with respect to either the Innkeepers Portfolio Loan Combination or the Sears Tower Loan Combination. Each of the series 2007-C6 pooling and servicing agreement and the series 2007-C2 pooling and servicing agreement provides for servicing in a manner acceptable for rated transactions similar in nature to the series 2007-C7 securitization and the servicing arrangements under each of the series 2007-C6 pooling and servicing agreement and the series 2007- C2 pooling and servicing agreement are generally similar, but not identical, to the servicing arrangements under the series 2007-C7 pooling and servicing agreement. In that regard: One or more parties to each of the series 2007-C6 pooling and servicing agreement and the series 2007-C2 pooling and servicing agreement will be responsible for making servicing advances with respect to the subject Loan Page 223 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-216 Combination, which servicing advances will be reimbursable (with interest at a published prime rate) to the maker thereof out of collections on the subject Loan Combination, and none of the parties to that agreement (in their capacities under such agreement) will have any right or duty to make advances of delinquent debt service payments on the related underlying mortgage loan included in the series 2007-C7 securitization transaction. The mortgage loans that form the subject Loan Combination are to be serviced and administered under a general servicing standard that is substantially similar (but not identical) to the Servicing Standard under the series 2007-C7 pooling and servicing agreement and as if they were a single mortgage loan indebtedness under that agreement (subject to any rights of the related Loan Combination Controlling Party or a representative on its behalf to consult or advise with respect to, or to approve or disapprove, various servicing-related actions involving the subject Loan Combination). The mortgage loans that form the subject Loan Combination will become specially serviced mortgage loans if specified events occur, which events are substantially similar (but not identical) to the Servicing Transfer Events under the Series 2007-C7 pooling and servicing agreement, in which case the party serving as the special servicer under the series 2007-C6 pooling and servicing agreement or the series 2007-C2 pooling and servicing agreement, as applicable, will be entitled to (among other things) special servicing fees, workout fees and/or liquidation fees with respect to the related underlying mortgage loan included in the series 2007-C7 securitization transaction that arise and are payable in a manner and to an extent that is substantially similar to the special servicing fees, workout fees and/or liquidation fees that are payable to the special servicer under the series 2007-C7 pooling and servicing agreement with respect to other underlying mortgage loans; provided that (a) the special servicing fee rate for the Innkeepers Portfolio Mortgage Loan will equal (i) 0.25% per annum when the loan balance is less than $25,000,000 and (ii) 0.15% per annum when the loan balance is greater than or equal to $25,000,000, and (b) the workout fee rate and the liquidation fee rate for the Innkeepers Portfolio Mortgage Loan will each equal (i) 1.0% when the loan balance is less than $25,000,000 and (ii) 0.75% when the loan balance is greater than or equal to $25,000,000. In general, under each of the series 2007-C6 pooling and servicing agreement and the series 2007-C2 pooling and servicing agreement, the occurrence of a Servicing Transfer Event with respect to any mortgage loan in a Loan Combination will automatically result in the occurrence of a Servicing Transfer Event with respect to the other mortgage loan(s) in that Loan Combination. However, if, subject to the terms, conditions and limitations of the related Co-Lender Agreement, any Sears Tower Note B Non-Trust Loan Noteholder prevents the occurrence of a Servicing Transfer Event with respect to the Sears Tower Note A-1 Non-Trust Loan, the Sears Tower Note A-2 Loan Combination and the Sears Tower Note A-3 Non-Trust Loan through the exercise of cure rights as set forth in the related Co-Lender Agreement, then the existence of such Servicing Transfer Event with respect to the related Sears Tower Note B Non-Trust Loan will not, in and of itself, result in the existence of a Servicing Transfer Event with respect to the Sears Tower Note A-1 Non-Trust Loan, the Sears Tower Note A-2 Loan Combination and the Sears Tower Note A-3 Non-Trust Loan, or the transfer to special servicing of the applicable Loan Combination, unless a separate Servicing Transfer Event may occur with respect thereto. The master servicer and special servicer for the Series 2007-C2 Securitization, in the case of the Sears Tower Loan Combination, or for the Series 2007-C6 Securitization, in the case of the Innkeepers Portfolio Loan Combination, will be responsible for entering into any modifications or amendments and for granting any waivers or consents with respect to that Loan Combination under terms and conditions similar to those described under The Series 2007-C7 Pooling and Servicing AgreementModifications, Waivers, Amendments and Consents and Description of the Mortgage PoolLoan Combinations in this prospectus supplement, except that, as specified in each of the series 2007-C2 pooling and servicing agreement and the series 2007-C6 pooling and servicing agreement, the master servicer thereunder will be primarily responsible for approving certain modifications, consents, waivers or amendments, including without limitation (a) consenting to subordination of the lien of the subject Loan Combination to an easement, right-of-way or similar agreement for utilities, access, parking, public improvements or another purpose, provided that such master servicer has determined in accordance with the applicable servicing standard that such easement, right-of-way or similar agreement will not materially interfere with the then-current use of the related mortgaged real property, the security intended to be provided by the related mortgage instrument or the related borrowers ability to repay the subject Loan Combination, or materially or adversely affect the value of the related mortgaged real property; Page 224 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-217 (b) granting waivers of minor covenant defaults (other than financial covenants), including delivery of late financial statements; (c) granting releases of non-material parcels of the related mortgaged real property, releases of the related mortgaged real property in connection with a defeasance or a pending or threatened condemnation and, if the related loan documents expressly require the mortgagee thereunder to grant a release upon the satisfaction of certain conditions, releases of the related mortgaged real property as required by the related loan documents; (d) approving routine leasing activity (including any subordination, standstill and attornment agreement) with respect to leases for less than the lesser of (a) 20,000 square feet and (b) 20% of the related mortgaged real property; (e) subject to certain related conditions, approving annual budgets for the related mortgaged property; (f) disbursements of any earnout or holdback amounts in accordance with the related loan documents; (g) waiving provisions of the subject Loan Combination requiring the receipt of a rating confirmation if the balance such mortgage loan does not exceed certain levels and the related provision of the mortgage loan does not relate to a due- on-sale or due-on-encumbrance clause; (h) subject to certain other restrictions regarding principal prepayments, waiving any provision of the subject Loan Combination requiring a specified number of days notice prior to a principal prepayment; (i) consenting to changing the property manager with respect to the related mortgaged real property; and (j) granting other similar non-material waivers, consents, modifications or amendments; provided that (1) any such modification, waiver or amendment would not in any way affect a payment term of the related mortgage loan (other than, in the case of a non-specially serviced mortgage loan, a waiver of payment of Default Interest or a late payment charge) and (2) agreeing to such modification, waiver or amendment would be consistent with the applicable servicing standard. In addition, the management, prosecution, defense and/or settlement of claims and litigation relating to any mortgage loan brought against the series 2007-C2 or series 2007-C6 trust fund or any party to the series 2007-C2 or series 2007-C6 pooling and servicing agreement will generally be handled by the related master servicer and/or special servicer, as more specifically provided for in the series 2007-C2 or series 2007-C6, as applicable, pooling and servicing agreement. In connection with handling such matters, the related master servicer and/or special servicer may be required to seek the consent of the series 2007-C2 or series 2007-C6, as applicable, controlling class representative with respect to material decisions and settlement proposals. In addition, the related master servicer or special servicer, as applicable, may be entitled to reasonable compensation for directing, managing, prosecuting and/or defending any such claims, as set forth in the series 2007-C2 or series 2007-C6, as applicable, pooling and servicing agreement. Any modification, extension, waiver or amendment of the payment terms of the subject Loan Combination is required to be structured so as to be consistent with the allocation and payment priorities in the related mortgage loan documents and the related Co-Lender Agreement, such that neither the trust as holder of the related underlying mortgage loan nor any holder of a related Non-Trust Loan gains a priority over the other such holder that is not reflected in the related mortgage loan documents and the related Co-Lender Agreement. Subject to the discussion in the following bullets, neither the special servicer nor the master servicer under the series 2007- C6 pooling and servicing agreement or series 2007-C2 pooling and servicing agreement, as applicable, will be permitted to take (or, in case of that special servicer, if and when appropriate, to consent to that master servicers taking) any of the following actions (or, subject to the related Co-Lender Agreement, some subset of the following actions) under the applicable pooling and servicing agreement with respect to the applicable Loan Combination, as to which action the related Loan Combination Controlling Party has objected within such time period provided for in the related Co-Lender Agreement (which is not more than 30 days) of having been notified thereof in writing and having been provided with all reasonably requested information with respect thereto: (a) any proposed foreclosure upon or comparable conversion, which may include acquisitions of an REO Property, of the related mortgaged real property and the other collateral securing the subject Loan Combination if it comes into and continues in default; Page 225 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-218 (b) any modification, extension, amendment or waiver of a monetary term (including the timing of payments or the maturity date and any acceleration of the loan unless such acceleration is by its terms automatic under the related loan documents) or any material non-monetary term (including a material term relating to insurance) of a mortgage loan that is part of the subject Loan Combination; (c) any proposed sale of a related REO Property or any proposed sale of the loan other than in connection with the exercise of a fair value purchase option pursuant to the applicable pooling and servicing agreement; (d) any acceptance of a discounted payoff or the forgiveness of any interest or principal payments of a mortgage loan that is part of the subject Loan Combination; (e) any determination to bring the related mortgaged real property (including if it is an REO Property) into compliance with applicable environmental laws or to otherwise address hazardous materials located at the related mortgaged real property; (f) any renewal or replacement of the then existing insurance policies to the extent that the renewal or replacement policy does not comply with the terms of the related loan documents or any waiver, modification or amendment of any insurance requirements under the related loan documents, in each case if lenders approval is required by the related loan documents; (g) any adoption or approval of a plan in bankruptcy of the related borrower or similar event in a bankruptcy or similar proceeding; (h) any release of collateral for the subject Loan Combination (including, but not limited to, the termination or release of any reserves, escrows or letters of credit), other than in accordance with the terms of, or upon satisfaction of, the subject Loan Combination; (i) any acceptance of substitute or additional collateral for the subject Loan Combination or any release of the borrower or any guarantor, other than in accordance with the terms thereof; (j) any waiver of or determination to enforce or not to enforce a due-on-sale or due-on-encumbrance clause with respect to the subject Loan Combination; (k) any acceptance of an assumption agreement releasing the related borrower from liability under the subject Loan Combination; (l) any approval of annual budgets, business plans, major leases, modifications to or terminations of major leases or a material capital expenditure, if lenders approval is required by the related loan documents; (m) any release of the related borrower or any guarantor from liability with respect to the subject Loan Combination or any material modification to, waiver of any material provision of, or material release of, any guaranty or indemnity agreement unless required under the loan agreement; (n) any replacement of the property manager or any proposed termination or material modification of the property management agreement, if lenders approval is required by the related loan documents; (o) any approval of the transfer of the related mortgaged real property or interests in the related borrower or the incurrence of additional indebtedness secured by the related mortgaged real property or any mezzanine financing by any beneficial owner of the borrower, if lenders approval is required by the related loan documents; (p) any modification to a ground lease or certain designated space leases; (q) any determination to apply casualty proceeds or condemnation awards toward repayment of a mortgage loan that is part of the subject Loan Combination rather than toward restoration of the related mortgaged real property; (r) any release, waiver or reduction of the amounts of escrows or reserves not expressly required by the terms of the related loan documents or under applicable law; (s) the subordination of any lien created pursuant to the terms of the related loan documents; (t) any material alteration to the related mortgaged real property, to the extent the lender has approval rights with respect to such item in the related loan documents; Page 226 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-219 (u) any proposed amendment to any single purpose entity provision of the related loan documents; (v) any determination by the master servicer that a Servicing Transfer Event that is based on imminent default has occurred with respect to a mortgage loan that is part of the subject Loan Combination; and (w) any proposed sale of the related mortgaged real property for less than the unpaid principal amount of the underlying mortgage loan that is part of the subject Loan Combination, accrued and unpaid interest thereon, all amounts required to be paid or reimbursed to the master servicer, special servicer and trustee under the the series 2007-C6 pooling and servicing agreement or series 2007-C2 pooling and servicing agreement, as applicable, and any unreimbursed realized losses allocated to the underlying mortgage loan that is part of the subject Loan Combination; provided that, if the special servicer or the master servicer, as applicable, determines that immediate action is necessary to protect the interests of the holders of the mortgage loans in the subject Loan Combination, as a collective whole, then the applicable special servicer or master servicer (to the extent the master servicer is otherwise permitted to take such action under the controlling pooling and servicing agreement), as applicable, may take (or, in the case of the applicable special servicer, if and to the extent applicable, consent to the applicable master servicers taking) any such action without waiting for the related Loan Combination Controlling Partys response. In addition, subject to the discussion in the following bullets, the related Loan Combination Controlling Party may generally direct the special servicer and/or master servicer under the series 2007-C6 pooling and servicing agreement or series 2007-C2 pooling and servicing agreement, as applicable, to take, or refrain from taking, any actions with respect to a Loan Combination that the related Loan Combination Controlling Party may consider consistent with the related Co-Lender Agreement or as to which provision is otherwise made in the related Co-Lender Agreement. Notwithstanding the foregoing, in the case of the Innkeepers Portfolio Loan Combination, if the holders of the Innkeepers Portfolio Mortgage Loan and the Innkeepers Portfolio Pari Passu Non-Trust Loan (or their respective representatives) as the related Loan Combination Controlling Party have not, within the requisite time period provided for in the related Co-Lender Agreement, executed a mutual consent with respect to any advice, consent or direction regarding a specified servicing action, the special servicer or master servicer, as applicable, under the series 2007-C6 pooling and servicing agreement will implement the servicing action that it deems to be in accordance with the applicable servicing standard, and the decision of the such special servicer or such master servicer, as applicable, will be binding on all such parties. Likewise, if the holders of the Sears Tower Note A-1 Non-Trust Loan, the Sears Tower Note A-2 Loan Combination and the Sears Tower Note A-3 Non-Trust Loan or their respective representatives constitute the related Loan Combination Controlling Party, and if they have not, within the requisite time period provided for in the Sears Tower Co-Lender Agreement, executed a mutual consent with respect to any advice, consent or direction regarding a specified servicing action, the series 2007-C2 special servicer or master servicer, as applicable, will implement the servicing action that it deems to be in accordance with the servicing standards, and the decision of the series 2007-C2 special servicer or master servicer, as applicable, will be binding on all such parties, subject to certain conditions set forth in the series 2007-C2 pooling and servicing agreement. Further notwithstanding the foregoing, no advice, direction or objection given or made by the Loan Combination Controlling Party for any Loan Combination, as contemplated by any of the foregoing bullets in this Servicing of the Loan Combinations section, may (1) require or cause the applicable special servicer or master servicer, as applicable, to violate (a) any other provision of the series 2007-C6 pooling and servicing agreement or series 2007-C2 pooling and servicing agreement, as applicable, including the obligation of that servicer to act in accordance with the Servicing Standard, (b) the related mortgage loan documents, including any applicable co-lender and/or intercreditor agreements, or (c) applicable law, including the REMIC provisions of the Internal Revenue Code or (2) subject that servicer to liability or materially expand the scope of its obligations under the respective pooling and servicing agreement; and that servicer is to ignore any such advice, direction or objection that would have such effect. Furthermore, neither the series 2007-C6 special servicer nor the series 2007-C2 special servicer will be obligated to seek approval from the related Loan Combination Controlling Party under the related pooling and servicing agreement for any actions to be taken by such special servicer with respect to the workout or liquidation of the subject Loan Combination if (a) the applicable special servicer has, as described above, notified the applicable Loan Combination Controlling Party in writing of various actions that such special servicer proposes to take with respect to the workout or liquidation of that Loan Combination and Page 227 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm Table of Contents S-220 (b) for 60 days following the first of those notices, the applicable Loan Combination Controlling Party has objected to all of those proposed actions and has failed to suggest any alternative actions that the special servicer considers to be consistent with the Servicing Standard. The holders or beneficial owners of a majority interest in each of the series 2007-C6 controlling class and the series 2007- C2 controlling class will have the right to replace the special servicer under the series 2007-C6 pooling and servicing agreement and series 2007-C2 pooling and servicing agreement, respectively, and the series 2007-C7 controlling class representative will have the right to replace the special servicer under the series 2007-C6 pooling and servicing agreement solely with respect to the Innkeepers Portfolio Mortgage Loan, and the related Loan Combination Controlling Party will have the right to replace the special servicer under the series 2007-C2 pooling and servicing agreement solely with respect to the Sears Tower Loan Combination, in each case on terms and conditions that are similar to those applicable to the replacement of the special servicer under the series 2007-C7 pooling and servicing agreement by the holders or beneficial owners of a majority interest in the series 2007-C7 controlling class, as described under The Series 2007-C7 Pooling and Servicing AgreementReplacement of the Special Servicer in this prospectus supplement. In general, the respective parties to each of the series 2007-C6 pooling and servicing agreement and the series 2007-C2 pooling and servicing agreement will have substantially the same limitations on liability and rights to reimbursement and/or indemnification as do the respective parties to the series 2007-C7 pooling and servicing agreement. If the related Non-Trust Loan is ever no longer part of the trust fund created pursuant to the series 2007-C6 pooling and servicing agreement or the series 2007-C2 pooling and servicing agreement, as applicable, then the subject Loan Combination will be serviced and administered under one or more successor servicing agreements entered into with the master servicer and, if applicable, the special servicer under the related pooling and servicing agreement, on terms substantially similar to those in the related pooling and servicing agreement, unless that master servicer, that special servicer and the holders of the mortgage loans that form the subject Loan Combination otherwise agree. No such other servicing agreement may be entered into on behalf of the trust as the holder of the related underlying mortgage loan unless the holders of all mortgage loans comprising the subject Loan Combination collectively agree to grant consent to such other servicing agreement, and entry into any successor servicing agreement will be conditioned upon receipt from S&P and Fitch of a written confirmation that entering into that agreement would not result in the withdrawal, downgrade, or qualification, as applicable, of the then current ratings assigned by those rating agencies to any class of series 2007-C7 certificates. Page 228 of 643 2/1/2011 http://www.sec.gov/Archives/edgar/data/1414315/000095013607008065/file1.htm
5/3/2010 Table of Contents Table of Contents http://www.sec.govfArchives/edgar/dat... the rate and timing of any principal prepayni'enls and/or other early liquidations of the underlying mortgage loans; a faster than anticipated rate of payments and other collections of principal on the underlying mortgage loans could result in a lower than anticipated yield with respect to the class X certificates, and an extremely rapid rate of prepayments and/or other liquidations of the underlying mortgage loans could result in a complete or partial loss of your initial in.,.,stment with respect to the class X certificates. The yield on the offered certificates with variable or capped pass-through rates could also be ad.,.,rsely affected if the underlying mortgage loans with relati.,.,ly higher net mortgage interest rates pay principal faster than the underlying mortgage loans with relati.,.,ly lower net mortgage interest rates. S-44 In addition, the pass-through rate for, and yield on, the class X certificates will vary with changes in the relati"' sizes of the respecti"' components. that make up the total notional amount of that class, with each of those components consisting of the total principal balance of a specified class of series 2007 -CS principal balance certificates. Holders of the class A-1, A-2, A-3, A-AB and A-4 certificates will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 1 and, in the absence of significant losses on the mortgage pool, should be largely .unaffected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 2. Con.,.,rsely, holders of the class A-1A certificates will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 2 and, only after the retirement of the class A-1, A-2, A-2FL, A-3, A-AB and A-4 certificates or in connection with significant losses on the mortgage pool, will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 1. See "Yield and Maturity Considerations" in th.is prospectus supplement and in the accompanying base prospectus. S-45 RISK FACTORS The offered certificates are not suitable in.,.,stments for all in.,.,stors. You should not purchase any offered certificates unless you understand and are able to bear the risks associated with those certificates. The offered certificates are complex securities and it is important that you possess, either alone or together with an in.,.,stment adi.isor, the expertise necessary to evaluate the information contained in this prospectus supplement and the accompanying base prospectus in the context of your financial situation. You should consider the following factors, as well as those set forth under "Risk Factors" in the accompanying base prospectus, in deciding whether to purchase any offered certificates. The "Risk Factors" section in the accompanying base prospectus includes a number of general risks associated with making an in.,.,stment in the offered certificates. The Class A-M, A.J, B, C, D, E and F Certificates Are Subordinate to, and Are Therefore Riskier than, the ClassA-1, A-2, A..J, A-AB, A-4 and A-1A Certificates ~ y o u purchase class A-M, A-J, B, C, D, E and F certificates, then your offered certificates will pro;;de credit support to other classes of. series 2007-GS certificates, including the A-1, A-2, A-3, A-AB, A-4, A1A and X classes, and to some or all of the REMIC regular interests corresponding to the floating rate classes of the series 2007 -CS certificates. As a result, you will recei"' payments after, and must bear the effects of losses on the underlying mortgage loans before, the holders of those other classes of series 2007-GS certificates. When making an in.,.,stment decision, you should consider, among other things- the payment priorities of the respecti"' classes of the series 2007-CS certificates (or, in the case of the floating rate classes of the series 2007-GS certificates, of the respecti"' corresponding REMIC regular interests), the order in which the principal balances of the respecti"' classes of the series 2007 -cs principal balance certificates (or, in the case of the floating rate classes of the series 2007 -cs certificates, of the respecti"' corresponding REMIC regular interests) will be reduced in connection with losses and default-related shortfalls, and the characteristics and quality of the mortgage loans in the trust. See "Description of the Mortgage Pool" and "Description of the Offered Certificates-Payments" and "-Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. See also "Risk Factors-The ln.,.,stment Performance of Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly Unpredictable," "-Payments on the Offered Certificates Will Be Made Solely from the Limited Assets of the Related Trust, and Those Assets May Be Insufficient to Make All Required Payments on Those Certificates" and "-Any Credit Support for Your Offered Certificates May Be Insufficient to Protect You Against All Potential Losses" in the accompanying base prospectus. The Offered Certificates Have Uncertain Yields to Maturity The yields on your offered certificates will depend on- the price you paid for your offered certificates, and sec.gov/ Archives/edgar/data/ . .Jfile 1.htm 31/404 5/3/2010 http://www.sec.gov/Archives/edgar/dat... The rate, timing and amount of payments on your offered certificates will depend on: (a) the pass-through rate for, and other payment terms of, your offered certificates; (b) the rate and timing of payments and other collections of principal on the underlying mortgage loans or, in some cases, a particular group of underlying mortgage loans; (c) the rate and timing of defaults, and the severity of losses, if any, on the underlying mortgage loans or, in some cases, a particular group of underlying mortgage loans; (d) the rate, timing, se..erity and allocation of other shortfalls and expenses that reduce amounts a"'ilable for payment on your offered certificates; (e) the collection and payment of prepayment premiums and yield maintenance charges with respect to the underlying mortgage loans or, in some cases, a particular group of underlying mortgage loans; and S-46 Table of Contents (f) sef\icing decisions with respect to the underlying mortgage loans or, in some cases, a particular group of underlying mortgage loans. In general, the factors described in clauses (a) through (f) of the preceding paragraph cannot be predicted with any certainty. Accordingly, you may find it difficult to determine the effect that these factors might ha\8 on the yield to maturity of your offered certificates. In the absence of significant losses on the mortgage pool, holders of the class A-1, A-2, A-3, A-AB and A-4 certificates should be concerned with the factors described in clauses (b) through (f) of the preceding paragraph primarily insofar as they relate to the underlying mortgage loans in loan group 1. Until the class A-1, A-2, A-2FL, A-3, A-AB and A-4 certificates are retired, holders of the class A-1A certificates should, in the absence of significant losses on the mortgage pool, be concerned with the factors described in clauses (b) through (f) of the preceding paragraph primarily insofar are they relate to the underlying mortgage loans in loan group 2. See "Description of the Mortgage Pool," "The Series 2007 -C6 Pooling and Sef\icing Agreement," "Sef\icing of the Potomac Mills Loan Combination" and "Sef\icing of the Och-Ziff Retail Portfolio Loan Combination", "Description of the Offered Certificates-Payments" and "-Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" and "Yield and Maturity Considerations" in this prospectus supplement. See also "Risk Factors-The Investment Performance of Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly Unpredictable" and "Yield and Maturity Considerations" in the accompanying base prospectus. The Investment Perfonmance of Your Offered Certificates May Vary Materially and Adversely from Your Expectations Because-the Rate of Prepayments and Other Unscheduled Collections of Principal on the Underlying Mortgage Loans Is Faster or Slower than You Anticipated ~ y o u purchase any offered certificate at a premium from its principal balance, and if payments and other collections of principal on the mortgage loans in the trust occur at a rate faster than you anticipated at the time of your purchase, then your actual yield to maturity may be lower than you had assumed at the time of your purchase. Con\ersely, if you purchase any offered certificate at a discount from its principal balance, and if payments and other collections of principal on the mortgage loans in the trust occur at a rate slower than you anticipated al the time of your purchase, then your actual yield to maturity may be lower than you had assumed at the time of your purchase. Holders of the class A-1, A-2, A-3, A-AB and A-4 certificates will be affected by the rate of payments and other collections of principal on the underlying mortgage loans in loan group 1 and, in the absence of significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 2. Conversely, holders of the class A-1A certificates will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 2 and, only after the retirement of the class A-1, A-2, A-2FL, A-3, A-AB and A-4 certificates or in connection with significant losses on the mortgage pool, will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group 1. ~ y o u purchase a class X certificate, your yield to maturity will be particularly sensiti..e to the rate and timing of principal payments on the underlying mortgage loans. A payment of principal in reduction of the total principal balance of any class of series 2007 -C6 principal balance certificates will result in a reduction of the total notional amount of the class X certificates. Accordingly, if principal payments on the underlying mortgage loans occur at a rate faster than that assumed at the lime of purchase, then your actual yield to maturity with respect to the class X certificates may be lower than that assumed at the time of purchase. Your yield to maturity could also be ad\ersely affected by- the repurchase of any underlying mortgage loan in connection with a material breach of representation and wanranty or a material document omission, all as described under "Description of the Mortgage Pool-Cures and Repurchases" in this prospectus supplement, the sale of defaulted underlying mortgage loans out of the trust in accordance with a fair "'lue or other purchase option, and the termination of the trust, as described under "Description of the Offered Certificates-Termination" in this prospectus supplement. Prior to in..esting in the class X certificates, you should fully consider the associated risks, including the risk that an extremely rapid rate of amortization, prepayment or other early liquidation of the underlying mortgage loans could result in your failure to fully recover your initial investment. The ratings on the class X certificates do not address whether a purchaser of those certificates would be able to reco..er its initial investment in them. S-47 Table of Contents You should consider that prepayment premiums and yield maintenance charges may not be collected in all circumstances. For example, a federal district court in Illinois in September 2006 held that, under Illinois law, the subject "yield maintenance" premium due in connection with a \Oiuntary prepayment of a commercial mortgage loan was an unenforceable penalty. The decision is currently on appeal to the US Court of Appeals for the Se\enth Ci':'uit. Furthermore, sec.gov/Archives/edgar/data/ . .Jfile1.htm
