Exhibit 10.12

MASTER REPURCHASE AGREEMENT

Dated as of June 28, 2013

between

PARLEX 4 FINANCE, LLC

as Seller,

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as Buyer

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TABLE OF CONTENTS

 

     Page  

ARTICLE 1. APPLICABILITY

     2   

ARTICLE 2. DEFINITIONS

     2   

ARTICLE 3. INITIATION; CONFIRMATION; TERMINATION; FEES; EXTENSION OF MATURITY
DATE; EXTENSION OF REPURCHASE DATE

     26   

ARTICLE 4. MARGIN MAINTENANCE

     46   

ARTICLE 5. INCOME PAYMENTS AND PRINCIPAL PROCEEDS

     46   

ARTICLE 6. SECURITY INTEREST

     49   

ARTICLE 7. PAYMENT, TRANSFER AND CUSTODY

     51   

ARTICLE 8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

     55   

ARTICLE 9. REPRESENTATIONS AND WARRANTIES

     55   

ARTICLE 10. NEGATIVE COVENANTS OF SELLER

     63   

ARTICLE 11. AFFIRMATIVE COVENANTS OF SELLER

     65   

ARTICLE 12. EVENTS OF DEFAULT; REMEDIES

     72   

ARTICLE 13. SINGLE AGREEMENT

     78   

ARTICLE 14. RECORDING OF COMMUNICATIONS

     78   

ARTICLE 15. NOTICES AND OTHER COMMUNICATIONS

     79   

ARTICLE 16. ENTIRE AGREEMENT; SEVERABILITY

     79   

ARTICLE 17. NON-ASSIGNABILITY

     79   

ARTICLE 18. GOVERNING LAW

     81   

 

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ARTICLE 19. NO WAIVERS, ETC.

     81   

ARTICLE 20. USE OF EMPLOYEE PLAN ASSETS

     82   

ARTICLE 21. INTENT

     82   

ARTICLE 22. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

     84   

ARTICLE 23. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     84   

ARTICLE 24. NO RELIANCE

     85   

ARTICLE 25. INDEMNITY

     86   

ARTICLE 26. DUE DILIGENCE

     87   

ARTICLE 27. SERVICING

     87   

ARTICLE 28. MISCELLANEOUS

     89   

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEX I    Names and Addresses for Communications between Parties SCHEDULE I   
Prohibited Transferees EXHIBIT I    Form of Confirmation EXHIBIT II   
Authorized Representatives of Seller EXHIBIT III-A    Monthly Reporting Package
EXHIBIT III-B    Quarterly Reporting Package EXHIBIT III-C    Annual Reporting
Package EXHIBIT IV    Form of Custodial Delivery Certificate EXHIBIT V    Form
of Power of Attorney EXHIBIT VI    Representations and Warranties Regarding
Individual Purchased Assets EXHIBIT VII    Asset Information EXHIBIT VIII   
Purchase Procedures EXHIBIT IX    Form of Bailee Letter EXHIBIT X    Form of
Margin Deficit Notice EXHIBIT XI    Form of Tax Compliance Certificates EXHIBIT
XII    UCC Filing Jurisdictions EXHIBIT XIII    Form of Servicer Notice EXHIBIT
XIV    Form of Release Letter EXHIBIT XV    Covenant Compliance Certificate
EXHIBIT XVI    Form of Re-Direction Letter

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MASTER REPURCHASE AGREEMENT

MASTER REPURCHASE AGREEMENT, dated as of June 28, 2013, by and between PARLEX 4
FINANCE, LLC, a Delaware limited liability company (the “Seller”) and JPMORGAN
CHASE BANK, National Association, a banking association organized under the laws
of the United States (“Buyer”).

ARTICLE 1.

APPLICABILITY

From time to time during the Funding Period (as defined herein) the parties
hereto may enter into transactions in which Seller and Buyer agree to the
transfer from Seller to Buyer of all of its rights, title and interest to
certain Eligible Assets (as defined herein) or other assets and, in each case,
the other related Purchased Items (as defined herein) (collectively, the
“Assets”) against the transfer of funds by Buyer to Seller, with a simultaneous
agreement by Buyer to transfer back to Seller such Assets at a date certain or
on demand, against the transfer of funds by Seller to Buyer. Each such
transaction shall be referred to herein as a “Transaction” and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in any exhibits identified herein as
applicable hereunder. Each individual transfer of an Eligible Asset shall
constitute a distinct Transaction. Notwithstanding any provision or agreement
herein, at no time shall Buyer be obligated to purchase or effect the transfer
of any Eligible Asset from Seller to Buyer.

ARTICLE 2.

DEFINITIONS

“Accelerated Repurchase Date” shall have the meaning specified in
Article 12(b)(i) of this Agreement.

“Acceptable Attorney” means Ropes & Gray, LLP or another attorney-at-law or law
firm that has delivered at Seller’s request a Bailee Letter, with the exception
of an attorney or law firm that is not reasonably satisfactory to Buyer.

“Accepted Servicing Practices” shall mean with respect to any Purchased Asset,
those servicing practices in conformity with accepted and prudent servicing
practices in the industry for loans of the same type and in a manner at least
equal in quality to the service the applicable servicer provides for assets that
are similar to such Purchased Asset.

“Act of Insolvency” shall mean, with respect to any Person, (i) the filing of a
petition, commencing, or authorizing the commencement of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law relating to the protection of creditors (“Insolvency Law”), or
suffering any such petition or proceeding to be commenced by another that is
consented to, not timely contested, or that results in entry by a Governmental
Authority having jurisdiction of an order for relief that, in the case of an
action not instigated by or on behalf of or with the consent of Seller, is not
dismissed or stayed within

 

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ninety (90) days; (ii) the seeking or consenting to the appointment of a
receiver, trustee, custodian or similar official for such Person or any
substantial part of the property of such Person; (iii) the appointment of a
receiver, conservator, or manager for such Person by any governmental agency or
authority having the jurisdiction to do so; (iv) the making of a general
assignment for the benefit of creditors; (v) the admission by such Person of its
inability to pay its debts or discharge its obligations as they become due or
mature; (vi) that any Governmental Authority or agency or any person, agency or
entity acting or purporting to act under Governmental Authority shall have taken
any action 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 the business of such Person; (vii) the consent by such Person
to the entry of an order for relief in an insolvency case under any Insolvency
Law; or (viii) the taking of action by any such Person in furtherance of any of
the foregoing.

“Additional Purchase Amount” shall have the meaning specified in Section 3(w)(i)
of this Agreement.

“Additional Purchase Available Amount” shall mean the positive difference, if
any, between (x) the Maximum Advance Purchase Price as of the proposed date for
an Additional Purchase Transaction minus (y) the outstanding Purchase Price of
such Purchased Asset as of such proposed date.

“Additional Purchase Transaction” shall have the meaning specified in
Section 3(w)(i) of this Agreement.

“Additional Purchase Transaction Conditions Precedent” shall have the meaning
specified in Section 3(w)(ii).

“Advance Rate” shall mean, with respect to each Transaction and any Pricing Rate
Period, the initial Advance Rate for such Transaction as shown in the related
Confirmation, as may be adjusted for an Additional Purchase Transaction or
Future Funding Transaction as set forth herein, unless otherwise agreed to by
Buyer and Seller, which in any case shall not exceed the Maximum Advance Rate.

“Affiliate” shall mean, when used with respect to any specified Person, (i) any
other Person directly or indirectly Controlling, Controlled by, or under common
Control with, such Person or (ii) any “affiliate” of such Person, as such term
is defined in the Bankruptcy Code.

“Affiliated Hedge Counterparty” shall mean JPMorgan Chase Bank, National
Association, or any Affiliate thereof, in its capacity as a party to any Hedging
Transaction with Seller.

“Agreement” shall mean this Master Repurchase Agreement, dated as of June 28,
2013 by and between Parlex 4 Finance, LLC and JPMorgan Chase Bank, National
Association, as such agreement may be modified or supplemented from time to
time.

“Alternative Rate” shall have the meaning specified in Article 3(g) of this
Agreement.

 

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“Alternative Rate Transaction” shall mean, with respect to any Pricing Rate
Period, any Transaction with respect to which the Pricing Rate for such Pricing
Rate Period is determined with reference to the Alternative Rate.

“Annual Reporting Package” shall mean the reporting package described on
Exhibit III-C.

“Anti-Money Laundering Laws” shall have the meaning specified in
Article 9(b)(xxxi) of this Agreement.

“Applicable Law” means all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive
orders, and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“Applicable Spread” shall mean, with respect to a Transaction involving a
Purchased Asset:

(i) so long as no Event of Default shall have occurred and be continuing, the
incremental per annum rate (expressed as a number of “basis points”, each basis
point being equivalent to 1/100 of 1%) specified in Schedule I attached to the
Fee Letter as being the “Applicable Spread” for Purchased Assets in such Asset
Type Grouping for the applicable LTV shown in Schedule I of the Fee Letter, as
applicable, or such other rate as may be agreed upon between Seller and Buyer,
and, in either case, as set forth in the related Confirmation; and

(ii) after the occurrence and during the continuance of an Event of Default, the
applicable incremental per annum rate described in clause (i) of this
definition, plus 400 basis points (4.0%);

provided, that the Applicable Spread may be increased in connection with an
Additional Purchase Transaction or Future Funding Transaction.

“Applicable Standard of Discretion” shall mean (a) if the ratio of (x) the
Maximum Purchase Price of such Purchased Asset to (y) the value of the related
Underlying Mortgaged Property, determined in Buyer’s commercially reasonable
discretion, is less than or equal to the LTV as of the Purchase Date, Buyer’s
commercially reasonable discretion, and (b) if the ratio of (x) the Maximum
Purchase Price of such Purchased Asset to (y) the value of the related
Underlying Mortgaged Property, determined in Buyer’s commercially reasonable
discretion, is greater than the LTV as of the Purchase Date, Buyer’s sole
discretion. For purposes of Buyer’s determination of the value of the relevant
Underlying Mortgaged Property, (i) the value may be determined using any
commercially reasonable method, including without limitation by reference to a
recent appraisal prepared in accordance with FIRREA, broker price opinions
and/or discounted cash flow analysis or any other commercially reasonable method
(for the avoidance of doubt, while not exclusive, any of the foregoing shall be
deemed for all purposes to be commercially reasonable) and (ii) for the
avoidance of doubt, Buyer may reduce value for any actual or potential risks
posed by any Liens on the related Underlying Mortgaged Property(ies).

 

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“Asset Due Diligence” shall have the meaning set forth in Article 3(b)(vi)
hereof.

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

“Asset Type Grouping” shall have the meaning set forth in the Fee Letter.

“Assets” shall have the meaning specified in Article 1 of this Agreement.

“Assignee” shall have the meaning set forth in Article 17(a) hereof.

“Bailee Letter” shall mean a letter from an Acceptable Attorney or from a Title
Company, in the form attached to this Agreement as Exhibit IX, wherein such
Acceptable Attorney or Title Company in possession of a Purchased Asset File
(i) acknowledges receipt of such Purchased Asset File, (ii) confirms that such
Acceptable Attorney, Title Company, or other Person acceptable to Buyer is
holding the same as bailee of Buyer under such letter and (iii) agrees that such
Acceptable Attorney or Title Company shall deliver such Purchased Asset File to
the Custodian by not later than the third (3rd) Business Day following the
Purchase Date (or, if applicable, the date of the Future Funding Transaction)
for the related Purchased Asset.

“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.

“Breakage Costs” shall have the meaning assigned thereto in Article 3(l).

“Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which the New York Stock Exchange or the Federal Reserve Bank of New York
is authorized or obligated by law or executive order to be closed and (iii) a
day on which banks in the State of New York, Pennsylvania, Kansas or Minnesota
are authorized or obligated by law or executive order to be closed or, with
respect to “London Business Days” for the determination of LIBOR, any day on
which banks in London, England are authorized or obligated by law or executive
order to be closed.

“Buyer” shall mean JPMorgan Chase Bank, National Association, or any permitted
successor or assign.

“Buyer Compliance Policy” shall mean any corporate policy of Buyer or of any
corporate entity controlling Buyer related to the compliance by Buyer or such
corporate entity or any of Buyer’s or by any such corporate entity’s Affiliates
with any Requirement of Law and/or any request or directive by any Governmental
Authority (whether or not having the force of law) and/or any proposed law, rule
or regulation, including without limitation any policy of Buyer or any such
corporation to comply with rules in proposed form or otherwise not yet in effect
or to adhere to standards or other requirements in excess of those that would be
required by any Requirement of Law.

 

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“Buyer Funding Costs” shall mean the actual funding costs of Buyer or of any
corporate entity controlling Buyer associated with any one or more of the
Transactions (including any related Additional Purchase Transaction or Future
Funding Transaction) or otherwise with Buyer’s obligations under the Transaction
Documents.

“Buyer’s Margin Amount” shall mean with respect to any Transaction and any
Purchased Asset on any date of determination, the Advance Rate applied to such
Purchased Asset at the time that such Transaction was entered into as agreed to
by Seller and Buyer and set forth in the applicable Confirmation (as increased
as a result of any Additional Purchase Transaction or Future Funding
Transaction), multiplied by the Market Value of such Purchased Asset as of such
date of determination; provided, that to the extent the Advance Rate is not set
forth in the related Confirmation, the Advance Rate shall be deemed to be the
applicable Advance Rate set forth on Schedule I to the Fee Letter.

“Capital Stock” shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent equity ownership interests in a Person which is not a
corporation, including, without limitation, any and all member or other
equivalent interests in any limited liability company, any and all partner or
other equivalent interests in any partnership or limited partnership, and any
and all warrants or options to purchase any of the foregoing.

“Cash Equivalents” shall mean, as of any date of determination, marketable
securities issued or directly and unconditionally guaranteed as to interest and
principal by the United States Government.

“Cash Sweep Tail Period” shall mean the period beginning on the second
(2nd) anniversary of the expiration of the Funding Period.

“Cash Sweep Tail Period Additional Amount” shall mean, with respect to any
Purchased Asset and on any date during the Cash Sweep Tail Period, an amount
equal to the difference of (a) the then-outstanding principal balance of such
Purchased Asset on such date less (b) the Purchase Price of such Purchased Asset
on such date.

“Change in Law” shall have the meaning specified in Section 3(h).

“Change of Control” shall mean, with respect to any Person, if either (a) any
“person” or “group” (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become,
or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a percentage of the total voting power of all
Capital Stock of such Person entitled to vote generally in the election of
directors, members or partners of 20% or more other than wholly-owned Affiliates
of such Person and related funds of The Blackstone Group L.P. or (b) Guarantor
shall cease to own and Control, of record and beneficially, directly or
indirectly, 100% of each class of outstanding Capital Stock of Seller.
Notwithstanding the foregoing, neither Buyer nor any other Person shall be
deemed to approve or to have approved any internalization of management as a
result of this definition or any other provision herein.

 

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“Closing Date” shall mean June 28, 2013.

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

“Collection Period” shall mean (i) with respect to the first Remittance Date,
the period beginning on and including the Closing Date and continuing to, and
including the calendar day immediately preceding such Remittance Date, and
(ii) with respect to each subsequent Remittance Date, the period beginning on
and including the Remittance Date in the month preceding the month in which such
Remittance Date occurs and continuing to and including the calendar day
immediately preceding the following Remittance Date.

“Concentration Limit” shall mean the limit on the maximum portion of the
aggregate Maximum Purchase Price for all Purchased Assets on each Business Day
that may relate to Purchased Assets that are Junior Mortgage Loans or Mezzanine
Loans, which limit shall be thirty-five percent (35%) of such then-current
aggregate Maximum Purchase Price for all Purchased Assets.

“Confirmation” shall have the meaning specified in Article 3(b)(v) of this
Agreement.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Control” shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise and
“Control,” “Controlling” and “Controlled” shall have meanings correlative
thereto.

“Covenant Compliance Certificate” shall mean a properly completed and executed
Covenant Compliance Certificate in form and substance identical to the
certificate attached hereto as Exhibit XV.

“Custodial Agreement” shall mean the Custodial Agreement, dated as of the date
hereof, by and among the Custodian, Seller and Buyer.

“Custodial Delivery Certificate” shall mean the form executed by Seller in order
to deliver the Purchased Asset Schedule and the Purchased Asset File to Buyer or
its designee (including the Custodian) pursuant to Article 7(b) of this
Agreement, a form of which is attached hereto as Exhibit IV.

“Custodian” shall mean U.S. Bank National Association, or any successor
Custodian appointed by Buyer with the prior written consent of Seller, not to be
unreasonably withheld, conditioned or delayed.

“Default” shall mean any event which, with the giving of notice, the passage of
time, or both, would constitute an Event of Default.

 

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“Defaulted Mortgage Asset” shall mean any asset (a) that is thirty (30) days or
more delinquent in the payment of principal, interest, fees or other amounts
payable under the terms of the related loan documents or other Asset
documentation or, with respect to a Senior Mortgage Loan or Junior Mortgage Loan
that is a participation interest, the Underlying Mortgage Loan is thirty
(30) days or more delinquent in the payment of principal, interest, fees or
other amounts payable under the terms of the related loan documents, (b) for
which there is a breach of the applicable representations and warranties set
forth on Exhibit VI hereto, (c) as to which an Act of Insolvency shall have
occurred (and, in the case of an involuntary Act of Insolvency, be continuing)
with respect to the Mortgagor, (d) as to which a non-monetary event of default
shall have occurred under any document included in the Purchased Asset File for
such Purchased Asset or (e) with respect to which there has been an extension,
amendment, waiver, termination, rescission, cancellation, release or other
modification to the terms of, or any collateral, guaranty or indemnity for, or
the exercise of any material right or remedy of a holder (including all lending,
corporate and voting rights, remedies, consents, approvals and waivers) of any
related loan or participation document that has an adverse effect on the
interest in such asset, as determined by Buyer in its sole discretion and with
respect to which Buyer has not consented to in writing.

“Depository” shall mean PNC Bank, National Association, or any successor
Depository appointed by Buyer with the prior written consent of Seller, not to
be unreasonably withheld, conditioned or delayed.

“Depository Account” shall mean a segregated interest bearing account, in the
name of Buyer, established at Depository pursuant to this Agreement, and which
is subject to the Depository Agreement.

“Depository Agreement” shall mean that certain Depository Agreement, dated as of
the date hereof, among Buyer, Seller and Depository, or any successor agreement
thereto approved by Buyer in its discretion.

“Due Diligence Legal Expenses” shall mean all of the reasonable and necessary
out of pocket third-party legal fees, costs and expenses actually incurred by
Buyer in connection with the Asset Due Diligence associated with Buyer’s
decision as to whether or not to enter into a particular Transaction (including
an Additional Purchase Transaction or Future Funding Transaction).

“Due Diligence Package” shall have the meaning specified in Exhibit VIII to this
Agreement.

“Early Repurchase” shall mean a repurchase of a Purchased Asset as described in
Article 3(f) of this Agreement.

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

“Eligible Assets” shall mean any of the following types of assets or loans
(1) that are acceptable to Buyer in its sole and absolute discretion (such
determination of acceptability only being applicable prior to the Purchase Date
for the related Purchased Asset, but shall not be a

 

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factor at any time after the Purchase Date for such Purchased Asset and the
initial Transaction), (2) on each day, with respect to which the representations
and warranties set forth in this Agreement (including the exhibits hereto) are
true and correct in all material respects except to the extent disclosed in a
Requested Exceptions Report approved by Buyer, and (3) that are secured directly
or indirectly by properties that are multi-family, mixed use, industrial, office
building or hospitality or such other types of properties that Buyer may agree
to in its sole discretion, and are properties located in the United States of
America, its territories or possessions (or elsewhere, in the sole discretion of
Buyer):

(i) Senior Mortgage Loans;

(ii) Junior Mortgage Loans;

(iii) Mezzanine Loans; and

(iv) any other asset or loan types or classifications that are acceptable to
Buyer, subject to its consent on all necessary and appropriate modifications to
this Agreement and each of the Transaction Documents, as determined by Buyer in
its sole and absolute discretion.

Notwithstanding anything to the contrary contained in this Agreement, the
following shall not be Eligible Assets for purposes of this Agreement, unless
otherwise specifically agreed to by Buyer in writing: (1) non-performing loans;
(2) loans that are Defaulted Mortgage Assets; (3) any asset, where payment of
the Purchase Price with respect thereto would cause the aggregate of all
Repurchase Prices to exceed the Maximum Facility Amount; (4) construction loans;
(5) Mezzanine Loans or Junior Mortgage Loans backed by hotels with a last-dollar
loan-to-value ratio in excess of seventy percent (70%); (6) other than as
approved by Buyer in its discretion, Assets where the Underlying Mortgaged
Property is owned or leased in whole or in part by any Seller, Guarantor or any
of their respective Affiliates; (7) Assets that, upon becoming a Purchased Asset
would violate the Concentration Limit; or (8) assets secured directly or
indirectly by loans described in the preceding clauses (1) through (7).

“Environmental Law” shall mean any federal, state, foreign or local statute,
law, rule, regulation, ordinance, code, guideline, written policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or hazardous materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
§ 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the
Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
§ 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C.
§ 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et
seq. and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and
any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.

“Environmental Site Assessment” shall have the meaning specified in Exhibit VI.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Article
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.

“ERISA Affiliate” shall mean any Person that is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code is treated as a single employer described
in Section 414 of the Code.

“Event of Default” shall have the meaning specified in Article 12 of this
Agreement.

“Exchange Act” shall have the meaning specified in the definition of “Change of
Control”.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
Buyer or any Assignee, or required to be withheld or deducted from a payment to
or for the account of Buyer or Assignee, (a) Taxes imposed on or measured by net
income (however denominated), franchise Taxes, Taxes imposed on or measured by
net worth (however denominated) and branch profits Taxes, in each case,
(i) imposed as a result of Buyer or Assignee being organized under the laws of,
or having its principal office or the office from which it books the
Transactions located in the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such Buyer
or Assignee with respect to an interest under this Agreement pursuant to a law
in effect on the date on which (i) such Buyer or Assignee acquires such interest
hereunder (other than pursuant to an assignment request by Seller under Article
3(u)) or (ii) Buyer or Assignee changes the office from which it books the
Transactions, except in each case to the extent that, pursuant to Article 3(n)
or Article 3(q), amounts with respect to such Taxes were payable either to
Buyer’s or Assignee’s assignor immediately before such Buyer or Assignee
acquired an interest hereunder or to such Buyer or Assignee immediately before
it changed the office from which it books the Transactions, (c) Taxes
attributable to such Buyer’s or Assignee’s failure to comply with its
obligations under Article 3(r) and Article 21(f), and (d) any U.S. federal
withholding Taxes imposed under FATCA.

