Exhibit 10.1

Execution Version

SECOND AMENDED AND RESTATED MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT

among

MORGAN STANLEY BANK, N.A.

as Buyer

and

MS LOAN NT-I, LLC, MS LOAN NT-II, LLC, CLNC CREDIT 1, LLC, CLNC CREDIT 2, LLC
CLNC CREDIT 1UK, LLC and CLNC CREDIT 1EU, LLC

collectively, as Seller

April 23, 2019

 

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TABLE OF CONTENTS

 

         Page  

1.

 

APPLICABILITY

     1  

2.

 

DEFINITIONS

     2  

3.

 

INITIATION; CONFIRMATION; TERMINATION; FEES

     36  

4.

 

MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

     47  

5.

 

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

     48  

6.

 

SECURITY INTEREST

     52  

7.

 

PAYMENT, TRANSFER AND CUSTODY

     54  

8.

 

CERTAIN RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED ASSETS

     60  

9.

 

EXTENSION OF FACILITY TERMINATION DATE; REDUCTION OF FACILITY AMOUNT

     61  

10.

 

REPRESENTATIONS

     62  

11.

 

NEGATIVE COVENANTS OF SELLER

     67  

12.

 

AFFIRMATIVE COVENANTS OF SELLER

     69  

13.

 

SINGLE-PURPOSE ENTITY

     73  

14.

 

EVENTS OF DEFAULT; REMEDIES

     75  

15.

 

SINGLE AGREEMENT

     80  

16.

 

NOTICES AND OTHER COMMUNICATIONS

     81  

17.

 

NON-ASSIGNABILITY

     81  

18.

 

GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL, ETC.

     83  

19.

 

NO RELIANCE; DISCLAIMERS

     84  

20.

 

INDEMNITY AND EXPENSES

     86  

21.

 

DUE DILIGENCE

     87  

22.

 

SERVICING

     88  

23.

 

TREATMENT FOR TAX PURPOSES

     89  

24.

 

INTENT

     89  

25.

 

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

     90  

26.

 

SETOFF RIGHTS

     91  

27.

 

MISCELLANEOUS

     91  

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SCHEDULES

 

SCHEDULE 1    Maximum Purchase Percentage SCHEDULE 2    Purchased Asset
Information SCHEDULE 3    Prohibited Transferees EXHIBITS EXHIBIT I    Form of
Confirmation EXHIBIT II-1    Form of Power of Attorney to Buyer EXHIBIT II-2   
Form of Power of Attorney to Seller EXHIBIT III-1    Representations and
Warranties Regarding each Purchased Asset that is a Mortgage Loan EXHIBIT III-2
   Representations and Warranties Regarding each Purchased Asset that is a
Mezzanine Loan EXHIBIT IV    Form of Bailee Agreement EXHIBIT V    Authorized
Representatives of Seller EXHIBIT VI    Form of Undertaking Letter

ANNEXES

ANNEX I    Names and Addresses for Communications Between Parties ANNEX II   
Wiring Instructions

 

ii

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SECOND AMENDED AND RESTATED MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT

This Second Amended and Restated Master Repurchase and Securities Contract
Agreement (this “Agreement”) is dated as of April 23, 2019 and is made by and
among MORGAN STANLEY BANK, N.A., as buyer (“Buyer”) and MS LOAN NT-I, LLC, a
Delaware limited liability company (“NT-I”), MS LOAN NT-II, LLC, a Delaware
limited liability company (“NT-II”), CLNC CREDIT 1, LLC, a Delaware limited
liability company (“Credit 1”), CLNC CREDIT 2, LLC, a Delaware limited liability
company (“Credit 2”), CLNC CREDIT 1UK, LLC, a Delaware limited liability company
(“UK Seller”), and CLNC CREDIT 1EU, LLC, a Delaware limited liability company
(“EU Seller”, and together with NT-I, NT-II, Credit 1, Credit 2 and UK Seller,
individually or collectively, as the context may require, “Seller”).

WHEREAS, NT-II, as seller, and Buyer, as buyer, entered into that certain Master
Repurchase and Securities Contract Agreement (as amended to the date hereof, the
“NT-II MRA”) as of June 5, 2015;

WHEREAS, NT-I, as seller, and Buyer, as buyer, entered into that certain Master
Repurchase and Securities Contract Agreement (as amended to the date hereof, the
“NT-I MRA”) as of October 13, 2015; and

WHEREAS, pursuant to that certain Amended and Restated Master Repurchase and
Securities Contract Agreement (the “First A&R MRA”), dated as of April 20, 2018
(the “Original Closing Date”), NT-I, NT-II and Buyer amended, restated and
consolidated the NT-I MRA and the NT-II MRA, and each of Credit 1 and Credit 2
joined the First A&R MRA as a Seller;

WHEREAS, NT-I, NT-II, Credit 1, Credit 2 and Buyer desire to amend and restate
the First A&R MRA pursuant to the terms of this Agreement, and each of UK Seller
and EU Seller desire to join this Agreement as a Seller;

NOW, THEREFORE, in consideration of the foregoing and the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereto
hereby covenant, agree, represent and warrant as follows:

 

1.

APPLICABILITY

From time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer one or more Eligible Assets, on a servicing-released
basis, against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller such Eligible Assets at a date certain (or such
earlier date, in accordance with the terms hereof), against the transfer of
funds by Seller to Buyer. Each such transaction involving the transfer of an
Eligible Asset from Seller to Buyer shall be referred to herein as a
“Transaction” and, unless otherwise agreed in writing, shall be governed by this
Agreement.

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2.

DEFINITIONS

Capitalized terms in this Agreement shall have the respective meanings set forth
below:

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended.

“AB Mortgage Loan” shall mean a Mortgage Loan evidenced by two or more senior
and subordinate Mortgage Notes.

“Accelerated Repurchase Date” shall have the meaning specified in
Section 14(b)(i) of this Agreement.

“Acceptable Attorney”: (i) Ropes & Gray LLP, (ii) a firm of solicitors regulated
by the Solicitors Regulation Authority (with respect to any Foreign Purchased
Asset secured by Mortgaged Property located in England) reasonably acceptable to
Buyer or (iii) any other attorney-at-law or law firm reasonably acceptable to
Buyer and as identified to the Custodian in the Purchased Asset File Checklist,
or notary (if required in the relevant jurisdiction) that has, in the case of
each of (i), (ii) and (iii) herein, delivered at Seller’s request a Bailee
Agreement or Undertaking Letter, as applicable.

“Act of Insolvency” shall mean, with respect to any Person, (a) the filing of a
decree or order for relief by a court having jurisdiction over such Person or
any substantial part of its assets or property in an involuntary case under any
applicable Insolvency Law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator, administration or
similar official for such Person or for any substantial part of its assets or
property, or ordering the winding-up or liquidation of such Person’s affairs,
and such decree or order shall remain unstayed and in effect for a period of
sixty (60) days, (b) the commencement by such Person of a voluntary case under
any applicable Insolvency Law now or hereafter in effect, (c) the consent by
such Person to the entry of an order for relief in an involuntary case under any
Insolvency Law, (d) the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, administration or similar official for such Person or for any
substantial part of its assets or property, (e) the making by such Person of any
general assignment for the benefit of creditors, (f) the admission in a legal
proceeding or otherwise in writing of the inability of such Person to pay its
debts or discharge its financial obligations generally as they become due or
mature, (g) the failure by such Person generally to pay its debts as they become
due, (h) the taking of any action by any Governmental Authority or agency or any
Person, agency or entity acting or purporting to act under Governmental
Authority to condemn, seize or appropriate, or to assume custody or control of,
all or any substantial part of the property of such Person, or shall have taken
any action to displace the management of such Person or to curtail its authority
in the conduct of a material portion of the business of such Person, or (i) the
taking of action by such Person in furtherance of any of the foregoing.

“Affiliate” shall mean, (a) when used with respect to Seller, Guarantor or
Sponsor, each of Manager, Sponsor or Sponsor’s Subsidiaries or (b) when used
with respect to any other specified Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, such
Person.

“Affiliated Hedge Counterparty” shall mean Morgan Stanley Bank, N.A., or any
Affiliate thereof, in its capacity as a party to any Hedging Transaction with
Seller.

 

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“Aggregate Repurchase Price” shall mean, as of any date of determination, the
aggregate Repurchase Price (excluding any accrued and unpaid Price Differential)
of all Purchased Assets outstanding as of such date (calculated, with respect to
any Foreign Purchased Assets, based on the Aggregate Foreign Asset Repurchase
Price).

“Aggregate Foreign Asset Repurchase Price” shall mean, as of any date of
determination, the aggregate Repurchase Price (excluding any accrued and unpaid
Price Differential) of all Foreign Purchased Assets outstanding as of such date
(calculated based on the Purchase Date Dollar Equivalent of the Repurchase
Prices for such Foreign Purchased Assets).

“Agreement” shall have the meaning specified in the introductory paragraph
hereto.

“ALR Equivalent” shall have the meaning specified in Exhibit III-1(9).

“Annual Fee” shall have the meaning specified in the Fee Letter.

“Applicable Currency” means U.S. Dollars, Pounds Sterling, Euro or such other
currency permitted by Buyer, in its sole discretion, as applicable.

“Applicable Spread” shall have the meaning specified in the Fee Letter.

“Appraisal” shall mean an appraisal of any Eligible Property prepared by a
licensed Independent Appraiser approved by Buyer in its reasonable discretion,
in accordance with (i) with respect to U.S. Purchased Assets, the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation, in
compliance with the requirements of Title 11 of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 and (ii) with respect to Foreign
Purchased Assets, RICS or its equivalent in any applicable jurisdiction, in each
case, utilizing customary valuation methods, such as the income, sales/market or
cost approaches, as any of the same may be updated by recertification from time
to time by the appraiser performing such Appraisal.

“Asset Base Component” shall mean, as of any date of determination, with respect
to each Purchased Asset, the product of (a) its then current Market Value,
multiplied by (b) the Maximum Purchase Percentage applicable to such Purchased
Asset as set forth in the related Confirmation (calculated, with respect to any
Foreign Purchased Asset, based on the Purchase Date Dollar Equivalent of the
applicable Market Value).

“Assignment of Leases” shall mean, with respect to any Purchased Asset that is a
Mortgage Loan, any assignment of leases, rents and profits or equivalent
instrument, whether contained in the related Mortgage or executed separately,
assigning to the holder or holders of such Mortgage all of the related
Mortgagor’s interest in the leases, rents and profits derived from the
ownership, operation, leasing or disposition of all or a portion of the related
Mortgaged Property as security for repayment of such Purchased Asset.

“Assignment of Mortgage” shall mean, with respect to any Purchased Asset that is
a Mortgage Loan, an assignment of the mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related property is located to reflect the assignment and pledge of
the Mortgage, subject to the terms of this Agreement.

 

3

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“Available Borrowing Capacity” means, on any date of determination, the total
unrestricted borrowing capacity which may be drawn (taking into account required
reserves and discounts) upon by the Guarantor and its Subsidiaries under any
credit facilities (excluding repurchase agreements or note on note facilities),
but with respect to any such credit facility, solely to the extent that such
available borrowing capacity is committed by the related lender.

“Bailee” shall mean an Acceptable Attorney or any such third party as Buyer and
Seller shall mutually approve in their sole discretion.

“Bailee Agreement” shall mean a Bailee Agreement among Seller, Buyer and Bailee
in the form of Exhibit IV hereto or as otherwise agreed to by Buyer and Seller.

“Bailee Delivery Failure” shall have the meaning specified in the Bailee
Agreement.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended,
modified or replaced from time to time.

“Business Day” shall mean

(a) for all purposes other than as covered by clauses (b), (c), (d) and
(e) below, any day other than (i) a Saturday or Sunday and (ii) a day on which
the New York Stock Exchange, the Federal Reserve Bank of New York, Custodian or
Buyer (or, as it relates to a specific Foreign Purchased Asset, commercial banks
in the relevant non-U.S. jurisdiction in which the Mortgaged Property securing
the related Foreign Purchased Asset is located or whose law governs the
applicable Purchased Asset Documents), are authorized or obligated by law or
executive order to be closed,

(b) with respect to any Pricing Rate Reset Date, a day on which banks are open
for dealing in foreign currency and exchange in London,

(c) with respect to all Remittance Dates, Repurchase Dates, notices and
determinations in connection with, and payments of Price Differential and the
Repurchase Price with respect to a specific U.S. Purchased Asset, any day which
is (i) a Business Day described in clause (a) and (ii) not a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close in the United States of America or any territory
thereof,

(d) with respect to all Remittance Dates, Repurchase Dates, notices an
determinations in connection with, and payments of Price Differential and the
Repurchase Price with respect to a specific GBP Purchased Asset, any day which
is (i) a Business Day described in clause (a) and (ii) not a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close in London, and

(e) with respect to all Remittance Dates, Repurchase Dates, notices and
determinations in connection with, and payments of Price Differential and the
Repurchase Price with respect to a specific EUR Purchased Asset, any day which
is (i) a Business Day described in clause (a) and (ii) not a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close in the principal financial center of the relevant
non-U.S. jurisdiction in which the Mortgaged Property securing such EUR
Purchased Asset is located or whose law governs the applicable Purchased Asset
Documents.

 

4

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“Buyer” shall have the meaning specified in the introductory paragraph hereto.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

“Capital Stock” means, with respect to any Person, all of the shares of capital
stock or share capital of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock or share capital of (or
other ownership or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock or share capital of
(or other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or acquisition from such Person of such shares (or such
other interests), and all of the other ownership or profit interests in such
Person (including partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are outstanding on any date of determination.

“Cash Equivalents” means, as of any date of determination (i) marketable
securities (a) issued or the principal and interest of which are directly and
unconditionally guaranteed by the United States or (b) issued by any agency of
the United States, the obligations of which are backed by the full faith and
credit of the United States and (ii) time deposits, certificates of deposit,
money market accounts or banker’s acceptances of any investment grade rated
commercial bank, in each case with respect to clauses (i) and (ii) which mature
within ninety (90) days after such date of determination.

“Cause” shall mean, with respect to an Independent Director, any of the
following: (i) acts or omissions by such Independent Director that constitute
willful disregard of, or bad faith or gross negligence with respect to, the
Independent Director’s duties with respect to Seller’s obligations under this
Agreement, (ii) such Independent Director has engaged in or has been charged
with, or has been convicted of, fraud or other acts constituting a crime under
any law applicable to such Independent Director, (iii) such Independent Director
is unable to perform his or her duties as Independent Director due to death,
disability or incapacity, or (iv) such Independent Director no longer meets the
definition of “Independent Director” in Section 2 of this Agreement.

 

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“Change of Control” shall mean any of the following events shall have occurred
without the prior written approval of Buyer: at any time: (i) prior to an
internalization of management by Guarantor, Manager or any Affiliate thereof (as
replacement manager) shall cease to be the manager or advisor of Guarantor;
(ii) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of
the 1934 Act) (other than Affiliates of Sponsor) shall become, or obtain rights
(whether by means of warrants, options or otherwise) to become, the beneficial
owner, directly or indirectly, of 49% or more of the total voting power of all
classes of ownership interests of Guarantor, Sponsor or Manager, entitled to
vote generally in the election of the directors (or the applicable equivalent)
of any such Person; (iii) Sponsor shall cease to own, of record and
beneficially, directly or indirectly 51% or more of the ownership interests of
Guarantor and Control Guarantor; (iv) Guarantor shall cease to own, of record
and beneficially, directly or indirectly, 100% or more of the ownership
interests of Seller and Control Seller; (v) prior to an internalization of
management by Guarantor, CLNS shall cease to Control Manager or any Affiliate
thereof (as replacement manager); or (vi) the first day on which a majority of
the members of the board of directors of the Sponsor are not Continuing
Directors. Notwithstanding the foregoing, Buyer shall not be deemed to approve
or to have approved any internalization of management by Sponsor or Guarantor as
a result of this definition or any other provision herein, other than to the
extent approved pursuant to Section 12(t) of this Agreement.

“CLNS” shall mean Colony NorthStar, Inc., a Maryland corporation.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Collection Period” shall mean, (x) with respect to any Remittance Date in any
month for U.S. Purchased Assets, the period beginning on the Remittance Date for
U.S. Purchased Assets in the preceding month to and including the calendar day
immediately preceding such Remittance Date and (y) with respect to any
Remittance Date for Foreign Purchased Assets, the period beginning on the
Remittance Date for Foreign Purchased Assets in the preceding three-month period
to and including the calendar day immediately preceding such Remittance Date.

“Colony” shall mean, Colony Capital Operating Company, LLC, a Delaware limited
liability company.

“Concentration Limit” shall mean, with respect to any New Asset, (a) the
original Purchase Price (calculated based on the Purchase Date Dollar Equivalent
for a Foreign Purchased Asset) of such New Asset does not exceed 40% of the
Facility Amount and (b) after giving effect to the purchase of such New Asset,
the aggregate Purchase Price (calculated based on the Purchase Date Dollar
Equivalent for Foreign Purchased Assets) of Purchased Assets secured by
hospitality properties shall not exceed 40% of the Facility Amount.

“Confirmation” shall have the meaning specified in Section 3(d) of this
Agreement.

“Consolidated EBITDA” means, with respect to any Person for any period, Core
Earnings plus an amount which, in the determination of Core Earnings for such
period, has been deducted (and not added back) for, without duplication,
(i) Consolidated Interest Expense, (ii) provisions for taxes based on income of
such Person and its Consolidated Subsidiaries (provided that Consolidated EBITDA
shall, solely with respect to the Consolidated EBITDA attributable to any Non
Wholly-Owned Consolidated Affiliate, only include the Consolidated Group Pro
Rata Share of such attributable amount), and (iii) preferred dividends.

 

6

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“Consolidated Group Pro Rata Share” means, with respect to any Non Wholly-Owned
Consolidated Affiliate, the percentage interest held by the Guarantor and its
Wholly Owned Subsidiaries, in the aggregate, in such Non Wholly-Owned
Consolidated Affiliate determined by calculating the percentage of Capital Stock
of such Non Wholly-Owned Consolidated Affiliate owned by the Guarantor and its
Wholly Owned Subsidiaries.

“Consolidated Interest Expense” means, with respect to any Person for any
period, total interest expense (including that attributable to Capital Lease
Obligations) of such Person and its Consolidated Subsidiaries for such period
with respect to all outstanding Indebtedness of such Person and its Consolidated
Subsidiaries (including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing and net
costs under Swap Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP); provided that
Consolidated Interest Expense shall, with respect to any Non Wholly-Owned
Consolidated Affiliate, only include the Consolidated Group Pro Rata Share of
the total cash interest expense (determined in accordance with GAAP) of such Non
Wholly-Owned Consolidated Affiliate for such period.

“Consolidated Leverage Ratio” means, with respect to any Person on any date of
determination, the ratio of (a) Consolidated Total Debt on such day to (b) Total
Asset Value as of such date.

“Consolidated Subsidiaries” means, with respect to any Person, all Subsidiaries
of such Person which are consolidated with such Person for financial reporting
purposes under GAAP.

“Consolidated Tangible Net Worth” means, for any Person on any date of
determination, all amounts that would, in conformity with GAAP, be included on a
consolidated balance sheet of such Person and its Consolidated Subsidiaries
under stockholders’ equity at such date plus (i) accumulated depreciation and
(ii) amortization of real estate intangibles such as in-place lease value, above
and below market lease value and deferred leasing costs which are purchase price
allocations determined upon the acquisition of real estate, in each case, of
such Person and its Consolidated Subsidiaries on such date (provided that the
amounts described in the foregoing clauses (i) and (ii) shall, solely with
respect to any such amount attributable to any Non Wholly-Owned Consolidated
Affiliate, only include the Consolidated Group Pro Rata Share of such
attributable amount) minus the Intangible Assets of such Person and its
Consolidated Subsidiaries on such date (provided that any such amount deducted
with respect to deferred financing costs shall, solely with respect to any such
amount attributable to any Non Wholly-Owned Consolidated Affiliate, only include
the Consolidated Group Pro Rata Share of such attributable amount).

“Consolidated Total Debt” means, with respect to any Person on any date of
determination, the aggregate principal amount of all Indebtedness of the such
Person and its Consolidated Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP; provided that Consolidated Total
Debt shall (i) exclude any Indebtedness attributable to a Specified GAAP
Reportable B Loan Transaction, (ii) exclude all Permitted Non-Recourse CLO
Indebtedness and (iii) solely with respect to the Indebtedness of any Non
Wholly-Owned Consolidated Affiliate, only include the Consolidated Group Pro
Rata Share of such Indebtedness.

 

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“Continuing Directors” means, as of any date of determination, any member of the
board of directors who (i) was a member of the board of directors of Sponsor on
January 31, 2018, or (ii) directors whose election or nomination was approved by
individuals referred to in the foregoing clause (i) constituting at the time of
such election or nomination at least a majority of the board of directors, or
(iii) directors whose election or nomination was approved by individuals
referred to in the foregoing clauses (i) and/or (ii) constituting at the time of
such election or nomination at least a majority of the board of directors.

“Control” shall mean, with respect to any Person, the possession of the direct
or indirect power to direct or cause the direction of the management or policies
of such Person, whether through the ability to exercise voting power, by
contract or otherwise. “Controlling” and “Controlled” and “under common Control”
have correlative meanings.

“Controlled Account” shall have the meaning specified in Section 5(a) of this
Agreement.

“Controlled Account Agreement” shall mean, individually or collectively as the
context may require, each controlled account agreement executed by Buyer, Seller
and Depository Bank (and any successor thereto or replacement thereof executed
by Buyer, Seller and Depository Bank) with respect to the Controlled Account, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.

“Core Earnings” means, with respect to any Person for any period, net income
determined in accordance with GAAP of such Person and its consolidated
subsidiaries and excluding (but only to the extent included in determining net
income for such period) (i) non-cash equity compensation expense, (ii) the
expenses incurred in connection with the formation of the Sponsor and the
offering in connection therewith, including the initial underwriting discounts
and commissions, (iii) acquisition costs from successful acquisitions (other
than acquisitions made in the ordinary course of business), (iv) real property
depreciation and amortization, (v) any unrealized gains or losses or other
similar non-cash items that are included in net income for the current quarter,
regardless of whether such items are included in other comprehensive income or
loss, (vi) extraordinary or non-recurring gains or losses and (vii) one-time
expenses, charges or gains relating to changes in GAAP; provided that Core
Earnings shall, solely with respect to the Core Earnings attributable to any Non
Wholly-Owned Consolidated Affiliate, only include the Consolidated Group Pro
Rata Share of such attributable amount.

“Custodial Agreement” shall mean the Second Amended and Restated Custodial
Agreement, dated as of the date hereof, entered into by and among Custodian,
Seller and Buyer, as the same may be amended, supplemented or otherwise modified
from time to time. “Custodian” shall mean Wells Fargo Bank, N.A., or any
successor custodian appointed by Buyer and reasonably acceptable to Seller, or
appointed by Buyer in Buyer’s sole discretion during the continuance of an Event
of Default.

“Customary Recourse Exceptions” means, with respect to any Non-Recourse
Indebtedness, exclusions from the exculpation provisions with respect to such
Non-Recourse Indebtedness such as fraud, misapplication of cash, voluntary
bankruptcy, environmental claims, breach of representations and warranties,
failure to pay taxes and insurance, as applicable, and other circumstances
customarily excluded by institutional lenders from exculpation provisions and/or
included in separate indemnification agreements in non-recourse financings of
commercial real estate.

 

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“Debt Yield Ratio” shall mean, with respect to any Eligible Property directly or
indirectly securing a New Asset, the quotient (expressed as a percentage) of
(i) net operating income for the trailing 12-month period for the most recently
ended fiscal quarter, divided by (ii) the total amount of indebtedness secured
directly or indirectly by such Eligible Property that is senior to or pari passu
with such New Asset (calculated in the Applicable Currency relevant to such
Eligible Property).

“Default” shall mean any event that, with the giving of notice, the passage of
the applicable cure period, or both, would constitute an Event of Default.

“Defaulted Asset” shall mean any Purchased Asset as to which (i) there is a
material breach beyond any applicable notice and cure period of a representation
or warranty by Seller under Exhibit III attached hereto (without regard to any
knowledge qualifier therein) other than permitted exceptions in the applicable
Exception Report, (ii) a default has occurred and is continuing beyond any
applicable notice and cure period under the related Purchased Asset Documents in
the payment when due of any scheduled payment of interest or principal or any
other amounts due under the Purchased Asset Documents, (iii) the occurrence and
continuance of any other material non-monetary “event of default” as defined
under the related Purchased Asset Documents, (iv) to the extent that the related
Transaction is deemed to be a loan under federal, state or the local law of the
applicable jurisdiction, Buyer ceases to have a first priority perfected
security interest in the related Purchased Asset, (v) a Significant Modification
has been made without the consent of Buyer pursuant to this Agreement, (vi) the
related Purchased Asset File or any portion thereof is subject to a continuing
Bailee Delivery Failure or has been released from the possession of Custodian
under the Custodial Agreement to anyone other than Buyer or any Affiliate of
Buyer except in accordance with the terms of the Custodial Agreement or
(vii) upon the occurrence of any Act of Insolvency with respect to any
co-participant or any other person having an interest in such Purchased Asset or
any related Mortgaged Property and such person acts as the “lead lender,”
“administrative agent,” “payment agent” or in any similar role, including,
without limitation, if such person collects payments or administers such
Purchased Asset.

“Depository Bank” shall mean Wells Fargo Bank, N.A., or any successor depository
bank appointed by Buyer and reasonably acceptable to Seller, or appointed by
Buyer in Buyer’s sole discretion during the continuance of an Event of Default.

“Diligence Fees” shall mean fees, costs and expenses payable by Seller to Buyer
in respect of Buyer’s reasonable, out-of-pocket fees, costs and expenses (other
than legal expenses) incurred in connection with its review of the Diligence
Materials hereunder and Buyer’s continuing due diligence reviews of Purchased
Assets pursuant to Section 21 or otherwise hereunder; provided, however, that,
so long as no Event of Default is continuing, such fees, costs and expenses
(other than the cost of appraisals and legal expenses) of Buyer shall not exceed
$10,000 per annum without the prior written consent of Seller.

 

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“Diligence Materials” shall mean, with respect to any New Asset, the related
Preliminary Due Diligence Package together with the related Supplemental Due
Diligence Package.

“Disclosing Party” shall have the meaning specified in Section 27(a) hereof.

“Dollar Equivalent” shall mean, as of any date of determination, with respect to
any amount in Euros or Pounds Sterling (or any other non-U.S. Dollar currency
approved by Buyer in its sole discretion), the equivalent amount in U.S.
Dollars, based on the Spot Rate. “Dollar Income” has the meaning set forth in
Section 5(b)(i).

“Draft Appraisal” shall mean a short form appraisal, “letter opinion of value”,
or any other form of draft appraisal reasonably acceptable to Buyer.

“Early Repurchase Date” shall have the meaning specified in Section 3(h) of this
Agreement.

“Eligible Assets” shall mean loan assets which, as of the related Purchase Date,
are either (i) performing Mortgage Loans or Participation Interests denominated
in an Applicable Currency, or Mezzanine Loans denominated in U.S. Dollars
(provided that such Mezzanine Loan was originated in connection with a Mortgage
Loan that is an Eligible Asset and that Seller is simultaneously pledging to
Buyer hereunder) (A) acceptable to Buyer in the exercise of its sole good faith
discretion as evidenced by Buyer’s delivery of an executed Confirmation,
(B) secured directly by one or more Eligible Properties, (C) which have a term
equal to or less than ten (10) years (assuming exercise of all extension
options), (D) as to which the applicable representations and warranties set
forth in Exhibit III are true and correct as of the applicable Purchase Date
unless otherwise disclosed in the Exception Report delivered to Buyer on or
prior to such Purchase Date, (E) that do not require any Hedging Transaction or
have a Hedging Transaction acceptable to Buyer in Buyer’s sole good faith
discretion, (F) that have a maximum LTV not in excess of 80% (calculated in the
Applicable Currency of such loan asset), (G) that have an original principal
balance of not less than $5,000,000 (or the equivalent thereof in the Applicable
Currency at the applicable Spot Rate), (H) that is not a Defaulted Asset and
(I) that are not subject to restrictions on transfer of lender’s interest
therein (other than customary “qualified transferee” requirements) and (ii) such
other commercial mortgage loan debt instruments acceptable to Buyer in Buyer’s
sole good faith discretion; in each case, acceptable to Buyer in Buyer’s sole
good faith discretion on a case-by-case basis as evidenced by Buyer’s delivery
of an executed Confirmation.

“Eligible Property” shall mean a property that is (i) a multifamily, office,
retail, industrial, hospitality, self-storage, such other property type
acceptable to Buyer in the exercise of its sole discretion or any combination
thereof and (ii) located in the United Sates (or any territory thereof) or in a
Permitted Foreign Jurisdiction.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.

 

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“ERISA Affiliate” shall mean any corporation or trade or business (whether or
not incorporated) that is a member of any group of organizations described in
(i) Section 414(b) or (c) of the Code or Section 4001(b) of ERISA of which
Seller is a member at any relevant time or (ii) solely for purposes of the lien
created under Section 302(f) of ERISA and Section 412(n) of the Code, described
in Section 414(m) or (o) of the Code of which Seller is a member.

“EURIBOR” shall mean, for any Pricing Period with respect to a EUR Purchased
Asset, the per annum rate for deposits in Euros for a three month period that
appears on Reuters Screen EURIBOR01 Page (or the successor thereto) as of 11:00
a.m., Brussels time, on the related Pricing Rate Reset Date.

“EURIBOR Alternate Index” shall mean an alternative published index selected by
Buyer (in non-binding consultation with Seller) to be used in calculating the
Pricing Rate, which such alternative index will be (a) then currently commonly
used in making determinations of the interest rate as an alternative to EURIBOR
for sellers under similar repurchase agreements with Buyer and (b) publicly
recognized by the International Swaps and Derivatives Association (or any
successor organization) as an alternative to EURIBOR, which the parties hereto
acknowledge and agree may be an index that does not yet exist and/or is not
commonly being used as of the date of this Agreement; provided, that in no event
shall such EURIBOR Alternate Index be less than zero percent.

“EURIBOR Alternate Rate” shall mean, with respect to each Collection Period, the
per annum rate of interest of the EURIBOR Alternate Index, determined as of the
date of determination immediately preceding the commencement of such Collection
Period.

“EURIBOR Alternate Rate Determination” shall have the meaning specified in
Section 3(k).

“EURIBOR Alternate Rate Spread” shall mean, if the Pricing Rate has been
converted to the EURIBOR Alternate Rate pursuant to Section 3(k) hereof, the
difference (expressed as the number of basis points) between (a) EURIBOR plus
the Applicable Spread on the date for which EURIBOR was last applicable to the
outstanding Transactions prior to such conversion and (b) the EURIBOR Alternate
Rate on the date for which EURIBOR was last applicable to the outstanding
Transactions prior to such conversion; provided, however, that if such
difference is a negative number, then the EURIBOR Alternate Rate Spread shall be
zero.

“EURIBOR Alternate Rate Transaction” shall mean, with respect to any Pricing
Period or (other applicable period), any Transaction with respect to which the
Pricing Rate for such Pricing Period (or other applicable period) is determined
with reference to the EURIBOR Alternate Rate.

“EURIBOR Rate” shall mean, as of any date of determination, a rate per annum
determined in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):

            EURIBOR                 

1.00 - EURIBOR Rate Reserve Percentage

 

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“EURIBOR Rate Reserve Percentage” shall mean, with respect to any date of
determination, the reserve percentage (expressed as a decimal fraction)
applicable two (2) Business Days before such date under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor thereto) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York, New
York with respect to liabilities or assets consisting of or including any
category of liabilities that includes deposits by reference to which the
interest rate on Transactions is determined having a term comparable to the
applicable Collection Period.

“EURIBOR Transaction” shall mean any Transaction with respect to which the
Pricing Rate is determined with reference to the EURIBOR Rate.

“Euro Income” has the meaning set forth in Section 5(b)(ii).

“European Insolvency Regulation” shall mean Section 3(1) of the European Council
Regulation (EC) No. 1346/2000 on Insolvency Proceedings.

“Euros” and “€” shall mean the lawful currency of the member states of the
European Union that have adopted and retain the single currency in accordance
with the treaty establishing the European Community, as amended from time to
time; provided that if any member state or states ceases to have such single
currency as its lawful currency (such member state(s) being the “Exiting
State(s)”), Euro and € shall, for the avoidance of doubt, mean for all purposes
of this Agreement the single currency adopted and retained as the lawful
currency of the remaining member states and shall not include any successor
currency introduced by the Exiting State(s).

“EUR Controlled Account” shall mean the Controlled Account for EUR Purchased
Assets.

“EUR Controlled Account Agreement” shall mean the Controlled Account Agreement
for the EUR Controlled Account.

“EUR Purchased Asset” shall mean a Foreign Purchased Asset for which the
Applicable Currency is Euros.

“EUR Servicer Acknowledgment” shall have the meaning specified in the definition
of “Servicer Acknowledgement”.

“EUR Servicing Agreement” shall have the meaning specified in the definition of
“Servicing Agreement”.

“Event of Default” shall have the meaning specified in Section 14(a).

“Exception Report” shall have the meaning specified in Section 3(c)(viii).

“Excluded Taxes” shall mean any of the following Taxes imposed on or with
respect to Buyer or required to be withheld or deducted from a payment to Buyer,
(a) Taxes imposed on or measured by net income (however denominated), franchise
Taxes, and branch profits Taxes, in each case, (i) imposed as a result of Buyer
being organized under the laws of, or having its principal office or the office
from which it books the Transaction located in, the jurisdiction imposing such
Tax (or any political subdivision thereof), or (ii) that are Other Connection
Taxes, (b) withholding

 

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Taxes imposed on amounts payable to or for the account of Buyer or an assignee
pursuant to a law in effect as of the date on which such Person (i) becomes a
party to this Agreement, (ii) changes the office from which it books the
Transactions or (iii) where Buyer is treated as a partnership for tax purposes
and the tax status of a partner in such partnership is determinative of the
obligation to pay Taxes, the later of the date on which Buyer acquired its
applicable interest hereunder or the date on which the affected partner becomes
a partner of Buyer, except to the extent that, pursuant to Section 3(p), the sum
payable to such Person’s assignor immediately before such Person became a party
to this Agreement or to such Person immediately before it changed the office
from which it books the Transaction was increased in respect of such Taxes,
(c) Taxes attributable to Buyer’s failure to comply with Section 3(q) of this
Agreement and (d) any withholding Taxes imposed under FATCA.

“Exit Fee” shall have the meaning specified in the Fee Letter.

“Extension Term” shall have the meaning specified in Section 9(a).

“Extension Fee” shall have the meaning specified in the Fee Letter.

“Executive Order 13224” shall mean Executive Order 13224 “On Terrorist
Financing: Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism”, effective September 24, 2001.

“Facility Amount” shall mean $600,000,000 subject to any reduction in accordance
with Section 9(b) hereof.

“Facility Termination Date” shall mean April 20, 2022, as the same may be
extended in accordance with Section 9(a) of this Agreement.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), together in each
case with any current or future regulations, guidance or official
interpretations thereof, any agreements entered into pursuant to
Section 1471(b)(1) of the Code and any law or agreement implementing an
intergovernmental approach thereto.

“FATF” shall mean the Financial Action Task Force on Money Laundering.

“FCA Regulations” has the meaning set forth in Section 24(j).

“FDIA” shall mean the Federal Deposit Insurance Act, as amended.

“FDICIA” shall mean Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991.

“Fee Letter” shall mean that certain Second Amended and Restated Fee Letter,
dated as of the date hereof, between Buyer and Seller, as the same may be
amended, supplemented or otherwise modified from time to time.

 

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“Filings” shall have the meaning specified in Section 6(b) of this Agreement.

“Final Approval” shall have the meaning specified in Section 3(c) of this
Agreement.

“Financial Covenant Compliance Certificate” shall mean, with respect to any
Person, an Officer’s Certificate to be delivered, subject to Section 3(e)(iii)
of this Agreement, within forty-five (45) days after the end of the first three
(3) fiscal quarters and within ninety (90) days after the end of each fiscal
year confirming that as of the fiscal quarter most recently ended, such Person
shall have maintained:

(a) Minimum Liquidity. Liquidity at any time of not less than the lower of
(i) Fifty Million Dollars ($50,000,000.00) and (ii) the greater of (A) Ten
Million Dollars ($10,000,000.00) and (B) five percent (5%) of Guarantor’s
Recourse Indebtedness;

(b) Minimum Tangible Net Worth. Consolidated Tangible Net Worth at any time of
not less than the sum of (i) $2,105,000,000.00, plus (ii) seventy-five percent
(75%) of the net cash proceeds thereafter received by the Guarantor (x) from any
offering by the Guarantor of its common equity and (y) from any offering by the
Sponsor of its common equity to the extent such net cash proceeds are
contributed to the Guarantor, excluding any such net cash proceeds that are
contributed to the Guarantor within ninety (90) days of receipt of such net cash
proceeds and applied to purchase, redeem or otherwise acquire Capital Stock
issued by the Guarantor (or any direct or indirect parent thereof;

(c) Maximum Consolidated Leverage Ratio. The Consolidated Leverage Ratio at any
time of not greater than 0.75 to 1.00; and

(d) Minimum Interest Coverage Ratio. As of any date of determination, the ratio
of (i) Consolidated EBITDA for the period of twelve (12) consecutive months
ended on such date (if such date is the last day of a fiscal quarter) or the
fiscal quarter most recently ended prior to such date (if such date is not the
last day of a fiscal quarter) to (ii) Consolidated Interest Expense for such
period of not less than 1.4 to 1.

“First Mortgage A-Note” shall mean (i) a senior Mortgage Note in an AB Mortgage
Loan or (ii) a senior pari passu Mortgage Note in a Split Mortgage Loan.

“Fixed Charges” shall mean, with respect to any Person at any time, the amount
of interest paid in cash with respect to Indebtedness as shown on such Person’s
consolidated statement of cash flow in accordance with GAAP.

“Foreign Asset Facility Sub-Limit” shall mean $100,000,000 subject to any
reduction in accordance with Section 9(b) hereof.

“Foreign Assignment Agreement” shall mean, with respect to a Foreign Purchased
Asset, a security agreement or a security deed between the applicable Seller and
Buyer, reasonably acceptable to Buyer, pursuant to which such Seller assigns to
Buyer all of its right, title and interest under and in relation to each related
Purchased Asset Document relating to such Foreign Purchased Asset (including its
rights against any Security Agent) and any professional report delivered with
respect to the applicable Purchased Asset that is addressed to or capable of
being relied on by such Seller.

 

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“Foreign Filing” shall have the meaning specified in Section 7(b)(iii) of this
Agreement.

“Foreign Purchased Asset” shall mean (i) with respect to any Transaction, the
Eligible Assets secured by Mortgaged Property located in a Permitted Foreign
Jurisdiction and which is sold by Seller to Buyer in such Transaction and
(ii) with respect to the Transactions for Foreign Purchased Assets in general,
all Eligible Assets secured by Mortgaged Property located in a Permitted Foreign
Jurisdiction sold by Seller to Buyer.

“Foreign Sanctions Authority” shall mean the Financial Conduct Authority, the
Foreign & Commonwealth Office, the European Union, Her Majesty’s Treasury of the
United Kingdom, the United Nations or any other analogous Governmental Authority
in any applicable non-U.S. jurisdiction in which a Mortgaged Property securing a
Purchased Asset is located.

“Foreign Sanctions List” shall mean any sanctions or “black” list maintained by
a Foreign Sanctions Authority.

“Future Advance Asset” shall mean any Purchased Asset with respect to which
there exists a continuing obligation on the part of the holder of the Purchased
Asset after the related closing date of such Purchased Asset to provide
additional funding to the Underlying Borrower upon the terms and conditions in
the applicable Purchased Asset Documents.

“Future Advance Purchase” shall have the meaning specified in Section 3(g) of
this Agreement.

“GAAP” shall mean United States generally accepted accounting principles
consistently applied as in effect from time to time.

“GBP Controlled Account” shall mean the Controlled Account for GBP Purchased
Assets.

“GBP Controlled Account Agreement” shall mean the Controlled Account Agreement
for the GBP Controlled Account.

“GBP Purchased Asset” shall mean a Foreign Purchased Asset for which the
Applicable Currency is Pounds Sterling.

“GBP Servicer Acknowledgment” shall have the meaning specified in the definition
of “Servicer Acknowledgement”.

“GBP Servicing Agreement” shall have the meaning specified in the definition of
“Servicing Agreement”.

“GLB Act” shall have the meaning specified in Section 27(b) hereof.

“GLB Indemnified Party” shall have the meaning specified in Section 27(b)
hereof.

 

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“Governmental Authority” shall mean any national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

“Guarantee” means, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee of a Person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which the Guarantee is made and
(b) the maximum amount for which such Person may be liable pursuant to the terms
of the instrument embodying such Guarantee, unless such primary obligation or
maximum amount for which such Person may be liable is not stated or
determinable, in which case the amount of such Guarantee shall be such Person’s
maximum reasonably anticipated liability in respect thereof as determined by
such Person in accordance with GAAP. The terms “Guarantee” and “Guaranteed” used
as verbs shall have correlative meanings.

“Guarantor” shall mean Credit RE Operating Company, LLC, a Delaware limited
liability company.

“Guaranty” shall mean that certain Amended and Restated Guaranty Agreement,
dated as of April 20, 2018, made by Guarantor in favor of Buyer as the same may
be amended, supplemented or otherwise modified from time to time.

“Hedging Transactions” shall mean, with respect to any or all of the Purchased
Assets, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including currency futures) or options contract or
any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller, or by the underlying obligor with respect
to any Purchased Asset and pledged to Seller as collateral for such Purchased
Asset, with one or more counterparties that is an Affiliated Hedge Counterparty
or a Qualified Hedge Counterparty or, with respect to any Hedging Transaction
pledged to Seller as additional collateral for a Purchased Asset, complies with
such other rating requirement applicable to such Hedging Transaction set forth
in the related Purchased Asset Documents or which is otherwise reasonably
acceptable to Buyer; provided that Seller shall not grant or permit any liens,
security interests, charges, or encumbrances with respect to any such Hedging
Transactions for the benefit of any Person other than Buyer.

“Income” shall mean, with respect to any Purchased Asset at any time, any
payment or other cash distribution thereon of principal, interest, dividends,
fees, reimbursements or proceeds thereof (including sales proceeds) or other
cash distributions thereon (including casualty or condemnation proceeds);
provided that in no event shall Income include any escrow or reserve payment
made by the related Underlying Borrower that is required to be reserved or
escrowed pursuant to the applicable Purchased Asset Documents; provided further
that if Servicer has the

 

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right to deduct fees or other amounts from such amounts collected by Servicer in
accordance with the Servicing Agreement, the amount of such fees shall not be
included in Income. For the avoidance of doubt, the determination of all Income
in respect of any Foreign Purchased Asset shall be in the Applicable Currency
for such Foreign Purchased Asset.

“Indebtedness” means, as to any Person at a particular time, without
duplication, the following to the extent they are included as indebtedness or
liabilities in accordance with GAAP:

 

  (a)

obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such property from such Person);

 

  (b)

obligations of such Person to pay the deferred purchase or acquisition price of
property or services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within sixty
(60) days of the date the respective goods are delivered or the respective
services are rendered;

 

  (c)

Indebtedness of others secured by a lien on the property of such Person, whether
or not the respective Indebtedness so secured has been assumed by such Person;

 

  (d)

obligations (contingent or otherwise) of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person;

 

  (e)

Capital Lease Obligations of such Person;

 

  (f)

obligations of such Person under repurchase agreements, sale/buy-back agreements
or like arrangements;

 

  (g)

Indebtedness of others Guaranteed by such Person;

 

  (h)

all obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person;

 

  (i)

Indebtedness of general partnerships of which such Person is a general partner;
and

 

  (j)

all net liabilities or obligations under any interest rate swap, interest rate
cap, interest rate floor, interest rate collar or other hedging instrument or
agreement.

“Indemnified Amounts” shall have the meaning specified in Section 20(a) of this
Agreement.

“Indemnified Parties” shall have the meaning specified in Section 20(a) of this
Agreement.

 

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“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of Seller
under any Transaction Document and (b) to the extent not otherwise described in
clause (a), Other Taxes.

“Independent Appraiser” shall mean an independent professional real estate
appraiser who (i) with respect to U.S. Purchased Assets, is a member in good
standing of the American Appraisal Institute, and, if the state in which the
subject Eligible Property is located certifies or licenses appraisers, is
certified or licensed in such state, and (ii) with respect to Foreign Purchased
Assets, holds a certification reasonably equivalent to the foregoing in the
applicable jurisdiction, and in each case, has a minimum of five (5) years’
experience in the subject property type.

“Independent Director” shall mean, with respect to any corporation or limited
liability company, an individual who: (a) is provided by CT Corporation,
Corporation Service Company, National Registered Agents, Inc., Wilmington Trust
Company, Stewart Management Company, Lord Securities Corporation, Puglisi &
Associates or, if none of those companies is then providing professional
independent directors, another nationally-recognized company reasonably approved
by Buyer, in each case that is not an Affiliate of such corporation or limited
liability company and that provides professional independent directors and other
corporate services in the ordinary course of its business; (b) is duly appointed
as a member of the board of directors of such corporation or as an independent
manager, member of the board of managers, or special member of such limited
liability company; and (c) is not, and has never been, and will not while
serving as Independent Director be (i) a member (other than an independent,
non-economic “springing” member or special member), partner, equityholder,
manager (other than in its capacity as independent manager), director, officer
or employee of such corporation or limited liability company or any of its
equityholders or affiliates (other than an affiliate that is not in the direct
chain of ownership of such corporation or limited liability company and that is
a Single-Purpose Entity, provided that the fees such individual earns from
serving as an Independent Director of such affiliates in any given year
constitute in the aggregate less than 5% of such individual’s annual income for
that year); (ii) a creditor, supplier or service provider (including provider of
professional services) to such corporation or limited liability company or any
of its equityholders or affiliates (other than a nationally recognized company
that routinely provides professional independent managers or directors and that
also provides lien search and other similar services to such corporation or
limited liability company or any of its equityholders or affiliates in the
ordinary course of business); (iii) a family member of any such member, partner,
equityholder, manager, director, officer, employee, creditor, supplier or
service provider; or (iv) a Person that controls (whether directly, indirectly
or otherwise) any of (i) or (ii) above.

