EXHIBIT 10.2

 

PARTICIPATION AGREEMENT

 

THIS PARTICIPATION AGREEMENT (“Agreement”) is made as of October 1, 2002, by and
among BankUnited, FSB (“Lender”), a federally chartered savings bank, and BU
REIT, Inc. (“Participant”), a Florida corporation.

 

RECITALS

 

Participant desires to purchase and/or receive by contribution from Lender and
Lender desires to sell, assign, contribute and/or transfer to Participant, on
the terms and conditions set forth herein, an undivided One Hundred Percent
(100%) participation interest in the benefits and obligations of Lender under
the Loans, in each Advance, the Notes, the Security Documents, and the other
Loan Documents associated therewith (all as hereinafter defined).

 

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the mutual receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE 1—DEFINITIONS

 

Section 1.1.  Definitions.    As used herein, the following terms have the
respective meaning ascribed thereto below, which meanings shall be applicable
equally to the singular and plural forms of the terms defined:

 

“Advance” shall mean any advance of Loan funds to or for the benefit of any
Borrower pursuant to the terms of the Loan Documents of a partially funded Loan
or this Agreement.

 

“Affiliate” shall mean any entity controlled directly or indirectly by Lender.

 

“Agreement” shall mean this Agreement, together with all exhibits and schedules
hereto, as the same may be modified, amended, or restated from time to time.

 

“Authority” shall mean any governmental or quasi-governmental authority
including, without limitation, any federal, state, county, municipal, or other
governmental or quasi-governmental agency, board, branch, bureau, commission,
court department, or other instrumentality or political subdivision, whether
domestic or foreign.

 

“Borrower” shall mean the borrower on each Loan participated hereunder.

 

“Business Day” shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in the State of Florida are authorized or obligated
by law or executive order to be closed.

 

“Collateral” shall have the meaning assigned to it in Section 3.4 hereof.

 

“Commitment” shall mean the commitment of Lender to fund a loan or future
Advances under a Loan.

 

“Commitment Fee” shall mean the commitment fee paid or to be paid to Lender
pursuant to the terms of a Commitment.

 

“Delinquency” shall have the meaning assigned to it in Section 7.1 hereof.

 

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“Delinquent Participant” shall have the meaning assigned to it in Section 7.1
hereof.

 

“Designated Representative” shall mean that person designated by a Participant
to act on behalf of Participant.

 

“Event of Default” shall have the meaning assigned to it in the Loan Agreement.

 

“Lender” shall have the meaning assigned to it in the introduction to this
Agreement.

 

“Loan(s)” shall mean the obligation of Borrower(s) to repay Lender an amount
evidenced by a Promissory Note(s) and other Loan Documents. Schedule A attached
hereto contains a list of the Loans being participated herein, as of the date
set forth on Schedule A, with account numbers and balances due and other
identifying data.

 

“Loan Agreement(s)” shall mean the Loan Agreement(s) executed by and between
Borrower(s) and Lender in connection with a Loan(s), as the same may be
modified, amended, or restated from time to time.

 

“Loan Documents” shall mean the documents and instruments executed and delivered
by a Borrower(s) and/or guarantors in favor of Lender in connection with a Loan.

 

“Note(s)” shall mean a Promissory Note(s) executed by a Borrower(s) in
connection with a Loan(s), as the same may be modified, amended, restated, or
renewed from time to time.

 

“Obligations” shall have the meaning assigned to it in Section 8.7 hereof.

 

“Partially Funded Loan” shall mean a Loan of a Borrower for which all of the
funding obligations of Lender have yet to be satisfied.

 

“Payments” shall have the meaning assigned to it in Section 3.3 hereof.

 

“Person” shall include, without limitation, any manner of association,
Authority, business trust, company, corporation, estate, joint venture, natural
person, partnership, trust, or other entity.

 

“Servicer” Any servicer of the Mortgage Loans.

 

“Share” shall mean the undivided participation fractional interest in the
Loan(s) of Participant.

 

Section 1.2.  Capitalized Terms.    Capitalized terms used herein and not
defined herein shall have the meanings given such terms in the Loan Agreement.

 

ARTICLE 2—TERMS OF PARTICIPANT’S SHARES

 

Section 2.1.  Consent.    Participant hereby consents to the execution,
delivery, and performance by Lender of the Loan Documents.

 

Section 2.2.  Advances to Borrowers.    Some of the Loans participated hereunder
require the making of further Advances by Lender. The balance of the Loan funds
shall be advanced by Lender payable under the Loan. Accordingly, by no later
than 2:00 p.m. on the fifth day of the succeeding month, but in no event sooner
than two business days after Lender requests such funds from Participant,
Participant shall deposit with Lender Participant’s Share of each Advance by
wire transferring to Lender such sum.

 

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ARTICLE 3—DUTIES OF LENDER

 

Section 3.1.  Possession of Documents.    Lender shall hold in its possession,
for the benefit of Participant, in accordance with the terms of this Agreement,
the originals (or original counterparts) of each of the Loan Documents and all
other material documents or instruments delivered to Lender pursuant to or in
connection with the transactions contemplated by any of the Loan Documents.
Lender shall also keep in its files, for the benefit of Participant,
resolutions, correspondence, schedules, credit information, appraisals, and such
other instruments and documents pertaining to the transactions contemplated
hereby or by any of the Loan Documents as Lender may deem advisable. Participant
shall have the right to examine and photocopy the original Loan Documents, or
original counterparts thereof, and other documents and information relating to
the transactions contemplated thereby contained in Lender’s files during normal
business hours at the office of Lender, located at 7815 NW 148th Street Miami
Lakes, Florida 33016 or at such other place as Lender may designate from time to
time, upon Participant’s delivery of reasonable prior notice to Lender.