“FATCA” means 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), any current or future
regulations or official interpretations thereof, and any agreements entered into
with a Governmental Authority pursuant thereto (including pursuant to
Section 1471(b)(1) of the Code).

“Federal Funds Rate” shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day of such transactions received by Buyer from three federal funds brokers
of recognized standing selected by it.

 

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

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

“Final Maturity Date” shall have the meaning specified in the definition of
“Maturity Date”.

“Financing Lease” shall mean any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.

“Fitch” shall mean Fitch Ratings, Inc.

“FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended.

“Force Majeure Event” shall mean any of the following: (a) there has occurred
and is continuing an outbreak of significant hostilities or escalation thereof
or other calamity or crisis the effect of which is that, in the reasonable
judgment of Buyer, it is impossible or commercially inadvisable to continue to
enter into transactions in the repurchase (or “repo”) market or financing market
with respect to assets similar to Eligible Assets, (b) a banking moratorium has
been declared and is continuing under federal law, New York law or by federal or
New York Governmental Authorities other applicable authorities, or (c) Buyer is
and continues to be prohibited, as a result of any Requirement of Law, from
entering into transactions similar to those contemplated under the Transaction
Documents.

“Foreign Buyer” shall mean an Assignee that is not a U.S. Person.

“Funding Period” shall mean the period beginning on the Closing Date and ending
on June 27, 2014, or such later date as may be reflected in a written amendment
to this Agreement agreed to by Buyer and Seller; provided, however, that the
decision to enter into any such amendment shall be at Buyer’s sole and absolute
discretion.

“Future Funding Amount” shall have the meaning specified in Section 3(x)(i).

“Future Funding Confirmation” shall have the meaning specified in
Section 3(x)(i).

“Future Funding Date” shall mean, with respect to any Purchased Asset, the date
on which Buyer advances any portion of the Future Funding Amount related to such
Purchased Asset.

“Future Funding Transaction” shall mean an additional Transaction requested with
respect to any Purchased Asset to provide for the advance of additional funds in
connection with any future funding that Seller is obligated to make to the
related Mortgagor under a Purchased Asset.

 

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“Future Funding Transaction Conditions Precedent” shall have the meaning
specified in Section 3(x)(iii).

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

“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 (including
any supra-national bodies such as the European Union or the European Central
Bank).

“Guarantee Agreement” shall mean the Guarantee Agreement, dated as of the date
hereof, from Guarantor, as guarantor in favor of Buyer, in form and substance
acceptable to Buyer.

“Guarantor” shall mean Blackstone Mortgage Trust, Inc., a Maryland corporation.

“Hedge-Required Asset” shall mean any Eligible Asset that is a fixed rate
Eligible Asset.

“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 Eurodollar 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, entered into by any Affiliated Hedge
Counterparty or Qualified Hedge Counterparty with Seller, either generally or
under specific contingencies that is required by Buyer, or otherwise pursuant to
this Agreement, to hedge the financing of a Hedge-Required Asset, or that Seller
has elected to pledge or transfer to Buyer pursuant to this Agreement.

“Income” shall mean, with respect to any Purchased Asset at any time, (x) any
collections or receipts of principal, interest, dividends, receipts or other
distributions or collections or any other amounts related to such Purchased
Asset, (y) all net sale proceeds received by Seller or any Affiliate of Seller
in connection with a sale or liquidation of such Purchased Asset and (z) all
payments actually received by Buyer on account of Hedging Transactions.

“Indebtedness” shall mean, for any Person, (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 ninety (90) 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 account of such
Person; (e) obligations of

 

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such Person under repurchase agreements, sale/buy-back agreements or like
arrangements; (f) Indebtedness of others guaranteed by such Person; (g) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; (h) Indebtedness of general
partnerships of which such Person is a general partner or is secondarily or
contingently liable (other than by endorsement of instruments in the course of
collection), whether by reason of any agreement to acquire such indebtedness to
supply or advance sums or otherwise; (i) all net liabilities or obligations
under any interest rate, interest rate swap, interest rate cap, interest rate
floor, interest rate collar, or other hedging instrument or agreement; and
(j) all obligations of such Person under Financing Leases. Notwithstanding the
foregoing, bona fide securitizations that fall into this category solely as a
result of the application of FAS 166 and/or FAS 167 shall not be considered
Indebtedness of any Person.

“Indemnified Amounts” shall have the meaning specified in Article 25 of this
Agreement.

“Indemnified Parties” shall have the meaning specified in Article 25 of this
Agreement.

“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) of this definition, Other Taxes.

“Independent Director” shall mean an individual with at least three (3) years of
employment experience serving as an independent director at the time of
appointment who is provided by, and is in good standing with, CT Corporation,
Corporation Service Company, National Registered Agents, Inc., Wilmington Trust
Company, Stewart Management Company, Lord Securities Corporation or, if none of
those companies is then providing professional independent directors or managers
or is not acceptable to the Rating Agencies, another nationally recognized
company reasonably approved by Buyer, in each case that is not an Affiliate of
Seller and that provides professional independent directors or managers and
other corporate services in the ordinary course of its business, and which
individual is duly appointed as a member of the board of directors or board of
managers of Seller and is not, and has never been, and will not while serving as
independent director or manager be:

(a) a member (other than an independent, non-economic “springing” member),
partner, equityholder, manager, director, officer or employee of Seller or any
of its equityholders or Affiliates (other than as an independent director or
manager of an Affiliate of Seller that is not in the direct chain of ownership
of Seller and that is required by a creditor to be a single purpose bankruptcy
remote entity, provided that such independent director or manager is employed by
a company that routinely provides professional independent directors or managers
in the ordinary course of business);

(b) a customer, creditor, supplier or service provider (including provider of
professional services) to Seller or any of its equityholders or Affiliates
(other than a nationally recognized company that routinely provides professional
independent directors or managers and other corporate services to Seller or any
of its equityholders or Affiliates in the ordinary course of business);

 

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(c) a family member of any such member, partner, equityholder, manager,
director, officer, employee, customer, creditor, supplier or service provider;
or

(d) a Person that Controls or is under common Control with (whether directly,
indirectly or otherwise) any of (a), (b) or (c) above.

A natural person who otherwise satisfies the foregoing definition other than
subparagraph (a) by reason of being the independent director or manager of a
single purpose bankruptcy remote entity in the direct chain of ownership of
Seller shall not be disqualified from serving as an independent director or
manager of Seller, provided that the fees that such individual earns from
serving as independent directors or managers of such Affiliates in any given
year constitute in the aggregate less than five percent (5%) of such
individual’s annual income for that year.

“Initial Maturity Date” shall have the meaning specified in the definition of
“Maturity Date”.

“Insolvency Law” shall have the meaning specified in the definition of “Act of
Insolvency”.

“Interim Servicer” shall mean Midland Loan Services, Inc., or any other servicer
approved by Buyer in its commercially reasonable discretion.

“Interim Servicing Agreement” shall mean the Interim Servicing Agreement, dated
as of the date hereof, by and among the Servicer, Seller and Buyer.

“IRS” shall mean the United States Internal Revenue Service.

“Junior Mortgage Loan” shall mean a performing mortgage loan evidenced by one or
more junior promissory notes or a participation interest evidenced by a
certificate of participation in a stabilized or transitional commercial,
multifamily fixed or floating rate mortgage loan evidenced by a promissory note,
in each case secured by first liens on multi-family or commercial properties.

“Knowledge” shall mean, as of any date of determination, the then-current actual
(as distinguished from imputed or constructive) knowledge of (i) Stephen Plavin,
Geoffrey Jervis or Douglas Armer, (ii) any asset manager at The Blackstone Group
L.P. responsible for any Purchased Asset, or (iii) any other employee with a
title equivalent or more senior to that of “principal” within The Blackstone
Group L.P. responsible for the origination, acquisition and/or management of any
Purchased Asset.

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate
determined by Buyer to be (i) the per annum rate for deposits in U.S. dollars
for a period equal to the applicable Pricing Rate Period, which appears on the
Reuters Screen LIBOR01 Page (or any successor thereto) as the London Interbank
Offering Rate as of 11:00 a.m., London time, on the day that is two (2) London
Business Days prior to that respective Pricing Rate Determination Date (rounded
upwards, if necessary, up to the nearest 1/1000 of 1%); (ii) if such rate does
not appear on said Reuters Screen LIBOR01 Page, the arithmetic mean (rounded as
aforesaid) of the offered quotations of rates obtained by Buyer from the
Reference Banks for deposits in U.S. dollars for a

 

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period equal to the applicable Pricing Rate Period to prime banks in the London
Interbank market as of approximately 11:00 a.m., London time, on the day that is
two (2) London Business Days prior to that Pricing Rate Determination Date and
in an amount that is representative for a single transaction in the relevant
market at the relevant time; or (iii) if fewer than two (2) Reference Banks
provide Buyer with such quotations, the rate per annum which Buyer determines to
be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates
which major banks in New York, New York selected by Buyer are quoting at
approximately 11:00 a.m., New York City time, on the Pricing Rate Determination
Date for loans in U.S. dollars to leading European banks for a period equal to
the applicable Pricing Rate Period in amounts of not less than U.S.
$1,000,000.00. Buyer’s determination of LIBOR shall be binding and conclusive on
Sellers absent manifest error. LIBOR may or may not be the lowest rate based
upon the market for U.S. Dollar deposits in the London Interbank Eurodollar
Market at which Buyer prices loans on the date which LIBOR is determined by
Buyer as set forth above.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing), and the
filing of any financing statement under the UCC or comparable law of any
jurisdiction in respect of any of the foregoing.

“London Business Day” shall mean any day other than (a) a Saturday, (b) a Sunday
or (c) any other day on which commercial banks in London, England are not open
for business.

“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 whether advanced on such
date or permitted to be advanced in the future) secured, directly or indirectly,
by the related Underlying Mortgaged Property(ies), to the aggregate value of
such Underlying Mortgaged Property(ies) as determined by Buyer in its
commercially reasonable discretion. For purposes of Buyer’s determination,
(i) the value of the Underlying Mortgaged Property may be determined using any
commercially reasonable method, including without limitation by reference to a
recent appraisal, broker price opinions, quotes from a recognized dealer in the
commercial real estate market and/or discounted cash flow analysis or other
method commonly utilized by Buyer or any other commercially reasonable method
and the foregoing shall be deemed for such purposes to be commercially
reasonable and (ii) for the avoidance of doubt, Buyer may reduce the value of
the Underlying Mortgaged Property for any actual or potential risks posed by any
Liens on the related Underlying Mortgaged Property(ies).

“Margin Deadline” shall have the meaning specified in Article 4(a).

“Margin Deficit” shall have the meaning specified in Article 4(a).

“Margin Deficit Notice” shall have the meaning specified in Article 4(a).

“Margin Notice Deadline” shall mean 1:00 p.m. New York time.

 

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“Mark-to-Market Representations” shall mean the representations and warranties
set forth (1) as items (t), (aa), (dd), (oo) and (rr) on Part 1 of Exhibit VI,
(2) as item (j) on Part 2 of Exhibit VI, (3) as item (k) on Part 3 of Exhibit
VI, and (4) as items (p), (bb), (gg), (ii), (mm) and (qq) on Part 4 of Exhibit
VI.

“Market Disruption Event” shall mean either (a) any event or events shall have
occurred in the determination of Buyer resulting in the effective absence of a
“repo market” or related “lending market” for purchasing (subject to repurchase)
or financing debt obligations secured by commercial mortgage loans, mezzanine
loans or securities or 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, or (b) any event or
events shall have occurred resulting in the effective absence of a “securities
market” for securities backed by Eligible Assets, including, but not limited to
the “CMBS/CLO market”, or an event or events shall have occurred resulting in
Buyer not being able to sell securities backed by Eligible Assets at prices
which would have been reasonable prior to such event or events, in each case as
determined by Buyer.

“Market Value” shall mean, with respect to any Purchased Asset, the market value
for such Purchased Asset, as determined by Buyer at the Applicable Standard of
Discretion on each Business Day in accordance with this definition. For purposes
of Article 4 and 5(e), as applicable, changes in the Market Value of a Purchased
Asset that is a Senior Mortgage Loan or a Junior Mortgage Loan shall be
determined solely in relation to material positive or negative changes (relative
to Buyer’s initial underwriting or the most recent determination of Market Value
in terms of the performance or condition of (i) the Underlying Mortgaged
Property(ies) securing the Purchased Asset or other collateral securing or
related to the Purchased Asset, (ii) the Purchased Asset’s borrower (including
obligors, guarantors, participants and sponsors) and the borrower on any
Underlying Mortgaged Property or other collateral securing such Purchased Asset
or the Underlying Mortgage Loan, as applicable, (iii) the commercial real estate
market relevant to the Underlying Mortgaged Property(ies), and (iv) any actual
or potential risks posed by any Liens on the related Underlying Mortgaged
Property(ies), taken in the aggregate. In addition, the Market Value for any
Purchased Asset shall be deemed to be zero on the third (3rd) Business Day
following the occurrence of any of the following with respect to such Purchased
Asset: (a) a breach of a representation or warranty contained in Exhibit VI
hereto other than a Mark-to-Market Representation or (b) the Repurchase Date
with respect to such Purchased Asset occurs without repurchase of such Purchased
Asset.

“Material Action” shall mean, as to any Person, to file any insolvency, or
reorganization case or proceeding, to institute proceedings to have such Person
be adjudicated bankrupt or insolvent, to institute proceedings under any
applicable insolvency law, to seek any relief under any law relating to relief
from debts or the protection of debtors, to consent to the filing or institution
of bankruptcy or insolvency proceedings against such Person, to file a petition
seeking, or consent to, reorganization or relief with respect to such Person
under any applicable federal or state law relating to bankruptcy or insolvency,
to seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian, or any similar official of or for such Person
or a substantial part of its property, to make any assignment for the benefit of
creditors of such Person, to admit in writing such Person’s inability to pay its
debts generally as they become due (unless such admission is true), or to take
action in furtherance of any of the foregoing.

 

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“Material Adverse Effect” shall mean a material adverse effect on (a) the
property, business, operations or financial condition of Seller or Guarantor
taken as a whole, (b) the ability of Seller or Guarantor to perform its
obligations under any of the Transaction Documents, (c) the validity or
enforceability of any of the Transaction Documents, (d) the rights and remedies
of Buyer under any of the Transaction Documents, (e) the timely payment of any
amounts payable under this Agreement or any other Transaction Document.

“Materials of Environmental Concern” shall mean any toxic mold, any petroleum
(including, without limitation, crude oil or any fraction thereof) or petroleum
products (including, without limitation, gasoline) or any hazardous or toxic
substances, materials or wastes, defined as such in or regulated under any
Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls, and urea-formaldehyde insulation.

“Maturity Date” shall mean June 27, 2014 or the immediately succeeding Business
Day, if such day shall not be a Business Day (the “Initial Maturity Date”), or
such later date as may be in effect pursuant to Article 3(m) hereof. For the
sake of clarity, the Maturity Date shall not be any date beyond the latest
Repurchase Date of any Purchased Asset subject to a Transaction (the “Final
Maturity Date”).

“Maturity Date Extension Conditions” shall have the meaning set forth in
Article 3(m)(i).

“Maximum Advance Purchase Price” shall mean, with respect to a Purchased Asset
with respect to which an Additional Purchase Transaction is requested in
accordance with the terms of this Agreement, an amount (expressed in dollars)
equal to the product obtained by multiplying (i) the Market Value of such
Purchased Asset (or the par amount of such Purchased Asset, if lower than Market
Value) as re-determined by Buyer as of the proposed date of such requested
Additional Purchase Transaction by (ii) the Maximum Advance Rate permitted for
such Purchased Asset as set forth in this Agreement.

“Maximum Advance Rate” shall mean, with respect to each Eligible Asset, the
“Advance Rate” specified for the applicable Asset Type Grouping in Schedule I
attached to the Fee Letter for the loan-to-value ratios shown in Schedule I, or
if not shown in Schedule I attached to the Fee Letter or if otherwise agreed to
by Seller and Buyer, in the related Confirmation; provided, however, that
(a) the Buyer is not obligated to purchase any Eligible Asset and (b) with
respect to any Eligible Asset to be purchased hereunder, the Advance Rates shown
in Schedule I attached to the Fee Letter are only indicative of the maximum
advance rate available to Seller, and Buyer is not obligated to purchase any
Eligible Asset at such Maximum Advance Rates.

“Maximum Facility Amount” shall mean (a) for the period from the Closing Date up
to but not including the expiration of the Funding Period, $250,000,000, and
(b) at any time after the expiration of the Funding Period, the aggregate
Maximum Purchase Price of all Purchased Assets as of the expiration of the
Funding Period, as permanently reduced thereafter by each reduction in the
Maximum Purchase Price of a Purchased Asset whether through prepayment,
repurchase, payment of Margin Deficits or otherwise.

 

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“Maximum Purchase Price” shall mean, with respect to any Purchased Asset, an
amount (expressed in dollars) equal to the product obtained by multiplying
(i) the Market Value of such Purchased Asset (or the par amount of such
Purchased Asset, if lower than Market Value) as of the Purchase Date by (ii) the
Maximum Advance Rate permitted for such Purchased Asset as set forth in this
Agreement.

“Mezzanine Loan” shall mean a performing loan evidenced by a note and primarily
secured by pledges of all the equity interests in entities that own, directly or
indirectly, multifamily or commercial properties that serve as collateral for
Senior Mortgage Loans.

“Mezzanine Note” shall mean the original promissory note that was executed and
delivered in connection with a particular Mezzanine Loan.

“Minimum Transfer Amount” shall mean, with respect to Seller, $250,000.

“Monthly Reporting Package” shall mean the reporting package described on
Exhibit III-A.

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

“Mortgage” shall mean a mortgage, deed of trust, deed to secure debt or other
instrument, creating a valid and enforceable first Lien on or a first priority
ownership interest in an estate in fee simple in real property and the
improvements thereon, securing a Mortgage Note or similar evidence of
indebtedness.

“Mortgage Note” shall mean a note or other evidence of indebtedness of a
Mortgagor secured by a Mortgage, including any Senior Mortgage Loan or Junior
Mortgage Loan that is a Purchased Asset.

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the
related Mortgage, or the obligor on a Mezzanine Note or Participation
Certificate.

“Multiemployer Plan” shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been, or were required to
have been, made by Seller or any ERISA Affiliate and that is covered by Title IV
of ERISA.

“New Asset” shall mean an Eligible Asset that Seller proposes to be included as
a Purchased Item.

“Originated Asset” shall mean any Eligible Asset originated by Seller.

“Other Connection Taxes” shall mean Taxes imposed as a result of a present or
former connection between such Buyer or Assignee and the jurisdiction imposing
such Tax (other than connections arising from such Buyer or Assignee 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).

 

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“Other Taxes” shall mean all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Transaction Document, except for (i) any such Taxes imposed
with respect to an assignment, transfer or sale of participation or other
interest in or with respect to the Transaction Documents (other than an
assignment made pursuant to Article 3(u) hereof), and (ii) for the avoidance of
doubt, any Excluded Taxes.

“Parent” shall mean 42-16 Partners LLC, a wholly owned Subsidiary of Guarantor.

“Participation Certificate” shall mean the original participation certificate
that was executed and delivered in connection with a Senior Mortgage Loan or
Junior Mortgage Loan that is a participation interest.

“Person” shall mean an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust, joint
stock company, joint venture, unincorporated organization, or any other entity
of whatever nature, or a Governmental Authority.

“Plan” shall mean an employee benefit or other plan established or maintained by
Seller or any ERISA Affiliate 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, other than a
Multiemployer Plan.

“Plan Party” shall have the meaning set forth in Article 20(a) of this
Agreement.

“Pledge Agreement” shall mean that certain Pledge Agreement, dated as of the
date hereof, by Parent in favor of Buyer, as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time, pledging all of
Seller’s Capital Stock to Buyer.

“Pre-Existing Asset” shall mean any Eligible Asset that is not an Originated
Asset.

“Price Differential” shall mean, with respect to any Purchased Asset as of any
date, the aggregate amount obtained by daily application of the applicable
Pricing Rate for such Purchased Asset to the outstanding Purchase Price of such
Purchased Asset on a 360-day-per-year basis for the actual number of days during
each Pricing Rate Period commencing on (and including) the Purchase Date for
such Purchased Asset and ending on (but excluding) the date of determination
(reduced by any amount of such Price Differential previously paid by Seller to
Buyer with respect to such Purchased Asset).

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to
the sum of (i) LIBOR and (ii) the relevant Applicable Spread, in each case, for
the applicable Pricing Rate Period for the related Purchased Asset. The Pricing
Rate shall be subject to adjustment and/or conversion as provided in the
Transaction Documents or the related Confirmation.

 

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“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate
Period with respect to any Transaction, the second (2nd) London Business Day
preceding the first day of such Pricing Rate Period.

“Pricing Rate Period” shall mean, with respect to any Transaction, Remittance
Date or Repurchase Date (a) in the case of the first Pricing Rate Period with
respect to any Transaction, the period commencing on and including the Purchase
Date for such Transaction and ending on and excluding the following Remittance
Date, and (b) in the case of any subsequent Pricing Rate Period, the period
commencing on and including the immediately preceding Remittance Date and ending
on and excluding such Remittance Date; provided, however, that in no event shall
any Pricing Rate Period for a Purchased Asset end subsequent to the Repurchase
Date for such Purchased Asset.

“Principal Proceeds” shall mean, with respect to any Purchased Asset, any
scheduled or unscheduled payment or prepayment of principal (including net sale
proceeds) received by the Depository or allocated as principal in respect of any
such Purchased Asset.