32/404
5/3/2010 http://www.sec.gov/Archives/edgar/dat... The yield on offered certificates with a variable or capped pass-through rate could also be adversely affected if the underlying mortgage loans with relatively higher net mortgage interest rates pay principal faster than the mortgage loans with relatively tower net mortgage interest rates. In addttion, the pass-through rate for, and yie_ld on, the class X certificates will vary with changes in the relative sizes of the respective components that make up the total notional amount of that class, with each of those components consisting of the total principal balance of a specified class of series 2007 -C6 principal balance certificates. The Interests of the Series 2007-CS Controlling Class Certificate holders May Be in Conflict with the Interests of the Offered Certilicateholders The holders or beneficial owners of series 2007-C6 certificates representing a majority interest in the controlling class of series 2007 -C6 certificates will be entitled to: (a) appoint a representative the rights and powers described and/or referred to under "The Series 2007 -C6 Pooling and SeNcing Agreement-The Series 2007 -C6 Controlling Class Representative and the SeNced Non-Trust Loan Noteholders" in this prospectus supplement; and (b) replace the special seNcer under the series 2007 -CS pooling and seNcing agreement, as and to the extent and subject to satisfaction of the conditions described under "The Series 2007-CS Pooling and SeNcing Agreement-Replacement of the Special SeNcer" in this prospectus supplement. Among other things, the series 2007-CS controlling class representative may direct the special seNcer'under the series 2007 -CS pooling and seNcing agreement or other applicable seNcing agreement to take, or to refrain from taking,. certain actions with respect to the and/or administration of any specially seNced mortgage loans and foreclosure properties in the trust that the series 2007 -CS controlling class representative may consider sable, subject to any rights in that regard that the related non-trust mortgage loan notehotder(s) may have with respect to an underlying mortgage loan that is part of a loan combination. In the absence of significant losses on the underlying mortgage loans, the series 2007-CS controlling class will be a non- offered class of series 2007-Cs certificates. The series 2007-CS controlling class certificateholders are therefore likely to have interests that conflict with those of the holders of the offered certificates. You should expect that the series 2007-C6 controlling class representative will exercise its rights and powers on behalf of the series 2007-C6 controlling class certificateholders, and it will not be liable to any other class of series 2007,C6 certificateholders for so doing. The Absence or Inadequacy of Insurance Coverage on the Mortgaged Properties May Adversely Affect Payments on Your Certificates After the terrorist attacks of September 11, 2001, the cost of insurance coverage for acts of terrorism increased and the. availability. of such insurance decreased. In response. to this situation, Congress enacted the Terrorism Risk Insurance Act of 2002, which was amended and extended by the Terrorism Risk Insurance Extension Act of 2005, signed into law by President Bush on December 22, 2005. The Terrorism Risk Insurance Extension Act of 2005 requires that qualifying insurerS offer terrorism insurance cpverage in all property and casualty insurance policies on terms not materially different than terms applicable to other losses. The federai government currently covers 85% 'of the losses from covered certified acts of terrorism on commercial risks in the United States only, in excess of a specified deductible amount calcu,tated as a percentage of an affiliated insurance group's prior year premiums on commercial lines policies covering risks in the United States. This specified deductible amount is 20% of such premiums for losses occurring in 2007. Further, to trigger coverage under the Terrorism Risk Insurance Extension Act of 2005, the aggregate industry property and casualty insurance losses resulting from an act of terrorism must exceed $100 million for acts of terrorism occurring in 2007. The Terrorism Risk Insurance Extension Act of 2005 now excludes coverage for commercial auto, burglary and theft, surety, professional liability and farm owners' multiperil. The Terrorism Risk Insurance Extension Act of 2005 will expire on December 31, 2007. The .Terrorism Risk Insurance Extension Act of 2005 applies only to losses resulting from attacks that have been committed by on of a foreign person or foreign interest, and does not cover acts of purely domestic terrorism. Further, any such attack must be certified as an "act of terrorism" by the federal government, wihich decision is not subfect to judicial As a result, insurers may continue to try to exclude from coverage under their policies losses S-48 Table of Contents resulting from terrorist acts not covered by the Terrorism Risk Insurance Extension Act of 2005. Moreover,. the Terrorism Risk Insurance Extension Act of 2005's deductible and copayment still leave insurers with high potential exposure for terrorism-related claims. Because nothing in the act prevents an insurer from raising premium rates on policyholders to cover potentiai tosses, or from obtaining reinsurance coverage to offSet its increased liability, the cost of premiums for such terrorism insurance coverage is still expected to be high. With respect to most of the mortgage loans that we intend to include in the trust, the related loan documents generally pro\.1de that either" (a) the borrowers are required to maintain fuli or partial insurance co\erage for property to the related mortgaged real property against certain acts of terrorism (except that, in many instances, including in the case of six (6) of the ten (10) largest mortgage loons described under "Description of the Mortgage Pool-Significant Underlying Mortgage Loans" .in this prospectus supplement, the requirement to obtain such insurance coverage may be subject to.the commercial availability of that coverage, certain limitations with respect to the cost thereof and/or wihether such hazards are at the time commonly insured against for property similar to such mortgaged real properties and located in or around the region in wihich such mortgaged real property is located), (b) the borroWers are required to such additional insurance coverage as lender may reasonably require to protect its interests or to cover such hazards as are commonly insured against for similarly situated properties, (c) a credit-fBted tenant is obligated to restore the mortgaged real property in the event of a casualty, or (d) a principal of the borrower has agreed to be responsible for losses resulting from terrorist acts wihich are not otherwise covered by insurance. If the related mortgage loan documents do not expressly require insurance against acts of terrorism, but permit the lender to require such other insurance as is reasonable, the related borrower may challenge wihether maintaining insurance against acts of terrorism is reasonable in light of all the circumstan'ces, including the cost. In the case of some of the mortgaged real properties securing mortgage loans that we intend to include in the trust, the insurance covering any of such mortgaged real properties for acts of terrorism may be through a blanket policy that also covers properties unrelated to the trust fund. Acts of terrorism at those other properties could exhaust coverage under the blanket policy. No representation is made as to the adequacy of any such insurance coverage prolided under a blanket policy, in light of the fact that multiple properties are covered by that policy. borrower is required to maintain insurance for terrorist or similar acts that was not maintained, the borrower may incur higher costs for insurance premiums in obtaining such coverage wihich would have an adverse effect on the net cash flow of the related mortgaged real property. Further, if the federal insurance back-stop program referred to above is not extended or renewed, premiums for terrorism insurance coverage will likely increase and/or the terms of such insurance may be materially amended to enlarge stated exclusions or to otherwise effectively decrease the scope of coverage available. In addition, in the event that any mortgaged real property securing an underlying mortgage loan sustains damage as a result of an uninsured terrorist or similar act, such damaged mortgaged real property may not generate adequate cash flow to pey, and/or adequate collateral to satisfy, all amounts owing under such mortgage loan, wihich could result in a default on that mortgage loan and, potentially, losses on some classes of the series 2007-C6 certificates. sec.gov/Archives/edgar/data/ . .Jfile1.htm 33/404 Edward A. Smith VENABLE LLP Rockefeller Center 1270 Avenue of the Americas, 25 th Floor New York, New York 10020 Telephone no. (212) 307-5500
-and-
Gregory A. Cross (pro hac vice pending) VENABLE LLP 750 E. Pratt Street, Suite 900 Baltimore, Maryland 21202 Telephone no. (410) 244-7400
Counsel for CWCapital Asset Management LLC
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------ BANK OF AMERICA, N.A., as Trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007-C30, acting by and through its Special Servicer, CWCapital Asset Management LLC, BANK OF AMERICA, N.A., as Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2, acting by and through CWCapital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12, 2007 and U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007-C31, ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC Commercial Mortgage Trust 2007-6, acting by and through CWCapital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12, 2007,
Plaintiffs,
-against-
PCV ST OWNER LP, ST OWNER LP, TRI- LINE CONTRACTING CORP., ATLAS FIRE PROTECTION, INC., POMALEE ELECTRIC x : : : : : : : : : : : : : : : : : : : : : : : : : : : :
10 Civ. 1178 (AKH) (ECF Case)
ORAL ARGUMENT REQUESTED Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 1 of 32 CO. INC., REFUSE SYSTEMS CORP., PRO TILE DISTRIBUTORS, INC., TRITON STONE AND MARBLE LLC, S.T.S. TRADING INC. d/b/a S.T. LUMBER & HOME CENTER, ELECTRICAL, PLUMBING, S.D. INTL INC. d/b/a S.D. STONE DEPOT, ELBEX AMERICA OF NEW YORK INC., NEW YORK CITY DEPARTMENT OF TRANSPORTATION PARKING VIOLATIONS BUREAU, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, and FIRE DEPARTMENT OF THE CITY OF NEW YORK,
CWCAPITAL ASSET MANAGEMENT LLCS MEMORANDUM IN OPPOSITION TO MOTION FOR LEAVE TO INTERVENE AS A PARTY-DEFENDANT FILED BY APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBREDFUND L.P., AND THOROUGHBRED MASTER LTD.
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 2 of 32 -i- BA2/387030 TABLE OF CONTENTS
PRELIMINARY STATEMENT .....................................................................................................1 BACKGROUND.............................................................................................................................4 A General Overview Of Parties To A Trust ..............................................................................4 The Loan And Trusts At Issue...................................................................................................4 The Property and the Default .....................................................................................................7 The Foreclosure Action..............................................................................................................7 ARGUMENT...................................................................................................................................8 I. Appaloosas Failure To Satisfy The PSAs No-Action Clause Bars Its Intervention .........8 II. Appaloosa Does Not Satisfy The Test To Intervene That Is Imposed By Rule 24 ...........11 A. Appaloosas Interests are Contingent, Collateral and Indirect .............................12 B. Appaloosas Interests will not be Impaired if Intervention is Denied ...................15 C. Appaloosas Interests are Adequately Represented by Parties Already in the Action.....................................................................................................................19 III. Appaloosa Has Not Complied With Rule 24(c)s Requirement To Plead Claims Or Defenses.............................................................................................................................23 CONCLUSION..............................................................................................................................24
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 3 of 32 -ii- BA2/387030 DECLARATION OF EDWARD A. SMITH dated March 12, 2010 (with attached exhibits): Exhibit 1 Excerpts of the Pooling and Servicing Agreement dated March 1, 2007 by and among Wachovia Commercial Mortgage Securities, Inc., as Depositor, Wachovia Bank, National Association, as Master Servicer, CWCAM, as Special Servicer, and Wells Fargo Bank, N.A., as Trustee (the PSA). ...................................................................................................... passim
Exhibit 2 Excerpts of the Pooling and Servicing Agreement dated May 1, 2007 by and among Wachovia Commercial Mortgage Securities, Inc., as Depositor, Wachovia Bank, National Association, as Master Servicer, LNR Partners, Inc., as Special Servicer, and Wells Fargo Bank, N.A., as Trustee. ............................................................................................................5, 6
Exhibit 3 Excerpts of the Pooling and Servicing Agreement dated April 1, 2007 by and among CWCapital Commercial Funding Corp., as Depositor, Wachovia Bank, National Association, as Master Servicer, CWCAM, as Special Servicer, and Wells Fargo Bank, N.A., as Trustee. ............................5, 6
Exhibit 4 Excerpts of the Pooling and Servicing Agreement dated April 1, 2007 by and among Merrill Lynch Mortgage Investors, Inc., as Depositor, Wachovia Bank, National Association, as Master Servicer, LNR Partners, Inc., as Special Servicer, and LaSalle Bank National Association, as Trustee. .......................................................................................5, 6
Exhibit 5 Excerpts of the Pooling and Servicing Agreement dated March 1, 2007 by and among Merrill Lynch Mortgage Investors, Inc., as Depositor, KeyCorp Real Estate Capital Markets, Inc., as Master Servicer No. 1, Wells Fargo Bank, National Association, as Master Servicer No. 2, WCAM, as Special Servicer, and LaSalle Bank National Association, as Trustee. ............................................................................................................5, 6
Exhibit 6 Amended and Restated Co-Lender Agreement dated March 12, 2007. ............6, 20
Exhibit 7 February 19, 2010 email exchange between counsel for CWCAM, Gregory A. Cross, Esq. and counsel for Appaloosa, Bruce Zirinsky, Esq..........................................................................................................................15
Exhibit 8 Order of the Honorable Lewis A. Kaplan in Teachers Insurance and Annuity Assoc. of America, et al. v. CRIIMI MAE Services Limited Pship., et al., 06 Civ. 0392 (LAK) dated September 7, 2007. ..............................22
Exhibit 9 Annex D to Prospectus Supplement for the 2007-C30 Trust dated March 14, 2007. .....................................................................................................17
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 4 of 32 -iii- BA2/387030 Exhibit 10 Letters dated November 6, 2009 from Wachovia Securities to CWCAM regarding the transfer of the Loan to special servicing. ..........................7
Exhibit 11 Letter dated August 20, 2007 identifying American Capital CRE Management LLC as a controlling class representative and the corresponding name of the CDO that owns the bonds. ...........................................6
Exhibit 12 Certifications from Appaloosa dated December 15, 2009 identifying its holdings in the Trusts (including interest only bonds identified by 92978QBZ9). .........................................................................................................21
Exhibit 13 February 2010 remittance report from the Trustee relating to the 2007- C30 Trust (Class S tranche has a CUSIP of 92978QBT31). .............................6, 20
Exhibit 14 February 2010 Security Position Report from the Depository Trust Company relating to CUSIP number 92978QBT31. .........................................6, 20
Exhibit 15 March 2010 screenshot identifying the owner of the Class S tranche in the 2007-C30 Trust. ...........................................................................................6, 20
Exhibit 16 Excerpts from Amended and Restated Loan and Security Agreement dated as of February 16, 2007 by and among PCV ST Owner LP and ST Owner LP and Wachovia Bank, National Association and Merrill Lynch Mortgage Lending, Inc. ..............................................................................17
Exhibit 17 Excerpts from Prospectus Supplement for 2007-C30 Trust dated March 14, 2007. ...................................................................................................2, 3
Exhibit 18 February 2010 remittance report from the Trustee relating to the Wachovia Bank Commercial Mortgage Trust 2007-C31. .......................................6
Exhibit 19 February 2010 Collateral Distribution Summary showing Class U tranche held by a CDO of LNR Securities Holdings, LLC. ....................................6
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 5 of 32 -iv- BA2/387030 TABLE OF AUTHORITIES
CASES PAGE
Am. Lung Assn v. Reilly, 141 F.R.D. 19 (E.D.N.Y. 1992) .........................................................13 Angevine v. City of Sesser, 39 F. Supp. 498 (E.D. Ill. 1941)........................................................15 Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co., No. 04 Civ. 10014 (PKL), 2005 WL 751914 (S.D.N.Y. Mar. 31, 2005) ..........................21, 22 Bachrach v. Gen. Inv. Corp., 29 F. Supp. 966 (S.D.N.Y. 1939) ...................................................10 Banyai v. Mazur, ---F. Supp. 2d---, 2009 WL 3754198 (S.D.N.Y. Nov. 5, 2009)........................11 Berry Estates, Inc. v. State of N.Y., 812 F.2d 67 (2d Cir. 1987)...................................................18 Block v. Mansfeld Mining & Smelting Co., 23 F. Supp. 700 (E.D.N.Y. 1938)..............................8 Bowling Green Trust Co. v. Virginia Passenger & Power Co., 132 F. 921 (E.D. Va. 1904)......................................................................................................22 Bridgeport Guardians, Inc. v. Delmonte, 256 F.R.D. 308 (D. Conn. 2009)............................11, 13 City of Bridgeport v. United States Dept of the Army, No. 3:09-CV-0532CSH, 2009 WL 3254475 (D. Conn. Oct. 6, 2009) ............................................................................23 Consol. Edison, Inc. v. Northeast Utils., No. 01 Civ. 1893(JGK), 2004 WL 35445 (S.D.N.Y. Jan. 7, 2004) ................................................................................19 Contl Cas. Co. v. State of N.Y. Mortgage Agency, No. 94 Civ. 84008(KMW), 1998 WL 513054 (S.D.N.Y. Aug. 18, 1998) ................................9 Cortec Indus., Inc. v. Sum Holding LP, 949 F.2d 42 (2d Cir. 1991)...............................................8 Creative Care, Inc. v. Perales, No. 89 C 1079, 1992 WL 100151, (E.D.N.Y. Mar. 6, 1992) ..........................................................................................................19 DSI Assocs. LLC v. United States, 496 F.3d 175 (2d Cir. 2007)..................................................13 Fed. Trade Commn v. First Capital Consumer Membership Servs., Inc., 206 F.R.D. 358 (W.D.N.Y. 2001)............................................................................................20 Friarton Estates Corp. v. City of N.Y., 65 B.R. 586 (S.D.N.Y. 1986) ..........................................18 Friedman v. Chesapeake & Ohio Ry. Co., 261 F. Supp. 728 (S.D.N.Y. 1966)...............................9 Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 6 of 32 -v- BA2/387030 Gaines v. N.Y. State Div. of Hous. & Cmty. Renewal, 90 N.Y.2d 545 (N.Y. 1997) .....................................................................................................18 Gibbs Wire & Steel Co., Inc v. Johnson, 255 F.R.D. 326 (D. Conn. 2009) ..................................12 Guaranty Trust Co. v. Chicago, M & St. P. Ry. Co., 15 F.2d 434 (N.D. Ill. 1926) ....................................................................................................22 H.L. Hayden of New York, Inc. v. Siemens Med. Sys., Inc., 797 F.2d 85 (2d Cir. 1986).......................................................................................................13 In re Bank of New York Derivative Litig., 320 F.3d 291 (2d Cir. 2003)......................................11 In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465 (S.D.N.Y. 1998) .....................11 In re Oceana Intl, 49 F.R.D. 329 (S.D.N.Y. 1969).......................................................................18 iXL Enter., Inc. v. GE Capital Corp., 167 Fed. Appx. 824 (2d Cir. 2006)....................................10 Jones v. Shell Oil Co., No. 3:05-CV-622-MJR, 2006 WL 83467 (S.D. Ill. Jan. 11, 2006)............................................................................................................23 Macatra B.V. v. Destiny Navigation, No. 08 Civ. 0711(LAP), 2010 WL 339774 (S.D.N.Y. Jan. 27, 2010) ............................................................................12 MasterCard Intl., Inc. v. Visa Intl Serv. Assn., Inc., 471 F. 3d 377 (2d Cir. 2006)..............................................................................................12, 15 McMahan & Co. v. Wherehouse Entmt, Inc., 65 F.3d 1044 (2d Cir. 1995) ..................................9 Metro W. Asset Mgmt., LLC v. Magnus Funding, Ltd., No. 03 Civ. 5539(NRB), 2004 WL 1444868 (S.D.N.Y. June 25, 2004)...................................9 Muscat v. Gray, 1 Misc. 3d 905(A), 2003 WL 23023768 (N.Y. Civ. Ct. Dec. 19, 2003) ..................................................................................................18 Palmer v. Bankers Trust Co., 12 F.2d 747 (8th Cir. 1926)...........................................................22 Parcel Serv. of Am., Inc. v. Net, Inc., 225 F.R.D. 416 (E.D.N.Y. 2005) ......................................15 Republic Natl Life Ins. Co. v. Beasley, 73 F.R.D. 658 (S.D.N.Y. 1977).....................................10 Restor-A-Dent Dental Labs., Inc. v. Certified Aloe Prods., Inc., 725 F. 2d. 871 (2d Cir. 1984)...................................................................................................13 Rossdeutcher v. Viacom, Inc., 768 A.2d 8 (Del. 2001)...................................................................9 Siam Commercial Bank Public Co. Ltd. v. Bel-Aire Knitworks, Inc., 2006 WL 1816327 (S.D.N.Y. June 28, 2006) ...................................................................14, 19 Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 7 of 32 -vi- BA2/387030 St. Charles Tower, Inc. v. County of Franklin, Mo., No. 4:09CV987-DJS, 2009 WL 3852462 (E.D. Mo. Nov. 17, 2009) .....................................23 Standard Fire Ins. Co. v. Donnelly, No. 1:08-CV-258, 2009 WL 1349948 (D. Vt. May 12, 2009)..............................................................................................................14 Teachers Ins. & Annuity Assn of Am. v. CRIIMI MAE Servs. Ltd. Pship, et al., ---F. Supp. 2d---, 2010 WL 395190 (S.D.N.Y. Feb. 3, 2010) ...................................................8 United States v. City of New York, 179 F.R.D. 373 (E.D.N.Y. 1998)..........................................13 United States v. Peoples Benefit Life Ins. Co., 271 F.3d 411 (2d Cir. 2001)..........................13, 14 United States v. Simpson Borough Place Corp., No. 01-CV-693 (DLI)(VVP), 2007 WL 2581888 (E.D.N.Y. Sept. 5, 2007) ..........................................................................13 Victor v. Riklis, No. 91 Civ. 2897 (LJF), 1992 WL 122911 (S.D.N.Y. May 15, 1992)..........................................................................................................9 Wakeen v. Hoffman House, Inc., 724 F.2d 1238 (7th Cir. 1984)....................................................9 Wash. Elec. Co-op., Inc. v. Mass. Mun. Wholesale Elec., 922 F.2d 92 (2nd Cir.1990) ...12, 13, 14 Zane v. Howdy, No. 313887, 1996 WL 289158 (Conn. Super. Ct. May 14, 1996)......................11
RULES
Fed. R. Civ. P. 19(a) ......................................................................................................................12 Fed. R. Civ. P. 24(a) .............................................................................................................. passim Fed. R. Civ. P. 24(c) ................................................................................................................23, 24
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 8 of 32
On behalf of the Trustees for the Trusts identified in the case-caption above, CWCapital Asset Management LLC (CWCAM), solely in its capacity as Special Servicer, submits this Memorandum in Opposition to the Motion for Leave to Intervene as a Party-Defendant (the Motion) filed by Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbredfund L.P., and Thoroughbred Master Ltd. (collectively, Appaloosa). 1
PRELIMINARY STATEMENT There is nothing special or extraordinary about Appaloosas position vis--vis the Trusts and the properties at issue in this foreclosure proceeding. Appaloosa is just another investor. Appaloosa has not made a $750 million investment in a Trust singularly secured by Stuyvesant Town and Peter Cooper Village, as it suggests. Rather, it owns approximately 3% of the certificates (many acquired for cents on the dollar after the Stuyvesant Town loans went into default) among five trusts with aggregate certificate investments of $22.6 billion that are partially secured by mortgages on Stuyvesant Town and Peter Cooper Village as well as more than a thousand other loans. This Motion is Appaloosas attempt to unilaterally circumvent the Trusts administrative structure and the wishes of the other 97% of investors who, in the governing trust documents, vested in CWCAM as the Special Servicer sole responsibility for administering defaulted mortgage loans. 2
Although Appaloosa concedes that its rights as a certificateholder are governed by the terms of the 2007-C30 Pooling and Servicing Agreement (the PSA), it omits entirely from its brief and proposed complaint any discussion of the prerequisites that agreement imposes on
1 Appaloosa repeatedly refers to CWCAM as the Plaintiff in the foreclosure action. Appaloosa is mistaken. The Plaintiffs are the Trustees for the Trusts, and CWCAM, solely in its capacity as Special Servicer, filed the foreclosure action on their behalf. 2 CWCAM acts subject to the advice and consent of the controlling class representatives of the 2007 C-30 Trust after consulting with the controlling class representatives for each of the other four trusts. In this case, those representatives are CWCapital Investments LLC, LNR Securities Holdings, LLC, and American Capital CRE Management LLC. See Ex. 2 at 3.25(a), Ex. 11. The Exhibit numbers identified in this memorandum refer to the Exhibits enumerated in and appended to the accompanying Declaration of Edward A. Smith dated March 12, 2010. Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 9 of 32 -2- BA2/387030 investors before they can take action outside of the Trust. The PSA explicitly prohibits investors, like Appaloosa, from filing any action unless they first have the support of 25% of all other classes of certificateholders and have given advance written notice that a default has occurred under the PSA with an opportunity to respond to the Trustee. Appaloosa has not complied with these requirements which serve as an absolute bar to this Motion. Appaloosa is not the first self-interested investor who has sought intervention when it had no standing. In each instance, the courts of the Second Circuit have denied the attempt recognizing that the investor is not necessary to the foreclosure and that its actions should be pursued, if at all, in a subsequent, separate proceeding. These courts have cautioned that permitting one off investor intervention would open the flood gates of litigation. These limits on one off certificateholder action are not a surprise to Appaloosa. In addition to the PSA, the Prospectus Supplement for Appaloosas investment made this clear: You and other certificateholders generally do not have a right to vote and do not have the right to make decisions with respect to the administration of the trust fund . Those decisions are generally made by the special servicer . Any decision made by [the special servicer] in respect of the trust fund, even if that decision is determined to be in your best interests by that party, may be contrary to the decision that you or other certificateholders would have made and may negatively affect your interests.