 

Section 3.2.  Furnishing of Information to Participant.    Upon Lender’s
acquisition of “Actual Knowledge” (which shall mean actual knowledge of any
officer of Lender having primary, day-to-day responsibility for administration
of the Loan or the head of Lender’s real estate department), Lender shall
furnish to Participant notice of the following: (i) any adverse change in the
perfection or priority of any lien securing the Loan; (ii) the occurrence of any
material Event of Default; (iii) any written request by Borrower or any other
obligor on the Loan to modify the terms of the Loan or substitute or release any
Collateral (except as contemplated by the Loan Agreement) or any obligor on the
Loan; and (iv) any loss, damage, destruction, condemnation, or other
governmental taking of all or any material portion of the Collateral.

 

Section 3.3.  Payments to Participant.    Whenever Lender collects or receives
immediately available funds representing payments of principal, interest,
recoverable expenses, or any other amounts payable to or for the benefit of
Lender pursuant to any of the Loan Documents or otherwise in connection with any
Loan including, without limitation, as a result of the enforcement of any
mortgage lien on or security interest in any Collateral (collectively,
“Payments”), but excluding any Commitment Fees or other similar fees, late
charges, and proceeds of insurance or condemnation awards to be held pending
restoration, as provided in the Loan Documents, Lender shall receive, hold, and
disburse the same as follows: (i) Lender shall retain for its own account and/or
disburse to Participant, as the case may be, expenses reimbursed by Borrower
pursuant to the terms of the Loan Documents and reimbursable to Lender and/or
Participant pursuant hereto; and (ii) Lender shall retain for its own account an
amount equal to the fee Lender is entitled to as compensation for servicing the
Loans, as set forth in Section 3.12, and shall disburse the remainder of the
Payments to Participant no later than 2:00 p.m. on the fifth day of the
succeeding month, except as otherwise provided by this Agreement. Lender shall
promptly notify Participant in writing of the manner in which its share of any
such Payments should be applied, consistent with the Loan Documents and this
Agreement, and Participant shall apply the same accordingly (absent manifest
error). Participant shall continue to receive its share of all Payments received
by Lender in connection with such Loan, except as otherwise provided by this
Agreement, until all such principal, interest, and other amounts have been
repaid in full.

 

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Section 3.4.  Collateral.    Lender shall hold in its name, for the benefit of
itself and Participant, all of the collateral pledged, mortgaged, hypothecated,
or assigned to or deposited with Lender from time to time pursuant to or as
security for each Loan or any of the indebtedness evidenced by the Loan
Documents (“Collateral”).

 

Section 3.5.  Loan Administration.    Lender shall have all rights with respect
to the collection administration of the Loans and the security therefor and
shall make all advances of the proceeds thereof in accordance with the Loan
Agreements. Participant agrees that Lender shall make all determinations as to
compliance by Borrower with the terms and conditions of the Loan Documents.
Participant shall administer all other functions of the Loans with the same
degree of care it ordinarily exercises in its administration of loans which it
holds entirely for its own account. Subject to the other provisions of this
Agreement and consistent with the foregoing standard, Lender shall administer
the Collateral so as to preserve its value in the manner which Lender shall deem
appropriate, and shall have the power to grant such releases, satisfactions,
consents, joinders, assignments and reassignments with respect to the Collateral
to the extent contemplated by and substantially in accordance with the terms of
the Loan Documents, in each such case without the consent of Participant.
Participant and Lender will maintain accurate books and records with respect to
the Loans and the costs and expenses related thereto in the same manner as the
Lender customarily maintains for similar loans in which it acts exclusively for
its own account, and Lender and Participant will make such books and records
available for inspection by a designated representative of the other at such
reasonable times and intervals as Lender and Participant may reasonably request,
all upon such reasonable prior notice to the other. Lender shall be entitled, at
its option, from time to time and at any time, to enter into any amendment of,
or waive compliance with the terms of, a Loan Agreement or any other Loan
Document without obtaining the prior approval of Participant, as long as Lender
exercises the same degree of care, skill, caution, and prudence as customarily
exercised by Lender in connection with transactions for its own account. Lender
shall not, however, without the written consent of Participant (other than as
contemplated by and provided for in the Loan Documents): (i) change the
principal amount of the Loans; (ii) postpone the due date of any scheduled
payment of principal or interest or waive any such payment or any other claim
against any Borrower; (iii) reduce the interest rate under the Notes from the
rate specified therein; (iv) release any guarantor from his obligations under
his guarantee of any Loan; (v) except in accordance with the Loan Agreements,
release, substitute or exchange the Collateral or any part thereof from any
Security Document; (vi) pledge, assign, transfer or extend any of the Loan
Documents; or (vii) except in the exercise of reasonable business judgment,
waive any condition to Lender’s obligation to make Advances of the proceeds of
the Loans to Borrowers pursuant to the terms of the Loan Documents.

 

A.    Participant shall be deemed to have consented to any action proposed to be
taken by Lender if, within ten days after receipt by Participant of Lender’s
written request for such consent, together with such supporting documentation as
shall be reasonably necessary to enable Participant to properly evaluate such
request, Participant shall have failed to deliver written notice to Lender that
it does not consent to such request.

 

B.    Lender agrees that, upon its receipt of any written notice from Borrower
claiming or asserting that Lender has breached its obligations to Borrower
pursuant to any of the Loan Documents or that Lender is in default of the
observance or performance of any of its obligations under any of the Loan
Documents, Lender will promptly give Participant notice thereof, will consult

 

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with Participant in connection therewith, and will afford Participant an
opportunity to discuss the nature of the response to be taken by Lender as a
result thereof.