“Prohibited Investor” shall mean (1) a person or entity whose name appears on
the list of Specially Designated Nationals and Blocked Persons by the Office of
Foreign Asset Control (“OFAC”), (2) any foreign shell bank, and (3) any person
or entity resident in 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 Financial
Action Task Force on Money Laundering (“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 FATF’s list of
Non-Cooperative Countries and Territories.)

“Prohibited Person” shall have the meaning set forth in Article 9(b)(xxix).

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

“Purchase Date” shall mean, with respect to any Purchased Asset, the date on
which Buyer purchases such Purchased Asset from Seller in connection with a
Transaction.

“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, adjusted after the Purchase Date as set forth below, not to
exceed the Maximum Purchase Price. The Purchase Price as of the Purchase Date
for any Purchased Asset shall be an amount (expressed in dollars) equal to the
product obtained by multiplying (i) the Market Value of such Purchased Asset as
of the Purchase Date (or the par amount of such Purchased Asset, if lower than
Market Value) by (ii) the Advance Rate for such Purchased Asset, as set forth on
the related Confirmation. The Purchase Price of any Purchased Asset shall be
(x) increased by an Additional Purchase Amount or Future Funding Amount made by
Buyer to Seller or by any other amounts disbursed by Buyer to Seller or to the
related borrower on behalf of Seller with respect to such Purchased Asset to the
related borrower on behalf of Seller with respect to such Purchased Asset and
(y) decreased by (A) the portion of any Principal Proceeds on such Purchased
Asset that are applied pursuant

 

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to Article 5 hereof to reduce such Purchase Price and (B) any other amounts paid
to Buyer by Seller specifically to reduce such Purchase Price and that are
applied pursuant to Article 5 hereof to reduce such Purchase Price.

“Purchased Asset” shall mean (i) with respect to any Transaction, the Eligible
Asset sold by Seller to Buyer in such Transaction and (ii) with respect to the
Transactions in general, all Eligible Assets sold by Seller to Buyer (other than
Purchased Assets that have been repurchased by Seller).

“Purchased Asset Documents” shall mean, with respect to a Purchased Asset, the
documents comprising the Purchased Asset File for such Purchased Asset.

“Purchased Asset Fee” shall have the meaning set forth in the Fee Letter.

“Purchased Asset File” shall mean the documents specified as the “Purchased
Asset File” in Article 7(b), together with any additional documents and
information required to be delivered to Buyer or its designee (including the
Custodian) pursuant to this Agreement; provided that to the extent that Buyer
waives, including pursuant to Article 7(b), receipt of any document in
connection with the purchase of an Eligible Asset (but not if Buyer merely
agrees to accept delivery of such document after the Purchase Date), such
document shall not be a required component of the Purchased Asset File until
such time as Buyer determines in good faith that such document is necessary or
customary for the servicing of the applicable Purchased Asset.

“Purchased Asset Schedule” shall mean a schedule of Purchased Assets attached to
each Trust Receipt and Custodial Delivery Certificate containing information
substantially similar to the Asset Information.

“Purchased Items” shall have the meaning specified in Article 6(a) of this
Agreement.

“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 S&P,
and “A1” 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 clause (b) no longer
applies with respect to such counterparty.

“Quarterly Reporting Package” shall mean the reporting package described on
Exhibit III-B.

“Rating Agency” shall mean any of Fitch, Moody’s, S&P, DBRS, Inc. and Kroll Bond
Rating Agency Inc.

“Re-direction Letter” shall have the meaning specified in Article 5(b).

“Reference Banks” shall mean banks each of which shall (i) be a leading bank
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market and (ii) have an

 

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established place of business in London. Initially, the Reference Banks shall be
JPMorgan Chase Bank, National Association, Barclays Bank, Plc and Deutsche Bank
AG. If any such Reference Bank should be unwilling or unable to act as such or
if Buyer shall terminate the appointment of any such Reference Bank or if any of
the Reference Banks should be removed from the Reuters Monitor Money Rates
Service or in any other way fail to meet the qualifications of a Reference Bank,
Buyer, in its sole discretion exercised in good faith, may designate alternative
banks meeting the criteria specified in clauses (i) and (ii) above.

“Register” shall have the meaning assigned in Article 17(c).

“Release Letter” shall mean a letter substantially in the form of Exhibit XIV
hereto (or such other form as may be acceptable to Buyer).

“REMIC” shall mean a real estate mortgage investment conduit, within the meaning
of Section 860D(a) of the Code.

“Remittance Date” shall mean the seventeenth (17th) calendar day of each month,
or the immediately succeeding Business Day, if such calendar day shall not be a
Business Day, or such other day as is mutually agreed to by Seller and Buyer.

“Repurchase Date” shall mean, with respect to a Purchased Asset, the earliest to
occur of (i) three hundred sixty-four (364) days from the Purchase Date
applicable to such Transaction, or if the Repurchase Date for such Transaction
is extended pursuant to Article 3(z), the date to which it is extended; (ii) any
Early Repurchase Date for such Transaction; (iii) the date set forth in the
applicable Confirmation; (iv) the Accelerated Repurchase Date; (v) the Maturity
Date; and (vi) the date that is two (2) Business Days prior to the maturity date
of such Purchased Asset (subject to extension, if applicable, in accordance with
the related Purchased Asset Documents); provided, that, solely with respect to
clause (vi), the settlement with respect to such Repurchase Date and Purchased
Asset may occur two (2) Business Days later.

“Repurchase Date Extension Conditions” shall have the meaning set forth in
Article 3(z).

“Repurchase Obligations” shall have the meaning assigned thereto in
Article 6(a).

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any
Repurchase Date or any date on which the Repurchase Price is required to be
determined hereunder, the price at which such Purchased Asset is to be
transferred from Buyer to Seller; such price will be determined in each case as
the sum of the (i) outstanding Purchase Price of such Purchased Asset (inclusive
of any other additional funds advanced by Buyer in connection with such
Purchased Asset including Additional Purchase Amounts and/or Future Funding
Amounts); (ii) the accreted and unpaid Price Differential with respect to such
Purchased Asset as of the date of such determination (other than, with respect
to calculations in connection with the determination of a Margin Deficit,
accreted and unpaid Price Differential for the current Pricing Rate Period);
(iii) any other amounts due and owing by Seller to Buyer and its Affiliates
pursuant to the terms of this Agreement as of such date; (iv) if such Repurchase
Date is not a Remittance Date, except as otherwise expressly set forth in this
Agreement, any Breakage Costs payable in connection with such repurchase other
than with respect to the determination of a Margin Deficit; (v) any amounts that
would be payable to (a positive amount) a Qualified Hedge

 

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Counterparty under any related Hedging Transaction, if such Hedging Transaction
were terminated on the date of determination, if such determination is in
connection with any calculation of Margin Deficit; (vi) any amounts that would
be payable to (a positive amount) an Affiliated Hedge Counterparty under any
related Hedging Transaction, if such Hedging Transaction were terminated on the
date of determination, if such determination is in connection with any
calculation of Margin Deficit (and not in connection with an actual repurchase
of a Purchased Asset) and (vii) at any time during the Cash Sweep Tail Period,
the Cash Sweep Tail Period Additional Amount. In addition to the foregoing, the
Repurchase Price shall be decreased by (A) the portion of any Principal Proceeds
on such Purchased Asset that is applied pursuant to Article 5 hereof to reduce
such Repurchase Price for such Purchased Asset and (B) any other amounts paid to
Buyer by or on behalf of Seller to reduce such Repurchase Price for such
Purchased Asset.

“Requested Exceptions Report” shall have the meaning assigned thereto in
Article 3(b)(vi)(E).

“Requirement of Law” shall mean any law, 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 Requirement” shall mean, with respect to any Pricing Rate Period, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect during such Pricing Rate Period (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System 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.

“Responsible Officer” shall mean the officers of Seller as designated in its
operating agreement.

“S&P” shall mean Standard and Poor’s Ratings Services.

“Secondary Market Transaction” shall have the meaning set forth in
Section 28(a).

“Seller” shall mean the entity identified as “Seller” in the Recitals hereto and
such other sellers as may be approved by Buyer in its sole discretion from time
to time.

“Senior Tranche” shall have the meaning set forth in Section 28(a).

“Senior Mortgage Loan” shall mean a performing senior commercial or multifamily
fixed or floating rate senior mortgage loan evidenced by one or more promissory
notes or senior participation interests in such a mortgage loan evidenced by a
certificate of participation, in each case secured by first liens on multifamily
or commercial properties.

 

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“Servicer Notice” shall mean the agreement between Buyer, Seller and the primary
servicer, substantially in the form of Exhibit XIII hereto, as amended,
supplemented or otherwise modified from time to time.

“Servicing Agreement” shall have the meaning specified in Article 27(b).

“Servicing Records” shall have the meaning specified in Article 27(b).

“Servicing Rights” shall mean rights of any Person, to administer, service or
subservice, the Purchased Assets or to possess related Servicing Records.

“Servicing Tape” shall have the meaning specified in Exhibit III-A hereto.

“Subordinate Eligible Assets” shall mean Eligible Assets described in items
(ii) and (iii) of the definition of Eligible Assets.

“Subordinate Financing” shall have the meaning set forth in Section 28(a).

“Subsidiary” shall mean, as to any Person, a corporation, partnership 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. Unless otherwise qualified, all references to a “Subsidiary” or
to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries
of Seller.

“Survey” shall mean a certified ALTA/ACSM (or applicable state standards for the
state in which the collateral is located) survey of the underlying real estate
directly or indirectly securing or supporting such Purchased Asset prepared by a
registered independent surveyor or engineer and in form and content satisfactory
to Buyer and the company issuing the Title Policy for such Property.

“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 Company” shall mean a nationally-recognized title insurance company
reasonably acceptable to Buyer.

“Title Policy” shall have the meaning specified in Exhibit VI.

“Transaction” shall mean a Transaction, as specified in Article 1 of this
Agreement and shall include any related Additional Purchase Transaction and any
related Future Funding Transaction.

“Transaction Documents” shall mean, collectively, this Agreement, any applicable
Schedules, Exhibits and Annexes to this Agreement, the Guarantee Agreement, the
Custodial

 

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Agreement, the Fee Letter, each Servicing Agreement, the Depository Agreement,
the Pledge Agreement, all Hedging Transactions and all Confirmations and
assignment documentation executed pursuant to this Agreement in connection with
specific Transactions.

“Transferee” shall have the meaning set forth in Article 17(a) hereof.

“Trust Receipt” shall mean a trust receipt issued by Custodian to Buyer
confirming the Custodian’s possession of certain Purchased Asset Files that are
the property of and held by Custodian for the benefit of Buyer (or any other
holder of such trust receipt) or a bailment arrangement with an Acceptable
Attorney or such other counsel or other third party acceptable to Buyer in its
sole discretion.

“UCC” shall have the meaning specified in Article 6(d) of this Agreement.

“Underlying Mortgage Loan” shall mean, with respect to any Senior Mortgage Loan
or Junior Mortgage Loan that is a participation interest or any Mezzanine Loan,
a mortgage loan made in respect of the related Underlying Mortgaged Property.

“Underlying Mortgaged Property” shall mean, in the case of:

A. a Senior Mortgage Loan, the mortgaged property securing such Senior Mortgage
Loan, or the mortgaged property securing the mortgage loan in which such Senior
Mortgage Loan represents a senior participation interest, as applicable;

B. a Junior Mortgage Loan, the mortgaged property securing such Junior Mortgage
Loan, or the mortgaged property securing the mortgage loan in which such Junior
Mortgage Loan represents a junior participation interest, as applicable; and

C. a Mezzanine Loan, the mortgaged property that is owned by the Person the
equity of which is pledged as collateral security for such Mezzanine Loan.

“Underwriting Issues” shall mean, with respect to any Purchased Asset as to
which Seller intends to request a Transaction, Additional Purchase Transaction
or Future Funding Transaction, all material information Known by Seller that,
based on the making of reasonable inquiries and the exercise of reasonable care
and diligence under the circumstances, would be considered a materially
“negative” factor (either separately or in the aggregate with other
information), or a material defect in loan documentation or closing deliveries
(such as any absence of any material Purchased Asset Document(s)), to a
reputable nationally recognized institutional mortgage buyer in determining
whether to originate or acquire the Purchased Asset in question.

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” shall have the meaning assigned to such term
in Article 3(r)(ii)(B)(3).

 

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All references to articles, schedules and exhibits are to articles, schedules
and exhibits in or to this Agreement unless otherwise specified. The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. References to “good faith” in this Agreement shall mean “honesty in
fact in the conduct or transaction concerned”.

ARTICLE 3.

INITIATION; CONFIRMATION; TERMINATION;

FEES; EXTENSION OF MATURITY DATE; EXTENSION OF REPURCHASE DATE

Buyer’s agreement to enter into the initial Transaction hereunder is subject to
the satisfaction, immediately prior to or concurrently with the making of such
Transaction, of all of the following items, each of which shall be satisfactory
in form and substance to Buyer and its counsel:

(a) The following documents, delivered to Buyer:

(i) this Agreement, duly completed and executed by each of the parties hereto
(including all exhibits hereto);

(ii) the Guarantee Agreement, duly completed and executed by each of the parties
thereto;

(iii) the Custodial Agreement, duly executed and delivered by each of the
parties thereto;

(iv) the Depository Agreement, duly completed and executed by each of the
parties thereto;

(v) the Interim Servicing Agreement, duly completed and executed by each of the
parties thereto;

(vi) the Pledge Agreement, duly completed and executed by each of the parties
thereto;

(vii) any and all consents and waivers applicable to Seller or to the Purchased
Assets;

(viii) UCC financing statements for filing in each of the UCC filing
jurisdictions described on Exhibit XII hereto, each naming Seller as “Debtor”
and Buyer as “Secured Party” and adequately describing as “Collateral” all of
the items set forth in the definition of Purchased Items in this Agreement,
together with any other documents necessary or requested by Buyer to perfect the
security interests granted by Seller in favor of Buyer under this Agreement or
any other Transaction Document such that the lien created in favor of Buyer is
senior to the claim of any other creditor of Seller or Affiliate of Seller;

 

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(ix) any documents relating to any Hedging Transactions;

(x) opinions of outside counsel to Seller reasonably acceptable to Buyer
(including, but not limited to, those relating to bankruptcy safe harbor,
enforceability, corporate matters, applicability of the Investment Company Act
of 1940 to Seller or any Affiliate of Seller and security interests);

(xi) good standing certificates and certified copies of the charters and by-laws
(or equivalent documents) of Seller, Parent and Guarantor and of all corporate
or other authority for Seller, Parent and Guarantor with respect to the
execution, delivery and performance of the Transaction Documents and each other
document to be delivered by Seller, Parent and Guarantor from time to time in
connection herewith (and Buyer may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary);

(xii) with respect to any Eligible Asset to be purchased hereunder on the
related Purchase Date that is not serviced by Seller, Seller shall have provided
to Buyer a copy of the related Servicing Agreement, certified as a true, correct
and complete copy of the original, together with a Servicer Notice, fully
executed by Seller and Servicer;

(xiii) Buyer shall have received payment from Seller of an amount equal to the
amount of actual costs and expenses, including, without limitation, the
reasonable fees and expenses of outside counsel to Buyer, incurred by Buyer in
connection with the development, preparation and execution of this Agreement,
the other Transaction Documents and any other documents prepared in connection
herewith or therewith; and

(xiv) all such other and further documents, documentation and legal opinions as
Buyer in its commercially reasonable discretion shall reasonably require.

(b) Buyer’s agreement to enter into each Transaction (including the initial
Transaction) is subject to the satisfaction of the following further conditions
precedent, both immediately prior to entering into such Transaction and also
after giving effect to the consummation thereof and the intended use of the
proceeds of the sale:

(i) the Purchase Date is prior to the expiration of the Funding Period.

(ii) the sum of (A) the unpaid Repurchase Price for all prior outstanding
Transactions and (B) the requested Maximum Purchase Price for the pending
Transaction, in each case, shall not exceed the Maximum Facility Amount.

(iii) no Market Disruption Event or Force Majeure Event has occurred and is
continuing, no Margin Deficit exists, and no Default or Event of Default has
occurred and is continuing under this Agreement or any other Transaction
Document.

(iv) Seller shall have paid to Buyer (x) the Purchased Asset Fee then due and
payable with respect to such Transaction pursuant to the Fee Letter and
(y) Buyer’s out-of-pocket costs and expenses pursuant to Article 28(e) of this
Agreement (which amounts referred to in the preceding sub-clauses (x) and
(y) may be paid through a holdback to the Purchase Price) and any other amounts
then due and owing to Buyer under this Agreement.

 

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(v) Seller shall give Buyer no less than one (1) Business Day’s prior written
notice of each Transaction (including the initial Transaction), together with a
signed, written confirmation in the form of Exhibit I attached hereto prior to
each Transaction (a “Confirmation”). Each Confirmation shall describe the terms
of the Transaction, the Purchased Assets, shall identify Buyer and Seller and
shall be executed by both Buyer and Seller (provided, that, in instances where
funds are being wired to an account other than account number 483024227101 at
Bank of America, account name “Blackstone Mortgage Trust, Inc.”, ABA #
026009593, the Confirmation shall be signed by two (2) Responsible Officers of
Seller); provided, however, that Buyer shall not be liable to Seller if it
inadvertently acts on a Confirmation that has not been signed by a Responsible
Officer of Seller, and shall set forth (among other things):

(A) the Purchase Date for the Purchased Assets included in the Transaction;

(B) the Purchase Price and Maximum Purchase Price for the Purchased Assets
included in the Transaction;

(C) the Repurchase Date for the Purchased Assets included in the Transaction;

(D) the requested Advance Rate and Maximum Advance Rate for the Purchased Assets
included in the Transaction;

(E) the amount of any Additional Purchase Amount or Future Funding Amount
requested;

(F) the Market Value and LTV of the Purchased Asset and the Underlying Mortgaged
Property as of the Purchase Date;

(G) the Applicable Spread; and

(H) any additional terms or conditions not inconsistent with this Agreement and
mutually agreed upon by Buyer and Seller.

No Confirmation may be amended unless in a writing executed by Buyer and Seller.
Neither (i) changes in the Repurchase Price related to a Purchased Asset due to
the application of Principal Proceeds nor (ii) periodic adjustments to LIBOR
related to a Purchased Asset shall require an amendment to the related
Confirmation; provided, however, that the funding of any Additional Purchase
Amount or Future Funding Amount shall require an amended and restated
Confirmation.

(vi) Buyer shall have the right to review the Eligible Assets Seller proposes to
sell to Buyer in any Transaction and to conduct its own due diligence
investigation of such Eligible Assets as Buyer determines (each, “Asset Due
Diligence”). Buyer shall be

 

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entitled to make a determination, in the exercise of its sole discretion, that,
in the case of a Transaction, it shall or shall not purchase any or all of the
assets proposed to be sold to Buyer by Seller. On the Purchase Date for the
Transaction, which shall be not less than one (1) Business Day following the
final approval of an Eligible Asset by Buyer in accordance with Exhibit VIII
hereto, the Eligible Assets shall be transferred to Buyer or the Custodian on
Buyer’s behalf against the transfer of the Purchase Price to an account of
Seller. Buyer shall inform Seller of its determination with respect to any such
proposed Transaction solely in accordance with Exhibit VIII attached hereto.
Upon the approval by Buyer of a particular proposed Transaction, Buyer shall
deliver to Seller a signed copy of the related Confirmation (which shall not be
binding upon Seller until it is signed and delivered by Seller and shall not be
binding upon Buyer until it is signed and delivered by Buyer) described in
clause (iii) above, on or before the scheduled date of the underlying proposed
Transaction. Prior to the approval of each proposed Transaction by Buyer, as
applicable:

(A) Buyer shall have (i) determined, in its sole and absolute discretion, that
the asset proposed to be sold to Buyer by Seller in such Transaction is an
Eligible Asset and (ii) determined conformity to the terms of the Transaction
Documents, Buyer’s internal credit and underwriting criteria, and (iii) obtained
internal credit approval, to be granted or denied in Buyer’s sole and absolute
discretion, for the inclusion of such Eligible Asset as a Purchased Asset in a
Transaction, without regard for any prior credit decisions by Buyer or any
Affiliate of Buyer, and with the understanding that Buyer shall have the
absolute right to change any or all of its internal underwriting criteria at any
time, without notice of any kind to Seller;

(B) Buyer shall have fully completed all external legal due diligence;

(C) Buyer shall have determined the Pricing Rate applicable to the Transaction
(including the Applicable Spread) in accordance with Schedule I attached to the
Fee Letter (as adjusted by Buyer on a case by case basis in its sole discretion)
hereto or as otherwise agreed by Buyer and Seller;

(D) no Market Disruption Event or Force Majeure Event has occurred and is
continuing, no Margin Deficit exists, and no Default or Event of Default has
occurred and is continuing under this Agreement or any other Transaction
Document;

(E) Seller shall have delivered to Buyer a list of all exceptions to the
representations and warranties relating to the Purchased Asset and any other
eligibility criteria for such Purchased Asset of which Seller has Knowledge (the
“Requested Exceptions Report”);

(F) Buyer shall have waived in writing all exceptions in the Requested
Exceptions Report;

 

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(G) both immediately prior to the requested Transaction and also after giving
effect thereto and to the intended use thereof, the representations and
warranties made by Seller in each of Exhibit VI and Article 9, as applicable,
shall be true, correct and complete on and as of such Purchase Date in all
respects with the same force and effect as if made on and as of such date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date);

(H) subject to Buyer’s right to perform one or more due diligence reviews
pursuant to Article 26, Buyer shall have completed its due diligence review of
the Purchased Asset File, and such other documents, records, agreements,
instruments, mortgaged properties or information relating to such Purchased
Asset as Buyer in its sole discretion deems appropriate to review and such
review shall be satisfactory to Buyer in its sole discretion and Buyer has
consented in writing (including by signing the related Confirmation) to the
Eligible Asset becoming a Purchased Asset;

(I) with respect to any Eligible Asset to be purchased hereunder on the related
Purchase Date that is not serviced by Seller or an Affiliate thereof, Seller
shall have provided to Buyer a copy of the related Servicing Agreement,
certified as a true, correct and complete copy of the original, together with a
Servicer Notice, fully executed by Seller and the servicer named in the related
Servicing Agreement;

(J) Seller, regardless of whether this Agreement is executed, shall have paid to
Buyer all legal fees and expenses of outside counsel actually incurred by Buyer
in connection with the entering into of any Transaction, including, without
limitation, costs associated with due diligence, recording or other
administrative expenses necessary or incidental to the execution of any
Transaction hereunder, which amounts, at Buyer’s option, may be withheld from
the sale proceeds of any Transaction hereunder;

(K) Buyer shall have determined in accordance with this Agreement that no Margin
Deficit shall exist, either immediately prior to or after giving effect to the
requested Transaction;

(L) on each Purchase Date Buyer shall have received, in the case of a “Table
Funded” Transaction, a Bailee Letter and, from Custodian, an Asset Schedule and
Exception Report (as defined in the Custodial Agreement) and a Trust Receipt and
with respect to each Purchased Asset, dated the Purchase Date, duly completed
and with exceptions acceptable to Buyer in its sole discretion in respect of
Eligible Assets to be purchased hereunder on such Business Day;

(M) Buyer shall have received from Seller a Release Letter covering each
Eligible Asset to be sold to Buyer;

 

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(N) Buyer shall have reasonably determined that no introduction of, or a change
in, any Requirement of Law or in the interpretation or administration of any
Requirement of Law applicable to Buyer has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Buyer to enter into
Transactions;

(O) the Repurchase Date for such Transaction is not later than the Maturity
Date;

(P) Seller shall have taken such other action as Buyer shall have reasonably
requested in order to transfer the Purchased Assets pursuant to this Agreement
and to perfect all security interests granted under this Agreement or any other
Transaction Document in favor of Buyer with respect to the Purchased Assets;

(Q) with respect to any Eligible Asset to be purchased hereunder, if such
Eligible Asset was acquired by Seller, Seller shall have disclosed to Buyer the
acquisition cost of such Eligible Asset (including therein reasonable supporting
documentation required by Buyer, if any);

(R) Buyer shall have received all such other and further documents,
documentation and legal opinions (including, without limitation, opinions
regarding the perfection of Buyer’s security interests) as Buyer in its
reasonable discretion shall reasonably require;

(S) Buyer shall have received a copy of any documents relating to any Hedging
Transaction, and Seller shall have pledged and assigned to Buyer, pursuant to
Article 6 hereunder, all of Seller’s rights under each Hedging Transaction
included within a Purchased Asset, if any;

(T) no “Termination Event”, “Event of Default”, “Potential Event of Default” or
any similar event by Seller, however defined therein, shall have occurred and be
continuing under any Hedging Transaction required to be assigned hereunder; and

(U) the counterparty to Seller in any Hedging Transaction shall be an Affiliated
Hedge Counterparty or a Qualified Hedge Counterparty, and, in the case of a
Qualified Hedge Counterparty, in the event that such counterparty no longer
qualifies as a Qualified Hedge Counterparty, then, at the election of Buyer,
Seller shall ensure that such counterparty posts additional collateral in an
amount satisfactory to Buyer under all its Hedging Transactions with Seller, or
Seller shall immediately terminate the Hedging Transactions with such
counterparty and enter into new Hedging Transactions with a Qualified Hedge
Counterparty.