(Ex. 17 at S - 56). Appaloosa justifies its request to intervene through frivolous and conclusory assertions of fact that are unsubstantiated and misleading. By way of illustration, Appaloosa repeatedly asserts that CWCAM is conflicted because it (or an affiliate) allegedly owns certificates and is therefore incapable of acting on behalf of the Certificateholders in this action. Whether CWCAM has any legal relationship or affiliation with an entity that owns certificates in the 2007-C30 Trust is irrelevant in determining which course of action will serve to maximize recovery to all of the Certificateholders. Nevertheless, the conflict Appaloosa attempts to Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 10 of 32 -3- BA2/387030 exploit exists throughout securitized real estate finance. The instant PSA, like every securitized commercial loan mortgage pooling and servicing agreement, vests with the most subordinate certificateholder (e.g., the first loss piece) the right to appoint the special servicer and consent rights with respect to actions taken as to the collateral that secures the Trusts cash flows. As a consequence, it is much more the norm rather than the exception that there is some relationship between the owner of the first loss piece and the special servicer. This relationship is well known to every sophisticated investor including Appaloosa. It too is discussed in both the PSA and the offering materials that were given to Appaloosa. 3 More importantly for purposes of this Motion, assuming arguendo that CWCAM ignored its broader duties to maximum recovery for all Certificateholders (something it is not doing) and focused solely on the affect of its decision on the first loss piece, its interests and Appaloosas interests would be aligned. In order for Appaloosa to experience a loss resulting from CWCAMs decisions, the most subordinate certificateholder (e.g., the alleged CWCAM affiliate) would have had to experience a loss first. There is nothing unique about foreclosing on a defaulted mortgage loan. In fact, the PSA requires prompt realization against defaulted collateral. Appaloosas Motion, on the other hand, requests a unique ruling that threatens the underpinnings of commercial real estate finance by disregarding agreed upon administrative structures and limitations on action while simultaneously opening the courts to a free for all competition among investors seeking one off
3 The Prospectus Supplement provided: The special servicer will be involved in determining whether to foreclose a defaulted mortgage loan. An affiliate of the special servicer may purchase certain other non-offered certificates. The circumstances described above could cause a conflict between the special servicers duties to the trust fund under the pooling and servicing agreement and its interest as a holder of a certificate. However, the pooling and servicing agreement provides that the mortgage loans shall be administered in accordance with the servicing standard without regard to ownership of any certificate by the special servicer or any affiliate of the special servicer. (Ex. 17 at S - 59).
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 11 of 32 -4- BA2/387030 tactical advantages for their self interested economic gain. Appaloosas Motion should be denied. BACKGROUND 4
A General Overview Of Parties To A Trust The trusts referred to herein are pools of commercial mortgage loans that are classified as real estate mortgage investment conduits (REMICs) for federal income tax purposes. A trust houses the commercial mortgage loans and is the record owner of the loans. The trustee deals primarily with the obligations of the trust vis--vis the certificateholders and serves as the custodian of the mortgage documents. The trust issues and delivers certificates with varying risks, which evidence a beneficial ownership interest in the trust. Different investors with varying risk appetites purchase certificates rated from AAA/Aaa to B/B to unrated certificates. The master servicer is responsible for servicing all loans owned by the trust. It manages the flow of payments and information and is responsible for the ongoing interactions with the borrower. Upon the occurrence of certain specified events, including but not limited to monetary default and imminent default, the administration of the loan is transferred from the master servicer to the special servicer. The special servicer is responsible for servicing and administering the loan in accordance with the Servicing Standard. The duties, powers, and limitations of the parties to a trust (i.e., the trustee, investors, master servicer and special servicer) are outlined in a pooling and servicing agreement. The Loan And Trusts At Issue On or about February 16, 2007, Defendants PCV ST Owner LP and ST Owner (the Defendant Borrowers), as joint and several obligors, duly executed and delivered six promissory notes (collectively, the Notes) made payable to Wachovia Bank, National
4 The purpose of this section is merely to provide some contextual information for the Court. Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 12 of 32 -5- BA2/387030 Association (Wachovia) and Merrill Lynch Mortgage Lending, Inc. (Merrill Lynch). (Dkt. No. 6, Amend. Compl. at 23). The Notes evidenced an indebtedness in the collective amount of $3 billion, plus interest at a specified rate (the Loan). Id. On that same day, the Defendant Borrowers, for the purpose of securing payment for the Loan, duly executed and delivered to Wachovia and Merrill Lynch a mortgage (the Mortgage) that granted a security interest in the Property (defined infra). Id. at 24. As further security for the Loan, the Defendant Borrowers entered into an assignment whereby the leases, rents and security deposits relating to the Property were assigned to Wachovia and Merrill Lynch (the Assignment). Id. at 27. Thereafter, Wachovia and Merrill Lynch assigned each of its right, title and interest in the Notes to five trusts, namely: (1) Wachovia Bank Commercial Mortgage Trust 2007-C30 (the 2007-C30 Trust); (2) COBALT CMBS Commercial Mortgage Trust 2007-C2; (3) Wachovia Bank Commercial Mortgage Trust 2007-C31; (4) ML-CFC Commercial Mortgage Trust 2007-5; and (5) ML-CFC Commercial Mortgage Trust 2007-6 (these four other trusts shall be referred to herein as the Other Trusts, and the Other Trusts with the 2007-C30 Trust shall be referred to herein as the Trusts). Id. at 29-33. Each of the Trusts issued various Classes of Certificates representing beneficial ownership interests in them. The aggregate principal amount of the Certificates issued by the Trusts is $22.6 billion, and the Trusts share in the proceeds from the Notes and Mortgage on a pari passu basis. (Exs. 1-5). Appaloosa asserts that it has purchased Certificates with a face amount of $750 million within the $22.6 billion pool, (App. Mem. at 2), 5 which represents approximately 3.3% of the principal balance of the Certificates. Appaloosa does not disclose what it paid for those
5 The citations to page numbers in Appaloosas memorandum refer to the pages as they appear in the Supplemental Memorandum filed by Appaloosa, which can be found at Docket No. 19. Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 13 of 32 -6- BA2/387030 Certificates, many of which, upon information and belief, were purchased at a steep discount after the Loan was transferred to special servicing. The controlling certificates are owned variously by Cobalt Vr., a CDO of American Capital CRE Management LLC, and a CDO of LNR Securities Holdings, LLC. See Exs. 13-15; Ex. 11; Exs. 18-19. CWCAM is the Special Servicer for the 2007-C30 Trust under that certain Pooling and Servicing Agreement dated March 1, 2007 by and among Wachovia Commercial Mortgage Securities, Inc., as Depositor, Wachovia, as Master Servicer, CWCAM, as Special Servicer, and Wells Fargo Bank, N.A., as Trustee (the PSA). (Ex. 1). Additionally, pursuant to Section 2(f) of that certain Amended and Restated Co-Lender Agreement dated March 12, 2007 (the Co- Lender Agreement), CWCAM has the right to administer, service and make all decisions and determinations regarding the Loan, and to enforce the Mortgage, Notes and all other documents and/or agreements evidencing the Loan (referred to as the Loan Documents). (Ex. 6). According to the Co-Lender Agreement, the governing PSA for purposes of CWCAMs administration and servicing of the Loan is the PSA for the 2007-C30 Trust. Id. at 2(a), (b), (c) and at page 3. 6
The PSA sets forth the duties, powers and limitations of the parties to the Trusts, and governs the distributions for payment to the Certificateholders. 7 In addition to the no action clause embedded in Section 11.03(c), discussed infra, that section also makes clear that a Certificateholder has no right to seek or obtain priority over any other Certificateholder or to enforce any right in the PSA except for the equal, ratable and common benefit of all
6 The Co-Lender Agreement explicitly cross-references the PSA. The term Pooling Agreement is defined at the top of page 3 of the Co-Lender Agreement as the pooling and servicing agreement into which Note A-1 is to be transferred and assigned. Note A-1 is the note described in paragraph 23 of the Amended Complaint that was transferred and assigned to the 2007-C30 Trust. Sections 2(a), (b) and (c) of the Co-Lender Agreement indicate that the Loan should be administered consistent with the terms of the PSA for the 2007-C30 Trust. 7 The PSA for the 2007-C30 Trust is materially consistent with the pooling and servicing agreements for the Other Trusts. (Exhibits 2-5 are copies of pertinent sections from the pooling and servicing agreements for the Other Trusts.) Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 14 of 32 -7- BA2/387030 Certificateholders. See Ex. 1 at 11.03(c). Section 11.03(b) further provides that no Certificateholder has any right to control the operation and management of the Trusts funds, or the obligations of the parties thereto. Id. at 11.03(b). The Property and the Default The Property that secures the Loan consists of Stuyvesant Town and Peter Cooper Village. It is more particularly described in Exhibit A attached to the Amended Complaint in this action. See Dkt. No. 6. On or about November 6, 2009, the Loan was transferred to special servicing because of an imminent default. (Ex. 10). On January 8, 2010, the Loan went into default when the Defendant Borrowers were unable to pay the monthly installments required under the Notes. (Dkt. No. 6 at 39.). The Plaintiffs notified the Defendant Borrowers in writing of the default by letter dated January 8, 2010, and demanded that the Defendant Borrowers make payment for all unpaid amounts then due and owing. (Id. 41). Thereafter, on January 29, 2010, Plaintiffs further notified the Defendant Borrowers that the unpaid debt outstanding under the Notes was accelerated, immediately due and payable. Id. The Defendant Borrowers have indicated a desire to surrender the Property to the Trusts. See Dkt. No. 14 at 4. The Foreclosure Action Pursuant to the PSA, CWCAM is obligated to foreclose on the Property and realize on the defaulted Mortgage. See Ex. 1 at 3.09(a). On February 18, 2010, CWCAM filed an Amended Complaint, seeking foreclosure of the Property. (Dkt. No. 6). The Amended Complaint contains a single count of foreclosure. On February 23, 2010, the Defendant Borrowers filed their Answer in which they stated that they do not have any objection to the relief requested in the Amended Complaint. (Dkt. No. 14 at 4). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 15 of 32 -8- BA2/387030 ARGUMENT I. Appaloosas Failure To Satisfy The PSAs No-Action Clause Bars Its Intervention
The no-action clause in the PSA that governs Appaloosas right to intervene in this foreclosure action bars its intervention. 8 Section 11.03 of the PSA entitled, Limitation on Rights of Certificateholders, provides in pertinent part: No Certificateholder shall have any right by virtue of any provision of this Agreement to institute any suit, action or proceeding in equity or law upon or under or with respect to this Agreement or any Mortgage Loan, unless, . . . such Holder previously shall have given to the Trustee a written notice of default hereunder, . . . and unless also (except in the case of a default by the Trustee) the Holders of Certificates entitled to at least 25% of the Voting Rights shall have made written request upon the Trustee to institute such action, suit or proceeding . . . and the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding. . . no one or more Holders of Certificates shall have any right in any manner whatsoever by virtue of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, . . . .
Ex. 1 at 11.03(c). 9 Appaloosa has not and cannot satisfy these requirements. Appaloosa does not represent 25 percent of the Voting Rights of the Trusts, does not have the support of 25 percent of the Voting Rights of the Trusts, and has not made written demand on the Trustee asserting that a default has occurred under the PSA. Appaloosas failure to satisfy these requirements is an absolute bar to its request to intervene.
8 Appaloosa concedes its rights are governed by the PSA. See Dkt. No. 16, Prop. Compl. 19. And, it incorporates the PSA in its proposed complaint by repeatedly referring to it. See Cortec Indus., Inc. v. Sum Holding LP, 949 F.2d 42, 47 (2d Cir. 1991) (explaining that an intervenors proposed complaint is deemed to include any statements or documents incorporated in it by reference). Yet, Appaloosa selectively decides not to attach it. 9 Section 11.03 of the PSA is indisputably a no-action clause. The United District Court for the Southern District of New York recently held that a nearly identical provision in a pooling and servicing agreement constituted a no- action clause that needed to be satisfied before a certificateholder could initiate litigation in connection with that agreement. See Teachers Ins. & Annuity Assn of Am. v. CRIIMI MAE Servs. Ltd. Pship, et al., --- F. Supp. 2d -- --, 2010 WL 395190, at *4 (S.D.N.Y. Feb. 3, 2010) (Kaplan, J.). See also Block v. Mansfeld Mining & Smelting Co., 23 F. Supp. 700, 704-05 (E.D.N.Y. 1938) (holding that, because bondholder did not show that she represented 15% of bondholders, had not provided notice to trustee of default, had not requested that action be brought by trustee, and had not offered to indemnify trustee, she was not allowed to proceed with suit because she did not satisfy the conditions precedent in the indenture agreement and to allow her to proceed with the suit would create preference over the other bondholders). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 16 of 32 -9- BA2/387030 The Courts in this District have repeatedly recognized the importance of enforcing no- action clauses particularly in a Trust structure like this one: If in a mortgage securing thousands of bonds every holder of a bond or bonds were free to sue at will for himself and for others similarly situated, the resulting harassment and litigation would not only be burdensome but intolerable. Friedman v. Chesapeake & Ohio Ry. Co., 261 F. Supp. 728, 731 n.7 (S.D.N.Y. 1966) affd 395 F.2d 663 (2d Cir. 1968) (emphasis added); Rossdeutcher v. Viacom, Inc., 768 A.2d 8, 22 (Del. 2001) (applying New York law in stating that no-action clauses protect against the exercise of poor judgment by a single bondholder or a small group of bondholders, who might otherwise bring a suit against the issuer that most bondholders would consider not to be in their collective interest.). Therefore, would-be parties like the Appaloosa Entities are barred unless and until they have shown they have satisfied the no-action clause. See McMahan & Co. v. Wherehouse Entmt, Inc., 65 F.3d 1044, 1051 (2d Cir. 1995) (In this case, plaintiffs failed to comply with the no-action clause, and, as a result, the district court ruled that their state-law claims were barred.) (emphasis added); Victor v. Riklis, No. 91 Civ. 2897 (LJF), 1992 WL 122911, at *6 (S.D.N.Y. May 15, 1992) (dismissing claims because [u]ntil [plaintiff] can demonstrate compliance with the no-action provision of the . . indentures, he is precluded from pursuing his . . . claims.). 10
Courts have routinely rejected attempts, like the one by Appaloosa here, to evade conditions precedent through motions to intervene. In Wakeen v. Hoffman House, Inc., 724 F.2d 1238 (7th Cir. 1984), for example, the Seventh Circuit affirmed the denial of a motion to intervene by a would-be party for failing to satisfy a condition precedent. There, the would-be
10 Accord Metro W. Asset Mgmt., LLC v. Magnus Funding, Ltd., No. 03 Civ. 5539(NRB), 2004 WL 1444868, at **5 (S.D.N.Y. June 25, 2004) (It is well established that no action clauses bar claims by individual bondholders who fail to comply with the conditions precedent recited therein); Contl Cas. Co. v. State of N.Y. Mortgage Agency, No. 94 Civ. 84008(KMW), 1998 WL 513054, at *2 (S.D.N.Y. Aug. 18, 1998) (stating that no action clause in indenture constituted conditions to commencement of a suit by a bondholder). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 17 of 32 -10- BA2/387030 party filed a motion to intervene in a class action case pursuant to Rule 24(b). See Wakeen, 724 F.2d at 1245. However, the would-be intervenor had failed to file a written charge which was a condition precedent to seeking judicial relief. Id. at 1245. In affirming the district courts denial of the motion to intervene, the Court of Appeals held that a would-be party may not use the guise of a motion to intervene to enter the case when it does not meet the procedural requirements to bring suit. Id. at 1246 (emphasis added). As the Court explained, [t]o hold otherwise would make a mockery of the concept of a right to sue and of the procedures by which one obtains the right. Id. (emphasis added). 11
In Republic Natl Life Ins. Co. v. Beasley, 73 F.R.D. 658 (S.D.N.Y. 1977), the would-be plaintiffs sought to intervene in an existing shareholder derivative action and settlement based on allegedly improper investments by the corporation and resulting settlement. 73 F.R.D. at 671. However, the would-be plaintiffs had failed to make a prior demand upon the board of directors of the corporation as a required predicate to bringing a shareholder derivative action on behalf of the corporation. Id. The district court therefore held that they could not intervene or be added as party plaintiffs because they failed to satisfy a necessary predicate to filing an action. Id. In Bachrach v. Gen. Inv. Corp., 29 F. Supp. 966 (S.D.N.Y. 1939), the would-be parties had applied to intervene pursuant to Rule 24(a) in a shareholder derivative action to seek an accounting for alleged dissipation of corporate assets. 29 F. Supp. at 967. However, the applicants had failed to make a prior demand on the directors and officers of the corporation as a condition precedent. Id. at 867. The district court denied their application to intervene as a matter of law, in part because it agreed that a demand [is] necessary prior to intervention with
11 See also iXL Enter., Inc. v. GE Capital Corp., 167 Fed. Appx. 824, 827 (2d Cir. 2006) (affirming the denial of a motion to intervene because the would-be party had failed to first obtain necessary permission from a bankruptcy court). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 18 of 32 -11- BA2/387030 the same force as if the intervention was an independent suit . . . . Id. at 968 (emphasis added). 12
Here, Appaloosa has not satisfied the necessary conditions precedent that it concedes govern its ability to even be considered for intervention: namely, that it procure the consent of 25% of each class of certificateholders of the Trusts, make prior demand to the Trustee on behalf of this group of certificateholders, and allow the Trustee the requisite period to consider their complaint. Having failed to do so, Appaloosa cannot proceed with its Motion. II. Appaloosa Does Not Satisfy The Test To Intervene That Is Imposed By Rule 24 Even if Appaloosa had complied with the PSAs no action clause, its Motion should be denied because it does not satisfy the prerequisites for intervention as of right under Federal Rule of Civil Procedure 24(a)(2). A putative intervenor bears the burden of proving its right to intervene. In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 490 (S.D.N.Y. 1998) (emphasis added); see also Bridgeport Guardians, Inc. v. Delmonte, 256 F.R.D. 308, 320 (D. Conn. 2009) (stating the Movants have not met their burden under Rule 24(a)(2)). The four prong test requires a showing that: (1) the motion is timely; (2) the applicant asserts an interest relating to the property or transaction that is the subject of the action; (3) the applicant is so situated that without intervention, disposition of the action may, as a practical matter, impair or impede the applicants ability to protect its interest; and (4) the applicants interest is not adequately represented by other parties.
