Learn about the critical role Independent Directors play in structured finance, credit, real estate and securitized transactions. This webinar will detail how an Independent Director serves on the board of directors for a special purpose entity to help to manage a loan and keep deals moving forward. Topics include: Definition of an Independent Director/Manager Definition of a Springing Member Duties and responsibilities of each (position) Procedures for handling a possible Bankruptcy proceeding How to identify a competent Independent Director How CT can help Presenter: Vic Duva, Director of Corporate Staffing

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Wolters Kluwer CT
Independent
Directors/Managers
Presented by:
Victor A. Duva
President – CT Corporation Staffing, Inc.

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Welcome and Thanks for Joining Us!
Host: Victor A. Duva
President/Director of CT Corporation Staffing, Inc.
• Started career at CT in January 1981
• Serving in current position since March 2003
• Appointed as an Independent Director/Manager
on a few occasions
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Independent Director/Manager – What is it?
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Appointed member of Board of Directors to protect against
voluntary bankruptcy petition being filed by shareholders,
members, partners, directors or managers (as applicable) of an
otherwise solvent Special Purpose Entity
Appointment is usually a result of a requirement placed by the
lender on the borrower while the indebtedness supporting the
financial transaction (loan, rated securities, etc..) is outstanding

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• The requirement of an Independent Director is generally driven by the
rating agencies’ legal criteria for rating structured finance transactions, on
the theory that it will make the SPE less likely to file for bankruptcy at the
behest of a self interested parent.
• A requirement placed on the Borrower (Special Purpose entity) by the
Lender in large financial real estate transactions, usually required on
financial transactions greater than $15-$20MM. This is another safeguard
to ensure an SPE borrower is bankruptcy-remote.
• One or more natural persons appointed to serve as a director of a special-
purpose entity, the consent of which is required by the SPE’s governing
documents to voluntarily file for bankruptcy or to amend the provisions of
the SPE’s articles which place Bankruptcy-Remote limitations on the SPE’s
activities.
Why Is an Independent Director Appointed?
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Who Can Be Appointed as an
Independent Director/Manager?
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The following is a generally acceptable definition of "independent director“:
• A duly appointed member of the board of directors of the relevant entity who
shall not have been, at the time of such appointment or at any time while serving
as a director or manager of the relevant entity and may not have been at any time
in the preceding five years, any of the following:
– A direct or indirect legal or beneficial owner in such entity or any of its
affiliates;
– A creditor, supplier, employee, officer, director, family member, manager, or
contractor of such entity or any of its affiliates; or
– A person who controls (whether directly, indirectly, or otherwise) such entity
or any of its affiliates, or any creditor, supplier, employee, officer, director,
manager, or contractor of such entity or its affiliates.

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Duties/Responsibilities of an Independent Director
• The most important duty is to ensure a bankruptcy filing does not take
place if the company is solvent and on the other side of the coin to vote
for bankruptcy when the company is insolvent
• Other “Material Actions”
– Consent to the dissolution, consolidation, merger or liquidation of the
company (when indebtedness has been satisfied)
– Sale of all of the assets of the company
– Amendment to change business activities
– Refinancing of original financial transaction
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Springing Member/Manager
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The reason for this type of
appointment is to have a
backup (such as our friend on
the bench) to continue the
operations of the company
until a new member is
appointed if the sole member
creates a vacancy.
A Springing Member is
appointed when the LLC is being
operated by a sole member.

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Duties/Responsibilities of a Springing Member
• The sole purpose of the Springing Member or as it is sometimes referred
to “Special Member” is to spring into the role of member when the sole
member’s role has been vacated.
• As previously mentioned, Lenders will require the appointment of a
Springing or Special Member when a Limited Liability Company has only
one such member. In Delaware, dissolution of the LLC can be prompted if
there are no members. The use of a Springing or Special Member avoids
this situation.
• The responsibility of a Springing Member is limited (until a successor
Member can be appointed)
– Keep the company active and in Good Standing
– Maintain a Registered Agent and Office
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Bankruptcy Procedures
• When a Bankruptcy filing is being contemplated, our Independent
Director’s request the following information for review:
– List of all entities involved
– Reason(s) for Bankruptcy
– A complete explanation of the reasons for the recommendation and the goal
the company hopes to achieve in the bankruptcy
– Include relevant financial information (including recent balance sheet and
P&L, and any projections, as well as appraisals of encumbered property)
– Any reports and presentations by financial and legal advisors
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Bankruptcy Procedures (cont.)
Actions by Independent Directors
• Obtain and review previously mentioned documents
• Contact internal legal department to discuss options, including whether
outside counsel* is required.
• Schedule Conference call with customer and representatives to discuss any
issues/decisions
• If applicable, execute Bankruptcy Consent
*Counsel for CT Corporation Staffing, Inc.
 Ronald Barlient (former Bankruptcy Judge) – Goldberg Kohn
 Kenneth S. Ulrich – Goldberg Kohn
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What to Look for in an Independent Director
Key Characteristics of an Independent Director/Manager:
• CT has been providing Independent Directors to the legal community since the
concept of placing an independent person on the board was initially adopted.
Since that time, we have been appointed on tens of thousands of entities to
fulfill this role.
• Our qualified and professional individuals have the experience and knowledge to
fulfill this role with qualified and Professional individuals.
• With the backing of CT, our customers know where to find us…in the same place
they’ve been looking for us for over 125 years.
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 Trustworthy
 Responsive
 Experience
 Location
 Integrity
 Longevity
 Knowledge
 Accountable

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Key Benefits of
CT’s Independent Director/Manager Services
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• CT is a nationally recognized service provider by all lenders, financial
institutions and rating agencies
• CT has predictable pricing; charging per entity; not per appointment
• CT carries its own Director and Officer insurance
• CT has robust and documented procedures for the handling of a bankruptcy
vote
• CT has a dedicated team of experts with a combined average of 20 years of
industry experience, whose primary responsibility is to work with customers
on director, springing member and staffing related requests
• CT is the most recognized brand in the industry and has been servicing our
clients for >125 years and has been providing staffing services for over 30
years.
• Our staffing services are a perfect complement to CT’s registered agent
services, including providing the Agent for Process required for all Contracts
and Agreements in a financial transaction.

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Questions
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Wolters Kluwer CT
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Thank You For Attending
Independent
Director/Managers