(c) Upon the satisfaction of all conditions set forth in Articles 3(a) and (b),
Seller shall sell, transfer, convey and assign to Buyer on a servicing-released
basis all of Seller’s right, title and interest in and to each Purchased Asset,
together with all related Servicing Rights against the transfer of the Purchase
Price to an account of Seller. With respect to any

 

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Transaction, the Pricing Rate shall be determined initially on the Pricing Rate
Determination Date applicable to the first Pricing Rate Period for such
Transaction, and shall be reset on the Pricing Rate Determination Date for each
of the next succeeding Pricing Rate Periods for such Transaction. Buyer or its
agent shall determine in accordance with the terms of this Agreement the Pricing
Rate on each Pricing Rate Determination Date for the related Pricing Rate Period
in Buyer’s sole and absolute discretion, and notify Seller in writing two
(2) Business Days prior to the next Pricing Rate Period of such Pricing Rate for
such period. Notwithstanding any other provision herein or in any other
Transaction Document, Buyer shall not be obligated to enter into any Transaction
or purchase any Asset and may terminate a Transaction at any time for any or no
reason until such time as Buyer has executed and delivered a Confirmation and
funded the Purchase Price with respect to any Transaction.

(d) Each Confirmation, together with this Agreement, shall be conclusive
evidence of the terms of the Transaction(s) covered thereby. In the event of any
conflict between the terms of such Confirmation and the terms of this Agreement,
other than with respect to the Advance Rate or the applicable Price Differential
set forth in the related Confirmation, the Confirmation shall prevail.

(e) On the Repurchase Date (including any Early Repurchase Date) for any
Transaction, termination of the Transaction will be effected by (A) payment by
Seller to Buyer of an amount equal to the sum of (1) the Repurchase Price for
the applicable Purchased Asset and (2) any other amounts then due and payable
under this Agreement (including, without limitation, Article 3(g)), any other
Transaction Documents, and any related Hedging Transactions with respect to such
Purchased Asset and (B) transfer to Seller of the Purchased Asset being
repurchased 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 Article 5 of this Agreement). In the event that a Purchased Asset is
repurchased as of the date set forth in clause (vi) of the definition of
Repurchase Date, the settlement of the payment of the Repurchase Price and other
amounts due in connection with the repurchase of such Purchased Asset pursuant
to this Section 3(e) shall occur no later than two (2) Business Days after such
Repurchase Date. For the avoidance of doubt, until such settlement occurs and
such amounts are paid, all rights of Buyer with respect to the applicable
Purchased Asset, including all liens and security interests granted in favor of
Buyer in connection therewith, shall continue in full force and effect.

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

(i) Seller notifies Buyer in writing of its intent to terminate such Transaction
and repurchase such Purchased Asset, setting forth the Early Repurchase Date and
identifying with particularity the Purchased Asset to be repurchased on such
Early Repurchase Date, no later than three (3) Business Days prior to such Early
Repurchase Date (unless such Early Repurchase is in connection with curing a
Margin Deficit or breach of any representation or warranty set forth in
Exhibit VI, or in connection with any of the events described in Article 3(h)
having occurred, in which case such notice shall not be required);

 

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(ii) on such Early Repurchase Date, Seller pays to Buyer an amount equal to the
sum of (A) the Repurchase Price for the applicable Purchased Asset and (B) any
other amounts due and payable under this Agreement (including, without
limitation, Article 3(g)) and under any related Hedging Transactions with
respect to such Purchased Asset against transfer to Seller or its agent of such
Purchased Assets;

(iii) on such Early Repurchase Date, in addition to the amounts set forth in
subclause (ii) above, Seller pays to Buyer, on account of all other Purchased
Assets then subject to Transactions, an amount sufficient to reduce the Purchase
Price for each such Purchased Asset to an amount equal to the Buyer’s Margin
Amount for each such Purchased Asset; and

(iv) such Early Repurchase does not cause Seller to violate the covenant set
forth in Article 10(k) hereof.

(g) If prior to the first day of any Pricing Rate Period with respect to any
Transaction, (i) Buyer shall have determined in the exercise of its reasonable
business judgment (which determination shall be conclusive and binding upon
Seller) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining LIBOR for such Pricing Rate
Period, or (ii) LIBOR determined or to be determined for such Pricing Rate
Period will not adequately and fairly reflect the cost to Buyer (as determined
and certified by Buyer) of making or maintaining Transactions during such
Pricing Rate Period, Buyer shall give written notice thereof to Seller as soon
as practicable thereafter. If such notice is given, the Pricing Rate with
respect to such Transaction for such Pricing Rate Period, and for any subsequent
Pricing Rate Periods until such notice has been withdrawn by Buyer, shall be a
per annum rate equal to the Federal Funds Rate plus the Applicable Spread (the
“Alternative Rate”).

(h) Notwithstanding any other provision herein, if the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof shall
make it unlawful (a “Change in Law”) for Buyer to enter into or maintain
Transactions as contemplated by the Transaction Documents, (a) the commitment of
Buyer hereunder to enter into new Transactions, Future Funding Transactions or
Additional Purchase Transactions and to continue Transactions as such shall
forthwith be canceled, and (b) if a Change in Law makes it unlawful to maintain
Transactions with a Pricing Rate based on LIBOR, the Transactions then
outstanding shall be converted automatically to Alternative Rate Transactions on
the last day of the then current Pricing Rate Period or within such earlier
period as may be required by law. If any such conversion of a Transaction occurs
on a day that is not the last day of the then current Pricing Rate Period with
respect to such Transaction, Seller shall pay to Buyer such amounts, if any, as
may be required pursuant to Article 3(i) of this Agreement.

(i) Upon written demand by Buyer, Seller shall indemnify Buyer and hold Buyer
harmless from any actual out-of-pocket loss, cost or expense (including, without
limitation, reasonable attorneys’ fees and disbursements of outside counsel)
that Buyer may sustain or incur as a consequence of (i) default by Seller in
repurchasing any Purchased Asset after Seller has given written notice in
accordance with Article 3(f) of an Early Repurchase, (ii) any payment of the
Repurchase Price on any day other than a Remittance Date, including Breakage
Costs, (iii) a

 

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default by Seller in selling Eligible Assets after Seller has notified Buyer of
a proposed Transaction and Buyer has agreed in writing to purchase such Eligible
Assets in accordance with the provisions of this Agreement, (iv) Buyer’s
enforcement of the terms of any of the Transaction Documents, (v) any actions
taken to perfect or continue any Lien created under any Transaction Documents,
and/or (vi) Buyer entering into any Transaction or any of the Transaction
Documents or owning any Purchased Item. A certificate as to such costs, losses,
damages and expenses, setting forth the calculations therefor shall be submitted
promptly in writing by Buyer to Seller and shall be prima facie evidence of the
information set forth therein.

(j) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:

(i) shall subject Buyer to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligation, or its deposits, reserves, other
liabilities or capital attributable thereto;

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of Buyer that is not
otherwise included in the determination of LIBOR hereunder; or

(iii) shall impose on Buyer any other condition;

and the result of any of the foregoing is to increase the cost to Buyer, by an
amount that Buyer deems to be material, of entering into, continuing or
maintaining Transactions, Additional Purchase Transactions or Future Funding
Transactions or to reduce any amount receivable under the Transaction Documents
in respect thereof; then, in any such case, Seller shall promptly pay Buyer,
upon its demand, any additional amounts necessary to compensate Buyer for such
increased cost or reduced amount receivable. This covenant shall survive the
termination of this Agreement and the repurchase by Seller of any or all of the
Purchased Assets.

(k) If Buyer shall have determined that the adoption of or any change in any
Requirement of Law or Buyer Compliance Policy made subsequent to the date hereof
regarding capital adequacy or otherwise affecting the Buyer Funding Costs, or in
the interpretation of any such Requirement of Law or Buyer Compliance Policy,
the application thereof or the compliance therewith, in each case whether by a
Governmental Authority, by Buyer or by any corporation controlling Buyer
(including, without limitation, any request or directive regarding capital
adequacy or otherwise affecting the Buyer Funding Costs (whether or not having
the force of law) from any Governmental Authority or any Buyer Compliance Policy
related to such request or directive), does or shall have the effect of reducing
the rate of return on Buyer’s or such corporation’s capital as a consequence of
any one or more of the Transactions, Additional Purchase Transactions or Future
Funding Transactions or otherwise as a consequence of its

 

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obligations under the Transaction Documents to a level below that which Buyer or
such corporation could have achieved, but for such adoption, change,
interpretation, application or compliance, by an amount that Buyer deems, in the
exercise of its reasonable business judgment, to be material, then, from time to
time, after submission by Buyer to Seller of a written request therefor, Seller
shall pay to Buyer such additional amount or amounts as will reimburse Buyer for
the actual damages, losses, costs and expenses incurred by Buyer in connection
with each such reduction; provided that Buyer has then-currently made the same
determination with respect to a similarly situated repurchase customer in a
situation where Buyer has similar contractual rights. Such notification as to
the calculation of any additional amounts payable pursuant to this subsection
shall be submitted by Buyer to Seller and shall be prima facie evidence of such
additional amounts. This covenant shall survive the termination of this
Agreement and the repurchase by Seller of any or all of the Purchased Assets.

(l) If Seller repurchases Purchased Assets on a day other than the last day of a
Pricing Rate Period, Seller shall indemnify Buyer and hold Buyer harmless from
any actual out-of-pocket losses, costs and/or expenses which Buyer sustains as a
direct consequence thereof (“Breakage Costs”), in each case for the remainder of
the applicable Pricing Rate Period. Buyer shall deliver to Seller a written
statement setting forth the amount and basis of determination of any Breakage
Costs in reasonable detail, it being agreed that such statement and the method
of its calculation shall be conclusive and binding upon Seller absent manifest
error. This Article 3(l) shall survive termination of this Agreement and the
repurchase of all Purchased Assets subject to Transactions hereunder.

(m) (i) Notwithstanding the definition of Maturity Date herein, upon written
request of Seller prior to the then-current Maturity Date, provided that all of
the extension conditions listed in clause (ii) below (collectively, the
“Maturity Date Extension Conditions”) shall have been satisfied, Seller may
request an extension of the Maturity Date for a period of up to three hundred
sixty-four (364) additional days by giving notice to Buyer of such extension;
provided, however, that in no event shall the Maturity Date be extended to a
date that is later than the Final Maturity Date.

(ii) For purposes of this Article 3(m), the Maturity Date Extension Conditions
shall be deemed to have been satisfied if:

(A) Seller shall have given Buyer written notice, not less than forty-five
(45) days prior, and no more than one hundred and eighty (180) days prior to the
originally scheduled Maturity Date, of Seller’ desire to extend the Maturity
Date; and if Seller fails to give such notice, Seller shall be deemed to have
elected not to extend the Maturity Date;

(B) no Force Majeure Event shall have occurred and be continuing, no Margin
Deficit shall exist, and no Default or Event of Default under this Agreement
shall have occurred and be continuing as of the date notice is given under
subclause (ii) above or as of the originally scheduled Maturity Date and no
“Termination Event,” “Event of Default” or “Potential Event of Default” or any
similar event by Seller, however denominated, shall have occurred and be
continuing under any Hedging Transaction; and

(C) all representations and warranties of Seller set forth in this Agreement
other than the Mark-to-Market Representations shall be true, correct, complete
and accurate in all material respects as of the existing Maturity Date, except
to the extent disclosed in a Requested Exceptions Report previously accepted by
Buyer.

 

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(iii) Notwithstanding any extension to the Maturity Date as described in this
Article 3, an extension of the Maturity Date shall not extend any particular
Transaction’s Repurchase Date unless the Repurchase Date for such a Transaction
is specifically extended by agreement of Buyer and Seller in accordance with
Article 3(z), and Buyer and Seller execute a new Confirmation containing the
same pricing terms as the original Confirmation and the extended Repurchase Date
for the Transaction.

(n) Any and all payments by or on account of any obligation of Seller under this
Agreement or any other Transaction Document 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 by a withholding agent, then the applicable withholding agent shall be
entitled to make such deduction or withholding and shall timely pay 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
by Seller to the applicable Buyer or Assignee shall be increased as necessary so
that after such deduction or withholding has been made (including such
deductions and withholdings applicable to additional sums payable under this
Article 3(n) or Article 3(o)) the applicable Buyer or Assignee receives an
amount equal to the sum it would have received had no such deduction or
withholding been made.

(o) Seller shall timely pay (i) any Other Taxes imposed on Seller to the
relevant Governmental Authority in accordance with Applicable Law, and (ii) any
Other Taxes imposed on the Buyer or Assignee upon written notice from such
Person setting forth in reasonable detail the calculation of such Other Taxes.

(p) As soon as practicable after any payment of Taxes by Seller to a
Governmental Authority pursuant to Article 3(o) or Article 3(q), Seller shall
deliver to Buyer or Assignee, as applicable, 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 or Assignee, as applicable.

(q) Seller shall indemnify Buyer and each Assignee, within ten (10) Business
Days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under Article 3(o) or this Article 3(q)) payable or paid by Buyer or
such Assignee or required to be withheld or deducted from a payment to such
Person and any reasonable out-of-pocket expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided that no
payment shall be required under this Article 3(q) for any claim for Indemnified
Taxes that were paid by Buyer or such Assignee two hundred and seventy (270) or
more days prior to the date of such claim. A certificate setting forth in
reasonable detail the calculation of the amount of such payment or liability
delivered to Seller by Buyer or such Assignee shall be conclusive absent
manifest error.

 

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(r) (i) Any Buyer and any Assignee that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Transaction
Document shall deliver to Seller, 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 or Assignee, if reasonably
requested by Seller, shall deliver such other documentation prescribed by
Applicable Law or reasonably requested by Seller as will enable Seller to
determine whether or not Buyer or Assignee 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 clauses (ii)(A),
(ii)(B), (ii)(D) and (iii) below) shall not be required if in Buyer’s or
Assignee’s reasonable judgment such completion, execution or submission would
subject Buyer or such Assignee to any material unreimbursed cost or expense or
would materially prejudice the legal or commercial position of Buyer or such
Assignee.

(ii) Without limiting the generality of the foregoing,

(A) Buyer and any Assignee that is a U.S. Person shall deliver to Seller on or
prior to the date on which Buyer or such Assignee acquires an interest under any
Transaction Document (and from time to time thereafter upon the reasonable
request of Seller), executed originals of IRS Form W-9 certifying that Buyer and
such Assignee is exempt from U.S. federal backup withholding tax;

(B) any Foreign Buyer shall, to the extent it is legally entitled to do so,
deliver to Seller (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Buyer acquires an
interest under this Agreement (and from time to time thereafter upon the
reasonable request of Seller), whichever of the following is applicable:

(1) in the case of a Foreign Buyer claiming the benefits of an income tax treaty
to which the United States is a party (x) with respect to payments of interest
under this Agreement, executed originals of IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“interest” article of such tax treaty and (y) with respect to any other
applicable payments under any Transaction Document, IRS Form W-8BEN 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;

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

(3) in the case of a Foreign Buyer claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit XI-1 to the effect that such

 

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Foreign 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 (y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Buyer is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit XI-2 or
Exhibit XI-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Buyer is a
partnership and one or more direct or indirect partners of such Foreign Buyer
are claiming the portfolio interest exemption, such Foreign Buyer may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit XI-4 on
behalf of each such direct and indirect partner;

(C) any Foreign Buyer shall, to the extent it is legally entitled to do so,
deliver to Seller (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Buyer acquires an
interest under 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

(D) if a payment made to Buyer or Assignee under any Transaction Document would
be subject to U.S. federal withholding Tax imposed by FATCA if Buyer or Assignee
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 or such Assignee 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 that Buyer or such Assignee has
complied with Buyer’s or such Assignee’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

(iii) Buyer and each Assignee agrees that if any form or certification described
in items (A), (B), (C) or (D) above it previously delivered 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.

 

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(s) 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 Article 3(o) or, Article 3(q) (including by the payment of
additional amounts pursuant to Article 3(i)), it shall pay to the indemnifying
party an amount equal to such refund (but only to the extent of indemnity
payments made under Article 3(i), Article 3(o) and/or Article 3(q) with respect
to the Taxes giving rise to such refund), net of all reasonable 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 Article 3(s) (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority. Notwithstanding
anything to the contrary in this Article 3(s), in no event will the indemnified
party be required to pay any amount to an indemnifying party pursuant to this
Article 3(s) the payment of which would place the indemnified party in a less
favorable net after-Tax position than the indemnified party would have been in
if the indemnification payments or additional amounts giving rise to such refund
had never 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.

(t) Each party’s obligations under clauses (n) through (s) of this Article 3
shall survive any assignment of rights by, or the replacement of, Buyer or
Assignee, the termination of the Agreement and the repayment, satisfaction or
discharge of all obligations under this Agreement.

(u) If any Buyer or Assignee requests compensation under Article 3 or, if Seller
is required to pay any Indemnified Taxes or additional amounts to any Buyer or
any Assignee or any Governmental Authority for the account of any Buyer or
Assignee pursuant to Article 3(i), Article 3(o) or Article 3(q), or if any Buyer
or Assignee defaults in its obligations under this Agreement, then Seller may,
at its sole expense and effort, upon notice to such Buyer or Assignee, require
such Buyer or Assignee to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Article 17), all its
interests, rights (other than its existing rights to payments pursuant to
Articles 3(g) or 3(i)) and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Buyer, if a Buyer
accepts such assignment); provided that (i) such Buyer shall have received
payment of an amount equal to the Repurchase Price for all Transactions, Price
Differential accreted with respect thereto, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
Repurchase Price principal and accreted Price Differential and fees) or Seller
(in the case of all other amounts) and (ii) in the case of any such assignment
resulting from a claim for compensation under Article 3(i) or payments required
to be made pursuant to Article 3(g), such assignment will result in a reduction
in such compensation or payments. A Buyer or Assignee shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Buyer or Assignee or otherwise, the circumstances entitling
Seller to require such assignment and delegation cease to apply.

 

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(v) If at any time prior to the Maturity Date, a non-use fee or other similar
charge is assessed against Buyer internally, Seller shall, monthly on demand
from Buyer, provided that Buyer has then-currently made the same determination
with respect to a similarly situated repurchase customer in a situation where
Buyer has similar contractual rights, reimburse Buyer for the exact amount of
each such fee, as and when originally assessed, with each such assessment and
payment to be in addition to the monthly Price Differential payments otherwise
due in accordance with the applicable provisions of this Agreement.