Banyai v. Mazur, --- F. Supp. 2d ---, 2009 WL 3754198, at *3 (S.D.N.Y. Nov. 5, 2009) (internal quotation omitted). Appaloosa is wrong when it asserts that satisfying these four prongs is merely discretionary. (App. Mem. at 7). Failure to satisfy any one of these requirements defeats its Motion. See In re Bank of New York Derivative Litig., 320 F.3d 291, 300 (2d Cir.
12 See also Zane v. Howdy, No. 313887, 1996 WL 289158, at *2 (Conn. Super. Ct. May 14, 1996) (denying motion to intervene to governmental entity where the entity had failed to show, as a condition precedent to suit, that it had received the necessary prior notice under state law). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 19 of 32 -12- BA2/387030 2003); accord Macatra B.V. v. Destiny Navigation, No. 08 Civ. 0711(LAP), 2010 WL 339774, at *2 (S.D.N.Y. Jan. 27, 2010). Appaloosa may not side-step any of the four prongs and has not satisfied prongs (2), (3) or (4). A. Appaloosas Interests are Contingent, Collateral and Indirect
Appaloosa is not affected by the foreclosure itself. It has no direct interest in the Property or the Mortgage; rather, its interests lie in the Certificates that it owns. In an attempt to distract the Court from these indisputable facts, Appaloosa conjures up future, contingent interests that simply do not concern the legal claims in this foreclosure action. For example, Appaloosa speculates about future collateral issues and double contingencies such as: (1) if the foreclosure takes place then, at a subsequent time, it is possible that: (2) future voting and fulcrum security rights may be affected (Prop. Compl. 20, 21); (3) double taxes may have to be paid when the Property is sold in the inevitable necessary workout (id. 20); (4) uncertain excess rent claims that may later be converted into a damage judgment (id.); (5) CWCAM may obtain a priming lien based on the speculative double taxes that may have to be paid (id.); and (6) if the assumed priming lien is obtained it may affect voting rights (id.). These contingent allegations are insufficient to sustain a motion to intervene. 13
Indeed, even the case law that Appaloosa relies upon establishes this point. In affirming the denial of the motion to intervene, the Second Circuit in Wash. Elec. Co-op., Inc. v. Mass. Mun. Wholesale Elec., 922 F.2d 92 (2nd Cir.1990), held that the putative intervenor failed to show it had a direct, substantial and legally protectable interest in the existing action. Wash.
13 The Defendant Borrowers who own the Property and are subject to the Mortgage have already consented to foreclosure. Appaloosas alleged interests in the foreclosure are so plainly indirect that it would not be considered a necessary party under Rule 19(a). Because it is not a necessary party, Appaloosa cannot satisfy the test for intervention as of right under Rule 24(a)(2). See MasterCard Intl., Inc. v. Visa Intl Serv. Assn., Inc., 471 F. 3d 377, 387 (2d Cir. 2006). See also Gibbs Wire & Steel Co., Inc v. Johnson, 255 F.R.D. 326, 329 (D. Conn. 2009) (citing MasterCard Intl. and denying motion to intervene because non-party shareholders could not meet the requirements of necessary parties under Rule 19(a)(1)(B) in existing action for breach of contract for failing to sell stock pursuant to right of first refusal). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 20 of 32 -13- BA2/387030 Elec., 922 F.2d at 97. The Circuit found that an interest that is contingent upon the occurrence of a sequence of events before it becomes colorable, will not satisfy the rule and that since the putative intervenors interest was based on a double contingency the interest was not sufficiently direct or substantial. 922 F.2d at 97 (emphasis added). 14 See also United States v. Peoples Benefit Life Ins. Co., 271 F.3d 411, 415 (2d Cir. 2001) (affirming denial of motion to intervene because applicants interest were indirect and contingent, and therefore not cognizable). Courts in other cases not cited by Appaloosa have also regularly denied intervention when the claimed interest was premised on the occurrences of a sequence of events. See, e.g., United States v. Simpson Borough Place Corp., No. 01-CV-693 (DLI)(VVP), 2007 WL 2581888, at *4 (E.D.N.Y. Sept. 5, 2007) (denying motion to intervene to reopen foreclosure action where interest was dependent on separate court findings regarding its entitlement to funds); United States v. City of New York, 179 F.R.D. 373 , 379 (E.D.N.Y. 1998) (denying motion to intervene to municipalities even though they certainly may have interests with respect to the subject of the dispute because their interests depended on a sequence of future proceedings in which their interests will be directly engaged); Am. Lung Assn v. Reilly, 141 F.R.D. 19, 21-22 (E.D.N.Y. 1992) (denying motion to intervene to utility companies in suit against EPA where their interests were based upon a double contingency of events). 15
Intervention must also be denied because Appaloosa is trying to inject a wide range of collateral issues into an uncomplicated foreclosure action. See Wash. Elec., 922 F.2d at 96 (holding that [i]ntervention cannot be used as a means to inject collateral issues into an existing
14 Citing H.L. Hayden of New York, Inc. v. Siemens Med. Sys., Inc., 797 F.2d 85, 88 (2d Cir. 1986); Restor-A- Dent Dental Labs., Inc. v. Certified Aloe Prods., Inc., 725 F. 2d. 871, 874 (2d Cir. 1984)). 15 Appaloosas alleged contingent future harms also do not satisfy the injury in fact requirement of Article III standing. See DSI Assocs. LLC v. United States, 496 F.3d 175, 185 (2d Cir. 2007) (refusing to permit intervention as of right under Rule 24(a) because petitioner did not establish standing under the law); Bridgeport Guardians, Inc. , 256 F.R.D. at 320 (holding that movants must have constitutional standing in order to intervene) (citation omitted). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 21 of 32 -14- BA2/387030 action). The action brought by CWCAM is a real estate foreclosure. The Defendant Borrowers have filed their Answer and have consented to the foreclosure. Appaloosa seeks to inject into this action vague allegations of purported wrongdoing and future harms that have nothing to do with the underlying foreclosure or the Defendant Borrowers. Appaloosa has not explained why it could not later bring a separate action for monetary damages if its allegations actually ripen into claims. See Siam Commercial Bank Public Co. Ltd. v. Bel-Aire Knitworks, Inc., 2006 WL 1816327, at *2 (S.D.N.Y. June 28, 2006) (Hellerstein, J.) (denying a motion to intervene in an attachment proceeding over a mortgaged property, because the putative intervenor could bring a separate action, and intervention would complicate this already unduly complicated set of lawsuits, and prejudice [plaintiff]). Even if the Court could resolve these collateral issues in this action, judicial economy should not come at the expense of rendering the single lawsuit more complex and protracted. Wash. Elec., 922 F.2d at 97 (citation and quotation omitted) (emphasis added). This is particularly true here where Appaloosa seeks to introduce collateral claims against CWCAM. See Standard Fire Ins. Co. v. Donnelly, No. 1:08-CV-258, 2009 WL 1349948, at *4 (D. Vt. May 12, 2009) (Intervention is not appropriate where the intervenor does not raise a defense to the plaintiffs claim but rather seeks intervention to assert a claim against the plaintiff.). The Second Circuit has warned against unleashing a flood of collateral litigation into otherwise straightforward actions like this one, and admonished courts to not allow Rule 24 to be used by opportunistic investors like Appaloosa to meddle in otherwise straightforward collection actions. See Peoples Benefit Life Ins. Co., 271 F.3d at 417 (affirming denial of intervention to creditor seeking to circumvent the state receivership proceedings and potentially gain an advantage over other creditors because it could open the door for other creditors and thereby Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 22 of 32 -15- BA2/387030 undermine state receivership laws). See also Angevine v. City of Sesser, 39 F. Supp. 498, 502 (E.D. Ill. 1941) (Finally I conclude that the intervening petitioners [individual bondholders] are without right to intervene to object to the decree of foreclosure or to the order of sale.). B. Appaloosas Interests will not be Impaired if Intervention is Denied
Appaloosa simply cannot show it is so situated that without intervention, disposition of the action may, as a practical matter, impair or impede the applicants ability to protect its interest . . . . MasterCard Intl., 471 F.3d at 389. Although Appaloosa seeks to establish irreparable injury, none of its allegations show actual irreparable injury resulting from this foreclosure action. And, in fact, Appaloosas vague allegations of future harms are simply conclusory and in many cases frivolous statements unsupported by any facts. 16 See United Parcel Serv. of Am., Inc. v. Net, Inc., 225 F.R.D. 416, 421 (E.D.N.Y. 2005) (noting that that well-pleaded allegations in support of a motion to intervene are generally accepted as true applies only to non-conclusory allegations . . . and [a]llegations that are frivolous on their face need not be considered by the court). Appaloosa first contends that CWCAM has not obtained an environmental assessment certifying that the Property is in compliance with applicable environmental laws and regulations. (App. Mem. at 2). Appaloosa is wrong. 17 CWCAM has obtained such an assessment and provided a copy to Appaloosa. Curiously, Appaloosa had the right to request a copy of the environmental site assessment at any time, see Ex. 1 at 3.15, but made no request for this information until after making the false assertion in its Motion that no Phase I report exists.
16 An example of Appaloosas penchant for stretching the truth is its assertion that, when it attempted to open substantive discussions regarding the problems associated with pursuing foreclosure with CWCAM, CWCAMs counsel responded by offering to write a letter for the Hall of Fame. (App. Mem. at 3). In fact, the email was not intended for Appaloosa a fact which was explained in an email exchange with Appaloosas counsel within minutes of the misdirected email being sent. A complete copy of the email exchange is attached. See Ex. 7. 17 The PSA, in fact, requires that a Phase I site assessment be completed, and if it reveals a problem a determination could be made that proceeding with foreclosure despite the revealed problem maximizes the recovery to the Certificateholders. See Ex. 1 at 3.09(c). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 23 of 32 -16- BA2/387030 Appaloosa next suggests that it be allowed to intervene because a foreclosure judgment could result in the Trusts paying transfer taxes both at foreclosure and subsequent resale to a third party purchaser. (App. Mem. at 2, 12-13). In the course of its duties, CWCAM always looks to minimize tax liability, but if this Court were to accept Appaloosas justification as a sufficient ground to permit intervention, it would have to do so in any foreclosure action where there is a possibility that a Trustee could credit bid on behalf of the lender. Foreclosure and subsequent resale is the norm rather than the exception when dealing with defaulted mortgage loans. Appaloosas supposition is, nevertheless, speculative. There is simply no way of knowing in advance of a foreclosure sale if a third party purchaser will buy the Property through the auction process, thereby alleviating the Trusts of any potential obligation to pay transfer taxes twice. In the event there is no such purchaser, transfer taxes are a fact of life and required by each jurisdiction where a property is located. This Property is no different, just more valuable than others. 18
Of greater importance to the 97% of Certificateholders who have not joined Appaloosa in this action is that Appaloosas request to delay and avoid foreclosure is contrary to the express mandate of the PSA which explicitly requires CWCAM to promptly realize on collateral when a default occurs. See Ex. 1 at 3.09. This requirement is not conditioned on avoiding the transfer taxes that are inevitably incidental to any sale. Appaloosas third justification for intervention is premised upon an assertion that CWCAM may obtain a priming lien due to the possible payment of double transfer taxes. (App. Mem. at 2, 13). The Master Servicer, Wachovia, not CWCAM, is charged with advancing all costs and expenses incurred by the lender relative to the Loan. See Ex. 1 at 3.03(c). The Trust,
18 Appaloosa asserts that transfer taxes might be avoided in a bankruptcy. First, the debtor needs to file bankruptcy, and a representative of the Defendant Borrowers has publicly stated that voluntary bankruptcy is not an option. Second, one may not file bankruptcy for the singular purpose of avoiding a transfer tax. Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 24 of 32 -17- BA2/387030 however, is obligated to make advances for customary and reasonable property expenses at any time the Special Servicer determines that additional funds are necessary to protect the ongoing operations of the Property, regardless of whether a foreclosure has occurred. Id. A foreclosure sale has no effect on the obligations to make advances. In this case, the Defendant Borrowers have no assets other than the Property and its respective cash flows. (Ex. 16 at 2.02(g)). The Property has never had sufficient cash flow to both service the debt and pay property related expenses. The Loan was originated with a $400 million interest reserve that ran out in December 2009. (Ex. 9 at D-4, D-8). The Trust has been drawing on reserve balances and escrow accounts to meet certain of the debt service payments, and has been advancing funds for other Property related expenses since January 2010. Appaloosa next misrepresents the effect of foreclosure on its future voting rights. (App. Mem. at 2). The amount of voting rights allocated to a class of certificates changes as the aggregate principal balance of the certificates included in that class changes. See Ex. 1 at 1.01, definition of Voting Rights. While the aggregate principal balance can change for several reasons such as when principal distributions are made to a particular class or when a realized loss from the final disposition of a mortgage loan is allocated to a particular class, the act of foreclosing on property securing a mortgage loan does not change the principal balance of any of the certificate classes and does not change any of the voting rights allocated to those classes. See Ex. 1 at 1.01, definition of Class Principal Balance. Instead, only after the ultimate disposition of the foreclosed upon property occurs and the special servicer finally determines that all recoverable amounts have been recouped with respect to the property can the calculation of any Realized Loss be made by the trust, (Ex. 1 at 1.01, definition of Realized Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 25 of 32 -18- BA2/387030 Loss), and only this determination will confirm whether any of the class principal balances will be changed and the associated voting rights effected. Finally, Appaloosa justifies its intervention on the erroneous legal assertion that a bankruptcy filed by an entity other than the Trusts could decrease excess rent claims owing to some property tenants. (App. Mem. at 2, 14-15). Obviously, the Trusts have no control over whether the Defendant Borrowers file a bankruptcy petition and therefore any consideration of Appaloosas argument is a red-herring. Appaloosa is also mistaken in any event. Under New York law, a tenant may recover an overcharge award through offsetting future rents against the current owner of the property or successor owners. See Gaines v. N.Y. State Div. of Hous. & Cmty. Renewal, 90 N.Y.2d 545, 547 & 551 (N.Y. 1997); Muscat v. Gray, 1 Misc. 3d 905(A), 2003 WL 23023768, at **1 & 3 (N.Y. Civ. Ct. Dec. 19, 2003). Additionally, a right of set off is not a dischargeable obligation in bankruptcy. See Friarton Estates Corp. v. City of N.Y., 65 B.R. 586, 591-92 (S.D.N.Y. 1986); Berry Estates, Inc. v. State of N.Y., 812 F.2d 67, 70 (2d Cir. 1987). The two cases cited by Appaloosa in support of its assertion that its interests will be impaired if intervention is denied are readily distinguishable. (App. Mem. at 12-13). In In re Oceana Intl, 49 F.R.D. 329 (S.D.N.Y. 1969), the putative intervenor sought to intervene in an action to void the sale of property on which the intervenor was operating its business. See In re Oceana, 49 F.R.D. at 331. Contrary to Appaloosas characterization that the intervenor in In re Oceana had tenuous interests, (App. Mem. at 12), the intervenors interest was manifest: it had possession of the property and [was] using it in its production process. 49 F.R.D. at 332 (emphasis added). By contrast, the Certificates owned by Appaloosa represent beneficial ownership interests in the Trusts. Appaloosa is not in possession of the Property (nor does it Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 26 of 32 -19- BA2/387030 have any right or title to the Property), it does not operate its business on the Property, and does not own a direct interest in the Mortgage. Unlike this simple foreclosure action, Consol. Edison, Inc. v. Northeast Utils., No. 01 Civ. 1893(JGK), 2004 WL 35445 (S.D.N.Y. Jan. 7, 2004) involved a complicated dispute over a failed merger between two utility companies. In that case, the shareholders had direct interests to a lost premium from the failed merger, and intervention did not significantly complicate the litigation. See Consol. Edison, 2004 WL 35445, at **4-5. Here, by contrast, Appaloosas indirect interests raise legal issues that are wholly collateral to a foreclosure action. Nothing in this foreclosure action will impair Appaloosa from bringing ripened claims to vindicate its purported interests. In sum, Appaloosa has failed to provide the most basic showing required for establishing intervention how absent intervention, this foreclosure action will impair its interests in the Certificates that it owns. See also Siam Commercial Bank, 2006 WL 1816327, at *2 (denying motion to intervene where the intervenor can assert any interest that has in relation to [the defendant] in a separate action); see also Creative Care, Inc. v. Perales, No. 89 C 1079, 1992 WL 100151, at *2 (E.D.N.Y. Mar. 6, 1992) (Because [applicant] can protect its interests in the pending state court action [to turnover funds], it may not intervene as of right in this action under Rule 24(a)). C. Appaloosas Interests are Adequately Represented by Parties Already in the Action __________
As a Special Servicer, CWCAM represents the interests of all the Certificateholders. Section 3.01 of the PSA requires CWCAM to administer the Loan pursuant to the Servicing Standard, which requires CWCAM to maximize the recovery on the Loan on a net present value basis and in the best interests of the Certificateholders. See Ex. 1 at 3.01. Additionally, the Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 27 of 32 -20- BA2/387030 PSA requires CWCAM to (i) pursue foreclosure in the event of a Default, (Ex. 1 at 3.09(c)), which the Appaloosa Entities admit has occurred, (Prop. Compl. 17), and (ii) consult solely with the controlling class representatives of the Other Trusts in regard to the proper course of action for the Loan, which CWCAM did and is doing (Ex. 1 at 3.25(a), Ex. 6 at 2(j)). The rights to information and consultation with other Certificateholders are spelled out in the PSA and are strictly limited because the Certificates that Appaloosa allegedly owns are freely traded. See Ex. 1 at 3.15 and 6.10. Appaloosa focuses on CWCAMs purported motives in seeking foreclosure, but a putative intervenors interest is not inadequately represented merely because its motive to litigate is different from that of a party. Fed. Trade Commn v. First Capital Consumer Membership Servs., Inc., 206 F.R.D. 358, 365 (W.D.N.Y. 2001) (quoting Wash. Elec., 922 F.2d at 98). While it is true that CWCAM is not acting solely in the best interests of Appaloosa, it is acting in the best interests of all Certificateholders of which Appaloosa is part. Appaloosa does not allege that foreclosure will fail to maximize recovery on the Loan on a net present value basis to the Certificateholders, and it makes no allegation of bad faith or fraud on the part of CWCAM. 19
Appaloosas conclusory assertion of an irreconcilable conflict is based on a misleading portrayal of a conflict it claims to exist because of CWCAMs alleged ownership position in the Trusts and Appaloosas ownership position. (App. Mem. at 11). Appaloosa asserts that CWCAM owns the S tranche in the 2007-C30 Trust. (Id.). Appaloosa is wrong. That tranche is owned by Cobalt Vr. See Exs. 13-15. Because the S tranche is more subordinate to the tranches owned by Appaloosa, any decision that adversely affects Appaloosa will adversely affect Cobalt Vr. Even if CWCAM or its affiliate did invest in the Trusts, it is commonplace in the CMBS market for affiliates of special servicers to own certificates in the pools that the special servicer
19 See Ex. 1 at 6.03 (noting that special servicer has no liability for actions taken in good faith). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 28 of 32 -21- BA2/387030 administers. The PSA expressly allows for this to occur. See Ex. 1 at 6.10. Indeed, whether CWCAM has any legal relationship or affiliation with the entity that actually owns Certificates in the Trusts is irrelevant in determining which course of action will serve to maximize recovery to all of the Certificateholders. Appaloosa does not plead any facts showing how the mere alleged ownership of Certificates by CWCAM creates an irreconcilable conflict with Appaloosa. It is instead Appaloosa who has a conflict with the other 97% of Certificateholders who have not joined it. Appaloosa owns Interest Only Certificates which are paid interest on notional principal amounts only so long as they remain outstanding. (Ex. 12). Payments attributable to a foreclosed upon loan cease once the Trust sells the foreclosed property to a third party purchaser even though such sale could result in large principal distributions to the other certificateholders. As a consequence, Appaloosa has an incentive to delay this foreclosure action by CWCAM and maintain its stream of interest payments regardless of its affect on other Certificateholders. It is precisely because of this type of irreconcilable conflict that all Certificateholders agreed in the PSA to the no-action clause that Appaloosa ignores. The Certificateholders collectively reconcile the conflict by vesting exclusive control and decision making authority with the Special Servicer and the controlling class representatives charging them to maximize the net present value recovery for all Certificateholders. The lone case Appaloosa cites in support of its claim to inadequate representation, Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co., No. 04 Civ. 10014 (PKL), 2005 WL 751914 (S.D.N.Y. Mar. 31, 2005), in fact supports the agreement of the Certificateholders contained in the PSA. In reaching its decision, Aristocrat found it noteworthy that the trustee consented to the bondholders intervention in the case. Id. at *2, n.2. The district court refused to allow Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 29 of 32 -22- BA2/387030 bondholders to intervene based on the argument that their views would not be advocated: The representation is therefore adequate even where the [trustee] refuses to advance the [intervenor bondholders] arguments that the [trustee] believes unavailing. Id. at *3. Intervention was instead permitted in Aristocrat, because of (i) the trustees consent and (ii) a finding of collusion and adversity of interest between the bondholders and the trustee. The subject matter at issue in Aristocrat was the indenture agreement itself and whether it should be modified in light of an alleged scriveners error. Id. at *1. Here, neither the Trustee nor the Trusts has consented to Appaloosas intervention, and there is no allegation by Appaloosa of collusion and adversity of interest on the part of the Trustee. Appaloosa should not be permitted to intervene in this foreclosure action when it has no direct interest in the Property or the Mortgage. See Palmer v. Bankers Trust Co., 12 F.2d 747, 752 & 754 (8th Cir. 1926) (stating general rule that trustee represents all of the bondholders and affirming lower courts refusal to allow bondholder to intervene in a foreclosure suit brought by a trustee under applicable mortgage); (cited in Angevine, 39 F. Supp. at 500-502 (same)). 20
Finally, Appaloosas conclusory legal opinion that CWCAM owes it a fiduciary duty by virtue of the PSA is mistaken. Nowhere in the PSA is there any indication that CWCAM was intended to be considered a fiduciary of Appaloosa or the Trusts in which it invested. See Ex. 1 at 3.01 (noting that the special servicer is an independent contractor). And, in fact, the Southern District of New York Court has ruled that a special servicer does not act in the capacity as a fiduciary to certificateholders. (Ex. 8).