“Index Rate” shall mean, (x) with respect to U.S. Purchased Assets and GBP
Purchased Assets, the applicable LIBOR Rate and (y) with respect to EUR
Purchased Assets, the EURIBOR Rate.

“Insolvency Law” shall mean the Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments and similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.

 

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“Insured Closing Letter and Escrow Instructions” shall mean a letter addressed
to Seller from the title insurance underwriter (or any agent thereof) or any
other Person acting as an agent for each Table Funded Purchased Asset and
related escrow instructions, which letter and instructions shall be in form and
substance reasonably acceptable to Buyer and Seller.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges (including deferred financing costs), unamortized debt discount and
capitalized research and development costs; provided, however, that Intangible
Assets shall not include real estate intangibles such as in-place lease value,
above and below market lease value and deferred leasing costs which are purchase
price allocations determined upon the acquisition of real estate.

“Last Endorsee” shall have the meaning specified in Section 7(b)(i) of this
Agreement.

“LIBOR” shall mean, (x) for any Pricing Period with respect to a U.S. Purchased
Asset, the per annum rate for deposits in U.S. Dollars that appears on Reuters
Screen LIBOR01 Page (or the successor thereto) as one-month LIBOR as of 11:00
a.m., London time, on the related Pricing Rate Reset Date and (y) for any
Pricing Period with respect to a GBP Purchased Asset, the per annum rate for
deposits in Pounds Sterling for a three-month period that appears on Reuters
Screen LIBOR01 Page (or the successor thereto) as of 11:00 a.m., London time, on
the related Pricing Rate Reset Date.

“LIBOR Alternate Index” shall mean an alternative published index selected by
Buyer (in non-binding consultation with Seller) to be used in calculating the
Pricing Rate, which such alternative index will be (a) then currently commonly
used in making determinations of the interest rate as an alternative to LIBOR
for sellers under similar repurchase agreements with Buyer and (b) publicly
recognized by the International Swaps and Derivatives Association (or any
successor organization) as an alternative to LIBOR, which the parties hereto
acknowledge and agree may be an index that does not yet exist and/or is not
commonly being used as of the date of this Agreement; provided, that in no event
shall such LIBOR Alternate Index be less than zero percent.

“LIBOR Alternate Rate” shall mean, with respect to each Collection Period, the
per annum rate of interest of the LIBOR Alternate Index, determined as of the
date of determination immediately preceding the commencement of such Collection
Period.

“LIBOR Alternate Rate Determination” shall have the meaning specified in
Section 3(k).

“LIBOR Alternate Rate Spread” shall mean, if the Pricing Rate has been converted
to the LIBOR Alternate Rate pursuant to Section 3(k) hereof, the difference
(expressed as the number of basis points) between (a) LIBOR plus the Applicable
Spread on the date for which LIBOR was last applicable to the outstanding
Transactions prior to such conversion and (b) the LIBOR Alternate Rate on the
date for which LIBOR was last applicable to the outstanding Transactions prior
to such conversion; provided, however, that if such difference is a negative
number, then the LIBOR Alternate Rate Spread shall be zero.

 

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“LIBOR Alternate Rate Transaction” shall mean, with respect to any Pricing
Period or (other applicable period), any Transaction with respect to which the
Pricing Rate for such Pricing Period (or other applicable period) is determined
with reference to the LIBOR Alternate Rate.

“LIBOR Rate” shall mean, as of any date of determination, a rate per annum
determined in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):

            LIBOR                 

1.00 - LIBOR Rate Reserve Percentage

“LIBOR Rate Reserve Percentage” shall mean, with respect to any date of
determination, the reserve percentage (expressed as a decimal fraction)
applicable two (2) Business Days before such date under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor thereto) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York, New
York with respect to liabilities or assets consisting of or including any
category of liabilities that includes deposits by reference to which the
interest rate on Transactions is determined having a term comparable to the
applicable Collection Period.

“LIBOR Transaction” shall mean any Transaction with respect to which the Pricing
Rate is determined with reference to the LIBOR Rate.

“Liquidity” means, for any Person and its Consolidated Subsidiaries, the sum of
(a) cash and Cash Equivalents and (b) Available Borrowing Capacity.

“LLC Certificate” shall mean, with respect to any Purchased Asset that is a
Mezzanine Loan, the certificate or certificates evidencing 100% of the related
Capital Stock.

“LTV” shall mean, with respect to any Purchased Asset, the ratio of the
aggregate outstanding debt (which shall include such Purchased Asset and all
debt senior to or pari passu with such Purchased Asset) secured, directly or
indirectly, by the related Eligible Property or Properties, to the aggregate
“as-is” market value of such Eligible Property or Eligible Properties as
determined by Buyer in Buyer’s sole good faith discretion, in each case,
denominated in the Applicable Currency of the relevant asset.

“Manager” shall mean CLNC Manager, LLC, a Delaware limited liability company,
and any replacement manager permitted pursuant to the terms of this Agreement.

“Margin Credit Event” shall mean, with respect to any Purchased Asset, the date
upon which material changes (i.e., changes that adversely impact the value of
the Purchased Asset other than to a de minimis extent, and in any event,
relative to Buyer’s initial underwriting or the most recent determination of
Market Value) relative to underwriting in terms of the performance or condition
of (i) the relevant Mortgaged Property, (ii) the Underlying Borrower (or its
sponsor(s)) in relation to such Purchased Asset or (iii) the commercial real
estate market in the relevant jurisdiction relating to the relevant Mortgaged
Property, taken in the aggregate, exist with respect to such Purchased Asset as
determined by Buyer in Buyer’s sole good faith discretion and in any event,
without regard to fluctuations in current interest rates and interest rate
spreads.

 

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“Margin Deficit” shall have the meaning specified in Section 4(a) of this
Agreement.

“Margin Excess” shall have the meaning specified in Section 4(b) of this
Agreement.

“Margin Percentage” shall mean, with respect to any Purchased Asset, the
applicable Margin Percentage specified in the applicable Confirmation.

“Market Value” shall mean, with respect to any Purchased Asset as of any date,
the market value of such Purchased Asset (including future advances with respect
to such Purchased Asset which have been funded as of such date) on such date, as
determined by Buyer in Buyer’s sole good faith discretion (using customary
factors utilized by Buyer in its ordinary course, which may include an
agreed-upon market-recognized third-party source) based solely on, with respect
to a Purchased Asset, material changes relative to Buyer’s initial underwriting
or most recent determination of market value in terms of the performance or
condition of: (a) the relevant Mortgaged Property, (b) the Underlying Borrower
(or its sponsor(s)) in relation to such Purchased Asset or (c) the commercial
real estate market in the relevant jurisdiction relating to the related
Mortgaged Property, taken in the aggregate, and in any event without regard to
fluctuations in current interest rates and interest rate spreads. For purposes
of Buyer’s determination (i) the Market Value of a Purchased Asset may be
determined by reference to an Appraisal, discounted cash flow analysis or any
other method selected by Buyer in Buyer’s sole good faith discretion, (ii) any
amounts or claims secured by the related Eligible Property or Properties ranking
senior to or pari passu with the lien of a Purchased Asset may be deducted from
the Market Value of such Purchased Asset, (iii) the Market Value of any
Purchased Asset may be zero if such Purchased Asset is determined not to be an
Eligible Asset by Buyer in Buyer’s sole good faith discretion, (iv) Buyer may
consider (A) the representations and warranties set forth in Exhibit III
(including a breach thereof), and exceptions thereto in its determination of the
Market Value of a Purchased Asset and (B) whether such Purchased Asset is a
Defaulted Asset and (v) for the avoidance of doubt, Buyer may reduce the Market
Value of a Purchased Asset for any actual risks (including risk of delay) posed
by any liens or claims on the related Eligible Property or Properties other than
Permitted Encumbrances. Seller shall reasonably cooperate with Buyer in its
determination of the Market Value of each Purchased Asset (including, without
limitation, providing all information and documentation in the possession of
Seller regarding such item of underlying collateral or otherwise reasonably
required by Buyer). For the avoidance of doubt, the Market Value of any
Purchased Asset shall be denominated in the same Applicable Currency as the
Purchase Price of such Purchased Asset.

“Material Adverse Effect” shall mean a material adverse effect on (i) the
property, business, operations or financial condition of Guarantor and/or
Seller, taken as a whole, (ii) the ability of the Guarantor and Seller to
perform its obligations under any of the Transaction Documents to which it is
party, (iii) the validity or enforceability of any of the Transaction Documents
or (iv) the rights and remedies of Buyer under any of the Transaction Documents.

 

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“Maximum Asset Exposure Threshold” shall mean, with respect to any Purchased
Asset, the Maximum Purchase Percentage, multiplied by the LTV (calculated in the
Applicable Currency of such Purchased Asset) of such Purchased Asset shall not
exceed (x) 63.75% for any Purchased Asset secured by a multifamily property and
(y) 60% for all other Purchased Assets, unless otherwise permitted by Buyer in
Buyer’s sole discretion.

“Maximum Purchase Percentage” shall mean, with respect to any Purchased Asset,
the “Maximum Purchase Price Percentage” specified in Schedule 1 (or as otherwise
specified in the applicable Confirmation).

“Mezzanine Borrower” shall mean, with respect to any Mezzanine Loan, the obligor
on the related Mezzanine Note, the pledgor under the related Mezzanine Pledge
Agreement and the owner of the related Capital Stock.

“Mezzanine Loan” shall mean any fixed or floating whole mezzanine loan secured,
in whole or in part, by a first priority pledge of, or security interest in, the
Capital Stock in one or more entities holding a direct or indirect beneficial
interest in an entity owning (or having a ground lease interest in) an Eligible
Property. For the avoidance of doubt, no Mezzanine Loan will be an Eligible
Asset unless the related Mortgage Loan is also an Eligible Loan Asset.

“Mezzanine Note” shall mean, with respect to a Mezzanine Loan, a note or other
evidence of indebtedness of a Mezzanine Loan.

“Mezzanine Pledge” the security interest created by a Mezzanine Pledge
Agreement.

“Mezzanine Pledge Agreement” shall mean, with respect to any Purchased Asset
that is a Mezzanine Loan, the pledge and security agreement creating a valid and
enforceable lien on the related Capital Stock.

“Monthly Statement” shall mean, for each calendar month during which this
Agreement shall be in effect, Seller’s or Servicer’s, as applicable,
reconciliation in arrears of beginning balances, interest and principal paid to
date and ending balances for each Purchased Asset, together with a written
report describing (i) any developments or events with respect to such Purchased
Asset since the prior Monthly Statement that are reasonably likely to have a
material adverse effect on the Market Value of such Purchased Asset, (ii) any
Defaults or potential Defaults of which Seller has knowledge, (iii) any and all
written modifications to any Purchased Asset Documents since the prior Monthly
Statement, (iv) loan status, collection performance and any delinquency and loss
experience with respect to each Purchased Asset, (v) an update as to the
expected disposition or sale of the Purchased Assets and (vi) such other
information as Buyer may reasonably request with respect to Seller, any
Purchased Asset, Underlying Borrower or Mortgaged Property, which report shall
be delivered to Buyer for each calendar month during the term of this Agreement
within fifteen (15) days following the end of such calendar month.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall mean (x) with respect to U.S. Purchased Assets, the mortgage,
deed of trust, deed to secure debt or other instruments, creating a valid and
enforceable first lien on or a first priority ownership interest in a Mortgaged
Property and (y) with respect to Foreign Purchased Assets, the related debenture
or equivalent security deed or other instrument creating a first priority

 

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lien or a first priority security interest in an estate in fee simple in real
property and the improvements thereon, securing a mortgage note or similar
evidence of indebtedness and any other security deed or other instrument, in
each case securing indebtedness under the applicable Requirement of Law in the
relevant non-U.S. jurisdiction.

“Mortgage Loan” shall mean (i) a whole commercial mortgage loan or (ii) a First
Mortgage A- Note, in each case secured by a Mortgage and evidenced by a Mortgage
Note and all other Purchased Asset Documents, all right, title and interest of
Seller in and to any Mortgaged Property covered by the related Mortgage and all
related Servicing Rights.

“Mortgage Note” shall mean, (x) with respect to a Mortgage Loan, a note or other
evidence of indebtedness of a Mortgagor secured by the applicable Mortgage and
(y) with respect to a Participation Interest, a Participation Certificate
evidencing such Participation Interest.

“Mortgaged Property” shall mean the real property or properties securing
repayment of the debt evidenced by (x) with respect to U.S. Purchased Assets, a
Mortgage Note (or Mortgage Notes, in the case of an AB Mortgage Loan or Split
Mortgage Loan) and (y) with respect to Foreign Purchased Assets, a Mortgage or
Mortgage Note.

“Mortgagor” shall mean the obligor on a Mortgage Note, the grantor of the
related Mortgage and the owner of the related Mortgaged Property, as applicable.

“Mount Street Servicer” shall have the meaning specified in the definition of
“Servicer”.

“New Asset” shall mean an Eligible Asset that Seller proposes to sell to Buyer
pursuant to a Transaction.

“New Foreign Asset” shall mean a New Asset that would become a Foreign Purchased
Asset if purchased by Buyer.

“New U.S. Asset” shall mean a New Asset that would become a U.S. Purchased Asset
if purchased by Buyer.

“Non-Recourse Indebtedness” means, Indebtedness that is not Recourse
Indebtedness.

“Non Wholly-Owned Consolidated Affiliate” means each Consolidated Subsidiary of
the Guarantor in which less than 100% of each class of the Capital Stock (other
than directors’ qualifying shares, if applicable) of such Consolidated
Subsidiary are at the time owned, directly or indirectly, by the Guarantor.

“OFAC” shall mean the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Officer’s Certificate” shall mean, as to any Person, a certificate of the chief
executive officer, the chief financial officer, the president, any vice
president or the secretary of such Person.

 

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“Other Connection Taxes” shall mean Taxes imposed as a result of a present or
former connection between such Buyer and the jurisdiction imposing such Tax
(other than connections arising from such Buyer having executed, delivered,
become a party to, performed its obligations under, received payments under,
received or perfected a security interest under, engaged in any other
Transaction pursuant to or enforced any Transaction Document, or sold or
assigned an interest in any Transaction or any Transaction Document).

“Other Taxes” shall mean any and all present or future stamp, court or
documentary, intangible, recording, filing or similar Taxes (including, without
limitation, United Kingdom stamp duty and stamp duty reserve tax) that may arise
from any payment made under any Transaction Document or from the execution,
delivery or enforcement of, or otherwise with respect to, any Transaction
Document.

“Participation Certificate” shall mean a participation certificate which
evidences the outstanding balance of a Participation Interest.

“Participation Interest” shall mean a senior or senior pari passu participation
interest in a performing Mortgage Loan.

“Permitted Encumbrances” shall mean (a) liens for real property Taxes, ground
rents, water charges, sewer rates and assessments not yet due and payable;
(b) liens arising by operation of law (such as materialmen’s, mechanics’,
carriers’, workmen’s, repairmen’s and similar liens) arising in the ordinary
course of business which are (i) discharged by payment, bonding or otherwise or
(ii) being contested in good faith by the related Mortgagor in accordance with
the related Purchased Asset Documents; (c) covenants, conditions and
restrictions, rights of way, easements and other matters of public record, which
do not individually or in the aggregate, in the reasonable judgment of Seller,
materially interfere with (i) the current use of the related Mortgaged Property,
(ii) the security intended to be provided by the related Mortgage, (iii) the
underlying obligor’s ability to pay its obligations when they become due or
(iv) the value of the related Mortgaged Property; (d) liens and encumbrances set
forth in the related Title Policy; and (e) rights of existing or future tenants
as tenants only pursuant to leases.

“Permitted Foreign Jurisdiction” means (i) provided that the condition set forth
in Section 3(e)(xvi) has been satisfied with respect to each such jurisdiction
(when applicable), Belgium, France, Germany, Ireland, Luxembourg, the
Netherlands, the United Kingdom or Spain, or (ii) any other non-U.S.
jurisdiction approved by Buyer in its sole and absolute discretion (such
approval to be evidenced by Buyer’s delivery of an executed Confirmation with
respect to a Foreign Purchased Asset secured by a Mortgaged Property located in
such other non-U.S. jurisdiction).

“Permitted Non-Recourse CLO Indebtedness” means Indebtedness that is
(i) incurred by a Subsidiary of Guarantor in the form of asset-backed securities
commonly referred to as “collateralized loan obligations” or “collateralized
debt obligations” and (ii) is Non-Recourse Indebtedness.

“Person” means, any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental authority
or other entity.

 

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“Plan” shall mean an employee benefit or other plan established or maintained
during the five- year period ended prior to the date of this Agreement or to
which Seller or any ERISA Affiliate makes, is obligated to make or has, within
the five-year period ended prior to the date of this Agreement, been required to
make contributions and that is covered by Title IV of ERISA or Section 302 of
ERISA or Section 412 of the Code.

“Plan Assets” shall mean assets of any (i) employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in
Section 4975(e)(l) of the Code) subject to Section 4975 of the Code, or
(iii) governmental plan (as defined in Section 3(32) of ERISA) subject to any
other federal, state or local laws, rules or regulations substantially similar
to Title I of ERISA or Section 4975 of the Code.

“Portfolio Exposure Threshold” shall mean that the product of (i) the actual
weighted-average aggregate Purchase Percentage of all Purchased Assets,
multiplied by (ii) the weighted average LTV for all Purchased Assets does not
exceed 57.5%, unless otherwise permitted by Buyer in Buyer’s sole discretion.

“Pound Income” has the meaning set forth in Section 5(b)(iii).

“Pounds Sterling” shall mean the lawful currency of the United Kingdom.

“Preliminary Approval” shall have the meaning specified in Section 3(b) of this
Agreement.

“Preliminary Due Diligence Package” shall mean, with respect to any New Asset,
the following due diligence information, to the extent applicable and to the
extent in the possession of Seller or otherwise available, relating to such New
Asset to be provided by Seller to Buyer pursuant to this Agreement:

(a) Seller’s internal credit committee or investment committee memorandum, among
other things, outlining the proposed transaction, including potential
transaction benefits and all material underwriting risks and issues identified
by Seller, anticipated exit strategies and underwriting models;

(b) current rent roll and roll over schedule, if applicable;

(c) cash flow pro-forma, plus historical information, if available;

(d) flood certification (or the equivalent in the applicable jurisdiction);

(e) maps and photos, if available;

(f) interest coverage ratios and Debt Yield Ratio;

(g) description of the Mortgaged Property, along with a description of the
Mortgagor and sponsor (including their experience with other projects, ownership
structure and financial statements);

(h) loan-to-value ratio;

 

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(i) Seller’s or any Affiliate’s relationship with the Underlying Borrower or any
affiliate;

(j) material third party reports, to the extent available and applicable,
including: (i) engineering and structural reports, each in form and prepared by
consultants acceptable to Buyer; (ii) current Appraisal; (iii) Phase I
environmental report (including asbestos and lead paint report) and, if
applicable, Phase II or other follow-up environmental report if recommended in
Phase I, each in form and prepared by consultants acceptable to Buyer;
(iv) seismic reports, each in form and prepared by consultants acceptable to
Buyer; (v) operations and maintenance plan with respect to asbestos containing
materials, each in form and prepared by consultants acceptable to Buyer; and
(vi) the servicing data tape (it being understood that, with respect to any New
Foreign Asset, Seller shall provide deliverables reasonably equivalent to the
foregoing items (i) through (vi) for the relevant non-U.S. jurisdiction);

(k) copies of documents evidencing such New Asset, or current drafts thereof,
including, without limitation, underlying debt and security documents,
guaranties, Underlying Borrower’s organizational documents, loan and collateral
pledge agreements, and intercreditor agreements, as applicable;

(l) insurance certificates or other evidence of insurance coverage evidencing
the insurance required to be maintained with respect to any Eligible Property or
Properties pursuant to Section 3(c)(iv) hereof (including evidence of terrorism
insurance coverage and such other customary insurance coverage satisfactory to
Buyer);

(m) analyses and reports with respect to such other matters concerning the New
Asset as Buyer may in its reasonable discretion require; and

(n) reports of UCC, tax lien, judgment and litigation searches (or, with respect
to a New Foreign Asset, their equivalent in the applicable non-U.S.
jurisdiction) as requested by Buyer, conducted by search firms reasonably
acceptable to Buyer with respect to the Purchased Asset, Seller and the related
underlying obligor, such searches to be conducted in each location Buyer shall
reasonably designate and such reports reasonably satisfactory to Buyer.

“Prescribed Laws” shall mean, collectively, (a) the USA PATRIOT Act,
(b) Executive Order 13224, (c) the International Emergency Economic Power Act,
50 U.S.C. §1701 et. seq., (d) the Bank Secrecy Act (31 U.S.C. Sections 5311 et
seq.) as amended and (e) all other Requirements of Law relating to money
laundering or terrorism, including without limitation, the USA PATRIOT Act and
all regulations and executive orders promulgated with respect to money
laundering or terrorism, including, without limitation, those promulgated by the
Office of Foreign Assets Control of the United States Department of the
Treasury.

“Price Differential” shall mean, with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Repurchase Price thereof (excluding any amount attributable
to Price Differential in the definition thereof), calculated on the basis of a
three hundred sixty (360) day per year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the date of determination (such
aggregate amount to be reduced by any amount of such Price Differential paid by
Seller to Buyer, prior to such date, with respect to such Transaction). Price
Differential shall be payable in the Applicable Currency of the Purchase Price
of the applicable Purchased Asset.

 

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“Pricing Period” shall mean, with respect to each Purchased Asset, (a) in the
case of the first (1st) Remittance Date, the period from and including the
original Purchase Date for such Purchased Asset to but excluding the next
following applicable Remittance Date, and (b) in the case of each subsequent
Remittance Date, the one-month or three-month period, as applicable, from and
including the preceding applicable Remittance Date to but excluding such
Remittance Date; provided that no Pricing Period for a Purchased Asset shall end
after the Repurchase Date for such Purchased Asset.

“Pricing Rate” shall mean, for any Pricing Period with respect to a Purchased
Asset, an annual rate equal to the Index Rate for such Pricing Period, plus the
Applicable Spread for the related Purchased Asset (subject to adjustment and/or
conversion as provided in Sections 3(k), 3(l), 3(n) and 3(o) of this
Agreement).    

“Pricing Rate Reset Date” shall mean, with respect to a Purchased Asset, (a) in
the case of the first (1st) Pricing Period for such Purchased Asset, the
original Purchase Date for such Purchased Asset, and (b) in the case of each
subsequent Pricing Period, two (2) Business Days preceding the Remittance Date
on which such Pricing Period begins.

“Principal Payment” shall mean, with respect to any Purchased Asset, any payment
or prepayment of principal received by Seller or Servicer in respect thereof
(including casualty or condemnation proceeds to the extent that such proceeds
are not required under the underlying loan documents to be reserved, escrowed,
readvanced or applied for the benefit of the Mortgagor or the related Mortgaged
Property). For purposes of clarification, prepayment premiums, fees or penalties
shall not be deemed to be principal.

“Prohibited Person” shall mean any Person: (i) listed in the Annex to, or
otherwise subject to the provisions of, Executive Order 13224 or any Foreign
Sanctions List; (ii) that is owned or controlled by, or acting for or on behalf
of, any person or entity that is listed in the Annex to, or is otherwise subject
to the provisions of, Executive Order 13224 or any Foreign Sanctions List;
(iii) with whom Buyer is prohibited from dealing or otherwise engaging in any
transaction by any terrorism or money laundering law, including Executive Order
13224; (iv) who commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order 13224; (v) that is the subject of
Sanctions; (vi) that is a foreign shell bank; (vii) that is a resident of, or
whose subscription funds are transferred from or through an account in, a
jurisdiction that has been designated as a non-cooperative with international
anti-money laundering principles or procedures by an intergovernmental group or
organization, such as the FATF, of which the U.S. is a member and with which
designation the U.S. representative to the group or organization continues to
concur (see http://www.fatf-gati.org for the FATF’s “Non-Cooperative Countries
and Territories Initiative”); or (viii) who is an Affiliate of a Person
described above.

“Prohibited Transferee” shall mean any of the Persons listed on Schedule 3
attached to this Agreement.

 

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“Property Report” shall mean, with respect to a Foreign Purchased Asset, any
certificate or report of title in relation to the related Mortgaged Property
that is delivered as a condition precedent to the making of the underlying loan
under the loan agreement for such Foreign Purchased Asset.

“Purchase Date” shall mean, with respect to any Purchased Asset, the date on
which such Purchased Asset is transferred by Seller to Buyer.

“Purchase Date Dollar Equivalent” shall mean, as of any date of determination,
with respect to any amount in Euros or Pounds Sterling (or any other non-U.S.
Dollar currency approved by Buyer in its sole discretion) relating to a Foreign
Purchased Asset, the equivalent amount in U.S. Dollars, based on the Purchase
Date Spot Rate for such Foreign Purchased Asset.

“Purchase Date Spot Rate” shall mean, with respect each specific Foreign
Purchased Asset, the Spot Rate as of the Purchase Date for such Foreign
Purchased Asset (which Purchase Date Spot Rate shall be set forth in the
applicable Confirmation).

“Purchase Percentage” shall mean, with respect to any Purchased Asset, the ratio
(expressed as a percentage) of the outstanding Purchase Price with respect to
such Purchased Asset to the outstanding unpaid principal balance of such
Purchased Asset.

“Purchase Price” shall mean, with respect to any Purchased Asset, the price at
which such Purchased Asset is transferred by Seller to Buyer on the applicable
Purchase Date. The Purchase Price as of any Purchase Date for any Purchased
Asset shall be an amount (expressed in the Applicable Currency of the Purchased
Asset) equal to the product of (a) the Market Value of such Purchased Asset,
multiplied by (b) the applicable Purchase Percentage. The Purchase Price shall
increase by any Future Advance Purchase pursuant to Section 3(g) and any payment
made to Seller in connection with a Margin Excess pursuant to Section 4(b), and
shall decrease by any payment applied in connection with a Margin Deficit
pursuant to Section 4(a) and any Principal Payment applied pursuant to Section 5
to reduce such Purchase Price and any other amounts paid to Buyer by Seller to
reduce such Purchase Price.

“Purchased Asset” shall mean a Foreign Purchased Asset or a U.S. Purchased
Asset, as applicable.

“Purchased Asset Documents” shall have the meaning specified in Section 7(b) of
this Agreement.

“Purchased Asset File” shall mean the Purchased Asset Documents, together with
any additional documents and information required to be delivered to Buyer or
its designee (including Custodian) pursuant to this Agreement.

“Purchased Asset File Checklist” shall mean the purchased asset file checklist,
a form of which is attached to the Custodial Agreement.

“Purchased Asset Information” shall mean, with respect to each Purchased Asset,
the information set forth in Schedule 2 attached hereto.

 

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“Purchased Asset Schedule” shall mean, a schedule of Purchased Assets, together
with the Purchased Asset Information for each such loan delivered in accordance
with the Custodial Agreement or the Bailee Agreement, as applicable.

“Qualified Hedge Counterparty” shall mean, with respect to any Hedging
Transaction, any entity, other than an Affiliated Hedge Counterparty, that
(a) qualifies as an “eligible contract participant” as such term is defined in
the Commodity Exchange Act (as amended by the Commodity Futures Modernization
Act of 2000), (b) the long-term debt of which is rated no less than “A-” by
Standard & Poor’s and A3 by Moody’s and (c) is reasonably acceptable to Buyer;
provided that, with respect to clause (c), if Buyer has approved an entity as a
counterparty, it may not thereafter deem such counterparty unacceptable with
respect to any previously outstanding Transaction unless clause (a) or (b) no
longer applies with respect to such counterparty.

“Quarterly Report” shall mean, for each fiscal quarter during which this
Agreement shall be in effect, Seller’s or Servicer’s, as applicable, certified
written report summarizing (with a separate cover sheet for each Purchased Asset
or, in the case of a Purchased Asset secured (directly or indirectly) by a
portfolio of Mortgaged Properties, a cover sheet for such portfolio on a
consolidated basis), with respect to the Mortgaged Properties securing each
Purchased Asset (or, in the case of a Purchased Asset secured (directly or
indirectly) by a portfolio of Mortgaged Properties, such information on a
consolidated basis), the net operating income, debt service coverage, occupancy,
the revenues per room (for hospitality properties) and sales per square footage
(for retail properties), in each case, to the extent received by Seller, and
such other information as mutually agreed by Seller and Buyer, which report
shall be delivered to Buyer for each fiscal quarter during the term of this
Agreement within forty-five (45) days following the end of each such fiscal
quarter.

“Ratification Agreement” shall mean that certain Ratification, Reaffirmation and
Confirmation of Transaction Documents, dated as of the date hereof, by Sellers
and Guarantor ratifying their respective obligations under the Transaction
Documents entered into prior to the date hereof.

“Receiving Party” shall have the meaning specified in Section 27(a) hereof.

“Recourse Indebtedness” means, with respect to any Person, for any period,
without duplication, the aggregate Indebtedness in respect of which such Person
is subject to recourse for payment, whether as a borrower, guarantor or
otherwise; provided, that Indebtedness arising pursuant to Customary Recourse
Exceptions shall not constitute Recourse Indebtedness until such time (if any)
as demand has been made for the payment or performance of such Indebtedness.

“Regulations T, U and X” shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.

“Remittance Date” shall mean, (x) with respect to U.S. Purchased Assets, the
nineteenth (19th) calendar day of each month, or the next succeeding Business
Day, if such calendar day shall not be a Business Day and (y) with respect to
Foreign Purchased Assets, January 19h, April 19th, July 19th and October 19th,
or the next succeeding Business Day, if such calendar day shall not be a
Business Day.

 

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“Representatives” shall have the meaning specified in Section 27(a) hereof.

“Repurchase Assets” shall have the meaning specified in Section 6(a) hereof.

“Repurchase Date” shall mean, with respect to any Purchased Asset, the date that
is the earliest to occur of the following: (a) the Facility Termination Date,
(b) the date otherwise specified in the related Confirmation, or (c) if
applicable, the related Early Repurchase Date or Accelerated Repurchase Date.

“Repurchase Obligations” shall mean the aggregate Repurchase Price and all other
amounts due under the Transaction Documents (including interest which would be
payable as post-petition interest in connection with any bankruptcy or similar
proceeding) irrespective of whether such obligations are direct or indirect,
absolute or contingent, matured or unmatured.

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any
date, the price at which such Purchased Asset is to be transferred from Buyer to
Seller upon termination of the related Transaction (which price shall be
expressed and payable in the Applicable Currency stated on the Confirmation for
such Purchased Asset); in each case, such price shall equal the sum of the
outstanding Purchase Price of such Purchased Asset and the accrued and unpaid
Price Differential with respect to such Purchased Asset as of the date of such
determination, minus all Income and other cash actually received by Buyer in
respect of such Purchased Asset and applied towards the Repurchase Price and/or
Price Differential pursuant to this Agreement.

“Requirement of Law” shall mean any law (including, without limitation,
Prescribed Laws), treaty, rule, regulation, code, directive, policy, order or
requirement or determination of an arbitrator or a court or other Governmental
Authority whether now or hereafter enacted or in effect.

“Reserve Requirements” shall mean, with respect to any date of determination,
the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such date (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System in New York,
New York or other governmental authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for Eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of such
Board of Governors) maintained by Buyer.

“RICS” shall mean the then-current Statements of Asset Valuation Practice and
Guidance Notes issued by the Royal Institution of Chartered Surveyors.

“Sanctions” shall have the meaning specified in Section 10(xxv)(A) of this
Agreement.

“SEC” shall mean the Securities and Exchange Commission.

“Security Agent” shall mean, with respect to a Foreign Purchased Loan that is in
syndicated form, a security agent or a security trustee appointed by the lenders
under such Foreign Purchased Loan to hold the benefit of any security agreements
relating to such Foreign Purchased Loan on their behalf.

 

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“Seller” shall have the meaning specified in the introductory paragraph of this
Agreement.

“Servicer” shall mean (i) with respect to U.S. Purchased Assets, Wells Fargo
Bank, N.A. (“Wells Servicer”), or any other servicer approved by Buyer in its
reasonable discretion, and (ii) with respect to Foreign Purchased Assets, Mount
Street Mortgage Servicing Limited (“Mount Street Servicer”).

“Servicer Acknowledgement” shall mean (i) with respect to U.S. Purchased Assets,
that certain servicer acknowledgement, dated as of April 20, 2018, executed by
NT-I, NT-II, Credit 1 and Credit 2 and acknowledged by Servicer and Buyer,
(ii) with respect to EUR Purchased Assets, any servicer acknowledgement executed
by EU Seller and acknowledged by Servicer and Buyer (the “EUR Servicer
Acknowledgment”), (iii) with respect to GBP Purchased Assets, any servicer
acknowledgement executed by UK Seller and acknowledged by Servicer and Buyer
(the “GBP Servicer Acknowledgment”) and (iv) such other servicing acknowledgment
in connection with a Servicing Agreement entered into by Seller on Buyer’s
behalf in accordance with Section 22 of this Agreement.

“Servicing Agreement” shall mean (i) with respect to U.S. Purchased Assets, that
certain Amended and Restated Servicing Agreement, dated as of April 20, 2018, by
and between Wells Fargo Bank, N.A. and NT-I, NT-II, Credit 1 and Credit 2 (the
“Wells Servicing Agreement”), (ii) with respect to EUR Purchased Assets, that
certain servicing agreement to be (or as may have been) entered into by and
between Mount Street Servicer and EU Seller (the “EUR Servicing Agreement”)
(iii) with respect to GBP Purchased Assets, that certain servicing agreement to
be (or as may have been) entered into by and between Mount Street Servicer and
UK Seller (the “GBP Servicing Agreement”) and (iv) such other servicing or
subservicing agreement entered into by Seller on Buyer’s behalf in accordance
with Section 22 of this Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

“Servicing Records” shall have the meaning specified in Section 22(b) of this
Agreement.

“Servicing Rights” shall mean contractual, possessory or other rights of any
Person to administer, service or subservice any Purchased Assets (or to possess
any Servicing Records relating thereto), including: (i) the rights to service
the Purchased Assets; (ii) the right to receive compensation (whether direct or
indirect) for such servicing, including the right to receive and retain the
related servicing fee and all other fees with respect to such Purchased Assets;
and (iii) all rights, powers and privileges incidental to the foregoing,
together with all Servicing Records relating thereto.

“Significant Modification” shall mean (i) the foreclosure, acceleration or
exercise of any material right or remedy following an event of default with
respect to such Purchased Asset by the holder thereof under any Purchased Asset
Document; (ii) any forbearance, extension or increase in principal amount with
respect to any Purchased Asset (other than future advances made pursuant to the
express terms of the Purchased Asset Documents), (iii) any modification, consent
to a modification or waiver of any monetary term or material non-monetary term
(including, without

 

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limitation, prepayment terms, timing of payments and acceptance of discounted
payoffs) of a Purchased Asset or any extension of the maturity date of such
Purchased Asset (except pursuant to the express terms of the Purchased Asset
Documents for which there is no material lender discretion), (iv) any release of
collateral or any acceptance of substitute or additional collateral for a
Purchased Asset or any consent to either of the foregoing, other than if
required pursuant to the specific terms of the related underlying loan documents
relating to such Purchased Asset and for which there is no material lender
discretion, (v) any waiver of a “due-on-sale” or “due-on-encumbrance” clause
with respect to a Purchased Asset or, if lender consent is required, any consent
to such a waiver or consent to a transfer of the collateral for a Purchased
Asset or direct or indirect interests in the Underlying Borrower or consent to
the incurrence of direct or indirect additional debt or preferred equity, other
than any such transfer or incurrence of debt as may be effected without the
consent of the lender under the related Purchased Asset Documents, or (vi) any
acceptance of an assumption agreement releasing an Underlying Borrower or
guarantor from all or a portion of liability under a Purchased Asset other than
pursuant to the specific terms of such Purchased Asset and for which there is no
material lender discretion.

“Single-Purpose Entity” shall mean any corporation, limited partnership or
limited liability company that, since the date of its formation and at all times
on and after the date hereof, has complied with and shall at all times comply
with the provisions of Section 13 of this Agreement.

“SIPA” shall have the meaning specified in Section 25(a) of this Agreement.

“Specified GAAP Reportable B Loan Transaction” means a transaction involving
either (i) the sale by the Guarantor or any Subsidiary of Guarantor of the
portion of an investment consisting of an “A-Note”, and the retention by the
Guarantor or any Subsidiary of Guarantor of the portion of such Investment Asset
consisting of a “B-Note”, which transaction is required to be accounted for
under GAAP as a “financing transaction” or (ii) the acquisition or retention by
the Guarantor or any of its Subsidiaries of an Investment Asset consisting of a
“b-piece” in a securitization facility, which transaction under GAAP results in
all of the assets of the trust that is party to the securitization facility, and
all of the bonds issued by such trust under such securitization facility that
are senior to the “b-piece”, to be consolidated on the Guarantor’s consolidated
balance sheet as assets and liabilities, respectively.

“Split Mortgage Loan” shall mean a Mortgage Loan evidenced by two or more senior
pari passu Mortgage Notes.

“Sponsor” shall mean Colony NorthStar Credit Real Estate, Inc., a Maryland
corporation.

“Spot Rate” shall mean, with respect to an Applicable Currency, as of any date
of determination, the rate quoted as the spot rate for the purchase of such
currency with another Applicable Currency at or about 11:00 a.m., London time,
on the date that is two (2) Business Days prior to the date as of which the
foreign exchange computation is made as obtained from the applicable screen on
Bloomberg.

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services and any
successor in interest.

 

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“Subsidiary” means, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.

“Supplemental Due Diligence Package” shall mean, with respect to any New Asset,
applicable information or deliveries concerning such New Asset to the extent
available, that Buyer shall reasonably request in addition to the Preliminary
Due Diligence Package, including, without limitation, a credit approval
memorandum representing the final terms of the underlying transaction, a
loan-to-value ratio computation and a final Debt Yield Ratio computation for
such New Asset.

“Survey” shall mean (x) with respect to U.S. Purchased Assets, a certified
ALTA/ACSM (or applicable state standards for the state in which a Mortgaged
Property is located) survey of a Mortgaged Property prepared by a registered
independent surveyor and (y) with respect to Foreign Purchased Assets, the
equivalent of the foregoing in any applicable jurisdiction, in each case, in
form and content reasonably satisfactory to Buyer and in the case of the
foregoing clause (x), in form and content reasonably satisfactory to the company
issuing the Title Policy for such Mortgaged Property.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Guarantor or any of
its Subsidiaries shall be a “Swap Agreement”.

“Table Funded Purchased Asset” shall mean a Purchased Asset which is sold to
Buyer simultaneously with the origination or acquisition thereof, which
origination or acquisition is financed with the Purchase Price, pursuant to
Seller’s request, paid directly to a title company or other settlement agent, in
each case, approved by Buyer, for disbursement in connection with such
origination or acquisition. A Purchased Asset shall cease to be a Table Funded
Purchased Asset after Custodian has delivered a Trust Receipt to Buyer
certifying its receipt of the Purchased Asset File therefor.

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Title Policy” shall have the meaning specified in Paragraph (7) of Exhibit III.

 

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“Total Asset Value” means, with respect to any Person as of any date of
determination, the net book value of the total assets of such Person and its
Consolidated Subsidiaries on such date as determined in accordance with GAAP
plus (x) accumulated depreciation and (y) amortization of real estate
intangibles; provided, that Total Asset Value shall (i) exclude the amount of
all restricted cash (other than reserves for Capital Expenditures) of such
Person and its Consolidated Subsidiaries to the extent such cash supports
obligations that do not constitute Consolidated Total Debt, (ii) include the net
book value of assets associated with a Specified GAAP Reportable B Loan
Transaction only to the extent in excess of the amount of any Indebtedness
attributable to such Specified GAAP Reportable B Loan Transaction, (iii) include
the net book value of assets associated with any Permitted Non-Recourse CLO
Indebtedness and (iv) solely with respect to the net book value of the total
assets of a Non Wholly-Owned Consolidated Affiliate, only include the
Consolidated Group Pro Rata Share of the net book value of such Non Wholly-Owned
Consolidated Affiliate’s total assets.

“Transaction” shall have the meaning specified in Section 1 of this Agreement.

“Transaction Conditions Precedent” shall have the meaning specified in
Section 3(e) of this Agreement.

“Transaction Costs” shall have the meaning specified in Section 20(b) of this
Agreement.

“Transaction Documents” shall mean, collectively, this Agreement, the Controlled
Account Agreement, the Custodial Agreement, the Fee Letter, the Guaranty, the
Servicing Agreement, the Ratification Agreement, any power of attorney executed
pursuant to this Agreement, all Transfer Documents, all Confirmations executed
pursuant to this Agreement in connection with specific Transactions and all
other documents executed in connection herewith and therewith, each of the
foregoing as they may be amended, restated, supplemented or modified from time
to time.

“Transfer” shall mean, with respect to any Person, any sale or other whole or
partial conveyance of all or any portion of such Person’s assets, or any direct
or indirect interest therein to a third party (other than in connection with the
transfer of a Purchased Asset to Buyer in accordance herewith), including the
granting of any purchase options, rights of first refusal, rights of first offer
or similar rights in respect of any portion of such assets or the subjecting of
any portion of such assets to restrictions on transfer.

“Transfer Certificate” shall mean, with respect to a Foreign Purchased Asset,
any form of transfer or substitution certificate(s) or assignment agreement(s)
that are scheduled to the related loan agreement or other equivalent agreement
for such Foreign Purchased Asset and that are used to effect the legal transfer
or assignment of such Foreign Purchased Asset.

“Transfer Documents” shall mean, with respect to any Purchased Asset, all
applicable documents described in Section 7(b) of this Agreement necessary to
transfer all of Seller’s right, title and interest in such Purchased Asset to
Buyer in accordance with the terms of this Agreement.

“Trust Receipt” shall mean a trust receipt issued by Custodian or Bailee, as
applicable, to Buyer confirming possession of certain Purchased Asset Files held
on behalf of Buyer (or any other holder of such Trust Receipt) in the form
required under the Custodial Agreement or the Bailee Agreement, respectively.

 

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“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of any
security interest is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, with respect to perfection or the effect of
perfection or non-perfection, “UCC” shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions of this
Agreement relating to such perfection or effect of perfection or non-perfection.

“Underlying Borrower” shall mean, with respect to any Purchased Asset that is a
Mortgage Loan, the Mortgagor, and with respect to any Purchased Asset that is a
Mezzanine Loan, the Mezzanine Borrower.

“Underlying Foreign Loan File” means the documents to be held by an Undertaker
pursuant to Section 7(b)(B)(y).

“Undertaker” is defined in the definition of “Undertaking Letter”.

“Undertaking Letter” shall mean one or more letters, in each case from an
Acceptable Attorney or another Person acceptable to Buyer in its sole discretion
(such Acceptable Attorney or other Person, an “Undertaker”), in form and
substance of Exhibit VI or as is otherwise customary in the relevant
jurisdiction, and in each case acceptable to Buyer in its sole discretion,
wherein such Undertaker in possession of a Purchased Asset File and/or
Underlying Foreign Loan File (i) acknowledges receipt of such Purchased Asset
File and/or Underlying Foreign Loan File and (ii) confirms that such Undertaker
is holding the same as agent on behalf of Buyer under such letter.

“Unused Fee” shall have the meaning specified in the Fee Letter.

“Upfront Fee” shall have the meaning specified in the Fee Letter.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56).

“U.S. Dollars” and “$” shall mean the lawful currency of the United States of
America.

“U.S. Purchased Asset” shall mean (i) with respect to any Transaction, the
Eligible Assets secured by Mortgaged Property located in the United States of
America or any territory thereof and which is sold by Seller to Buyer in such
Transaction and (ii) with respect to the Transactions for U.S. Purchased Assets
in general, all Eligible Assets secured by Mortgaged Property located in the
United States of America or any territory thereof sold by Seller to Buyer.

“U.S. Tax Compliance Certificate” shall have the meaning specified in
Section 3(q)(ii)(C) hereof.

“Wells Servicer” shall have the meaning specified in the definition of
“Servicer”.

 

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“Wells Servicing Agreement” shall have the meaning specified in the definition
of “Servicing Agreement”.

“Wholly Owned Subsidiary” means, with respect to any Person, any other Person
all of the Capital Stock of which (other than directors’ qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.

 

3.

INITIATION; CONFIRMATION; TERMINATION; FEES

(a) Seller may, from time to time, prior to the Facility Termination Date,
request that Buyer enter into a Transaction with respect to one or more New
Assets. Seller shall initiate each request by submitting a Preliminary Due
Diligence Package for Buyer’s review and approval in Buyer’s sole good faith
discretion. Notwithstanding anything to the contrary herein, Buyer shall have no
obligation to consider for purchase any New Asset if, immediately after the
purchase of such New Asset, (i) the Aggregate Repurchase Price (including the
proposed Purchase Price of such New Asset) would exceed the Facility Amount or
(ii) the Aggregate Foreign Asset Repurchase Price (including the proposed
Purchase Price of such New Asset if it is a New Foreign Asset) would exceed the
Foreign Asset Facility Sub-Limit. Buyer and its representatives shall have the
right to review all New Assets proposed to be sold to Buyer in any Transaction
and to conduct its own due diligence investigation of such New Assets as Buyer
determines is necessary in Buyer’s sole good faith discretion. Notwithstanding
any provision to the contrary herein or any other Transaction Document, Buyer
shall be entitled to make a determination, in Buyer’s sole good faith
discretion, whether a New Asset qualifies as an Eligible Asset or whether to
reject any New Asset proposed to be sold to Buyer by Seller.