(w) (i) If at any time prior to the Cash Sweep Tail Period, there exists
Additional Purchase Available Amount with respect to a Purchased Asset, Seller
may submit to Buyer a request that Buyer increase the Purchase Price for such
Purchased Asset in an amount requested by Seller, which amount shall be no less
than $250,000 and shall not exceed the Additional Purchase Available Amount as
of the proposed date for such increase to the Purchase Price for such Purchased
Asset (each such transaction, an “Additional Purchase Transaction” and the
amount so funded with respect to each Additional Purchase Transaction, the
“Additional Purchase Amount”). Notwithstanding the foregoing, Seller may not
request, and Buyer shall not be obligated to pay, any Additional Purchase Amount
unless no uncured Margin Deficit, Force Majeure Event, Default or Event of
Default has occurred and is continuing or would result from the funding of such
Additional Purchase Transaction. Upon delivery of a request by Seller for an
Additional Purchase Transaction, and Buyer’s satisfaction that all terms and
conditions set forth in this Section 3(w) have been complied with (including,
without limitation, those in the immediately preceding sentence), Buyer shall,
within one (1) Business Day following Seller’s request therefore, pay the
Additional Purchase Amount for each such Additional Purchase Transaction. In
connection with any such Additional Purchase Transaction, Buyer and Seller shall
execute and deliver to each other an updated Confirmation setting forth the new
outstanding Purchase Price with respect to such Transaction. Notwithstanding the
above or any other provision in this Agreement, to the extent that the Purchase
Price of any Purchased Asset is reduced by Seller pursuant to Section 3(y) of
this Agreement to an amount that is less than fifty percent (50%) of the Maximum
Purchase Price of such Purchased Asset, the Additional Purchase Available Amount
with respect to such Purchased Asset shall thereafter (unless Buyer, in its sole
discretion, determines not to apply the following reduction) be reduced by the
amount equal to the difference between (i) fifty percent (50%) of the Maximum
Purchase Price of such Purchased Asset and (ii) the Purchase Price of such
Purchased Asset following the application of such reduction to the Purchase
Price pursuant to Section 3(y) which causes the Purchase Price to be less than
fifty percent (50%) of the Maximum Purchase Price.

(ii) Buyer’s agreement to enter into any Additional Purchase Transaction with
respect to any Purchased Asset is further subject to the satisfaction, in
Buyer’s reasonable discretion, of the following conditions precedent (the
“Additional Purchase Transaction Conditions Precedent”):

(A) Buyer shall have determined the Pricing Rate applicable to the related
Transaction (including the Applicable Spread) in accordance with Schedule I
attached to the Fee Letter or as otherwise agreed by Buyer and Seller;

 

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(B) no uncured Margin Deficit, Force Majeure Event, Default or Event of Default
has occurred and is continuing or would result from the funding of such
Additional Purchase Transaction;

(C) both immediately prior to the requested Additional Purchase Transaction and
also after giving effect thereto and to the intended use thereof, the
representations and warranties made by Seller in each of Exhibit VI and
Article 9, as applicable, shall be true, correct and complete on and as of the
date of such Additional Purchase Transaction in all respects with the same force
and effect as if made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such
specific date) except to the extent disclosed in a Requested Exceptions Report
previously accepted by Buyer; and

(D) the sum of (A) the unpaid Repurchase Price for all outstanding Transactions
and (B) the requested Additional Purchase Amount, shall not exceed the Maximum
Facility Amount as of such date.

(iii) In connection with any such Additional Purchase Transaction, Buyer and
Seller shall execute and deliver to each other an updated Confirmation setting
forth the new outstanding Purchase Price with respect to such Transaction.

(iv) No decision on the part of Buyer to enter into an Additional Purchase
Transaction or the advance of any Additional Purchase Amount shall be deemed to
be a waiver of any covenant, representation or warranty or other obligation of
Seller contained herein.

(x) (i) At any time prior to the expiration of the Funding Period, Seller may
request a Future Funding Transaction by giving Buyer written notice thereof
together with a written Confirmation signed by an officer of Seller (a “Future
Funding Confirmation”) at least two (2) Business Days prior to the proposed
Future Funding Date. Buyer shall be entitled to make a determination, in the
exercise of its sole and absolute discretion, that, in the case of a Future
Funding Transaction, it shall or shall not enter into the Future Funding
Transaction, and notwithstanding any other provision herein, Buyer shall have no
obligation to enter into any Future Funding Transaction. If Buyer determines it
will enter into a Future Funding Transaction and that the Future Funding
Transaction Conditions Precedent have been satisfied with respect to the
applicable Future Funding Transaction in its sole and absolute discretion, Buyer
shall deliver to Seller a countersigned copy of the related Future Funding
Confirmation on or before the Future Funding Date for the proposed Future
Funding Transaction. On the Future Funding Date for the applicable Future
Funding Transaction, funds in the amount stated in the Future Funding
Confirmation (the “Future Funding Amount”) shall be transferred by Buyer to the
Purchased Asset’s underlying obligor. Each Future Funding Confirmation, together
with this Agreement, shall be conclusive evidence of the terms of the Future
Funding Transaction covered thereby. If terms in a Future Funding Confirmation
are inconsistent with terms in this Agreement with respect to a particular
Future Funding Transaction, the Future Funding Confirmation shall prevail.

 

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(ii) While Buyer and Seller hereby acknowledge and agree that it is not intended
that Buyer re-underwrite each Purchased Asset in connection with a Future
Funding Transaction request, Seller shall provide Buyer with all confirmatory or
updated documentation that is reasonably requested by Buyer in connection with
Buyer’s evaluation of the Future Funding Transaction for the related Purchased
Asset as Buyer reasonably determines to be necessary and appropriate and Buyer
shall conduct such additional diligence based on such information as Buyer
determines to be necessary or appropriate and Seller shall provide Buyer such
additional information with respect to such due diligence as Buyer may
reasonably request.

(iii) Buyer’s agreement to enter into any Future Funding Transaction with
respect to any Purchased Asset is subject to the satisfaction, in Buyer’s
reasonable discretion, of the following conditions precedent (the “Future
Funding Transaction Conditions Precedent”):

(A) the date of the Future Funding Transaction is prior to the expiration of the
Funding Period;

(B) if, in connection with the entry into the initial Transaction relating to
the Purchased Asset that is the subject of a Future Funding Transaction, Buyer
and Seller agreed upon additional conditions precedent which are required to be
satisfied with respect to such Purchased Asset and that are specified in the
related Future Funding Confirmation, then such additional conditions precedent
have been satisfied;

(C) Buyer shall have (i) determined, in its sole and absolute discretion, that
the related Purchased Asset is an Eligible Asset and (ii) determined conformity
to the terms of the Transaction Documents, Buyer’s internal credit and
underwriting criteria, and (iii) obtained internal credit approval, to be
granted or denied in Buyer’s sole and absolute discretion, for the Future
Funding Transaction, without regard for any prior credit decisions by Buyer or
any Affiliate of Buyer, and with the understanding that Buyer shall have the
absolute right to change any or all of its internal underwriting criteria at any
time, without notice of any kind to Seller;

(D) Buyer shall have fully completed all external due diligence as discussed in
clause (ii) above;

(E) Buyer shall have determined the Pricing Rate applicable to the related
Transaction (including the Applicable Spread) in accordance with Schedule I
attached to the Fee Letter (as adjusted by Buyer on a case by case basis in its
sole discretion) hereto or as otherwise agreed by Buyer and Seller;

(F) no Material Adverse Effect or Force Majeure Event shall have occurred, no
Margin Deficit shall exist, and no Default or Event of Default under this
Agreement shall have occurred and be continuing;

 

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(G) both immediately prior to the requested Future Funding Transaction and also
after giving effect thereto and to the intended use thereof, the representations
and warranties made by Seller in each of Exhibit VI and Article 9, as
applicable, shall be true, correct and complete on and as of the date of such
Future Funding Transaction in all respects with the same force and effect as if
made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date);

(H) the LTV of the related Purchased Asset taking into account the requested
advance of the Future Funding Amount is no greater than the LTV of the related
Purchased Asset as of the Purchase Date;

(I) following such increase in the outstanding Purchase Price attributable to
the Future Funding Amount (1) no Margin Deficit shall exist and (2) no breach of
the Concentration Limit shall occur;

(J) the Future Funding Amount shall be equal to or greater than $250,000;

(K) the sum of (A) the unpaid Repurchase Price for all outstanding Transactions
and (B) the requested Future Funding Amount shall not exceed the Maximum
Facility Amount as of such date;

(L) Seller shall have delivered to Buyer a certification that all conditions
precedent to the future funding obligation under the Purchased Asset
documentation have been satisfied in all material respects and provided Buyer
with any evidence or documentation thereto Buyer may request;

(M) Seller shall have paid to Buyer all legal fees and expenses of outside
counsel actually incurred by Buyer in connection with the entering into of the
Future Funding Transaction, including, without limitation, costs associated with
due diligence, recording or other administrative expenses necessary or
incidental to the execution of the Future Funding Transaction, which amounts, at
Buyer’s option, may be withheld from the sale proceeds of the Future Funding
Transaction;

(N) on the date of the Future Funding Transaction Buyer shall have received, in
the case of a “Table Funded” Transaction, a Bailee Letter and, from Custodian,
an Asset Schedule and Exception Report (as defined in the Custodial Agreement)
and a Trust Receipt and with respect to each Purchased Asset, dated the Purchase
Date, duly completed and with exceptions acceptable to Buyer in its sole
discretion in respect of Eligible Assets to be purchased hereunder on such
Business Day;

(O) Buyer shall have received from Seller a Release Letter covering the related
Purchased Asset;

 

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(P) Buyer shall have reasonably determined that no introduction of, or a change
in, any Requirement of Law or in the interpretation or administration of any
Requirement of Law applicable to Buyer has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Buyer to enter into
Future Funding Transactions;

(Q) the Repurchase Date for the related Transaction is not later than the
Initial Maturity Date;

(R) Seller shall have taken such other action as Buyer shall have reasonably
requested in order to transfer the Purchased Assets pursuant to this Agreement
and to perfect all security interests granted under this Agreement or any other
Transaction Document in favor of Buyer with respect to the Purchased Assets;

(S) Buyer shall have received all such other and further documents,
documentation and legal opinions (including, without limitation, opinions
regarding the perfection of Buyer’s security interests) as Buyer in its
reasonable discretion shall reasonably require;

(T) Buyer shall have received a copy of any documents relating to any Hedging
Transaction, and Seller shall have pledged and assigned to Buyer, pursuant to
Article 6 hereunder, all of Seller’s rights under each Hedging Transaction
included within a Purchased Asset, if any;

(U) no “Termination Event”, “Event of Default”, “Potential Event of Default” or
any similar event by Seller, however defined therein, shall have occurred and be
continuing under any Hedging Transaction required to be assigned hereunder;

(V) the counterparty to Seller in any Hedging Transaction shall be an Affiliated
Hedge Counterparty or a Qualified Hedge Counterparty, and, in the case of a
Qualified Hedge Counterparty, in the event that such counterparty no longer
qualifies as a Qualified Hedge Counterparty, then, at the election of Buyer,
Seller shall ensure that such counterparty posts additional collateral in an
amount satisfactory to Buyer under all its Hedging Transactions with Seller, or
Seller shall immediately terminate the Hedging Transactions with such
counterparty and enter into new Hedging Transactions with a Qualified Hedge
Counterparty; and

(W) Seller shall pay to Buyer on the Future Funding Date the Purchased Asset Fee
attributable to the Future Funding Amount.

(iv) If Buyer determines, in accordance with Section 3(x)(i) that the Future
Funding Transaction Conditions Precedent have not been satisfied (or otherwise
waived by Buyer in its sole discretion), and that Buyer shall not advance the
Future Funding Advance requested by Seller, then, on any Business Day
thereafter, Seller may elect, in its sole discretion, to repurchase the related
Purchased Asset.

(v) No decision on the part of Buyer to enter into a Future Funding Transaction
or the advance of any Future Funding Amount shall be deemed to be a waiver of
any covenant, representation or warranty or other obligation of Seller contained
herein.

 

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(y) On any Business Day prior to the Repurchase Date, Seller shall have the
right, from time to time, to transfer cash to Buyer for the purpose of reducing
the outstanding Purchase Price of, but not terminating, a Transaction and
without the release of any Purchased Items; provided, that (i) any such
reduction in outstanding Purchase Price occurring on a date other than a
Remittance Date shall be required to be accompanied by payment of (A) all unpaid
accrued Price Differential as of the applicable Business Day on the amount of
such reduction and (B) any other amounts due and payable by Seller under this
Agreement and under any related Hedging Transactions with respect to such
Purchased Asset, (ii) such transfer of cash to Buyer shall be in an amount no
less than $1,000,000, and (iii) Seller shall provide Buyer with three
(3) Business Days prior notice with respect to a reduction in outstanding
Purchase Price in an amount greater than $5,000,000 occurring on any date that
is not a Remittance Date. In connection with any such reduction of outstanding
Purchase Price pursuant to this Section 3(y), Buyer and Seller shall execute and
deliver to each other an updated Confirmation setting forth the new outstanding
Purchase Price with respect to such Transaction.

(z) If all of the extension conditions listed in clauses (i) through (iv) of
this Article 3(z) (collectively, the “Repurchase Date Extension Conditions”)
shall have been satisfied, Seller may extend the Repurchase Date for a
Transaction for a period of up to three hundred sixty-four (364) additional days
by giving notice to Buyer of such extension; provided that in no event shall the
Repurchase Date for any Transaction be extended beyond the Final Maturity Date.
For purposes of the preceding sentence, the Repurchase Date Extension Conditions
shall be deemed to have been satisfied if:

(i) Buyer shall have received payment from Seller of the Purchased Asset Fee;

(ii) Seller shall have given Buyer written notice, not less than thirty
(30) days prior but no more than ninety (90) days prior to the originally
scheduled Repurchase Date, of Seller’s desire to extend the Repurchase Date; and
if Seller fails to give such notice, Seller shall be deemed to have elected not
to extend the Repurchase Date;

(iii) no Force Majeure Event shall have occurred and be continuing, no Margin
Deficit shall exist, and no Default or Event of Default under this Agreement
shall have occurred and be continuing as of the date notice is given under
subclause (i) above or as of the originally scheduled Repurchase Date and no
“Termination Event,” “Event of Default” or “Potential Event of Default” or any
similar event by Seller, however denominated, shall have occurred and be
continuing under any Hedging Transaction required to be assigned hereunder; and

(iv) all representations and warranties shall be true, correct, complete and
accurate in all material respects as of the then-scheduled Repurchase Date,
except to the extent disclosed in a Requested Exceptions Report previously
accepted by Buyer.

 

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ARTICLE 4.

MARGIN MAINTENANCE

(a) If at any time the Buyer’s Margin Amount for all Purchased Assets is less
than the aggregate Purchase Price outstanding for all Purchased Assets (a
“Margin Deficit”), then Buyer may by written notice (which may be in electronic
form) delivered to Seller in the form of Exhibit X (a “Margin Deficit Notice”)
require Seller to, at Seller’s option, to the extent such Margin Deficit equals
or exceeds the Minimum Transfer Amount, (i) repurchase some or all of the
Purchased Assets at their respective Repurchase Prices, (ii) make a payment in
reduction of the Repurchase Price of some or all of the Purchased Assets in
immediately available funds, (iii) deliver collateral in the form of cash or
Cash Equivalents, or (iv) choose any combination of the foregoing, such that,
after giving effect to such transfers, repurchases and payments, Buyer’s Margin
Amount for all Purchased Assets shall be equal to or greater than the aggregate
Repurchase Price for all Purchased Assets. In connection with the delivery of
cash or Cash Equivalents in accordance with clause (iii) above, Seller shall
deliver to Buyer any additional documents (including, without limitation, to the
extent not covered by any previously delivered legal opinions, one or more
opinions of counsel reasonably satisfactory to Buyer) and take any actions
reasonably necessary in Buyer’s discretion for Buyer to have a first priority,
perfected security interest in such cash or Cash Equivalents, as applicable.

(b) If a Margin Deficit Notice is given by Buyer under Article 4(a) of this
Agreement on any Business Day at or prior to the Margin Notice Deadline, Seller
shall cure the related Margin Deficit as provided in Article 4(a) prior to 5:00
p.m. New York time no later than one (1) Business Day following the day such
Margin Deficit Notice is given by Buyer. If any Margin Deficit Notice is given
by Buyer on any Business Day at any time after the Margin Notice Deadline,
Seller shall cure the related Margin Deficit as provided in Article 4(a) by no
later than prior to 5:00 p.m. New York time no later than two (2) Business Days
following the day such Margin Deficit Notice is given by Buyer.

(c) The failure of Buyer, on any one or more occasions, to exercise its rights
hereunder, shall not change or alter the terms and conditions to which this
Agreement is subject or limit the right of Buyer to do so at a later date.
Seller and Buyer each agree that a failure or delay by Buyer to exercise its
rights hereunder shall not limit or waive Buyer’s rights under this Agreement or
otherwise existing by law or in any way create additional rights for Seller.

ARTICLE 5.

INCOME PAYMENTS AND PRINCIPAL PROCEEDS

(a) The Depository Account shall be established at the Depository and shall be
subject to the Depository Agreement concurrently with the execution and delivery
of this Agreement by Seller and Buyer. Pursuant to the Depository Agreement,
Buyer shall have sole dominion and control (including “control” within the
meaning of the UCC (as defined in Section 6(d) below)) over the Depository
Account. The Depository Account shall at all times be subject to the Depository
Agreement. All Income or other amounts in respect of the Purchased Assets, as
well as any interest received from the reinvestment of such Income or other
amounts, shall be deposited directly by the applicable Mortgagor into the
Depository Account in accordance with the Re-direction Letter. Depository shall
then apply such Income in accordance with the applicable provisions of
Articles 5(c) through 5(e) of this Agreement.

 

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(b) Contemporaneously with the sale to Buyer of any Purchased Asset, Seller
shall deliver to each Mortgagor, issuer of a participation interest, servicer
and paying agent with respect to each Purchased Asset or borrower under a
Purchased Asset an irrevocable direction letter substantially in the form of
Exhibit XVI (the “Re-direction Letter”), instructing, as applicable, the
Mortgagor, issuer of a participation interest, servicer or trustee with respect
to such Purchased Asset or borrower (as applicable) to pay all amounts payable
under the related Purchased Asset into the Depository Account. If a Mortgagor,
issuer of a participation interest, servicer or paying agent with respect to the
Purchased Asset or borrower forwards any Income or other amounts with respect to
a Purchased Asset to Seller or any Affiliate of Seller rather than directly into
the Depository Account, Seller shall, or shall cause such Affiliate to,
(i) deliver an additional Re-direction Letter to the applicable Mortgagor,
issuer of a participation interest, servicer or paying agent with respect to the
Purchased Asset or borrower and make other reasonable best efforts to cause such
Mortgagor, issuer of a participation interest, servicer or paying agent with
respect to the Purchased Asset or borrower to forward such amounts directly to
the Depository Account and (ii) deposit in the Depository Account any such
amounts within one (1) Business Day of Seller’s (or its Affiliate’s) receipt
thereof.

(c) So long as no Event of Default with respect to any Purchased Asset shall
have occurred and be continuing, prior to the Cash Sweep Tail Period, all Income
or other amounts received by the Depository in respect of any Purchased Asset
(other than Principal Proceeds) during each Collection Period shall be applied
by the Depository on the related Remittance Date in the following order of
priority:

(i) first, (i) to the Custodian for payment of the document custodian fees
payable to Custodian pursuant to the Custodian Agreement, then (ii) to the
Depository for payment of fees payable to the Depository in connection with the
Depository Account and then (iii) to the Interim Servicer for payment of the
loan servicing fees payable monthly to the Interim Servicer pursuant plus the
reasonable out-of-pocket costs and expenses, in each case, as required under the
Interim Servicing Agreement as in effect from time to time;

(ii) second, pro rata, (A) to Buyer, an amount equal to the Price Differential
that has accreted and is outstanding as of such Remittance Date and (B) to any
Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated
Hedge Counterparty under any Hedging Transaction related to a Purchased Asset;

(iii) third, to Buyer, an amount equal to any other amounts then due and payable
to Buyer or its Affiliates under any Transaction Document (including any
outstanding Margin Deficits); and

(iv) fourth, to Seller, the remainder, if any.

Notwithstanding the foregoing, so long as any Default has occurred and is
continuing, but has not become an Event of Default, all amounts remaining in the
Depository Account on each

 

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Remittance Date after application to clauses (i) through (iii) above shall
remain in the Depository Account until such Default has either (x) been cured to
Buyer’s satisfaction, in which case such remaining amounts shall be distributed
to Seller pursuant to clause (iv) above, or (y) has matured into an Event of
Default, in which case such remaining amounts shall be distributed pursuant to
Article 5(e) below.

(d) So long as no Event of Default with respect to any Purchased Asset shall
have occurred and be continuing, prior to the Cash Sweep Tail Period, any
Principal Proceeds shall be applied by the Depository on the Business Day
following the Business Day on which such funds are deposited in the Depository
Account in the following order of priority:

(i) first, pro rata, (A) to Buyer, until the Purchase Price for such Purchased
Asset has been reduced to the Buyer’s Margin Amount for such Purchased Asset as
of the date of such payment (as determined by Buyer after giving effect to such
Principal Proceeds and application of net sales proceeds, if applicable) and
(B) solely with respect to any Hedging Transaction with an Affiliated Hedge
Counterparty related to such Purchased Asset, to such Affiliated Hedge
Counterparty an amount equal to any accrued and unpaid breakage costs or
termination payments under such Hedging Transaction related to such Purchased
Asset;

(ii) second, to Buyer, an amount equal to any other amounts due and owing to
Buyer or its Affiliates under any Transaction Document (including any
outstanding Margin Deficits); and

(iii) third, to Seller, the remainder of such Principal Proceeds.

Notwithstanding the foregoing, so long as any Default has occurred and is
continuing, but has not become an Event of Default, all amounts remaining in the
Depository Account on each Remittance Date after application to clauses
(i) through (ii) above shall remain in the Depository Account until such Default
has either (x) been cured to Buyer’s satisfaction, in which case such remaining
amounts shall be distributed to Seller pursuant to clause (iii) above, or
(y) has matured into an Event of Default, in which case such remaining amounts
shall be distributed pursuant to Article 5(e) below.