 

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Section 3.6.  Servicing.

 

(a)    The Lender, as an independent contractor, shall (i) service and
administer the Mortgage Loans in a manner that is consistent with the terms of
this Agreement and with servicing industry standards and shall (ii) exercise the
same care that the Lender customarily employs and exercises in servicing and
administering mortgage loans for its own account.

 

(b)    The Lender and Participant shall comply with their respective obligations
to provide notice of transfer of servicing (if applicable) to Mortgagors
pursuant to Section 6 of the Real Estate Settlement Procedures Act, if
applicable. Servicing will be retained by Lender at the servicing fee rate
indicated in Section 3.12 with payments on the 25th of each month with actual
reporting and actual remittances. Lender shall deduct the service fee from the
monthly remittance due Participant.

 

(c)    Lender warrants that Lender shall see that the improvements on the
premises securing each Mortgage Loan are kept insured by hazard insurance
policies issued by a company acceptable to FNMA/FHLMC, in an amount equal to the
outstanding principal of the Mortgage Loan or the full insurable value of the
improvements, whichever is less, and of a type at least as protective as fire
and extended coverage, containing a mortgagees clause naming the Lender and its
successors and assigns as loss payee.

 

(d)    Upon Participants request, Lender warrants that the Servicer shall
furnish a detailed statement of its financial condition, and shall give
Participant or its authorized representative upon reasonable advance notice
opportunity at any time during business hours to examine Servicers books and
records. Lender warrants that Servicer shall cause a certified public accountant
employed by it to provide Buyer, not later than 90 days after the close of
Servicers fiscal year, with a certified statement of Servicer’s financial
condition as of the close of its fiscal year.

 

(e)    Until the principal and interest of each mortgage is paid in full, Lender
warrants that Servicer shall:

 

(1)    Proceed diligently to collect all payments due under the terms of each
Mortgage Loan as they become due.

 

(2)    Keep a complete, accurate, and separate account of and properly apply all
sums collected by it from the Mortgagor on account of each such Mortgage Loan
for principal and interest, taxes, assessments and other public charges, hazard
insurance premiums and FHA insurance or mortgage insurance premiums, and upon
request, furnish Participant with evidence acceptable to Participant all
expenditures for taxes, assessments and other public charges, hazard insurance
premiums and FHA insurance or mortgage insurance premiums. In the event any
Mortgagor fails to make a payment to said Lender required to be made under the
terms of said Mortgage Loan, Lender warrants that Servicer will notify
Participant of such fact within thirty days after the same shall have become due
and payable.

 

(3)    Deposit all funds received on behalf of such Mortgage Loan in a custodial
demand deposit account in an institution, the deposits of which are insured by
the Federal Deposit Insurance Corporation. Such account shall be held by
Servicer as trustee or custodian which shall

 

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maintain detailed records to show the respective interests of each individual
Mortgagor in the account. Each such account shall be established and maintained
in a manner which complies with the applicable rules and regulations of the
Federal Deposit Insurance Corporation.

 

(4)    From the funds so deposited, (1) pay promptly to the proper parties when
and if due FHA insurance premiums, mortgage insurance premiums, taxes, special
assessments, ground rents, and premiums on hazard insurance, and (2) on or
before the 25th day of each month pay to Participant all amounts of principal
and interest collected under the Mortgage Loan, retaining as full compensation
for all services performed hereunder the earned portion of the Servicing Fee per
annum agreed to in this Agreement for each specific loan or block of loans, plus
late charge, if any, collected from the mortgagor pursuant to the terms of the
mortgage, or any other HUD or VA allowable fees.

 

(5)    Submit to Participant at lease annually an accounting of the balances in
each trust account, together with a certificate that all disbursements were made
for proper purposes, and that all payments required to be made hereunder have
been made, with exceptions, if any.

 

(6)    Make interest rate adjustments in compliance with applicable regulatory
adjustable loan requirements, the loan contract, and which reflect the
applicable Mortgage Loan rate index. The applicable interest rate adjustments
shall be implemented in accordance with the applicable adjustable loan
regulations and Mortgage Loan contract. Servicer shall execute and deliver all
appropriate notices required by the applicable adjustable loan regulations and
loan contract regarding such interest rate adjustments including but not by way
of limitations, timely notification of Participant, or to Participants
successors or assigns, of all applicable data and information regarding such
interest rate adjustments, and methods of implementation of such interest rate
adjustments, new schedules of Participants pro rata share of collections of
principal and interest, and of all prepayments of any loan hereunder by
Mortgagor. If Mortgagor on any Mortgage Loan hereunder is in default at the time
such notices are executed and delivered to such Mortgage, Servicer shall timely
execute and deliver to mortgagor notice that all contractual rights under the
applicable loan contract in regard to such default are reserved even though the
interest rate is adjusted.

 

(7)    Perform such other customary duties, furnish such reports, and execute
such other documents in connection with its duties hereunder as Participant from
time to time reasonably may require.

 

(f)    Lender warrants that Servicer will notify Participant upon receipt of
notice of the following:

 

(1)    The vacating of or any change in the occupancy of any premises securing a
Mortgage.

 

(2)    The sale or transfer of any such premises.

 

(3)    The death, bankruptcy, insolvency or other disability of a mortgagor
which might impair ability to repay the loans.

 

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(4)    Any loss or damage to any such premises, in which event, in addition to
notifying Participant, Lender shall see that the insurance companies concerned
are promptly notified by Servicer.