(b) Upon Buyer’s receipt of a Preliminary Due Diligence Package with respect to
a New Asset, Buyer shall have the right to request a Supplemental Due Diligence
Package to evaluate such New Asset. Upon Buyer’s receipt of such Supplemental
Due Diligence Package or Buyer’s waiver thereof, Buyer shall, within five
(5) Business Days, either (i) notify Seller of Buyer’s intent to proceed with
the Transaction and of its determination with respect to the Purchase Price and
the Market Value for the related New Asset (such notice, a “Preliminary
Approval”) or (ii) deny, in Buyer’s sole good faith discretion, Seller’s request
for the applicable Transaction. Buyer’s failure to respond to Seller within five
(5) Business Days, as applicable, shall be deemed to be a denial of Seller’s
request to enter into the proposed Transaction, unless Buyer and Seller have
agreed otherwise in writing.

(c) Upon Seller’s receipt of Buyer’s Preliminary Approval with respect to a
Transaction, Seller shall, if Seller desires to enter into such Transaction with
respect to the related New Asset upon the terms set forth by Buyer in its
Preliminary Approval, deliver the documents set forth below in this Section 3(c)
with respect to each New Asset and related Eligible Property or Properties (to
the extent not already delivered in the Preliminary Due Diligence Package or in
the Supplemental Due Diligence Package) as a condition precedent to Buyer’s
Final Approval and issuance of a Confirmation, all in a manner and/or form
satisfactory to Buyer in Buyer’s sole good faith discretion and pursuant to
documentation satisfactory to Buyer in Buyer’s sole good faith discretion:

 

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(i) Delivery of Purchased Asset Documents. Copies of each of the final Purchased
Asset Documents, or drafts of such Purchased Asset Documents in substantially
final form if such New Asset is being originated concurrently with the transfer
to Buyer, subject to delivery of final, executed copies of such Purchased Asset
Documents on the Purchase Date of such New Asset.

(ii) Environmental and Engineering. A “Phase I” (and, if recommended by the
Phase I, a “Phase II”) environmental report, an asbestos survey, if applicable,
and an engineering report, or, with respect to any New Foreign Asset, reports
reasonably equivalent to the foregoing in the applicable jurisdiction, each in
form reasonably satisfactory to Buyer, by an engineer and an environmental
consultant, approved by Buyer in its reasonable discretion.

(iii) Appraisal. If obtained by Seller, an Appraisal or a Draft Appraisal of the
related Eligible Property or Properties dated less than six (6) months prior to
the proposed Purchase Date. If Buyer receives only a Draft Appraisal prior to
entering into a Transaction, Seller shall use its best efforts to deliver an
Appraisal on or before thirty (30) days after the Purchase Date.

(iv) Insurance. Certificates or other evidence of insurance detailing insurance
coverage in respect of the related Eligible Property or Properties of types
(including but not limited to casualty, general liability and terrorism
insurance coverage), in amounts, with insurers and otherwise in compliance with
the terms, provisions and conditions set forth in the Purchased Asset Documents
and otherwise reasonably satisfactory to Buyer. Such certificates or other
evidence shall indicate that Seller (or as to a New Asset that is a
Participation Interest, the lead lender on the related whole loan in which
Seller is a participant) will be named as an additional insured as its interest
may appear and shall contain a loss payee endorsement in favor of such
additional insured with respect to the policies required to be maintained under
the Purchased Asset Documents, or, with respect to any New Foreign Asset,
certificates reasonably equivalent to the foregoing.

(v) Opinions of Counsel. Copies of all legal opinions with respect to the New
Asset (which shall include a non-consolidation opinion, if applicable) that
shall be in form and substance reasonably satisfactory to Buyer; provided that
Seller may deliver drafts of such opinions if such New Asset is being originated
concurrently with the transfer to Buyer and shall deliver final, executed copies
of such legal opinions on the Purchase Date of such New Asset.

(vi) Title Policy. With respect to any New Asset, (A) An unconditional
commitment from the title company to issue a Title Policy or Policies in favor
of Seller and Seller’s successors and/or assigns with respect to each Mortgage
securing such New Asset with an amount of insurance that shall be not less than
the principal balance of such New Asset, (B) an endorsement or confirmatory
letter from the existing title company to an existing Title Policy (in an amount
not less than the principal balance of such New Asset) in favor of Seller and
Seller’s successors and/or assigns that adds such parties as an additional
insured, or (C) in the case of a New Foreign Asset, the equivalent of the
foregoing in the applicable jurisdiction.

(vii) Additional Real Estate Matters. To the extent obtained by Seller, such
other real estate related certificates and documentation as may have been
reasonably requested by Buyer, such as: (A) certificates of occupancy (or their
equivalent) issued by the appropriate Governmental Authority and either letters
certifying that the related Eligible Property or Properties are in material

 

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compliance with all applicable zoning or equivalent laws issued by the
appropriate Governmental Authority, a zoning report (or its equivalent) in form
and prepared by a zoning consultant reasonably satisfactory to Buyer or evidence
that the related Title Policy includes a zoning endorsement; and (B) abstracts
of all material leases in effect at the Mortgaged Property delivered in
connection with the New Asset.

(viii) Exception Report. A written report of any exceptions to the
representations and warranties in Exhibit III attached hereto (an “Exception
Report”).

(ix) Other Documents. Such other documents as Buyer shall reasonably deem to be
necessary and are customarily provided to Buyer by other similar commercial
mortgage loan repurchase transactions.

Within five (5) Business Days of Seller’s delivery of the documents and
materials contemplated in this Section 3(c), Buyer shall, in its sole good faith
discretion, either: (A) notify Seller that Buyer has not approved the New Asset
or (B) notify Seller that Buyer agrees to purchase the New Asset, subject to
satisfaction (or waiver by Buyer) of the Transaction Conditions Precedent (a
“Final Approval”) set forth in Section 3(e) below. Buyer’s failure to respond to
Seller within five (5) Business Days shall be deemed to be a denial of Seller’s
request that Buyer purchase the New Asset, unless Buyer and Seller have agreed
otherwise in writing.

(d) Subject to satisfaction of the Transaction Conditions Precedent, Buyer shall
deliver to Seller a written confirmation of its Final Approval in the form of
Exhibit I attached hereto with respect to a proposed Transaction (a
“Confirmation”); provided that, unless otherwise agreed by Seller, Buyer shall
deliver a separate Confirmation with respect to each New Asset that will be the
subject of a Transaction. Each Confirmation, which is mutually executed by Buyer
and Seller, shall be deemed to be incorporated herein by reference with the same
effect as if set forth herein at length.

(e) Provided that each of the Transaction Conditions Precedent set forth in this
Section 3(e) have been satisfied (or waived by Buyer in Buyer’s sole
discretion), and subject to Seller’s rights under Section 3(f) hereof, Buyer
shall transfer the Purchase Price to Seller with respect to each New Asset for
which it has issued a Confirmation on the Purchase Date specified in such
Confirmation (which Purchase Date shall be at least two (2) Business Days after
the date the Final Approval is delivered), and the related New Asset shall be
concurrently transferred by Seller to Buyer or its nominee. For purposes of this
Section 3(e), the conditions precedent to any proposed Transaction (the
“Transaction Conditions Precedent”) shall be satisfied with respect to such
proposed Transaction if:

(i) no Default, Event of Default or Margin Deficit shall have occurred and be
continuing as of the Purchase Date for such proposed Transaction;

(ii) Seller shall have executed the Confirmation delivered by Buyer;

 

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(iii) Guarantor shall have delivered to Buyer a true and accurate Financial
Covenant Compliance Certificate with respect to Guarantor’s most recently ended
fiscal quarter for which a Financial Covenant Compliance Certificate was
required to be delivered hereunder; provided that to the extent Guarantor has
previously delivered to Buyer a Financial Covenant Compliance Certificate for
the most recently ended fiscal quarter, Seller or Guarantor need not provide an
additional Financial Covenant Compliance Certificate for such fiscal quarter in
connection with the proposed Transaction;

(iv) Seller shall have delivered to Buyer an Officer’s Certificate (which may be
included in the Confirmation) of Seller certifying that the representations and
warranties made by Seller in this Agreement are true and correct in all material
respects as of the Purchase Date for such Transaction (except such
representations which by their terms speak as of a specified date and subject to
any exceptions disclosed to Buyer in an Exception Report prior to issuance of
the Confirmation by Buyer);

(v) (A) Buyer shall have determined, in Buyer’s sole good faith discretion, in
accordance with the applicable provisions of Section 3(a) of this Agreement that
the New Asset proposed to be sold to Buyer by Seller in such Transaction is an
Eligible Asset, (B) Buyer shall have obtained internal credit approval for the
inclusion of such New Asset as a Purchased Asset in a Transaction, (C) Buyer
shall have confirmed that, after giving effect to such Purchased Asset, the
Concentration Limit shall be satisfied and (D) Buyer shall have determined, in
Buyer’s sole good faith discretion, that the Maximum Asset Exposure Threshold
and Portfolio Exposure Threshold will not be exceeded immediately after giving
effect to the requested Transaction; in each case, as evidenced by Buyer’s
delivery of an executed Confirmation;

(vi) (A) if the New Asset is not a Table Funded Purchased Asset, the applicable
Purchased Asset File described in Section 7(b) of this Agreement (1) shall have
been delivered to Custodian, and Buyer shall have received a Trust Receipt with
respect to such Purchased Asset File or (2) shall have been delivered to Bailee
and Bailee shall have executed and delivered a Bailee Agreement and Buyer shall
have received a Trust Receipt from Bailee, and (B) if the Purchased Asset is a
Table Funded Purchased Asset, the documents required by Section 7(b) shall have
been delivered to Bailee;

(vii) Seller shall have delivered to each Underlying Borrower or obligor or
related servicer or lead lender under any Purchased Asset a direction letter in
accordance with Section 5(a) of this Agreement unless such Underlying Borrower
or obligor or related servicer or lead lender is already remitting payments to
Servicer whereupon Seller shall direct Servicer to remit all such amounts into
the Controlled Account in accordance with Section 5(a) of this Agreement and to
service such payments in accordance with the provisions of this Agreement;

(viii) Seller shall have paid to Buyer (A) any fees then due and payable under
the Fee Letter and (B) any unpaid Transaction Costs in respect of such Purchased
Asset due and owing by Seller (which amounts, at Seller’s option, may be held
back from funds remitted to Seller by Buyer on the Purchase Date);

(ix) such Purchased Asset shall not be a Defaulted Asset;

(x) Buyer shall have received true and complete copies of fully executed
originals of all Transfer Documents;

 

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(xi) Buyer shall have received a copy of any document relating to any Hedging
Transaction, and Seller shall have validly pledged and assigned to Buyer all of
Seller’s rights under each Hedging Transaction included within a Purchased
Asset, if any;

(xii) no event shall have occurred or circumstance shall exist that has a
Material Adverse Effect;

(xiii) the applicable Controlled Account relevant to such New Asset shall have
been established and the required Transaction Documents set forth in
Section 7(d)(i) shall have been executed and delivered;

(xiv) there shall not have occurred (A) a material adverse change in financial
markets, an outbreak or escalation of hostilities or a material change in
national or international political, financial or economic conditions, or (B) a
general suspension of trading on major stock exchanges, or (C) a material
disruption in or moratorium on commercial banking activities or securities
settlement services;

(xv) there shall not have occurred (A) an event or events in the determination
of Buyer resulting in the effective absence of a “repo market” or comparable
“lending market” for financing debt obligations secured by commercial mortgage
loans, or (B) an event or events shall have occurred resulting in Buyer not
being able to finance Eligible Assets through the “repo market” or “lending
market” with traditional counterparties at rates which would have been
reasonable prior to the occurrence of such event or events; and

(xvi) with respect to any New Foreign Asset, Buyer shall have received an
opinion of local counsel in the applicable non-U.S. jurisdiction, acceptable to
Buyer and at Buyer’s sole cost and expense, indicating that Buyer is permitted
to enter into the contemplated Transaction in such jurisdiction.

(f) Each Confirmation, together with this Agreement, shall be conclusive
evidence of the terms of the Transaction covered thereby (absent manifest error
or mutual mistake) unless objected to in writing by Seller no more than two
(2) Business Days after the date such Confirmation is received by Seller. An
objection sent by Seller with respect to any Confirmation must state
specifically that the writing is an objection, must specify the provision(s) of
such Confirmation being objected to by Seller, must set forth such provision(s)
in the manner that Seller believes such provisions should be stated, and must be
received by Buyer no more than two (2) Business Days after such Confirmation is
received by Seller. Buyer may, in Buyer’s sole discretion issue another
Confirmation addressing Seller’s objections or may elect not to proceed with the
proposed Transaction.

(g) With respect to any Transaction involving an Eligible Asset that is a Future
Advance Asset, Seller shall indicate in the related Preliminary Due Diligence
Package that such Eligible Asset is a Future Advance Asset and shall provide
Buyer with the information required to complete the Confirmation regarding such
Future Advance Asset, as well as, the then remaining unfunded principal amount
of all Purchased Assets that constitute Future Advance Assets. Subject to
Section 4, at any time prior to the Repurchase Date, in the event a future
advance is made or is to be made by Seller pursuant to the Purchased Asset
Documents for a Future Advance Asset,

 

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Seller may submit to Buyer a request that Buyer transfer cash to Seller in an
amount not to exceed the Maximum Purchase Percentage, multiplied by the amount
of such future advance (a “Future Advance Purchase”), which Future Advance
Purchase shall increase the outstanding Purchase Price for such Future Advance
Asset. Subject to satisfaction (or, in Buyer’s sole discretion, waiver) of the
following conditions precedent to Buyer’s obligation to make any Future Advance
Purchase, Buyer shall transfer cash in the Applicable Currency of such Future
Advance Asset to Seller as provided in this Section 3(g) (and in accordance with
the wire instructions provided by Seller in such request) on the date requested
by Seller, which date shall be no earlier than two (2) Business Days following
the Business Day on which Buyer has reasonably determined that such conditions
precedent have been, or will have been, on the date of the related Future
Advance Purchase, satisfied (or, in Buyer’s sole discretion, waived):

(i) as of the funding of such Future Advance Purchase, no Margin Deficit,
Default or Event of Default has occurred and is continuing or would result from
the funding of such Future Advance Purchase;

(ii) the funding of the Future Advance Purchase would not cause (x) the
aggregate outstanding Purchase Price for all Purchased Assets to exceed the
Facility Amount or (y) the aggregate outstanding Purchase Price for all Foreign
Purchased Assets to exceed the Foreign Asset Facility Sub-Limit (each of the
foregoing calculations to be made, with respect to any Foreign Purchased Assets,
based on the Purchase Date Dollar Equivalent of the Purchase Prices for such
Foreign Purchased Assets);

(iii) the Future Advance Purchase would not cause the Purchase Price of the
applicable Future Advance Asset to exceed the Concentration Limit;

(iv) Buyer shall have determined, in Buyer’s sole good faith discretion, that
the Maximum Asset Exposure Threshold and Portfolio Exposure Threshold will not
be exceeded immediately after giving effect to the funding of the Future Advance
Purchase;

(v) Seller shall have demonstrated to Buyer’s reasonable satisfaction that all
conditions to the future advance under the Purchased Asset Documents have been
satisfied; and

(vi) previously or simultaneously with Buyer’s funding of the Future Advance
Purchase, Seller shall have funded or caused to be funded to the Underlying
Borrower (or to an escrow agent or as otherwise directed by the Underlying
Borrower) its pro rata portion (taking into account Buyer’s Future Advance
Purchase) in respect of such Future Advance Asset.

(h) Seller shall be entitled to terminate a Transaction on demand, and
repurchase the related Purchased Asset on any Business Day prior to the
applicable Repurchase Date (an “Early Repurchase Date”); provided, however,
that:

(i) no Default, Event of Default or Margin Deficit shall be continuing (unless
such repurchase cures such Default, Event of Default or Margin Deficit) or would
occur or result from such early repurchase;

 

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(ii) Seller notifies Buyer in writing, no later than five (5) Business Days
prior to the Early Repurchase Date, of its intent to terminate such Transaction
and repurchase the related Purchased Asset (or such shorter period of time as
Buyer may agree to); provided that, Seller shall have the right to revoke such
notice at any time up to the Business Day prior to such Early Repurchase Date
and that if the repurchase is for purposes of Seller’s cure or satisfaction of a
Default, Event of Default or Margin Deficit, no such prior notice shall be
required; and

(iii) Seller shall pay to Buyer on the Early Repurchase Date an amount equal to
the sum of the Repurchase Price for such Transaction, all Transaction Costs and
any other amounts payable by Seller and outstanding under this Agreement or the
other Transaction Documents (including, without limitation, amounts due under
Section 3(n), Section 3(o) and Section 3(p) of this Agreement, if any, and the
Exit Fee, if applicable) with respect to such Transaction against transfer to
Seller or its agent of the related Purchased Asset.

(i) On the Repurchase Date for any Transaction, termination of the applicable
Transaction will be effected by transfer to Seller or, if requested by Seller,
its designee of the related Purchased Assets, and any Income in respect thereof
received by Buyer (and not previously credited or transferred to, or applied to
the obligations of, Seller pursuant to Section 4 or Section 5 hereof) against
the simultaneous transfer to Buyer of the applicable Repurchase Price, all
Transaction Costs and any other amounts payable by Seller and outstanding under
this Agreement with respect to such Transaction (including without limitation,
amounts payable under Section 3(n), Section 3(o) and Section 3(p) of this
Agreement, if any and the Exit Fee, if applicable) to an account of Buyer.

(j) So long as no Event of Default has occurred and is then continuing, the
Repurchase Price with respect to one or more Purchased Assets may be paid in
part at any time upon two (2) Business Days prior written notice from Seller to
Buyer; provided, however, that any such payment shall be accompanied by an
amount representing accrued Price Differential with respect to such Purchased
Asset(s) on the amount of such payment and all other amounts then due under the
Transaction Documents with respect to such Purchased Asset. Each partial payment
of the Repurchase Price that is voluntary (as opposed to mandatory under the
terms of this Agreement) shall be in an amount of not less than $100,000 (or,
with respect to any Foreign Purchased Asset, the equivalent thereof in the
Applicable Currency based on the applicable Spot Rate).

(k) If (i) Buyer shall have reasonably determined (which determination shall be
conclusive and binding upon Seller absent manifest error) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate, (ii) the LIBOR Rate determined or to
be determined will not adequately and fairly reflect the cost to Buyer (as
reasonably determined by Buyer) of making or maintaining Transactions, or
(iii) LIBOR has been succeeded by the LIBOR Alternate Index (each a “LIBOR
Alternate Rate Determination”), and Buyer has made the same determination for
all similar commercial real estate repurchase transactions, then Buyer shall
give written notice (including email) of such LIBOR Alternate Rate Determination
to Seller as soon as practicable thereafter. If such notice is given, the
Pricing Rate applicable to U.S. Purchased Assets and GBP Purchased Assets shall
be converted from the LIBOR Rate plus the Applicable Spread to the LIBOR
Alternate Rate plus the LIBOR Alternate Rate Spread for the Pricing Period to
which such LIBOR Alternate Rate Determination relates, and for any subsequent
Pricing Period until such notice has been withdrawn by Buyer (which withdrawal
shall be delivered by Buyer promptly after Buyer becomes aware that the
condition for switching to the LIBOR Alternate Rate no longer exists). If
(i) Buyer

 

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shall have reasonably determined (which determination shall be conclusive and
binding upon Seller absent manifest error) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the EURIBOR Rate, (ii) the EURIBOR Rate determined or to be
determined will not adequately and fairly reflect the cost to Buyer (as
reasonably determined by Buyer) of making or maintaining Transactions, or
(iii) EURIBOR has been succeeded by the EURIBOR Alternate Index (each a “EURIBOR
Alternate Rate Determination”), and Buyer has made the same determination for
all similar commercial real estate repurchase transactions, then Buyer shall
give written notice (including email) of such EURIBOR Alternate Rate
Determination to Seller as soon as practicable thereafter. If such notice is
given, the Pricing Rate applicable to EUR Purchased Assets shall be converted
from the EURIBOR Rate plus the Applicable Spread to the EURIBOR Alternate Rate
plus the EURIBOR Alternate Rate Spread for the Pricing Period to which such
EURIBOR Alternate Rate Determination relates, and for any subsequent Pricing
Period until such notice has been withdrawn by Buyer (which withdrawal shall be
delivered by Buyer promptly after Buyer becomes aware that the condition for
switching to the EURIBOR Alternate Rate no longer exists).

(l) Notwithstanding any other provision herein, (A) if, after the date of this
Agreement, the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for Buyer to effect
LIBOR Transactions as contemplated by the Transaction Documents, (i) Buyer’s
entry into new LIBOR Transactions and continuation of LIBOR Transactions as such
shall forthwith be canceled, and (ii) the LIBOR Transactions then outstanding
shall be converted automatically to LIBOR Alternate Rate Transactions, and
(B) if, after the date of this Agreement, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof shall make it
unlawful for Buyer to effect EURIBOR Transactions as contemplated by the
Transaction Documents, (i) Buyer’s entry into new EURIBOR Transactions and
continuation of EURIBOR Transactions as such shall forthwith be canceled, and
(ii) the EURIBOR Transactions then outstanding shall be converted automatically
to EURIBOR Alternate Rate Transactions.

(m) If Buyer shall have determined that the introduction of, or a change in, any
Requirement of Law or in the interpretation or administration of any Requirement
of Law (including, without limitation changes in any Reserve Requirements and
any other increase in cost to Buyer, as applicable) has made it unlawful, or any
Governmental Authority shall have asserted that it is unlawful, for Buyer to
enter into any Transaction or any Governmental Authority has imposed material
restrictions on the authority of Buyer to enter into any Transaction, then on
notice thereof by Buyer to Seller, but only if Buyer has given the same notice
for all similar commercial real estate repurchase transactions, any obligations
of Buyer to enter into Transactions shall be suspended until Buyer notifies
Seller that the circumstances giving rise to such determination no longer exist.

(n) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless
from any actual loss, cost or expense (not to include any lost profit or
opportunity, or indirect or consequential damages) (including, without
limitation, reasonable out-of-pocket attorneys’ fees and disbursements) that
Buyer actually sustains or incurs as a direct result of (i) a default by Seller
in terminating any Transaction after Seller has given a notice in accordance
with Section 3(h) of a termination of a Transaction, (ii) any payment of all or
any portion of the Repurchase Price, as the case may be, on any day other than a
Remittance Date or (iii) Seller’s failure to sell Eligible Assets

 

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to Buyer after Seller has notified Buyer of a proposed Transaction and Buyer has
given a Final Approval to purchase such Eligible Assets in accordance with the
provisions of this Agreement; provided that Seller shall not be obligated to so
repay or reimburse Buyer under this Section 3(n) unless Buyer incurred such
actual loss, cost or expense as LIBOR or EURIBOR breakage costs. A certificate
as to such costs, losses, damages and expenses, setting forth the calculations
therefor shall be submitted promptly by Buyer to Seller in writing and shall be
prima facie evidence of the information set forth therein, absent manifest
error. This covenant shall survive the termination of this Agreement and the
repurchase by Seller of any or all of the Purchased Assets.

(o) If Buyer shall have reasonably determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy, including the Reserve
Requirements or any other reserve, special deposit or similar requirements
relating to extensions of credit or other assets of Buyer or in the
interpretation or application thereof or compliance by Buyer or any corporation
controlling Buyer with any request or directive regarding such requirements
(whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof has the effect of reducing the rate of return on
Buyer’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which Buyer or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
Buyer’s or such corporation’s policies with respect to such requirements) by an
amount deemed by Buyer to be material, and Buyer has made the same determination
for all similar commercial real estate repurchase transactions, then from time
to time, within ten (10) Business Days after submission by Buyer to Seller of a
written request therefor, Seller shall pay to Buyer such additional amount or
amounts as will compensate Buyer for such reduction. A certificate as to the
calculation of any additional amounts payable pursuant to this Section 3(o)
shall be submitted by Buyer to Seller and shall be conclusive and binding upon
Seller in the absence of manifest error. With respect to each reduction in the
rate of return described above, this Section 3(o) shall survive for a period of
nine (9) months from the date of the incurrence of such reduction by Buyer. This
Section 3(o) shall survive the termination of this Agreement and the repurchase
by Seller of any or all of the Purchased Assets and, for the avoidance of doubt,
shall not apply to Taxes.

(p) Any and all payments by or on account of any obligation of Seller under this
Agreement shall be made without deduction or withholding for any Taxes, except
as required by applicable law. If any applicable law requires the deduction or
withholding of any Tax from any such payment, then Seller shall make (or cause
to be made) such deduction or withholding and shall timely pay (or cause to be
timely paid) the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law and, if such Tax is an Indemnified
Tax, then the sum payable shall be increased by Seller as necessary so that
after such deduction or withholding has been made, Buyer receives an amount
equal to the sum it would have received had no such deduction or withholding
been made. Seller shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with Requirements of Law. As soon as practicable after
any payment of Taxes by Seller to a Governmental Authority pursuant to this
Section 3(p), Seller shall deliver to Buyer the original or a certified copy of
a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Buyer.

 

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(q) If Buyer is entitled to an exemption from or reduction of withholding Tax
with respect to payments made under the Transaction Documents, Buyer shall
deliver to Seller, prior to becoming a party to this Agreement, and at the time
or times reasonably requested by Seller, such properly completed and executed
documentation reasonably requested by Seller as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, Buyer
shall deliver such other documentation prescribed by applicable law or
reasonably requested by Seller as will enable Seller to determine whether or not
Buyer is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3(q)(ii)(A), Section 3(q)(ii)(B) and
Section 3(q)(ii)(D) below) shall not be required if in Buyer’s reasonable
judgment such completion, execution or submission would be illegal, would
subject Buyer to any material unreimbursed cost or expense or would otherwise
materially prejudice the legal or commercial position of Buyer. Without limiting
the generality of the foregoing:

(i) if Buyer is a United States Person, it shall deliver to Seller on or prior
to the date on which Buyer becomes a party to this Agreement (and from time to
time thereafter upon the reasonable request of Seller), executed originals of
IRS Form W-9 certifying that Buyer is exempt from U.S. federal backup
withholding tax;

(ii) if Buyer is not a United States Person, it shall, to the extent it is
legally entitled to do so, deliver to Seller (in such number of copies as shall
be requested by Seller) on or prior to the date on which Buyer becomes a party
under this Agreement (and from time to time thereafter upon the reasonable
request of Seller), whichever of the following is applicable:

(A) in the case of Buyer that is claiming the benefits of an income tax treaty
to which the United States is a party, (1) with respect to payments
characterized as interest for U.S. federal income tax purposes under any
Transaction Document, executed originals of IRS Form W-8BEN-E establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“interest” article of such tax treaty and (2) with respect to any other
applicable payments under any Transaction Document, IRS Form W- 8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(B) executed originals of IRS Form W-8ECI;

(C) in the case of Buyer claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (1) a certificate to the effect that
Buyer is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of Seller within the meaning of Section 881(c)(3)(B) of
the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(2) executed originals of IRS Form W-8BEN-E; or

(D) to the extent Buyer is not the beneficial owner, executed originals of IRS
Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax
Compliance Certificate, IRS Form W-9, and/or other certification documents from
each beneficial owner, as applicable; provided that if Buyer is a partnership
and one or more direct or indirect partners of Buyer are claiming the portfolio
interest exemption, Buyer may provide a U.S. Tax Compliance Certificate on
behalf of each such direct and indirect partner;

 

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(iii) if Buyer is not a United States Person, it shall, to the extent it is
legally entitled to do so, deliver to Seller (in such number of copies as shall
be requested by Seller) on or prior to the date on which Buyer becomes a party
to this Agreement (and from time to time thereafter upon the reasonable request
of Seller), executed originals of any other form prescribed by applicable law as
a basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit Seller to determine the withholding or
deduction required to be made; and

(iv) if a payment made to Buyer under any Transaction Document would be subject
to U.S. federal withholding Tax imposed by FATCA if Buyer were to fail to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), Buyer shall deliver
to Seller at the time or times prescribed by law and at such time or times
reasonably requested by Seller such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by Seller as may be necessary for
Seller to comply with its obligations under FATCA and to determine whether Buyer
has complied with Buyer’s obligations under FATCA or to determine the amount to
deduct and withhold from such payment. Solely for purposes of this
Section 3(q)(ii)(D), “FATCA” shall include any amendments made to FATCA after
the date of this Agreement.

Buyer agrees that if any form or certification it previously delivered pursuant
to this Section 3(q) expires or becomes obsolete or inaccurate in any respect,
it shall update such form or certification or promptly notify Seller in writing
of its legal inability to do so.

(r) If any of the events described in Section 3(k), Section 3(n), Section 3(o)
or Section 3(p) result in Buyer’s election to use the LIBOR Alternate Rate or
EURIBOR Alternate Rate, or Buyer’s request for additional amounts, then Seller
shall have the option to notify Buyer in writing of its intent to terminate all
of the Transactions, terminate this Agreement and repurchase all of the
Purchased Assets without payment of any Exit Fee, Unused Fee, Annual Fee or
similar fee no later than five (5) Business Days after such notice is given to
Buyer, and such repurchase by Seller shall be conducted pursuant to and in
accordance with Section 3(h). The election by Seller to terminate the
Transactions in accordance with this Section 3(r) shall not relieve Seller for
liability with respect to any additional amounts or increased costs actually
incurred by Buyer prior to the actual repurchase of the Purchased Assets.

(s) From and after the Facility Termination Date, Buyer shall have no further
obligation to purchase any New Assets. On the Facility Termination Date, Seller
shall be obligated to repurchase all of the Purchased Assets and transfer
payment of the Repurchase Price for each such Purchased Asset, together with the
accrued and unpaid Price Differential and all Transaction Costs and other
amounts due and payable to Buyer hereunder, against the transfer by Buyer to
Seller or its agent or nominee of each such Purchased Asset. Following the
Facility Termination Date, Buyer shall not be obligated to transfer any
Purchased Assets to Seller until payment in full to Buyer of all amounts due
hereunder.

 

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(t) Notwithstanding any provision herein to the contrary, (i) the Dodd-Frank
Wall Street Reform and Consumer Protection Act and all rules, regulations,
guidelines or directives promulgated in connection therewith or in
implementation thereof that are finalized or become effective after the date
hereof, and (ii) all requests, rules, guidelines, requirements and directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or by United States
or foreign regulatory authorities that are finalized or become effective after
the date hereof, shall in each case be deemed to be an adoption of or change in
a Requirement of Law made subsequent to the date of this Agreement.

(u) If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section 3 (including by the payment of additional amounts
pursuant to this Section 3), it shall pay to the indemnifying party an amount
equal to such refund (but only to the extent of indemnity payments made under
this Section 3 with respect to Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over
pursuant to this Section 3(u) (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority). Notwithstanding anything to the
contrary in this Section 3(u), in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this
Section 3(u) the payment of which would place the indemnified party in a
less-favorable net after-Tax position than that which the indemnified party
would have been in if the Tax subject to indemnification and giving rise to such
refund had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts with respect to such Tax had not
been paid. This paragraph shall not be construed to require any indemnified
party to make available its Tax returns (or any other information relating to
its Taxes that it deems confidential) to the indemnifying party or any other
Person.

(v) Notwithstanding anything to the contrary set forth herein, but subject to
Section 5(b) of this Agreement, if agreed by Buyer in its sole discretion, any
payments to be made by Seller to Buyer hereunder, whether on account of Price
Differential, Repurchase Price, fees or otherwise, may be made by Seller in the
same Applicable Currency in which such payment obligation is denominated or in
any other Applicable Currency, provided that a payment made in such other
Applicable Currency must be made in an amount equal to the amount in such
Applicable Currency determined at Spot Rate at the time of such payment (such
payment an “Other Currency Payment”).

 

4.

MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

(a) Buyer may determine and re-determine the Asset Base Components on any
Business Day and on as many Business Days as it may elect. During the
continuance of a Margin Credit Event with respect to one or more Purchased
Assets, if at any such time the aggregate Purchase Price of all Purchased Assets
is greater than the aggregate Asset Base Components of all Purchased Assets as
determined by Buyer in Buyer’s sole good faith discretion and notified in
writing and by telephone to Seller on any Business Day (a “Margin Deficit”),
then Seller shall, not later than two (2) Business Days after receipt of notice
of such Margin Deficit from Buyer, deliver

 

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to Buyer (i) cash in an amount sufficient to reduce the aggregate Purchase Price
of the Purchased Assets to an amount equal to the aggregate Asset Base
Components as re-determined by Buyer after giving effect to the delivery of cash
by Seller to Buyer pursuant to this Section 4(a) or (ii) Cash Equivalents
acceptable to Buyer with a market value that, when added to the aggregate Asset
Base Components, equals or exceeds the aggregate Purchase Price; provided that,
Seller shall not be required to cure a Margin Deficit unless and until the
aggregate outstanding Margin Deficit of all Purchased Assets equals or exceeds
$1,000,000 on any date of determination. Any cash delivered to Buyer pursuant to
this Section 4(a) shall be applied by Buyer to reduce the Purchase Price of the
applicable Purchased Assets. Any Margin Excess applied to the Margin Deficit
pursuant to this Section 4(a) or Section 5(b)(i)(D) shall be applied by Buyer to
increase the Purchase Price of the applicable Purchased Asset. For the purposes
of this Section, with respect to any Foreign Purchased Assets, the applicable
Asset Base Components and Purchase Prices will be calculated based on the
Purchase Date Dollar Equivalent of the Purchase Prices and Market Values, as
applicable, of such Foreign Purchased Assets.

(b) If at any such time the Purchase Price of any Purchased Asset is less than
the Asset Base Component of such Purchased Asset (a “Margin Excess”), then Buyer
shall, no later than five (5) Business Days after receipt of a request from
Seller, transfer (i) cash in the Applicable Currency to Seller in an amount (not
to exceed such Margin Excess) such that the Purchase Price of such Purchased
Asset, after the addition of any such cash so transferred, will thereupon not
exceed such Asset Base Component as re-determined by Buyer after giving effect
to the delivery of cash by Buyer to Seller pursuant to this Section 4(b) and/or
(ii) Cash Equivalents previously delivered to Buyer in accordance with
Section 4(a) with a market value equal to such Margin Excess; provided that
(i) no Margin Deficit, Default or Event of Default has occurred and is
continuing or would result from such funding, (ii) such funding shall not result
in (x) the Aggregate Repurchase Price of all Purchased Assets exceeding the
Facility Amount or (y) the Aggregate Foreign Asset Repurchase Price exceeding
the Foreign Asset Facility Sub-Limit and (iii) each such funding shall be in an
amount of not less than $100,000 (or, with respect to any Foreign Purchased
Asset, the equivalent thereof in the Applicable Currency based on the applicable
Spot Rate on the date of such funding). Any cash delivered by Buyer to Seller
pursuant to this Section 4(b) shall be applied by Buyer to increase the Purchase
Price of the applicable Purchased Asset. Buyer and Seller shall execute and
deliver a restated Confirmation for the applicable Transaction to set forth the
new Purchase Price for such Purchased Asset. Seller may not request funding
under this Section 4(b) more than three (3) times in any calendar month.

 

5.

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

(a) On or before the date hereof (or, with respect to the (i) GBP Controlled
Account, on or before the Purchase Date of the first GBP Purchased Asset, and
(ii) EUR Controlled Account, on or before the Purchase Date of the first EUR
Purchased Asset), Seller and Buyer shall establish and maintain with the
Depository Bank deposit accounts in the name of Seller and under the sole
control of Buyer with respect to which the Controlled Account Agreement shall
have been executed (such accounts, individually or collectively as the context
may require, together with any replacement or successor thereof, the “Controlled
Account”). Seller shall cause all Income with respect to the Purchased Assets to
be deposited in the applicable Controlled Account. In furtherance of the
foregoing, Seller shall cause Servicer to remit to the Controlled Account all
Income received in respect of the Purchased Assets within two (2) Business Days
of receipt. All Income in respect of the Purchased Assets, which may include
payments in respect of associated Hedging Transactions, shall be deposited
directly into, or, if applicable, remitted directly from the applicable
underlying collection account to, the Controlled Account.

 

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(b) Unless an Event of Default shall have occurred and be continuing, on each
Remittance Date, Buyer shall cause Depository Bank to remit and apply all Income
on deposit in the Controlled Account in respect of the Purchased Assets and the
associated Hedging Transactions as follows:

 

  (i)

with respect to all Income denominated in U.S. Dollars (“Dollar Income”):

(A) first, to Buyer, an amount equal to the Price Differential which has accrued
and is outstanding in respect of all of the U.S. Purchased Assets as of such
Remittance Date;

(B) second, to Buyer, any accrued and unpaid Unused Fee and all Transaction
Costs and all other amounts payable by Seller and outstanding hereunder and
under the other Transaction Documents (other than the Repurchase Price);

(C) third, if a Principal Payment in respect of any U.S. Purchased Asset has
been made during the related Collection Period and has not been disbursed in
accordance with Section 5(c) below, to Buyer an amount equal to the product of
the amount of such Principal Payment, multiplied by the applicable Purchase
Percentage;

(D) fourth, if a Margin Deficit shall exist, to Buyer, an amount such that,
after giving effect to such payment, the aggregate Purchase Price of the
Purchased Assets is equal to the aggregate Asset Base Components of the
Purchased Assets, as determined by Buyer after giving effect to such payment, to
the extent of remaining funds in the Controlled Account (the foregoing
calculations to be made in accordance with Section 4(a));

(E) fifth, if the Remittance Date coincides with a Remittance Date for Foreign
Purchased Assets, to pay amounts due under Section 5(b)(ii)(A) – (B) after
application of all Euro Income and Pound Income (applied pursuant to
Section 5(b)(iii)(C)) therefor, such Dollar Income to, at Seller’s option,
either (i) be applied against such amounts as Other Currency Payments, or
(ii) be converted to Euros based on the Spot Rate as of the Remittance Date for
such payment;

(F) sixth, if the Remittance Date coincides with a Remittance Date for Foreign
Purchased Assets, to pay amounts due under Section 5(b)(iii)(A) – (B) after
application of all Pound Income and Euro Income (applied pursuant to
Section 5(b)(ii)(C)) therefor, such Dollar Income to, at Seller’s option, either
(i) be applied against such amounts as Other Currency Payments, or (ii) be
converted to Pounds Sterling based on the Spot Rate as of the Remittance Date
for such payment;

(G) seventh, to Seller, the remainder, if any;

 

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  (ii)

with respect to all Income denominated in Euros (“Euro Income”):

(A) first, to Buyer, an amount equal to the Price Differential which has accrued
and is outstanding in respect of all of the EUR Purchased Assets as of such
Remittance Date;

(B) second, if a Principal Payment in respect of any EUR Purchased Asset has
been made during the related Collection Period and has not been disbursed in
accordance with Section 5(c) below, to Buyer an amount equal to the product of
the amount of such Principal Payment, multiplied by the applicable Purchase
Percentage;

(C) third, to pay amounts remaining due under Section 5(b)(iii)(A) – (B) after
application of all Pound Income therefor, such Euro Income to, at Seller’s
option, either (i) be applied against such amounts as Other Currency Payments,
or (ii) be converted to Pounds Sterling based on the Spot Rate as of the
Remittance Date for such payment;

(D) fourth, to pay amounts due under Section 5(b)(i)(A) – (D) after application
of all Dollar Income therefor, such Euro Income to, at Seller’s option, either
(i) be applied against such amounts as Other Currency Payments, or (ii) be
converted to U.S. Dollars based on the Spot Rate as of the Remittance Date for
such payment;

(E) fifth, to Seller, the remainder, if any;

 

  (iii)

with respect to all Income denominated in Pounds Sterling (“Pound Income”):

(A) first, to Buyer, an amount equal to the Price Differential which has accrued
and is outstanding in respect of all of the GBP Purchased Assets as of such
Remittance Date;

(B) second, if a Principal Payment in respect of any GBP Purchased Asset has
been made during the related Collection Period and has not been disbursed in
accordance with Section 5(c) below, to Buyer an amount equal to the product of
the amount of such Principal Payment, multiplied by the applicable Purchase
Percentage;

(C) third, to pay amounts remaining due under Section 5(b)(ii)(A) – (B) after
application of all Euro Income therefor, such Pound Income to, at Seller’s
option, either (i) be applied against such amounts as Other Currency Payments,
or (ii) be converted to Euros based on the Spot Rate as of the Remittance Date
for such payment;

(D) fourth, to pay amounts due under Section 5(b)(i)(A) – (D) after application
of all Dollar Income and Euro Income (applied pursuant to Section 5(b)(ii)(D))
therefor, such Pound Income to, at Seller’s option, either (i) be applied
against such amounts as Other Currency Payments, or (ii) be converted to U.S.
Dollars based on the Spot Rate as of the Remittance Date for such Payment;

 

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(E) fifth, to Seller, the remainder, if any;

provided that if, (a) on any Remittance Date applicable only to U.S. Purchased
Assets, the amounts deposited in the Controlled Account shall be insufficient to
make the payments required under Section 5(b)(i)(A) – (C), and Seller does not
otherwise make such payments on such Remittance Date, the same shall constitute
an Event of Default hereunder or (b) on any Remittance Date applicable to both
U.S. Purchased Assets and Foreign Purchased Assets, the amounts deposited in the
Controlled Account shall be insufficient to make the payments required under
Section 5(b)(i)(A) – (C), Section 5(b)(ii)(A) – (B) or Section 5(b)(iii)(A) –
(B), and Seller does not otherwise make such payments on such Remittance Date,
the same shall constitute an Event of Default hereunder.

(c) Unless an Event of Default shall have occurred and be continuing, with
respect to any unscheduled Principal Payment (including net sale proceeds) in
respect of any Purchased Asset for which the Income thereof has been received by
Depository Bank during any Collection Period, Buyer shall cause Depository Bank
to remit and apply such payment, no later than two (2) Business Days after
Buyer’s receipt of notice from Seller of its intent to apply such payment in
accordance with this Section 5(c), as follows:

(i) first, to Buyer, if a Margin Deficit shall exist, an amount such that, after
giving effect to such payment, the aggregate Purchase Price of the Purchased
Assets (calculated in accordance with Section 4(a)) is equal to the aggregate
Asset Base Components of the Purchased Assets (calculated in accordance with
Section 4(a)), as determined by Buyer after giving effect to such payment, to
the extent of remaining funds in the Controlled Account (which payment, with
respect to any Principal Payment that is not in U.S. Dollars shall be converted
to U.S. Dollars at the applicable Spot Rate for such payment or, if agreed by
Buyer in its sole discretion, be applied as Other Currency Payments;

(ii) second, to Buyer, an amount equal to the product of the amount of such
Principal Payment multiplied by the applicable Purchase Percentage; and

(iii) third, to Seller, the remainder, if any.

(d) If an Event of Default shall have occurred and be continuing, all Income on
deposit in the Controlled Account in respect of the Purchased Assets and the
associated Hedging Transactions shall be applied as determined in Buyer’s sole
discretion pursuant to Section 14(b)(ii).

(e) If at any time during the term of any Transaction any Income is distributed
to Seller with respect to the related Purchased Asset or Seller has otherwise
received such Income and has made a payment in respect of such Income to Buyer
pursuant to this Section 5, and for any reason such amount is required to be
returned by Buyer to an obligor under such Purchased Asset (either before or
after the Repurchase Date), Buyer may provide Seller with notice of such
required return, and Seller shall pay the amount of such required return to
Buyer by 11:00 a.m., New York time, on the Business Day following Seller’s
receipt of such notice.

 

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(f) Subject to the other provisions hereof, Seller shall be responsible for all
Transaction Costs in respect of any Purchased Assets to the extent it would be
so obligated if the Purchased Assets had not been sold to Buyer. Buyer shall
provide Seller with notice of any Transaction Costs, and Seller shall pay the
amount of any Transaction Costs to Buyer by 11:00 a.m., New York time, on the
later of (i) five (5) Business Days after the date on which Buyer has informed
Seller that such amount is due under the Purchased Asset Documents and
(ii) three (3) Business Days following Seller’s receipt of such notice.

 

6.

SECURITY INTEREST

(a) Buyer and Seller intend that all Transactions hereunder be sales to Buyer of
the Purchased Assets for all purposes (other than for U.S. Federal, state and
local income or franchise tax purposes) and not loans from Buyer to Seller
secured by the Purchased Assets. However, in the event that any Transaction is
deemed to be a loan, Seller hereby pledges to Buyer as security for the
performance by Seller of the Repurchase Obligations and hereby grants to Buyer a
first priority security interest in all of Seller’s right, title and interest in
and to the following (collectively, the “Repurchase Assets”):

(i) all of the Purchased Assets (including, for the avoidance of doubt, all
security interests, mortgages and liens on personal or real property securing
the Purchased Assets) and related Servicing Rights;

(ii) all Income from the Purchased Assets;

(iii) all insurance policies and insurance proceeds relating to any Purchased
Asset or the related Eligible Property;

(iv) all “general intangibles”, “accounts” and “chattel paper” as defined in the
UCC relating to or constituting any and all of the foregoing;

(v) all replacements, substitutions or distributions on or proceeds, payments
and profits of, and records and files relating to, any and all of the foregoing;

(vi) the Foreign Assignment Agreements, if any; and

(vii) any other property, rights, titles or interests as are specified in the
Confirmation and/or the Trust Receipt, the Purchased Asset Schedule or exception
report with respect to the foregoing in all instances, whether now owned or
hereafter acquired, now existing or hereafter created.