(e) At any time during the Cash Sweep Tail Period or if an Event of Default
shall have occurred and be continuing, all Income (including, without
limitation, any Principal Proceeds or any other amounts received, without regard
to their source) or any other amounts received by the Depository in respect of a
Purchased Asset shall be applied by the Depository on the Business Day next
following the Business Day on which such funds are deposited in the Depository
Account in the following order of priority:

(i) first, (i) to the Custodian for payment of the document custodian fees
payable to Custodian pursuant to the Custodian Agreement, then (ii) to the
Depository for payment of fees payable to the Depository in connection with the
Depository Account and then (iii) to the Interim Servicer for payment of the
loan servicing fees payable monthly to the Interim Servicer pursuant plus the
reasonable out-of-pocket costs and expenses, in each case, as required under the
Interim Servicing Agreement as in effect from time to time;

 

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(ii) second, pro rata, (A) to Buyer, an amount equal to the Price Differential
that has accreted and is outstanding in respect of all of the Purchased Assets
as of such Business Day and (B) to any Affiliated Hedge Counterparty, any
amounts then due and payable to an Affiliated Hedge Counterparty under any
Hedging Transaction related to such Purchased Asset;

(iii) third, to Buyer, on account of the Repurchase Price of such Purchased
Asset until the Repurchase Price for such Purchased Asset has been reduced to
zero;

(iv) fourth, to Buyer, on account of the Repurchase Price of all Purchased
Assets until the Repurchase Price for all such Purchased Assets has been reduced
to zero;

(v) fifth, to Buyer, an amount equal to any other amounts due and owing to Buyer
or its Affiliates under any Transaction Document; and

(vi) sixth, to Seller, any remainder.

ARTICLE 6.

SECURITY INTEREST

(a) Buyer and Seller intend that the Transactions hereunder be sales to Buyer of
the Purchased Assets and not loans from Buyer to Seller secured by the Purchased
Assets. However, in order to preserve Buyer’s rights under this Agreement in the
event that a court or other forum recharacterizes the Transactions hereunder as
loans and as security for the performance by Seller of all of Seller’s
obligations to Buyer under the Transaction Documents and the Transactions
entered into hereunder, or in the event that a transfer of a Purchased Asset is
otherwise ineffective to effect an outright transfer of such Purchased Asset to
Buyer, Seller hereby assigns, pledges and grants a security interest in all of
its right, title and interest in, to and under the Purchased Items (as defined
below) to Buyer to secure the payment of the Repurchase Price on all
Transactions to which it is a party and all other amounts owing by Seller or
Seller’s Affiliates to Buyer and any of Buyer’s present or future Affiliates
hereunder, including, without limitation, amounts owing pursuant to Article 25,
and under the other Transaction Documents, including any obligations of Seller
under any Hedging Transaction entered into with any Affiliated Hedge
Counterparty (including, without limitation, all amounts anticipated to be paid
to Buyer by an Affiliated Hedge Counterparty as provided for in the definition
of Repurchase Price or otherwise) and to secure the obligation of Seller or its
designee to service the Purchased Assets in conformity with Article 27 and any
other obligation of Seller to Buyer (collectively, the “Repurchase
Obligations”). Seller agrees to mark its computer records and tapes to evidence
the interests granted to Buyer hereunder. All of Seller’s right, title and
interest in, to and under each of the following items of property, whether now
owned or hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the “Purchased Items”:

(i) the Purchased Assets and all “securities accounts” (as defined in
Article 8-501(a) of the UCC) to which any or all of the Purchased Assets are
credited;

 

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(ii) any and all interests of Seller in, to and under the Depository Account and
all monies from time to time on deposit in the Depository Account;

(iii) any cash or Cash Equivalents delivered to Buyer in accordance with Article
4(a);

(iv) the Purchased Asset Documents, Servicing Agreements, Servicing Records,
Servicing Rights, all servicing fees relating to the Purchased Assets, insurance
policies relating to the Purchased Assets, and collection and escrow accounts
and letters of credit relating to the Purchased Assets;

(v) Seller’s right under each Hedging Transaction, if any, relating to the
Purchased Assets to secure the Repurchase Obligations;

(vi) all “general intangibles”, “accounts”, “chattel paper”, “investment
property”, “instruments”, “securities accounts” and “deposit accounts”, each as
defined in the UCC, relating to or constituting any and all of the foregoing;

(vii) any other items, amounts, rights or properties transferred or pledged by
Seller to Buyer under any of the Transaction Documents; and

(viii) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, and records (but excluding any financial models
or other proprietary information) and files relating to any and all of any of
the foregoing.

(b) Without limiting Article 6(a) hereto, to secure payment of the Repurchase
Obligations owing to Buyer, Seller hereby grants to Buyer a security interest in
the Purchased Items, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located.

(c) Buyer agrees to act as agent for and on behalf of the Affiliated Hedge
Counterparties with respect to the security interest granted hereby to secure
the obligations owing to the Affiliated Hedge Counterparties under any Hedging
Transactions, including, without limitation, with respect to the Purchased
Assets and the Purchased Asset Files held by the Custodian pursuant to the
Custodial Agreement.

(d) Buyer’s security interest in the Purchased Items shall terminate only upon
termination of Seller’s obligations under this Agreement and the other
Transaction Documents, all Hedging Transactions and the documents delivered in
connection herewith and therewith. Upon such termination, Buyer shall promptly
deliver to Seller such UCC termination statements and other release documents as
may be commercially reasonable and return the Purchased Assets to Seller and
reconvey the Purchased Items to Seller and release its security interest in the
Purchased Items. For purposes of the grant of the security interest pursuant to
this Article 6, this Agreement shall be deemed to constitute a security
agreement under the New York Uniform Commercial Code (the “UCC”). Buyer shall
have all of the rights and may exercise all of the remedies of a secured
creditor under the UCC and the other laws of the State of New York. In
furtherance of the foregoing, (a) Buyer, at Seller’s sole cost and expense, as
applicable, shall cause to be filed in such locations as may be necessary to
perfect and maintain perfection and

 

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priority of the security interest granted hereby, UCC financing statements and
continuation statements (collectively, the “Filings”), and shall forward copies
of such Filings to Seller upon the filing thereof, and (b) Seller shall from
time to time take such further actions as may be reasonably requested by Buyer
to maintain and continue the perfection and priority of the security interest
granted hereby (including marking its records and files to evidence the
interests granted to Buyer hereunder). For the avoidance of doubt,
notwithstanding clause (vi) of the definition of Repurchase Date and the proviso
thereto, Buyer’s security interest in any particular Purchased Asset shall not
terminate until Seller has fully paid the related Repurchase Price.

(e) Seller acknowledges that neither it nor Guarantor has any right to service
the Purchased Assets but only has rights as a party to the Interim Servicing
Agreement or any other servicing agreement with respect to the Purchased Assets.
Without limiting the generality of the foregoing and in the event that Seller or
Guarantor is deemed to retain any residual Servicing Rights, and for the
avoidance of doubt, each of Seller and Guarantor grants, assigns and pledges to
Buyer a security interest in the Servicing Rights and proceeds related thereto
and in all instances, whether now owned or hereafter acquired, now existing or
hereafter created. The foregoing provision is intended to constitute a security
agreement or other arrangement or other credit enhancement related to the
Agreement and Transactions hereunder as defined under Sections 101(47)(v) and
741(7)(x)(A)(xi) of the Bankruptcy Code.

ARTICLE 7.

PAYMENT, TRANSFER AND CUSTODY

(a) On the Purchase Date for each Transaction, ownership of the Purchased Asset
shall be transferred to Buyer or its designee (including the Custodian) against
the simultaneous transfer of the Purchase Price in immediately available funds
to an account of Seller specified in the Confirmation relating to such
Transaction and otherwise in accordance with this Agreement.

(b) (i) With respect to each Transaction, Seller shall deliver or cause to be
delivered to Buyer or its designee the Custodial Delivery Certificate in the
form attached hereto as Exhibit IV, provided, that notwithstanding the
foregoing, upon request of Seller, Buyer in its sole but good faith discretion
may elect to permit Seller to make such delivery by not later than the third
(3rd) Business Day after the related Purchase Date, so long as Seller causes an
Acceptable Attorney, Title Company or other Person acceptable to Buyer to
deliver to Buyer and the Custodian a Bailee Letter on or prior to such Purchase
Date. Subject to Article 7(c), in connection with each sale, transfer,
conveyance and assignment of a Purchased Asset, on or prior to each Purchase
Date with respect to such Purchased Asset, Seller shall deliver or cause to be
delivered and released to the Custodian a copy or original of each document as
specified in the Asset File (as defined in the Custodial Agreement, and
collectively, the “Purchased Asset File”), pertaining to each of the Purchased
Assets identified in the Custodial Delivery Certificate delivered therewith,
together with any other documentation in respect of such Purchased Asset
requested by Buyer, in Buyer’s sole but good faith discretion.

(ii) With respect to each Additional Purchase Transaction and Future Funding
Transaction, Seller shall deliver or cause to be delivered to Buyer or its
designee an updated Custodial Delivery Certificate that includes any additional
documents delivered and/or executed in connection with any such Additional
Purchase Transaction or Future

 

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Funding Transaction, as applicable, provided, that notwithstanding the
foregoing, upon request of Seller, Buyer in its sole but good faith discretion
may elect to permit Seller to make such delivery by not later than the third
(3rd) Business Day after the related date of the Additional Purchase Transaction
or Future Funding Transaction, as applicable, so long as Seller causes an
Acceptable Attorney, Title Company or other Person acceptable to Buyer to
deliver to Buyer and the Custodian a Bailee Letter on or prior to such date.
Subject to Article 7(c), on or prior to that date of a Additional Purchase
Transaction or Future Funding Transaction, as applicable, Seller shall deliver
or cause to be delivered and released to the Custodian a copy or original of
each additional document delivered and/or executed in connection with each such
Additional Purchase Transaction or Future Funding Transaction, as applicable, as
specified in the Asset File (as defined in the Custodial Agreement), pertaining
to each of the Purchased Assets identified in the Custodial Delivery Certificate
delivered therewith, together with any other documentation in respect of such
Purchased Asset requested by Buyer, in Buyer’s sole but good faith discretion.

(c) From time to time, Seller shall forward to the Custodian 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 (including without limitation in connection with an
Additional Purchase Transaction or Future Funding Transaction), and upon receipt
of any such other documents, the Custodian shall hold such other documents as
Buyer shall request from time to time. With respect to any documents that 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 the Custodian promptly when they are received. With respect to all of the
Purchased Assets delivered by Seller to Buyer or its designee (including the
Custodian), Seller shall execute an omnibus power of attorney substantially in
the form of Exhibit V attached hereto irrevocably appointing Buyer its
attorney-in-fact with full power to (i) complete the endorsements of the
Purchased Assets, including without limitation the Mortgage Notes, Assignments
of Mortgages, Mezzanine Notes, Participation Certificates and assignments of
participation interests and any transfer documents related thereto, (ii) record
the Assignments of Mortgages, (iii) prepare and file and record each Assignment
of Mortgage or other assignment, (iii) take any action (including exercising
voting and/or consent rights) with respect to any participation interest,
(iv) complete the preparation and filing, in form and substance satisfactory to
Buyer, of such financing statements, continuation statements, and other UCC
forms, as Buyer may from time to time, reasonably consider necessary to create,
perfect, and preserve Buyer’s security interest in the Purchased Assets,
(v) enforce Seller’s rights under the Purchased Assets purchased by Buyer
pursuant to this Agreement, and (vi) to take such other steps as may be
necessary or desirable to enforce Buyer’s rights against, under or with respect
to such Purchased Assets and the related Purchased Asset Files and the Servicing
Records to achieve the remedies and other provisions contemplated by this
Agreement; provided that Buyer agrees not to and shall not exercise its rights
under such power of attorney unless a monetary Default, material non-monetary
Default or an Event of Default has occurred and is continuing. Notwithstanding
the immediately preceding proviso, in the event that a material non-monetary
Default has occurred and is continuing, Buyer

 

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agrees it shall use commercially reasonable efforts to notify Seller of any
action described above and Seller shall promptly take such action. Buyer agrees
not to exercise the rights described above under such power of attorney for two
(2) Business Days subsequent to such material non-monetary Default unless
(x) Buyer reasonably believes that Buyer needs to take action sooner in order to
protect its interest in the Purchased Items or (y) a monetary Default or an
Event of Default has occurred and is continuing. If Seller fails to complete
such action within such two (2) Business Day period, then Buyer shall, upon
notice to Seller, be entitled to exercise its rights under such power of
attorney, provided that a failure to provide any notice or refrain from taking
any action under this Article 7(c) shall not limit or waive Buyer’s rights to
exercise such rights or invalidate such action or in any way create any
liability whatsoever on the part of Buyer for exercising such rights. Buyer
shall deposit the Purchased Asset Files representing the Purchased Assets, or
direct that the Purchased Asset Files be deposited directly, with the Custodian.
The Purchased Asset Files shall be maintained in accordance with the Custodial
Agreement. If a Purchased Asset File is not delivered to Buyer or its designee
(including the Custodian), such Purchased Asset File 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. 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 sale of the related Purchased Asset to Buyer. Seller or its designee
(including the Custodian) 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, is in
connection with a repurchase of any Purchased Asset by Seller or as otherwise
required by law.

(d) Subject to clause (e) below, Buyer hereby grants to Seller a revocable
option to direct Buyer with respect to the exercise of all voting and corporate
rights with respect to the Purchased Assets and to vote, take corporate actions
and exercise any rights in connection with the Purchased Assets, so long as no
monetary Default, material non-monetary Default, or Event of Default has
occurred and is continuing. Such revocable option is not evidence of any
ownership or other interest or right of either Seller in any Purchased Asset.
Upon the occurrence and during the continuation of (i) a monetary Default,
(ii) a material non-monetary Default, (iii) an Event of Default or (iv) with
respect to the exercise of any voting or corporate rights with respect to the
Purchased Assets that could be reasonably determined to materially impair the
Market Value, and in each case subject to the provisions of the Purchased Asset
Documents, the revocable option discussed above shall be deemed to automatically
terminate and Buyer shall be entitled to exercise all voting and corporate
rights with respect to the Purchased Assets without regard to Seller’s
instructions (including, but not limited to, if an Act of Insolvency shall occur
with respect to Seller, to the extent Seller controls or is entitled to control
selection of any servicer, Buyer may transfer any or all of such servicing to an
entity satisfactory to Buyer); provided further, that with respect to clause
(iv) above, Buyer shall use commercially reasonable efforts to consult in good
faith with Seller regarding the exercise of any such voting or corporate rights,
provided that a failure by Buyer to consult with Seller under this Article 7(d)
shall not limit or waive Buyer’s rights to exercise such voting and corporate
rights or invalidate such vote or exercise of rights or in any way create any
liability whatsoever on the part of Buyer for exercising such rights.

 

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(e) Notwithstanding the rights granted to Seller pursuant to clause (d) above,
Seller shall not, and shall not permit Interim Servicer, the primary servicer or
any other servicer of any Purchased Asset to consent to any amendments,
modifications, waivers, releases, sales, transfers, dispositions or other
resolutions relating to the Purchased Assets (including, with respect to a
Purchased Asset that is a participation interest, relating to the Underlying
Mortgage Loan) (except to the extent contemplated or required by the related
Purchased Asset Documents) including, without limitation, the following actions
set forth in clauses (i) through (v) below, without the prior written consent of
Buyer:

(i) any forbearance, extension or other modification or waiver with respect to
any Purchased Asset;

(ii) the release, discharge or reduction of any: (A) lien on any Underlying
Mortgaged Property or collateral for the related Purchased Asset or Purchased
Item or (B) lien or claim on any letters of credit and other non-cash collateral
that is required to be maintained pursuant to the Purchased Asset Documents or
underlying mortgage loan documents, if any;

(iii) the extension of credit (including increasing the terms of any existing
credit) to any Person with respect to any Purchased Asset or Underlying Mortgage
Loan or Underlying Mortgaged Property;

(iv) any sale or other disposition of any Purchased Asset, Underlying Mortgage
Loan, Underlying Mortgaged Property or any other material property or collateral
related thereto; and

(v) the incurrence of any lien or other encumbrance other than as expressly
created hereunder or under any other Transaction Document.

(f) Notwithstanding the provisions of Article 7(b) above requiring the execution
of the Custodial Delivery Certificate and corresponding delivery of the
Purchased Asset File to the Custodian on or prior to the related Purchase Date,
with respect to each Transaction involving a Purchased Asset that is identified
in the related Confirmation as a “Table Funded” Transaction, Seller shall, in
lieu of effectuating the delivery of all or a portion of the Purchased Asset
File on or prior to the related Purchase Date, (i) deliver to the Custodian by
facsimile or email on or before the related Purchase Date for the Transaction
copies of (A) the promissory note(s), original stock certificate or
Participation Certificate in favor of Seller evidencing the making of the
Purchased Asset, with Seller’s endorsement of such instrument to Buyer, (B) the
mortgage, security agreement or similar item creating the security interest in
the related collateral and the applicable assignment document evidencing the
transfer to Buyer, (C) such other components of the Purchased Asset File as
Buyer may require on a case by case basis with respect to the particular
Transaction, and (D) evidence satisfactory to Buyer that all documents necessary
to perfect Seller’s (and, by means of assignment to Buyer on the Purchase Date,
Buyer’s) interest in the Purchased Items for the Purchased Asset, (ii) deliver
to Buyer and Custodian a Bailee Letter

 

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from an Acceptable Attorney, Title Company or other Person acceptable to Buyer
on or prior to such Purchase Date and (iii) not later than the third
(3rd) Business Day following the Purchase Date, deliver to Buyer the Custodial
Delivery Certificate and to the Custodian the entire Purchased Asset File.

ARTICLE 8.

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

(h) Title to all Purchased Items shall pass to Buyer on the applicable Purchase
Date, and Buyer shall have free and unrestricted use of all Purchased Items,
subject, however, to the terms of this Agreement. Nothing in this Agreement or
any other Transaction Document shall preclude Buyer from engaging in repurchase
transactions with the Purchased Items or otherwise selling, transferring,
pledging, repledging, hypothecating, or rehypothecating the Purchased Items on
terms and conditions that shall be in Buyer’s discretion, but no such
transaction shall relieve Buyer of its obligations to transfer the Purchased
Assets to Seller pursuant to Article 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 Article 5 hereof, or of Buyer’s obligations pursuant to
Article 17.

(i) 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.

ARTICLE 9.

REPRESENTATIONS AND WARRANTIES

(a) Each of Buyer and Seller represents and warrants to the other that (i) it is
duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance of
any Transaction by the other party hereto, as agent for a disclosed principal),
(iii) the person signing this Agreement on its behalf is duly authorized to do
so on its behalf (or on behalf of any such disclosed principal), (iv) it has
obtained all authorizations of any governmental body required in connection with
this Agreement and the Transactions hereunder and such authorizations are in
full force and effect, (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law, ordinance or
rule applicable to it or its organizational documents or any agreement by which
it is bound or by which any of its assets are affected and (vi) it has not dealt
with any broker, investment banker, agent, or other Person (other than Buyer or
an Affiliate of Buyer in the case of Seller) who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to any of the Transaction Documents. On the Purchase Date for any
Transaction for the purchase of any Purchased Assets by Buyer from Seller and
any Transaction hereunder and covenants that at all times while this Agreement
and any Transaction thereunder is in effect, Buyer and Seller shall each be
deemed to repeat all the foregoing representations made by it.

 

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(b) In addition to the representations and warranties in subsection (a) above,
Seller represents and warrants to Buyer as of the date of this Agreement and
will be deemed to represent and warrant to Buyer as of the Purchase Date for the
purchase of any Purchased Assets by Buyer from Seller and any Transaction
thereunder and covenants that at all times while this Agreement and any
Transaction thereunder is in effect, unless otherwise stated herein:

(i) Organization. Seller is duly organized, validly existing and in good
standing under the laws and regulations of the jurisdiction of Seller’s
incorporation or organization, as the case may be, and 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, except
where failure to so qualify could not be reasonably likely to have a Material
Adverse Effect. Seller has the power to own and hold the assets it purports to
own and hold, and to carry on its business as now being conducted and proposed
to be conducted, and has the power to execute, deliver, and perform its
obligations under this Agreement and the other Transaction Documents.

(ii) Due Execution; Enforceability. The Transaction Documents have been or will
be 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. 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
conflict with or result in a breach of any of the terms, conditions or
provisions of (A) the organizational documents of Seller, (B) any contractual
obligation to which Seller is now a party or the rights under which have been
assigned to Seller or the obligations under which have been assumed by Seller or
to which the assets of Seller are subject or constitute a default thereunder, or
result thereunder in the creation or imposition of any lien upon any of the
assets of Seller, other than pursuant to the Transaction Documents, (C) any
judgment or order, writ, injunction, decree or demand of any court applicable to
Seller, or (D) any applicable Requirement of Law applicable to these
Transactions, in the case of clauses (B) or (C) above, to the extent that such
conflict or breach would have a Material Adverse Effect upon Seller’s ability to
perform its obligations hereunder.

(iv) Litigation; Requirements of Law. Except as otherwise disclosed in writing
to Buyer prior to the Closing Date, as of the date hereof and as of the Purchase
Date for any Transaction hereunder, there is no action, suit, proceeding,
investigation, or arbitration pending or, to the Knowledge of Seller, threatened
against Seller, the Guarantor or any of their respective assets, nor is there
any action, suit, proceeding, investigation, or arbitration pending or
threatened against Seller or the Guarantor that is reasonably likely to result
in any Material Adverse Effect. Seller is in compliance in all material respects
with all Requirements of Law. Neither Seller nor the Guarantor is 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) Good Title to Purchased Assets and Other Collateral. Immediately prior to
the purchase of any Purchased Assets by Buyer from Seller, such Purchased Assets
are free and clear of any lien, encumbrance or impediment to transfer (including
any “adverse claim” as defined in Article 8-102(a)(1) of the UCC), and Seller is
the record and beneficial owner of and has good and marketable title to and 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 free of any adverse claim subject to the rights of Seller and obligations
of Buyer under this Agreement or any other Transaction Document in each case
except for (1) Liens to be released simultaneously with the sale to Buyer
hereunder and (2) Liens granted by Seller in favor of the counterparty to any
Hedging Transaction, solely to the extent such liens are expressly subordinate
to the rights and interests of Buyer hereunder. Without limitation of the
foregoing, the provisions of this Agreement are effective to create in favor of
Buyer a valid security interest in all rights, title and interest of Seller in,
to and under the Purchased Items and Buyer shall have a valid, perfected first
priority security interest in the Purchased Items free of any adverse claim
subject to the rights of Seller and obligations of Buyer under this Agreement or
any other Transaction Document (and without limitation on the foregoing, Buyer,
as entitlement holder, shall have a “security entitlement” to the Purchased
Assets).