 

(5)    Any lack of repair or any other deterioration or waste suffered or
committed in respect to the premises covered by the mortgage.

 

It is understood, however, that no notice need to be given to the Participant of
any facts other than those of which Lender or Servicer shall have actual notice,
and those of which Servicer would have had notice.

 

(g)    Lender warrants that Servicer will not waive, modify, release or consent
to postponement on the part of the mortgagor of any term or provision of the
mortgage without the written consent of Participant.

 

(h)    It is understood Lender shall require Servicer reinspection only with
respect to those proprieties on which the mortgage becomes ninety (90) or more
days delinquent.

 

(i)    Lender warrants Servicer will upon the request and under the direction of
Participant assist in the foreclosure or other acquisition of the Mortgaged
Property securing any Mortgage, the transfer of such property to the FHA or VA
and the collection of any applicable mortgage insurance and pending completion
of these steps, protect such property from waste and vandalism. In the event
that title to the property is acquired in foreclosure or deed in lieu of
foreclosure, the deed or certificate of sale shall be taken in the name of the
Participant or its designee. The disposition of the property is the Participants
responsibility.

 

(j)    In the event Participant sells all or any part of its interest in a
Mortgage Loan covered by the contract to a third party, including the sale of
participating interest therein, such third party shall succeed to all of the
rights of Participant hereunder for the portion purchased and this Agreement
shall remain in full force and effect. However, in no event shall there by more
than two (2) persons at any given time having the status of a Participant
hereunder. In such event, Lender warrants that Servicer will remit all principal
and interest installments collected under the Mortgage Loans directly to such
third party or parties by or before the 25th of each month, after deduction of
the Servicing Fee as herein provided. The obligation to make direct remittances
and to execute and deliver all appropriate notices required by this Agreement to
such third party or parties, shall arise upon thirty days written notice of such
assignment given by such subsequent buyers to Servicer.

 

(k)    The Participant may, by notice to Lender, terminate this Agreement as to
any or all of the Mortgage Loans being serviced if:

 

(l)    Lender fails to perform its obligations hereunder and is notified by
Participant within sixty (60) days of such discovery. Upon notification, Lender
shall have ninety (90) days to correct and cure such deficiency.

 

(1)    Lender or Servicer becomes insolvent or bankrupt or is placed under

 

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conservatorship or receivership.

 

(2)    Lender assigns its rights and obligation hereunder, without written
consent of Participant.

 

(3)    In any event and without cause, upon thirty (30) days written notice and
payment to Lender of a sum equal to 2.5% of the aggregate principal amount then
outstanding of all the Mortgage Loans subject to this Agreement.

 

(m)    Upon termination of this agreement, Lender warrants that Servicer will
account for and turn over to Participant all funds collected under each Mortgage
Loan, less only the compensation then due Servicer, and deliverer to Participant
all records and documents relating to each such mortgage that it may have in its
possession.

 

(n)    The Servicer of the Mortgage Loans sold pursuant to this Agreement is
Lender. Lender agrees that Servicer will not be changed without Participants
consent.

 

(o)    In the event servicing is transferred to a new lender, Lender agrees that
it will remit to Participant, or at Participants option, to the new lender,
within 48 hours after receipt, any payment received from a Mortgagor on a
Mortgage Loan including, without limitation, al payments of principal and
interest, late charges, and bad check charges received from a Mortgagor on or
after the Closing Date. Lender shall remit such payment via a nationally
recognized overnight delivery service.

 

Section 3.7.  Exculpation.    Lender shall have no duties or responsibilities to
Participant with respect to the Loans, except those expressly set forth in this
Agreement, and only to the extent herein provided. Notwithstanding anything in
this Agreement to the contrary, however, neither Lender nor any of its officers,
directors, employees, shareholders, attorneys, agents, or Affiliates shall be
liable for any act, omission, mistake, or error in judgment with respect to any
transaction relating to the Loan Documents or this Agreement, unless caused by
its or their gross negligence or willful misconduct (including, without
limitation, a willful breach of this Agreement).

 

Section 3.8.  Consultation with Participant.    Lender may at any time request
instructions from Participant with respect to any actions or approvals which by
the terms of this Agreement or the Loan Documents, Lender is permitted or
required to take or to grant. If such instructions are requested, Lender shall
be absolutely entitled to refrain from taking any action and withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under this
Agreement or the Loan Documents, until it shall have received such instructions
from Participant. Participant shall not have any right of action whatsoever
against Lender as a result of Lender’s acting or refraining from acting
hereunder or under the Loan Documents in accordance, with instructions from
Participant.

 

Section 3.9.  Consultation with Legal Counsel.    Lender may at any time consult
with independent legal counsel selected by it on any legal issue or question,
and any action taken by Lender in connection therewith in good faith and in
accordance with the oral or written opinion of

 

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such legal counsel shall not render Lender liable to Participant, provided such
action shall not contravene any of the express provisions of this Agreement.

 

Section 3.10.  Reliance.    Lender shall be entitled to rely upon any
certificate, telex, teletype message, cablegram, writing, notice, statement,
order, or other document or telephone conversation believed by it to be genuine
and correct and to have been signed, sent, or made by the proper Person.

 

Section 3.11.  No Partnership.    Neither the execution of this Agreement, nor
the sharing in the Loans or in any of the proceeds of the Collateral, nor any
agreement to share in profits or losses arising as a result of this transaction
is intended to be, nor shall it be construed to be, the formation of a
partnership or joint venture between or among the parties hereto, and no party
shall be liable to any other Person for the liability of any other party hereto
arising in connection with the Loans or any transaction connected therewith.