(b) With respect to the security interest in the Repurchase Assets granted in
Section 6(a) hereof, and with respect to the security interests granted in
Sections 6(c) and 6(d), Buyer shall, during the continuance of an Event of
Default, have all of the rights and may exercise all of the remedies of a
secured creditor under the UCC and any other applicable law (including the
equivalent under applicable Requirements of Law in the relevant non-U.S.
jurisdiction (with

 

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respect to Foreign Purchased Assets)) and shall have the right to apply the
Repurchase Assets or proceeds therefrom to the obligations of Seller under the
Transaction Documents. In furtherance of the foregoing, (i) Buyer, at Seller’s
sole cost and expense, shall cause to be filed as a protective filing with
respect to the Repurchase Assets and as a UCC filing with respect to the
security interests granted in Sections 6(c) and 6(d) one or more UCC financing
statements in form satisfactory to Buyer (to be filed in the filing office
indicated therein), in such locations as may be necessary to perfect and
maintain perfection and priority of the outright transfer (including under
Section 22 of this Agreement) and the security interest granted hereby and, in
each case, continuation statements and any amendments thereto (including,
without limitation, by causing to be filed any amendments necessary to add or
delete Repurchase Assets covered by the financing statement to reflect the
purchase and repurchase of Purchased Assets), and shall forward copies of such
filings to Seller upon completion thereof, (ii) with respect to any Foreign
Purchased Assets, Buyer, at Seller’s sole cost and expense, shall make any and
all necessary and customary filings, notices or other required actions in the
applicable non-U.S. jurisdiction to maintain the perfection and priority of the
outright transfer and the security interest granted hereby and in the Foreign
Assignment Agreement (collectively, the items in (i) and (ii), the “Filings”),
and (iii) Seller shall, from time to time, at its own expense, deliver and cause
to be duly filed all such further filings, instruments and documents and take
all such further actions as may be reasonably necessary or as may be reasonably
requested by Buyer with respect to the perfection and priority of the outright
transfer of the Purchased Assets and the security interest granted hereunder and
by any Foreign Assignment Agreement in the Repurchase Assets and the rights and
remedies of Buyer with respect to the Repurchase Assets (including under
Section 22 of this Agreement) (including the payments of any fees and Taxes
required in connection with the execution and delivery of this Agreement).

(c) Seller hereby pledges and grants to Buyer, for the benefit of Buyer, as
security for the performance by Seller of the Repurchase Obligations and hereby
grants to Buyer a first priority security interest in all of Seller’s right,
title and interest in and to Seller’s rights under all Hedging Transactions
relating to Purchased Assets entered into by Seller and all proceeds thereof.
Seller shall take all action as is reasonably necessary to obtain consent to
assignment of any such Hedging Transaction to Buyer and shall cause the
counterparty under each such Hedging Transaction to enter into such document or
instrument satisfactory to Buyer, Seller and such counterparty, pursuant to
which such counterparty will covenant and agree to accept notice from Buyer to
redirect payments under such Hedging Transaction as Buyer may direct. So long as
no Event of Default shall be continuing, Buyer agrees that it will not redirect
payments under any Hedging Transaction pledged to Buyer pursuant to the terms of
this Section 6(c).

(d) Seller hereby pledges to Buyer as security for the performance by Seller of
the Repurchase Obligations and hereby grants to Buyer a first priority security
interest in all of Seller’s right, title and interest in and to the Controlled
Account and all amounts and property from time to time on deposit therein and
all replacements, substitutions or distributions on or proceeds, payments and
profits of, and records and files relating to, the Controlled Account.

(e) In connection with the repurchase by Seller of any Purchased Asset in
accordance herewith, upon receipt of the Repurchase Price by Buyer, Buyer will
deliver to Seller, at Seller’s expense, such documents and instruments as may be
reasonably necessary and requested by Seller to reconvey such Purchased Asset
and any Income related thereto to Seller and to evidence the termination of
Buyer’s security interest therein including, without limitation, UCC termination
statements.

 

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7.

PAYMENT, TRANSFER AND CUSTODY

(a) Subject to the terms and conditions of this Agreement, on the Purchase Date
for each Transaction, ownership of the Purchased Assets and all rights
thereunder shall be transferred to Buyer or its designee (including Custodian)
against the simultaneous transfer of the Purchase Price to an account of Seller
specified in the Confirmation relating to such Transaction. Buyer will provide
Seller with a power of attorney, substantially in the form attached as Exhibit
II-2 hereto, allowing Seller to administer, operate and service such Purchased
Assets. Provided that no Event of Default shall have occurred and be continuing,
the power of attorney (including, subject to the terms of this Agreement, the
exercise of any voting or similar rights by Seller) shall be binding upon Buyer
and Buyer’s successors and assigns.

(b) With respect to each Table Funded Purchased Asset (or any Transaction for
which Buyer approves the utilization of a Bailee or Undertaker), Seller shall
cause Bailee or Undertaker, as applicable, to deliver to Buyer by no later than
1:00 p.m. (New York time), on the Purchase Date, in writing (including by email
transmission), (i) with respect to U.S. Purchased Assets, a true and complete
copy of the related Mortgage Note, Mezzanine Note, LLC Certificate or
Participation Certificate (as applicable), the Insured Closing Letter and Escrow
Instructions, if any, and the executed Bailee Agreement, and (ii) with respect
to Foreign Purchased Assets, a true and complete copy of the related Transfer
Certificate and Foreign Assignment Agreement (as applicable) and the executed
Undertaking Letter. In connection with the sale of each Purchased Asset, not
later than 1:00 p.m. (New York time), two (2) Business Days prior to the related
Purchase Date (or with respect to a Table Funded Purchased Asset (or any
Transaction for which Buyer approves the utilization of a Bailee or Undertaker)
not later than 1:00 p.m. (New York time) on the third (3rd) (or, in the case of
a Foreign Purchased Asset, the seventh (7th)) Business Day following the
applicable Purchase Date), (A) with respect to U.S. Purchased Assets, Seller
shall deliver or cause Bailee to deliver (with a copy to Buyer) and release to
Custodian (together with the Purchased Asset File Checklist), and shall cause
Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a
Table Funded Purchased Asset (or any Transaction for which Buyer approves the
utilization of a Bailee), not later than two (2) Business Days following the
receipt by Custodian) confirming the receipt of, the following original (or
where indicated below, copied) documents, to the extent applicable, with respect
to each U.S. Purchased Asset identified in the Purchased Asset File Checklist
delivered therewith and (B) with respect to Foreign Purchased Assets, (x) Seller
shall deliver or cause Bailee to deliver (with a copy to Buyer) and release to
Custodian (together with the Purchased Asset File Checklist), and shall cause
Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a
Table Funded Purchased Asset (or any Transaction for which Buyer approves the
utilization of a Bailee or Undertaker), not later than two (2) Business Days
following the receipt by Custodian) confirming the receipt of, the original
Foreign Assignment Agreement and original Transfer Certificate and
(y) simultaneously with the foregoing, Seller shall deliver or cause Undertaker
to deliver to Buyer an Undertaking Letter with respect to the remaining
documents listed below (all of the documents listed below, with respect to any
Purchased Asset, collectively, the “Purchased Asset Documents”):

 

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With respect to each Purchased Asset that is a Mortgage Loan or a Participation
Interest, the following documents, as applicable:

(i) the original Mortgage Note bearing all intervening endorsements, endorsed
“Pay to the order of “                 ” without recourse” and signed in the
name of the last endorsee (the “Last Endorsee”) by an authorized Person of the
Last Endorsee (in the event that the Purchased Asset was acquired by the Last
Endorsee in a merger, the signature must be in the following form: “[Last
Endorsee], successor by merger to [name of predecessor]”; in the event that the
Purchased Asset was acquired or originated by the Last Endorsee while doing
business under another name, the signature must be in the following form: “[Last
Endorsee], [formerly known] or [doing business] as [previous name]”) or a lost
note affidavit in a form reasonably approved by Buyer, with a copy of the
applicable Mortgage Note attached thereto;

(ii) the original loan agreement and guaranty, if any, executed in connection
with the Purchased Asset;

(iii) the original Mortgage with evidence of recording thereon (or, in the case
of a Foreign Purchased Asset, with evidence of all filings, recordings,
notifications and/or registrations required under applicable Requirements of Law
in the relevant non-U.S. jurisdiction to perfect a valid first priority security
in the Mortgaged Property (“Foreign Filing”)), or a true and correct copy of the
original that has been submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is located
(or, in the case of a Foreign Purchased Asset, that has been submitted for
Foreign Filing, as applicable);

(iv) with respect to the Mortgage, the originals of all assumption,
modification, consolidation or extension agreements with evidence of recording
thereon (or, in the case of a Foreign Purchased Asset, with evidence of Foreign
Filing), or true and correct copies of the originals that have each been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located (or, in the case of a
Foreign Purchased Asset, that has been submitted for Foreign Filing, as
applicable);

(v) the original Assignment of Mortgage in blank for each Purchased Asset, in
form and substance acceptable for recording and signed in the name of the Last
Endorsee (in the event that the Purchased Asset was acquired by the Last
Endorsee in a merger, the signature must be in the following form: “[Last
Endorsee], successor by merger to [name of predecessor]”; in the event that the
Purchased Asset was acquired or originated while doing business under another
name, the signature must be in the following form: “[Last Endorsee], [formerly
known] or [doing business] as [previous name]”);

(vi) with respect to any Foreign Purchased Asset, copies or, to the extent
originals are customarily required in the applicable jurisdiction of such
Foreign Purchased Asset, originals of all Transfer Certificates duly executed by
the relevant parties;

(vii) with respect to any Foreign Purchased Asset, an original of the Foreign
Assignment Agreement;

 

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(viii) the originals of all intervening assignments of mortgage (if any) with
evidence of recording thereon (or, in the case of a Foreign Purchased Asset,
with evidence of Foreign Filing), or copies thereof;

(ix) with respect to any U.S. Purchased Asset, the original Title Policy or, if
the original Title Policy has not been issued, a copy of the irrevocable marked
commitment to issue the same;

(x) the original of any security agreement, chattel mortgage or equivalent
document executed in connection with the Purchased Asset and, together, in the
case of any Foreign Purchased Asset, with evidence of all filings, recordings,
notifications and/or registrations required under applicable Requirements of Law
in the relevant non-U.S. jurisdiction necessary to perfect a valid first
priority security interest in the relevant Mortgaged Property;

(xi) the original Assignment of Leases, if any, with evidence of recording
thereon (or, in the case of a Foreign Purchased Asset, with evidence of Foreign
Filing), or a true and correct copy of the original that has been submitted for
recordation in the appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located (or, in the case of a Foreign Purchased
Asset, that has been submitted for Foreign Filing, as applicable);

(xii) the originals of all intervening assignments of assignment of leases and
rents, if any, or copies thereof, with evidence of recording thereon (or, in the
case of a Foreign Purchased Asset, with evidence of Foreign Filing), or copies
thereof;

(xiii) a copy of the UCC financing statements, certified as true and correct by
Seller, and all necessary UCC continuation statements with evidence of filing
thereon or copies thereof (or, with respect to any Foreign Purchased Asset,
their equivalent under applicable Requirements of Law in the relevant non-U.S.
jurisdiction) together with evidence that such UCC financing or continuation
statements (or such equivalent) have been sent for filing, and UCC assignments
in blank, which UCC assignments (or such equivalent) shall be in form and
substance acceptable for filing in the applicable jurisdictions;

(xiv) the original environmental indemnity agreement or similar guaranty or
indemnity, whether stand-alone or incorporated into the applicable loan
documents (if any);

(xv) the original omnibus assignment in blank or such other documents necessary
and sufficient to transfer to Buyer all of Seller’s right, title and interest in
and to the Purchased Asset (if any);

(xvi) a Survey of the Mortgaged Property (if any) as accepted by the title
company for issuance of the Title Policy (or, with respect to any Foreign
Purchased Asset, as accepted by Buyer);

(xvii) a copy of all servicing agreements related to such Purchased Asset;

(xviii) a copy of the Mortgagor’s opinions of counsel;

(xix) with respect to any Foreign Purchased Asset, a Property Report and an
overview thereon prepared by Seller’s counsel addressed to or capable of being
relied on by Buyer or its designee upon registration of Buyer or its designee as
lender of record (if available);

 

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(xx) in the case of a Purchased Asset that is a Participation Interest, the
original Participation Certificate evidencing such Participation Interest
together with an assignment in blank;

(xxi) in the case of a Purchased Asset that is a Participation Interest, the
participation agreement and any other documents evidencing such Participation
Interest;

(xxii) an assignment of any management agreements, permits, contracts and other
material agreements (if any);

(xxiii) the original or a copy of the intercreditor or co-lender agreement (if
any) executed in connection with the Purchased Asset to the extent the subject
borrower, or an affiliate thereof, has encumbered its assets with senior, junior
or similar financing, whether mortgage financing or mezzanine loan financing;

(xxiv) copies of all documents relating to the formation and organization of the
related obligor under such Purchased Asset, together with all consents and
resolutions delivered in connection with such obligor’s obtaining such Purchased
Asset; and

(xxv) all other material documents and instruments evidencing, guaranteeing,
insuring, securing or modifying such Purchased Asset, executed and delivered in
connection with, or otherwise relating to, such Purchased Asset, including all
documents establishing or implementing any lockbox pursuant to which Seller is
entitled to receive any payments from cash flow of the underlying real property;

(xxvi) with respect to any Foreign Purchased Asset, any other documentation that
is reasonable and customary in the relevant non-U.S. jurisdiction to effect the
purpose of the applicable Transaction.

With respect to each Purchased Asset that is a Mezzanine Loan, the following
documents, as applicable:

(i) the original executed Mezzanine Note relating to such Mezzanine Loan, which
Mezzanine Note shall (A) be endorsed (either on the face thereof or pursuant to
a separate allonge) by the most recent endorsee prior to the applicable Seller,
without recourse, to the order of such Seller and further reflect a complete,
unbroken chain of endorsement from the related originator to such Seller and
(B) be accompanied by a separate allonge pursuant to which such Seller has
endorsed such Note, without recourse, in blank;

(ii) true and correct copies of the related intercreditor agreement (if any) and
the related Mezzanine Pledge Agreement and all other material documents
(including, without limitation, opinions of counsel) or agreements relating to
such Mezzanine Loan or affecting the rights (including, without limitation, the
security interests) of any holder thereof;

 

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(iii) as applicable, true and correct copies of any assignment, assumption,
modification, consolidation or extension made prior to the related Purchase Date
in respect of such Mezzanine Note or any document or agreement referred to in
clause (ii) above, in each case, if the document or agreement being assigned,
assumed, modified, consolidated or extended is recordable, with evidence of
recording thereon (unless the particular item has not been returned from the
applicable recording office);

(iv) as applicable, an original assignment of each agreement referred to in
clause (ii) above, in recordable form if the agreement being assigned is a
recordable document, executed in blank by the applicable Seller;

(v) if certificated, each LLC Certificate, together with an undated power
covering each such certificate, duly executed in blank;

(vi) copies of all UCC financing statements filed in respect of such Mezzanine
Loan prior to the related Purchase Date, including all amendments and
assignments related thereto, if any, in each case with evidence of filing in the
applicable jurisdiction indicated thereon;

(vii) an original assignment of each UCC financing statement filed in respect of
such Mezzanine Loan, prepared in blank, in form suitable for filing;

(viii) the related original omnibus assignment, if any, executed in blank;

(ix) the original Title Policy for such Mezzanine Loan (provided that any
exception to this item shall note whether the related Purchased Asset File
includes a “marked up” commitment or proforma policy marked as binding and
countersigned or evidenced as binding by an escrow letter or closing
instructions), if any, together with an original mezzanine endorsement, if any,
and date down to owner’s policy, if any;

(x) any additional documents identified on the related Purchased Asset File
Checklist delivered to Custodian in accordance with Article II of this
Agreement; and

(xi) any additional documents required to be added to the related Purchased
Asset File pursuant to this Agreement.

provided that if Seller cannot deliver, or cause to be delivered, any of the
original documents and/or instruments required to be delivered as originals
under the provisions above (excluding the Mortgage Note, Assignment of Mortgage,
Mezzanine Note and LLC Certificate, as applicable, originals of which must be
delivered at the time required under the provisions above), Seller shall deliver
a photocopy thereof and, unless waived by Buyer, an Officer’s Certificate of
Seller certifying that such copy represents a true and correct copy of the
original. Seller shall then, (A) use commercially reasonable efforts to obtain
and deliver the original document within one hundred eighty (180) days after the
related Purchase Date (or such longer period after the related Purchase Date to
which Buyer may consent in its sole discretion, so long as Seller is, as
certified in writing to Buyer not less frequently than monthly, using
commercially reasonable efforts to obtain the original), (B) after the
expiration of such best efforts period, deliver to Buyer a certification that
states, despite Seller’s best efforts, Seller was unable to obtain such original
document and (C) thereafter have no further obligation to deliver the related
original document.

 

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(c) From time to time, Seller shall forward to Custodian or Undertaker
additional original documents or additional documents evidencing any assumption,
modification, consolidation or extension of a Purchased Asset approved in
accordance with the terms of this Agreement, and upon receipt of any such other
documents, Custodian or Undertaker shall hold such other documents on behalf of
Buyer and as Buyer shall request from time to time. With respect to any
documents which have been delivered or are being delivered to recording offices
for recording and have not been returned to Seller in time to permit their
delivery hereunder at the time required, in lieu of delivering such original
documents, Seller shall deliver to Buyer a true copy thereof with an Officer’s
Certificate certifying that such copy is a true, correct and complete copy of
the original, which has been transmitted for recordation. Seller shall deliver
such original documents to Custodian or Undertaker promptly when they are
received. With respect to all of the Purchased Assets delivered by Seller to
Buyer or its designee (including Custodian), or Undertaker, as applicable,
Seller shall execute an omnibus power of attorney substantially in the form of
Exhibit II-1 attached hereto irrevocably appointing Buyer its attorney-in-fact
with full power to (i) complete and record any Assignment of Mortgage or
Transfer Certificate, (ii) complete the endorsement of any Mortgage Note,
Mezzanine Note, LLC Certificate or Participation Certificate (as applicable) and
(iii) take such other steps as may be necessary or desirable to enforce Buyer’s
rights against any Purchased Assets and the related Purchased Asset Files and
the Servicing Records; which power, in each case, Buyer agrees will only be
exercised during the continuance of an Event of Default. Buyer shall deposit the
Purchased Asset Files representing the Purchased Assets, or cause the Purchased
Asset Files to be deposited directly, with Custodian or Undertaker to be held by
Custodian or Undertaker, as applicable, on behalf of Buyer. The Purchased Asset
Files shall be maintained in accordance with Custodial Agreement or applicable
Undertaking Letter, as applicable. Any Purchased Asset File not delivered to
Buyer or its designee (including Custodian) or Undertaker is and shall be held
in trust by Seller or its designee for the benefit of Buyer as the owner
thereof. Seller or its designee shall maintain a copy of the Purchased Asset
File and the originals of the Purchased Asset File not delivered to Buyer or its
designee or Undertaker. The possession of the Purchased Asset File by Seller or
its designee is at the will of Buyer for the sole purpose of servicing the
related Purchased Asset, and such retention and possession by Seller or its
designee is in a custodial capacity only. The books and records (including,
without limitation, any computer records or tapes) of Seller or its designee
shall be marked appropriately to reflect clearly the transfer, subject to the
terms and conditions of this Agreement, of the related Purchased Asset to Buyer.
Seller or its designee (including Custodian) or Undertaker shall release its
custody of the Purchased Asset File only in accordance with written instructions
from Buyer, unless such release is required as incidental to the servicing of
the Purchased Assets or is in connection with a repurchase of any Purchased
Asset by Seller or is pursuant to the order of a court of competent
jurisdiction.

(d) On the date of this Agreement, Buyer shall have received all of the
following items and documents, each of which shall be satisfactory to Buyer in
form and substance:

 

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(i) Transaction Documents. (A) This Agreement, duly executed and delivered by
Seller and Buyer (including all exhibits); (B) the Custodial Agreement, duly
executed and delivered by Seller, Buyer and Custodian; (C) the Controlled
Account Agreement, duly executed and delivered by Seller, Buyer and Depository
Bank (provided, however, that Buyer shall not receive the (1) GBP Controlled
Account Agreement until the date that is on or before the Purchase Date of the
first GBP Purchased Asset, and (2) EUR Controlled Account Agreement until the
date that is on or before the Purchase Date of the first EUR Purchased Asset);
(D) the Fee Letter, duly executed and delivered by Seller and Buyer; (E) the
Guaranty, duly executed and delivered by Guarantor; (F) the power of attorney
executed by Seller in the form of Exhibit II-1; (G) the Servicing Agreement and
Servicer Acknowledgement duly executed by the parties thereto (provided,
however, that Buyer shall not receive the (1) GBP Servicing Agreement or (if
required by Buyer) GBP Servicer Acknowledgment until the date that is on or
before the Purchase Date of the first GBP Purchased Asset, and (2) EUR Servicing
Agreement or (if required by Buyer) EUR Servicer Acknowledgment until the date
that is on or before the Purchase Date of the first EUR Purchased Asset); (H)
the Filings; and (I) the Ratification Agreement, together with any other
documents necessary or requested by Buyer to perfect the security interest
granted by Seller in favor of Buyer, for the benefit of Buyer, under this
Agreement or any other Transaction Documents;

(ii) Fees and Costs. All Transaction Costs payable to Buyer in connection with
the negotiation of the Transaction Documents;

(iii) Organizational Documents. Certified copies of the organizational documents
of Seller and Guarantor and resolutions or other documents evidencing the
authority of Seller and Guarantor with respect to the execution, delivery and
performance of the Transaction Documents to which it is a party and each other
document to be delivered by Seller and/or Guarantor from time to time in
connection with the Transaction Documents (and Buyer may conclusively rely on
such certifications until it receives notice in writing from Seller or
Guarantor, as the case may be, to the contrary);

(iv) Legal Opinion. Opinions of counsel to Seller and Guarantor in form and
substance satisfactory to Buyer as to authority, enforceability of the
Transaction Documents to which it is a party, perfection, bankruptcy safe
harbors, the Investment Company Act and such other matters as may be requested
by Buyer; and

(v) Other Documents. Such other documents as Buyer may reasonably request prior
to the date hereof.

 

8.

CERTAIN RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED ASSETS

(a) Subject to the terms and conditions of this Agreement, title to all
Purchased Assets shall pass to Buyer on the applicable Purchase Date, and Buyer
shall have free and unrestricted use of its interest in the Purchased Assets in
accordance with the terms and conditions of the Purchased Asset Documents.
Nothing in this Agreement or any other Transaction Document shall preclude Buyer
from engaging (at Buyer’s sole expense) in repurchase transactions with the
Purchased Assets with Persons in conformity with the terms and conditions of the
Purchased Asset Documents or otherwise selling, transferring, pledging,
repledging, hypothecating, or rehypothecating the Purchased Assets to Persons in
conformity with the terms and conditions of the Purchased Asset Documents, but
no such transaction shall relieve Buyer of its obligations to transfer the
Purchased Assets to Seller pursuant to Section 3 of this Agreement or of Buyer’s
obligation to credit or pay Income to, or apply Income to the obligations of,
Seller pursuant to Section 5 of this Agreement or otherwise affect the rights,
obligations and remedies of any party to this Agreement.

 

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(b) Nothing contained in this Agreement or any other Transaction Document shall
obligate Buyer to segregate any Purchased Assets delivered to Buyer by Seller.
Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, no Purchased Asset shall remain in the custody of Seller
or an Affiliate of Seller other than as permitted herein. Subject to the terms
and conditions of this Agreement, any documents delivered to Custodian pursuant
to Section 7 of this Agreement shall be released only in accordance with the
terms and conditions of the Custodial Agreement.

 

9.

EXTENSION OF FACILITY TERMINATION DATE; REDUCTION OF FACILITY AMOUNT

(a) At the request of Seller delivered to Buyer no earlier than ninety (90) days
and no later than thirty (30) days before each anniversary of the date of this
Agreement, Seller may request that Buyer add an additional one (1) year to the
term of the Facility and extend the Facility Termination Date for a one (1) year
period (each such additional one-year term, an “Extension Term”). Such request
may be approved or denied in Buyer’s sole discretion (on the same terms or such
different terms as may be determined by Buyer at such time in its sole
discretion), and in any case shall be approved and be effective only if (i) no
Default, Event of Default or Margin Deficit shall exist on the date of Seller’s
request to extend or on the then current Facility Termination Date, (ii) all
representations and warranties in this Agreement shall be true, correct,
complete and accurate in all material respects as of the date of Seller’s
request to extend and as of the applicable anniversary of the date of this
Agreement (except such representations which by their terms speak as of a
specified date and subject to any exceptions disclosed to Buyer in an Exception
Report prior to such date and approved by Buyer), and (iii) Seller shall have
paid the Extension Fee to Buyer in accordance with the Fee Letter.

(b) On each anniversary of the date of this Agreement, Seller may, upon at least
five (5) Business Days’ prior notice to Buyer, permanently reduce in part the
unused portions of the Facility Amount; provided, however, that (i) each such
partial reduction of the Facility Amount shall be in an aggregate amount of
$5,000,000 or a multiple thereof, (ii) after giving effect to such reduction,
the aggregate Purchase Price of all Purchased Assets (calculated, with respect
to any Foreign Purchased Assets, based on the Purchase Date Dollar Equivalents
of the Purchase Prices for such Foreign Purchased Assets) shall not exceed the
Facility Amount, (iii) there shall be a corresponding proportionate reduction of
the Foreign Asset Facility Sub-Limit, and after giving effect to such reduction,
the aggregate Purchase Price of all Foreign Purchased Assets (calculated based
on the Purchase Date Dollar Equivalents of the Purchase Prices for such Foreign
Purchased Assets) shall not exceed the Foreign Asset Facility Sub-Limit (as so
reduced), and (iv) the Facility Amount shall not be reduced below $50,000,000.

 

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10.

REPRESENTATIONS

Seller represents and warrants to Buyer that as of the date of this Agreement
and as of each Purchase Date and at all times while this Agreement and any
Transaction thereunder is in effect or any Repurchase Obligations remain
outstanding or at such other time specified:

(i) Organization. Seller (A) is a limited liability company duly organized,
validly existing and in good standing under the laws and regulations of the
State of Delaware; (B) is duly licensed, qualified, and in good standing in
every state where such licensing or qualification is necessary for the
transaction of Seller’s business; and (C) has all requisite limited liability
company or other power, and has all governmental licenses, authorizations,
consents and approvals necessary to (1) own and hold its assets and to carry on
its business as now being conducted and proposed to be conducted, (2) execute,
deliver and perform its obligations under, this Agreement and the other
Transaction Documents and (3) enter into the Transactions.

(ii) Authorization; Due Execution; Enforceability. The execution, delivery and
performance by Seller of each of this Agreement and each of the Transaction
Documents have been duly authorized by all necessary limited liability company
or other action on its part. The Transaction Documents have been duly executed
and delivered by Seller for good and valuable consideration. The Transaction
Documents constitute the legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms subject to
bankruptcy, insolvency, and other limitations on creditors’ rights generally and
to equitable principles.

(iii) Non-Contravention; Consents. Neither the execution and delivery of the
Transaction Documents, nor consummation by Seller of the transactions
contemplated by the Transaction Documents (or any of them), nor compliance by
Seller with the terms, conditions and provisions of the Transaction Documents
(or any of them) will (A) conflict with or result in a breach of the
organizational documents of Seller (B) conflict with any applicable law
(including, without limitation, Prescribed Laws), rule or regulation or result
in a breach or violation of any of the terms, conditions or provisions of any
judgment or order, writ, injunction, decree or demand of any Governmental
Authority applicable to Seller, (C) result in the creation or imposition of any
lien or any other encumbrance upon any of the assets of Seller, other than
pursuant to the Transaction Documents or (D) violate or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, contract or other material agreement to which Seller
is a party or by which Seller may be bound.

(iv) Litigation; Requirements of Law. Except as disclosed in writing to Buyer on
or before the date of this Agreement and from time to time, there is no action,
suit, proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against Seller or any of its assets which

(A) is reasonably likely to, individually or in the aggregate, result in any
Material Adverse Effect;

(B) is reasonably likely to have an adverse effect on the validity of the
Transaction Documents or any action taken or to be taken in connection with the
obligations of Seller under any of the Transaction Documents; or (C) makes a
claim or claims for payment of an amount greater than $500,000 (or the
equivalent thereof in any other currency based on the Spot Rate). Seller is in
compliance in all material respects with all Requirements of Law. Seller is not
in default in any material respect with respect to any judgment, order, writ,
injunction, decree, rule or regulation of any arbitrator or Governmental
Authority.

 

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(v) No Broker. Seller has not dealt with any broker, investment banker, agent or
other Person (other than Buyer or an Affiliate of Buyer) who may be entitled to
any commission or compensation in connection with the sale of the Purchased
Assets pursuant to any Transaction Documents.

(vi) Good Title to Purchased Assets. Immediately prior to the purchase of any
Purchased Assets by Buyer from Seller, such Purchased Assets are free and clear
of any lien, security interest, claim, option, charge, encumbrance or impediment
to transfer to Buyer (including any “adverse claim” as defined in
Section 8-102(a)(1) of the UCC), and are not subject to any rights of set-off,
any prior sale, transfer, assignment, or participation by Seller or any
agreement (other than the Transaction Documents) by Seller to assign, convey,
transfer or participate in such Purchased Assets, in whole or in part, and
Seller is the sole legal record and beneficial owner of, and owns and has the
right to sell and transfer, such Purchased Assets to Buyer, and, upon transfer
of such Purchased Assets to Buyer, Buyer shall be the owner of such Purchased
Assets (other than for U.S. Federal, state and local income and franchise tax
purposes) free of any adverse claim, subject to Seller’s rights pursuant to this
Agreement. In the event that the related Transaction is recharacterized as a
secured financing of the Purchased Assets and with respect to the security
interests granted in Sections 6(a), 6(c) and 6(d), the provisions of this
Agreement and the filing of the Filings (together, with respect to any Foreign
Purchased Asset, with the relevant Foreign Assignment Agreement) are effective
to create in favor of Buyer a valid security interest in all right, title and
interest of Seller in, to and under the Repurchase Assets specified in
Section 6(a) and the other collateral specified in Sections 6(c) and 6(d), and
Buyer shall have a valid, perfected and enforceable first priority security
interest in the Repurchase Assets and such other collateral to the extent such
security interest can be perfected by filing or by delivery to and possession by
Custodian or delivery to the Controlled Account, subject to no lien or rights of
others other than as granted herein.

(vii) No Default; No Material Adverse Effect. No Default or Event of Default
exists under or with respect to the Transaction Documents. To Seller’s
knowledge, there are no post-Transaction facts or circumstances that have a
Material Adverse Effect on any Purchased Asset that Seller has not notified
Buyer of in writing.

(viii) Representations and Warranties Regarding Purchased Assets; Delivery of
Purchased Asset File. Each Purchased Asset sold hereunder, as of the applicable
Purchase Date for the Transaction in question, conforms to the applicable
representations and warranties set forth in Exhibit III attached hereto, except
as has been disclosed to Buyer in an Exception Report prior to Buyer’s issuance
of a Confirmation with respect to the related Purchased Asset. It is understood
and agreed that the representations and warranties set forth in Exhibit III
hereto (as modified by any Exception Report disclosed to Buyer in writing prior
to Buyer’s issuance of a Confirmation with respect to the related Purchased
Asset), shall survive delivery of the respective Purchased Asset File to Buyer
or its designee (including Custodian). With respect to each Purchased Asset, the
Mortgage Note, Mezzanine Note, LLC Certificate or Participation Certificate (as
applicable), the Mortgage (if any), the Assignment of Mortgage (if any), the
Transfer Certificate (if any), the

 

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Pledge Agreement (if any), any assignments of the foregoing and any other
documents required to be delivered under this Agreement and the Custodial
Agreement for such Purchased Asset have been delivered (or with respect to Table
Funded Purchased Assets (or any Purchased Asset for which Buyer has approved the
utilization of a Bailee) shall be delivered in accordance with Section 7(b)) to
Buyer or Custodian on its behalf or such requirement will have been expressly
waived in writing by Buyer. Seller or its designee is in possession of a
complete, true and accurate Purchased Asset File with respect to each Purchased
Asset, except for such documents the originals of which have been delivered to
Custodian.

(ix) Adequate Capitalization; No Fraudulent Transfer. Seller has adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations. Seller
is generally able to pay, and has paid, its debts as they come due. Seller has
not become, and is not presently, insolvent nor will Seller be made insolvent by
virtue of Seller’s execution of or performance under any of the Transaction
Documents, including, after giving effect to any Transaction, within the meaning
of applicable Insolvency Law. Seller is not contemplating the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of Seller or any of its assets. Seller is not transferring any New
Assets with any intent to hinder, delay or defraud any of its creditors. For
purposes of this Section 10(ix), “debt” means “liability on a claim”, “claim”
means any (1) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, and (2) right to
an equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.

(x) Organizational Documents. Seller has delivered to Buyer true and correct
certified copies of its organizational documents, together with all amendments
thereto.

(xi) No Encumbrances. There are (A) no outstanding rights, options, warrants or
agreements on the part of Seller for a purchase, sale or issuance, in connection
with the Purchased Assets, (B) no agreements on the part of Seller to issue,
sell or distribute the Purchased Assets and (C) no obligations on the part of
Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any
securities or interest therein, except, in each of the foregoing instances, as
contemplated by the Transaction Documents.

(xii) No Investment Company or Holding Company. Neither Seller nor Guarantor is
required to register as an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

(xiii) Taxes. Seller has filed or caused to be filed all tax returns that would
be delinquent if they had not been filed on or before the date hereof and has
paid all Taxes due and payable on or before the date hereof and all Taxes, fees
or other charges imposed on it and any of its assets by any Governmental
Authority except for any such Taxes that are being appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided in accordance with GAAP; no tax liens
have been filed against any of Seller’s assets; and, to Seller’s knowledge, no
claims are being asserted with respect to any such Taxes, fees or other charges.

 

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(xiv) ERISA. Neither Seller nor any ERISA Affiliate (A) sponsors or maintains
any Plans or (B) makes any contributions to or has any liabilities or
obligations (direct or contingent) with respect to any Plans. Seller does not
hold Plan Assets, and assuming the assets of Buyer do not include Plan Assets
the consummation of the transactions contemplated by this Agreement will not
constitute or result in any non-exempt prohibited transaction under Section 406
of ERISA, Section 4975 of the Code or substantially similar Laws to which the
assets of Seller are subject.

(xv) Judgments/Bankruptcy. Except as disclosed in writing to Buyer, there are no
judgments against Seller that are unsatisfied of record or docketed in any court
located in the United States of America or any non-U.S. jurisdiction and no Act
of Insolvency has ever occurred with respect to Seller.

(xvi) Full and Accurate Disclosure. No information provided pursuant to or
during the negotiation of the Transaction Documents, or any written statement
furnished by or on behalf of Seller pursuant to the terms of the Transaction
Documents (including any certification of Bailee), contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made when such statements and omissions are
considered in the totality of the circumstances in question.

(xvii) Financial Information. All financial data concerning Seller and Guarantor
and all data concerning the Purchased Assets that has been delivered to Buyer by
Seller, any Affiliate of Seller or Seller’s advisors is true and correct in all
material respects and, does not omit any such material data in the possession of
or otherwise available to Seller or Guarantor and has been prepared in
accordance with GAAP (to the extent applicable). Since the delivery of such
data, except as otherwise disclosed in writing to Buyer, there has been no
material adverse change in the business or financial condition of Seller or
Guarantor or the Purchased Assets, or in the results of operations of Seller or
Guarantor.

(xviii) Jurisdiction of Organization. Seller’s jurisdiction of organization is
the State of Delaware.

(xix) Location of Books and Records. The location where Seller keeps its books
and records is at its chief executive office at 399 Park Avenue, 18th Floor New
York, NY 10022.

(xx) Authorized Representatives. The duly authorized representatives of Seller
are listed on, and true signatures of such authorized representatives are set
forth on, Exhibit V attached to this Agreement.

(xxi) Use of Proceeds; Regulations T, U and X. All proceeds of each Transaction
shall be used by Seller for purposes permitted under Seller’s governing
documents; provided that no part of the proceeds of any Transaction will be used
by Seller to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock. Neither the entering
into nor consummation of any Transaction hereunder, nor the use of the proceeds
thereof, will violate any provisions of Regulations T, U or X.

 

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(xxii) Regulatory Status. Seller is not a “bank holding company” or a direct or
indirect subsidiary of a “bank holding company” as defined in the Bank Holding
Company Act of 1956, as amended, and Regulation Y thereunder of the Board of
Governors of the Federal Reserve System.

(xxiii) Hedging Transactions. As of the Purchase Date for any Purchased Asset
that is subject to a Hedging Transaction, each such Hedging Transaction is in
full force and effect in accordance with its terms, each counterparty thereto is
an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and no
“Termination Event”, “Event of Default”, “Potential Event of Default” or any
similar event, however denominated, has occurred and is continuing with respect
thereto.

(xxiv) Anti-Money Laundering. The operations of Seller, Guarantor and their
Subsidiaries are and have been conducted at all times in material compliance
with all applicable financial recordkeeping and reporting requirements,
including those required by the Prescribed Laws, and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving Seller or Guarantor or any of their Subsidiaries with
respect to the Prescribed Laws is pending or, to the best knowledge of Seller,
threatened.

(xxv) OFAC.

(A) None of Seller, any director, officer or employee of Seller, or to Seller’s
knowledge, any agent, Affiliate or representative of Seller, is a Person that
is, or is owned or controlled by a Person that is: (1) the subject of any
sanction administered or enforced by OFAC or any Foreign Sanctions Authority
(collectively, “Sanctions”); or (2) located, organized or resides in a country
or territory that is the subject of comprehensive Sanctions (including, without
limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria.

(B) Seller is not now knowingly engaged in, and will not knowingly engage in,
any dealings or transactions with (1) any Person that at the time of dealing or
transaction is or was the subject of Sanctions, or (2) in any country or
territory that at the time of the dealing or transaction is or was the subject
of Sanctions.

(xxvi) Anti-Corruption.

(A) None of Seller, its directors, officers, or employees, or, to Seller’s
knowledge, any agent, Affiliate or representative of Seller or any Affiliate of
them, has taken or will take any action in furtherance of an offer, payment,
promise to pay, or authorization or approval of the payment or giving of money,
property, gifts or anything else of value, directly or indirectly, to any Person
while knowing that all or some portion of the money or value will be offered,
given or promised to anyone to improperly influence official action, to obtain
or retain business or otherwise to secure any improper advantage, in each case
in violation of applicable anti-corruption or anti-bribery laws.

 

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(B) Seller and, to Seller’s knowledge, Seller’s Affiliates have conducted their
businesses in compliance with applicable anti-corruption laws and have
instituted and maintained, and will continue to maintain, policies and
procedures reasonably designed to promote and achieve compliance with such laws
and with the representations and warranties contained in this Section 10(xxvi).

(xxvii) Centre of Main Interests. Seller warrants, represents and covenants that
it has not (A) taken any action that would cause its “centre of main interests”
(as such term is used in the European Insolvency Regulation) to be located in
the United Kingdom, Europe or any jurisdiction other than the United States or
(B) registered as a company in any jurisdiction other than the State of
Delaware.

 

11.

NEGATIVE COVENANTS OF SELLER

On and as of date of this Agreement and each Purchase Date and at all times
while this Agreement and any Transaction hereunder is in effect or any
Repurchase Obligations remain outstanding, Seller shall not without the prior
written consent of Buyer:

(a) subject to Seller’s right to repurchase the Purchased Assets, take any
action which would directly or indirectly materially impair or adversely affect
Buyer’s title to the Purchased Assets;

(b) transfer, assign, convey, grant, bargain, sell, set over, deliver or
otherwise dispose of, or pledge or hypothecate, directly or indirectly, any
interest in any Purchased Assets to any Person other than Buyer, or engage in
repurchase transactions or similar transactions with respect to such Purchased
Asset with any Person other than Buyer, except where such Purchased Asset is
simultaneously repurchased from Buyer in accordance with this Agreement;

(c) create, incur or permit to exist any lien, encumbrance or security interest
in or on any of the Repurchase Assets or other collateral subject to the
security interests granted by Seller pursuant to Section 6 of this Agreement or
the Foreign Assignment Agreement;

(d) create, incur or permit any lien, security interest, charges, or
encumbrances with respect to any Repurchase Assets or Hedging Transaction
relating to the Purchased Assets for the benefit of any Person other than Buyer;

(e) consent or assent to a Significant Modification of any Purchased Asset
without the prior written consent of Buyer (which shall not be unreasonably
withheld, delayed or conditioned so long as no Event of Default is continuing);

(f) take any action or permit such action to be taken which would result in a
Change of Control without the prior written consent of Buyer in its sole
discretion; provided Buyer’s consent shall not be unreasonably withheld with
respect to a Change of Control which relates to CLNS’s Control over Colony
Capital Operating Company, LLC;

 

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(g) during the continuation of any Default or Event of Default, make any
distribution, payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of any equity or ownership interest of Seller, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Seller;

(h) sponsor or maintain any Plans or make any contributions to, or have any
liability or obligation (direct or contingent) with respect to, any Plan or
permit any ERISA Affiliate to sponsor or maintain any Plans or make any
contributions to, or have any liability or obligation (direct or contingent)
with respect to, any Plan;

(i) engage in any transaction that would cause any obligation or action taken or
to be taken hereunder (or the exercise by Buyer of any of its rights under this
Agreement, the Purchased Assets or any Transaction Document) to be a non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under any other similar Laws to which the
assets of Seller are subject assuming in all events that the assets of Buyer do
not include Plan Assets;

(j) [Intentionally omitted];

(k) seek its dissolution, liquidation or winding up, in whole or in part;

(l) incur any Indebtedness except as provided in Section 13(i) hereof or
otherwise cease to be a Single-Purpose Entity;

(m) permit the organizational documents or organizational structure of Seller to
be amended without the prior written consent of Buyer (which consent shall not
be unreasonably withheld, delayed or conditioned);

(n) acquire or maintain any right or interest in any Purchased Asset or
Mortgaged Property that is senior to, junior to or pari passu with the rights
and interests of Buyer therein under this Agreement and the other Transaction
Documents without the prior written consent of Buyer unless such right or
interest becomes a Purchased Asset hereunder;

(o) knowingly, directly or indirectly use the proceeds from any Transaction, or
lend contribute or otherwise make available such proceeds to any other Person
(i) to fund or facilitate any activities or business (A) of or with any Person
that, at the time of such funding or facilitation, is the subject of Sanctions,
or (B) in any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions, or (ii) in any other manner that
would result in a violation of Sanctions by any Person (including Buyer);

(p) knowingly, directly or indirectly use the proceeds from any Transaction or
lend, contribute or otherwise make available such proceeds to any Person for the
purpose of financing or facilitating any activity that would violate applicable
anti-corruption laws, rules, or regulations; or

(q) take any action that will cause its “centre of main interests” (as such term
is used in the European Insolvency Regulation) to be located in the United
Kingdom, Europe or any jurisdiction other than the United Sates or register as a
company in any jurisdiction other than the State of Delaware.

 

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12.

AFFIRMATIVE COVENANTS OF SELLER

On and as of the date of this Agreement and each Purchase Date and at all times
while this Agreement and any Transaction thereunder is in effect or any
Repurchase Obligations remain outstanding:

(a) Seller shall promptly notify Buyer of any event and/or condition that is
likely to have a Material Adverse Effect of which Seller has knowledge.

(b) Seller shall give notice to Buyer of the following (together with details of
the occurrence referred to therein and stating what actions Seller has taken or
proposes to take with respect thereto):

(i) promptly upon receipt by Seller of notice or knowledge of the occurrence of
any Default or Event of Default;

(ii) with respect to any Purchased Asset sold to Buyer hereunder, promptly
following receipt of any unscheduled Principal Payment (in full or in part);

(iii) with respect to any Purchased Asset sold to Buyer hereunder, promptly
following receipt by Seller of notice or knowledge that the related Mortgaged
Property has been materially damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged so
as to materially and affect adversely the value of such Mortgaged Property;

(iv) promptly upon receipt of notice by Seller or knowledge of (A) any Purchased
Asset that becomes a Defaulted Asset, (B) any lien or security interest (other
than security interests created hereby) on, or claim asserted against, any
Purchased Asset or, to Seller’s knowledge, the underlying collateral therefor,
or (C) any event or change in circumstances that has or could reasonably be
expected to have a material and adverse effect on the Market Value of a
Purchased Asset;

(v) promptly, and in any event within ten (10) days after service of process on
any of the following, give to Buyer notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or arbitrable
proceedings directly affecting Seller or directly affecting any of the assets of
Seller before any Governmental Authority that (A) questions or challenges the
validity or enforceability of any of the Transaction Documents or any material
action to be taken in connection with the transactions contemplated hereby,
(B) makes a claim or claims in an aggregate amount greater than $500,000 (or the
equivalent thereof in any other currency based on the Spot Rate), (C) which,
individually or in the aggregate, if adversely determined could reasonably be
likely to have a Material Adverse Effect or (D) raises any lender licensee
issues with respect to any Purchased Asset;

 

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(vi) promptly upon any transfer of any underlying Mortgaged Property or any
direct or indirect equity interest in any Mortgagor of which Seller has
knowledge, whether or not consent to such transfer is required under the
applicable Purchased Asset Documents; and

(vii) promptly, and in any event within ten (10) days after Seller or any of its
ERISA Affiliates knows or has reason to know that any “reportable event” (within
the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected
to occur in respect of a Plan that, individually or in the aggregate, either has
resulted, or could reasonably be expected to result, in a Material Adverse
Effect.