20 Accord Bowling Green Trust Co. v. Virginia Passenger & Power Co., 132 F. 921, 926 (E.D. Va. 1904) (refusing to allow bondholders to intervene in foreclosure suit and stating that: Courts in any case should be slow to interfere with trustees, in the apparently lawful discharge of their duties, at the instance of a comparatively small number of minority bondholders or stockholders, and least of all should it do so when it appears that such bondholders and stockholders are not themselves seeking actual relief, but are attempting to obstruct the trustee in the discharge of what it deems to be its duty.); Guaranty Trust Co. v. Chicago, M & St. P. Ry. Co., 15 F.2d 434, 440 (N.D. Ill. 1926) (denying intervention and noting that courts will be equally vigilant to see that dissenting bondholders be not permitted to create a maneuvering value in their bonds). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 30 of 32 -23- BA2/387030 III. Appaloosa Has Not Complied With Rule 24(c)s Requirement To Plead Claims Or Defenses Appaloosa proposes to intervene as a party defendant, but it has not attached an answer that sets forth defenses to the Complaint. See Fed. R. Civ. P. 24(c) (The motion must state the grounds for intervention and be accompanied by a pleading that sets out the claim or defense for which intervention is sought.). 21 Appaloosa has instead attached a proposed complaint that is little more than a barebones collection of vague attacks. In violation of Federal Rule of Civil Procedure 8(a), Appaloosas proposed complaint does not state any legal counts or claims. This failure to answer is more than a technical oversight as Appaloosa has no defenses to the foreclosure action itself, no standing under the PSA to pursue claims against CWCAM, and no irreparable injury. Courts routinely deny motions to intervene, when, as with Appaloosas Proposed Complaint, the proposed intervenors pleadings did not adequately set out the claim or defense for which intervention is sought. Jones v. Shell Oil Co., No. 3:05-CV-622-MJR, 2006 WL 83467, at *1 n.2 (S.D. Ill. Jan. 11, 2006) (denying motion to intervene in part under Rule 24(c) because the pleading submitted by the intervener does not comply with Rule 8(a)); see also City of Bridgeport v. United States Dept of the Army, No. 3:09-CV-0532CSH, 2009 WL 3254475, at *1 n.1 (D. Conn. Oct. 6, 2009) (stating that the intervenors barebones motion papers cannot be characterized as a pleading within the meaning of the Rule). Appaloosas inability to plead a claim or defense is an absolute bar to its requested intervention.
21 Accord St. Charles Tower, Inc. v. County of Franklin, Mo., No. 4:09CV987-DJS, 2009 WL 3852462, at *1 (E.D. Mo. Nov. 17, 2009) (explaining that the Rule 24(c) requirement is not merely a procedural formality, but is integral to the Courts necessary analysis of the legal rights asserted by the intervenor, and concomitant issues such as standing and jurisdiction.). Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 31 of 32 -24- BA2/387030 CONCLUSION Appaloosa has failed to satisfy necessary conditions precedent under the PSA, has not complied with Federal Rule of Civil Procedure 24(c), and cannot satisfy the four-prong test for intervention as of right under Federal Rule of Civil Procedure 24(a). Accordingly, CWCAM respectfully asks the Court to deny Appaloosas Motion for Leave to Intervene as a Party- Defendant. Dated: Baltimore, Maryland March 12, 2010 Respectfully submitted,
VENABLE LLP
By: /s/ Edward A. Smith Gregory A. Cross (pro hac vice pending) 750 East Pratt Street, Suite 900 Baltimore, Maryland 21202 Telephone: (410) 244-7400
-and-
Edward A. Smith Rockefeller Center 1270 Avenue of the Americas, 25 th Floor New York, New York 10020 Telephone: (212) 307-5500
Counsel for CWCapital Asset Management LLC, solely in its capacity as Special Servicer for the Trusts
Case 1:10-cv-01178-AKH Document 54 Filed 03/12/10 Page 32 of 32 . ~ . lit The Matter .Qf: BANK OF AMERICA N.A., v. PCV ST. OWNER LP, April 29,2010 CONFERENCE SOUTHERN DISTRICT REPORTERS 500PEARLSTREET NEW YORK.; NY10007 212-805-0300 Original File 04T7BOAC.txt; Pages 1-40 Word Index included with this Min-D-Script BANK OF AMERICA N.A., v. PCV ST. OWN:ER LP, . [1) [2) [3) [4] [5] [6) [7) [-8) [9)
tlll [12) [13) [14) [15) [16) [17) [18) [19) [20) [21) [22] [23) [24) [25) 11.1 [2) [3) [4) [51 [6) (7) [8) 1?1 [10) [11] [12) [13) [14) [15) [16) [17} {18) [191. {201 [21} [221 (231 [241 [251 04t7boac UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x BANK OF AMERICA N,A., Plaintiff, Page 1 v. i.O Civ. 1178 PCV ST. OWNER LP, Defendant. ------------------------------x Before: HON. ALVIN K. HELLERSTEIN District Judge APPEARANCES VENABLE LLP . Attorneys for Plaintiff BY: GREGORY CROSS COLLEEN MALLON EDWARD SMITH GIBBS & BRUNS LLP BY: Appaloosa Management LP, Intervene' WARNER PARTNERS PC BY: Appaloosa Management. LP, Intervenor (Case called) (In open court) Page2 MR. CROSS: Good morning, your Honor. Greg Cross, Venable, on .behalf of CW Capital Asset Management. With me at counsel table is Colleen Mallon and Ed Smith of my firm. THE COURT: Thank you. Be seated. MR. WARNER: For Appaloosa, the proposeD inte.rvenors . Ken Warner of Warner Partners. THE COURT: How are you, Mr. Warner? MR. WARNER: Good morning, .your THE COURT: Nice to see you. MR. WARNER: Thank you very much. And with me is Cathy Patrick from Gibbs & Bruns in Texas, and Ms. Patrick will be handling the oral argument this morning. MS. PATRICK: Good morning, your Honor. THE COURT: Mr, Warner, I have never known you to step aside before. MR. WARNER: Thank you, your Honor, but it-'s .a privilege for me to step aside for Ms. Patrick. THE COURT: Very nice. All right, Patrick, you are making a motion to intervene, so I will hear you first. MS. PATRICK: Good morning, your Honor. Thank you very much fo.r the privilege of appearing here on behalf of the Appaloosa [1) [2) [3) [4) [5) [6) (7) [8) [9) [10] [ll] [12) [13) [14) (15] (16) [17) [Hi) (19) [20) [21] [22] [23} April 29, 2010 .Page 3 We a.re here today because quite simply in the absence of an permitting Appaloosa to intervene, the certificate holders that have billions of dollars at Stake, ..A(,paloosa which itself has $800 million at stake, will suffer h\'ndreds of millions of dollars of unnecessary and avoidable losSes, and a community, StuyveSant Towri, will be dismembered and sold in pieces by a c.onflid:ed serv:icer, behaving recklessly on behalf of trustees. that have done nothing to _prevent it. THE COURT: Prevent what? MS. PATRICK: Pi:-event cw Capital '.s breach of its servicing obligations and acting pursuant to the conflict of intereSt that we have in the papers, your Honor. Those facts are not actually disputed by CW Capital. THE COURT: What is the conflict? MS. PATRICK: The conflict, your Honor, is quite simply that_ they stand in tWo capacities 'in this case. First, spec.ial ser-vicer, they a:ce obliged to act on behalf of all certificate holders in their best interest; and, 'second, as the holder of the controlling class of certificates they are required to act solely in the interest of thoSe certificate holders are an affiliate of theirs. Your Honor, if I may approach -- THE COURT: But you are all in the same category, [241 aren't you? [25} [1} 121 [3] [41 lSI [6} [71 [8] [9) [10} [11) [12) [13} [141 [15) [16) [17) [18) [19} (20) (21) [22) (23) [24) [25} MS. PATRICK: No, your Honor, we are not all in the Page4 same category. The category of bonds that they owri are deep! y subordinated and under water, and it is ou_r belief that cw Capital is pursuing foreclosure in order to permit those bonds not to be wiped out. THE COURT: Well, 'if they are subordinate to they cant gain anything unless you gain something. So, where is the conflict? MS. PATRICK: Your Honor, may I hand up these materials? THE COURT: No, no. MS. PATRICK: The answer quite simJ?lY is they do not have to act with regard to the certificate holders when they act on behalf of that deeply subordinated tranche. THE COURT: They have to act on behalf of their :rec?rd ownership. You dont have a record ownership. They have a record ownership. They have the obligation to service everybody for whoni they hol<;I, and you are included, and others are included, inciu<;ing themselves .. aut they have an 9bl.igation to act, and I don t see how you have any kind of standing. MS. PATRICK: Well, your Honor, we believe we do have standing. THE COURT: I know. That's why you brought the motion, but you have to persuade .me. MS. PATRICK: Yes, your Honor, I understand. CONFERENCE Min-U-Script (1) Page 1 - Page 4 April 29, 2010 PageS r11 THE COURT: What does the document say? r21 MS. PATRICK: The document says that the trust is !31 operated for our benefit. !41 THE COURT: Yes, but who has the right to sue and the rs1 obligation to sue? (61 MS. PATRICK: Your Honor, the servicer and the trustee . !71 have the obllgation to sue. raJ THE COURT: And do you have an obligation to sue? !9f MS. PATRICK: Your Honor, we do not have an obligation tlOl to sue; but we are permitted to intervene to protect our right m1 to faithful performance of the servicing standard, as is r121 required by the pooling and servicing agreement. [131 THE COURT: What document gives you that right? [141 MS. PATRICK: The pooling and servicing agreement 151 giver us that right. 161 THE COURT: What provision? !171 MS. PATRICK: The pooling and servicing agreement at r1aJ Section 3.01 arid at Section 6.03. U9l 3.01 requires that the servicer act for the benefit of r2oJ all certificate holders, and 6.03 states that when they breach r211 their servicing obligation they are not immune from liability 1221 to holders like Appaloosa that.are -- 1231 THE COURT: Yes, you can sue them for breach of their 241 fiduciary obligation. !251 Don't shake your head. You will h,ave a chance to talk Page6 [1] if you need to. [2] MS. PATRICK: Yes, your Honor, we can. The issue is {3] it i.s inefficient to contemplate the filing of a second and [4] separate lawsuit for damages when Rule 24 permits us to -- [51 excuse me, your Honor, go ahead. [61 . THE COURT: It was my fault. I interrupted you. We [7] don't do interrupt anybody else in New York. [81 MS. PATRICK: May I proceed? ( ~ ] THE COURT: Yes. (10) MS. PATRICK: It's inefficient to require us to file a [111 separate damages lawsuit when the damages that we will suffer [121 could be prevented and avoided if we were permitted here to [131 intervene. And we have met the elements of Rule 24. [141 THE COURT: Ifl were to permit you to intervene, I [15) would have to permit every other certificate holder to [16) intervene, and that would be total inefficiency and chaos. [17.] MS. PATRICK: Your Honor, we don'tbelieve that's [181 true. Obviously the issue here is that nobody is representing [19] the interests of the certificate holders. ' [201 THE COURT: Well, that's not true. They're bringing a [211 lawsuit to foreclose. You don't want to be foreclosed. You [221 want some kind of a deal. You would like to be bought out, but [2.31 you can't. You can't get a special deal. The suit to [241 foreclose is the remedy. You say that there is a bankruptcy [25] remedy, and maybe there is, but that's for the record holder to :SANK OF AMERlCA N.A., v. PCVST.OWNERLP, Page7 r11 decide. !21 MS. PATRICK: Your Honor, the difference is here, when 31 you look at the underlying facts, pursuit of foreclosure 41 inflicts hundreds of millions of dollars of avoidable damages. rs1 THE COURT: You're claiming that it was an unwise !61 choice. That doesn't mean that it's a conflicting choice; it r11 just means it's an unwise choice. And if it's unwise, everyone !81 for whom they act is equally hurt. 91 MS. PATRICK: Yes. r1o1 THE COURT: And you're not hurt any more than anybody r111 else. Their affiliated interests are hurt as well as you, and r121 yo:u are ahead of them, so you don't care if they're hurt. !13! MS. PATRICK: Well, we actually do care, your Honor. !14! And we don't have to demonstrate that we're hurt differently, t15J but we can demonstrate that here. The assertion-- !16! THE COURT: Well, you all might be hurt. Maybe they t171 have made an unwise choice, but they have to make the choice. !181 And if they make a bad choice, you may have remedies, though !191 acting on a bad choice does not necessarily give you cause of. r2o1 action for breach of fiduciary obligation. r211 MS. PATRICK:. Well, it d.oes, your Honor. Under 6.03 r221 of the PSA, nothing in the pooling and servicing agreement [231 absolves them from liability to the certificate holders for, t24J among other things, negligence in the performance of their [251 obligations as servicer. [11 [21 [3] [4] [51 [6] [7] [8] [9] [10] [11] [12] [13] [141 [15] [161 [171 [181 [191 [20] [211 [22! [23] [24] [25] Page 8 THE COURT: So, after all is said and done, if it doesn't work out the way you like and you think they have been negligent, you can sue them. MS. PATRICK: Yes, your Honor, we can. I'm not denying that. THE COURT: I won't consider it a related action. Some other judge may draw it, but you can sue. MS. PATRICK: Your Honor, I don't dispute that we can sue them for breach of fiduciary duty. We're here because it seems to me and to Appaloosa sensible to trY to avoid a lawsuit for hundreds of millions of dollars in damages if this court had somebody before it which would hold the servicer accountable for the performance of its prudent servicing obligations. And there is -- THE COURT: Well, do you have a section that gives you that right? So far you haven't cited anything to me that does. MS. PATRICK: Oh, your Honor, the limitation of action provision that they rely on so heavily actually cuts the other way. There are three cases that have-- THE COURT: What section number is that? MS. PATRICK: It's 11.09, I believe. Hold on, just a minute. THE COURT: Is it 11.03? MS. PATRICK: It is 11.03. I apologize. THE COURT: "No certificate holder shall have any Page 5 - Page 8 (2) Min-D-Script CONFERENCE BANK' OF AMERICA N.A., v. PCV ST. OWNER LP, . [1) [2) [;3) [4) [5) [6) [7) [8) [9) [.10) _111) [12) (13) [14) [15) (16) [17) [28) [19) (20] (21] [22] [23] [24] [25] Page9 right by virtue of any provision of this agreement" -- that's you, correct? MS. PATRICK: That's me. THE COUR:r: -- "to institute any suit, action or proceeding in equity or law, upon or under, or with respect to this agreement, or any mortgage loan, unless such certificate holder previously shall have .given to the trustee a written notice of default hereunder" --.have you done that? MS. PATRICK: No; your Honor, we don't have to for a breach of :fiduciary duty. THE COURT: It says so. "And unless also the holders of certificates to at least 25 percent of the voting rights shall have made written request upon the trustee to institute such action, suit or proceeding." Has that happened? MS. PATRICK: No, your Honor; but it doesn't-- THE COURT: So, the two preconditions of 11.03 haven't occurred. MS. PATRICK: Your Honor, under Cruden, the Second Circuit case, we do not have to make such demand and we do not have to have 25 percent, beeause the Second Circuit has that it would be absurd to ask the trustee to sue itself. And here, where the trustee is the plaintiff in a . lawsuit that is a breach of its obligations, and the servicer is proceeding with the trustee's authority to breach its Page 10 111 obligations, Cruden is four square on point. r21 THE COURT: So, you're saying that the trustee by !31 bringing this lawsuit to foreclose is breaching its obligation? t41 MS. PATRICK: Yes,yourHonor. !51 THE COURT: How so? !6J MS. PATRICK: Because they are operating a trust for 171 benefit of the certificate holders. They are required to re1 insist on prudent servicing. And here the pursuit of 91 foreclosure, which subjects the. certificate holders to hundreds 1DJ of millions of dollars wholly avoidable, wasteful and rn1 unnecessary taxes, is. a breach of the servicing standard, and r121 the trustee's failure to prevent it is a breach of the !131 trustee's obligations. 141 THE COURT: What provision is breached? 151 MS. PATRICK: Sectio:ti 3.01, which requires that the 161 servicer act for the benefit of the holders; and fundamental r 11 I nature of the pooling and servicing agreement, which at the 181 outset obligates the trustee to operate the pool for the benefit ofthe holders. 1201 THE COURT: I'm sorry, but the action to foreclose 121 J which you contend is unwise was brought on behalf of everyone r22i in the pool, so it's not abreach. It may be an unwise act, !231 but it's not a breach. 241 MS. PATRICK: Well, I guess we're somewhat talking 251 past each other. Let me give it one more try. April 29, . Page 11 IJ:l THE COURT: Sure . . (2] MS. PATRICK: Here is the way I-- (3] THE COURT: We're known in New York City for our 141 . patience. [5] [6] [7] MS. PATRICK: You have been very patient with me, your Honor, and I appreciate it. Here is the way in which I think aboutthat. . 81 The pooling and servicing agreement requires as [91 . faithful performance of that agreement prudent servicing for t1o1 the benefit of the holders. That is a breach of the !111 contractual duty under the pooling and servicing agreement when r121 they fail to insist on that, and that's why in Cruden, in [131 Greenwich Capital and in MBiA, each of those cases, and in the !141 Teachers case, which Judge Kaplan had before him, in Teachers !151 Judge Kaplan noted that virtually identical section of a 161 pooling and servicing agreement, Section 6.03, gave the 171 certificate holder there the right to avoid sul!ll11acy judgment r1a1 because of the allegation that the actions taken by the !191 servicer were injurious to the certificate holders. r2o1 So, the point is we are entitled to faithful r21 1 performance under that contract. That's clear. What is 1221 faithful performance under that contract? It is prudent !231 servicing. That is clear and undisputed. !24J When we are victimized by that c:Jirectly, by a trustee !251 that fails to insist on prudent servicing, and instead pursues Page 12 111 a reckless foreclosure that inflicts hundreds of millions of [2) dollars oflosses on the holders, we .are entitled to sue under 31 Cruden, and we are not barred by the no action clause .. 41 THE COURT: Let me ask you this question. What would 5J you do that the trustee has done? !6J MS. PATRICK: Well, what we would do is urge the court [7 I as a party to the case to require cw Capital to demonstrate re1 that foreclosure and the assumption of these taxes and unknown rs1 liabilities is indeed in the best interest of the certificate t1o1 holders. m1 THE COURT: What alternatives are there? r121 MS. PATRICK: There is bankruptcy, your Honor, where !13J these matters can be dealt with appropriately. !141 THE COURT: How would you go about doing the 151 bankruptcy? !16J MS. PATRICK: Your Honor, when you put this in !171 bankruptcy it gives not just the certificat() hOlders but the r1eJ tenants an opportunity to work through an ordinarily !191 reorganization. 1201 THE COURT: Well, why wasn't bankruptcy declared? !211 MS. PATRICK: Your Honor, wedon'tknowthe answer to r221 that. .!23! THE COURT: Maybe there weren1 enough creditors? !241 MS. PATRICK: CW Capital has enough creditors. CW !25J . Capital can insist on that in itself. It is here acting on CONFEtu;NCE Min-U-Sctipt (3) Page 9 - Page 12 April 29, 2010 [1] [2] [3] [4] [5] [6] [7] [8] Page 13 behalf of several trustees, not just THE COURT: He makes an open argument that actions to foreclose on real estate are just as effective and often more effective than a bankruptcy proceeding. MS. PATRICK: Yom Honor, we don't believe that is true in a complex mortgage like this one, where there are . issues of tenant claims for excess rent. the J 51 judgment. where the tenants are trying to put together the ability to buy [9] . the property and wiping out the mezzanine debt adversely affects their options. We don't believe it makes sense to foreclose when doing so creates priming lie11s that push hplders like Appaloosa that would otherwise have a recovery on their notes into a position where they have no recovery at all. [10] [l:L] [12] {13] [14] [15] [16] [17] [18] [19] [20] THE COURT: It's a very complicated All right, I get your point. Anything eise you want to tell me? MS. PATRICK: Your Honor, we think that the key reason that we are here is that allowing Appaloosa to intervene ensures that the court will have before it all of the options that are available to reorganize this historic property. Here is the real issue -- 1211 THE COURT: Well, look, ifl am the judge on a lawsuit 1221 that seeks foreclosure where is my discretion to say yoU: can't !231 foreclose, you have to go to bankruptcy? [241 MS. PATRICK: Your Honor, here is the discretion. The !251 discretion would be to say if' you allow us to intervene, to [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [i4] . [15] !16] [17] [18] [19] [20i [21] [22] [23] [24] [25] Page14 require CW Capital -- which has a conflict and which has a fiduciary obligation of prudent servicing-- to demonstrate utmost fairness, to demonstrate that pursuing foreclosure and these priming liens that create losses for the people on whose behave they are supposed to ad is the only prudent option. It's not-- THE COURT: That's not an intervention in this lawsuit; that's a different lawsuit. rm sorry. Why don't you just try to organize -- you still need three creditors for involuntary bankruptcy? MS. PATRICK: Your Honor, CW Capital and others would take the position I think that we arenot entitled to pursue bankruptcy. THE COURT: I understand, but does the law still require three creditors? MS. PATRICK: It does. It does. THE COURT: So, why don't you try to get three creditors to start involuntary bankruptcy? That would take the jurisdiction away from me. I would welcome that. MS. PATRICK: But we like it here, your Honor. Y oirr Honor, I appreciate very much your time. The key point from our perspective is that without us here nobody in the_ case is going to insist on a demonstration of prudent servicing. That's evident from the. motion for summary judgment which doesn't even mention the issues that we-have raised. And BANK OF N.A., v. . PCV ST. OWNERLP, Page 15 111 . we thank you for your consideration. [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] (15] THE COURT: Thank you, Ms. Patrick. Mr. Cross. MR CROSS: Good morning. THE COURT: Good morning. MR. CROSS: I agree with much of what you had to say. THE COURT: I am going to ask you to take the podium, Mr. Cross, because otherwise you block Mr .. Warner. MR. CROSS: That's easier for me anyway. Thank you. Your Honor, we are here on a foreclosure action. Appaloosa doesn't assert any interest in the borrower, any interest in the propertY, any interest in the mortgage that permits foreclosure, and Appaloosa concedes the right of CW Capital, a special servicer, to foreclose on behalf of the trust. !161 What Appaloosa is seeking, and was evident from the 1111 argument, is a series of advisory opinions from the court with !181 respect to the effect of potential bankruptcy and With respect 191 to a breach of contract claim. that they may bring some day as 1201 to CW Capital's actions under the pooling and servicing 1211 agreement. 