 

Section 3.12.  Compensation for Loan Administration and Servicing.    Lender
shall be entitled to receive a fee as compensation for the administration and
servicing of the Loans. This fee shall be payable monthly and calculated by
multiplying the average monthly principal amounts of the Loans outstanding times
25 hundredths of one percentage point ( 0.25%) times the number of days in the
month divided by 365. Lender will provide Participant with a calculation of the
fee each month. The fee will be retained by Lender out of the principal and
interest payments collected from the Borrowers, as set forth in Section 3.3.

 

ARTICLE 4—REPRESENTATIONS AND WARRANTIES

 

Section 4.1.  Representations and Warranties of Participant.    Participant, as
a material inducement to Lender to enter into this Agreement and to consummate
all of the transactions contemplated hereby, represents and warrants to Lender
as follows:

 

A.    Participant is duly organized and validly existing under the laws of its
jurisdiction of incorporation and has the legal power and authority to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.

 

B.    The execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly authorized,
by all necessary action on the part of Participant, do not and will not
contravene its articles of incorporation or bylaws or any agreement, law,
governmental rule, regulation, or order binding on Participant (including,
without limitation, legal lending limits applicable to it), and do not require
the consent or approval of the giving of notice to, the registration with, or
the taking of any other action with respect to, any Authority.

 

C.    This Agreement constitutes the legal, valid, and binding obligation of
Participant and is enforceable in accordance with its terms.

 

D.    Neither Participant nor any Person that Participant has authorized to act
on its behalf has directly or indirectly offered any interest or participation
in this Agreement to any other Person.

 

E.    Participant has been given adequate opportunity to review and in fact has
independently evaluated the terms of the transaction contemplated by this
Agreement and the Commitment, as

 

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Participant has deemed necessary and prudent in order to make its own
determination to enter into this Agreement.

 

F.    Participant has made and will continue to make such independent evaluation
of such financial information and other data relating to Borrowers, guarantors,
and the Collateral as Participant deems necessary and prudent. Participant
acknowledges that all reports and other information furnished by Lender to
Participant with respect to Borrowers, guarantors, the Loans, or otherwise,
whether in writing or orally, have been without representation or warranty by
Lender with respect to their truth or accuracy and Participant has assumed no
responsibility with respect to such reports. Participant recognizes that such
reports have been and will continue to be prepared from information made
available by Borrowers to Lender’s personnel, who are not acting as accountants
and who are not verifying the information so supplied. Participant further
acknowledges that all such reports have been and shall be furnished and received
strictly on a confidential basis for the exclusive use of Participant, and
Participant agrees that it shall not make any such information available to any
other Person, except to Authorities, Participant’s legal counsel, and as
otherwise required by prudence or any applicable law, or to the extent otherwise
permitted pursuant to the terms hereof to be provided to any prospective
participant or assignee.

 

G.    Participant is entering into this Agreement as a sophisticated and
knowledgeable party, relying entirely upon its own independent evaluation of the
current and projected financial condition and creditworthiness of Borrowers and
guarantors and the adequacy of the Collateral. Participant further acknowledges
that Lender has made no oral or written guaranty or warranty, express or
implied, and assumes no responsibility as to (i) recitals, statements,
representations or warranties in any of the Loan Documents; (ii) the
authorization, execution, effectiveness, genuineness, validity, or
enforceability of any of the provisions of this Agreement (except as set forth
in Section 4.2.B below) or the Loan Documents (except that Lender shall obtain,
when available, an opinion of counsel from the various Borrower’s counsel
opining as to the enforceability of the Loan Documents); (iii) any filing,
recording, registration, giving of notice, or other action taken or to be taken
with respect to any of the Loan Documents (except as is otherwise provided in
Articles 2 and 3 hereof); (iv) compliance with any provision of law or the
requirements of any Authority; (v) the priority, perfection (except that Lender
shall be responsible for the continuation of Uniform Commercial Code financing
statements) or effectiveness of any lien or security interest created or
intended to be created by any of the Loan Documents; or (vi) the collectibility
of the indebtedness evidenced by the Notes, as to all of which matters
Participant has made independent investigation and has satisfied itself.

 

H.    Participant is entitled to receive payments hereunder without the
withholding of any tax and will furnish to Lender such forms, certifications,
statements, and other documents as Lender may request from time to time to
evidence the Participant’s exemption from the withholding of any tax imposed by
any jurisdiction or to enable Lender to comply with any applicable laws or
regulations relating thereto.

 

Section 4.2.  Representations and Warranties of Lender.    Lender, as a material
inducement to Participant to enter into this Agreement and to consummate all of
the transactions contemplated hereby, represents and warrants to Participant as
follows:

 

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A.    Lender is a federally-chartered savings bank and has the legal power and
authority to enter into and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.

 

B.    The execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary action on the part of Lender, do not and will not contravene
its articles of incorporation or bylaws or any agreement, law, governmental
rule, regulation, or order binding on Lender (including, without limitation,
legal lending limits applicable to it) and do not require the consent or
approval of, the giving of notice to, the registration with, or the taking of
any other action with respect to any Authority.

 

C.    This Agreement constitutes the legal, valid, and binding obligation of
Lender and is enforceable in accordance with its terms.

 

ARTICLE 5—COVENANTS OF PARTICIPANT

 

Section 5.1.  Payment of Advances.    Participant agrees to deliver its Share of
Advances to the Lender in the manner and at the times set forth in Section 2.2
hereof.