(c) To the extent in the possession of Seller or otherwise available, Seller
shall provide Buyer with copies of such documents as Buyer may reasonably
request evidencing the truthfulness of the representations set forth in
Section 10 hereof.

(d) Seller shall defend the right, title and interest of Buyer in and to the
Purchased Assets and any Hedging Transactions against, and take such other
action as is necessary to remove, any liens, security interests, claims,
encumbrances, charges and demands of all Persons thereon (other than security
interests granted to Buyer hereunder), and take any such other action as is
necessary to obtain or preserve a first priority perfected security interest in
the Purchased Assets and any Hedging Transactions.

(e) Seller will permit Buyer or its designated representative to inspect any of
Seller’s records with respect to all or any portion of the Purchased Assets and
the conduct and operation of its business related thereto at such reasonable
times and with reasonable frequency requested by Buyer or its designated
representative and to make copies of extracts of any and all thereof.

(f) If any amount payable under or in connection with any of the Purchased
Assets shall be or become evidenced by any promissory note, other instrument or
chattel paper (as each of the foregoing is defined under the UCC), or the
equivalent thereof in any non-U.S. jurisdiction, such note, instrument or
chattel paper shall be immediately delivered to Buyer or its designee upon
receipt by Seller, duly endorsed in a manner satisfactory to Buyer or if any
collateral or other security shall subsequently be delivered to Seller in
connection with any Purchased Asset, Seller shall immediately deliver or forward
such item of collateral or other security to Buyer or its designee upon receipt
by Seller, together with such instruments of assignment as Buyer may reasonably
request.

(g) Seller shall provide (or cause to be provided) to Buyer the following
financial and reporting information:

(i) the Monthly Statement;

(ii) the Quarterly Report, together with all operating statements and occupancy
information that Seller or Servicer has received relating to the Purchased
Assets for the related fiscal quarter;

(iii) Guarantor’s Financial Covenant Compliance Certificate;

 

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(iv) within forty-five (45) days following the end of each of the first three
quarters, and within ninety (90) days following the end of each fiscal year, as
the case may be, an Officer’s Certificate of Seller in form and substance
reasonably satisfactory to Buyer certifying, after due inquiry, to such
officer’s knowledge, that, except as otherwise disclosed therein, during such
fiscal quarter or year, as applicable, Seller has observed or performed all of
its material covenants and other material agreements, and satisfied every
material condition, contained in this Agreement and the other Transaction
Documents to be observed, performed or satisfied by it, and that there has
occurred no Event of Default and no event or circumstance has occurred that is
reasonably likely to result in a Material Adverse Effect;

(v) within ten (10) Business Days after Buyer’s request, such further
information with respect to the operation of any Mortgaged Property, Purchased
Asset, the financial affairs of Seller or Guarantor and any Plan and
Multiemployer Plan as may be reasonably requested by Buyer, including all
business plans prepared by or for Seller, to the extent in the possession of
Seller or otherwise available;

(vi) upon the request of Buyer no more often than annually, updated Appraisals
of the Mortgaged Properties relating to the Purchased Assets, at Seller’s sole
cost and expense; and

(vii) within ten (10) Business Days after Buyer’s request, such other reports as
Buyer shall reasonably request to the extent in the possession of Seller or
otherwise available.

Notwithstanding anything to the contrary contained in this Section 12 or
otherwise in this Agreement, Seller’s failure to deliver any financial
statements required pursuant to this Section 12(g) shall not constitute an Event
of Default under this Agreement to the extent that such financial statements
have been publicly posted on the official website of Guarantor or its parent or
appropriately filed with the SEC. Seller shall promptly deliver electronic
notice to Buyer after the posting of any financial statements required to be
delivered hereunder to Guarantor’s website or the filing of same with the SEC
together with a link to such posted or filed financial statements.

(h) Seller shall at all times comply in all material respects with all laws
(including, without limitation, Prescribed Laws), ordinances, rules and
regulations of any federal, state, municipal or other public authority having
jurisdiction over Seller or any of its assets, and Seller shall do or cause to
be done all things reasonably necessary to preserve and maintain in full force
and effect its legal existence and all licenses material to its business.

(i) Seller agrees that, from time to time upon the prior written request of
Buyer, Seller shall execute and deliver such further documents, provide such
additional information and reports and perform such other acts as Buyer may
reasonably request in order to insure compliance with all Prescribed Laws and to
fully effectuate the purposes of this Agreement; provided, however, that nothing
herein shall be construed as requiring Buyer to conduct any inquiry or
decreasing Seller’s responsibility for its statements, representations,
warranties or covenants hereunder. In order to enable Buyer and its respective
Affiliates to comply with any anti-money laundering program and related
responsibilities including, but not limited to, any obligations under the
Prescribed Laws and regulations thereunder, Seller on behalf of itself and its
Affiliates makes the following representations and covenants to Buyer and its
Affiliates: (A) that neither Seller, nor, any of its Affiliates, is a Prohibited
Person and (B) Seller is not acting on behalf of or on behalf of any Prohibited
Person. Seller agrees to promptly notify Buyer or a person appointed by Buyer to
administer their anti-money laundering program, if applicable, of any change in
information affecting this Section 12(i) of which Seller has knowledge.

 

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(j) Seller shall at all times keep proper books of records and accounts in which
full, true and correct entries shall be made of its transactions in accordance
with GAAP and set aside on its books from its earnings for each fiscal year all
such proper reserves in accordance with GAAP.

(k) Seller shall advise Buyer in writing of the opening of any new chief
executive office of Seller or the closing of any such office and of any change
in Seller’s name or the places where the books and records pertaining to the
Purchased Assets are held not less than ten (10) Business Days prior to taking
any such action.

(l) Seller shall pay when due all Transaction Costs. Seller shall pay and
discharge all Taxes, levies, liens and other charges, if any, on its assets and
on the Purchased Assets that, in each case, in any manner would create any lien
or charge upon the Purchased Assets, except for any such liens granted under the
Transaction Documents and any such Taxes as are being appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided in accordance with GAAP.

(m) Seller shall maintain its existence as a limited liability company organized
solely and in good standing under the law of the State of Delaware and shall not
dissolve, liquidate, merge with or into any other Person or otherwise change its
organizational structure or documents or identity or incorporate or organize in
any other jurisdiction.

(n) Seller shall maintain all records with respect to the Purchased Assets and
the conduct and operation of its business with no less a degree of prudence than
if the Purchased Assets were held by Seller for its own account and will furnish
Buyer, upon request by Buyer or its designated representative, with information
reasonably obtainable by Seller with respect to the Purchased Assets and the
conduct and operation of its business.

(o) Seller shall provide Buyer with notice of each modification of any Purchased
Asset Documents consented to by Seller (including such modifications which do
not constitute a Significant Modification).

(p) Seller shall provide Buyer with reasonable access to operating statements,
the occupancy status and other property level information, with respect to the
Mortgaged Properties, plus any such additional reports as Buyer may reasonably
request, in each case to the extent in the possession of Seller or Servicer or
otherwise available.

(q) Seller may propose, and Buyer will consider, but shall be under no
obligation to approve, strategies for the foreclosure or other realization upon
the security for any Purchased Asset that has become a Defaulted Asset.

(r) Seller shall not cause any Purchased Asset to be serviced by any servicer
other than a servicer expressly approved in writing by Buyer.

 

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(s) If Seller shall at any time become entitled to receive or shall receive any
rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for a Purchased Asset, or otherwise in respect thereof, Seller shall
accept the same as Buyer’s agent, hold the same in trust for Buyer and deliver
the same forthwith to Buyer (or Custodian, as appropriate) in the exact form
received, duly endorsed by Seller to Buyer if required, together with all
related and necessary duly executed Transfer Documents to be held by Buyer
hereunder as additional collateral security for the Transactions. If any sums of
money or property so paid or distributed in respect of the Purchased Assets
shall be received by Seller, Seller shall, until such money or property is paid
or delivered to Buyer, hold such money or property in trust for Buyer,
segregated from other funds of Seller, as additional collateral security for the
Transactions.

(t) Seller shall not permit Sponsor or Guarantor to internalize its management
without Buyer’s prior written approval, which shall not be unreasonably
withheld.

 

13.

SINGLE-PURPOSE ENTITY

Seller hereby represents and warrants to Buyer and covenants with Buyer that, on
and as of the date of this Agreement and each Purchase Date and at all times
while this Agreement and any Transaction hereunder is in effect or any
Repurchase Obligations remain outstanding; provided that, without limiting the
obligations of Guarantor under the Guaranty, it is understood that nothing
contained in this Section 13 or elsewhere in this Agreement shall obligate the
direct or indirect owners of Seller to make capital contributions to Seller to
enable Seller to meet its obligations under this Agreement:

(a) it is and intends to remain solvent, and it has paid and will pay its debts
and liabilities (including overhead expenses) from its own assets as the same
shall become due;

(b) it has complied and will comply with the provisions of its certificate of
formation and its limited liability company agreement;

(c) it has done or caused to be done and will do all things necessary to observe
limited liability company formalities and to preserve its existence;

(d) it has maintained and will maintain all of its books, records, financial
statements and bank accounts separate from those of its affiliates (that is not
a Seller), its members and any other Person, and it will file its own tax
returns (except to the extent consolidation is required or permitted under GAAP
or as a matter of law);

(e) it has been, is, will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate), it shall correct any known misunderstanding regarding its status
as a separate entity, it shall conduct business in its own name, it shall not
identify itself or any of its Affiliates as a division or part of the other and
it shall maintain and utilize separate stationery, invoices and checks;

(f) it has not owned and will not own any property or any other assets other
than the Purchased Assets, cash and its interest under any associated Hedging
Transactions; provided, however, that Seller shall not be in breach of this
provision to the extent that Seller acquires or originates a New Asset under its
good faith belief, on such date of acquisition or origination, as applicable,
that such New Asset will become a Purchased Asset, so long as such New Asset is
promptly transferred by Seller;

 

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(g) it has not engaged and will not engage in any business other than the
origination, acquisition, ownership, financing, securitizing and disposition of
the Purchased Assets and the associated Hedging Transactions in accordance with
the applicable provisions of the Transaction Documents; provided, however, that
Seller shall not be in breach of this provision to the extent that Seller
acquires or originates a New Asset under its good faith belief, on such date of
acquisition or origination, as applicable, that such New Asset will become a
Purchased Asset, so long as such New Asset is promptly transferred by Seller;

(h) it has not entered into, and will not enter into, any contract or agreement
with any of its affiliates, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arm’s length basis with Persons other than such affiliate;

(i) it has not incurred and will not incur any indebtedness or obligation,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (A) obligations under the Transaction
Documents, (B) obligations under the documents evidencing the Purchased Assets,
and (C) unsecured trade payables, in an aggregate amount not to exceed $500,000
at any one time outstanding, incurred in the ordinary course of acquiring,
owning, financing, securitizing and disposing of the Purchased Assets; provided,
however, that any such trade payables incurred by Seller shall be paid within
sixty (60) days of the date incurred;

(j) it shall not acquire obligations or securities of any member or affiliate of
any member or any other Person (other than in connection with the origination or
acquisition of Purchased Assets or New Assets which Seller believes in good
faith, on the date of origination or acquisition, as applicable, will become a
Purchased Asset, so long as such New Asset is promptly transferred by Seller);

(k) it will maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;

(l) neither it nor Guarantor will seek the dissolution, liquidation or winding
up, in whole or in part of Seller;

(m) except as otherwise permitted herein, it will not commingle its funds and
other assets with those of any of its Affiliates (that is not a Seller) or any
other Person;

(n) it has maintained and will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any of its Affiliates (that is not a Seller) or any other
Person;

(o) it has not held and will not hold itself out to be responsible for the debts
or obligations of any other Person (that is not a Seller);

(p) it will (i) have at all times at least one (1) Independent Director and
(ii) provide Buyer with up-to-date contact information for all Independent
Directors and a copy of the agreement pursuant to which each Independent
Director consents to and serves as an Independent Director for Seller;

 

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(q) its organizational documents shall provide that (i) no Independent Director
of Seller may be removed or replaced without Cause, (ii) Buyer be given at least
two (2) Business Days prior notice of the removal and/or replacement of any
Independent Director, together with the name and contact information of the
replacement Independent Director and evidence of the replacement’s satisfaction
of the definition of Independent Director and (iii) any Independent Director of
Seller shall not have any fiduciary duty to anyone including the holders of the
equity interests in Seller and any Affiliates of Seller except Seller and the
creditors of Seller with respect to taking of, or otherwise voting on, any Act
of Insolvency; provided that the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing;

(r) it shall not, without the consent of its Independent Directors, institute
any proceeding to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief under the
Bankruptcy Code or consent to the filing of any such petition or to the
appointment of a receiver, rehabilitator, conservator, liquidator, assignee,
trustee or sequestrator (or other similar official) of it or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
or make an assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take any action in
furtherance of any of the foregoing; and

(s) it shall not have any employees.

Notwithstanding anything to the contrary contained herein or in any other
Transaction Document, so long as this Agreement shall remain in effect, Seller
may enter into one or more asset transfer agreements to transfer Purchased
Assets to a securitization seller, depositor, trust, issuer or other similar
Person; provided that (i) Seller does not have any financial liability or
obligation under any such asset transfer agreement, and (ii) Guarantor or
another Person (other than Seller) agrees to be responsible and liable for the
performance of any and all financial obligations of Seller under any such asset
transfer agreement or arising in connection therewith.

 

14.

EVENTS OF DEFAULT; REMEDIES

(a) Events of Default. The following shall constitute an event of default by
Seller hereunder (each, an “Event of Default”):

(i) failure of Seller to repurchase one or more Purchased Assets on the
applicable Repurchase Date;

(ii) failure of Seller to apply any Income received by Seller in accordance with
the provisions hereof;

(iii) (A) the Transaction Documents shall for any reason not cause, or shall
cease to cause, Buyer to be the owner of, or, if recharacterized as a secured
financing, a secured party with respect to, the Repurchase Assets specified in
Section 6(a) hereof and the other collateral specified in Sections 6(c) or 6(d)
hereof free of any adverse claim, liens and other rights of others (other

 

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than as granted herein); (B) if a Transaction is recharacterized as a secured
financing, the Transaction Documents with respect to any Transaction shall for
any reason cease to create a valid first priority perfected security interest in
favor of Buyer in the Repurchase Assets specified in Section 6(a) hereof and the
other collateral specified in Sections 6(c) or 6(d) hereof; or (C) if any of the
Transaction Documents shall cease to be in full force and effect (other than as
a direct result of an intentional act or omission by Buyer in breach of this
Agreement) or if the enforceability of any of them is challenged or repudiated
by Seller, Guarantor or any of their Affiliates, and in the case of clauses
(A) or (B) of the foregoing, such condition is not cured by Seller within three
(3) Business Days after the earlier of (i) notice thereof from Buyer to Seller
or (ii) Seller otherwise obtaining knowledge thereof;

(iv) failure of Seller to make the payments required under Section 4(a) or
Section 5(b) hereof on the date such payment is due;

(v) failure of Seller to make any other payment owing to Buyer which has become
due, whether by acceleration or otherwise, under the terms of this Agreement
which failure is not remedied within the period specified herein or, if no
period is specified for such payments five (5) Business Days after notice
thereof to Seller from Buyer;

(vi) breach by Seller in the due performance or observance of any term, covenant
or agreement contained in Section 11 of this Agreement and such breach shall not
be cured within five (5) Business Days after the earlier of (A) delivery of
written notice by Buyer to Seller thereof or (B) Seller otherwise obtaining
knowledge of such breach or failure to perform;

(vii) a Change of Control shall have occurred that has not been consented to by
Buyer; provided Buyer’s consent shall not be unreasonably withheld with respect
to a Change of Control which relates to CLNS’s Control over Colony Capital
Operating Company, LLC;

(viii) any representation made by Seller herein or in any Transaction Document
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated (subject to any exceptions
disclosed to Buyer in an Exception Report prior to issuance of the Confirmation
by Buyer) which incorrect or untrue representation is not cured within five
(5) Business Days of receipt of notice by Seller; provided that the
representations and warranties made by Seller in Sections 10(vi) or 10(viii) (in
the case of Section 10(vi), with respect to the affected or Purchased Assets
only) hereof shall not be considered an Event of Default if incorrect or untrue
in any material respect (which determination shall be made with respect to the
representations and warranties in Exhibit III without regard to any knowledge
qualifier therein), and Buyer’s sole remedy with respect thereto shall be to
terminate the related Transaction, in which case Seller shall repurchase the
related Purchased Asset(s) on an Early Repurchase Date no later than five
(5) Business Days after receiving written notice from Buyer of such termination;
provided, however, that if Seller shall have made any such representation with
knowledge that it was materially incorrect or untrue at the time made and such
exception was not disclosed to Buyer in an Exception Report, such
misrepresentation shall constitute an Event of Default;

 

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(ix) (A) a final judgment by any competent court in the United States of America
or any non-U.S. jurisdiction in which Seller operates, for the payment of money
in an amount greater than $500,000 shall have been rendered against Seller and
remains undischarged or unpaid for a period of forty-five (45) days, during
which period execution of such judgment is not effectively stayed or (B) a final
judgment by any competent court in the United States of America for the payment
of money in an amount greater than $50,000,000 shall have been rendered against
Guarantor and remains undischarged or unpaid for a period of forty-five
(45) days, during which period execution of such judgment is not effectively
stayed by bonding or other means reasonably acceptable to Buyer;

(x) (A) Seller shall have defaulted or failed to perform under any note,
indenture, loan agreement, guaranty, swap agreement or any other contract,
agreement or transaction to which it is a party, and which default (1) involves
the failure to pay a matured obligation in excess of $500,000 or (2) involves an
obligation of at least $500,000 and is a monetary default or a material
non-monetary default and permits acceleration of the obligation by any other
party to or beneficiary of such note, indenture, loan agreement, guaranty or
swap agreement or (B) Guarantor shall have defaulted or failed to perform under
any note, indenture, loan agreement, guaranty, swap agreement or any other
contract, agreement or transaction to which it is a party, and which default
(1) involves the failure to pay a matured obligation in excess of $50,000,000 or
(2) involves an obligation of at least $50,000,000 and is a monetary default or
a material non-monetary default and permits acceleration of the obligation by
any other party to or beneficiary of such note, indenture, loan agreement,
guaranty or swap agreement; provided, however, that any such default, failure to
perform or breach shall not constitute an Event of Default if Seller or
Guarantor, as the case may be, cures such default, failure to perform or breach,
as the case may be, within the grace period, if any, provided under the
applicable agreement;

(xi) Guarantor shall fail to maintain the following financial conditions (in
each case on a consolidated basis):

(A) Liquidity. Liquidity shall equal or exceed the lower of (1) Fifty Million
Dollars ($50,000,000.00) and (2) the greater of (x) Ten Million Dollars
($10,000,000.00) and (y) five percent (5%) of Guarantor’s Recourse Indebtedness;

(B) Minimum Tangible Net Worth. Consolidated Tangible Net Worth shall equal or
exceed the sum of (1) $2,105,000,000.00, plus (2) seventy-five percent (75%) of
the net cash proceeds thereafter received by the Guarantor (x) from any offering
by the Guarantor of its common equity and (y) from any offering by the Sponsor
of its common equity to the extent such net cash proceeds are contributed to the
Guarantor, excluding any such net cash proceeds that are contributed to the
Guarantor within ninety (90) days of receipt of such net cash proceeds and
applied to purchase, redeem or otherwise acquire Capital Stock issued by the
Guarantor (or any direct or indirect parent thereof;

(C) Maximum Consolidated Leverage Ratio. Consolidated Leverage Ratio shall be
equal to or less than 0.75 to 1.00; and

(D) Minimum Interest Coverage Ratio. As of any date of determination, the ratio
of (1) Consolidated EBITDA for the period of twelve (12) consecutive months
ended on such date (if such date is the last day of a fiscal quarter) or the
fiscal quarter most recently ended prior to such date (if such date is not the
last day of a fiscal quarter) to (2) Consolidated Interest Expense for such
period shall equal or exceed 1.4 to 1.

 

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(xii) if Seller shall breach or fail to perform any of the terms, covenants,
obligations or conditions of this Agreement or any other Transaction Document,
other than as specifically otherwise referred to in this Section 14(a), and such
breach or failure to perform is susceptible of cure and is not remedied within
(A) the specified cure period or (B) if no cure period is specified, ten
(10) Business Days after notice thereof to Seller by Buyer, or its successors or
assigns; provided, however, that with respect to clause (B) only, if such
default is susceptible to cure but cannot reasonably be cured within such ten
(10) Business Day period; and provided further that Seller shall have commenced
to cure such default within such ten (10) Business Day period and thereafter
diligently and expeditiously proceeds to cure the same, such ten (10) Business
Day period shall be extended for such time as is reasonably necessary for
Seller, in the exercise of due diligence, to cure such default, and in no event
shall such cure period exceed thirty (30) days from Seller’s receipt of Buyer’s
notice of such default;

(xiii) an Act of Insolvency shall have occurred with respect to Seller or
Guarantor;

(xiv) intentionally omitted;

(xv) an “event of default” or “termination event” (as defined in the agreements
relating to a facility described below), by Seller or Guarantor beyond any
applicable notice and cure period, shall have occurred and be continuing under
(A) any repurchase facility, loan facility or hedging transaction entered into
by Seller or Guarantor and Buyer or any Affiliate of Buyer, (B) any repurchase
facility, loan facility or hedging transaction with Buyer or any Affiliate of
Buyer in which Seller or Guarantor is a guarantor or (C) any Hedging Transaction
entered into by Seller or Guarantor or in which Seller or Guarantor is a
guarantor; or

(xvi) (A) any of the representations and warranties of Guarantor in the Guaranty
or in any Financial Covenant Compliance Certificate shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been made
or repeated or (B) Guarantor shall breach any covenant in the Guaranty, and, in
each case, if no cure period is specified for the applicable breach, such breach
has not been cured within five (5) Business Days after receipt of notice thereof
from Buyer.

(b) Remedies. If an Event of Default shall occur and be continuing, the
following rights and remedies shall be available to Buyer:

(i) At the option of Buyer, exercised by written notice to Seller (which option
shall be deemed to have been exercised, even if no notice is given, immediately
upon the occurrence of an Act of Insolvency with respect to Seller), the
Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (the date on which such option is
exercised or deemed to have been exercised being referred to hereinafter as the
“Accelerated Repurchase Date”) (and any Transaction for which the related
Purchase Date has not yet occurred shall be canceled).

 

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(ii) If Buyer exercises or is deemed to have exercised the option referred to in
Section 14(b)(i) hereof (A) Seller’s obligations hereunder to repurchase all
Purchased Assets shall become immediately due and payable on and as of the
Accelerated Repurchase Date, and all Income deposited in the Controlled Account
shall be retained by Buyer and applied to the Repurchase Obligations until such
Repurchase Obligations have been reduced to zero (0) at which time any remainder
shall be remitted to Seller; (B) the Repurchase Price with respect to each
Transaction (determined as of the Accelerated Repurchase Date) shall include the
accrued and unpaid Price Differential with respect to each Purchased Asset
accrued at the Pricing Rate applicable upon an Event of Default for such
Transaction; and (C) Custodian shall, upon the request of Buyer (with
simultaneous copy of such request to Seller), deliver to Buyer all instruments,
certificates and other documents then held by Custodian relating to the
Purchased Assets.

(iii) Buyer may, after ten (10) days’ notice to Seller of Buyer’s intent to take
such action (provided that no such notice shall be required in the circumstances
set forth in Section 9-611(d) of the UCC), (A) immediately sell, at a public or
private sale in a commercially reasonable manner and at such price or prices as
Buyer may reasonably deem to be satisfactory any or all of the Purchased Assets
on a servicing released basis or (B) in Buyer’s sole discretion elect, in lieu
of selling all or a portion of such Purchased Assets, to give Seller credit for
such Purchased Assets in an amount equal to the market value of such Purchased
Assets against the aggregate unpaid Repurchase Obligations. The proceeds of any
disposition of Purchased Assets effected pursuant to this Section 14(b)(iii)
shall be applied: first, to the costs and expenses incurred by Buyer in
connection with Seller’s default; second, to the costs of covering any Hedging
Transactions pledged or assigned to Buyer by Seller hereunder, if any; third, to
the Repurchase Price; fourth, to all other outstanding Repurchase Obligations;
and fifth, the balance, if any, to Seller. In the event that Buyer shall not
have received repayment in full of the Repurchase Obligations following its
liquidation of the Purchased Assets, Buyer may, in its sole discretion, pursue
Seller and Guarantor (to the extent provided in the Guaranty) for all or any
part of any deficiency.

(iv) The parties recognize that it may not be possible to purchase or sell all
of the Purchased Assets on a particular Business Day, or in a transaction with
the same purchaser, or in the same manner because the market for such Purchased
Assets may not be liquid. In view of the nature of the Purchased Assets, the
parties agree that, to the extent permitted by applicable law, liquidation of a
Transaction or the Purchased Assets shall not require a public purchase or sale
and that a good faith private purchase or sale shall be deemed to have been made
in a commercially reasonable manner. Accordingly, Buyer may elect, in Buyer’s
sole discretion, the time and manner of liquidating any Purchased Assets, and
nothing contained herein shall (A) obligate Buyer to liquidate any Purchased
Assets on the occurrence and during the continuance of an Event of Default or to
liquidate all of the Purchased Assets in the same manner or on the same Business
Day or (B) constitute a waiver of any right or remedy of Buyer.

(v) Seller shall be liable to Buyer for (A) the amount of all reasonable
out-of-pocket expenses, including reasonable out-of-pocket legal fees and
expenses of counsel, incurred by Buyer in connection with or as a consequence of
an Event of Default, (B) all out-of-pocket costs incurred in connection with
covering Hedging Transactions pledged or assigned by Seller to Buyer hereunder,
(C) all damages, losses, judgments and out-of-pocket costs and other expenses of
any kind that may be imposed on, incurred by or asserted against Buyer relating
to or arising out of such Hedging Transactions, and (D) any other loss, damage
or out-of-pocket cost or expense directly arising or resulting from the
occurrence of an Event of Default.

 

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(vi) Buyer may exercise any or all of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and at any time during
the continuance thereof. All rights and remedies arising under the Transaction
Documents, as amended from time to time, are cumulative and not exclusive of any
other rights or remedies that Buyer may have.

(vii) Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives any defenses Seller might
otherwise have to require Buyer to enforce its rights by judicial process.
Seller also waives any defense Seller might otherwise have arising from the use
of nonjudicial process, disposition of any or all of the Purchased Assets, or
from any other election of remedies. Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm’s length.

(viii) Without limiting any other rights or remedies of Buyer, Buyer shall have
the right of setoff set forth in Section 26 hereof.

(ix) Buyer shall have, in addition to its rights and remedies under the
Transaction Documents, all of the rights and remedies provided by applicable
federal, state, foreign, and local laws (including, without limitation, if the
Transactions are recharacterized as secured financings, the rights and remedies
of a secured party under the UCC of the State of New York or, with respect to
any Foreign Purchased Asset, the equivalent Requirement of Law in the relevant
non-U.S. jurisdiction, to the extent that the UCC or such other Requirement of
Law is applicable, and the right to offset any mutual debt and claim and the
right to appropriate the Purchased Assets in accordance with this
Section 14(b)(ix)), in equity, and under any other agreement between Buyer and
Seller, exercisable upon ten (10) days’ notice from Buyer to Seller. Without
limiting the generality of the foregoing, Buyer shall be entitled to set off the
proceeds of the liquidation of the Purchased Assets against all of Seller’s
obligations to Buyer or its Affiliates, whether under this Agreement or under
any other agreement between Seller and Buyer or between Seller and any Affiliate
of Buyer, or otherwise, whether or not such obligations are then due, without
prejudice to Buyer’s right to recover any deficiency.

(x) Buyer shall at any time have the right, in each case until such time as
Buyer determines otherwise, to retain, to suspend payment or performance of, or
to decline to remit, any amount or property that Buyer would otherwise be
obligated to pay, remit or deliver to Seller hereunder if a Default or an Event
of Default has occurred.

(xi) For the avoidance of doubt, Buyer shall have no obligation to review or
purchase any Eligible Asset during the continuance of an Event of Default.

 

15.

SINGLE AGREEMENT

Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees to perform all of its obligations in respect of
each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder.

 

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16.

NOTICES AND OTHER COMMUNICATIONS

All notices, consents, approvals and requests required or permitted hereunder
shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by email (with confirmation of receipt
by the receiving party); provided that such email notice must also be delivered
by one of the means set forth in clauses (a), (b) or (c) above, to the addresses
specified in Annex I hereto or at such other address and person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section 16. A notice shall be deemed to have been given: (i) in the case of hand
delivery, at the time of delivery; (ii) in the case of registered or certified
mail, when delivered or the first attempted delivery on a Business Day; (iii) in
the case of expedited prepaid delivery upon the first attempted delivery on a
Business Day; or (iv) in the case email, upon receipt of confirmation of
receipt; provided that such emailed notice is also delivered as required in this
Section 16. A party receiving a notice that does not comply with the technical
requirements for notice under this Section 16 may elect to waive any
deficiencies and treat such notice as having been properly given.
Notwithstanding the foregoing, notices pursuant to Section 4 hereof may be sent
by electronic mail to the e-mail addresses set forth on Annex I attached hereto;
provided that such notice delivered by email shall be deemed to be given only
upon receipt of confirmation of receipt by the receiving party.

 

17.

NON-ASSIGNABILITY

(a) The rights and obligations of Seller under the Transaction Documents, the
Hedging Transactions and under any Transaction shall not be assigned by Seller
without the prior written consent of Buyer. Any attempt by Seller to assign any
of its rights or obligations under this Agreement without the prior written
consent of Buyer shall be null and void, ab initio.

(b) Buyer may at any time, without the consent of Seller, sell participations in
up to 100% (in the aggregate, in one or more transactions, including any
assignments under Section 17(c)) of Buyer’s rights and/or obligations under the
Transaction Documents; provided that, so long as no Event of Default has
occurred and is continuing, (i) Buyer’s obligations and Seller’s rights and
obligations under the Transaction Documents shall remain unchanged, (ii) Seller
shall continue to deal solely and directly with Buyer in connection with Buyer’s
rights and obligations under the Transaction Documents and Seller shall have no
obligations or duties to any Person other than Buyer, (iii) Buyer shall continue
to (A) retain the sole decision-making authority granted to Buyer under the
Transaction Documents, (B) determine whether to purchase any Eligible Asset in a
Transaction and (C) determine the Market Value of the Purchased Assets, in each
case in accordance with the Transaction Documents, (iv) Buyer shall not
participate any portion of its rights and obligations under the Transaction
Documents to any Person that is a Prohibited Transferee or an Affiliate of an
Underlying Borrower with respect to any Purchased Assets, (v) Buyer shall not
participate a controlling interest in this Agreement and (vi) Buyer will give
written notice of any participation within five (5) calendar days of the
effective date of such assignment to each party (but Buyer shall not have any
liability for any failure to timely provide such notice).

 

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(c) Buyer may at any time, without the consent of Seller but upon notice to
Seller, sell and assign up to 100% (in the aggregate, in one or more
transactions, and including any participation under Section 17(b)) of the rights
and obligations of Buyer under the Transaction Documents. From and after the
effective date of such assignment, such assignee shall be a party and, to the
extent provided in such assignment agreement, have the rights and obligations of
Buyer under the Transaction Documents with respect to the percentage and amount
of the Repurchase Price allocated to it; provided that, so long as no Event of
Default has occurred and is continuing, (i) Buyer shall be the agent for any
such transferee(s) or assignee(s) and shall remain solely responsible to Seller
for the performance of all of Buyer’s obligations under the Transaction
Documents, (ii) Seller shall continue to deal solely and directly with Buyer in
connection with Buyer’s rights and obligations under the Transaction Documents,
(iii) Buyer shall continue to (A) retain the sole decision-making authority
granted to Buyer under the Transaction Documents, (B) determine whether to
purchase any Eligible Asset in a Transaction and (C) determine the Market Value
of the Purchased Assets, in each case in accordance with the Transaction
Documents, (iv) any such sale or assignment shall not be in violation of any
eligibility, qualified transferee or similar restrictions set forth in any
Purchased Asset Documents, (v) Buyer shall not sell or assign any portion of its
rights and obligations under the Transaction Documents to any Person that is a
Prohibited Transferee or an Affiliate of an Underlying Borrower with respect to
any Purchased Assets, (vi) Buyer shall not assign a controlling interest in this
Agreement and (viii) Buyer will give written notice of any assignment within
five (5) calendar days of the effective date of such assignment to each party
(but Buyer shall not have any liability for any failure to timely provide such
notice).

(d) So long as an Event of Default shall have occurred and be continuing, Buyer
may assign, participate or sell its rights and obligations under the Transaction
Documents and/or any Transaction to any Person without prior notice to Seller
and without regard to the limitations set forth in Section 17(b) and
Section 17(c) above. From and after the date Buyer is no longer a party to this
Agreement, Buyer shall have no obligation to act as agent or to make decisions
under this Agreement.

(e) Buyer, acting solely for this purpose as an agent of Seller, shall maintain
a copy of each assignment and a register for the recordation of the names and
addresses of the assignees, and ownership rights in the Transactions, Purchased
Assets or other interests under this Agreement. The entries in such register
shall be conclusive absent manifest error, and each of Seller, Buyer and their
assignees shall treat each Person whose name is recorded in such register
pursuant to the terms hereof as the beneficial owner of the interests in the
Transactions, Purchased Assets or other interests under this Agreement for all
purposes. If any assignee is a not a U.S. Person, such assignee shall timely
provide Seller with such forms as may be required to establish the assignee’s
status for U.S. withholding tax purposes.

 

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(f) If Buyer sells a participation, Buyer shall, acting solely for this purpose
as an agent of Seller, maintain a register on which it enters the name and
address of each participant and the ownership rights of each participant in the
Transactions, Purchased Assets or other interests under this Agreement. The
entries in such register shall be conclusive absent manifest error, and Buyer
shall treat each Person whose name is recorded in such register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary. If any participant is a not a U.S. Person, such participant
shall timely provide Seller with such forms as may be required to establish such
participant’s status for U.S. withholding tax purposes.

(g) Subject to the foregoing, the Transaction Documents and any Transactions
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns. Nothing in the Transaction
Documents, express or implied, shall give to any Person, other than the parties
to the Transaction Documents and their respective successors, any benefit or any
legal or equitable right, power, remedy or claim under the Transaction
Documents.

(h) Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall prevent or prohibit Buyer from pledging its interest in the
Purchased Assets hereunder to a Federal Reserve Bank in support of borrowings
made by Buyer from such Federal Reserve Bank; provided, however, no such pledge
shall release Buyer, as the case may be, from any of its obligations under this
Agreement or any other Transaction Documents or substitute any such pledgee for
Buyer, as the case may be, as a party to this Agreement or any other Transaction
Documents.

 

18.

GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL, ETC.

(a) This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof, except for
Section 5-1401 of the General Obligations Law of the State of New York.

(b) Each party irrevocably and unconditionally submits to the non-exclusive
jurisdiction of any United States Federal or New York State court sitting in
Manhattan, and any appellate court from any such court, solely for the purpose
of any suit, action or proceeding brought to enforce its obligations under this
Agreement or relating in any way to this Agreement or any Transaction under this
Agreement.

(c) To the extent that either party has or hereafter may acquire any immunity
(sovereign or otherwise) from any legal action, suit or proceeding, from
jurisdiction of any court or from set off or any legal process (whether service
or notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) with respect to itself or any of
its property, such party hereby irrevocably waives and agrees not to plead or
claim such immunity in respect of any action brought to enforce its obligations
under this Agreement or relating in any way to this Agreement or any Transaction
under this Agreement.

(d) EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON
ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE AND IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS BY THE

 

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MAILING OF COPIES OF SUCH PROCESS TO THEM AT THEIR RESPECTIVE ADDRESS SPECIFIED
HEREIN. EACH PARTY HEREBY 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. NOTHING IN THIS
SECTION 18 SHALL AFFECT THE RIGHT OF BUYER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF BUYER TO BRING ANY ACTION OR
PROCEEDING AGAINST SELLER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.

(e) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE AGREEMENT,
ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER
OR THEREUNDER.

 

19.

NO RELIANCE; DISCLAIMERS

(a) Each party hereby acknowledges, represents and warrants to the other that,
in connection with the negotiation of, the entering into, and the performance
under, the Transaction Documents and each Transaction thereunder:

(i) It is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written or oral)
of the other party to the Transaction Documents, other than the representations
expressly set forth in the Transaction Documents.

(ii) It has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed to be
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed to be
necessary and not upon any view expressed by the other party.

(iii) It is a sophisticated and informed Person that has a full understanding of
all the terms, conditions and risks (economic and otherwise) of the Transaction
Documents and each Transaction thereunder and is capable of assuming and willing
to assume (financially and otherwise) those risks.

(iv) It is entering into the Transaction Documents and each Transaction
thereunder for the purposes of managing its borrowings or investments or hedging
its underlying assets or liabilities and not for purposes of speculation.

(v) It is not acting as a fiduciary or financial, investment or commodity
trading advisor for the other party and has not given the other party (directly
or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.

 

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(b) Each determination by Buyer of the Market Value with respect to each New
Asset or Purchased Asset or the communication to Seller of any information
pertaining to Market Value under this Agreement shall be made in Buyer’s sole
good faith discretion, subject to the following disclaimers:

(i) Buyer has assumed and relied upon, with Seller’s consent and without
independent verification, the accuracy and completeness of the information
provided by Seller and reviewed by Buyer. Buyer has not made any independent
inquiry of any aspect of the New Assets or Purchased Assets or the underlying
collateral. Buyer’s view is based on economic, market and other conditions as in
effect on, and the information made available to Buyer as of, the date of any
such determination or communication of information, and such view may change at
any time without prior notice to Seller.

(ii) Market Value determinations and other information provided to Seller
constitute a statement of Buyer’s view of the value of one or more loans or
other assets at a particular point in time and does not (A) constitute a bid for
a particular trade, (B) indicate a willingness on the part of Buyer or any
Affiliate thereof to make such a bid, or (C) reflect a valuation for
substantially similar assets at the same or another point in time, or for the
same assets at another point in time.

(iii) Market Value determinations and other information provided to Seller may
vary significantly from valuation determinations and other information that may
be obtained from other sources.

(iv) Market Value determinations and other information provided to Seller are
communicated to Seller solely for its use and may not be relied upon by any
other person and may not be disclosed or referred to publicly or to any third
party without the prior written consent of Buyer, which consent Buyer may
withhold or delay in its sole and absolute discretion.

(v) Buyer makes no representations or warranties with respect to any Market
Value determinations or other information provided to Seller. Buyer shall not be
liable for any incidental or consequential damages arising out of any inaccuracy
in such valuation determinations and other information provided to Seller.

(vi) Market Value determinations and other information provided to Seller in
connection with Section 3(b) hereof are only indicative of the initial Market
Value of the New Asset submitted to Buyer for consideration thereunder, and may
change without notice to Seller prior to, or subsequent to, the transfer by
Seller of the New Asset pursuant to Section 3(e) hereof. No indication is
provided as to Buyer’s expectation of the future value of such Purchased Asset
or the underlying collateral.

(vii) Initial Market Value determinations and other information provided to
Seller in connection with Section 3(b) hereof are to be used by Seller for the
sole purpose of determining whether to proceed in accordance with Section 3
hereof and for no other purpose.

The parties hereto agree that the method of valuation of Purchased Assets
provided for in this Agreement shall constitute a commercially reasonable method
of valuation for the purposes of the FCA Regulations.

 

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20.

INDEMNITY AND EXPENSES

(a) Seller hereby agrees to hold Buyer and its respective Affiliates and each of
their respective officers, directors and employees (the “Indemnified Parties”)
harmless from and indemnify the Indemnified Parties against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments or
suits that may be payable or determined to be payable with respect to any of the
Purchased Assets or in connection with any of the transactions contemplated by
this Agreement (or the recharacterization of any Transaction) and the documents
delivered in connection herewith and therewith (other than income Taxes of
Buyer), fees, actual out of pocket costs and expenses (including reasonable
out-of-pocket attorneys’ fees and disbursements of outside counsel and any and
all servicing and enforcement costs incurred with respect to the Purchased
Assets) or disbursements (all of the foregoing, collectively, “Indemnified
Amounts”) that may at any time (including, without limitation, such time as this
Agreement shall no longer be in effect and the Transactions shall have been
repaid in full) be imposed on or asserted against any Indemnified Party in any
way whatsoever arising out of or in connection with, or relating to, this
Agreement or any Transactions thereunder or any action taken or omitted to be
taken by any Indemnified Party under or in connection with any of the foregoing;
provided that Seller shall not be liable for Indemnified Amounts resulting from
the bad faith, gross negligence or willful misconduct of any Indemnified Party
or for any overhead expenses of Buyer. Without limiting the generality of the
foregoing, Seller agrees to hold each Indemnified Party harmless from and
indemnify each Indemnified Party against all Indemnified Amounts with respect to
all Purchased Assets relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation ERISA, the Truth in Lending Act and/or Real
Estate Settlement Procedures Act, that, in each case, results from anything
other than the bad faith, gross negligence or willful misconduct of an
Indemnified Party. Notwithstanding the foregoing, Seller’s indemnification
obligations with respect to violations of applicable law and environmental
matters shall expire after an Event of Default has occurred and is continuing
and Buyer has consummated its remedies hereunder with respect to all of the
Purchased Assets subject to Transactions; provided, that Seller’s
indemnification shall only expire with respect to any acts or omissions that
occurred after the date of such consummation by Buyer of such remedies so long
as such acts or omissions were not caused by Seller or an Affiliate or at the
direction of Seller or its Affiliates; provided, further, that to the extent of
Seller’s indemnification obligations which have not expired pursuant to the
preceding proviso, Buyer hereby acknowledges and agrees that Buyer shall have
exhausted Buyer’s remedies pursuant to the related Purchased Asset and Purchased
Asset Documents, including, without limitation, any such remedies contained in
any environmental indemnity agreements of the underlying obligors therefor,
prior to pursuing any indemnification remedy against Seller. In any suit,
proceeding or action brought by Buyer in connection with any Purchased Asset for
any sum owing thereunder, or to enforce any provisions of any Purchased Asset
Documents, Seller will save, indemnify and hold Buyer harmless from and against
all expenses, loss or damage suffered by Buyer by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by Seller of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Seller. Seller also agrees to reimburse an Indemnified Party
as and when billed by such Indemnified Party for all such Indemnified Party’s
costs and expenses incurred in connection with the enforcement or the
preservation of such

 

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Indemnified Party’s rights under this Agreement and any other Transaction
Document or any transaction contemplated hereby or thereby, including without
limitation the fees and disbursements of its counsel. Seller hereby acknowledges
that its obligations hereunder are recourse obligations of Seller. Indemnified
Amounts shall not include Taxes other than any Taxes that represent provable
losses, claims or damages arising from a non-Tax claim.

(b) Seller agrees to pay as and when billed by Buyer (i) all Indemnified Amounts
provided in Section 20(a), (ii) all of the reasonable out-of-pocket costs and
expenses incurred by Buyer in connection with the development, preparation and
execution of, and any amendment, supplement or modification to this Agreement
and the other Transaction Documents or any other documents prepared in
connection herewith or therewith including without limitation all the reasonable
out-of-pocket fees, disbursements and expenses of outside counsel to Buyer,
(iii) all of the reasonable out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the Transactions
contemplated hereby and thereby including without limitation all the reasonable,
out-of-pocket fees, disbursements and expenses of outside counsel to Buyer,
(iv) all costs and expenses contemplated by Section 14(b)(v) and (v) all the
Diligence Fees (collectively, “Transaction Costs”). Transaction Costs shall not
include costs incurred by Buyer for overhead, general administrative expenses of
Buyer. To the extent any Transaction Costs are incurred in an Applicable
Currency other than U.S. Dollars, such Transaction Costs shall, unless otherwise
agreed by Buyer in its sole discretion, be paid by Seller in their Dollar
Equivalent as of the date of payment.

 

21.

DUE DILIGENCE

(a) Seller acknowledges that, so long as no Event of Default is then continuing
(at reasonable times and upon reasonable prior notice), Buyer has the right to
perform continuing due diligence reviews with respect to the Purchased Assets,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or determining or re-determining the Asset Base
Component for purposes of Section 4 of this Agreement, or otherwise, and Seller
agrees that Buyer, at its option, has the right at any time to conduct a partial
or complete due diligence review on any or all of the Purchased Assets,
including, without limitation, ordering new credit reports and Appraisals
(subject to Section 12(g)(vi) hereof) on the applicable collateral and otherwise
regenerating the information used to originate such Purchased Assets. Upon
reasonable prior notice to Seller, Buyer or its authorized representatives will
be permitted during normal business hours to examine, inspect, and make copies
and extracts of, the Purchased Asset Files, Servicing Records and any and all
documents, records, agreements, instruments or information relating to any
Purchased Asset in the possession or under the control of Seller, any servicer
or sub-servicer and/or Custodian. Seller also shall make reasonably available to
Buyer a knowledgeable financial or accounting officer for the purpose of
financial or accounting answering questions respecting the Purchased Asset
Files, the Servicing Records and the Purchased Assets. Seller agrees to
reasonably cooperate with Buyer and any third party underwriter designated by
Buyer in connection with such underwriting, including, but not limited to,
providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Purchased Assets in the possession, or under the control, of such Seller. Seller
agrees to reimburse Buyer for any and all reasonable out-of-pocket attorneys’
fees,

 

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costs and expenses incurred by Buyer in connection with continuing due diligence
on Eligible Assets and Purchased Assets, including, without limitation, the cost
of annual updated Appraisals on the Mortgaged Properties and Diligence Fees in
accordance with this Agreement. To the extent any of the foregoing costs are
incurred in an Applicable Currency other than U.S. Dollars, such costs shall,
unless otherwise agreed by Buyer in its sole discretion, be paid by Seller in
their Dollar Equivalent as of the date of payment.