(vi) No Adverse Effect; No Default or Event of Default. As of the related
Purchase Date and the date of each Future Funding Transaction and Additional
Purchase Transaction, Seller has no Knowledge of any facts or circumstances that
are reasonably likely to have a material adverse effect on any Purchased Asset
or Underlying Mortgaged Property. No Default or Event of Default has occurred or
exists under or with respect to the Transaction Documents.

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

(viii) Representations and Warranties Regarding Purchased Assets; Delivery of
Purchased Asset File.

(A) As of the date hereof, Seller has not assigned, pledged, or otherwise
conveyed or encumbered any Purchased Items to any other Person, and immediately
prior to the sale of, and/or grant of a security interest in, the Purchased
Items to, or in favor of, Buyer.

(B) The provisions of this Agreement and the related Confirmation are effective
to either constitute a sale of Purchased Items to Buyer or to create in favor of
Buyer a legal, valid and enforceable security interest in all right, title and
interest of Seller in, to and under the Purchased Items.

 

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(C) Upon receipt by the Custodian of each Mortgage Note, Mezzanine Note or
Participation Certificate, endorsed in blank by a duly authorized officer of
Seller, either a purchase shall have been completed by Buyer of such Mortgage
Note, Mezzanine Note or Participation Certificate, as applicable, or Buyer shall
have a valid and fully perfected first priority security interest in all right,
title and interest of Seller in the Purchased Items described therein.

(D) Each of the representations and warranties made in respect of the Purchased
Assets pursuant to Exhibit VI are true, complete and correct, except to the
extent disclosed in a Requested Exceptions Report previously accepted by Buyer.

(E) Upon the filing of financing statements on Form UCC-1 naming Buyer as
“Secured Party”, Seller as “Debtor” and describing the Purchased Items in the
jurisdiction and filing office listed on Exhibit XII attached hereto, the
security interests granted hereunder in that portion of the Purchased Items
which can be perfected by filing under the UCC will constitute fully perfected
security interests under the UCC in all right, title and interest of Seller in,
to and under such Purchased Items.

(F) Upon execution and delivery of the Depository Agreement, Buyer shall either
be the owner of, or have a valid and fully perfected first priority security
interest in, the Depository Account and all amounts at any time on deposit
therein.

(G) Upon execution and delivery of the Depository Agreement, Buyer shall either
be the owner of, or have a valid and fully perfected first priority security
interest in, the “investment property” and all “deposit accounts” (each as
defined in the UCC) comprising Purchased Items or any after-acquired property
related to such Purchased Items. Except to the extent disclosed in a Requested
Exceptions Report, 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 the Custodian.

(ix) Adequate Capitalization; No Fraudulent Transfer. Seller has, as of such
Purchase Date, adequate capital for the normal obligations foreseeable in a
business of its size and character and in light of its contemplated business
operations. Seller is generally able to pay, and as of the date hereof is
paying, its debts as they come due. Seller has not become, or is not presently,
financially insolvent nor will Seller be made insolvent by virtue of Seller’s
execution of or performance under any of the Transaction Documents within the
meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.
Seller has not entered into any Transaction Document or any Transaction pursuant
thereto in contemplation of insolvency or with intent to hinder, delay or
defraud any creditor.

(x) No Conflicts or Consents. Neither the execution and delivery of this
Agreement and the other Transaction Documents by Seller, nor the consummation of
any of the transactions by it herein or therein contemplated, nor compliance
with the terms

 

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and provisions hereof or with the terms and provisions thereof, will contravene
or conflict with or result in the creation or imposition of (or the obligation
to create or impose) any lien upon any of the property or assets of Seller
pursuant to the terms of any indenture, mortgage, deed of trust, or other
agreement or instrument to which Seller is a party or by which Seller may be
bound, or to which Seller may be subject, other than liens created pursuant to
the Transaction Documents. No consent, approval, authorization, or order of any
third party is required in connection with the execution and delivery by Seller
of the Transaction Documents to which it is a party or to consummate the
transactions contemplated hereby or thereby which has not already been obtained
(other than consents, approvals and filings that have been obtained or made, as
applicable, or that, if not obtained or made, are not reasonably likely to have
a Material Adverse Effect).

(xi) Governmental Approvals. No order, consent, approval, license, authorization
or validation of, or filing, recording or registration by Seller with, or
exemption by, any Governmental Authority is required to authorize, or is
required in connection with, (A) the execution, delivery and performance of any
Transaction Document to which Seller is or will be a party, (B) the legality,
validity, binding effect or enforceability of any such Transaction Document
against Seller or (C) the consummation of the transactions contemplated by this
Agreement (other than consents, approvals and filings that have been obtained or
made, as applicable, and the filing of certain financing statements in respect
of certain security interests).

(xii) Organizational Documents. Seller has delivered to Buyer certified copies
of its organization documents, together with all amendments thereto, if any.

(xiii) No Encumbrances. Except as contemplated by the Transaction Documents,
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 Asset, and (C) no obligations on the part of Seller (contingent or
otherwise) to purchase, redeem or otherwise acquire any securities or interest
therein, except as contemplated by the Transaction Documents.

(xiv) Federal Regulations. Seller is not (A) required to register as an
“investment company,” or a company “controlled by an investment company,” within
the meaning of the Investment Company Act of 1940, as amended, or (B) a “holding
company,” or a “subsidiary company of a holding company,” or an “affiliate” of
either a “holding company” or a “subsidiary company of a holding company,” as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended.

(xv) Taxes. Seller has timely filed or caused to be filed all required federal
and other material tax returns that, to the Knowledge of Seller, would be
delinquent if they had not been filed on or before the date hereof and has paid
all Taxes imposed on it and any of its assets by any Governmental Authority
except for any such Taxes (A) as are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
provided in accordance with GAAP or (B) to the extent that the failure to pay
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Effect. No Tax liens have been filed against any of Seller’s assets and, to
Seller’s Knowledge, no claims are being asserted in writing with respect to any
such Taxes (except for liens and with respect to Taxes not yet due and payable
or liens or claims with respect to Taxes that are being contested in good faith
and for which adequate reserves have been established in accordance with GAAP).

(xvi) Judgments/Bankruptcy. Except as disclosed in writing to Buyer, there are
no judgments against Seller unsatisfied of record or docketed in any court
located in the United States of America. No Act of Insolvency has ever occurred
with respect to Seller.

(xvii) Solvency. Neither the Transaction Documents nor any Transaction,
Additional Purchase Transaction or Future Funding Transaction thereunder are
entered into in contemplation of insolvency or with intent to hinder, delay or
defraud any of Seller’s creditors. The transfer of the Purchased Assets subject
hereto and the obligation to repurchase such Purchased Assets is not undertaken
with the intent to hinder, delay or defraud any of Seller’s creditors. As of the
Purchase Date, Seller is not insolvent within the meaning of 11 U.S.C.
Section 101(32) or any successor provision thereof and the transfer and sale of
the Purchased Assets pursuant hereto and the obligation to repurchase such
Purchased Asset (A) will not cause the liabilities of Seller to exceed the
assets of Seller, (B) will not result in Seller having unreasonably small
capital, and (C) will not result in debts that would be beyond Seller’s ability
to pay as the same mature. Seller received reasonably equivalent value in
exchange for the transfer and sale of the Purchased Assets and the Purchased
Items subject hereto. No petition in bankruptcy has been filed against Seller in
the last ten (10) years, and Seller has not in the last ten (10) years made an
assignment for the benefit of creditors or taken advantage of any debtors relief
laws. Seller has only entered into agreements on terms that would be considered
arm’s length and otherwise on terms consistent with other similar agreements
with other similarly situated entities.

(xviii) Use of Proceeds; Margin Regulations. 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 of any Transaction nor the use of any proceeds thereof will violate, or be
inconsistent with, any provision of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

(xix) Full and Accurate Disclosure. No material information contained in the
Transaction Documents, or any written statement furnished by or on behalf of
Seller pursuant to the terms of the Transaction Documents, 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.

(xx) Financial Information. All financial data concerning Seller and the
Purchased Assets that has been delivered by or on behalf of Seller to Buyer is
true,

 

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complete and correct in all material respects. All financial data concerning
Seller has been prepared fairly in accordance with GAAP. All financial data
concerning the Purchased Assets provided and prepared by Seller has been
prepared in accordance with standard industry practices. Since the delivery of
such data, except as otherwise disclosed in writing to Buyer, there has been no
change in the financial position of Seller or the Purchased Assets, or in the
results of operations of Seller, which change is reasonably likely to have a
Material Adverse Effect on Seller.

(xxi) Hedging Transactions. To the Knowledge of Seller, 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.

(xxii) Servicing Agreements. Seller has delivered to Buyer all Servicing
Agreements pertaining to the Purchased Assets and to the Knowledge of Seller, as
of the date of this Agreement and as of the Purchase Date for the purchase of
any Purchased Assets subject to a Servicing Agreement, each such Servicing
Agreement is in full force and effect in accordance with its terms and no
default or event of default exists thereunder.

(xxiii) No Reliance. Seller has made its own independent decisions to enter into
the Transaction Documents and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. Seller is not relying upon any advice
from Buyer as to any aspect of the Transactions, including without limitation,
the legal, accounting or tax treatment of such Transactions.

(xxiv) PATRIOT Act.

A. Seller is in compliance, in all material respects, with the (1) the Trading
with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) and any other applicable enabling legislation or
executive order relating thereto, and (2) the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001). No part of the proceeds of any Transaction will, to
Seller’s Knowledge, be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

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B. Seller agrees that, from time to time upon the prior written request of
Buyer, it shall (1) 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 the provisions hereof
(including, without limitation, compliance with the USA Patriot Act of 2001 and
to fully effectuate the purposes of this Agreement and (2) provide such opinions
of counsel concerning matters relating to this Agreement as Buyer may reasonably
request; provided, however, that nothing in this Article 9(b)(xxvi) 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 Affiliates to comply with any
anti-money laundering program and related responsibilities including, but not
limited to, any obligations under the USA Patriot Act of 2001 and regulations
thereunder, Seller on behalf of itself and its Affiliates makes the following
representations and covenants to Buyer and its Affiliates that neither Seller,
nor, to Seller’s Knowledge, any of its Affiliates, is a Prohibited Investor,
and, to Seller’s Knowledge, Seller is not acting on behalf of or for the benefit
of any Prohibited Investor. 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 representation and
covenant.

(xxv) Ownership of Property. Seller does not own, and has not ever owned, any
assets other than (A) the Purchased Assets and (B) such incidental personal
property related thereto.

(xxvi) Insider. Seller is not an “executive officer,” “director,” or “person who
directly or indirectly or acting through or in concert with one or more persons
owns, Controls, or has the power to vote more than 10% of any class of voting
securities” (as those terms are defined in 12 U.S.C. § 375(b) or in regulations
promulgated pursuant thereto) of Buyer, of a bank holding company of which Buyer
is a Subsidiary, or of any Subsidiary, of a bank holding company of which Buyer
is a Subsidiary, of any bank at which Buyer maintains a correspondent account or
of any lender which maintains a correspondent account with Buyer

(xxvii) Office of Foreign Assets Control. Seller warrants, represents and
covenants that neither Seller nor any of its Affiliates are or will be an entity
or person (A) that is listed in the Annex to, or is otherwise subject to the
provisions of, Executive Order 13224 issued on September 24, 2001 (“EO13224”);
(B) whose name appears on the United States Treasury Department’s Office of
Foreign Assets Control (“OFAC”) most current list of “Specifically Designed
National and Blocked Persons,” (C) who commits, threatens to commit or supports
“terrorism”, as that term is defined in EO 13224; or (D) who is otherwise
affiliated with any entity or person listed above (any and all parties or
persons described in (A) through (D) above are herein referred to as a
“Prohibited Person”). Seller covenants and agrees that none of Seller nor any of
its Affiliates will knowingly (1) conduct any business, nor engage in any
transaction or dealing, with any Prohibited Person or (2) engage in or conspire
to engage in any transaction that evades or avoids or that the purpose of
evading or avoiding any of the prohibitions of EO 13224.

 

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Seller further covenants and agrees to deliver to Buyer any such certification
or other evidence as may be requested by Buyer in its sole and absolute
discretion, confirming that none of Seller or any of the its Affiliates is a
Prohibited Person and none of Seller, or any of its Affiliates has engaged in
any business transaction or dealings with a Prohibited Person, including, but
not limited to, the making or receiving of any contribution of funds, goods or
services to or for the benefit of a Prohibited Person.

(xxviii) Notice Address; Name; Jurisdiction of Organization. On the date of this
Agreement, Seller’s address for notices is as specified on Annex I. Seller’s
legal name is, and has at all times been, Parlex 4 Finance, LLC. Seller’s sole
jurisdiction of organization is, and at all times has been, Delaware. The
location where Seller keeps its books and records, including all computer tapes
and records relating to the Purchased Items, is its notice address. Seller may
change its address for notices and for the location of its books and records by
giving Buyer written notice of such change.

(xxix) Anti-Money Laundering Laws. Seller either (1) is entirely exempt from or
(2) has otherwise fully complied with all applicable anti-money laundering laws
and regulations (collectively, the “Anti-Money Laundering Laws”), by
(A) establishing an adequate anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, (B) conducting the requisite due
diligence in connection with the origination of each Purchased Asset for
purposes of the Anti-Money Laundering Laws, including with respect to the
legitimacy of the related obligor (if applicable) and the origin of the assets
used by such obligor to purchase the property in question, and (C) maintaining
sufficient information to identify the related obligor (if applicable) for
purposes of the Anti-Money Laundering Laws.

(xxx) Ownership. Seller is and shall remain at all times a wholly-owned direct
or indirect subsidiary of Guarantor.

ARTICLE 10.

NEGATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is
no longer in force with respect to any Transaction, Seller shall not, without
the prior written consent of Buyer:

(a) subject to Seller’s right to repurchase any Purchased Asset, take any action
that would directly or indirectly 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 the Purchased Items (or any of it) to any Person other than Buyer,
or engage in repurchase transactions or similar transactions with respect to the
Purchased Items (or any of it) with any Person other than Buyer, unless and
until such Purchased Asset relating to such Purchased Items is repurchased by
Seller in accordance with this Agreement;

 

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(c) modify in any material respect any Servicing Agreements to which it is a
party, without the consent of Buyer in its discretion, not to be unreasonably
withheld, conditioned, or delayed;

(d) create, incur or permit to exist any Lien in or on any of its property,
assets, revenue, the Purchased Assets, unless and until such Purchased Asset
relating to such Purchased Items is repurchased by Seller in accordance with
this Agreement, the Purchased Items, whether now owned or hereafter acquired,
other than the Liens granted by Seller pursuant to Article 6 of this Agreement
and the Lien granted by Parent under the Pledge Agreement;

(e) except as otherwise expressly permitted herein, enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation, winding up or dissolution), sell all or
substantially all of its assets without the consent of Buyer in its sole and
absolute discretion;

(f) consent or assent to any amendment or supplement to, or termination of, any
note, loan agreement, mortgage or guarantee relating to the Purchased Assets or
other agreement or instrument relating to the Purchased Assets other than in
accordance with Section 7(e) or Article 27;

(g) permit the organizational documents or organizational structure of Seller to
be amended without the prior written consent of Buyer not to be unreasonably
withheld, conditioned, or delayed, other than special purpose entity provisions,
for which such consent shall be at Buyer’s sole and absolute discretion;

(h) acquire or maintain any right or interest in any Purchased Asset or
Underlying Mortgaged Property that is senior to or pari passu with the rights
and interests of Buyer therein under this Agreement and the other Transaction
Documents unless such right or interest becomes a Purchased Asset hereunder;

(i) use any part of the proceeds of any Transaction hereunder for any purpose
which violates, or would be inconsistent with, the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System;

(j) enter into any Hedging Transaction with respect to any Purchased Asset with
any entity that is not an Affiliated Hedge Counterparty or a Qualified Hedge
Counterparty; and

(k) permit, at any time after thirty (30) days subsequent to the Purchase Date
of the first Purchased Asset subject to a Transaction, the number of Purchased
Assets that are Senior Mortgage Loans to be less than three (3); provided,
however, that in the event of an Early Repurchase of all Purchased Assets
subject to Transactions, this Article 10(k) shall not apply until such time as
Buyer and Seller enter into a new Transaction subsequent to such Early
Repurchase of all Purchased Assets.

 

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ARTICLE 11.

AFFIRMATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is
no longer in force with respect to any Transaction:

(a) Seller shall promptly notify Buyer of any material adverse change in its
business operations and/or financial condition; provided, however, that nothing
in this Article 11 shall relieve Seller of its obligations under this Agreement.

(b) Seller shall provide Buyer with copies of such documents as Buyer may
reasonably request evidencing the truthfulness of the representations set forth
in Article 9.

(c) Seller shall (1) defend the right, title and interest of Buyer in and to the
Purchased Items against, and take such other action as is necessary to remove,
the Liens, security interests, claims and demands of all Persons (other than
Liens created in favor of Buyer pursuant to the Transaction Documents) and
(2) at Buyer’s reasonable request, take all action necessary to ensure that
Buyer will have a first priority security interest in the Purchased Assets
subject to any of the Transactions in the event such Transactions are
recharacterized as secured financings.

(d) Seller shall notify Buyer and the Depository of the occurrence of any
Default or Event of Default with respect to Seller of which Seller has Knowledge
as soon as possible but in no event later than the second (2nd) Business Day
after obtaining actual knowledge of such event.

(e) Seller shall cause the special servicer rating of the special servicer with
respect to all mortgage loans underlying Purchased Assets to be no lower than
“average” by S&P to the extent Seller controls or is entitled to control the
selection of the special servicer. In the event the special servicer rating with
respect to any Person acting as special servicer for any mortgage loans
underlying Purchased Assets shall be below “average” by S&P, or if an Act of
Insolvency occurs with respect to Seller or Guarantor, Buyer shall be entitled
to transfer special servicing with respect to all Purchased Assets to an entity
satisfactory to Buyer, to the extent Seller controls or is entitled to control
the selection of the special servicer.

(f) Seller shall promptly (and in any event not later than two (2) Business Days
following receipt) deliver to Buyer (i) any notice of the occurrence of an event
of default under or report received by Seller pursuant to the Purchased Asset
Documents; (ii) any notice of transfer of servicing under the Purchased Asset
Documents and (iii) any other information with respect to the Purchased Assets
that may be reasonably requested by Buyer from time to time and within Seller’s
possession or control or are obtainable by Seller.

(g) Seller will permit Buyer, its Affiliates or its designated representative,
upon reasonable prior written notice from Buyer, at reasonable times not to
exceed twice per calendar year unless an Event of Default has occurred and is
continuing, at Buyer’s sole cost and expense, to inspect records of Seller with
respect to the Purchased Items that are not privileged and the conduct and
operation of its business related thereto subject to the terms of any
confidentiality agreement between Buyer and Seller and applicable law, and if no
such confidentiality agreement then exists between Buyer and Seller, Buyer and
Seller shall act in accordance with customary market standards regarding
confidentiality and applicable law. Buyer shall act in a commercially reasonable
manner in requesting and conducting any inspection relating to the conduct and
operation of Seller’s business.

 

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(h) 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 the Custodian, as appropriate) in the exact form
received, duly endorsed by Seller to Buyer, if required, together with all
related necessary transfer documents, to be held by Buyer hereunder as
additional collateral security for the Transactions. If any sums of money or
property are paid or distributed in respect of the Purchased Assets and 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.

(i) At any time from time to time upon the reasonable request of Buyer, at the
sole expense of Seller, Seller will (i) promptly and duly execute and deliver
such further instruments and documents and take such further actions as Buyer
may reasonably request for the purposes of obtaining or preserving the full
benefits of this Agreement including the perfected, first-priority security
interest required hereunder, (ii) ensure that such security interest remains
fully perfected at all times and remains at all times first in priority as
against all other creditors of such Seller (whether or not existing as of the
Closing Date, any Purchase Date or in the future) and (iii) obtain or preserve
the rights and powers herein granted (including, among other things, filing such
UCC financing statements as Buyer may reasonably request). If any amount payable
under or in connection with any of the Purchased Items shall be or become
evidenced by any promissory note, other instrument or certificated security,
such note, instrument or certificated security shall be immediately delivered to
Buyer, duly endorsed in a manner satisfactory to Buyer, to be itself held as a
Purchased Item pursuant to this Agreement, and the documents delivered in
connection herewith.

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

(i) Within fifteen (15) calendar days after each month-end, a monthly reporting
package substantially in the form of Exhibit III-A attached hereto (the “Monthly
Reporting Package”);

(ii) Within forty-five (45) calendar days after the last day of each of the
first three fiscal quarters in any fiscal year, a quarterly reporting package
substantially in the form of Exhibit III-B attached hereto (the “Quarterly
Reporting Package”);

(iii) Within ninety (90) calendar days after the last day of its fiscal year, an
annual reporting package substantially in the form of Exhibit III-C attached
hereto (the “Annual Reporting Package”); and

(iv) (A) Upon Buyer’s request, a listing of any material changes in Hedging
Transactions with Qualified Hedge Counterparties, the names of the Qualified
Hedge Counterparties and the material terms of such Hedging Transactions,
delivered within ten (10) days after Buyer’s request; and

(B) copies of Seller’s and Guarantor’s Federal Income Tax returns, if any,
delivered within thirty (30) days after the earlier of (1) filing or (2) the
last filing extension period.

 

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(k) Seller shall make a representative available to Buyer every month for
attendance at a telephone conference, the date of which to be mutually agreed
upon by Buyer and Seller, regarding the status of each Purchased Asset, Seller’s
compliance with the requirements of Articles 10 and 11, and any other matters
relating to the Transaction Documents or Transactions that Buyer wishes to
discuss with Seller.