 

Section 5.2.  Other Payments.    If a Borrower fails to pay taxes, assessments,
insurance premiums, or any other charges or sums required by the Loan Documents
to be paid, as the same become due and payable, or Lender otherwise deems it
necessary to pay any such amounts on behalf of Participant, Lender may advance
such amounts and Participant will fund or reimburse its Share of the amounts
thereof to Lender in the same manner as if the same were an Advance to a
Borrower in the manner set forth in Section 2.2 hereof. Any such amounts, to the
extent provided in the Loan Documents, shall become additional Advances under a
Loan and shall be secured by the Loan Documents and the Collateral.
Additionally, Participant agrees to pay to Lender, to the extent Lender is not
reimbursed by Borrowers, its share of any reasonable out-of-pocket expenses and
liabilities hereafter incurred by Lender in connection with the administration
of the Loans, except those expenses which are considered in the industry normal
and ordinary servicing expenditures for which Lender shall be compensated by
virtue of its retention of its servicing fee.

 

Section 5.3.  Declaration of Invalidation.    Participant agrees that, to the
extent amounts or any part thereof, received in connection with the Loans from
Borrowers or otherwise, whether by payment, realization of Collateral, or
otherwise are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required by any Authority to be repaid to a trustee,
receiver or any other Person under any applicable law, order or judgment,
including the Bankruptcy Code or any similar state law or any other cause of
action, Participant shall repay to Lender, after request by Lender, its Share of
any such amount (with interest to the extent required), so that Participant will
be affected by any such invalidation, declaration, set aside, or repayment in
accordance with its Share thereof.

 

Section 5.4.  Receipt of Default Sums.    Participant shall hold all sums, if
any, received directly from Borrower with respect to the Loan Documents, after
the occurrence of an Event of Default (of which Lender has given notice to
Participant), whether received by voluntary payment,

 

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the exercise of any right of counterclaim, set-off, or otherwise, in trust for
the benefit of Participant and shall promptly deliver all such sums to Lender
for application as provided in Section 6.4 hereof.

 

Section 5.5.  Indemnification.    Participant hereby agrees to indemnify and
hold harmless Lender (including its officers, directors, attorneys, agents,
employees, and Affiliates) from all liabilities, obligations, damages,
penalties, claims, costs, charges, and expenses including, without limitation,
attorneys’ fees and disbursements at the trial and appellate levels
(collectively, “Losses”), in proportion to Participant’ s Share, which may be
incurred by Lender or which may be imposed upon Lender by any Borrower or any
third party, arising out of or resulting from, by reason of, or in connection
with, any act or failure to act on the part of Lender in accordance with the
terms of the Loan Documents or this Agreement (including, without limitation,
any lawsuit by any Borrower or any third party against Lender for failure to
fund the Loan or any part thereof), except to the extent caused by Lender’ s
failure to meet the standard of care set forth in Section 3.5 of this Agreement.

 

Section 5.6.  Transfer.    Participant shall not sell, assign, subparticipate,
pledge, hypothecate, or otherwise transfer all or any part of its interest in
the Loans, the Loan Documents, the Collateral, or its rights under this
Agreement, except to an Affiliate, without the prior consent of Lender, which
may be given or withheld in Lender’s sole discretion. Lender shall at all times
continue to be the party responsible for the servicing and administration of the
Loan except as reserved to the Participant hereunder. Any valid assignee or
transferee under this section shall be deemed a Participant for all purposes of
this Agreement.

 

ARTICLE 6—DEFAULT BY A BORROWER

 

Section 6.1.  Default.    If Lender or Participant determines that an Event of
Default of a Borrower has occurred, the Participant shall immediately attempt to
formulate a course of action; provided, however, that if Participant shall fail
to formulate such course of action within ten Business Days after notification
that an Event of Default has occurred, or if, in Lender’s judgment, immediate
action is required in less than ten Business Days in order to protect the
interests of Participant in the Loan, the Collateral, or the Loan Documents,
Lender shall pursue the remedies provided in the Loan Documents and may proceed
in such manner as it deems appropriate and advisable.

 

Section 6.2.  Foreclosure.     Lender shall hold the Loan Documents (together
with any and all other documents executed and delivered in connection therewith)
and title to any of the Collateral acquired by Lender after an Event of Default
in its name or that of an Affiliate of Lender as agent for Participant (to the
extent of Participant’s Share thereof). Accordingly, in the event of a
foreclosure and foreclosure sale of any Collateral or any judicial sale of any
of the collateral, Lender shall bid at such sale for the benefit of Participant
and if such bid is successful, Lender shall, to the extent permitted by law,
cause all title instruments relating to such Collateral to be issued in the name
of Lender or such Affiliate, as agent for Participant, in accordance with
Participant’s Share. If a successful bid is entered by a third party, then, to
the extent that the proceeds of the foreclosure sale are, pursuant to law, the
property of the holder of the Loan Documents, such proceeds shall be received by
Lender and shall thereupon be distributed to Participant in proportion to its
Share.

 

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Section 6.3.  Default Administration.    Upon the determination by Lender or
Participant, as the case may be, of a course of action taken after an Event of
Default in accordance with Section 6.1 hereof, Lender shall have the right to
maintain, manage, and operate the Collateral and sell all or any part thereof in
a manner consistent with such course of action or as Lender determines to be
prudent, respectively, and may employ an independent management company, sales
agent, or others to maintain, manage, operate, and sell the Collateral, all of
which activity shall be part of Lender’s right to service and administer the
Loan. If Lender determines, in its discretion, that a management agreement is
necessary, Lender will negotiate such management agreement in good faith. In the
event of the appointment of a receiver for any of the Collateral during the
pendency of a foreclosure proceeding or otherwise, Participant shall share in
the profits and expenses of the receivership in proportion to its Share.