 

22.

SERVICING

(a) The parties hereto agree and acknowledge that the Purchased Assets will be
sold by Seller to Buyer on a servicing released basis. In furtherance of the
foregoing, Seller and Buyer hereby agree and confirm that from and after the
date hereof, only such Servicing Agreements that have been approved by Buyer
shall govern the servicing of the Purchased Assets and any prior agreement
between Seller and any other Person or otherwise with respect to such servicing
is hereby superseded in all respects. Provided that Buyer shall have received a
duly executed Servicer Acknowledgement from Servicer, prior to an Event of
Default, Seller may retain, on behalf of Buyer, Servicer to service the
Purchased Assets for the benefit of or on behalf of Buyer; provided, however,
that the obligation of Servicer to service any Purchased Asset for the benefit
of or on behalf of Buyer as aforesaid shall cease upon the repurchase of such
Purchased Asset by Seller in accordance with the provisions of this Agreement or
as otherwise provided in the Servicer Acknowledgement.

(b) Seller agrees that, as between Seller and Buyer, Buyer is the owner of all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Assets (the “Servicing
Records”) so long as the Purchased Assets are subject to this Agreement. Seller
covenants to safeguard any such Servicing Records in Seller’s possession and to
deliver them promptly to Buyer or its designee (including Custodian) at Buyer’s
request.

(c) Seller shall not, and shall not provide consent to Servicer to, employ any
other sub-servicers to service the Purchased Assets, except as contemplated by
the Servicing Agreement, without the prior written approval of Buyer which
approval shall be in Buyer’s sole discretion.

(d) Seller shall cause Servicer to execute a Servicer Acknowledgement
acknowledging Buyer’s interest in the Purchased Assets and the Servicing
Agreement and agreeing that Servicer shall deposit or, as applicable, shall
cause to be deposited, all Income with respect to the Purchased Assets in the
Controlled Account, all in such manner as shall be reasonably acceptable to
Buyer.

(e) To the extent applicable, Seller shall cause the Servicing Agreement or the
Servicing Acknowledgment to permit Buyer to inspect Servicer’s servicing
facilities for the purpose of satisfying Buyer that Servicer has the ability to
service such Purchased Asset as provided in this Agreement.

 

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(f) Buyer may, in its sole discretion if an Event of Default shall have occurred
and be continuing, sell the Purchased Assets on a servicing released basis
without payment of any termination fee or any other amount to Servicer. Upon the
occurrence of an Event of Default hereunder, Buyer shall have the right
immediately to terminate Servicer’s right to service the Purchased Assets
without payment of any penalty or termination fee.

 

23.

TREATMENT FOR TAX PURPOSES

It is the intention of the parties that, for U.S. Federal, state and local
income and franchise tax purposes, the Transactions constitute a financing, and
that Seller is, and, so long as no Event of Default shall have occurred and be
continuing, will continue to be, treated as the owner of the Purchased Assets
for such purposes. Unless prohibited by applicable law, Seller and Buyer agree
to treat the Transactions as described in the preceding sentence on any and all
filings with any U.S. Federal, state or local taxing authority.

 

24.

INTENT

(a) The parties intend and acknowledge that this Agreement is a “master netting
agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy
Code.

(b) The parties intend and acknowledge that each Transaction is a “securities
contract” as that term is defined in Section 741(7) of the Bankruptcy Code.

(c) The parties intend and acknowledge that the Guaranty is a “securities
contract” as that term is defined in Section 741(7)(A)(xi) of the Bankruptcy
Code.

(d) The parties intend and acknowledge that any provisions hereof or in any
other document, agreement or instrument that is related in any way to the
servicing of the Purchased Assets shall be deemed “related to” this Agreement
within the meaning of Section 741 of the Bankruptcy Code.

(e) Each party hereto agrees that is shall not challenge the characterization of
this Agreement as a “securities contract” or a “master netting agreement” within
the meaning of the Bankruptcy Code.

(f) It is understood that either party’s right to accelerate or terminate this
Agreement or to liquidate Purchased Assets delivered to it in connection with
the Transactions hereunder or to exercise any other remedies pursuant to
Section 13(r) hereof is a contractual right to accelerate or terminate this
Agreement or to liquidate Purchased Assets as described in Sections 555 and 559
of the Bankruptcy Code. It is further understood and agreed that either party’s
right to cause the termination, liquidation or acceleration of, or to offset net
termination values, payment amounts or other transfer obligations arising under
or in connection with this Agreement or the Transactions hereunder is a
contractual right to cause the termination, liquidation or acceleration of, or
to offset net termination values, payment amounts or other transfer obligations
arising under or in connection with this Agreement as described in Section 561
of the Bankruptcy Code.

(g) The parties agree and acknowledge that if a party hereto is an “insured
depository institution,” as such term is defined in the FDIA, then each
Transaction hereunder is a “qualified financial contract,” as that term is
defined in the FDIA and any rules, orders or policy statements thereunder
(except insofar as the type of assets subject to such Transaction would render
such definition inapplicable).

 

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(h) It is understood that this Agreement constitutes a “netting contract” as
defined in and subject to FDICIA and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation,”
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA). It is further understood and agreed that either party’s right to cause
the termination, liquidation or acceleration of, or to offset net termination
values, payment amounts or other transfer obligations arising under or in
connection with this Agreement or the Transactions hereunder is a contractual
right to cause the termination, liquidation or acceleration of, or to offset net
termination values, payment amounts or other transfer obligations arising under
or in connection with this Agreement as described in Section 561 of the
Bankruptcy Code.

(i) It is understood that this Agreement constitutes a “netting contract” as
defined in and subject to FDICIA and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation,”
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA).

(j) The parties intend and recognize that the arrangements under this Agreement
are to constitute a “title transfer financial collateral arrangement” or a
“security financial collateral arrangement” for the purposes of the Financial
Collateral Arrangements (No 2) Regulations 2003 (the “FCA Regulations”).

 

25.

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the SEC under Section 15 of the 1934 Act, the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other
party with respect to any Transaction hereunder;

(b) in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the SEC
under Section 15C of the 1934 Act, SIPA will not provide protection to the other
party with respect to any Transaction hereunder;

(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable; and

(d) in the case of Transactions in which one of the parties is an “insured
depository institution”, as that term is defined in Section 1813(c)(2) of Title
12 of the United States Code, funds held by the financial institution pursuant
to a Transaction are not a deposit and therefore are not insured by the Federal
Deposit Insurance Corporation, the Savings Association Insurance Fund or the
Bank Insurance Fund, as applicable.

 

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26.

SETOFF RIGHTS

Without limiting any other rights or remedies of Buyer, upon the occurrence and
during the continuance of an Event of Default, Buyer shall have the right,
without prior notice to Seller, and any such notice being expressly waived by
Seller to the extent permitted by applicable law, to set off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final) in any currency, and any other obligation (including to return excess
margin), credits, indebtedness, claims, securities, collateral or other
property, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by or due from Buyer
to or for the credit of the account of Seller to any obligations of Seller
hereunder to Buyer. If a sum or obligation is unascertained, Buyer may estimate
that obligation and set off in respect of such estimate, subject to the relevant
party accounting to the other when the obligation is ascertained. This
Section 26 shall be without prejudice and in addition to any right of setoff,
combination of accounts, lien or other rights to which any party is at any time
otherwise entitled (whether by operation of law, contract or otherwise).

 

27.

MISCELLANEOUS

(a) Confidentiality. The Transaction Documents and their respective terms,
provisions, supplements and amendments, and transactions and notices thereunder,
are proprietary to the parties hereto and shall be held by each party (as the
“Receiving Party”) in strict confidence and shall not be disclosed to any third
party without the consent of the other party (as the “Disclosing Party”) except
for (i) disclosure to the Manager or its Affiliates or to the Receiving Party’s
Affiliates, directors, attorneys, advisers, agents or accountants (the
“Representatives”); provided that the Receiving Party shall (A) inform each of
its Representatives receiving any Transaction Documents of the confidential
nature of the Transaction Documents, (B) direct its Representatives to treat the
Transaction Documents confidentially, and (C) be responsible for any improper
use of the Transaction Documents by the Receiving Party or its Representatives
or (ii) disclosure required by law, rule, regulation or order of a court or
other regulatory body deemed necessary and/or advisable by such Person’s legal
counsel or (iii) disclosure to any hedge counterparty to the extent necessary to
obtain any Hedging Transaction hereunder or (iv) any disclosures or filing(s)
required under federal securities laws and/or regulations promulgated thereunder
or state securities laws; provided further that, in the case of disclosure by
any party pursuant to the foregoing clauses (ii), (iii) and (iv), the Receiving
Party shall, to the extent permitted by law, provide the Disclosing Party with
prior written notice to permit such other party to seek a protective order to
take other appropriate action if permitted by law. Each party shall reasonably
cooperate in the Disclosing Party’s efforts to obtain a protective order or
other reasonable assurance that confidential treatment will be accorded the
Transaction Documents. If, in the absence of a protective order, the Receiving
Party or any of its Representatives is compelled as a matter of law to disclose
any such information, the Receiving Party may disclose to the party compelling
disclosure only the part of the Transaction Documents as is required by law to
be disclosed (in which case, prior to such disclosure, the Receiving Party shall
advise and consult with the Disclosing Party and its counsel as to such
disclosure and the nature and wording of such disclosure) and shall use
commercially reasonable efforts to obtain confidential treatment therefor.

 

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Notwithstanding anything to the contrary contained herein, Buyer and any of its
Representatives may disclose any such information, without notice to Seller, to
any governmental agency, regulatory authority or self-regulatory authority
(including, without limitation, bank and securities examiners) having or
claiming to have authority to regulate or oversee any aspect of Buyer’s business
or that of its Representatives in connection with the exercise of such authority
or claimed authority. Notwithstanding the foregoing or anything to the contrary
contained herein or in any other Transaction Document, the parties hereto may
disclose to any and all Persons, without limitation of any kind, the federal
income tax treatment of the Transactions, any fact relevant to understanding the
federal tax treatment of the Transactions, and all materials of any kind
(including opinions or other tax analyses) relating to such federal income tax
treatment; provided that the Receiving Party may not disclose the name of or
identifying information with respect to the Disclosing Party or any pricing
terms or other nonpublic business or financial information (including any
sublimits and financial covenants) that is unrelated to the purported or claimed
federal income tax treatment of the Transactions and is not relevant to
understanding the purported or claimed federal income tax treatment of the
Transactions, without the prior written consent of the Disclosing Party. Buyer
and Seller hereby agree that the obligations under this Section 27(a) shall not
apply to disclosures of any information, documents or portions thereof that
(i) were of public knowledge or literature generally available to the public at
the time of such disclosure; (ii) have become part of the public domain by
publication or otherwise, other than as a result of the failure of any Person
required to keep such information confidential as provided in this Section 27(a)
to do so; (iii) are disclosed with the prior written consent of the other party
hereto; (iv) were already in the Receiving Party’s possession; (v) are obtained
by the Receiving Party from a third party who, to the knowledge of the Receiving
Party, is not prohibited from transmitting such information or documents to the
Receiving Party by a contractual, legal or fiduciary obligation to the
Disclosing Party; or (vi) are independently developed by the Receiving Party.

(b) Compliance with the GLB Act. Seller shall, with respect to all Purchased
Assets, comply with the applicable provisions of the Gramm-Leach-Bliley Act of
1999 (the “GLB Act”) and any applicable state and local privacy laws pursuant to
the GLB Act for financial institutions and applicable state and local privacy
laws. Seller agrees to hold Buyer and its Affiliates and each of their officers,
directors and employees (each, a “GLB Indemnified Party”) harmless from and
indemnify any GLB Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such GLB Indemnified Party directly relating to or arising
out of Seller’s violation of the GLB Act or any applicable state or local
privacy laws with respect to the Purchased Assets.

(c) Waiver. No express or implied waiver of any Event of Default by Buyer shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by Buyer shall constitute a waiver of its right to exercise any other
remedy hereunder. No modification or waiver of any provision of this Agreement
and no consent by any party to a departure here from shall be effective unless
and until such shall be in writing and duly executed by both of the parties
hereto.

(d) Time of the Essence. Time is of the essence under the Transaction Documents
and all Transactions thereunder, and all references to a time shall mean New
York time in effect on the date of the action unless otherwise expressly stated
in the Transaction Documents.

 

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(e) Rights Cumulative. All rights, remedies and powers of Buyer hereunder and in
connection herewith are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers of
Buyer whether under law, equity or agreement. In addition to the rights and
remedies granted to it in this Agreement to the extent applicable, Buyer shall
have all rights and remedies of a secured party under the UCC and any other
applicable law (including any applicable non-U.S. jurisdiction).

(f) Counterparts. The Transaction Documents may be executed in counterparts,
each of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.

(g) Headings. The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.

(h) Interpretation. Each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or be invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

(i) Integration. This Agreement, the Fee Letter and each Confirmation contains a
final and complete integration of all prior expressions by the parties with
respect to the subject matter hereof and thereof and shall constitute the entire
agreement among the parties with respect to such subject matter, superseding all
prior oral or written understandings.

(j) Binding Effect. Each party understands that this Agreement is a legally
binding agreement that may affect such party’s rights. Each party represents to
the other that such party has received legal advice from counsel of its choice
regarding the meaning and legal significance of this Agreement and that it is
satisfied with its legal counsel and the advice received from it.

(k) Interpretation. Should any provision of this Agreement require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all parties have
participated in the preparation of this Agreement.

(l) Waiver of Damages. Buyer and Seller agree that neither party shall assert
any claims against the other or against any Affiliate of the other for special,
indirect, consequential or punitive damages hereunder.

(m) Joint and Several Liability. The representations, covenants, warranties and
obligations of each Seller hereunder are joint and several. In the event of
(a) any payment by one or more of the Sellers of any amount in excess of its
respective Proportional Amount (as defined below), or (b) the foreclosure of,
the delivery of assignments in lieu of foreclosure relating to, or the Buyer
otherwise acquiring title to, any of the Purchased Assets of one or more
Sellers, each Seller (the “Overpaying Seller”) that has paid more than its
Proportional Amount or whose assets

 

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have been utilized to satisfy obligations hereunder or otherwise for the benefit
of one or more other Sellers shall be entitled, after satisfaction of all the
other obligations of the Sellers to the Buyer under the Transaction Documents,
to contribution from each of the benefited Sellers (i.e., the Sellers, other
than the Overpaying Seller, who have paid less than their respective
Proportional Amount or whose assets have not been so utilized to satisfy
obligations hereunder) for the amounts so paid, advanced or benefited, up to
such benefited Seller’s then current Proportional Amount. Such right to
contribution shall be subordinate in all respects to the obligations of the
Sellers under the Transaction Documents. As used herein, the “Proportional
Amount” with respect to any Seller shall equal the amount derived as follows:
(a) the ratio of the aggregate amount of the obligations under the Transaction
Documents allocable to the Purchased Assets in which such Seller has an interest
to the then outstanding obligations; times (b) the aggregate amount paid or
payable by the Sellers hereunder.

(n) Unless explicitly stated otherwise, whenever the due date for any payment
hereunder or under any of the Transaction Documents is not a Business Day, the
entire amount that would have been due and payable on such due date shall
instead be due and payable on the immediately succeeding Business Day.

[SIGNATURES COMMENCE ON THE NEXT PAGE]

 

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

 

BUYER: MORGAN STANLEY BANK, N.A., a national banking association By:  

/s/ Anthony Preisano

Name:   Anthony Preisano Title:   Authorized Signatory

[Signatures continue on following page]

 

[Second Amended and Restated Master Repurchase and Securities Contract
Agreement]

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

SELLER:

MS LOAN NT-I, LLC,

a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:   David A. Palamé Title:   Vice President

 

MS LOAN NT-II, LLC,

a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:   David A. Palamé Title:   Vice President

 

CLNC CREDIT 1, LLC,

a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:   David A. Palamé Title:   Vice President

 

CLNC CREDIT 2, LLC,
a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:  

David A. Palamé

Title:

 

Vice President

 

[Second Amended and Restated Master Repurchase and Securities Contract
Agreement]

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

CLNC CREDIT 1EU, LLC,
a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:   David A. Palamé Title:   Vice President CLNC CREDIT 1UK, LLC,
a Delaware limited liability company

By:  

/s/ David A. Palamé

Name:   David A. Palamé Title:   Vice President

 

 

[Second Amended and Restated Master Repurchase and Securities Contract
Agreement]

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

 

Schedule 1

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

SCHEDULE 2

PURCHASED ASSET INFORMATION

 

a)

Loan Number/Loan Type

 

b)

Obligor Name

 

c)

Property Address

 

d)

Original Balance

 

e)

Future Advance Amount, if any

 

f)

Original Coupon

 

g)

Outstanding Balance

 

h)

Maturity Date

 

i)

Table Funding (Yes/No)

 

j)

Such information as Buyer and Seller shall agree on a case-by-case basis

 

Schedule 2

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

 

Schedule 3

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

EXHIBIT I

CONFIRMATION

MORGAN STANLEY BANK, N.A.

Ladies and Gentlemen:

Morgan Stanley Bank, N.A. (“Buyer”) is pleased to deliver our written
CONFIRMATION of our agreement (subject to satisfaction of the Transaction
Conditions Precedent) to enter into the Transaction pursuant to which Buyer
shall purchase from [SELLER ENTITY] (“Seller”) the Purchased Asset identified on
Schedule 1 attached hereto, pursuant to the Second Amended and Restated Master
Repurchase and Securities Contract Agreement among Buyer, MS Loan NT-I, LLC, MS
Loan NT-II, LLC, CNLC Credit 1, LLC, CLNC Credit 2, LLC, CLNC CREDIT 1UK, LLC
and CLNC CREDIT 1EU, LLC, dated as of April 23, 2019 (as amended from time to
time, the “Repurchase Agreement”; capitalized terms used herein without
definition have the meanings given in the Repurchase Agreement), as follows
below and on Schedule 1 [and Schedule 2]1 attached hereto:

 

Seller:    [SELLER ENTITY] Purchase Date:    [__________],[_______]/[See
Schedule 2] Purchased Asset:    As identified on attached Schedule 1 Aggregate
Principal Amount:    [$][€][£][_________]/[See Schedule 2] Remaining Future
Advance Amount (if any):    [$][€][£] [_________]/[See Schedule 2] Repurchase
Date:    [__________],[_______] Initial Purchase Price:    [$][€][£]
[_________]/[See Schedule 2] [Dollar Equivalent of Initial Purchase Price as of
the date hereof]    $[_____________] Purchase Date Spot Rate:    [___] Pricing
Rate:    [LIBOR][EURIBOR] + [__]%] Purchase Percentage:    [__]%2 Maximum
Purchase Percentage    [__]% Maximum Asset Exposure Threshold:    [__]%
Applicable Currency:   

[U.S. Dollars][Euros][Pounds Sterling]

 

1 

NTD: Include if Purchased Asset is a Future Funding Asset.

2 

NTD: To reflect actual advance rate for Purchased Loan.

 

Exhibit I

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

Location of Mortgaged Property:    [United States][United Kingdom]
[Belgium][Luxembourg][France][Germany]
[Ireland][the Netherlands][Spain]3 4 Type of Funding:    [Table
Funded]/[Non-Table Funded] Governing Agreement:    As identified on attached
Schedule 1 Seller’s Wiring Instructions:   

[Bank Name: ____________

 

ABA #: ________________

 

Account Name: __________]

[SIGNATURES ON THE NEXT PAGE]

 

 

3 

NTD: For any non-US jurisdiction, Buyer to confirm that condition in
Section 3(e)(xvi) has been satisfied before execution of Confirmation.

4 

NTD: if Buyer has approved a jurisdiction other than those listed here, Seller
must provide a revised Safe Harbor Opinion that applies to purchased assets
secured by property located in such new jurisdiction.

 

Exhibit I-2

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

MORGAN STANLEY BANK, N.A., a national banking association By:  

 

  Name:   Title:

AGREED AND ACKNOWLEDGED:

 

[SELLER ENTITY], a Delaware limited liability company By:  

 

  Name:   Title:]

 

Exhibit I-3

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

SCHEDULE 1 TO CONFIRMATION STATEMENT

 

Purchased Asset:    [Asset Type] dated as of [         ] in the original
principal amount of [$][€][£] [         ], made by [         ] to [         ]
under and pursuant to that certain [loan agreement/applicable document] (the
“Governing Agreement”). Aggregate Principal Amount:    [$][€][£] [         ]
[(plus up to [$][€][£] [         ] of future advances under Section [         ]
of the Governing Agreement). Buyer’s obligation to fund any future advances is
contingent on (a) Seller’s satisfaction of the conditions contained in
Section 3(g) of the Repurchase Agreement and (b) a bringdown by Seller of all
representations and warranties made on the date hereof with regard to the
Purchased Asset pursuant to Section 10 of the Repurchase Agreement.]
Representations:    Seller acknowledges and agrees that upon funding by Buyer of
the Purchase Price for the Purchased Asset [and, in connection with any
subsequent funding of a Future Advance Purchase under the Purchased Asset, (i)]
Seller shall be deemed to have confirmed that all of the representations and
warranties set forth in Section 10 of the Repurchase Agreement are true and
correct as of the Purchase Date with respect to the Purchased Asset which is
subject to this Confirmation [or the applicable funding date, as the case may
be,], except such representations and warranties which by their terms speak as
of a specified date and except as set forth in the attached Exception Report or
in the Exception Report delivered with respect to any other Purchased Asset [and
(ii) with respect to the funding of a Future Advance Purchase, Seller shall be
deemed to have represented and warranted that all of the conditions to funding
of such advance set forth in Section [         ] of the Governing Agreement have
been satisfied (and no conditions to such advance under the Governing Agreement
have been waived, except as may be permitted under this Agreement)].
Fixed/Floating:    [Fixed]/[Floating] Coupon:    [         ]% Term of Loan
including Extension Options:    [         ], [         ] Amortization (e.g., IO,
full amortization, etc.):    [         ]-year amortization[, with
[         ]-month IO.]

 

Exhibit I-4

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

[SCHEDULE 2 TO CONFIRMATION STATEMENT]5

 

Purchase Date    Initial / Future
Advance Purchase
Price   Remaining Future
Advance Amount   Aggregate Principal
Amount

[                ], [        ]

   [$] [€] [£] [                ]   [$] [€] [£] [                 ]  
[$] [€] [£] [                 ]

[                ], [        ]

   [$] [€] [£] [                ]   [$] [€] [£] [                 ]  
[$] [€] [£] [                 ]

[                ], [        ]

   [$] [€] [£] [                ]   [$] [€] [£] [                 ]  
[$] [€] [£] [                 ]

Total:

   [$] [€] [£] [                ]   [$] [€] [£] [                 ]  
[$] [€] [£] [                 ]

 

 

5 

Include if Purchased Asset is a Future Funding Asset.

 

Exhibit I-5

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

EXCEPTION REPORT

Representation numbers referred to below relate to the corresponding
Representations and Warranties Regarding the Purchased Assets set forth in
Exhibit III to the Repurchase Agreement.

 

Exhibit I-6

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

EXHIBIT II-1

FORM OF POWER OF ATTORNEY TO BUYER

Know All Men by These Presents, that [SELLER ENTITY] (“Seller”), does hereby
appoint MORGAN STANLEY BANK, N.A. (together with its permitted successors and
assigns, “Buyer”), in connection with the Repurchase Agreement (defined below)
its attorney-in-fact to act in Seller’s name, place and stead during the
continuance of an Event of Default in any way which Seller could do with respect
to (i) the completion of the endorsements of the Mortgage Notes, Mezzanine
Notes, LLC Certificates and Participation Certificates (as applicable), the
Transfer Certificate(s) (as applicable), and the Assignments of Mortgages,
(ii) the recordation of the Assignments of Mortgages and (iii) the enforcement
of Seller’s rights under the Purchased Assets purchased by Buyer pursuant to the
Second Amended and Restated Master Repurchase and Securities Contract Agreement
dated as of [__], 2019, as amended from time to time, among MS Loan NT-I, LLC,
MS Loan NT-II, LLC, CLNC Credit 1, LLC, CLNC Credit 2, LLC, CLNC CREDIT 1UK, LLC
and CLNC CREDIT 1EU, LLC, and Buyer (the “Repurchase Agreement”) (including, for
the avoidance of doubt, the enforcement and exercise of Seller’s rights in
respect of any interest reserve account or other deposit account or securities
account established by any borrower or any other related obligor in connection
with any Purchased Assets (including the enforcement and exercise of Seller’s
rights in respect of all funds or other assets deposited in, or credited to,
such accounts)) and to take such other steps as may be necessary or desirable to
enforce Buyer’s rights against such Purchased Assets, the related Purchased
Asset Files, the Servicing Records and the Hedging Transactions to the extent
that Seller is permitted by law to act through an agent. Capitalized terms used
herein and not otherwise defined shall have the meanings given such terms in the
Repurchase Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD
PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT
HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO
SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OR SUCH REVOCATION
OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS
OWN BEHALF AND ON BEHALF OF SELLER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND
HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY
ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON
THE PROVISIONS OF THIS INSTRUMENT.

 

Exhibit II-1

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

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed this
         day of                     , 20        .

 

[SELLER ENTITY], a Delaware limited liability company By:  

 

  Name:   Title:]

 

STATE OF    )    ) COUNTY OF    )

On this                      of                     , before me, the
undersigned, a Notary Public in and for said state, personally appeared
                    , personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

 

Notary Public

(Seal)

 

Exhibit II-1-2

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

EXHIBIT II-2

FORM OF POWER OF ATTORNEY TO SELLER

Know All Men by These Presents, that Morgan Stanley Bank, N.A., as Buyer
(together with its permitted successors and assigns, “Buyer”) does hereby
appoint MS Loan NT-I, LLC, MS Loan NT-II, LLC, CLNC Credit 1, LLC, CLNC Credit
2, LLC, CLNC CREDIT 1UK, LLC and CLNC CREDIT 1EU, LLC each a Delaware limited
liability company (individually or collectively, as the context may require,
“Seller”), its attorney-in-fact to act in Buyer’s name, place and stead in any
way which Buyer could with respect to modifications described below, to mortgage
and mezzanine loan documents with respect to Purchased Assets sold by Seller to
Buyer under that certain Second Amended and Restated Master Repurchase and
Securities Contract Agreement dated as of [______], 2019, as amended from time
to time, among Seller and Buyer (the “Repurchase Agreement”). Capitalized terms
used herein and not otherwise defined shall have the meanings given such terms
in the Repurchase Agreement.

Seller is permitted to administer and service the Purchased Assets without the
consent of Buyer, any assignee or any other Person, pursuant to this power of
attorney delivered by Buyer, which power of attorney shall not be revoked by
Buyer unless an Event of Default under the Repurchase Agreement has occurred and
is then continuing. Notwithstanding the foregoing, Seller shall not consent or
assent to a Significant Modification without the prior written consent of Buyer.
All waivers or material actions entered into or taken in respect of the
Purchased Assets pursuant to this power of attorney shall be in writing. Seller
shall notify Buyer and Custodian, in writing, of any waiver or other action
entered into or taken thereby in respect of any such Purchased Asset pursuant to
this power of attorney, and shall deliver to Custodian (with a copy to Buyer)
for deposit in the related Purchased Asset File, an original counterpart of the
agreement, if any, relating to such waiver or other action, within three
(3) Business Days following the execution thereof. Actions taken under the
foregoing power of attorney shall be binding upon each holder of the Purchased
Assets.

THIS POWER OF ATTORNEY MAY BE REVOKED BY BUYER BY DELIVERY OF WRITTEN NOTICE TO
SELLER DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THE REPURCHASE
AGREEMENT. IF THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IF REQUESTED BY
SELLER, BUYER WILL PROMPTLY CONFIRM IN WRITING TO SELLER, AND ANY OTHER PERSON
OR ENTITY REASONABLY DESIGNATED BY SELLER, THAT THIS POWER OF ATTORNEY HAS NOT
BEEN REVOKED AND IS IN FULL FORCE AND EFFECT.

 

Exhibit II-1

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

IN WITNESS WHEREOF, Buyer has caused this Power of Attorney to be executed this
         day of                 , 20        .

 

MORGAN STANLEY BANK, N.A., a national member bank By:  

 

  Name:   Title:

 

STATE OF    )    ) COUNTY OF    )

On this              of                 , before me, the undersigned, a Notary
Public in and for said state, personally appeared                 , personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her capacity, and that by his/her signature
on the instrument, the person, or the entity upon behalf of which the person
acted, executed the instrument.

 

 

Notary Public

(Seal)

 

Exhibit II-1-2

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

EXHIBIT III-1

REPRESENTATIONS AND WARRANTIES

REGARDING EACH PURCHASED ASSET THAT IS A MORTGAGE LOAN

With respect to each Purchased Asset and the related Mortgaged Properties on the
related Purchase Date and at all times while this Agreement and any Transaction
contemplated hereunder is in effect, Seller shall be deemed to make the
following representations and warranties to Buyer as of such date; provided,
however, that with respect to any Purchased Asset, such representations and
warranties shall be deemed to be modified by any Exception Report delivered by
Seller to Buyer prior to the issuance of a Confirmation with respect thereto.

 

(1)

Whole Loan; Ownership of Purchased Assets. At the time of the sale, transfer and
assignment to Buyer, no Mortgage Note, Mortgage or Participation Certificate was
subject to any assignment (other than assignments to Seller), participation
(other than with respect to the Participation Interests) or pledge, and Seller
had good title to, and was the sole owner of each Purchased Asset free and clear
of any and all liens, charges, pledges, encumbrances, participations (other than
with respect to the Participation Interests), any other ownership interests on,
in or to such Purchased Asset. Seller has full right and authority to sell,
assign and transfer each Purchased Asset, and the assignment to Buyer
constitutes a legal, valid and binding assignment of such Purchased Asset free
and clear of any and all liens, pledges, charges or security interests of any
nature encumbering such Purchased Asset.

 

(2)

Loan Document Status. Each related Mortgage Note, Mortgage, Assignment of Leases
(if a separate instrument), guaranty and other agreement executed by or on
behalf of the related Mortgagor, guarantor or other obligor in connection with
such Purchased Asset is the legal, valid and binding obligation of the related
Mortgagor, guarantor or other obligor (subject to any non-recourse provisions
contained in any of the foregoing agreements and any applicable state
anti-deficiency, one-action or market value limit deficiency legislation), as
applicable, and is enforceable in accordance with its terms, except (a) as such
enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law) and
(b) that certain provisions in such Purchased Asset Documents (including,
without limitation, provisions requiring the payment of default interest, late
fees or prepayment/yield maintenance or prepayment fees, charges and/or
premiums) are, or may be, further limited or rendered unenforceable by or under
applicable law, but (subject to the limitations set forth in clause (a) above)
such limitations or unenforceability will not render such Purchased Asset
Documents invalid as a whole or materially interfere with the mortgagee’s
realization of the principal benefits and/or security provided thereby (clauses
(a) and (b) collectively, the “Standard Qualifications”). Except as set forth in
the immediately preceding sentences, there is no valid offset, defense,
counterclaim or right of rescission available to the related borrower with
respect to any of the related Mortgage Notes, Mortgages or other Purchased Asset
Documents, including, without limitation, any such valid offset, defense,
counterclaim or right based on intentional fraud by Seller in connection with
the origination of the Purchased Asset, that would deny the mortgagee the
principal benefits intended to be provided by the Mortgage Note, Mortgage or
other Purchased Asset Documents.

 

Exhibit III

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

(3)

Mortgage Provisions. The Purchased Asset Documents for each Purchased Asset
contain provisions that render the rights and remedies of the holder thereof
adequate for the practical realization against the Mortgaged Property of the
principal benefits of the security intended to be provided thereby, including
realization by judicial or, if applicable, non-judicial foreclosure subject to
the limitations set forth in the Standard Qualifications.

 

(4)

Hospitality Provisions. The Purchased Asset Documents for each Purchased Asset
that is secured by a hospitality property operated pursuant to a franchise
agreement includes an executed comfort letter or similar agreement signed by the
Mortgagor and franchisor of such property enforceable against such franchisor,
either directly or as an assignee of the originator. The Mortgage or related
security agreement for each Purchased Asset secured by a hospitality property
creates a security interest in the revenues of such property for which a UCC
financing statement (or, with respect to any Foreign Purchased Asset, its
equivalent under applicable Requirements of Law in the relevant non-U.S.
jurisdiction) has been filed in the appropriate filing office.

 

(5)

Mortgage Status; Waivers and Modifications. Since origination and except by
written instruments set forth in the related Purchased Asset File or as
otherwise provided in the related Purchased Asset Documents (a) the material
terms of such Mortgage, Mortgage Note, guaranty, participation agreement, if
applicable, and related Purchased Asset Documents have not been waived,
impaired, modified, altered, satisfied, canceled, subordinated or rescinded in
any respect that could have a material adverse effect on Purchased Asset; (b) no
related Mortgaged Property or any portion thereof has been released from the
lien of the related Mortgage in any manner which materially interferes with the
security intended to be provided by such Mortgage or the use or operation of the
remaining portion of such Mortgaged Property; and (c) neither the related
borrower nor the related guarantor nor the related participating Person has been
released from its material obligations under the Purchased Asset Documents. With
respect to each Purchased Asset, except as contained in a written document
included in the Purchased Asset File, there have been no modifications,
amendments or waivers, that could be reasonably expected to have a material
adverse effect on such Purchased Asset consented to by Seller.

 

(6)

Lien; Valid Assignment. Subject to the Standard Qualifications, each assignment
of Mortgage to Buyer, assignment of Assignment of Leases to Buyer, Transfer
Certificate (if applicable) and Foreign Assignment Agreement (if applicable)
constitutes a legal, valid and binding assignment to Buyer. Each related
Mortgage and Assignment of Leases is freely assignable without the consent of
the related Mortgagor. Each related Mortgage is a legal, valid and enforceable
first lien or other first priority security interest on the related Mortgagor’s
fee or leasehold interest in the Mortgaged Property in the principal amount of
such Purchased Asset or allocated loan amount (subject only to Permitted
Encumbrances), except as the enforcement thereof may be limited by the Standard
Qualifications. Such Mortgaged Property (subject to and excepting Permitted
Encumbrances) is free and clear of any recorded mechanics’ liens, recorded
materialmen’s liens (or, with respect to any

 

Exhibit III-2

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

  Foreign Purchased Asset, their equivalent under applicable Requirements of Law
in the relevant non-U.S. jurisdiction) and other recorded encumbrances, and no
rights exist which under law could give rise to any such lien or encumbrance
that would be prior to or equal with the lien of the related Mortgage, except
those which are bonded over, escrowed for or, in the case of U.S. Purchased
Assets, insured against by a lender’s title insurance policy (as described
below). Any security agreement, chattel mortgage or equivalent document related
to and delivered in connection with the Purchased Asset establishes and creates
a valid and enforceable lien on property described therein, except as such
enforcement may be limited by Standard Qualifications subject to the limitations
described in Paragraph (9) below. Notwithstanding anything herein to the
contrary, no representation is made as to the perfection of any security
interest in rents or other personal property to the extent that possession or
control of such items or actions other than the filing of UCC financing
statements (or, with respect to any Foreign Purchased Asset, their equivalent
under applicable Requirements of Law in the relevant non-U.S. jurisdiction) is
required in order to effect such perfection.

 

(7)

Permitted Liens; Title Insurance. Each Mortgaged Property securing a Purchased
Asset is covered by an American Land Title Association loan title insurance
policy or a comparable form of loan title insurance policy approved for use in
the applicable jurisdiction or, in the case of any Foreign Purchased Asset, the
equivalent thereof in the applicable jurisdiction (or, if such policy is yet to
be issued, by a pro forma policy, a preliminary title policy with escrow
instructions or a “marked up” commitment, in each case binding on the title
insurer, or if such Purchased Asset is a Mezzanine Loan, by a UCC 9 insurance
policy) (the “Title Policy”) in the original principal amount of such Purchased
Asset (or with respect to a Purchased Asset secured by multiple properties, an
amount equal to at least the allocated loan amount with respect to the Title
Policy for each such property) after all advances of principal (including, in
states where a “date down endorsement” is unavailable, any advances held in
escrow or reserves), that insures for the benefit of the owner of the
indebtedness secured by the Mortgage, the first priority lien of the Mortgage,
which lien is subject only to Permitted Encumbrances. None of the Permitted
Encumbrances are mortgage liens that are senior to or coordinate and co-equal
with the lien of the related Mortgage. Such Title Policy (or, if it has yet to
be issued, the coverage to be provided thereby) is in full force and effect, all
premiums thereon have been paid and no claims have been made by Seller
thereunder and no claims have been paid thereunder. Neither Seller, nor to
Seller’s knowledge, any other holder of the Purchased Asset, has done, by act or
omission, anything that would materially impair the coverage under such Title
Policy. Each Title Policy contains no exclusion for, or affirmatively insures
(except for any Mortgaged Property located in a jurisdiction where such
affirmative insurance is not available in which case such exclusion may exist),
(a) that the area shown on the survey is the same as the property legally
described in the Mortgage and (b) to the extent that the Mortgaged Property
consists of two or more adjoining parcels, such parcels are contiguous.

 

(8)

Junior Liens. There are no subordinate mortgages or junior liens securing the
payment of money encumbering the related Mortgaged Property (other than
Permitted Encumbrances). Seller has no knowledge of any mezzanine debt secured
directly by interests in the related Mortgagor.

 

Exhibit III-3

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

(9)

Assignment of Leases. There exists as part of the related Purchased Asset File
an Assignment of Leases (either as a separate instrument or incorporated into
the related Mortgage) or, with respect to any Foreign Purchased Asset, other
applicable equivalent Purchased Asset Document in the applicable jurisdiction
(“ALR Equivalent”). Subject to the Permitted Encumbrances, and with respect to
any Foreign Purchased Asset only, to the extent disclosed by or on behalf of the
applicable Seller to Buyer in writing prior to the Purchase Date as part of the
Diligence Materials, each related Assignment of Leases or ALR Equivalent, as
applicable, creates a valid first-priority collateral assignment of, or a valid
first-priority lien or security interest in, rents and certain rights under the
related lease or leases, subject only to a license granted to the related
Mortgagor to exercise certain rights and to perform certain obligations of the
lessor under such lease or leases, including the right to operate the related
leased property, except as the enforcement thereof may be limited by the
Standard Qualifications. No Person other than the related Mortgagor owns any
interest in any payments due under such lease or leases that is superior to or
of equal priority with the lender’s interest therein. The related Mortgage or
related Assignment of Leases or ALR Equivalent, as applicable, subject to
applicable law, provides that, upon an event of default under the Purchased
Asset, a receiver is permitted to be appointed for the collection of rents or
for the related mortgagee to enter into possession to collect the rents or for
rents to be paid directly to the mortgagee.

 

(10)

UCC Filings. Seller has filed and/or recorded or caused to be filed and/or
recorded (or, if not filed and/or recorded, have been submitted in proper form
for filing and/or recording), UCC-1 financing statements (or, with respect to
any Foreign Purchased Asset, their equivalent under applicable Requirements of
Law in the relevant non-U.S. jurisdiction) in the appropriate public filing
and/or recording offices necessary at the time of the origination of the
Purchased Asset to perfect a valid security interest in all items of physical
personal property reasonably necessary to operate such Mortgaged Property owned
by such Mortgagor and located on the related Mortgaged Property (other than any
non-material personal property, any personal property subject to a purchase
money security interest, a sale and leaseback financing arrangement as permitted
under the terms of the related Purchased Asset Documents or any other personal
property leases applicable to such personal property), to the extent perfection
may be effected pursuant to applicable law by recording or filing, as the case
may be. Subject to the Standard Qualifications, each related Mortgage (or
equivalent document) creates a valid and enforceable lien and security interest
on the items of personalty described above. No representation is made as to the
perfection of any security interest in rents or other personal property to the
extent that possession or control of such items or actions other than the filing
of UCC-1 financing statements (or, with respect to any Foreign Purchased Asset,
their equivalent under applicable Requirements of Law in the relevant non-U.S.
jurisdiction) are required in order to effect such perfection. Each UCC-1
financing statement (or, with respect to any Foreign Purchased Asset, its
equivalent under applicable Requirements of Law in the relevant non-U.S.
jurisdiction), if any, filed with respect to personal property constituting a
part of the related Mortgaged Property and each UCC-2 or UCC-3 assignment (or,
with respect to any Foreign Purchased Asset, its equivalent under applicable
Requirements of Law in the relevant non-U.S. jursdication), if any, of such
financing statement to Seller was in suitable form for filing in the filing
office in which such financing statement (or equivalent in a non-U.S.
jurisdiction) was filed.

 

Exhibit III-4

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

(11)

Condition of Property. Seller or the originator of the Purchased Asset inspected
or caused to be inspected each related Mortgaged Property within six months of
origination of the Purchased Asset and within twelve months of the Purchase
Date. An engineering report or property condition assessment was prepared in
connection with the origination of each Purchased Asset no more than twelve
months prior to the Purchase Date. To Seller’s knowledge, based solely upon due
diligence customarily performed in connection with the origination of comparable
mortgage loans, each related Mortgaged Property is (a) free and clear of any
material damage, (b) in good repair and condition and (c) free of structural
defects, except in each case (i) for any damage or deficiencies that would not
materially and adversely affect the use, operation or value of such Mortgaged
Property as security for the Purchased Asset, (ii) if such repairs have been
completed or (iii) if escrows in an aggregate amount consistent with the
standards utilized by Seller with respect to similar loans it holds for its own
account have been established, which escrows will in all events be in an
aggregate amount not less than the estimated cost of such repairs. Seller has no
knowledge of any material issues with the physical condition of the Mortgaged
Property that Seller believes would have a material adverse effect on the use,
operation or value of the Mortgaged Property other than those disclosed in the
engineering report and those addressed in clauses (i), (ii) and (iii) above.

 

(12)

Taxes and Assessments. All real estate taxes, governmental assessments and other
similar outstanding governmental charges (including, without limitation, water
and sewage charges), or installments thereof, that could be a lien on the
related Mortgaged Property that would be of equal or superior priority to the
lien of the Mortgage and that prior to the Purchase Date have become delinquent
in respect of each related Mortgaged Property have been paid, or, if the
appropriate amount of such taxes or charges is being appealed or is otherwise in
dispute, an escrow of funds has been established in an amount sufficient to
cover such payments and reasonably estimated interest and penalties, if any,
thereon. For purposes of this Paragraph (12), real estate taxes and governmental
assessments and other outstanding governmental charges and installments thereof
shall not be considered delinquent until the earlier of (a) the date on which
interest and/or penalties would first be payable thereon and (b) the date on
which enforcement action is entitled to be taken by the related taxing
authority.

 

(13)

Condemnation. As of the date of origination and to Seller’s knowledge as of the
Purchase Date, there is no proceeding pending, and, to Seller’s knowledge as of
the date of origination and as of the Purchase Date, there is no proceeding
threatened, for the total or partial condemnation of such Mortgaged Property
that would have a material adverse effect on the value, use or operation of the
Mortgaged Property.

 

(14)

Actions Concerning Purchased Asset. As of the date of origination and to
Seller’s knowledge as of the Purchase Date, there was no pending, filed or
threatened action, suit or proceeding, arbitration or governmental investigation
involving any Mortgagor, guarantor, or the Mortgaged Property, an adverse
outcome of which would reasonably be

 

Exhibit III-5

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

  expected to materially and adversely affect (a) such Mortgagor’s title to the
Mortgaged Property, (b) the validity or enforceability of the Mortgage, (c) such
Mortgagor’s ability to perform under the related Purchased Asset Documents,
(d) such guarantor’s ability to perform under the related guaranty, (e) the use,
operation or value of the Mortgaged Property, (f) the principal benefit of the
security intended to be provided by the Purchased Asset Documents, (g) the
current ability of the Mortgaged Property to generate net cash flow sufficient
to service such Purchased Asset or (h) the current principal use of the
Mortgaged Property.

 

(15)

Escrow Deposits. As of the Purchase Date, all escrow deposits and payments
required to be escrowed with lender pursuant to the Purchased Asset Documents
are in the possession, or under the control, of Seller or its servicer, and
there are no deficiencies (subject to any applicable grace or cure periods) in
connection therewith, and all such escrows and deposits (or the right thereto)
that are required to be escrowed with lender under the related Purchased Asset
Documents are being conveyed by Seller to Buyer or its servicer. Any and all
requirements under the Purchased Asset Documents as to completion of any
material improvements and as to disbursements of any funds escrowed for such
purpose, which requirements were to have been complied with on or before the
Purchase Date, have been complied with in all material respects or the funds so
escrowed have not been released (other than for costs incurred since origination
with respect to the applicable work). No other such escrow amounts have been
released except in accordance with the terms and conditions of the Purchased
Asset Documents.

 

(16)

No Holdbacks. The principal balance of the Purchased Asset set forth on the
Purchased Asset Schedule has been fully disbursed as of the Purchase Date and,
except for Future Funding Assets, there is no requirement for future advances
thereunder (except in those cases where the full amount of the Purchased Asset
has been disbursed but a portion thereof is being held in escrow or reserve
accounts pending the satisfaction of certain conditions relating to leasing,
repairs or other matters with respect to the related Mortgaged Property, the
Mortgagor or other considerations determined by Seller to merit such holdback),
and any requirements or conditions to disbursements of any loan proceeds held in
escrow have been satisfied with respect to any disbursements of any such escrow
fund made on or prior to the date hereof.