1221 Those type of unrelated, not direct 231 causes of action, are exactly what has been rejected by the !241 Second Circuit as a basis for intervention. They do not assert 2SJ a direct interest in the subject matter of this proceeding. [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [171 [18] [19] [20] [21] [22] [23] [24] [25] Page 16 And the assertion that bankruptcy is some easy flip-the-coin option highlights just how speculative their claims are. First, as you recognized, CW Capital is not the borrower. CW Capital cannot file a bankruptcy action as a borrower. Appaloosa would.ask the court to conclude that CW Capital can initiate an involuntary proceeding. Itwotild ask the court to speculate that once our borrower was in a . pankruptcy proceeding our borrower would decide to sell to a party which was acceptable .to the trust. If would ask you to speculate that that borrower would agree to buy a purchase was acceptable to the trust. It would ask you to speculate that the borrower would not seek a proceeding. It would a!)k you to further speculate that the borrower would sell pursuant to a plan, which is the only means that you could avoid transfer taxes. THE COURT: Describe your lawsuit; the lawsuit that is before me, the lawsuit in which they seek to intervene. . MR. CROSS: This is a straightforward lawsuit where CW Capital, a special servicer, is foreclosing against real property on behalf of five trusts that it represents .. That's all it is. THE COURT: What is its tranche? To what is it senior and to what is it junior? MR. CROSS: CW Capital doesn't own a tranche. In every one of these securitized real estate offerings the owner Page 13 16 (4) Min-D-Script CONFERENCE BANK OF AMERiCA N.A., v. PCV ST. OWNER LP, Page17 1 1 1 of a certain class of certificates origirially gets to appoint [2] the special servicer. That's true in every single !31 securitization of coriunercial real estate, and this one was no 14 1 different. !SJ An affiliate of CW Capital originally owned a !6T certificate and appointed CW Capital special servicer. That 111 certificate has s4J,ce been sold into another securitization and 181 is owned by that securitization .. An affiliate of CW Capital 191 manages that securitization and Capital as a [10J special servicer. 1111 . But your Honor was exactly right, in order for that 1121 CDO to experience any gain or loss it is below in the capital I13J stack Appaloosa. You know, it stands it on its head to say 1141 that CyY Capital is acting precipitously so that that 1151 certificate can gain, because that certificate can only gain if 1161 Appaloosa is paid in full. Appaloosa is here acting in its own !17 1 interests. Appaloosa is seeking delay. Appaloosa is acting 11SJ out-- !191 THE COURT: Why do you think? 1201 MR. CROSS: I think they are seeking delay because [21.] they Iiave concluded they could exercise control over the 122 1 property if they sought delay, or be paid off. I can't say !231 that to be the fact, but that would seem to be consistent. Or, !24! if they are acting just in their certificate interest, they I25J have concluded that delay may be their only hope of being paid. Page 18 [1.] Because delay isn't without cost here. You know, we have a [2] borrower who wants to leave this property. [3] THE COURT: They would just like to be at the table, I [4] think, making decisions. . [5] . CROSS: And the certificate holders address that. i6J The certificate holders agreed contractually that one party and Pl one party only would make the decisions, and that that party [8] would be the special servicer, and that party is CW Capital. [9] THE coURT: How many interests are there for whom you. [10] act? How many interests? Ill] MR. CROSS: Yes, it's five trusts. I don't know the [12] number of certificates. I would guess more than a hundred [13] different tranches of certificates. It's $24 billion across [14] five trusts. There is an obligation for CW Capital to consult [15] with two other controlling class representatives in these [16] pools, both of those filed -- [1.7] THE COURT: So, the logic of allowing Appaloosa to [18] intervene would be to allow a number of others to intervene. [19] MR. CROSS: Correct, they could all intervene. And [20] they could intervene in any -- [21.] THE COURT: -- at every level of priority. (22] MR. CROSS: That's exactly right. And they could [23] intervene in any commercial real estate foreclosure action [24] brought in front of any court. [25] THE COURT: That would create chaos. April 29, 2010 Page 19 [11 MR. CROSS: Complete chaos. You would be sorting out 121 the special servicer's decision making in a courtroom in every !3J single deal where any aggrieved certificate holder wanted to 141 come forward. !51 THE COURT: Mr. Cross, 1 would like you to take me 161 through the provisions of the agreements that bind you and bind 111 all certificate holders. 181 MR. CROSS: Sure, your Honor. Let me get a copy. !91 THE. COURT: If you would like one of your colleagues 1101 to do that, that's quite all right. 1111 MR. CROSS: No, rm happy to do it; I just wanted to 1121 get the text actually in front of me. (131 .J THE COURT: If you would like to do that sitting down [14] so you could have the help of your colleague, that's fine. !lSI MR. CROSS: No, I will be fine. fm too familiar with 1161 these provisions unfortunately. ll7J Section 3.01 of the pooling and servicing agreement 1181 obligates a certificate holder to act in the interests of all 1191 certific;:ate holders i.n accordance with the servicing standard. 1201 THE COURT: And ifyou failed to do that, you are 1211 exposed in an independent lawsuit. r221 MR. CROSS: Right. And just so you understand, the [231 common parlance for what the servicing standard requires is to 124 1 maximize a net present value recovery for all certificate 125J holders in the trust. So, that's the analysis, what's going to [1] [2] [3] [4] [5] [6] [7] [8] [9] (10] [UJ (12] [13] [14] [15] [16] [17] [18] (19] [20] [21] [22] [23] [24] [25] Page 20 achieve the most money for the trust. That's the special servicer' s responsibility. THE COURT: And you have to make that judgment. MR. CROSS: Thafs correct. THE COURT: And you are a compa11y that has extensive experience and capacityto make those judgments. MR. CROSS: That's correct. THE COURT: I have looked you up, but tell me for the record who you are.-- not you personally, your client. MR. CWCapital is the second largest special servicer of commercial mortgages in the United States. They are also the most highly ranked special servicer in the United States by the rating agencies. They have loans.in all 50 states. They have 200 different trusts for which they are named as special servicer. They and forerunners have been in the business of special servicing for more than 20 years. THE COURT: Thank you. MR. CROSS: CW Capital; it is correct; is responsible if it is negligent in the exercise of its duties, and it is responsible to both the tiustee, and it is responsible to a certificate holder who satisfies the no action clause that your Honor reviewed previously. THE COURT: The style of the caption therefore is the Bank of America National Association, the trustee. . CONFERENCE Min-U-Script (S)_Page 17- Page 20 April 29, 2010 . [1] [2] [3] [4] [5] [6] [7] Page21 MR. CROSS: New York law requires that. You put the trustee's name in because they are the beneficial holder for the trust. THE COURT: They are the holder. MR. CROSS: right. THE COURT: Not the beneficial holder. MR. CROSS: I misspoke, you're correct. [8] THE COURT: And they act through the special servicer, 9J through you, but you're really superfluous in the. title. [10] MR. CROSS: That's right, your Honor. And when you 1111 are measuring -- for example, if you are measuring diversity, 1121 you look past the special servicer. !131 THE COURT: And what you have done is list as 14J ancillary to the plaintiff the various institutions for whom 151 the plaintiff acts. 1161 MR. CROSS: Correct. 1 111 THE COURT: So, bank of America is the plaintiff. !1Bl It's an action of foreclosure against various defendants who !191 have record ownership in Stuyvesant Town and Peter Cooper 1201 Village. 1211 MR. CROSS: And I believe, Bank of America was 1221 succeeded by Wachovia, so I think it now should be Wachovia !231 We filed an amended pleading to that effect. . !241 THE COURT: You'll clear that up, but it's the same [251 point. [1] [2] [3] [4] [5] [6] [71 [61 !91 [10] [lll, [12] [131 [14] [15] [16] [17] [18) [19] [20] [21] [22] (23] [241 [25] Page 22 MR. CROSS: Right. THE COURT: And what you do in an action of foreclosure is foreclose against every record owner and every record lien holder. MR. CROSS: That's correct. THE COURT: The object of a foreclosure is to either obtain payment of the defaulted debt, or to take possession, or to sell the property, and thereby realize the maximum possible for the debt that is represented by the .plaintiff. MR. CROSS: That's correct. That's exactly right. . THE COURT: And the title fulcrum debt or fulcrum holder is loosely thrown around here. What that means, it's a dynamic concept, as I understand it. It's that tranche of the debt, that level of seniority. which comes after everybody senior to that is paid off in full. MR. CROSS: And it moves up and down. THE COURT: It can move up and down. If, for example, a million dollar debt is paid except for a hundred dollars that's owed, the debtlevel below that can pay off that hundred dollars, thus causing everybody senior to disappear and take control of the property. MR. CROSS: And it's particularly volatile in a deal like this where 'you have five trusts and $23 billion. THE COURT: It can move up and down. It's really a dynamic concept. BANK OF AMERICA N.A., v. PCV OWNER LP, Page23 111 MR. CROSS: That's right. 121 THE COURT: And it's particularly in need of a single 31 party that can make decisions and be responsible for those 41 decisions rather than to have the chaos of numbers of people 51 all intervening in that particular tranche. 61 MR. CROSS: That's right: And it's worth noting that !71 the holders of those certificates like Appaloosa trade in and !81 out of them as the market moves up and down and as time passes 91 by, so Appaloosa, for example -- !101 THE COURT: They could pick up for a song and hold on 1111 and make a )cilling, or they could lose their entire investment. 1121 MR. CROSS: Which we believe they have. !131 THE COURT: Well, but that's a story for a different 141 lawsuit. 151 All right. So, we have covered 3.01. What's the next 161 section that's relevant? 1111 MR. CROSS: 3.01 is the key provision. The default !181 provision-- actually I do need help here. !191 I believe the default provision is 6.02. 1201 THE COURT: What does it provide? 1211 MR. CROSS: 6.03. 1221 THE COURT: What do those sections provide? 231 MR. CROSS: 6.03 says the specialer servicer is !241 responsible for negligence. That's the section we talked about 251 previously. [1] [2] . [3] [4] [5] [6] [7) [8] [9] [10] (11) (12] [13] [14] [15] [16] [17] [16] [19] [20] [21] [221 [23] [24] [25] Page 24 THE COURT: Yes. MR. CROSS: 11.03 is the no action. THE COURT: So 6.03, if they are negligent in the course of time of choosing poorly, and not reasonably, they could be subjected to a surcharge in a separate lawsuit but not in an intervention lawsuit. MR. CROSS: Correct. If the no action clause is satisfied -- which is the 9lause you reviewed previously -- I think those are the three controlling provisions for today. THE COURT: The anomaly of the intervention is that they want to take part in 'a foreclosure lawsuit which they say is completely unwise and they'd like to undo. So, it's not really an intervention at all. MR; CROSS: No. And we cite them in our brief, but the courts in this' Circuit who have looked at intervention where you are seeking to circumvent a no action clause, they've applied it equally. Because ifthey have a claim later that CW Capital acted negligently, bring it. If they can be joined by any certificate holders -- THE COURT: No, I think we have covered that. So, that's 6.03 and now the other one is 11.03. MR. CROSS: Correct, those the three key provisions. THE COURT: Wl).ich I read out before. And 8.03(c) also is relevant: No provision of this agreement shall be construed to relieve the trustee from liability for its own negligent Page 21 - Page 24 (6) Min-D-Script CONFERENCE BANK OF AMERiCA N.A., v. PCV ST. OWNER LP, 111 action, its own negligent failure to act, or its own 121 misconduct. Page25 131 MR. CROSS: And I want to make a point on that, your 141 Honor. Because If you read their complaint, there is no rs1 allegation against the trustee here; all of the allegationS run 161 to CW Capital in its capacity as special servicer and its [71 actions as special officer. And Cruden is not on point. What raJ Cruden says is a claim against the trustee -- 191 THE COURT: Cruden is the case you cited which is 1101 Stanley C. Cruden, C-r-u-d-e-n, and others. 1111 MR. CROSS: And what that case says is that if it's an 112, action against the trustee, and you have to deliver notice to 1131 the trustee,. then the Second Circuit would allow the 1141 forgiveness of notice. They do not address the 25 percent 1151 element of25 percent of the certificate holders joining. !16J THE COURT: It's not really on point. 1111 MR. CROSS: That's. right, it's not this action. And 1181 there was a misstatement. I actually am in the case in front 1191 of Judge Kaplap.. 1201 THE COURT: Let's let that go. I think we have 1211 covered all the portions of the agreement that we areto cover. 1221 Anything else you want to tell me? 1231 MR. CROSS: Just that Judge Kaplan's decision 1241 reaffmned the no action clause in the context of an action 1251 brought against a special servicer. The only thing that Page 26 111 remains in that case is a factual determination with respect to 121 the term "effected" which is unique to that pooling and !3J servicing agreement. It said a no action clause must be 141 satisfied in a case just like this. !51 And a case we did not cite, Peak Partners, which is a [61 Third Circuit decision, the court was presented with exactly r11 this scenario, and it's at 191 Fed. 118, and in that case the 181 Third Circuit said in an action against the specialet servicer 1 9J you must file a no action provision, and it distinguished r1o1 Cruden on that point, saying that Cruden does not apply in a 1111 case like this. 1121 And I cannot underscore enough, your Honor, the [13J importance of a decision here. If you were to. find that 'Cruden 1141 accepted any action against a special servicer or master 1151 servicer under a pooling and servicing agreement out. of the no [16] action provisions, chaos would ensue because it allow 1111 people to jump over their contractually-agreed provisions. [181 If-- and you recognize this point-- but if you were 1191 to allow a certificate holder to intervene iii a foreclosure 1201 action largely because they claim transfer taxes may have to be 1211 any certificate holder could intervene in any foreclosure 1221 action anywhere, and it would be complete chaos. [231 We have potentially thousands of certificate holders 1241 just in these trusts, just concerning this. I thank you for 1251 your time. Do you have any additional questions? April 29, 2010 Page 27 111 THE COURT: No. 121 Any brief closing remarks, Ms. Patrick? 131 MS.PATRICK: Yes,yourHonor. Onthefloodof 141 litigation point, here is the limitation on it. There are two !51 important limitations on that. !61 First, we are dealing here with whatis largely 111 undisputed and obvious, which is the unnecessary incurrence of. 181 hundreds of millions of dollars of tax, liability in a 191 foreclosure. It's difficult to imagine that a prudent servicer [1o1 would do that on a regular basis, that there would be a cause 1111 of action, that there would be such an extraordinary course of 1121 conduct by a servicer burdened by those servicing 1131 So, it is not the case that eveey foreclosure will 1141 permit eveey certificate holder to intervene. It is only in a U5l case like this where there is clear evidence of undisputed !161 breach of the fiduciary standard of prudent servicing;where 1111 there is even going to be an argument. And even then, your 1181 Honor, it is a matter of discretion whether to grant an 1191 intervention. 1201 And we respectfully submit that saying to peciple that 1211 have hundreds of millions of dollars at stake you cannot be [22) heard to prevent an injury to yourself, instead 'you must sue 1231 for damages, is in reality the course that unleashes the flood 1241 oflitigation, because it will leave people with no option [25J other than to suffer the damages an4 sue, when in the rare case Page28 . 111 where a servicer breaches -- as they have .done here -- 121 intervention could avoid those damages entirely. 131 Thank you, your Honor. 141 . THE COURT: All right. !hank you. The inotion to 151 intervene is denied. Let me state my reasons and my findings 161 and my conclusions. 111 First, to identify the parties: The proposed 181 intervener-defendant, Appaloosa Investment LP, is a Delaware 191 limited partnership with its principal place of business in New 1101 Jersey. There are three other proposed intervenors, all of 1111 . which are related to Appaloosa Investment LP and have their 1121 principle places of business in New Jersey. Two are Delaware !131 limited partrrerships, one is a British Virgin Islands company. 1141 Plaintiff, CW Capital, the special servicer, is a 1151 Massachusetts limited liability company with its principal 1161 placeofbusiness in Massachusetts. CW Capital filed a 1111 complaint in its capacity as special servicer for Bank of 1181 America N.A., a North Carolina incorporation, and on behalf of 1191 the U.S. Bank National Association, a Minnesota incorporation. 1201 There are various other defendantS, all of which are 1211 New York entities, with their principal place of business in 1221 New York. 1231 The complaint alleges this court's jurisdiction on the 1241 basis of complete diversity between each and all the plaintiffs 1251 and each and all of the defendants pursuant to 28 U.S. C. CONFERENCE Min-D-Script {7) Page 25 - Page 28 . April 29, 2010 Page29 111 Section 1332. 