 

Section 6.4.  Enforcement Costs.    Should Lender commence any proceeding or in
any way seek to enforce its rights or remedies under the Loan Documents,
irrespective of whether as a result thereof Lender shall acquire title to the
Collateral or any part thereof, either through foreclosure, deed in lieu of
foreclosure, judicial sale, or otherwise, Participant shall, upon demand
therefor from time to time, to the extent the applicable Borrower has not
reimbursed Lender, contribute its share of the costs and expenses of attorneys.
Without limiting the generality of the foregoing, Participant shall contribute
its share of all costs and expenses incurred by Lender (including attorneys’
fees and expenses) if Lender employs counsel for advice or other representation
(whether or not any suit has been or shall be filed) with respect to the
Collateral or any part thereof, or any of the Loan Documents (including any
proposed modification of the Loan) or to attempt to enforce any security
interest or lien in any of the Collateral or to enforce any rights of the Lender
or any Borrower’s obligations or those of any other party under any of the Loan
Documents.

 

Section 6.5.  Application of Default Sums.    All amounts received by
Participant with respect to the Loan Documents following any Event of Default
whether paid by Borrower, realized from the Collateral, or otherwise, shall be
applied by Lender as follows: (i) first, to the payment of any and all costs and
expenses including, without limitation, reasonable trial and appellate
attorneys’ fees, costs, and disbursements incurred by Participant in connection
with or incidental to its collection of any amount due and payable to
Participant under the Loan Documents, the preparation for sale of the Collateral
or any portion thereof, and the sale, transfer, and delivery of the Collateral
or any portion thereof; (ii) second, to the satisfaction of all amounts
including principal, interest, fees, and other amounts due and payable to
Participant, pursuant to the Loan Documents; (iii) third, to the payment of any
other amounts required by applicable law; and (iv) last, to the extent of the
surplus, if any, of such proceeds, to the Borrower (or such other entity as may
be entitled thereto).

 

Section 6.6.  Losses.    All losses incurred by Participant as a result of any
failure on the part of Borrower to repay the Loan and any other sums due
pursuant to the Loan Documents shall be borne by Participant in accordance with
its Share.

 

ARTICLE 7—DELINQUENCY OF PARTICIPANT

 

Section 7.1.  Delinquency.    If Lender fails to transfer or contribute funds to
a Borrower or Participant fails to transfer or contribute funds to Lender as,
when and to the full extent required hereunder or under any Loan Agreements
participating hereunder (“Delinquency”), Participant shall

 

14

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be in breach of its obligations hereunder. For the purposes hereof, Participant
in breach will be referred to as a “Delinquent” and the amount of the funds not
transferred or contributed by the Delinquent Participant will be referred to as
the “Delinquent Amount.”

 

Section 7.2.  Delinquency Advances.    If a Delinquency by Participant occurs,
then Lender shall be obligated to fund such Delinquent Amount. For the purposes
hereof, any such advance by Lender (to the extent not repaid) shall be referred
to as a “Delinquency Advance.” Any Delinquency Advance shall bear interest at
the delinquency rate provided in the Note. Participant shall be obligated to
repay to Lender on demand any Delinquency Advance. During any period of
Delinquency (until its Delinquent Amount(s) and interest thereon shall have been
repaid in full), Participant shall not be entitled to any payments under this
Agreement; instead, such payments shall be applied in reduction of Participant’s
Delinquent Amount(s) (and interest thereon) and distributed to or retained by
Lender. For so long as such Delinquency Advance is not repaid in full with
interest thereon, Lender shall have the option to increase the amount of its
commitment by the unadvanced portion of Participant’s commitment (including the
amount of the Delinquency Advance, which shall be deemed unadvanced for such
purpose) and simultaneously to reduce the amount of Participant’s commitment by
such unadvanced portion, at which time the Delinquent Participant shall have no
further right to fund such future Advances, but shall otherwise not be relieved
of any of its liabilities to the Lender pursuant to this Agreement;
notwithstanding anything to the contrary in this Agreement, the Shares of Lender
and Participant shall be simultaneously adjusted to reflect the change in the
commitment amount of such parties.

 

ARTICLE 8—MISCELLANEOUS

 

Section 8.1.  Insolvency.    If any proceeding is commenced which involves the
dissolution, termination of existence, insolvency, or business failure of
Participant or the appointment of a receiver of any part of the property of
Participant, or the assignment for the benefit of creditors of a Participant, or
if any proceeding is commenced under any Bankruptcy law of a Participant, then
in addition to Lender’s other rights and remedies, Lender shall have the right
to immediately purchase Participant’s Share in the Loan at “Par Value.” As used
herein, the term “Par Value” shall mean an amount equal to the aggregate of all
principal, interest, and other sums then owing with respect to Participant’s
Share of the Loan as of the date of the sale. If any such insolvency or other
event described in the first sentence of this Section shall occur with respect
to Lender, Participant shall have the right to remove Lender as servicer and
administrator of the Loan. In such case, Participant shall take over the
remaining servicing and administration of the Loan pursuant to this Agreement
(the “New Lead Lender”). The New Lead Lender shall succeed to all rights,
duties, and obligations of Lender under this Agreement from and after the date
it takes over the servicing of the Loan and Lender shall be released from all
further obligations under this Agreement arising from and after such date.
Lender shall notify Borrower that the New Lead Lender has taken over the
servicing and administration of the Loan and that Borrower is to recognize such
status including, without limitation, the making of all payments under the Loan
to the New Lead Lender. Lender shall also take all actions requested by the New
Lead Lender to assist the New Lead Lender in taking over the servicing and
administration of the Loan.