 

(17)

Insurance.

Each related Mortgaged Property is, and is required pursuant to the related
Mortgage to be, insured by a property insurance policy providing coverage for
loss in accordance with coverage found under a “special cause of loss form” or
“all risk form” that includes replacement cost valuation issued by an insurer
meeting the requirements of the related Purchased Asset Documents and having a
claims-paying or financial strength rating of any one of the following: (i) at
least “A-:VII” from A.M. Best Company, Inc., (ii) at least “A3” (or the
equivalent) from Moody’s (iii) at least “A-” from Standard & Poor’s or (iv) with
respect to any Foreign Purchased Asset, other equivalent rating from a
comparable rating company (collectively, the “Insurance Rating

 

Exhibit III-6

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

Requirements”), in an amount (subject to a customary deductible) not less than
the lesser of (1) the original principal balance of the Purchased Asset and
(2) the full insurable value on a replacement cost basis of the improvements,
furniture, furnishings, fixtures and equipment owned by the Mortgagor and
included in the Mortgaged Property (with no deduction for physical
depreciation), but, in any event, not less than the amount necessary or
containing such endorsements as are necessary to avoid the operation of any
coinsurance provisions with respect to the related Mortgaged Property.

Each related Mortgaged Property is also covered, and required to be covered
pursuant to the related Loan Documents, by business interruption or rental loss
insurance which (subject to a customary deductible) (i) covers a period of not
less than 12 months (or with respect to each Purchased Asset on a single asset
with a principal balance of $50 million (or, with respect to any Foreign
Purchased Asset, its Purchase Date Dollar Equivalent) or more, 18 months); (ii)
for a Purchased Asset with a principal balance of $50 million (or, with respect
to any Foreign Purchased Asset, its Purchase Date Dollar Equivalent) or more,
contains a 180 day “extended period of indemnity”; and (iii) covers the actual
loss sustained during restoration.

If any material part of the improvements, exclusive of a parking lot, located on
a Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency (or other applicable body with respect to a
Foreign Purchased Asset) as having special flood hazards, the related Mortgagor
is required to maintain insurance in the maximum amount available under the
National Flood Insurance Program (or, with respect to a Foreign Purchased Asset,
in such amount as is customary in the applicable non-U.S. jurisdiction), plus
such additional excess flood coverage in an amount as is generally required by
prudent institutional commercial mortgage lenders originating mortgage loans for
securitization.

If windstorm and/or windstorm related perils and/or “named storms” are excluded
from the primary property damage insurance policy, the Mortgaged Property is
insured by a separate windstorm insurance policy issued by an insurer meeting
the Insurance Rating Requirements or endorsement covering damage from windstorm
and/or windstorm related perils and/or named storms in an amount not less than
the wind modeling PML determined at the 0.400% critical probability or 1 in 250
return period on a replacement cost basis of the improvements and personalty and
fixtures included in the related Mortgaged Property by an insurer meeting the
Insurance Rating Requirement.

The Mortgaged Property is covered, and required to be covered pursuant to the
related Purchased Asset Documents, by a commercial general liability insurance
policy issued by an insurer meeting the Insurance Rating Requirements including
coverage for property damage, contractual damage and personal injury (including
bodily injury and death) in amounts as are generally

 

Exhibit III-7

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

required by a prudent institutional commercial mortgage lender for loans
originated for securitization, and in any event not less than $1 million per
occurrence and $2 million in the aggregate (or, in each case, with respect to
any Foreign Purchased Asset, the Purchase Date Dollar Equivalent).

With respect to a U.S. Purchased Asset, an architectural or engineering
consultant has performed an analysis of each of the Mortgaged Properties located
in seismic zones 3 or 4 in order to evaluate the structural and seismic
condition of such property, for the sole purpose of assessing either the
scenario expected limit (the “SEL”) or the probable maximum loss (the “PML”) for
the Mortgaged Property in the event of an earthquake. In such instance, the SEL
or PML, as applicable, was based on a 475-year return period, an exposure period
of 50 years and a 10% probability of exceedance. If the resulting report
concluded that the SEL or PML, as applicable, would exceed 20% of the amount of
the replacement costs of the improvements, earthquake insurance on such
Mortgaged Property was obtained by an insurer rated at least “A:VII” by A.M.
Best Company, Inc. or “A3” (or the equivalent) from Moody’s or “A-” by
Standard & Poor’s in an amount not less than 100% of the SEL or PML, as
applicable.

The Purchased Asset Documents require insurance proceeds in respect of a
property loss to be applied either (a) to the repair or restoration of all or
part of the related Mortgaged Property, with respect to all property losses in
excess of 5% of the then outstanding principal amount of the related Purchased
Asset, the lender (or a trustee appointed by it) having the right to hold and
disburse such proceeds as the repair or restoration progresses, or (b) to the
reduction of the outstanding principal balance of such Purchased Asset together
with any accrued interest thereon.

All premiums on all insurance policies referred to in this Paragraph
(17) required to be paid as of the Purchase Date have been paid, and such
insurance policies name the lender under the Purchased Asset and its successors
and assigns as a loss payee under a mortgagee endorsement clause or, in the case
of the general liability insurance policy, as named or additional insured. Such
insurance policies will inure to the benefit of Buyer. Each related Purchased
Asset obligates the related Mortgagor to maintain all such insurance and, at
such Mortgagor’s failure to do so, authorizes the lender to maintain such
insurance at the Mortgagor’s cost and expense and to charge such Mortgagor for
related premiums and other related expenses, including reasonable attorney’s
fees. All such insurance policies (other than commercial liability policies)
require at least 10 days’ prior notice to the lender of termination or
cancellation arising because of nonpayment of a premium and at least 30 days
prior notice to the lender of termination or cancellation (or such lesser
period, not less than 10 days, as may be required by applicable law) arising for
any reason other than non-payment of a premium and no such notice has been
received by Seller.    

 

Exhibit III-8

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

(18)

Access; Utilities; Separate Tax Lots. Each Mortgaged Property (a) is located on
or adjacent to a public road and has direct legal access to such road, or has
access via an irrevocable easement or irrevocable right of way permitting
ingress and egress to/from a public road, (b) to Seller’s knowledge, is served
by or has uninhibited access rights to public or private water and sewer (or
well and septic) and all required utilities, all of which are appropriate for
the current use of the Mortgaged Property, and (c) constitutes one or more
separate tax parcels (if applicable) which do not include any property which is
not part of the Mortgaged Property or, if applicable, is subject to an
endorsement under the related Title Policy insuring the Mortgaged Property, or
in certain cases, an application has been, or will be, made to the applicable
governing authority for creation of separate tax lots, in which case the
Purchased Asset Documents require the Mortgagor to escrow an amount sufficient
to pay taxes for the existing tax parcel of which the Mortgaged Property is a
part until the separate tax lots are created or the non-recourse carveout
guarantor under the Purchased Asset Documents has indemnified the mortgagee for
any loss suffered in connection therewith.

 

(19)

No Encroachments. To Seller’s knowledge based solely on surveys obtained in
connection with origination (which may have been a previously existing “as
built” survey) and the lender’s Title Policy (or, if such policy is not yet
issued, a pro forma title policy, a preliminary title policy with escrow
instructions or a “marked up” commitment) obtained in connection with the
origination of each Purchased Asset (or, with respect to any Foreign Purchased
Asset, except as disclosed by or on behalf of the applicable Seller to Buyer in
writing prior to the Purchase Date), all material improvements that were
included for the purpose of determining the appraised value of the related
Mortgaged Property at the time of the origination of such Purchased Asset are
within the boundaries of the related Mortgaged Property, except encroachments
that do not materially and adversely affect the value or current use of such
Mortgaged Property or for which insurance or endorsements were obtained under
the Title Policy. No improvements on adjoining parcels encroach onto the related
Mortgaged Property except for encroachments that do not materially and adversely
affect the value or current use of such Mortgaged Property or for which
insurance or endorsements were obtained under the Title Policy. No material
improvements encroach upon any easements except for encroachments the removal of
which would not materially and adversely affect the value or current use of such
Mortgaged Property or for which insurance or endorsements have been obtained
under the Title Policy.

 

(20)

No Contingent Interest or Equity Participation. No Purchased Asset has a shared
appreciation feature, any other contingent interest feature or a negative
amortization feature (except that a Purchased Asset may provide for the accrual
of the portion of interest in excess of the rate in effect prior to the
anticipated Repayment Date) or an equity participation by Seller.

 

(21)

[Reserved.]

 

(22)

Compliance with Usury Laws. The interest rate (exclusive of any default
interest, late charges, yield maintenance charges, exit fees, or prepayment
premiums) of such Purchased Asset complied as of the date of origination with,
or was exempt from, all applicable laws of the applicable jurisdiction
(including state or federal laws, regulations and other requirements) pertaining
to usury.

 

Exhibit III-9

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

(23)

Authorized to do Business. To Seller’s knowledge, and to the extent required
under applicable law, as of the Purchase Date and as of each date that such
entity held the Mortgage Note, each holder of the Mortgage Note was authorized
to transact and do business in the jurisdiction in which each related Mortgaged
Property is located, or the failure to be so authorized does not materially and
adversely affect the enforceability of such Purchased Asset by Buyer.

 

(24)

Trustee under Deed of Trust. With respect to each Mortgage which is a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
currently so serves and is named in the deed of trust or has been substituted in
accordance with the Mortgage and applicable law or may be substituted in
accordance with the Mortgage and applicable law by the related mortgagee, and
except in connection with a trustee’s sale after a default by the related
Mortgagor or in connection with any full or partial release of the related
Mortgaged Property or related security for such Purchased Asset, and except in
connection with a trustee’s sale after a default by the related Mortgagor, no
fees are payable to such trustee except for de minimis fees paid.

 

(25)

Local Law Compliance. To Seller’s knowledge, based upon any of a letter from any
governmental authorities, a legal opinion, an architect’s letter, a zoning
consultant’s report, an endorsement to the related Title Policy, or other
affirmative investigation of local law compliance consistent with the
investigation conducted by Seller for similar commercial, multifamily and
manufactured housing community mortgage loans intended for securitization, with
respect to the improvements located on or forming part of each Mortgaged
Property securing a Purchased Asset, there are no material violations of
applicable laws, zoning ordinances, rules, covenants, building codes,
restrictions and land laws (collectively, “Zoning Regulations”) other than those
which (i) constitute a legal non-conforming use or structure, as to which the
Mortgaged Property may be restored or repaired to the full extent necessary to
maintain the use of the structure immediately prior to a casualty or the
inability to restore or repair to the full extent necessary to maintain the use
or structure immediately prior to the casualty would not materially and
adversely affect the use or operation of the Mortgaged Property, (ii) are
insured by the Title Policy or other insurance policy (or, with respect to any
Foreign Purchased Asset, matters that have been disclosed in the related
Property Report), (iii) are insured by law and ordinance insurance coverage in
amounts customarily required by prudent commercial mortgage lenders for loans
originated for securitization that provides coverage for additional costs to
rebuild and/or repair the property to current Zoning Regulations or (iv) would
not have a material adverse effect on the Purchased Asset. The terms of the
Purchased Asset Documents require the Mortgagor to comply in all material
respects with all applicable governmental regulations, zoning and building laws.

 

Exhibit III-10

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

(26)

Licenses and Permits. Each Mortgagor covenants in the Purchased Asset Documents
that it shall keep all material licenses, permits, franchises, certificates of
occupancy, consents and applicable governmental authorizations necessary for its
operation of the Mortgaged Property in full force and effect, and to Seller’s
knowledge based upon a letter from any government authorities or other
affirmative investigation of local law compliance consistent with the
investigation conducted by Seller for similar commercial, multifamily and
manufactured housing community mortgage loans intended for securitization, all
such material licenses, permits and applicable governmental authorizations are
in effect. The Purchased Asset Documents require the related Mortgagor to be
qualified to do business in the jurisdiction in which the related Mortgaged
Property is located and for the Mortgagor and the Mortgaged Property to be in
compliance in all material respects with all regulations, zoning and building
laws.

 

(27)

Recourse Obligations. The Purchased Asset Documents for each Purchased Asset
provide that such Purchased Asset is non-recourse to the related parties thereto
except that: (a) the related Mortgagor and a guarantor (which is a natural
person or persons, or an entity distinct from the Mortgagor (but may be
affiliated with Mortgagor) that has assets other than equity in the related
Mortgaged property that are not de minimis) shall be fully liable for actual
out-of-pocket losses, liabilities, costs and damages arising from certain acts
of the related Mortgagor and/or its affiliates specified in the related
Purchased Asset Documents, which acts generally include the following: (i) acts
of fraud or intentional material misrepresentation, (ii) misappropriation of
rents (following an event of default), insurance proceeds or condemnation
awards, (iii) intentional material physical waste of the Mortgaged Property,
(iv) intentional misconduct and (v) any breach of the environmental covenants
contained in the related Loan Documents, and (b) the Purchased Asset shall
become full recourse to the related Mortgagor and a guarantor (which is a
natural person or persons, or an entity distinct from the Mortgagor (but may be
affiliated with Mortgagor) that has assets other than equity in the related
Mortgaged property that are not de minimis), upon any of the following events:
(i) if any petition for bankruptcy, insolvency, dissolution or liquidation
pursuant to federal bankruptcy law, or nay similar federal or state law, shall
be filed, consented to, or acquiesced in by the Mortgagor, (ii) Mortgagor and/or
its principals shall have colluded with other creditors to cause an involuntary
bankruptcy filing with respect to the Mortgagor or (iii) upon the transfer of
either the Mortgaged Property or equity interests in Mortgagor made in violation
of the Purchased Asset Documents.

 

(28)

Mortgage Releases. The terms of the related Mortgage or related Purchased Asset
Documents do not provide for release of any material portion of the Mortgaged
Property from the lien of the Mortgage except (a) a partial release, accompanied
by principal repayment of not less than a specified percentage at least equal to
the lesser of (i) 115% of the related allocated loan amount of such portion of
the Mortgaged Property and (ii) the outstanding principal balance of the
Purchased Asset, (b) upon payment in full of such Purchased Asset, (c) releases
of out-parcels that are unimproved or other portions of the Mortgaged Property
which will not have a material adverse effect on the underwritten value of the
Mortgaged Property and which were not afforded any material value in the
appraisal obtained at the origination of the Purchased Asset and are not
necessary for physical access to the Mortgaged Property or compliance with
zoning requirements, or (d) as required pursuant to an order of condemnation.

 

Exhibit III-11

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

(29)

Financial Reporting and Rent Rolls. The Purchased Asset Documents for each
Purchased Asset require the Mortgagor to provide the owner or holder of the
Mortgage with quarterly and/or monthly (other than for single-tenant properties)
and annual operating statements, and quarterly and/or monthly (other than for
single-tenant properties) rent rolls for properties that have leases
contributing more than 5% of the in-place base rent and annual financial
statements, which annual financial statements with respect to each Purchased
Asset with more than one Mortgagor are in the form of an annual combined balance
sheet of the Mortgagor entities (and no other entities), together with the
related combined statements of operations, members’ capital and cash flows,
including a combining balance sheet and statement of income for the Mortgaged
Properties on a combined basis.

 

(30)

Acts of Terrorism Exclusion. With respect to each Purchased Asset over
$20 million (or the equivalent thereof based on the Purchase Date Dollar
Equivalent), the related special-form all-risk insurance policy and business
interruption policy (issued by an insurer meeting the Insurance Rating
Requirements) do not specifically exclude Acts of Terrorism, as defined in the
Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance
Program Reauthorization Act of 2007 (collectively, the “TRIA”) (or, with respect
to a Foreign Purchased Asset, the equivalent term under the equivalent
Requirements of Law under the relevant non-U.S. jurisdiction), from coverage, or
if such coverage is excluded, it is covered by a separate terrorism insurance
policy. With respect to each other Purchased Asset, the related special-form
all-risk insurance policy and business interruption policy (issued by an insurer
meeting the Insurance Rating Requirements) does not specifically exclude Acts of
Terrorism, as defined in the TRIA (or, with respect to a Foreign Purchased
Asset, the equivalent term under the equivalent Requirements of Law under the
relevant non-U.S. jurisdiction), from coverage, or if such coverage is excluded,
it is covered by a separate terrorism insurance policy. With respect to each
Purchased Asset, the related Purchased Asset Documents do not expressly waive or
prohibit the mortgagee from requiring coverage for Acts of Terrorism, as defined
in the TRIA (or, with respect to a Foreign Purchased Asset, the equivalent term
under the equivalent Requirements of Law under the relevant non-U.S.
jurisdiction), or damages related thereto except to the extent that any right to
require such coverage may be limited by commercial availability on commercially
reasonable terms; provided, however, that if the TRIA (or, with respect to a
Foreign Purchased Asset, the equivalent Requirements of Law under the relevant
non-U.S. jurisdiction) or a similar or subsequent statute is not in effect,
then, provided that terrorism insurance is commercially available, the Mortgagor
under each Purchased Asset is required to carry terrorism insurance, but in such
event the Mortgagor shall not be required to spend on terrorism insurance
coverage more than two times the amount of the insurance premium that is payable
in respect of the property and business interruption/rental loss insurance
required under the related Purchased Asset Documents (without giving effect to
the cost of terrorism and earthquake components of such casualty and business
interruption/rental loss insurance) at the time of the origination of the
Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the
borrower is required to purchase the maximum amount of terrorism insurance
available with funds equal to such amount.

 

Exhibit III-12

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

(31)

Due on Sale or Encumbrance. Subject to specific exceptions set forth below,
(i) in the case of a U.S. Purchased Asset, such Purchased Asset contains a “due
on sale” or other such provision for the acceleration of the payment of the
unpaid principal balance of such Purchased Asset, and (ii) in the case of a
Foreign Purchased Asset, such Foreign Purchased Asset contains a provision for
the acceleration of the payment of the unpaid principal balance of such Foreign
Purchased Asset, if, without the consent of the holder of the Mortgage (which
consent, in some cases, may not be unreasonably withheld) and/or complying with
the requirements of the related Purchased Asset Documents (which provide for
transfers without the consent of the lender which are customarily acceptable to
prudent commercial and multifamily mortgage lending institutions on the security
of property comparable to the related Mortgaged Property, including, without
limitation, transfers of worn-out or obsolete furnishings, fixtures, or
equipment promptly replaced with property of equivalent value and functionality
and transfers by leases entered into in accordance with the Purchased Asset
Documents), (a) the related Mortgaged Property, or any equity interest of
greater than 50% in the related Mortgagor, is directly or indirectly pledged,
transferred or sold, other than as related to (i) family and estate planning
transfers or transfers upon death or legal incapacity, (ii) transfers to certain
affiliates as defined in the related Purchased Asset Documents, (iii) transfers
that do not result in a change of Control of the related Mortgagor or transfers
of passive interests so long as the guarantor retains Control, (iv) transfers to
another holder of direct or indirect equity in the Mortgagor, a specific Person
designated in the related Purchased Asset Documents or a Person satisfying
specific criteria identified in the related Purchased Asset Documents, such as a
qualified equityholder, (v) transfers of stock or similar equity units in
publicly traded companies or (vi) a substitution or release of collateral within
the parameters of Paragraph (28) herein, or (vii) to the extent set forth in any
Exception Report, by reason of any mezzanine debt that existed at the
origination of the related Purchased Asset, or future permitted mezzanine debt
in each case as set forth in any Exception Report or (b) the related Mortgaged
Property is encumbered with a subordinate lien or security interest against the
related Mortgaged Property, other than any Permitted Encumbrances. The Mortgage
or other Purchased Asset Documents provide that to the extent any rating agency
fees are incurred in connection with the review of and consent to any transfer
or encumbrance, the Mortgagor is responsible for such payment along with all
other reasonable fees and expenses incurred by the Mortgagee relative to such
transfer or encumbrance. For purposes of the foregoing representation, “Control”
means the power to direct the management and policies of an entity, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise.

 

(32)

Single-Purpose Entity. Each Purchased Asset requires the borrower to be a
Single-Purpose Entity for at least as long as the Purchased Asset is
outstanding. Both the Purchased Asset Documents and the organizational documents
of the Mortgagor with respect to each Purchased Asset with a principal amount on
the Purchase Date of $5 million (or the Purchase Date Dollar Equivalent) or more
provide that the borrower is a Single-Purpose Entity, and each U.S. Purchased
Asset with a principal amount on the Purchase Date of $40 million or more has a
counsel’s opinion regarding non-consolidation of the Mortgagor. For purposes of
this Paragraph (32), a “Single-Purpose Entity” shall mean an entity, other than
an individual, whose organizational documents provide substantially to the
effect that

 

Exhibit III-13

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

  it was formed or organized solely for the purpose of owning and operating one
or more of the Mortgaged Properties securing the Purchased Assets and prohibit
it from engaging in any business unrelated to such Mortgaged Property or
Properties, and whose organizational documents further provide, or which entity
represented in the related Purchased Asset Documents, substantially to the
effect that it does not have any assets other than those related to its interest
in and operation of such Mortgaged Property or Properties, or any indebtedness
other than as permitted by the related Mortgage(s) or the other related
Purchased Asset Documents, that it has its own books and records and accounts
separate and apart from those of any other person, and that it holds itself out
as a legal entity, separate and apart from any other person or entity.

 

(33)

Ground Leases. For purposes of this Exhibit III, a “Ground Lease” shall mean a
lease creating a leasehold estate in real property where the fee owner as the
ground lessor conveys for a term or terms of years its entire interest in the
land and buildings and other improvements, if any, comprising the premises
demised under such lease to the ground lessee (who may, in certain
circumstances, own the building and improvements on the land), subject to the
reversionary interest of the ground lessor as fee owner and does not include
industrial development agency (IDA) or similar leases for purposes of conferring
a tax abatement or other benefit.

With respect to any Purchased Asset where the Purchased Asset is secured by a
leasehold estate under a Ground Lease in whole or in part, and the related
Mortgage does not also encumber the related lessor’s fee interest in such
Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or
other agreement received from the ground lessor in favor of Seller, its
successors and assigns, Seller represents and warrants that:

 

  (a)

The Ground Lease or a memorandum regarding such Ground Lease has been duly
recorded or registered (with respect to any Foreign Purchased Asset, to the
extent applicable and customary for similar financings of such type in the
relevant non-U.S. jurisdiction), as applicable, or submitted for recordation or
registration (as applicable) in a form that is acceptable for recording or
registration (as applicable) in the applicable jurisdiction. The Ground Lease or
an estoppel or other agreement received from the ground lessor permits the
interest of the lessee to be encumbered by the related Mortgage and does not
restrict the use of the related Mortgaged Property by such lessee, its
successors or assigns in a manner that would materially adversely affect the
security provided by the related Mortgage. No material change in the terms of
the Ground Lease had occurred since its recordation, except by any written
instrument which are included in the related Purchased Asset File;

 

  (b)

The lessor under such Ground Lease has agreed in a writing included in the
related Purchased Asset File (or in such Ground Lease) that the Ground Lease may
not be amended or modified, or canceled or terminated, without the prior written
consent of the lender (except termination or cancellation if (i) notice of a
default under the Ground Lease is provided to lender and (ii) such default is
curable by lender as provided in the Ground Lease but remains uncured beyond the
applicable cure period), and no such consent has been granted by Seller since
the origination of the Purchased Asset except as reflected in any written
instruments which are included in the related Purchased Asset File;

 

Exhibit III-14

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

  (c)

The Ground Lease has an original term (or an original term plus one or more
optional renewal terms, which, under all circumstances, may be exercised, and
will be enforceable, by either Mortgagor or the mortgagee) that extends not less
than 20 years beyond the stated maturity of the related Purchased Asset, or 10
years past the stated maturity if such Purchased Asset fully amortizes by the
stated maturity (or with respect to a Purchased Asset that accrues on an actual
360 basis, substantially amortizes);

 

  (d)

The Ground Lease either (i) is not subject to any liens or encumbrances superior
to, or of equal priority with, the Mortgage, except for the related fee interest
of the ground lessor and the Permitted Encumbrances, or (ii) is subject to a
subordination, non-disturbance and attornment agreement (or its equivalent, in
the case of Foreign Purchased Asset) to which the mortgagee on the lessor’s fee
interest in the Mortgaged Property is subject;

 

  (e)

The Ground Lease does not place commercially unreasonable restrictions on the
identity of the mortgagee and the Ground Lease is assignable to the holder of
the Purchased Asset and its successors and assigns without the consent of the
lessor thereunder, and in the event it is so assigned, it is further assignable
by the holder of the Purchased Asset and its successors and assigns without the
consent of the lessor, in each case, so long as the successor or assignee
satisfies the requirements of a “permitted leasehold mortgagee” or comparable
definition in the applicable Ground Lease;

 

  (f)

Seller has not received any written notice of material default (or in the case
of a Foreign Purchased Asset, forfeiture or other foreign equivalent) under or
notice of termination of such Ground Lease. To Seller’s knowledge, there is no
material default (or in the case of a Foreign Purchased Asset, forfeiture or
other foreign equivalent) under such Ground Lease and no condition that, but for
the passage of time or giving of notice, would result in a material default (or
in the case of a Foreign Purchased Asset, forfeiture or other foreign
equivalent) under the terms of such Ground Lease and to Seller’s knowledge, such
Ground Lease is in full force and effect;

 

  (g)

The Ground Lease or ancillary agreement between the lessor and the lessee
requires the lessor to give to the lender written notice of any default, and
provides that no notice of default or termination is effective against the
lender unless such notice is given to the lender;

 

  (h)

A lender is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under the
Ground Lease through legal proceedings) to cure any default under the Ground
Lease which is curable after the lender’s receipt of notice of any default
before the lessor may terminate the Ground Lease;

 

Exhibit III-15

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

  (i)

The Ground Lease does not impose any restrictions on subletting that would be
viewed as commercially unreasonable by a prudent commercial mortgage lender;

 

  (j)

Under the terms of the Ground Lease, an estoppel or other agreement received
from the ground lessor and the related Mortgage (taken together), any related
insurance proceeds or the portion of the condemnation award allocable to the
ground lessee’s interest (other than (i) de minimis amounts for minor casualties
or (ii) in respect of a total or substantially total loss or taking as addressed
in Paragraph (33)(k) below) will be applied either to the repair or to
restoration of all or part of the related Mortgaged Property with (so long as
such proceeds are in excess of the threshold amount specified in the related
Purchased Asset Documents) the lender or a trustee appointed by it or the ground
lessor having the right to hold and disburse such proceeds as repair or
restoration progresses, or to the payment of the outstanding principal balance
of the Purchased Asset, together with any accrued interest;

 

  (k)

In the case of a total or substantially total taking or loss, under the terms of
the Ground Lease, an estoppel or other agreement and the related Mortgage (taken
together), any related insurance proceeds, or portion of the condemnation award
allocable to ground lessee’s interest in respect of a total or substantially
total loss or taking of the related Mortgaged Property to the extent not applied
to restoration, will be applied first to the payment of the outstanding
principal balance of the Purchased Asset, together with any accrued interest;
and

 

  (l)

Provided that the lender cures any defaults which are susceptible to being
cured, the ground lessor has agreed to enter into a new lease with the lender
upon termination of the Ground Lease for any reason, including rejection of the
Ground Lease in a bankruptcy proceeding.

 

(34)

Servicing. The servicing and collection practices used by Seller with respect to
the Purchased Asset have been, in all material respects, legal and have met
customary industry standards for servicing of similar commercial loans.

 

(35)

Origination and Underwriting. The origination practices of Seller, or to
Seller’s knowledge, the related originator if Seller was not the originator,
with respect to each Purchased Asset have been, in all material respects, legal
and as of the date of its origination, such Purchased Asset and the origination
thereof complied in all material respects with, or was exempt from, all
requirements of applicable law (including federal, state or local laws and
regulations) relating to the origination of such Purchased Asset. At the time of
origination of such Purchased Asset, the origination, due diligence and
underwriting performed by or on behalf of Seller in connection with each
Purchased Asset complied in all material respects with the terms, conditions and
requirements of Seller’s origination, due diligence, underwriting procedures,
guidelines and standards for similar commercial and multifamily loans.

 

Exhibit III-16

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

(36)

Rent Rolls; Operating Histories. Seller has obtained a rent roll (each, a
“Certified Rent Roll”) (other than with respect to hospitality properties)
certified by the related Mortgagor or the related guarantor(s) as accurate and
complete in all material respects as of a date within 180 days of the date of
origination of the related Purchased Asset. Seller has obtained operating
histories (the “Certified Operating Histories”) with respect to each Mortgaged
Property certified by the related Mortgagor or the related guarantor(s) as
accurate and complete in all material respects as of a date within 180 days of
the date of origination of the related Purchased Asset. The Certified Operating
Histories collectively report on operations for a period equal to (a) at least a
continuous three-year period or (b) in the event the Mortgaged Property was
owned, operated or constructed by the Mortgagor or an affiliate for less than
three years then for such shorter period of time.

 

(37)

No Material Default; Payment Record. As of the Purchase Date, no Purchased Asset
has been more than 30 days delinquent, without giving effect to any grace or
cure period, in making required payments since origination, and as of the
Purchase Date, no Purchased Asset is delinquent (beyond any applicable grace or
cure period) in making required payments. As of the Purchase Date, to Seller’s
knowledge, there is (a) no, and since origination there has been no, material
default, breach, violation or event of acceleration existing under the related
Purchased Asset Documents, or (b) no event (other than payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration, which default, breach, violation or event of
acceleration, in the case of either clause (a) or (b), materially and adversely
affects the value of the Purchased Asset, or the value, use or operation of the
related Mortgaged Property, provided, however, that this Paragraph (37) does not
cover any default, breach, violation or event of acceleration that specifically
pertains to or arises out of an exception scheduled to any other representation
and warranty made by Seller in any Exception Report. No person other than the
holder of such Purchased Asset may declare any event of default under the
Purchased Asset or accelerate any indebtedness under the Purchased Asset
Documents.

 

(38)

Bankruptcy. As of the date of origination of the related Purchased Asset and to
Seller’s knowledge as of the Purchase Date, neither the Mortgaged Property nor
any portion thereof is the subject of, and no Mortgagor, guarantor or tenant
occupying a single-tenant property is a debtor in state or federal bankruptcy,
insolvency or similar proceeding.

 

(39)

Organization of Mortgagor. With respect to each Purchased Asset, in reliance on
certified copies of the organizational documents of the Mortgagor delivered by
the Mortgagor in connection with the origination of such Purchased Asset, the
Mortgagor is, in the case of any U.S. Purchased Asset, an entity organized under
the laws of a state of the United States of America, the District of Columbia or
the Commonwealth of Puerto Rico.

Seller has obtained an organizational chart or other description of each
Mortgagor which identifies all beneficial controlling owners of the Mortgagor
(i.e., managing members, general partners or similar controlling person for such
Mortgagor) (the “Controlling Owner”) and all owners that hold a 20% or greater
direct ownership share (the “Major

 

Exhibit III-17

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

  Sponsors”). Seller (a) required questionnaires to be completed by each
Controlling Owner and guarantor or performed other processes designed to elicit
information from each Controlling Owner and guarantor regarding such Controlling
Owner’s or guarantor’s prior history regarding any bankruptcies or other
insolvencies, any felony convictions, and (b) performed or caused to be
performed searches of the public records or services such as Lexis/Nexis, or a
similar service designed to elicit information about each Controlling Owner,
Major Sponsor and guarantor regarding such Controlling Owner’s, Major Sponsor’s
or guarantor’s prior history regarding any bankruptcies or other insolvencies,
any felony convictions, and provided, however, that manual public records
searches were limited to the last 10 years (clause (a) and (b) collectively, the
“Sponsor Diligence”). Based solely on the Sponsor Diligence, to the knowledge of
Seller, no Major Sponsor or guarantor (i) was in a state or federal bankruptcy
or insolvency proceeding (or, in the case of any Foreign Purchased Asset, an
insolvency proceeding under the laws of any non-U.S. jurisdiction), (ii) had a
prior record of having been in a state of federal bankruptcy or insolvency
(including insolvency under non-U.S. law), or (iii) had been convicted of a
felony.

 

(40)

Environmental Conditions. At origination, each Mortgagor represented and
warranted that to its knowledge no hazardous materials or any other substances
or materials which are included under or regulated by applicable environmental
laws are located on, or have been handled, manufactured, generated, stored,
processed, or disposed of on or released or discharged from the Mortgaged
Property, except for those substances commonly used in the operation and
maintenance of properties of kind and nature similar to those of the Mortgaged
Property in compliance with all applicable environmental laws and in a manner
that does not result in contamination of the Mortgaged Property or in a material
adverse effect on the value, use or operations of the Mortgaged Property, and
except for the use of such substances or materials that was remediated or abated
in all material respects.

A Phase I environmental site assessment (or update of a previous Phase I and or
Phase II site assessment) and, with respect to certain Purchased Assets, a Phase
II environmental site assessment (collectively, and with respect to Foreign
Purchased Assets, the equivalent thereof in the applicable jurisdiction, an
“ESA”) meeting ASTM requirements (or their equivalent in the applicable
jurisdiction with respect to Foreign Purchased Assets) was conducted by a
reputable environmental consultant in connection with such Purchased Asset
within 12 months prior to its origination date (or an update of a previous ESA
was prepared), and such ESA either (i) did not identify the existence of
recognized environmental conditions (as such term is defined in ASTM E1527-05 or
its successor or with respect to Foreign Purchased Assets the equivalent term in
the applicable jurisdiction, “Environmental Conditions”) at the related
Mortgaged Property or the need for further investigation with respect to any
Environmental Condition that was identified, or (ii) if the existence of an
Environmental Condition or need for further investigation was indicated in any
such ESA, then at least one of the following statements is true: (A) an amount
reasonably estimated by a reputable environmental consultant to be sufficient to
cover the estimated cost to cure any material noncompliance with applicable
environmental laws or the Environmental Condition has been escrowed by the
related Mortgagor and is held or controlled by the related lender; (B) if the
only Environmental Condition relates to the

 

Exhibit III-18

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

  presence of asbestos-containing materials, radon in indoor air, lead based
paint or lead in drinking water, and the only recommended action in the ESA is
the institution of such a plan, an operations or maintenance plan has been
required to be instituted by the related Mortgagor that can reasonably be
expected to mitigate the identified risk; (C) the Environmental Condition
identified in the related environmental report was remediated or abated in all
material respects prior to the date hereof, and, if and as appropriate, a no
further action or closure letter was obtained from the applicable governmental
regulatory authority (or the Environmental Condition affecting the related
Mortgaged Property was otherwise listed by such governmental authority as
“closed” or a reputable environmental consultant has concluded that no further
action is required); (D) a secured creditor environmental policy or a pollution
legal liability insurance policy that covers liability for the Environmental
Condition was obtained from an insurer rated no less than “A-“ (or the
equivalent) by Moody’s, Standard & Poor’s and/or Fitch, Inc. (and with respect
to any Foreign Purchased Asset, other equivalent rating from a comparable rating
company); (E) a party not related to the Mortgagor was identified as the
responsible party for such Environmental Condition and such responsible party
has financial resources reasonably estimated to be adequate to address the
situation; or (F) a party related to the Mortgagor having financial resources
reasonably estimated to be adequate to address the situation is required to take
action. To Seller’s knowledge, except as set forth in the ESA, there is no
Environmental Condition (as such term is defined in ASTM E1527-05 or its
successor or with respect to Foreign Purchased Assets the equivalent term in the
applicable jurisdiction) at the related Mortgaged Property as of the Purchase
Date.

In the case of each Purchased Asset with respect to which there is an
environmental insurance policy (the “Environmental Insurance Policy”), (i) such
Environmental Insurance has been issued by issuer set forth in the related
Exception Report (the “Policy Issuer”) and is effective as of the Purchase Date,
(ii) as of origination and to Seller’s knowledge as of the Purchase Date the
Environmental Insurance Policy is in full force and effect, there is no
deductible and Seller is a named insured under such policy, (iii) (A) a property
condition or engineering report was prepared, if the related Mortgaged Property
was constructed prior to 1985, with respect to asbestos-containing materials
(“ACM”) and, if the related Mortgaged Property is a multifamily property, with
respect to radon gas (“RG”) and lead-based paint (“LBP”), and (B) if such report
disclosed the existence of a material and adverse LBP, ACM or RG environmental
condition or circumstance affecting the related Mortgaged Property, the related
Mortgagor (1) was required to remediate the identified condition prior to
closing the Purchased Asset or provide additional security or establish with the
mortgagee a reserve in an amount deemed to be sufficient by Seller, for the
remediation of the problem, and/or (2) agreed in the Purchased Asset Documents
to establish an operations and maintenance plan after the closing of the
Purchased Asset that should reasonably be expected to mitigate the environmental
risk related to the identified LBP, ACM or RG condition, (iv) on the effective
date of the Environmental Insurance Policy, Seller as originator had no
knowledge of any material and adverse environmental condition or circumstance
affecting the Mortgaged Property (other than the existence of LBP, ACM or RG)
that was not disclosed to the Policy Issuer in one or more of the following:
(A) the application for insurance, (B) a Mortgagor questionnaire that was
provided to the Policy Issuer, or (C) an engineering or other report provided to
the Policy Issuer, and (v) the premium of any Environmental Insurance Policy has
been paid through the maturity of the policy’s term and the term of such policy
extends at least five years beyond the maturity of the Purchased Asset.

 

Exhibit III-19

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

(41)

Lease Estoppels. With respect to each U.S. Purchased Asset (and, in the case of
any Foreign Purchased Asset, to the extent applicable and customary for similar
financings of such type in the relevant non-U.S. jurisdiction, provided that, if
not customary, Seller has informed Buyer of such fact), with respect to each
Purchased Asset secured by retail, office or industrial properties, Seller
requested the related Mortgagor to obtain estoppels from each commercial tenant
with respect to the rent roll delivered as of the origination date. With respect
to each U.S. Purchased Asset (and, in the case of any Foreign Purchased Asset,
to the extent applicable and customary for similar financings of such type in
the relevant non-U.S. jurisdiction to obtain lease estoppels, provided that, if
not customary, Seller has informed Buyer of such fact), with respect to each
Purchased Asset predominantly secured by a retail, office or industrial property
leased to a single tenant, Seller reviewed such estoppel obtained from such
tenant no earlier than 90 days prior to the origination date of the related
Purchased Asset. With respect to each Purchased Asset predominantly secured by a
retail, office or industrial property leased to a single tenant, to Seller’s
knowledge, as of the Purchase Date (i) the related lease is in full force and
effect and (ii) there exists no default under such lease, either by the lessee
thereunder or by the lessor subject, in each case, to customary reservations of
tenant’s rights, such as with respect to CAM and pass-through audits and
verification of landlord’s compliance with co-tenancy provisions. With respect
to each U.S. Purchased Asset (and, in the case of any Foreign Purchased Asset,
to the extent applicable and customary for similar financings of such type in
the relevant non-U.S. jurisdiction to obtain lease estoppels, provided that, if
not customary, Seller has informed Buyer of such fact), with respect to each
Purchased Asset predominantly secured by a retail, office or industrial
property, Seller has received lease estoppels executed within 90 days of the
origination date of the related Purchased Asset that collectively account for at
least 65% of the in-place base rent for the Mortgaged Property that secure a
Purchased Asset that is represented as of the origination date. To Seller’s
knowledge, as of the Purchase Date (i) each lease represented on the rent roll
delivered as of the origination date is in full force and effect and (ii) there
exists no material default under any such related lease that represents 20% or
more of the in-place base rent for the Mortgaged Property either by the lessee
thereunder or by the related Mortgagor, subject, in each case, to customary
reservations of tenant’s rights, such as with respect to CAM and pass-through
audits and verification of landlord’s compliance with co-tenancy provisions.

 

(42)

Appraisal. The Purchased Asset File contains an appraisal of the related
Mortgaged Property with an appraisal date within six months of the Purchased
Asset origination date, and within 12 months of the Purchase Date. The appraisal
is signed by an appraiser who is a Member of the Appraisal Institute (or, in the
case of any Foreign Purchased Asset, the equivalent thereof in the applicable
jurisdiction in which the Mortgaged Property is located). Each appraiser has
represented in such appraisal or in a supplemental letter that the appraisal
satisfies the requirements of the “Uniform Standards of Professional Appraisal
Practice” as adopted by the Appraisal Standards Board of the Appraisal

 

Exhibit III-20

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

  Foundation (or, in the case of any Foreign Purchased Asset, RICS or its
equivalent the applicable jurisdiction in which the Mortgaged Property is
located) and has certified that such appraiser had no interest, direct or
indirect, in the Mortgaged Property or the borrower or in any loan made on the
security thereof, and its compensation is not affected by the approval or
disapproval of the Purchased Asset.

 

(43)

Purchased Asset Schedule. The information pertaining to each Purchased Asset
which is set forth in the Purchased Asset Schedule is true and correct in all
material respects as of the Purchase Date and contains all information required
by the Repurchase Agreement to be contained therein.

 

(44)

Cross-Collateralization. No Purchased Asset is cross-collateralized or
cross-defaulted with any other mortgage loan.

 

(45)

Advance of Funds by Seller. After origination, as of the Purchase Date, no
advance of funds has been made by Seller to the related Mortgagor other than in
accordance with the Purchased Asset Documents, and, to Seller’s knowledge, no
funds have been received from any person other than the related Mortgagor or an
affiliate for, or on account of, payments due on the Purchased Asset (other than
as contemplated by the Purchased Asset Documents, such as, by way of example and
not in limitation of the foregoing, amounts paid by the tenant(s) into a
lender-controlled lockbox if required or contemplated under the related lease or
Purchased Asset Documents). Except with respect to Future Advance Assets, Seller
nor any affiliate thereof has any obligation to make any capital contribution to
any Mortgagor under a Purchased Asset, other than contributions made on or prior
to the date hereof.

 

(46)

Compliance with Anti-Money Laundering Laws. Seller has complied in all material
respects with all applicable anti-money laundering laws and regulations (which
(A) with respect to U.S. Purchased Assets, includes without limitation the USA
Patriot Act of 2001, and (B) with respect to Foreign Purchased Assets, includes
equivalent and applicable laws and regulations under the relevant non-U.S.
jurisdiction) (collectively, the “Anti-Money Laundering Laws”). Seller has
established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of the Purchased Asset for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the said Mortgagor to
purchase the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor as required by the Anti-Money
Laundering Laws.

 

(47)

OFAC. No Purchased Asset is subject to nullification pursuant to Executive Order
13224, the regulations promulgated by OFAC (the “OFAC Regulations”) or the
regulations promulgated by any Foreign Sanctions Authority, or in violation of
Executive Order 13224, the OFAC Regulations or the regulations promulgated by
any Foreign Sanctions Authority, and no Mortgagor is subject to the provisions
of Executive Order 13224, the OFAC Regulations or the regulations promulgated by
any Foreign Sanctions Authority nor listed on any Foreign Sanctions List or as a
“blocked person” for purposes of the OFAC Regulations.

 

Exhibit III-21

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

(48)

Floating Interest Rates. Each Purchased Asset bears interest at a floating rate
of interest that is based on (x) in the case of any U.S. Purchased Asset and GBP
Purchased Asset, LIBOR, as applicable, plus a margin (which interest rate may be
subject to a minimum or “floor” rate) and (y) in the case of any EUR Purchased
Asset, EURIBOR, plus a margin (which interest rate may be subject to a minimum
or “floor” rate).

 

Exhibit III-22

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

EXHIBIT III-2

REPRESENTATIONS AND WARRANTIES

REGARDING EACH PURCHASED ASSET THAT IS A MEZZANINE LOAN

With respect to each Purchased Asset that is a Mezzanine Loan and the related
Mortgaged Property or Mortgaged Properties, on the related Purchase Date and at
all times while this Agreement and any Transaction contemplated hereunder is in
effect, Seller shall be deemed to make the following representations and
warranties to Buyer as of such date; provided, however, that, with respect to
any Purchased Asset, such representations and warranties shall be deemed to be
modified by any Exception Report delivered by Seller to Buyer prior to the
issuance of a Confirmation with respect thereto.

 

(1)

The representations and warranties set forth in Exhibit III-1 regarding Mortgage
Loans shall be deemed incorporated herein in respect of each underlying Mortgage
Loan and the related Mortgaged Property and Mortgagor related to the Purchased
Asset; provided that if such representation is duplicative of any specific
representation regarding the underlying Mortgage Loan, underlying Mortgaged
Property or the Mortgagor, the representation hereunder shall control.

 

(2)

The Mezzanine Loan is a mezzanine loan secured by a pledge of all of the Capital
Stock of a Mortgagor on the underlying Mortgage Loan that owns income producing
commercial real estate.

 

(3)

Whole Loan; Ownership of Purchased Assets. At the time of the sale, transfer and
assignment to Buyer, no Mezzanine Note was subject to any assignment (other than
assignments to Seller), participation or pledge, and Seller had good title to,
and was the sole owner of, each Purchased Asset free and clear of any and all
liens, charges, pledges, encumbrances, participations, any other ownership
interests on, in or to such Purchased Asset, but subject to any related
intercreditor agreement provided to Buyer prior to the Purchase Date. Seller has
full right and authority to sell, assign and transfer each Purchased Asset, and
the assignment to Buyer constitutes a legal, valid and binding assignment of
such Purchased Asset free and clear of any and all liens, pledges, charges or
security interests of any nature encumbering such Purchased Asset, but subject
to any related intercreditor agreement provided to Buyer prior to the Purchase
Date.