1 2 1 I'm going to pass on any findings on the issue of !31 subject matter jurisdiction. Limited liability companies are !41 treated as partnerships, and were this to go forward, and ifl 151 haven't already done it, I would require proof that there is [61 diversity between every constituent member of each of the 1'11 limited liability companies on either side, plaintiffs and 181 defendants. [9) (10) [UJ [12] (13] [14! The underlying lawsuit is a foreClosure action. Plaintiffs acting as lenders seek to foreclose on the Stuyvesant Town and Peter Cooper Village properties, substantial residential apartment houses on the Lower East Side ofManhattan. . Defendants, t h ~ borrowers, do not object to 1151 foreclosure. The moving party, Appaloosa Investment LP, holds 1161 certificates issued by the trusts that hold mortgages s.ecured tnl by the properties. Appaloosa seeks to intervene as a matter of 118! right as a party defendant under Rule 24(a) of the Federal 1191 Rules of Civil Procedure. t2o1 These actions have been removed from the New York 1211 Supreme Court. They were originally assigned to Judge Stein, 1221 and they were transferred in the ordinary procedures of this !23! court to me. l24J Rule 24(a) provides as an intervention of right on a 125 1 timely motion -- and this is a timely motion -- the court must Page30 [1] permit.anyone to intervene who is given an unconditional right (2! to intervene by a federal statute -- that's not applicable (3] here -- or claims an interest relating to the property or (4) transaction that is the subject of the action, and is so [5] situated that disposing ofthe action may as a practical matter [6] impair or impede the movant's ability to protect its interests [7] unless existing parties adequately represent that interest. [8] As evident from my questioning and my comments during (9] argument, there is no sufficient proof that the parties [101 bringing the lawsuit do not adequately represent all the (ll] constituents, certificate holders ,or the trusts, including the (12] proposed intervener. (13] I pass on whether or not ownership of a certificate is (14] sufficiently related to the property or transaction that is the (15] subject of this foreclosure action. It appears to me that even (16] were that to be so, disposing of the action would not as a [17] practical matter impair or impede the rnoving party's ability to [18] protect its interests, since it is superior, as has been [19] brought out, in its relationship to all other certificate (20] holders to any who are alleged to be affiliated with the. (21] servicer. .(22] These are the facts which are substantially (23] undisputed: [24] Defendant borrowed $3 billion from Wachovia and (25] Merrill Lynch Lending, two different entities, to purchase the BANK OF AMERICA N.A., v. PCV ST. OWNER LP, Page31 111 Stuyvesant Town and Peter Cooper Village properties. 121 Defendants executed and delivered to the lenders a mortgage 131 that granted a security interest in the properties and t4J assigned, pursuant to that security interest, the leases, rents rsJ and security deposits relating to Stuyvesant Town and Peter t6J Cooper Village. 111 Thereafter, Wachovia and Merrill Lynch assigned their t8J rights, titles and interests to the mortgages to five trusts. !91 The Wachovia Bank commercial mortgage trust 2007-C30 is the 1101 controlling trust l11J Each trust issued various classes of certificates 1121 representing beneficial ownership interests in the trusts and t13J the property owned by the trusts. The aggregate principal !14 1 amount pf the certificates issued by the trusts was $22.6 r>sJ billion. The trust contained commercial mortgage loans, and t16l the trusts are the record owner of the loans on the properties, 1111 along with many other unrelated properties. The certificates !181 evidence a beneficial ownership in the lease held by the t19J trusts. t2oJ Appaloosa, the proposed intervenor, alleges that it [21] holds certificates valued at approximately $750 million. .1221 Appaloosa holds interest-only certificates, I guess stripped [23] from the overall investment, that are paid on notional t24J principal amounts as long as the principal amounts remain t2s1 outstanding. Thus, it is argued Appaloosa has an incentive to P.age 32 [1! delay the foreclosure action as long as possible to maintain [2! i ~ interest stream running to it. A large percentage of the [3) certificates are secured by senior debt. Appaloosa, however, [4] owns a substantial percentage of tranches that it contends are [5] fulcrum tranches. And I defined fulcrum before and noted that [6) it is a dynamic concept that is very much dependent on the [7] amounts raised in the foreclosure and the amounts available to (8] pay off senior debt. [9] Appaloosa alleges that it has a large position in the [10] senior certificates, holding 12 percent of a class called the [11] AM class, 22 percent of a second most senior tranche called the (12] AJ class, both in the C-30 trust. [13] Appaloosa holds also 46 percent of aD tranche, 49 [14 J percent of an F tranche, and 11 percent, 15 percent and 32 [15] percent ownership respectively in three other subordinate (16] tranches for the C-30 trust, and contends that the various .(17] tranches are fulcrum tranches. [18] A master sen:icer is responsible for servicing all the [19] loans owned by the trust. However, on the occurrence of (20] certain specified events, including default, the loan [21] administration is transferred from the master servicer to the [22] special servicer, and here the special servicer is CW Capital. [23] The duties, powers and limitations of the special (24 1 servicer, as well as the trustee and the investors, are defined [25! in a pooling and servicing agreement. Under this agreement the Page 29 - Page 32 (8) Min-U-Script CONFERENCE AMERICA N.A., v. PCV ST:OWNERLP, Page 33 special servicer has the right and the obligation to 121 administer, service, and make all decisions and determinations !31 regarding the loans, and to enforce the mortgage notes and all 141 other documents or agreements evidencing the loans: rs1 Under Section 3.09(a) of the agreement, the special [6] servicer is to exercise reasonable efforts to foreclose upon or rn otherwise comparably convert the ownership of properties, raJ securing such of the mortgage loans as come into and continue !91 in default. Exactly what it did. 1101 Appaloosa alleges that CW Capital, the special 1 n1 servicer, is conflicted as a fiduciary. It is conflicted, it 1121 alleges, because it is both a controlling class representative and the special servicer. As the special servicer, CW Capital must act in the best interests of all certificate holders and risJ without regard to its own holdings. However, as the 1161 class representative, CW Capital is permitted to [17] instruct the special servicer, itself, to take action solely in r1e1 CW Capital's individual interests. !191 . CW Capital owns, through a corporate affiliate lmown 1201 as CW Capital COBALTVr,.Ltd., certificates In theC-30 trusts. [211 That affiliate owns certificates m the s tranche, junior to 1221 . Appaloosa's certificates. Appaloosa contends that since the C 1231 tranche is far out of the money, CW (:apital has an incentive to !241 use its S tranche rights to extract value at the expense of !251 other certificate holders. [1] [2) [31 [41 [5] "[6] [7] [BJ [9] [101 [111 [121 [131 [141 [lSi [16] [171 {181 [191 [201 [211 [22] [231 Page34 It's a statement, ifl might digress, without meaning, because in deck servicing you can't get down to a junior tranche unless you completely pay off every senior tranche. And the very nature of the relationship is that Appaloosa must be made whole, at least in principle, before you can come down to reach that which is more subordinate. Appaloosa contends that it will suffer irreparable harm if the foreclosure is successful. It contends that the foreclosure inay adversely affect its future voting and fulcrum security rights, subject the trust to double transfer taxation, subject the trust to uncertain excess rent claims, and lead CW Capital to obtain a priming lien. What is a priming lien? . MS. PATRICK: Your Honor, when they pay those transfer taxes, they get a first lien on top of everybody else, and so it pushes everybody else down. THE COURT: You mean it becomes subrogated. To the extent it pays out money to a somewhat senior position, it becomes subrogated to that position. MS. PATRICK: Well, it subordinates the other debt holders, yes. THE COURT: Of course, they are subordinated anyhow. All right. And if that lien is obtained, it could [241 affect Appaloosa's voting rights since a priming lien is senior 1251 to or equal to the preexisting liens on the property; By April Z9, 2010 Page35 111 defmition, you can't get a priming lien unless you pay off 121 that which is senior .. So; there is seniority anyhow. It !31 doesn't change anything. 41 On November 6, 2009, loan was transferred from the rs1 master servicer to the special servicer because of imminent 161 default. Defendant did default in January 2010. This !71 complaint was filed m February 2010, and it seeks foreclosure raJ of the properties. Defendants answered and did not object to !91 the foreclosure. 1101 I have read out Section 3.09 which requires the r111 special servicer to exercise reasonable efforts.consistent with r121 the servicing standard, to foreclose upon or otherwise !131 comparably convert the ownership of properties, securing su.ch ru1 mortgage loans that are in default and.in the arguments section !151 11.03 of the pooling and servicing_ agreement which provides 161 certificate holders are not to have any right to institute any t17J suit, action or proceeding in equity or law, with two 181 exceptions which are not satiSfied here. !191 Appaloosa argues that it could get around 1201 11.03 because it is seeking to intervene as a defendant in the r211 lawsuit, but there is no indication tl)at it truly is a 1221 defendant. If anything, it belongs to the plaintiff's l23J interest, and it would create an inconsistency in the !241 pleadings. Ifl were to allow the intervention, I would have r2s1 to realign it to the plaintiffs side and, as i say, that would Page36 r11 play havoc with the foreclosure. 121 It contends that under Section 8.03C, the special 31 servicer is exposed to iiability for negligent actions and its 4 f own negligent failure to actor its own misconduct.. But that 51 niay be the basis for a separate action; it's not the basis .for 61 an intervention. 71 Third, it argues that Section 11.03 is intended to bar [81 SUitS by Certificate holders against the issuer, DOt SUits by 91 certificate holders against the tnistee. [1o1 Again, it completely confounds and conflicts with what r111 is involved here. The trustee is suing on behalf of all [12] interests subsumed within it, and that includes the certificate 1131 holders and that includes Appaloosa. r 141 And they argue that there are no cases that prevent a !151 certificate holder from bringing a lawsuit, notwithstanding the 1161 clause. But the courts are to enfqrce the language of !171 agreements, and the are plain and simple and needs !181 no analysis ofcase law. ti9J So, Appaloosa does not show that it has a direct, t20I substantial and legally protectable interest in the action, r2.11 which is one of the requirements in United States v. People [221 Benefit Life Insurance Company, 271 F.3d 411,415 (2d Cir. [231 2001). 241 Appaloosa's interest is contingent upon the l25 1 concurrence of a sequence of events, namely the negligence or CONFERENCE Min-U-Script (9) Page 33 - Page 36 t; ; April 29, 2010 [11 [2] [31 [41 [51 [61 [71 [91 [91 [101 [111 [121 [13] [141 [151 [161 [171 [181 [191 [201 [211 [221 . [23] [24] [251 [ll [2] [3] [41 [51 [6] . [7] [8] 9i [101 [111 [12] [13) [14] [15] [i6J [17] (181 [191 [20] [21] i221 [23] [24] [25] Page37 failure of the trustee acting for all of the groups, and it is not the businessofthis lawsuit. Its interests are contingent and speculative. Whether its future voting or fulcrum voting rights may be effected is something that's speculative and in the future. Whether double taxes may have to be paid and whether there are other more prudent actions that can be taken are matters that will have to be spelled out in a different lawsuit. But the case before me is an action of foreclosure, and that's the case of controversy upon which I act and nothing else. There may be damage claims that follow from the foreclosure. That's a function of what can or may not happen after a foreclosure, and again it's speculative. And. the same thing with a pruning lien. Appaloosa's interests are not likely to be impaired or impeded. If intervention is denied, it's one of many certificate holders within a group that's shown no conflict that is relevant in this situation, and there is no basis to argue that it will be impaired or impeded in its position as certificate holder. An intervener also is required to show that it can adequately represent the parties for him whom it wishes to intervene. It can't act on behalf of all of the certificate holders, and it can't act on behalfof all of the defenlllts and clearly has no place in this lawsuit. are my findings and conclusions. The motion is Page38 denied. Thank you .very much. THE COURT: Sit down for a minutes. Let me address this to Mr. Cross. Where are we going to go with this lawsuit now? MR. CROSS: We filed a motion for summary judgment on the foreclosure papers last Thursday. COURT: You filed a motion for summary judgment, but the defendants have already admitted their liability. MR. CROSS: Right. There are a few mechanics liens that.are attached to the property that need to be cleaned up through summary judgment. It's pretty straightforward, I think .. THE COURT: And then what happens after that? MR. CROSS: We get an order for foreclosure, assuming your Honor finds in our favor. THE. COURT: Do I appoint a receiver for the property? MR. CROSS: We're not seeking a receiver at this time. THE COURT: Who is going to administer the property? MR. CROSS: The property right now is being administered by Tishman Speyer's affiliate; and we have a consultant who is helping with the transition. THE COURT: They are the partY that caused the default. MR. CROSS: They are economically the party that caused default. They are acting responsibly with respect to [1] [2] [3] [41 [51 [61 [71 [81 [91 [10] [11] [12] [131 [14] [15] [16] [17] [18] . [19.] [20.] [211 [22]' [23] [24] [25] [1) [21 [31 [41 [51 [61 [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [171 (18] [19] [20] [21] (22.] [23] [24] [25] BANK OF AMERICAN.A., v. PCV ST. OWNER LP, Page39 the party, and putting a third-party in charge of 11,000 apartments didn't seem wise at this time. THE COURT: Except Tislunan hasn't done a veiy good job, has he? MR. CROSS: I don't to comment. They are doing a fine job in the transition. They have been very cooperative with us, and so -- THE COURT: OK. MR. CROSS: If that changes, we will come back for a receiver. THE COURT: What about jurisdiction? MR. CROSS: We tested that pretty thoroughly. The jurisdiction runs between the trusttles of the trusts -- that's the case law -- and the LLCs. THE COU.RT: Bank of America. MR. CROSS: Yes. Well, Wachovia. And the LLCs that are the OW!lers, And I have worked through all the LLC ownership structure. with Tishman, so we are comfortable there is complete diversity, and we can supplement on that. THE COURT: I would like a submission on that-- MR. CROSS: We will. THE COURT: -- that shows that. And ifs clear that s4!te law governs the issue of diversity, that because Bank of America is a national does that matter? Page40 MR. CROSS: No. We have a couple of reported decisions on that in just this kind of context where you are dealing with a special setvicer on behalf of a trustee and what tb.e court looks to, and we can cite those to you. THE COURT: All right. Would:you do that so I am satisfied on the issue of diversity? MR. CROSS: Sure. THE COURT: OK. Th.anks very much. *** Page 37- Page 40 (10) Min-U-Sctipt CONFERENCE BANK OF AMERICA N.A., v. PCV ST. OWNER LP, $ 8 $22.6 31:14 8.03c24:23 $23 22:23 8.03C 36:2 $24 18:13 $3 30:24 A $750 31:21 ability 13:8;30:6,17 1 absolves 7:23 absurd 9:21 .11- 32:14 acceptable 16:9,11 11,000 39:1 accepted 26: 14 11.03 8:23,24;9: 16;24:2, accordance 19: 19 21;35:15,20;36:7 accountable 8:13 11.09 8:21 achieve 20;1 118 26:7 across 18:13 12 32:10 act 5:19.;7:8;10:16,22; 1332 29:1 14:5; 18: 10;19:18;21:8; 15 32:14 25:1 ;33:14;36:4;37: 10,22, 191 26:7 23 acted 24:18 2 acting 7:19;12:25;17:14, 16,17,24;29:10;37:i;38:25 20 20:16 action 7:20;8:6,17;9:4,14; 200 20:14 10:20;12:3;15:10,23;16:4; 2001 36:23 18:23;20:22;21: 18;22:2; 2007-C30 31:9 24:2,7, 16;25: 1,12, 17,24, 2009 35:4 24;26:3,8,9, 14, 16,20,22; 201(} 35:6,7 27: II ;29:9;30:4,5, 15, 16; 22 32:11 32: I ;33: 17;35: 17;36:5,20; 24 6:4,13 37:9 24a 29: 18,24 actions 11:18;13:2;15:20; 25 9:12,20;25:14,15 25:7;29:20;36:3;3 7:7 271 36:22 acts21:15 2828:25 actually 7: 13;8: 18; 19: 12; 2d 36:22 . 23:18;25:18 additional 26:25 3 address 18:5;25:14;38:2 adequately 30:7,10; 3.015:18,19;10:15;19:17; 37:21 23:15,17 administer 33:2;38: 18 3.09 35:10 administered 38:20 . 3.09a 33:5 administration 32:21 32 32:14 admitted 3S:8 adversely 13:9;34:9 4 advisory 15:17 affect 34:9,24 411 36:22 affects 13:10 415 36:22 affiliate 17:5,8;33: 19,21; 46 32:13 38:20 49 32:13 affiliated 7: 11 ;30:20 again 37:12 5 Again 36:10 against 16: 19;21: 18;22:3; 50 20:13 25:5,8, 12,25;26:8, 14;36:8, 9 6 agencies 20: 13 aggregate 31:1.3 635:4 .aggrieved 19:3 6.02 23:19 agree 15:6;16:10 6.03 5:18,20;7:21;1 1:16; agreed 18:6 23:21,23;24:3,21 agreement 5:12,14,17; CONFERENCE 7:22;9:1,6;10:17; 11:8,9,11, 16;15:21;19:17;24:24; 25:21;26:3,15;32:25,25; 33:5;35:15 agreements 19:6;33:4; 36:17,17 ahead 6:5;7:12 AJ 32:12 . allegation 11:18;25:5 allegations 25:5 alleged 30:20 alleges 28:23;31 :20;32:9; 33:10,12 allow 13:25;18:18;25:13; 26: 16, 19;35:24 allowin_g 13:17;18)7 along 31:17 alternatives 12:11 amended 21:23 America 20:25;21: 17,21; 28:18;39:15,24 among7:24 amount31:14 amounts 31:24,24;32:7,7 analysis 19:25 ;36: 18 ancillary 21:14 anomaly 24:10 answered 35:8 apartment 29: 12 apartments 39:2 apologize 8:24 Appaloosa 5:22;8:10; 13:12,17; 15: 11,13,16; 16:5; 17:13,16, 16,17,17;18:17; 23:7,9;28:8,11;29:15, 17; 31 :20,22,25;32:3,9,13; 33: I 0,22;34:4,7;35: 19; 36:13,19 Appaloosa's 33:22; 34:24;36:24;37:14 appears 30:15 applicable 30:2 applied 24: 17 apply26:10 appoint 17:1;38:16 appointed 17:6 appoints 17:9 appreciate 11:6;14:21 appropriately 12:13 approximately 20: 14; 31:21 argue 36:14;37:18 argued 31 :25 argues 35:19;36:7 argument 13:2;15;17; 27:17;30:9 arguments 35:14 around 22:12;35:19 assert 15:11,24 assertion 7:15;16:1 assigned 29:21;31 :4,7 association 39:25 Association 20:25;28:19 Min-D-Script April 29, 2010 assuming 38:14. business 13: 14;20: 16; assumption 12:8 28:9,12,16,21;37:2 attached 38:10 buy 13:8;16:10 authority 9:25 available 13: 19;32:7 c avoid 8:10;11:17;16:15; 28:2 C-30 32:12,16;33:20 avoidable 7:4;10:10 called 32:10,11 avoided 6:12 can 5:23;6:2;7:15;8:3,4,7, away 14:19 . 8;12:13,25;16:.6;17:15,15; 22:17,19,24;23:3;24:18; B 34:5;37:7,12,20;39:19;40:4 capacity 20:6;25:6;28: 17 back39:9 capitai17:I2 bad 7:18,19 Capitalll:13;12:7,24,25; bank 21:17 14: 1,11; 15:14;16:3,4,6,19, Bank 20:25;21:21;28:17, 24;17:5,6,8,9,14;18:8, 14; 19;31 :9;39: 15,24 20:10,19;24:18;25:6;28:14, bankruptcy6:24;12:12, 16;32:22;33: 10, 13, 16,19, 15,17,20; 13:4,23; 14:10,13,. 20,23;34:12 18;15: 18;16:1,4,8 Capital's 15:20;33:18 bar36:7 caption 20:24 barred 12:3 care 7:12,13 basis 15:24;27:10;28:24;. Carolina 28:18 36:5,5;37:17 case 9:19;11:14;12:7; becomes 34:17,19 14:23;25:9, 1,1, 18;26:1 ,4,5, behalf 10:21;13:1;15:14; 7,11;27:13,15,25;36:18; 16:20;28: 18;36: 11 ;37:22, 37:8,9;39: 14 23;40:3 cases 8:19;11:13;36:14 behave 14:5 cause 7:19;27:10 belongs 35:22 caused 38:22,25 below 17:12;22:19 causes 15:2J beneficial21:2,6;31:12, causing 22:20 18 coo 17:12 benefit 5:3,19;10:7,16,19; certain 17:1 ;32:20 11:10 certificate 5:20;6:15,19; Benefit 36:22 7:23;8:25;9:6;1 0:7 ,9; best 12:9;33:14 II :17,19;12:9,17; 17:6,7, billion, 18:13;22:23;30:24; 15, 15,24;18:5,6;19:3,7, 18, -31:15 ( .. 19,24;20:22;24: 19;25: 15; bind 19:6,6 26:19,21,23;27:14;30:11, block 15:8 13,19;33:14,25;35:16;36:8, borrowed 30:24 9,12,15;37:16,19,22 borrower 15:11;16:4,5,7, certificates 9:12;17:1; 8,10,12,14;18:2 18:12,13;23:7;29: 16;31:11, borrowers 29:14 14,17,21,22;32:3,10;33:20, both 18:16;20:21;32:12; 21,22 33:12 chance5:25 bought6:22 change 35:3 breach 5:20,23;7:20;8:9; changes 39:9 9:10,24,25;10:11,12,22,23; chaos 6:16;18:25;19:1; 11:10;15:19;27:16 23:4;26: 16,22 breached 10:14 charge 39:1 breaches 28:1 choice 7:6,6,7,17,17,18, breaching 10:3 19 brief 24:14;27:2 choosing 24:4 bring 15:19;24:18 Cir36:22 bringing 6:20; 1 0:3;30: 1 0; Circuit 9: 19,20; 1 5:24; 36:15 24: 15;25: 13;26:6,8 British 28:13 circumvent 24:16 brought 10:21;18:24; cite 24:14;26:5;40:4 25:25;30: 19 cited 8:16;25:9 burdened 27:12 City 11:3 (1) $22.6- City BANK OF AMERICAN A v