 

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Section 8.1.  Notice.    Except as otherwise indicated herein, any notice,
request, demand, or other communication permitted or required to be given
hereunder (collectively, a “Notice”) shall be in writing, shall be signed by the
party giving it, and shall be deemed to have been properly delivered if
delivered by hand (with receipt acknowledged) to the party to whose attention it
is directed or if mailed by United States registered or certified mail, return
receipt requested or if sent by express courier service (with receipt
acknowledged) addressed to the following addresses:

 

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If to Lender:

    

BankUnited, FSB

    

7815 NW 148th Street

    

Miami Lakes, Florida 33016

           

If to Participant:

    

BU REIT, Inc.

    

7815 NW 148th Street

    

Miami Lakes, Florida 33016

 

or to such other address as the party to be served with Notice may furnish in
accordance with the terms of this Section to the party seeking or desiring to
serve Notice as a place for the service of Notice.

 

Section 8.2.  Entire Agreement.    This Agreement contains the entire agreement
of the parties and supersedes all other representations, warranties, agreements
and understandings, oral or otherwise, between the parties with respect to the
matters contained herein.

 

Section 8.3.  Effective Date.    This Agreement shall be effective on the date
(“Effective Date”) as of which (i) this Agreement shall have been executed by
Participant and (ii) the Loan Documents shall have become effective by their
terms.

 

Section 8.4.  Severability.    The determination by any court of competent
jurisdiction that any provision of this Agreement is not enforceable in
accordance with its terms shall not affect the validity or enforceability of the
remaining provisions of this Agreement, but rather such unenforceable provisions
shall be stricken or modified in accordance with such court’s decision and this
Agreement, as so modified, shall continue to bind the parties hereto.

 

Section 8.5.  Waiver of Jury Trial.    The parties hereto hereby severally,
voluntarily, knowingly, and intentionally waive any and all rights to trial by
jury in any legal action or proceeding arising under or in connection with this
Agreement, regardless of whether such action or proceeding concerns any
contractual or tortious or other claim. The parties hereto acknowledge that this
waiver of jury trial is a material inducement to the parties hereto in entering
into this Agreement, that the parties hereto would not have entered into this
Agreement without this jury trial waiver, and that each of them has been
represented by an attorney or has had an opportunity to consult with an attorney
regarding this Agreement and understands the legal effect of this jury trial
waiver.

 

Section 8.6.  Survival, etc.    Notwithstanding the applicable statute of
limitations, any other law, or any investigation made at any time by or on
behalf of any party hereto, all representations, warranties, covenants, and
other agreements (collectively, “Obligations”) made by any party herein shall
survive the execution and delivery of this Agreement, and shall remain and
continue in full force and effect until Participant shall have fully performed
and discharged all of its respective Obligations hereunder, without regard to
any modification, extension, renewal, amendment, or waiver of any provision of
any Note or any of the other Loan Documents.

 

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Section 8.7.  Governing Law and Venue.    This Agreement shall be construed in
accordance with the laws of the State of Florida. The parties agree that venue
for any lawsuit in connection with this Agreement shall be in Miami-Dade County,
Florida, unless an action to which Participant is made a defendant or third
party defendant is filed in a different jurisdiction by a plaintiff not a party
hereto.

 

Section 8.8.  Benefit.    This Agreement shall inure to the benefit of and be
binding upon each party hereto and their permitted successors and assigns,
subject to the provisions of Section 5.6 hereof. Nothing in this Agreement or in
any transaction contemplated hereby, either express or implied, is intended to
confer upon any Person other than the parties hereto any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.

 

Section 8.9.  Counterparts.    This Agreement may be executed in one or more
counterparts, each of which may be executed by one or more of the parties
hereto, but all of which, when taken together, shall constitute but one
agreement.

 

Section 8.10.  No Waiver by Action.    Any waiver or consent respecting any
Obligation or other provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given and shall not be
deemed, regardless of the frequency given, to be a further or continuing waiver
or consent. The failure or delay of a party at any time or times to require
performance of, or to exercise its rights with respect to, any Obligation or
other provision of this Agreement, including any investigation by or on behalf
of any party, in no manner shall affect such party’s right at a later time to
enforce any such provision.

 

Section 8.11.  Modification.    Each and every modification and amendment of
this Agreement shall be in writing and signed by all of the parties hereto, and
each and every waiver of, or consent to any departure from, any Obligation or
other provision of this Agreement, shall be in writing and signed by the party
hereto against which such waiver or consent is sought to be enforced.

 

Section 8.12.  Captions.    The sections, captions, and other headings contained
in this Agreement are for convenient reference purposes only and shall not
affect the meaning or interpretation, or define, describe, extend, or limit the
scope or intent of this Agreement or any provision hereof.

 

Section 8.13.  Attorneys’ Fees.    In the event any party hereto institutes
legal proceedings in connection with, or for the enforcement of, this Agreement,
the prevailing party shall be entitled to recover its costs of suit, including
reasonable attorneys’ fees and disbursements, at both trial and appellate
levels.

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

Lender:

BankUnited, FSB

By:

 

/S/    HUMBERTO L. LOPEZ

--------------------------------------------------------------------------------

   

Name: Humberto L. Lopez

Title: Senior Executive Vice President and

Chief Financial Officer

 

 

Participant:

BU REIT, Inc.

By:

 

/S/    ROBERTO DIAZ

--------------------------------------------------------------------------------

   

Name: Roberto Diaz

Title: Secretary

 

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SCHEDULE A

 

List of Loans Being Participated

Balance as of October 1, 2002

 

20