 

(4)

Loan Document Status. Each related Mezzanine Note, Mezzanine Pledge Agreement,
guaranty and other agreement executed by or on behalf of the Mezzanine Borrower,
guarantor or other obligor in connection with such Purchased Asset is the legal,
valid and binding obligation of the Mezzanine Borrower, guarantor or other
obligor (subject to any non-recourse provisions contained in any of the
foregoing agreements and any applicable state anti-deficiency, one-action or
market value limit deficiency legislation), as applicable, and is enforceable in
accordance with its terms, except (a) as such enforcement may be limited by
(i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding

 

Exhibit III-23

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

  in equity or at law) and (b) that certain provisions in such Purchased Asset
Documents (including, without limitation, provisions requiring the payment of
default interest, late fees or prepayment/yield maintenance or prepayment fees,
charges and/or premiums) are, or may be, further limited or rendered
unenforceable by or under applicable law, but (subject to the limitations set
forth in clause (a) above) such limitations or unenforceability will not render
such Purchased Asset Documents invalid as a whole or materially interfere with
the lender’s realization of the principal benefits and/or security provided
thereby (clauses (a) and (b) collectively, the “Standard Qualifications”).
Except as set forth in the immediately preceding sentences, there is no valid
offset, defense, counterclaim or right of rescission available to Mezzanine
Borrower with respect to any of the related Mezzanine Notes or other Purchased
Asset Documents, including, without limitation, any such valid offset, defense,
counterclaim or right based on intentional fraud by Seller in connection with
the origination of the Purchased Asset, that would deny the lender the principal
benefits intended to be provided by the Mezzanine Note, or other Purchased Asset
Documents.

 

(5)

Purchased Asset Document Provisions. The Purchased Asset Documents for each
Purchased Asset contain provisions that render the rights and remedies of the
holder thereof adequate for the practical realization against the Capital Stock
of the principal benefits of the security intended to be provided thereby,
including realization by foreclosure subject to the limitations set forth in the
Standard Qualifications.

 

(6)

Hospitality Provisions. The Purchased Asset Documents for each Purchased Asset
for which the underlying Mortgage Loan is secured by a hospitality property
operated pursuant to a franchise agreement includes an executed comfort letter
or similar agreement signed by the Mortgagor and franchisor of such property
enforceable against such franchisor, either directly or as an assignee of the
originator.

 

(7)

Waivers and Modifications. Since origination and except by written instruments
set forth in the related Purchased Asset File or as otherwise provided in the
related Purchased Asset Documents (a) the material terms of such Mezzanine Note,
guaranty, Mezzanine Pledge Agreement and related Purchased Asset Documents have
not been waived, impaired, modified, altered, satisfied, canceled, subordinated
or rescinded in any respect that could have a material adverse effect on the
Purchased Asset, (b) no related Capital Stock or any portion thereof has been
released from the lien of the related Mezzanine Pledge Agreement in any manner
which materially interferes with the security intended to be provided by such
Mezzanine Pledge Agreement, and (c) neither Mezzanine Borrower nor the related
guarantor nor the related participating Person has been released from its
material obligations under the Purchased Asset Documents. With respect to each
Purchased Asset, except as contained in a written document included in the
Purchased Asset File, there have been no modifications, amendments or waivers,
that could be reasonably expected to have a material adverse effect on such
Purchased Asset consented to by Seller.

 

(8)

Lien. Any security agreement, Mezzanine Pledge Agreement or equivalent document
related to and delivered in connection with the Purchased Asset establishes and
creates a valid and enforceable lien on property described therein, except as
such enforcement may be limited by Standard Qualifications.

 

Exhibit III-24

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

(9)

Permitted Liens; Title Insurance. Seller’s security interest in the collateral
for the Mezzanine Loan is covered by a Title Policy in the original principal
amount of such Purchased Asset after all advances of principal (including any
advances held in escrow or reserves), that insures for the benefit of the owner
of the Mezzanine Loan the first priority lien on the collateral for the
Mezzanine Loan, which lien is subject only to the liens created by the Purchased
Asset Documents. Such Title Policy (or, if it has yet to be issued, the coverage
to be provided thereby) is in full force and effect, all premiums thereon have
been paid and no claims have been made by Seller thereunder and no claims have
been paid thereunder. Neither Seller, nor to Seller’s knowledge, any other
holder of the Purchased Asset, has done, by act or omission, anything that would
materially impair the coverage under such Title Policy.

 

(10)

UCC Filings. Seller has filed or caused to be filed and (or, if not filed, have
been submitted in proper form for filing), UCC-1 financing statements in the
appropriate public filing offices necessary at the time of the origination of
the Purchased Asset to perfect a valid security interest in all items of
personal property owned by Mezzanine Borrower, to the extent perfection may be
effected pursuant to applicable law by filing. Subject to the Standard
Qualifications, each related Mezzanine Pledge Agreement (or equivalent document)
creates a valid and enforceable lien and security interest on the items of
personalty described above. No representation is made as to the perfection of
any security interest in personal property to the extent that possession or
control of such items or actions other than the filing of UCC-1 financing
statements are required in order to effect such perfection. Each UCC-1 financing
statement, if any, filed with respect to personal property owned by such
Mezzanine Borrower and each UCC-2 or UCC-3 assignment, if any, of such financing
statement to Seller was in suitable form for filing in the filing office in
which such financing statement was filed.

 

(11)

Actions Concerning Purchased Asset. As of the date of origination and to
Seller’s knowledge as of the Purchase Date, there was no pending, filed or
threatened action, suit or proceeding, arbitration or governmental investigation
involving any Mezzanine Borrower, guarantor or Mortgagor, an adverse outcome of
which would reasonably be expected to materially and adversely affect (a) such
Mezzanine Borrower’s ownership of the Capital Stock in Mortgagor, (b) the
validity or enforceability of the Purchased Asset Documents, (c) such Mezzanine
Borrower’s or Mortgagor’s ability to perform under the related Purchased Asset
Documents, (d) such guarantor’s ability to perform under the related guaranty,
(e) the principal benefit of the security intended to be provided by the
Purchased Asset Documents or (f) the current ability of the Mortgaged Property
to generate net cash flow sufficient to service such Purchased Asset.

 

(12)

Escrow Deposits. As of the Purchase Date, all escrow deposits and payments
required to be escrowed with lender pursuant to the Purchased Asset Documents
are in the possession, or under the control, of Seller or its servicer, and
there are no deficiencies (subject to any applicable grace or cure periods) in
connection therewith, and all such escrows and deposits (or the right thereto)
that are required to be escrowed with lender under the related Purchased Asset
Documents are being conveyed by Seller to Buyer or its servicer. Any and all
requirements under the Purchased Asset Documents as to disbursements of any

 

Exhibit III-25

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

  funds escrowed, which requirements were to have been complied with on or
before the Purchase Date, have been complied with in all material respects or
the funds so escrowed have not been released. No other escrow amounts have been
released except in accordance with the terms and conditions of the Purchased
Asset Documents.

 

(13)

No Holdbacks. The principal balance of the Purchased Asset set forth on the
Purchased Asset Schedule has been fully disbursed as of the Purchase Date and,
except for Future Funding Assets, there is no requirement for future advances
thereunder (except in those cases where the full amount of the Purchased Asset
has been disbursed but a portion thereof is being held in escrow or reserve
accounts pending the satisfaction of certain conditions relating to leasing,
repairs or other matters with respect to the related Mortgaged Property, the
Mortgagor or other considerations determined by Seller to merit such holdbacks),
and any requirements or conditions to disbursements of any loan proceeds held in
escrow have been satisfied with respect to any disbursements of any such escrow
fund made on or prior to the date hereof.

 

(14)

Insurance. The Purchased Asset Documents require insurance proceeds in respect
of a property loss to be applied either (a) to the repair or restoration of all
or part of the underlying Mortgaged Property, with respect to all property
losses in excess of 5% of the then outstanding principal amount of the related
underlying Mortgage Loan, the mortgage lender (or a trustee appointed by it)
having the right to hold and disburse such proceeds as the repair or restoration
progresses, or (b) to the reduction of the outstanding principal balance of the
underlying Mortgage Loan together with any accrued interest thereon, with any
excess applied to the existing outstanding principal balance of the Mezzanine
Loan.

 

All

premiums on all insurance policies referred to in this Paragraph (14) required
to be paid as of the Purchase Date have been paid, and such insurance policies
name the lender under the Purchased Asset and its successors and assigns as a
loss payee under a mortgagee endorsement clause or, in the case of the general
liability insurance policy, as named or additional insured. Such insurance
policies will inure to the benefit of Buyer. Each related Purchased Asset
obligates the underlying Mortgagor to maintain all such insurance and, at such
Mortgagor’s failure to do so, authorizes the lender to maintain such insurance
at the Mortgagor’s cost and expense and to charge such Mortgagor for related
premiums and other related expenses, including reasonable attorney’s fees. All
such insurance policies (other than commercial liability policies) require at
least 10 days’ prior notice to the lender of termination or cancellation arising
because of nonpayment of a premium and at least 30 days prior notice to the
lender of termination or cancellation (or such lesser period, not less than 10
days, as may be required by applicable law) arising for any reason other than
non-payment of a premium and no such notice has been received by Seller.

 

(15)

No Contingent Interest or Equity Participation. No Purchased Asset has a shared
appreciation feature, any other contingent interest feature or a negative
amortization feature (except that a Purchased Asset may provide for the accrual
of the portion of interest in excess of the rate in effect prior to the
anticipated Repayment Date) or an equity participation by Seller.

 

Exhibit III-26

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

(16)

Compliance with Usury Laws. The interest rate (exclusive of any default
interest, late charges, yield maintenance charges, exit fees, or prepayment
premiums) of such Purchased Asset complied as of the date of origination with,
or was exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury.

 

(17)

Authorized to do Business. To Seller’s knowledge, and to the extent required
under applicable law, as of the Purchase Date and as of each date that such
entity held the Mezzanine Note, each holder of the Mezzanine Note was authorized
to transact and do business in the jurisdiction in which the underlying
Mortgaged Property is located, or the failure to be so authorized does not
materially and adversely affect the enforceability of such Purchased Asset by
Buyer.

 

(18)

Compliance With Laws. The Mezzanine Loan complies in all material respects with,
or is exempt from, all requirements of federal, state or local law relating to
such Mezzanine Loan. The terms of the Purchased Asset Documents require
Mezzanine Borrower and the underlying Mortgagor to comply in all material
respects with all applicable governmental regulations, zoning and building laws.

 

(19)

Licenses and Permits. The Purchased Asset Documents require that Mezzanine
Borrower shall cause each underlying Mortgagor to keep all material licenses,
permits, franchises, certificates of occupancy, consents and applicable
governmental authorizations necessary for its operation of the underlying
Mortgaged Property in full force and effect, and to Seller’s knowledge based
upon a letter from any government authorities or other affirmative investigation
of local law compliance consistent with the investigation conducted by Seller
for similar commercial, multifamily and manufactured housing community mortgage
loans intended for securitization, all such material licenses, permits and
applicable governmental authorizations are in effect. The Purchased Asset
Documents require the related underlying Mortgagor to be qualified to do
business in the jurisdiction in which the related underlying Mortgaged Property
is located and for Mezzanine Borrower, the underlying Mortgagor and the
Mortgaged Property to be in compliance in all material respects with all
regulations, zoning and building laws.

 

(20)

Recourse Obligations. The Purchased Asset Documents for each Purchased Asset
provide that such Purchased Asset is non-recourse to the related parties thereto
except that: (a) Mezzanine Borrower and a guarantor (which is a natural person
or persons, or an entity distinct from Mezzanine Borrower (but may be affiliated
with Mezzanine Borrower) that has assets other than equity in the underlying
Mortgagor that are not de minimis) shall be fully liable for losses,
liabilities, costs and damages arising from certain acts of Mezzanine Borrower
and/or its principals specified in the related Purchased Asset Documents, which
acts generally include the following: (i) acts of fraud or intentional material
misrepresentation, (ii) misappropriation of rents (following an event of
default), insurance proceeds or condemnation awards, (iii) intentional material
physical waste of the underlying Mortgaged Property, (iv) intentional misconduct
and (v) any breach of the environmental covenants contained in the related
Purchased Asset Documents, and (b) the Purchased Asset shall become full
recourse to Mezzanine Borrower and a guarantor (which is a natural person or
persons, or an entity distinct from Mezzanine Borrower (but may be

 

Exhibit III-27

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

  affiliated with Mezzanine Borrower) that has assets other than equity in the
underlying Mortgagor that are not de minimis), upon any of the following events:
(i) if any petition for bankruptcy, insolvency, dissolution or liquidation
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed or consented to by Mezzanine Borrower, (ii) Mezzanine Borrower and/or
its principals shall have colluded with other creditors to cause an involuntary
bankruptcy filing with respect to Mezzanine Borrower or (iii) upon the transfer
of the equity interests in the underlying Mortgagor made in violation of the
Purchased Asset Documents.

 

(21)

Collateral Release. The terms of the related Mezzanine Pledge Agreement or
related Purchased Asset Documents do not provide for release of any material
portion of the collateral securing the Mezzanine Loan from the lien of the
Mezzanine Pledge Agreement except (a) a partial release, accompanied by
principal repayment of not less than a specified percentage at least equal to
the lesser of (i) 110% of the related allocated loan amount of such portion of
the collateral securing the Mezzanine Loan and (ii) the outstanding principal
balance of the Purchased Asset, or (b) upon payment in full of such Purchased
Asset.

 

(22)

Financial Reporting and Rent Rolls. The Purchased Asset Documents for each
Purchased Asset require Mezzanine Borrower to provide the mezzanine lender with
quarterly (other than for single-tenant properties) and annual operating
statements, and quarterly (other than for single-tenant properties) rent rolls
for properties that have leases contributing more than 5% of the in-place base
rent and annual financial statements, which annual financial statements with
respect to each Purchased Asset with more than one underlying Mortgagor or more
than one Mezzanine Borrower are in the form of an annual combined balance sheet,
as applicable, of the Mezzanine Borrower entities and the underlying Mortgagor
entities (and no other entities), together with the related combined statements
of operations, members’ capital and cash flows, including a combining balance
sheet and statement of income for the underlying Mortgaged Properties on a
combined basis.

 

(23)

Acts of Terrorism Exclusion. With respect to each Purchased Asset over
$20 million, the related special-form all-risk insurance policy and business
interruption policy (issued by an insurer meeting the Insurance Rating
Requirements) do not specifically exclude Acts of Terrorism, as defined in the
Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance
Program Reauthorization Act of 2007 (collectively, the “TRIA”), from coverage,
or if such coverage is excluded, it is covered by a separate terrorism insurance
policy. With respect to each other Purchased Asset, the related special-form
all-risk insurance policy and business interruption policy (issued by an insurer
meeting the Insurance Rating Requirements) does not specifically exclude Acts of
Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded,
it is covered by a separate terrorism insurance policy. With respect to each
Purchased Asset, the related Purchased Asset Documents do not expressly waive or
prohibit the mezzanine lender from requiring coverage for Acts of Terrorism, as
defined in the TRIA, or damages related thereto except to the extent that any
right to require such coverage may be limited by commercial availability on
commercially reasonable terms; provided, however, that if the TRIA or a similar
or subsequent statute is not in effect, then, provided that terrorism insurance
is

 

Exhibit III-28

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

  commercially available, the underlying Mortgagor under each Purchased Asset is
required to carry terrorism insurance, but in such event the underlying
Mortgagor shall not be required to spend on terrorism insurance coverage more
than two times the amount of the insurance premium that is payable in respect of
the property and business interruption/rental loss insurance required under the
related Purchased Asset Documents (without giving effect to the cost of
terrorism and earthquake components of such casualty and business
interruption/rental loss insurance) at the time of the origination of the
Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the
borrower is required to purchase the maximum amount of terrorism insurance
available with funds equal to such amount.

 

(24)

Due on Sale or Encumbrance. Subject to specific exceptions set forth below, each
Purchased Asset contains a “due on sale” or other such provision for the
acceleration of the payment of the unpaid principal balance of such Purchased
Asset if, without the consent of the mezzanine lender (which consent, in some
cases, may not be unreasonably withheld) and/or complying with the requirements
of the related Purchased Asset Documents (which provide for transfers without
the consent of the lender which are customarily acceptable to prudent commercial
and multifamily mortgage lending institutions on the security of property
comparable to the collateral for the Mezzanine Loan, including, without
limitation, transfers of worn-out or obsolete furnishings, fixtures, or
equipment promptly replaced with property of equivalent value and functionality
and transfers by leases entered into in accordance with the Purchased Asset
Documents), (a) the related underlying Mortgaged Property or equity interest of
greater than 50% in the related underlying Mortgagor, is directly or indirectly
pledged, transferred or sold, other than as related to (i) family and estate
planning transfers or transfers upon death or legal incapacity, (ii) transfers
to certain affiliates as defined in the related Purchased Asset Documents,
(iii) transfers that do not result in a change of Control of Mezzanine Borrower
or the related underlying Mortgagor or transfers of passive interests so long as
the guarantor retains Control, (iv) transfers to another holder of direct or
indirect equity in the underlying Mortgagor, a specific Person designated in the
related Purchased Asset Documents or a Person satisfying specific criteria
identified in the related Purchased Asset Documents, such as a qualified
equityholder, (v) transfers of stock or similar equity units in publicly traded
companies, (vi) a substitution or release of collateral within the parameters of
Paragraph (21) herein, or (vii) to the extent set forth in any Exception Report,
by reason of any mezzanine debt that existed at the origination of the related
Purchased Asset, or future permitted mezzanine debt in each case as set forth in
any Exception Report or (b) the related underlying Mortgaged Property is
encumbered with a subordinate lien or security interest against the related
underlying Mortgaged Property, other than any Permitted Encumbrances, or the
collateral for the Mezzanine Loan is encumbered with a subordinate lien or
security interest against such collateral, other than any liens granted pursuant
to the Purchased Asset Documents. The Purchased Asset Documents provide that to
the extent any rating agency fees are incurred in connection with the review of
and consent to any transfer or encumbrance, the Mezzanine Borrower is
responsible for such payment along with all other reasonable fees and expenses
incurred by the mezzanine lender relative to such transfer or encumbrance. For
purposes of the foregoing representation, “Control” means the power to direct
the management and policies of an entity, directly or indirectly, whether
through the ownership of voting securities or other beneficial interests, by
contract or otherwise.

 

Exhibit III-29

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

(25)

Single-Purpose Entity. Each Purchased Asset requires Mezzanine Borrower to be a
Single-Purpose Entity for at least as long as the Purchased Asset is
outstanding. Both the Purchased Asset Documents and the organizational documents
of Mezzanine Borrower with respect to each Purchased Asset with a principal
amount on the Purchase Date of $5 million or more provide that Mezzanine
Borrower is a Single-Purpose Entity, and each Purchased Asset with a principal
amount on the Purchase Date of $40 million or more has a counsel’s opinion
regarding non-consolidation of Mezzanine Borrower. For purposes of this
Paragraph (25), a “Single-Purpose Entity” shall mean an entity, other than an
individual, whose organizational documents provide substantially to the effect
that it was formed or organized solely for the purpose of owning the Capital
Stock of the underlying Mortgagor securing the Purchased Assets and prohibit it
from engaging in any business unrelated to owning such Capital Stock, and whose
organizational documents further provide, or which entity represented in the
related Purchased Asset Documents, substantially to the effect that it does not
have any assets other than those related to its interest in the underlying
Mortgagor, or any indebtedness other than as permitted by the related Mezzanine
Pledge Agreement or the other related Purchased Asset Documents, that it has its
own books and records and accounts separate and apart from those of any other
person, and that it holds itself out as a legal entity, separate and apart from
any other person or entity.

 

(26)

Ground Leases. With respect to any Purchased Asset where the underlying Mortgage
Loan is secured by a leasehold estate under a Ground Lease in whole or in part,
and the related underlying Mortgage does not also encumber the related lessor’s
fee interest in such Mortgaged Property, based upon the terms of the Ground
Lease and any estoppel or other agreement received from the ground lessor in
favor of Seller, its successors and assigns, Seller represents and warrants
that:

 

  (a)

(i) the Ground Lease or a memorandum regarding such Ground Lease has been duly
recorded or submitted for recordation in a form that is acceptable for recording
in the applicable jurisdiction; (ii) the Ground Lease or an estoppel or other
agreement received from the ground lessor permits the interest of the lessee to
be encumbered by the related Mortgage and does not restrict the use of the
related Mortgaged Property by such lessee, its successors or assigns in a manner
that would materially adversely affect the security provided by the related
Mortgage and (iii) no material change in the terms of the Ground Lease had
occurred since its recordation, except by any written instrument which are
included in the related Purchased Asset File;

 

  (b)

the lessor under such Ground Lease has agreed in a writing included in the
related Purchased Asset File (or in such Ground Lease) that the Ground Lease may
not be amended or modified in any material respect, or canceled or terminated,
without the prior written consent of the mezzanine lender (except termination or
cancellation if (i) notice of a default under the Ground Lease is provided to
mezzanine lender and (ii) such default is curable by mezzanine lender as
provided in the Ground Lease but remains uncured beyond the applicable cure
period), and no such consent has been granted by Seller since the origination of
the Purchased Asset except as reflected in any written instruments which are
included in the related Purchased Asset File;

 

Exhibit III-30

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

  (c)

the Ground Lease has an original term (or an original term plus one or more
optional renewal terms, which, under all circumstances, may be exercised, and
will be enforceable, by either the underlying Mortgagor or the mortgagee) that
extends not less than 20 years beyond the stated maturity of the related
Purchased Asset, or 10 years past the stated maturity if such Purchased Asset
fully amortizes by the stated maturity (or with respect to a Purchased Asset
that accrues on an actual 360 basis, substantially amortizes);

 

  (d)

the Ground Lease either (i) is not subject to any liens or encumbrances superior
to, or of equal priority with, the underlying Mortgage, except for the related
fee interest of the ground lessor and the Permitted Encumbrances, or (ii) is
subject to a subordination, non-disturbance and attornment agreement to which
the mortgagee on the lessor’s fee interest in the underlying Mortgaged Property
is subject;

 

  (e)

the Ground Lease does not place commercially unreasonable restrictions on the
identity of the mortgagee and the Ground Lease is assignable to the holder of
the Purchased Asset and its successors and assigns without the consent of the
lessor thereunder, and in the event it is so assigned, it is further assignable
by the holder of the Purchased Asset and its successors and assigns without the
consent of the lessor;

 

  (f)

Seller has not received any written notice of material default under or notice
of termination of such Ground Lease and, to Seller’s knowledge, there is no
material default under such Ground Lease and no condition that, but for the
passage of time or giving of notice, would result in a material default under
the terms of such Ground Lease and to Seller’s knowledge, such Ground Lease is
in full force and effect;

 

  (g)

the Ground Lease or ancillary agreement between the lessor and the lessee
requires the lessor to give to the lender written notice of any default, and
provides that no notice of default or termination is effective against the
lender unless such notice is given to the lender;

 

  (h)

a lender is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under the
Ground Lease through legal proceedings) to cure any default under the Ground
Lease which is curable after the lender’s receipt of notice of any default
before the lessor may terminate the Ground Lease;

 

  (i)

the Ground Lease does not impose any restrictions on subletting that would be
viewed as commercially unreasonable by a prudent commercial mortgage lender;

 

Exhibit III-31

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

  (j)

under the terms of the Ground Lease, an estoppel or other agreement received
from the ground lessor and the related underlying Mortgage (taken together), any
related insurance proceeds or the portion of the condemnation award allocable to
the ground lessee’s interest (other than (i) de minimis amounts for minor
casualties or (ii) in respect of a total or substantially total loss or taking
as addressed in Paragraph (26)(k) below) will be applied either to the repair or
to restoration of all or part of the related underlying Mortgaged Property with
(so long as such proceeds are in excess of the threshold amount specified in the
related Purchased Asset Documents) the lender or a trustee appointed by it or
the ground lessor having the right to hold and disburse such proceeds as repair
or restoration progresses, or, to the payment of the outstanding principal
balance of the underlying Mortgage Loan, together with any accrued interest,
with excess, if any, applied to the Mezzanine Loan;

 

  (k)

in the case of a total or substantially total taking or loss, under the terms of
the Ground Lease, an estoppel or other agreement and the related underlying
Mortgage (taken together), any related insurance proceeds, or portion of the
condemnation award allocable to ground lessee’s interest in respect of a total
or substantially total loss or taking of the related underlying Mortgaged
Property to the extent not applied to restoration, will be applied first, pro
rata, to the payment of the outstanding principal balance of the underlying
Mortgage Loan and the Purchased Asset, together with any accrued interest; and

 

  (l)

provided that the lender cures any defaults which are susceptible to being
cured, the ground lessor has agreed to enter into a new lease with the lender
upon termination of the Ground Lease for any reason, including rejection of the
Ground Lease in a bankruptcy proceeding.

If applicable, the ground lessor consented to and acknowledged that (i) the
Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine
Loan and related change in ownership of the ground lessee will not require the
consent of the ground lessor or constitute a default under the ground lease,
(iii) copies of default notices would be sent to mezzanine lender (or, in the
alternative, mortgage lender has agreed to send such notice to mezzanine lender
pursuant to the related intercreditor agreement) and (iv) it would accept cure
from mezzanine lender on behalf of the ground lessee (or, in the alternative,
mortgage lender has agreed to tender such cure on behalf of mezzanine lender
pursuant to the related intercreditor agreement).

 

(27)

Servicing. The servicing and collection practices used by Seller with respect to
the Purchased Asset have been, in all material respects, legal and have met
customary industry standards for servicing of similar commercial loans.

 

(28)

Origination and Underwriting. The origination practices of Seller (or to
Seller’s knowledge, the related originator if Seller was not the originator)
with respect to each Purchased Asset have been, in all material respects, legal
and as of the date of its origination, such Purchased Asset and the origination
thereof complied in all material respects with, or was exempt from, all
requirements of federal, state or local laws and regulations relating to the
origination

 

Exhibit III-32

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

  of such Purchased Asset. At the time of origination of such Purchased Asset,
the origination, due diligence and underwriting performed by or on behalf of
Seller in connection with each Purchased Asset complied in all material respects
with the terms, conditions and requirements of Seller’s origination, due
diligence, underwriting procedures, guidelines and standards for similar
commercial and multifamily loans.

 

(29)

Rent Rolls; Operating Histories. Seller has obtained a rent roll (other than
with respect to hospitality properties) certified by the related Mezzanine
Borrower or the related guarantor(s) as accurate and complete in all material
respects as of a date within 180 days of the date of origination of the related
Purchased Asset. Seller has obtained operating histories (the “Certified
Operating Histories”) with respect to each underlying Mortgaged Property
certified by the related Mezzanine Borrower or the related guarantor(s) as
accurate and complete in all material respects as of a date within 180 days of
the date of origination of the related Purchased Asset. The Certified Operating
Histories collectively report on operations for a period equal to (a) at least a
continuous three-year period or (b) in the event the underlying Mortgaged
Property was owned, operated or constructed by the underlying Mortgagor or an
affiliate for less than three years then for such shorter period of time.

 

(30)

No Material Default; Payment Record. As of the Purchase Date, no Purchased Asset
has been more than 30 days delinquent, without giving effect to any grace or
cure period, in making required payments since origination, and as of the
Purchased Date, no Purchased Asset is delinquent (beyond any applicable grace or
cure period) in making required payments. As of the Purchase Date, to Seller’s
knowledge, there is (a) no, and since origination there has been no, material
default, breach, violation or event of acceleration existing under the related
Purchased Asset Documents, or (b) no event (other than payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration, which default, breach, violation or event of
acceleration, in the case of either clause (a) or (b), materially and adversely
affects the value of the Purchased Asset or the collateral for the Mezzanine
Loan, or the value, use or operation of the underlying Mortgaged Property,
provided, however, that this Paragraph (30) does not cover any default, breach,
violation or event of acceleration that specifically pertains to or arises out
of an exception scheduled to any other representation and warranty made by
Seller in any Exception Report. No person other than the holder of such
Purchased Asset may declare any event of default under the Purchased Asset or
accelerate any indebtedness under the Purchased Asset Documents.

 

(31)

Bankruptcy. As of the date of origination of the related Purchased Asset and to
Seller’s knowledge as of the Purchase Date, no Mezzanine Borrower, guarantor or
issuer is a debtor in state or federal bankruptcy, insolvency or similar
proceeding.

 

(32)

Organization of Mezzanine Borrower. With respect to each Purchased Asset, in
reliance on certified copies of the organizational documents of Mezzanine
Borrower delivered by Mezzanine Borrower in connection with the origination of
such Purchased Asset, Mezzanine Borrower is an entity organized under the laws
of a state of the United States of America, the District of Columbia or the
Commonwealth of Puerto Rico.

 

Exhibit III-33

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

Seller has obtained an organizational chart or other description of each
Mezzanine Borrower which identifies all beneficial controlling owners of the
Mezzanine Borrower (i.e., managing members, general partners or similar
controlling person for such Mezzanine Borrower) (the “Controlling Owner”) and
all owners that hold a 20% or greater direct ownership share (the “Major
Sponsors”). Seller (a) required questionnaires to be completed by each
Controlling Owner and guarantor or performed other processes designed to elicit
information from each Controlling Owner and guarantor regarding such Controlling
Owner’s or guarantor’s prior history regarding any bankruptcies or other
insolvencies, any felony convictions, and (b) performed or caused to be
performed searches of the public records or services such as Lexis/Nexis, or a
similar service designed to elicit information about each Controlling Owner,
Major Sponsor and guarantor regarding such Controlling Owner’s, Major Sponsor’s
or guarantor’s prior history regarding any bankruptcies or other insolvencies,
any felony convictions, and provided, however, that manual public records
searches were limited to the last 10 years (clauses (a) and (b) collectively,
the “Sponsor Diligence”). Based solely on the Sponsor Diligence, to the
knowledge of Seller, no Major Sponsor or guarantor (i) was in a state or federal
bankruptcy or insolvency proceeding, (ii) had a prior record of having been in a
state of federal bankruptcy or insolvency, or (iii) had been convicted of a
felony.

 

(33)

Environmental Conditions. In the case of each Purchased Asset with respect to
which there is an environmental insurance policy (the “Environmental Insurance
Policy”), (i) such Environmental Insurance has been issued by the issuer set
forth in the related Exception Report (the “Policy Issuer”) and is effective as
of the Purchase Date, (ii) as of origination and to Seller’s knowledge as of the
Purchase Date the Environmental Insurance Policy is in full force and effect,
there is no deductible and Seller is a named insured under such policy,
(iii) (A) a property condition or engineering report was prepared, if the
related underlying Mortgaged Property was constructed prior to 1985, with
respect to asbestos-containing materials (“ACM”) and, if the related underlying
Mortgaged Property is a multifamily property, with respect to radon gas (“RG”)
and lead-based paint (“LBP”), and (B) if such report disclosed the existence of
a material and adverse LBP, ACM or RG environmental condition or circumstance
affecting the related underlying Mortgaged Property, the related underlying
Mortgagor (1) was required to remediate the identified condition prior to
closing the Purchased Asset or provide additional security or establish with the
mortgagee a reserve in an amount deemed to be sufficient by Seller, for the
remediation of the problem, and/or (2) agreed in the Purchased Asset Documents
to establish an operations and maintenance plan after the closing of the
Purchased Asset that should reasonably be expected to mitigate the environmental
risk related to the identified LBP, ACM or RG condition, (iv) on the effective
date of the Environmental Insurance Policy, Seller as originator had no
knowledge of any material and adverse environmental condition or circumstance
affecting the underlying Mortgaged Property (other than the existence of LBP,
ACM or RG) that was not disclosed to the Policy Issuer in one or more of the
following: (A) the application for insurance, (B) an underlying Mortgagor
questionnaire that was provided to the Policy Issuer, or (C) an engineering or
other report provided to the Policy Issuer, and (v) the premium of any
Environmental Insurance Policy has been paid through the maturity of the
policy’s term and the term of such policy extends at least five years beyond the
maturity of the Purchased Asset.

 

Exhibit III-34

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

(34)

Lease Estoppels. With respect to each Purchased Asset for which the underlying
Mortgage Loan is secured by retail, office or industrial properties, Seller
requested the related underlying Mortgagor to obtain estoppels from each
commercial tenant with respect to the rent roll delivered as of the origination
date. With respect to each Purchased Asset for which the underlying Mortgage
Loan is predominantly secured by a retail, office or industrial property leased
to a single tenant, Seller reviewed such estoppel obtained from such tenant no
earlier than 90 days prior to the origination date of the related Purchased
Asset, and to Seller’s knowledge, as of the Purchase Date (i) the related lease
is in full force and effect and (ii) there exists no default under such lease,
either by the lessee thereunder or by the lessor subject, in each case, to
customary reservations of tenant’s rights, such as with respect to common area
maintenance (“CAM”) and pass-through audits and verification of landlord’s
compliance with co-tenancy provisions. With respect to each Purchased Asset for
which the underlying Mortgage Loan is predominantly secured by a retail, office
or industrial property, Seller has received lease estoppels executed within 90
days of the origination date of the related Purchased Asset that collectively
account for at least 65% of the in-place base rent for the underlying Mortgaged
Property related to the Purchased Asset that is represented as of the
origination date. To Seller’s knowledge, as of the Purchase Date (i) each lease
represented on the rent roll delivered as of the origination date is in full
force and effect and (ii) there exists no material default under any such
related lease that represents 20% or more of the in-place base rent for the
underlying Mortgaged Property either by the lessee thereunder or by the related
underlying Mortgagor, subject, in each case, to customary reservations of
tenant’s rights, such as with respect to CAM and pass-through audits and
verification of landlord’s compliance with co-tenancy provisions.

 

(35)

Appraisal. The Purchased Asset File contains an appraisal of the related
underlying Mortgaged Property with an appraisal date within six months of the
Purchased Asset origination date, and within 12 months of the Purchase Date. The
appraisal is signed by an appraiser who is a Member of the Appraisal Institute.
Each appraiser has represented in such appraisal or in a supplemental letter
that the appraisal satisfies the requirements of the “Uniform Standards of
Professional Appraisal Practice” as adopted by the Appraisal Standards Board of
the Appraisal Foundation and has certified that such appraiser had no interest,
direct or indirect, in the underlying Mortgaged Property or the borrower or in
any loan made on the security thereof, and its compensation is not affected by
the approval or disapproval of the Purchased Asset.

 

(36)

Purchased Asset Schedule. The information pertaining to each Purchased Asset
which is set forth in the Purchased Asset Schedule is true and correct in all
material respects as of the Purchased Date and contains all information required
by the Repurchase Agreement to be contained therein.

 

(37)

Cross-Collateralization. No Purchased Asset is cross-collateralized or
cross-defaulted with any other loan, other than the related Mortgage Loan.

 

Exhibit III-35

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

(38)

Advance of Funds by Seller. After origination, as of the Purchase Date, no
advance of funds has been made by Seller to Mezzanine Borrower other than in
accordance with the Purchased Asset Documents, and, to Seller’s knowledge, no
funds have been received from any person other than Mezzanine Borrower or an
affiliate for, or on account of, payments due on the Purchased Asset (other than
as contemplated by the Purchased Asset Documents). Neither Seller nor any
affiliate thereof has any obligation to make any capital contribution to any
Mezzanine Borrower under a Purchased Asset, other than contributions made on or
prior to the date hereof.

 

(39)

Compliance with Anti-Money Laundering Laws. Seller has complied in all material
respects with the Prescribed Laws. Seller has established an anti-money
laundering compliance program as required by the Prescribed Laws, has conducted
the requisite due diligence in connection with the origination of the Purchased
Asset for purposes of the Prescribed Laws, including with respect to the
legitimacy of the applicable Mezzanine Borrower and the origin of the assets
used by said Mezzanine Borrower to acquire the Capital Stock, and maintains, and
will maintain, sufficient information to identify the applicable Mezzanine
Borrower for purposes of the Prescribed Laws.

 

(40)

OFAC. (a) No Purchased Asset is (i) subject to nullification pursuant to
Executive Order 13224 or the regulations promulgated by OFAC (the “OFAC
Regulations”) or (ii) in violation of Executive Order 13224 or the OFAC
Regulations, and (b) no Mezzanine Borrower is (i) subject to the provisions of
Executive Order 13224 or the OFAC Regulations or (ii) listed as a “blocked
person” for purposes of the OFAC Regulations.

 

(41)

Floating Interest Rates. Each Purchased Asset bears interest at a floating rate
of interest that is based on LIBOR plus a margin (which interest rate may be
subject to a minimum or “floor” rate).

 

(42)

Other than consents and approvals obtained as of the Purchase Date or those
already granted in the Purchased Asset Documents, no consent or approval by any
Person is required in connection with Seller’s sale and/or Buyer’s acquisition
of such Mezzanine Loan, for Buyer’s exercise of any rights or remedies in
respect of such Mezzanine Loan or for Buyer’s sale, pledge or other disposition
of such Mezzanine Loan. No third party holds any “right of first refusal”,
“right of first negotiation”, “right of first offer”, purchase option, or other
similar rights of any kind, and no other impediment exists to any such transfer
or exercise of rights or remedies.

 

(43)

The related Purchased Asset Documents provide for the acceleration of the
payment of the unpaid principal balance of the Mezzanine Loan if (i) Mezzanine
Borrower voluntarily transfers or encumbers all or any portion of any related
Capital Stock, or (ii) any direct or indirect interest in Mezzanine Borrower is
voluntarily transferred or assigned, other than, in each case, as permitted
under the terms and conditions of the related loan documents.

 

Exhibit III-36

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

(44)

Pursuant to the terms of the related Purchased Asset Documents: (a) no material
terms of any related underlying Mortgage Loan may be waived, canceled,
subordinated or modified in any material respect and no material portion of such
Mortgage or the underlying Mortgaged Property may be released without the
consent of the holder of the Mezzanine Loan; (b) no material action in
furtherance of an Act of Insolvency may be taken by the Mortgagor with respect
to the underlying Mortgaged Property without the consent of the holder of the
Mezzanine Loan; and (c) the holder of the Mezzanine Loan’s consent is required
prior to the Mortgagor incurring any additional indebtedness.

 

(45)

Article 8 Opt-In. The LLC Certificate of the issuer of the Capital Stock
securing the Purchased Asset constitutes a “security” within the meaning of
Article 8 of the UCC, and no amendment of the issuer’s operating agreement that
amends the opt-in may be effected without the consent of the holder of the
Mezzanine Loan.

 

Exhibit III-37

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

EXHIBIT IV

FORM OF BAILEE AGREEMENT

[SELLER’S NAME AND ADDRESS]

                              , 20        

[                    ]

 

Re:

Bailee Agreement (the “Bailee Agreement”) in connection with the sale of
[                ] by [SELLER] (“Seller”) to Morgan Stanley Bank, N.A., as buyer
(together with its permitted successors and assigns, “Buyer”)

Ladies and Gentlemen:

In consideration of the mutual premises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller, Buyer and [                ] (“Bailee”) hereby agree as
follows:

1. Seller shall deliver to Bailee in connection with any Purchased Assets
delivered to Bailee hereunder a Purchased Asset File Checklist to which shall be
attached a Purchased Asset Schedule identifying the Purchased Assets that are
being delivered to Bailee hereunder.

2. On or prior to the date indicated on the Purchased Asset File Checklist (the
“Purchase Date”), Seller shall have delivered to Bailee, as bailee for hire, the
Purchased Asset File for each of the Purchased Assets listed in the Purchased
Asset Schedule attached to such Purchased Asset File Checklist.

3. Bailee shall issue and deliver to Buyer (as defined in Section 5 below) on or
prior to the Purchase Date by facsimile or other electronic transmission an
initial trust receipt and certification in the form of Attachment 1 attached
hereto (the “Trust Receipt”), which Trust Receipt shall state that Bailee has
received the documents comprising the Purchased Asset File as set forth in the
Purchased Asset File Checklist, in addition to such other documents required to
be delivered to Buyer pursuant to the Second Amended and Restated Master
Repurchase and Securities Contract Agreement dated as of [    ], 2019, among
Seller and Buyer (the “Repurchase Agreement”).

4. On the applicable Purchase Date, in the event that Buyer fails to purchase
any New Asset from Seller that is identified in the related Purchased Asset File
Checklist, Buyer shall deliver by facsimile or other electronic transmission to
Bailee at [                ] to the attention of [                ], an
authorization (the “Facsimile Authorization”) to release the Purchased Asset
Files with respect to the Purchased Assets identified therein to Seller. Upon
receipt of such Facsimile Authorization, Bailee shall release the Purchased
Asset Files to Seller in accordance with Seller’s instructions.

 

Exhibit IV

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

5. Following the Purchase Date, Bailee shall forward the Purchased Asset Files
to Wells Fargo Bank, N.A. (“Custodian”) by insured overnight courier for receipt
by Custodian no later than 2:00 p.m. on the third (3rd) (or, in the case of a
Foreign Purchased Asset, the seventh (7th)) Business Day following the
applicable Purchase Date (the “Delivery Date”).

6. From and after the applicable Purchase Date until the time of receipt of the
Facsimile Authorization or the applicable Delivery Date, as applicable, Bailee
(a) shall maintain continuous custody and control of the related Purchased Asset
Files as bailee for Buyer and (b) is holding the related Purchased Asset Loans
as sole and exclusive bailee for Buyer unless and until otherwise instructed in
writing by Buyer.

7. Seller agrees to indemnify and hold Bailee and its partners, directors,
officers, agents and employees harmless against any and all third party
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney’s fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Bailee
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (other than special, indirect, punitive or
consequential damages, which shall in no event be paid by Seller) were imposed
on, incurred by or asserted against Bailee because of the breach by Bailee of
its obligations hereunder, which breach was caused by negligence, lack of good
faith or willful misconduct on the part of Bailee or any of its partners,
directors, officers, agents or employees. The foregoing indemnification shall
survive any resignation or removal of Bailee or the termination or assignment of
this Bailee Agreement.

8. In the event that Bailee fails to deliver a Mortgage Note, Mezzanine Note,
LLC Certificate or Participation Certificate, as applicable, or other material
portion of a Purchased Asset File that was in its possession to Custodian within
three (3) Business Days following the applicable Purchase Date, the same shall
constitute a “Bailee Delivery Failure” under this Bailee Agreement.

9. Seller hereby represents, warrants and covenants that Bailee is not an
affiliate of or otherwise controlled by Seller. Notwithstanding the foregoing,
the parties hereby acknowledge that Bailee hereunder may act as counsel to
Seller in connection with a proposed loan.

10. This Bailee Agreement may not be modified, amended or altered, except by
written instrument, executed by all of the parties hereto.

11. This Bailee Agreement may not be assigned by Seller or Bailee without the
prior written consent of Buyer.

12. For the purpose of facilitating the execution of this Bailee Agreement as
herein provided and for other purposes, this Bailee 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 and be one
and the same instrument. Electronically transmitted signature pages shall be
binding to the same extent.

 

Exhibit IV-2

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

13. This Bailee Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

14. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Repurchase Agreement.

[SIGNATURES COMMENCE ON NEXT PAGE]

 

Exhibit IV-3

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

Very truly yours,

[SELLER]

a Delaware limited liability company, Seller

By:

     

Name:

 

Title:]

 

ACCEPTED AND AGREED:

[                     ], Bailee

By:

     

Name:

 

Title:

ACCEPTED AND AGREED:

MORGAN STANLEY BANK, N.A.,

a national banking association, Buyer

By:

     

Name:

 

Title:

 

Exhibit IV-4

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

ATTACHMENT 1 TO BAILEE AGREEMENT

FORM OF BAILEE’S TRUST RECEIPT

_____________, 20__

Morgan Stanley Bank, N.A.

1585 Broadway, 2nd Floor

New York, New York 10036

Attention: Geoffrey Kott & Anthony Preisano

Re: Bailee Agreement, dated [    ], 20[    ] (the “Bailee Agreement”) among
[SELLER] ( “Seller”), Morgan Stanley Bank, N.A. (“Buyer”) and (“Bailee”)

Ladies and Gentlemen:

In accordance with the provisions of Section 3 of the Bailee Agreement, the
undersigned, as Bailee, hereby certifies that as to the Purchased Asset(s)
referred to therein, it has reviewed the Purchased Asset File(s) and has
determined that (i) all documents listed in Schedule A attached to the Bailee
Agreement are in its possession and (ii) such documents have been reviewed by it
and appear regular on their face and relate to the Purchased Asset(s).

Bailee hereby confirms that it is holding the Purchase Loan File as agent and
bailee for the exclusive use and benefit of Buyer pursuant to the terms of the
Bailee Agreement.

All capitalized terms used herein and not defined herein shall have the meanings
ascribed to them in the Bailee Agreement.

 

 

Bailee

 

By:

     

Name:

 

Title:

 

Exhibit IV 5

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

EXHIBIT V

AUTHORIZED REPRESENTATIVES OF SELLER

 

Name   Specimen Signature

[ATTACH]

 

Exhibit V

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

EXHIBIT VI

FORM OF UNDERTAKING LETTER

[Letterhead of Law Firm]

[DATE]

MORGAN STANLEY BANK, N.A.

[                 ]

[                 ]

[                 ]

(as Buyer under the MRSA)

Dear Sirs,

Reference is hereby made to the facility agreement made between, amongst others,
(1) [•] as borrower; (2) [applicable Seller] as original lender and (2) [•] as
agent (the “Agent”) (the “Facility Agreement”).

We have obtained instructions from the Agent on behalf of the Finance Parties
(as defined in the Facility Agreement) to issue this undertaking.

We are holding the deeds and documents relating to the Facility Agreement set
out in Schedule 1 to this letter (the “Documents”). We hereby undertake to hold
all the Documents strictly to your order or as you direct at all times.

Yours faithfully,

[NAME OF LAW FIRM]

 

Exhibit VI

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

SCHEDULE 1

SCHEDULE OF DEEDS AND

DOCUMENTS RELATING TO

[NAME OF TRANSACTION]

 

Date    Document    Parties                                          

 

Exhibit IV-2