. ., . Apri1_29,2010 " PCV ST. OWNER LP, Civi129:19 contends 32:4,16;33:22; 12:3;25:7,8,9,1 0;26: 10, H), digress 34: I evident 14:24;15:16;30:8 claim 15:19;24:17;25:8; 34:7,8;36:2 13 direct 15:22,25;36:19 exactly 15:23;17:11; 26:20 context 25:24;40:2 C-r-u-d-e-n 25:10 directly 11:24 18:22;22: l 0;26:6 claiming 7:5 contingent36:24;37:3 cuts 8:18 disappear 22:20 Exactly 33:9 claims 13:7;16:2;30:3; continue 33:8 CW l2:7,24,24;14:l,ll; discretion 13:22,24,25; example 21:11;22:17; 34:11;37:10 contract ll:2i,22;15:19 J 5: 13,20; 16:3,4,5,18,24; 27:18 23:9 class 17:1;18:15;32:10, . coritractualll:ll 17:5,6,8,9,14;18:8,14; disposing 30:5,16 except 22:18 ll,l2;33:12,16 contractually 18:6 20:10,19;24: 17;25:6;28:14, dispute 8:8 Except39:3 classes 31: 11 contractually-agreed 16;32:22;33: 10,13,16,]8, distinguished 26:9 exceptions 35:18 clause 12:3;20:22;24:7,8, 26:17 19,20,23;34: 11 diversity21:11;28:24; excess 13:7;34:11 16;25:24;26:3;36: 16 control 17:21;22:21 29:6;39: 19,24;40:6 excuse6:5 cleaned 38:10 controlling 18:15;24:9; D document 5:1,2,13 executed 31 :2. clear 11:21,23;21:24; 31:10;33: 12,16 documents 33:4 exercise 17:21;20:20; 27:15;39:23 controversy 37:9 damage 37:10 dollar22:18 33:6;35:11 clearly 37:24 convert 33:7;35: 13 6:4,11,11;7:4; dollars 1;10:10; existing 30:7 client 20:9. Cooper 21:19;29:11;31:1, 8:11 ;27:23,25;28:2 12:2;22: 18,20;27:8,21 expense 33:24 closing 27:2. 6 day 15:19 done 8:1 ;9:8;12:5;21:13; experience 17:12;20:6 COBALT 33:20 cooperative 39:6 deal 6:22,23;19:3;22:22 28:1 ;29:5;39:3 exposed 19:21;36:3 colleag1,1e 19:14 copy 19:8 dealing 27:6;40:3 double 34:10;37:5 extensive 20:5 colleagues 19:9 corporate 33:19 dealt 12:13 down 19:13;22:16,17,24; extent 34:18 comfortable 39:18 cost.18:l debt 13:9;22:7,9,11,14,18, 23:8;34:2,5,16;38:2 extract 33:24 comment 39:5 couple40:1 19;32:3,8;34:20 draw 8:7 extraordinary 27:11 comments 30:8 course 24:4;27:11,23; decide 7:1;16:8 during 30:8 . commercial 17:3; 18:23; 34:22 decision 19:2;25:23;26:6, duties 20:20;32:23 F 20:11;31:9,15 court 8:11;12:6;13:18; 13 duty 8:9;9: 1 0; 11: H common 19:23 15:17;16:5,7; 18:24;26:6; decisions 18:4, 7;23:3,4; dynamic 22: 13,25;32:6 F3d 36:22 companies 29:3,7 29:23,25;40:4 33:2;40:2 fact 17:23 company 20:5;28: 13,15 Court 29:21 deck34:2 E facts 7:3;30:22 Company 36:22 COURT 5:1,4,8,13,16,23; declared 12:20 factual26: 1 comparably 33:7;35:13 6:6,9,14,20;7:5,1 0, 16;8:1, default 9:8;23:17,19; easier 15:9 fail11:12 complaint 25:4;28: 17,23; 6,15,20,23,25;9:4,11,16; 32:20;33:9;35:6,6;14; East.29:12 failed 19:20 35:7 10:2,5,14,20;11:1,3;12:4, . 38:23,25 easy 16:1 fails 11:25 complete 26:22;28:24; 11,14,20,23;13:2,14,21; defaulted 22:7 economically 38:24 failure 10:12;25:1;36:4; 39:19 14:7,14,17;15:2,5,7;16:16, defendant 29: 18;35:20, effect 15:18;21:23 37:1 Complete 19:1 22; 17: 19; 18:3,9,17,21,25; 22 effected 26:2;37:4 fairness 14:3 completely 2.4: 12;34:3; 19:5,9,13,20;20:3,5,8,18, Defendant 30:24;35:6 effective 13:3,4 faithfui5:1I;II :9,2.0,22 36:10 24;21 :4,6,8, 13,17 ,24;22:2, defendants 21:18;28:20, efforts 33:6;35: 11 familiar 19:15 complex 13:6 6,11,17,24;23:2,10,13,20, 25;29:8;37:23;38:8 either 22:6;29:7 far 8:16;33:23 complicated 13:14 22;24: 1 ,3, 1 Defendants 29: 14;31 :2; element 25:15 fault 6:6 concedes 15:13 16,20;27: 1;28:4;34: 17;22; . 35:8 elements 6:13 favor38:15 concept 22:13,25;32:6 38:2,7,13,16,18,22;39:3,8, defined 32:5,24 else 6:7;7:11;13:15;25:22; February 35:7 concerning 26:24 11,15,20,22;40:5,8 definition 35:1 Fed 26:7 conclude 16:5 courtroom 19:2 Delaware 28:8,12 enforce 33:3;36: 16 federal 30:2 concluded 17:21,25 courts 24:15;36:16 delay 17: 17,20,22,25; enough 12:23,24;26:12 Federal29:18 conclusions 28:6;37:25 court's 28:23 18:1;32:1 ensue 26:16 few38:9 concurrence 36:25 cover25:21 deliver 25:12 ensures 13:18 fiduciary 5:24;7:20;8:9; conduct 27:12 covered 23:15;24:20; delivered 31 :2 entire 23:11 9:10;14:2;27:16;33:11 conflict 14:1;37:16 25:21 demand9:19 entirely 28:2 file 6: 10;16:4;26:9 conflicted 33:11,11 cram-down 16:12 demonstrate 7:14,15; entities 28:21 ;30:25 filed 18:1 6;21 :23;28: 16; conflicting 7:6 create 14:4;18:25;35:23 12:7;14:2,3 entitled 11:20;12;2;14:12 35:7;38:5,7 conflicts 36: 10 creates 13:11 demonstration 14:23 equal34:25 filing 6:3 confounds 36:10 creditors 12:23,24;14:9, denied 28:5;37:15;38:1 equally 7:8;24: 17 find 26:13 consider 8:6 15,18 denying8:5 equity 9:5;35: 17 findings 28:5;29:2;37:25 consideration 15:1 Cross 15:3,8;19:5;38:3 . dependent 32:6 estate 13:3;16:25;17:3; finds 38:15 consistent 17:23;35: I1 CROSS 15:4,6,9;16:18, deposits 31:5 18:23 fine I9:14,I5;39:6 constituent 29:6 24;17:20;18:5,11,19,22; Describe 16:16 even 14:25;27: 17, 17; first 34:15 constituents 30:11 19:1,8,1I,15,22;20:4,7,10, determination 26: I 30:15 First 16:3;27:6;28:7 construed 24:24 19;21 :1,5,7,10, 16,21;22:1, determinations 33:2 events 32:20;36:25 five 16:20;18:11,14;22:23; consult I8: 14 5, I 0, 16,22;23: 1 ,6, I 2, 17, difference 7:2 everybody 22: 14,20; 31:8 consultant 38:21 21 ,23;24:2, 7, 14,22;25:3, different 14:8;17:4;18:13; 34:15,16 flip-the-coin 16:1 contained 3l:I5 11,17,23;38:5,9,14,17,19, 20:14;23: 13;30:25;37:8 everyone 7:7;I0:21 flood 27:3,23 contemplate 6:3 24;39:5,9,I2,16,21;40:1,7 differently 7:14 evidence 27:15;31:I8 follow 37:11 contend I0:21 Cruden 9:18;10:1;11:12; difficult 27:9 evidencfng 33:4 foreclose 6:21,24;I0:3, Civil- foreclose (2) Min-D-Script CONFERENCE BANK OF AMERICA N.A., v. PCV ST. OWNER LP, 20;13:3,11,23;15:14;22:3; 11: 17; 19:3, 18;20:22;21 :2, 29:10;33:6;35:12 4,6;22:4,12;26:19,21; foreclosed 6:21 27:14;36:15;37:19 foreclosing 16:19 holders 5:20,22;6:19; foreclosure 7:3;10:9; 7:23;9:11;10:7,9,16,19; I2:1,8;13:22;14:3;I5:10, 1 J:IO;I9;I2:2,IO,l7;13:11; 13; 18:23;21: 18;22:3,6; 18:5,6;19:7,19,25;23:7; 24:11;26:19,21;27:9,13; 24: 19;25: 15;26:23;30: 11, 29:9,15;30:I5;32:1_,7;34:8, 20;33:I4,25;34:2i;35:16; 9;35:7,9;36: 1 ;37:9, 11, 12; 36:8,9,13;37:16,23 38:6,14 holding 32: I 0 forerunners 20:15 holdings 33:15 forgiveness 25:14 holds 29:15;31:21,22; forward 19:4;29:4 32:13 four 10:1 Honor 5:6,9;6:2,5, 17;7:2, front 18:24;19:12;25: 18 13,21;8:4,8,I7;9:9,15, 18; fulcrum 22:11,11;32:5,5, 10:4;11:6;12:12,16,21; 17;34:9;37:4 13:5,1($,24;14:11,20,21; full17:16;22:15 15:10;17:11;19:8;20:23; function 37:11 21:1 0;25:4;26: 12;27:3, 18; fundamental10:16 28:3;34:14;38:15 further 16:13 hope 17:25 future 34:9;37:4,5 houses 29:12 G hundred 18: 12;22: 18,19 hundreds 7:4;8:11;10:9; I2:1;27:8,21 gain 17:12,15,I5 hurt gave 11:16 gets 17:1 I given 9:7;30:1 giver5:15 identical 11:15 gives 5:13;8:15;12:17 identify 28:7 good39:3 imagine 27:9 Good 15:4,5 imminent 35:5 governs 39;23 immune 5:21 grant27:18 impair 30:6,17 granted 31:3 impaired 37:14,18 Greenwich 1 i:l3 impede 30:6,17 group 37:16 impeded 37:15,18 groups 37:1 importance 26:13 guess 10:24;18:12;31:22 important 27:5 incentive 31:25;33:23 H includes 36:12,13 . including 30:11;32:20 happen 37:12 inconsistency 35:23 happened 9:14 incorporation 28:18,19 happens 38:13 incurrence 27:7 happy 19:11 indeed 12:9 harm 34:8 independent 19:21 havoc36:1 indication 35:21 head 5:25;17:13 individual 33:18 heard 27:22 inefficiency 6:16 heavily8:18 inefficient 6:3,10 held 31:18 inflicts 7:4;12:1 help 19:14;23:18 initiate 1<$:6 helping 38:21 injurious 11:19 hereunder 9:8 injury 27:22 highlights 16:2 insist 10:8;11:12,25; highly 20:12 12:25;14:23 historic 13:19 instead 11:25;27:22 hold 8:12;23:10;29:16 institute 9:4,13;35:16 Hold 8:21 institutions 21:14 holder 6: 15,25;8:25;9:7; instruct 33:17 CONFERENCE Insurance 36:22 intended 36:7 interest 12:9;15:1 1,12,12, 25; 17:24;30:3,7;31 :3,4; 32:2;35:23;36:20,24 interest-only 31:22 interests 6:19;7:11; 17: 17; 18:9,10; 19:18;30:6, . 18;31:8,12;33:14,18;36:I2; 37:3,14 interrupt 6:7 interrupted 6:6 intervene 5:10;6:13,14, I6; 13:17,25;16:17; 18:18, 18,19,20,23;26: 19,21; 27: 14;28:5;29: 17;30: 1,2; 35:20;37:22 intervener 30:12;37:20 intervener-defendant 28:8 intervening 23:5 intervenor 31 :20 intervenors 28:10 interVention I4:7;15:24; 24:6,10,I3,15;27:19;28:2; 29:24;35:24;36:6;37: 15 into 13:13;17:7;33:8 investment 23:1 I ;31 :23 Investment 28:8,11; . 29:15 investors 32:24 involuntary 14:10,18; 16:6 involved 36:11 irreparable 34:7 Islands 28:13 ' issue 6:2; 18;13:20;29:2; 39:23;40:6 issued 29:16;31:11,14 issuer36:8 issues 13:7;14:25 J J51 13:7 January 35:6 28:10,12 job39:4,6 joined 24:18 joining 25:15 judge 8:7;13:21 Judge 11:14,15;25:19,23; 29:21 judgment II: 17; 13:7; 14:24;20:3;38:5,7, 11 judgments 20:6 jump 26:17 junior 16:23;33:21;34:2 jurisdiction 14:19;28:23; 29:3;39:11,13 K Min-U-Script April 29, 2010 Kaplan 11:14,15;25:19 Lower29:12 Kaplan's 25:23 LP 28:8,ll;29:15 key 13:16;I4:21;23:17; Ltd 33:20 24:22 Lynch 30:25;31:7 killing 23:11 kind 6:22;40:2 M known 11:3;33:19 L maintain 32:1 makes 13:2,10 making 18:4;19:2 language 36: 16 manages 17:9 large 32:2,9. Manhattan 29:13 largely 26:20;27:6 many 18:9,10;31:17; largest 20: 10 37:15 last38:6 . market 23:8 later 24:17 Massachusetts 28:15,16 ' law 9:5;14:14;21:1;35:17; master 26:14;32:18,21; 36: 18;39: 14,23 35:5 lawsuit 6:4,11,21 ;8: 10; matter 15:25;27:18;29:3,. 9:24; I 0:3; 13:21; 1.4:8,8; I7;30:5,17;39:25 16:16,16,17,18; 19:21; matters 12:13;37:7 23:14;24:5,6,11;29:9; maximize 19:24 30:10;35:21;36:15;37:2,8, maximum 22:8 24;38:3- may 7: 18;8:7; 1 0:22; I5: 19; lead 34:11 17:25;26:20;30:5;34:9; lease 31:I8 12 leases 31:4 May6:8 least 9:12;34:5 maybe6:25 leave 18:2;27:24 Maybe 7:16;12:23 legally 36:20 MBIA 11:13 lenders 29:10;31:2 mean 7:6;34: 17 Lending 30:25 meaning 34:I level18:21;22:14,19 means 7:7;16:14;22:i2 liabilities 12:9 measuring 21:11,11 liability 5:21;7:23;24:25; mechanics 38:9 27:8;28: 15;29:3,7;36:3; member29:6 38:8 mention 14:25 lien 22:4;34:12,13,15,23, Merrill 30:25;31 :7 24;35:1;37:13 met6:13 liens 13:l1;14:4;34:25; mezzanine 13:9 38:9 might 7:16;34:1 Life 36:22 million 22:18;31:21 likely37:14 millions 7:4;8: 11; 10:1 0; limitation 8: 17;27:4 12:1;27:8,21 limitations 27:5;32:23 Minnesota 28:19 iimited 28:9,13,15;29:7 minute 8:22 Limited 29:3 minutes 38:2 listZ1:13 misco.nduct 25:2;36:4 litigation 27:4,24 misspoke 21:7 LLC39:17 misstatement 25:18 LLCs 39:14,16 money 20: 1 ;33 :23;34: 18 loan 9:6;32:20;35:4 more 7:10;10:25;13:3; loans 20:13;31:15,16; 18: 12;20:16;34:6;37:6 32:19;33:3,4,8;35: i4 morning 15:4,5 . logic 18: 17 mortgage 9:6;13:6;15:12; long 31:24;32:1 31:2,9,15;33:3,8;35: 14 look 7:3;13:21;21:12 mortgages 20: 11 ;29: 16; looked 20:8;24:15 31:8 looks 40:4 most 20:1, 12;32: 11 loosely 22: 12 motion 14:24;28:4;29:25, lose 23:11 25;37:25;38:5, 7 . loss 17:12 movant's 30:6 losses 12:2;14:4 move 22:17,24 (3) foreclosed - move April 29, 2010 BANK OF AMERICA N.A., v. PCV ST. 'OWNER LP, moves 22: 16;23:8 one 10:25;13:6;16:25; Patrick 15:2;27:2 present 19:24 rather23:4 moving 29:15;30:17 17:3;18:6,7;19:9;24:21; PATRICK 5:2,6,9,I4,I 7; presented 26:6 rating 20:13 much 14:21;15:6;32:6; 28:13;36:21;37:15 6:2,8,10,17;7:2,9,I3,21; pretty 38:11 ;39: 12 reach 34:6 38:1;40:8 only 14:5;16:14;I7:I5,25; 8:4,8,17,2I,24;9:3,9,15,18; prevent 10: 12;27:22; read 24:23;25:4;35: 10 must 26:3,9;27:22;29:25; 18:7;25:25;27: 14 I0:4,6,15,24;Il:2,5;12:6, 36:I4 reaffirmed 25:24 33:14;34:4 open 13:2 12,16,21,24;I3:5,16,24; prevented 6:12 real13:3,20;16:19,25; operate I0:18 14:11,16,20;27:3;34:14,20 ' previously 9:7;20:23; 17:3;18:23 N operated5:3, pay 22: 19;32: 8;34:3, 14; 23:25;24:8 realign 35:25 operating 1 0:6 35:1 price 16:11 reality 27:23 NA28:18 opinions I5:17 payment 22:7 priming 13:II;14:4; realize22:8 name21:2 opportunity I2:18 pays34:18 34: I2, 13,24;35: I ;37: 13 really 21 :9;22:24;24: 13; named 20:15 option I4:5; 16:2;27:24 Peak26:5 principal28:9,15,21; 25:16 namely 36:25 options 13:10,18 people 14:4;23:4;26: 17; 31:13,24,24 reason 13:16 national 39:24 order 17:11;38:14 27:20,24 principle 28:12;34:5 reasonable 33:6;35: II National20:25;28:19 ordinarily 12:18 People 36:2I priority 18:21 reasonably 24:4 nature I0:17;34:4 ordinary 29:22 percent 9:12,20;25:14,I5; Procedure 29:19 reasons 28:5 necessarily 7:19 organize 14:9 32:10,11,13,I4,14,14,15. procedures 29:22 receiver 38:16,17;39:10 need 6:1;14:9;23:2,18; originally 17:1,5;29:21 percentage 32:2,4 proceed 6:8 reckless 12: 1 38:10 others 14:11;18:18;25:10 performance 5:11 ;7:24; proceeding 9:5,14,25; recognize 26:18 needs 36:17 otherwise 13:12;15:8; 8:13;I I:9,21,22 13:4; 15:25; 16:6,8, 13;35: 17 recognized 9:21;16:3 .negligence 7:24;23:24; 33:7;35:12 permit 6:14,15;27:I4;30:1 proof 29:5;30:9 record 6:25;20:9;21:4,19; 36:25 out 6:22;8:2; 13:9; 17: 18; permits 6:4;I5:13 properties 29:11,17;3I:I, 22:3,4;3I:I6 negligent 8:3;20:20;24:3, I 9:1 ;23:8;24:23;26: I 5; permitted 5:10;6:I2; 3;16,17;33:7;35:8,13 re.covery 13;12,13-;19:24 25;25: I ;36:3,4 30: 19;33:23;34: 18;35: 10; 33:I6 property 13:9,19;I5:I2; regard 33:I5 negligently 24:18 37:8 personally 20:9 16:20;I7:22;I8:2;22:8,2I; regarding 33:3 net I9:24 outset I 0: 18 perspective 14:22 30:3, 14;3I: 13;34:25;38: 10,. regular 27:IO New 6:7;11:3;2I:I;28:9, outstanding 31 :25 Peter 21:19;29:11;3I :I,5 I6,18,19 rejected I5:23 I2,2I,22;29:20 over 17:2I ;26: 17 pick 23:10 proposed 28:7,I0;30:12; related 8:6;28: 11 ;30: 14 next23:15 overall 3I :23 place 28:9,I6,21;37:24 31:20 relating 30:3;31:5 nobody6:18;14:22 owed 22:19 places 28:12 protect 5:1 0;30:6, 18 relationship 30:19;34:4 North 28:18 own 16:24;17:16;24:25; plain 36:17- protectable 36:20 relevant 23: I 6;24:24;- noted 25:1,1;33: 15;36:4,4 plaintiff 9:23;21:I4, 15, 17; provide 23:20,22 37:17 notes 13: 13;33:3 owned I7:5,8;31: I3; 22:9 provides 29:24;35:15 relieve 24:25 notice 9:8;25:12,14 32:19 Plaintiff 28:I4 provision 5:16;8:18;9:1; rely8:18 noting23:6 owner I6:25;22:3;3I:I6 plaintiffs 28:24;29:7 IO: 14;23:17,I8,I9;24:24; remain 3I:24 notional.31:23 owners 39:17 plaintiff's 35:22,25 26:9 remains 26:1 notwithstanding 36:15 ownership 21:19;30:13; Plaintiffs 29:IO provisions 19:6,16;24:9, remarks 27:2 November 35:4 31:12, 18;32: 15;33:7;35: 13; plan 16:14 22;26:I6,17 remedies 7:18 number 8:20;18:12,18 39:I8 play36:l prudent 8:I3;I0:8;1I:9, remedy 6:24,25 numbers 23:4 owns 32:4;33:I9,21 pleading 21:23 22,25i14:2,5,23;27:9,16; removed 29:20 pleadings 35:24. 37:7 -rent 13:7;34:11 0 p podium 15:7 PSA7:22 rents 31:4. point 10:I;11:20;13:I5; purchase I6:I0;30:25 . reorganization 12:19 object 22:6;29: 14;35:8 paid 17:I6,22,25;22:15, 14:22;21 :25;25:3,7,16; pursuant I6:14;28:25; reorganize 13: 19 obligates 10:I8;I9:18 18;i6:2I;31:23;37:6 26:10,18;27:4 -3I:4 reported 40: 1 obligation 5:5,7,8,9,21, papers 38:6 pool 1 0: 18,22 pursue I4:I2 represent 30:7,10;37:21 24;7:20; 1 0:3;14:2;I8: 14; parlance 19:23 pooling 5:12,I4,17;7:22; pursues 11:25 representative 33:I2,I6 33:1 part 24:11 10: I 7;1 i :8,1 I, 16; I5:20; pursuing 14:3 representatives I8:I5 obligations 7:25;8:14; particular 23:5 19: 17;26:2, 15;32:25;35: IS pursuit 7:3;I0:8 represented 22:9 9:24;10:I,l3 particularly 22:22;23:2 pools 18:16 push 13:11 representing 6:18;3I:I2 obtain 22:7;34: I2 parties 28:7;30:7,9;37:2i poorly24:4 pushes 34:16 represents 16:20 obtained 34:23 Partners 26:5 portions 25:2I put 12:I6;13:8;2I:1 request 9: 13 obvious 27:7 partnership 28:9 position 13:13;I4:I2; putting 39:1 require 6:10;12:7;14: I, Obviously 6: 18 partnerships 28: 13;29:4 32:9;34:I8,19;37:18 . I5;29:5 occurred 9:17 party I2:7; 16:9; 18:6,7, 7, possession 22:7 Q required 5:12;10:7;37:20 occurrence32: 19 8;23:3;29: 15,I8;38:22,24; p.ossible 22:8;32:I requirements 36:2I off I7:22;22:15,19;32:8; 39:1 potentiaii5:18 quite 19:10 requires 5:19;10:15;11 :8; 34:3;35:I party's 30:17 potentially 26:23 19:23;2I:1;35:10 offerings 16:25 pass 29:2;30: 13 powers 32:23 R residential29:12 officer 25:7 passes 23:8 practical30:5,17 respect 9:5;15:18,I8; often 13:3 past 10:25;:?1:12 precipitously 17:14 raised 14:25;32:7 26:1;38:25 OK 39:8;40:8 patience I1:4 preconditions 9: 16 ranked 20:12 respectfully 27:20 once 16:7 patient 11 :5 preexisting 34:25 rare 27:25 respectively 32: 15 moves - respectively ( 4) Min-D-Script CONFERENCE BANK OF AMERICA N.A., v. PCV ST. OWNER LP, responsibility 20:2 18:8;20:11,12,15;21:8,12; responsible 20:I9,2I,21; 23:23;25:6,25;26:8,I4,I5; 23:3,24;32:18 27:9, 12;28: 1,14,17;30:21; responsibly 38:25 32:18,21 ,22,22,24;33: 1 ,6, reviewed 20:23;24:8 - 1 I,13,13,I 7;35:5,5,11; right 5:4,1 0,13,15;8: 16; 36:3;40:3 9: I ;I 1:17;I3: 15;15: 13; servicer's I 9:2;20:2 17:ll;I8:22;19:10;2I:5,IO; servicing 5:11,12,I4,I7, 22:I0;23: 1,6,I5;25:I 7; 21;7:22;8:13;10:8, I 1,I 7; 28:4;29: 18,24;30:1;33: 1;- I I:8,9,I I,I6,23,25;I4:2, 34:23;35: 16;38:19;40:5 24;15:20; 19:17,19,23; Right I 9:22;22: I ;38:9 20: 16;26:3, I5;27: 1_2,I 6; rights 9:12;31:8;33:24; 32:18,25;34:2;35: 12,I5 34:1 0,24;37:4 several I3:I Rule 6:4, 13;29: I 8,24 shake5:25 Rules29:I9 shall8:25;9:7,13;24:24 run 25:5 show 36:19;37:20 running 32:2 shown37:I6 runs 39:13 shows 39:22 s side 29:7;35:25 Side29:12 simple 36: I 7 same 21:24;37:13 single I 7:2; 19:3;23:2 satisfied 24:8;26:4;35:I8; Sit38:2 40:6 sitting I9:13 satisfies 20:22 situated 30:5 saying 10:2;26:10;27:20 situation 37:17 scenario 26:7 sold 17:7 second 6:3;20:10;32:11 solely 33:17 Second 9:I8,20;15:24; somebody 8: 12 25:13 somewhat 1 0:24;34: I 8 section 8:15,20;ll:I5; song23:)0 23:16,24;35:14 sorry 10:20;I4:8 Section 5:I8,18;10:15; sorting 19: I I 1:16;I 9:17;29:1 ;33:5; sought 17:22 35:10,19;36:2,7 speciai6:23;I5:14;16:I9; sections 23:22 17:2,6,10; 18:8;19:2;20:1, secured 29:16;32:3 10, 12, 15, 16;21 :8, 12;25;6, securing 33:8;35:13 7,25;26: I4;28: 14,17;32:22, securitization I 7:3, 7,8,9 22,23;33: 1,5,10,13,13,17; securitized I 6:25 35:5,1 I;36:2;40:3 security 31 :3,4,5;34: I 0 specialer 23:23;26:8 seek 16:12,I7;29:10 specified 32:20 seeking 15:16;I 7: 17,20; speculate 16:7,10,12,13 24: I 6;35:20;38: 17 speculative I5:22;16:2; seeks 13:22;29: 17;35:7 37:3,5,13 seem 17:23;39:2 spelled 37:8 seems 8:10 Speyer's 38:20 sell 16:8,14;22:8 square I0:1 senior 16:22;22: I 5,20; stack 17:13 32:3,8, 10, I 1 ;34:3,18,24; stake 27:21 35:2 standard 5:II;10:1l; seniority22:14;35:2 I9:19,23;27: I6;35:12 sense 13:10 standards 27:12 sensible 8: 10 stands l7:I3 separate 6:4, II ;24:5; Stanley25:10 36:5 start 14:18 sequence 36:25 state 28:5;39:23 series 15:I7 statement 34: l service 33:2 states 5:20;20:14 servicer 5:6,I9;7:25; States 20:11,13;36:21 8:12;9:24;10:I6;11:19; statute 30:2 15: I4;I 6: 19; I 7:2,6, IO; Stein 29:21 CONFERENCE still14:9,14 story23:13 straightforward 16: 18; 38:1 I stream 32:2 stripped 31 :22 structure 39:18 Stuyvesant21:19;29:11; 3I:I,5 style20:24 subject 15:25;29:3;30:4, 15;34:10,11 subjected 24:5 subjects 10:9 submission 39:20 submit 27:20 subordinate 32:15;34;6 subordinated 34:22 subordinates 34:20 subrogated 34:17,I9 substantial29:12;32:4; 36:20 substantially 30:22 subsumed 36:12 succeeded 21:22 successful 34:8 sue 5:4,5,7,8,10,23;8:3,7, 9;9:21; I 2:2;27:22,25 suffer 6: II ;27:25;34:7 -sufficient 30:9 sufficiently 30:I4 suing 36:11 suit 6:23;9:4, 14;35: I 7 suits 36:8,8 _summary 11:17;14:24; 38:5,7,11 superfluous 21:9 superior 30:18 supplement 39: 19 supposed 14:5 Supreme 29:21 surcharge 24:5 Sure 11:1;19:8;40:7 T table 18:3 talk 5:25 talked 23:24 talking 10:24 tax 27:8 taxation 34:10 taxes 10:11:12:8; I6:15; 26:20;34:15;37:6. Teachers Il:I4,14 tenant 13:7 tenants 12:18;13:8 term 26:2 tested 39:I2 Thanks40:8 Thereafter 31:7 thereby 22:8 therefore 20:24 Min-U-Script April 29, 2010 Third 26:6,8;36:7 36:2 third-party39:1 Under 7:2I;32:25;33:5 thoroughly39:12 underlying 7:3;29:9 though 7:I8 underscore 26:12 thousands 26:23 undisputed 11:23;27:7, three 8:I9;I4:9,I5,17; 15;30:23 24:9,22;28:1 0;32:15 undo 24:12 thrown 22: I2 unfortunately I9:16 Thursday 38:6 _ unique 26:2 thus 22:20 United 20:11, I2;36:2I Thus 31:25 unknown 12:8 timely 29:25,25 unleashes 27:23 Tishman 38:20;39:3,18 unless 9:6,I I;30:7;34:3; title 2I :9;22: I I 35:I titles 31:8 unnecessary IO:l I;27:7 today24:9 unrelated 15:22;3I:I7 together 13:8 unwise 7:5,7,7,17;10:21, top 34:15 22;24:12 total6:16 up 20:8;21 :24;22:16,17, Town 2I:I9;29:II;31:1,5 24;23:8,10;38:10 trade 23:7 upon 9:5,13;33:6;35:12; tranche I6:22,24;22:13; 36:24;37:10 - 23:5;32:Il,I3,I4;33:21,23, urge 12:6 24;34:3,3 usc 28:25 tranches 18-:13;32:4,5, use 33:24 16,17,17 utmost 14:3 transaction 30:4,I4 transfer 16:15;26:20; v 34:10,14 transferred 29:22;32:2I; value 19:24;33:24 - 35:4- valued 31:21 transition 38:2I;39:6 various 21:14,18;28:20; treated 29:4 3I:ll;32:16 true 6: 18,20; 13:6; I 7:2 victimized II :24_ truly 35:21 Village 2I:20;29:11;3I:1, trust 5:2;10:6;15:I5;16:9, 6 11;19:25;20:I;2I:3;31 :9, Virgin 28:13 IO,I l,I5;32:I2,16,19; virtually ll:I5 34:10,11 virtue 9:I trustee 5:6;9:7,I3,21,23; volatile 22:22 I0:2,18;I 1 :24;I2:5;20:21, voting 9:I2;34:9,24;37:4, 25;24:25;25:5,8,12,13; 4 32:24;36:9,11 ;37:1;40:3 Vr33:20 trustees 13:1;39:13 trustee's 9:25;10:12,13; w 21:2 trusts 16:20;18:11,14; Wachovia 21 :22,22; 20: 14;22:23;26:24;29: 16; 30:24;31 :7,9;39: 16 30:I 1;31:8,12,13,14,16,19; wants 18:2 33:20;39:13 Warner 15:8 try 8:10;I0:25;14:9,I7 wastefull0:10 trying I3:8 way 8:2,19;I 1:2,6 two 9:I6;18:15;27:4; welcome I4:19 30:25;35: 17 weren't 12:23 Two28:12 what's 19:25 type I5':22 What's 23:15 whole 34:5 u wholly. 10: I 0 whose I4:4 uncertain 34: 1 I wiping 13:9 unconditional 30: I wise 39:2 under 9:5,I8;11:1 I,2I,22; wishes 37:2I I2:2;15:20;26: 15;29: I8; within 36:12;37:16 (5) responsibility within April 29, 2010 BANK OF AMERICA N.A.; v. PCV ST. OWNER LP, witbout 14:22;18:1;33:15; 34:1 work 8:2;12:18 worked 39:17 ~ worth 23:6 written 9:7,13 y years 20:17 York 6:7;11:3;21:1;28:21, 22;29:20 . ' ~ without- York (6) Min-U-Script CONFERENCE Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 1 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 2 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 3 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 4 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 5 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 6 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 7 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 8 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 9 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 10 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 11 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 12 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 13 of 14 Case 1:10-cv-01178-AKH Document 71 Filed 03/19/10 Page 14 of 14