(l) Seller shall and shall cause Guarantor to at all times (i) comply with all
material contractual obligations, (ii) comply in all respects with all laws,
ordinances, rules, regulations and orders (including, without limitation,
environmental laws) of any Governmental Authority or any other federal, state,
municipal or other public authority having jurisdiction over Seller and
Guarantor or any of its assets and Seller and Guarantor shall do or cause to be
done all things necessary to preserve and maintain in full force and effect its
legal existence, and all licenses material to its business and (iii) maintain
and preserve its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business (including,
without limitation, preservation of all lending licenses held by Seller and of
Seller’s status as a “qualified transferee” (however denominated) under all
documents which govern the Purchased Assets).

(m) Seller shall and shall cause Guarantor to at all times keep proper books of
records and accounts in which full, true and correct entries shall be made of
its transactions fairly 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.

(n) Seller shall observe, perform and satisfy all the terms, provisions,
covenants and conditions required to be observed, performed or satisfied by it,
and shall pay when due all costs, fees and expenses required to be paid by it,
under the Transaction Documents. Seller will continue to be a U.S. Person that
is a partnership for U.S. federal income tax purposes, or a disregarded entity
of a U.S. Person for U.S. federal income tax purposes. Seller shall pay and
discharge all Taxes on its assets and on the Purchased Items that, in each case,
in any manner would create any Lien upon the Purchased Items, except for Liens
created pursuant to the Transaction Documents and other than any Liens with
respect to Taxes, 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 or Taxes that are
not yet due and payable.

(o) Seller shall advise Buyer in writing of the opening of any new chief
executive office or the closing of any such office of Seller or Guarantor and of
any change in Seller’s or Guarantor’s name or respective jurisdictions of
organization or the places where the books and records pertaining to the
Purchased Assets are held not less than thirty (30) Business Days’ prior to
taking any such action.

 

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

(q) Seller shall provide Buyer and its Affiliates with reasonable access plus
any such additional reports as Buyer may reasonably request. Upon two
(2) Business Days’ prior notice (unless a Default or an Event of Default shall
have occurred and is continuing, in which case, no prior notice shall be
required), during normal business hours, Seller shall allow Buyer to (i) review
any operating statements, occupancy status and other property level information
with respect to the underlying real estate directly or indirectly securing or
supporting the Purchased Asset that either is in Seller’s possession or is
available to Seller, (ii) examine, copy (at Buyer’s expense) and make extracts
from its books and records, to inspect any of its properties, and (iii) discuss
Seller’s business and affairs with its officers.

(r) Seller shall enter into Hedging Transactions with respect to each of the
Hedge-Required Assets to the extent necessary to hedge interest rate risk
associated with the Purchase Price on such Hedge-Required Assets, in a manner
reasonably acceptable to Buyer.

(s) Seller shall take all such steps as Buyer deems necessary to perfect the
security interest granted pursuant to Article 6 in the Hedging Transactions,
shall take such action as shall be necessary or advisable to preserve and
protect Seller’s interest under all such Hedging Transactions (including,
without limitation, requiring the posting of any required additional collateral
thereunder), and hereby authorizes Buyer to take any such action that Seller
fails to take after demand therefor by Buyer. Seller shall provide the Custodian
with copies of all documentation relating to Hedging Transactions with Qualified
Hedge Counterparties promptly after entering into same. All Hedging
Transactions, if any, entered into by Seller with Buyer or any of its Affiliates
in respect of any Purchased Asset shall be terminated contemporaneously with the
repurchase of such Purchased Asset on the Repurchase Date therefor.

(t) Seller shall:

(i) continue to engage in business of the same general type as now conducted by
it or otherwise as reasonably approved by Buyer prior to the date hereof and
maintain and preserve its legal existence and all of its material rights,
privileges, licenses and franchises necessary for the operation of its business
(including, without limitation, preservation of all lending licenses held by
Seller and of Seller’s status as a “qualified transferee” (however denominated)
under all documents which govern the Purchased Assets) to the extent that
failure to do so would have a Material Adverse Effect;

(ii) comply with all contractual obligations and with the requirements of all
applicable laws, rules, regulations and orders of Governmental Authorities
(including, without limitation, all environmental laws) if failure to comply
with such requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect;

 

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(iii) keep adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied;

(iv) pay and discharge all Taxes imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto, except
for any such Taxes the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained; and

(v) not cause or permit any Change of Control without providing Buyer with at
least ten (10) Business Days prior written notice thereof.

(u) Seller shall cause each servicer of the Purchased Asset to provide to Buyer
and to the Custodian via electronic transmission, promptly upon request by Buyer
a Servicing Tape for the month (or any portion thereof) prior to the date of
Buyer’s request; provided that to the extent any servicer does not provide any
such Servicing Tape, Seller shall prepare and provide to Buyer and the Custodian
via electronic transmission a remittance report containing the servicing
information that would otherwise be set forth in the Servicing Tape; provided,
further, that regardless of whether Seller at any time delivers any such
remittance report, Seller shall at all times use commercially reasonable efforts
to cause each servicer to provide each Servicing Tape in accordance with this
Article 11(u).

(v) Seller’s organizational documents shall at all times include the following
provisions: (a) at all times there shall be, and Seller shall cause there to be,
at least one (1) Independent Director; (b) Seller shall not, without the
unanimous written consent of its board of directors including the Independent
Director, take any Material Action or any action that might cause such entity to
become insolvent; (c) no Independent Director may be removed or replaced unless
Seller provides Buyer with not less than five (5) Business Days’ prior written
notice of (i) any proposed removal of an Independent Director, together with a
statement as to the reasons for such removal, and (ii) the identity of the
proposed replacement Independent Director, together with a certification that
such replacement satisfies the requirements set forth in the organizational
documents for an Independent Director; and provided further, that any removal or
replacement shall not be effective until the replacement Independent Director
has accepted his or her appointment; (d) to the fullest extent permitted by
applicable law, including Section 18-1101(c) of the Bankruptcy Code and
notwithstanding any duty otherwise existing at law or in equity, the Independent
Director shall consider only the interests of Seller, including its creditors in
acting or otherwise voting with respect to a Material Action; (e) except for
duties to Seller as set forth in subsection (d) above (including duties to its
equity owners and its creditors solely to the extent of their respective
economic interests in Seller but excluding (i) all other interests of the equity
owners, (ii) the interests of other Affiliates of Seller, and (iii) the
interests of any group of Affiliates of which Seller is a part), the Independent
Director shall not have any fiduciary duties to any Person bound by its
organizational documents; (f) the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing under applicable law; and
(g) to the fullest extent permitted by applicable law, including
Section 18-1101(e) of the Bankruptcy Code, an Independent Director shall not be
liable to Seller or any other Person for breach of contract or breach of duties
(including fiduciary duties), unless the Independent Director acted in bad faith
or engaged in willful misconduct. No consent by Buyer shall be required for the
removal of any Independent Director for Cause. “Cause” means, with respect to an
Independent Director, (i)

 

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acts or omissions by such Independent Director that constitute willful disregard
of such Independent Director’s duties as set forth in Seller’s organizational
documents, (ii) that 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) that such
Independent Director is unable to perform his or her duties as Independent
Director due to death, disability or incapacity, or (iv) that such Independent
Director no longer meets the definition of Independent Director.

(w) Seller has not and will not, except in connection with the obligations
contemplated under the Transaction Documents:

(i) engage in any business or activity other than the entering into and
performing its obligations under the Transaction Documents, and activities
incidental thereto;

(ii) acquire or own any assets other than (A) the Purchased Assets, and (B) such
incidental personal property related thereto;

(iii) merge into or consolidate with any Person, or dissolve, terminate,
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure;

(iv) fail to observe all organizational formalities, or fail to preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under the applicable laws of the jurisdiction of its organization or
formation, or (B) amend, modify, terminate or fail to comply with the material
provisions of its organizational documents, in each case without the prior
written consent of Buyer;

(v) own any subsidiary, or make any investment in, any Person;

(vi) commingle its assets with the assets of any other Person (excluding any
consolidation of its financials with those of an Affiliate in accordance with
GAAP), or permit any Affiliate or constituent party independent access to its
bank accounts;

(vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than the debt incurred pursuant to this
Agreement and the other Transaction Documents and unsecured trade debt in an
unpaid amount less than $100,000;

(viii) fail to maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and apart
from those of any other Person; except that Seller’s financial position, assets,
liabilities, net worth and operating results may be included in the consolidated
financial statements of an Affiliate, provided that (A) appropriate notation
shall be made on such consolidated financial statements to indicate the separate
identity of Seller from such Affiliate and that Seller’s assets and credit are
not available to satisfy the debts and other obligations of such Affiliate or
any other Person, and (B) Seller’s assets, liabilities and net worth shall also
be listed on Seller’s own separate balance sheet;

 

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(ix) except for capital contributions or capital distributions permitted under
the terms and conditions of Seller’s organizational documents and properly
reflected on its books and records, enter into any transaction, contract or
agreement with any general partner, member, shareholder, principal, guarantor of
the obligations of Seller, or any Affiliate of the foregoing, except upon terms
and conditions that are intrinsically fair, commercially reasonable and
substantially similar to those that would be available on an arm’s-length basis
with unaffiliated third parties;

(x) maintain its assets in such a manner that it will be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person;

(xi) assume or guaranty the debts of any other Person, hold itself out to be
responsible for the debts of any other Person, or otherwise pledge its assets to
secure the obligations of any other Person or hold out its credit or assets as
being available to satisfy the obligations of any other Person;

(xii) except in connection with the origination of the Purchased Assets, make
any loans or advances to any Person, or own any stock or securities of, any
Person;

(xiii) (A) fail to file its own tax returns separate from those of any other
Person, except to the extent Seller is not required to file tax returns under
Applicable Law, (B) fail to pay any taxes required to be paid under Applicable
Law, or any obligation to reimburse its equityholders or their Affiliates for
any taxes that such equityholders or their Affiliates may incur as a result of
any profits or losses of Seller;

(xiv) fail to (A) hold itself out to the public as a legal entity separate and
distinct from any other Person, (B) conduct its business solely in its own name
or (C) correct any misunderstanding of which Seller has Knowledge regarding its
separate identity;

(xv) fail to 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, provided that the foregoing shall not require
any member, partner or shareholder of Seller to make any additional capital
contributions to Seller;

(xvi) if it is a partnership or limited liability company, without the unanimous
written consent of all of its partners or members, as applicable, and the
written consent of one hundred percent (100%) of all directors or managers of
Seller, including, without limitation, the Independent Director, take any
Material Action or any action that might cause such entity to become insolvent;

(xvii) fail to allocate shared expenses (including, without limitation, shared
office space and services performed by an employee of an Affiliate) among the
Persons sharing such expenses and to use separate stationery, invoices and
checks bearing its own name;

(xviii) fail to remain solvent or pay its own liabilities only from its own
funds; provided that the foregoing shall not require any member, partner or
shareholder of Seller to make any additional capital contributions to Seller;

 

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(xix) acquire obligations or securities of its partners, members, shareholders
or other Affiliates, as applicable;

(xx) have any employees, but shall be permitted to utilize employees of its
Affiliates pursuant to arms-length terms;

(xxi) fail to maintain and use separate stationery, invoices and checks bearing
its own name;

(xxii) have any of its obligations guaranteed by an Affiliate except for the
Guarantee Agreement;

(xxiii) identify itself as a department or division of any other Person; or

(xxiv) except in connection with the Purchased Assets, buy or hold evidence of
indebtedness issued by any other Person (other than cash or investment-grade
securities).

(x) With respect to each Eligible Asset to be purchased hereunder, Seller shall
notify Buyer in writing of the creation of any right or interest in such
Eligible Asset or related Underlying Mortgaged Property that is senior to or
pari passu with the rights and interests that are to be transferred to Buyer
under this Agreement and the other Transaction Documents, and whether any such
interest will be held or obtained by Seller or an Affiliate of Seller.

(y) Seller shall be solely responsible for the fees and expenses of the
Custodian, Depository and each servicer (including, without limitation, the
Interim Servicer) of any or all of the Purchased Assets.

(z) Seller shall obtain estoppels and agreements reasonably acceptable to Buyer
for each Asset that is subject to a ground lease.

(aa) Seller shall notify Buyer in writing of any event or occurrence that could
be reasonably determined to cause Guarantor to breach any of the covenants
contained in paragraph 9 of the Guarantee Agreement.

(bb) With respect to each Purchased Asset subject to a Transaction, Seller shall
pay Buyer the applicable Purchased Asset Fee for such Purchased Asset as forth
herein and in the Fee Letter.

ARTICLE 12.

EVENTS OF DEFAULT; REMEDIES

(a) Each of the following events shall constitute an “Event of Default” under
this Agreement:

(i) Seller or Guarantor shall fail to repurchase (A) Purchased Assets upon the
applicable Repurchase Date or (B) a Purchased Asset that is no longer an
Eligible Asset in accordance with Article 12(c);

 

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(ii) Buyer shall fail to receive on any Remittance Date the accreted value of
the Price Differential (less any amount of such Price Differential previously
paid by Seller to Buyer) (including, without limitation, in the event the Income
paid or distributed on or in respect of the Purchased Assets is insufficient to
make such payment and Seller does not make such payment or cause such payment to
be made) (except that such failure shall not be an Event of Default by Seller if
sufficient Income, including Principal Proceeds which would otherwise be
remitted to Seller pursuant to Article 5 of this Agreement, is on deposit in the
Depository Account and the Depository fails to remit such funds to Buyer);

(iii) Seller or Guarantor shall fail to cure any Margin Deficit, to the extent
such Margin Deficit equals or exceeds the Minimum Transfer Amount, in accordance
with Article 4 of this Agreement;

(iv) Seller or Guarantor shall fail to make any payment not otherwise addressed
under this Article 12(a) owing to Buyer that has become due, whether by
acceleration or otherwise under the terms of this Agreement, the Pledge
Agreement, the Guarantee Agreement or any other Transaction Document, which
failure is not remedied within five (5) Business Days of notice thereof;

(v) Seller shall default in the observance or performance of its obligation in
Article 7(c) or any agreement contained in Articles 10 or 11 of this Agreement
and such default shall not be cured within five (5) Business Days after notice
by Buyer to Seller thereof;

(vi) an Act of Insolvency occurs with respect to Seller or Guarantor;

(vii) any employee with a title equivalent or more senior to that of “Senior
Vice President” of Seller or Guarantor shall admit in writing to any Person in
an external communication (whether electronic or otherwise) its inability to, or
its intention not to, perform any of its material obligations hereunder;

(viii) the Custodial Agreement, the Depository Agreement, the Pledge Agreement,
the Guarantee Agreement or any other Transaction Document or a replacement
therefor acceptable to Buyer shall for whatever reason be terminated or cease to
be in full force and effect, or the enforceability thereof shall be contested by
Seller;

(ix) Seller or Guarantor shall be in default under (A) any Indebtedness of
Seller or Guarantor, as applicable, which default (1) involves the failure to
pay a matured obligation in excess of $250,000, with respect to Seller or
$15,000,000, with respect to Guarantor or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary with respect to
such Indebtedness, if the aggregate amount of the Indebtedness in respect of
which such default or defaults shall have occurred is at least $250,000, with
respect to Seller or $15,000,000, with respect to Guarantor; or (B) any other
material contract to which Seller or Guarantor is a party, which default
(1) involves the failure to pay a matured obligation if the aggregate amount of
such obligation is

 

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greater than $250,000 with respect to Seller or $15,000,000 with respect to
Guarantor, or (2) permits the acceleration of the maturity of obligations by any
other party to or beneficiary of such contract if the aggregate amount of such
obligations is greater than $250,000, with respect to Seller or $15,000,000,
with respect to Guarantor;

(x) Seller or Guarantor shall be in default under any Indebtedness of Seller or
Guarantor, as applicable, to Buyer or any of its present or future Affiliates,
which default (A) involves the failure to pay a matured obligation, or
(B) permits the acceleration of the maturity of obligations by any other party
to or beneficiary with respect to such Indebtedness;

(xi) (A) Seller or an ERISA Affiliate shall engage in any non-exempt “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan that is not exempt from such Sections of ERISA and the Code,
(B) any material “accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the Pension Benefit Guaranty Corporation or a Plan shall arise on
the assets of Seller or any ERISA Affiliate, (C) a “Reportable Event” (as
referenced in Section 4043(b)(3) of ERISA) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which Reportable Event (as
so defined) or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of Buyer, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (D) any Plan shall terminate for
purposes of Title IV of ERISA, (E) Seller or any ERISA Affiliate shall, or in
the reasonable opinion of Buyer is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan or (F) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (A) through (F) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect;

(xii) either (A) the Transaction Documents shall for any reason not cause, or
shall cease to cause, Buyer to be the owner free of any adverse claim of any of
the Purchased Assets, and such condition is not cured by Seller within three
(3) Business Days after notice thereof from Buyer to Seller, or (B) if a
Transaction is recharacterized as a secured financing, and the Transaction
Documents with respect to any Transaction shall for any reason cease to create
and maintain a valid first priority security interest in favor of Buyer in any
of the Purchased Assets;

(xiii) an “Event of Default,” “Termination Event,” “Potential Event of Default”
or other default or breach, however defined therein, occurs under any Hedging
Transaction on the part of Seller, or the counterparty to Seller on any such
Hedging Transaction with a Qualified Hedge Counterparty ceases to be a Qualified
Hedge Counterparty, that is otherwise not cured within any applicable cure
period thereunder or, if no cure period exists thereunder, which is not cured by
Seller within three (3) Business Days after notice thereof from an Affiliated
Hedge Counterparty or Qualified Hedge Counterparty to Seller;

 

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(xiv) any governmental, regulatory, or self-regulatory authority shall have
taken any action to suspend or terminate the rights, privileges, or operations
of Seller, which suspension has a Material Adverse Effect in the determination
of Buyer;

(xv) any other representation (other than the representations and warranties of
Seller set forth in Exhibit VI and Article 9(b)(viii)(D), which shall not be
considered an Event of Default if incorrect or untrue in any material respect)
made by Seller to Buyer shall have been incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated and such
incorrect or untrue representation exists and continues unremedied for ten
(10) calendar days after the earlier of receipt of written notice thereof from
Buyer or Seller’s Knowledge of such incorrect or untrue representation;

(xvi) a final non-appealable judgment by any competent court in the United
States of America for the payment of money (A) rendered against Seller in an
amount greater than $250,000 or (B) rendered against Guarantor in an amount
greater than $15,000,000, and remained undischarged or unpaid for a period of
sixty (60) days, during which period execution of such judgment is not
effectively stayed by bonding over or other means reasonably acceptable to
Buyer;

(xvii) if Seller shall breach or fail to perform any of the terms, covenants,
obligations or conditions of this Agreement, other than as specifically
otherwise referred to in this definition of “Event of Default”, and such breach
or failure to perform is not remedied within the earlier of five (5) Business
Days after (a) delivery of notice thereof to Seller by Buyer, or (b) Knowledge
on the part of Seller of such breach or failure to perform; provided, that, if
Buyer determines, in its sole discretion, that any such breach is capable of
being cured and Seller is diligently and continuously pursuing such a cure in
good faith but is not able to do so on a timely basis, Seller shall have an
additional period of time, not to exceed thirty (30) additional days, within
which to complete such cure; provided further, that such additional 30-day
period shall not apply to any breach of or other failure to comply with the
terms of Article 10(k) of this Agreement;

(xviii) the Guarantee Agreement or a replacement therefor acceptable to Buyer
shall for whatever reason be terminated or cease to be in full force and effect,
or the enforceability thereof shall be contested by Guarantor or Seller; and

(xix) the breach by Guarantor of any material term or condition set forth in the
Guarantee Agreement or of any representation, warranty, certification or
covenant made or deemed made in the Guarantee Agreement by Guarantor or if any
certificate furnished by Guarantor to Buyer pursuant to the provisions hereof or
thereof or any information with respect to the Purchased Assets furnished in
writing on behalf of Guarantor shall prove to have been false or misleading in
any respect as of the time made or furnished; provided, however, that any such
default, failure to perform or breach shall not constitute an Event of Default
if Guarantor cures such default or failure to perform, as the case may be,
within the grace notice and/or cure period, if any, provided under the
applicable agreement.

 

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(b) After the occurrence and during the continuance of an Event of Default,
Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. If an Event of
Default shall occur and be continuing with respect to Seller, 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 or
Guarantor), 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”).

(ii) If Buyer exercises or is deemed to have exercised the option referred to in
Article 12(b)(i) of this Agreement:

(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

(B) to the extent permitted by applicable law, the Repurchase Price with respect
to each Transaction (determined as of the Accelerated Repurchase Date) shall be
increased by the aggregate amount obtained by daily application of, on a 360 day
per year basis for the actual number of days during the period from and
including the Accelerated Repurchase Date to but excluding the date of payment
of the Repurchase Price (as so increased), (x) the Pricing Rate for such
Transaction multiplied by (y) the Repurchase Price for such Transaction
(decreased by (I) any amounts actually remitted to Buyer by the Depository or
Seller from time to time pursuant to Article 5 of this Agreement and applied to
such Repurchase Price, and (II) any amounts applied to the Repurchase Price
pursuant to Article 12(b)(iii) of this Agreement); and

(C) the Custodian shall, upon the request of Buyer, deliver to Buyer all
instruments, certificates and other documents then held by the Custodian
relating to the Purchased Assets.

(iii) Upon the occurrence and during the continuance of an Event of Default with
respect to Seller, Buyer may (A) immediately sell on a servicing released basis,
at a public or private sale in a commercially reasonable manner and at such
price or prices as Buyer may deem satisfactory any or all of the Purchased
Assets, and/or (B) in its 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 Price for such Purchased Assets and any other
amounts owing by Seller under the Transaction Documents. The proceeds of any
disposition of Purchased Assets effected pursuant to this

 

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Article 12(b)(iii) shall be applied, (v) first, to the costs and expenses
incurred by Buyer in connection with Seller’s default; (w) second, to actual
out-of-pocket damages incurred by Buyer in connection with Seller’s default
(including, but not limited to, costs of cover and/or Hedging Transactions, if
any), (x) third, to the Repurchase Price; (y) fourth, to any Breakage Costs; and
(z) fifth, to return any excess to Seller.

(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 liquidation of a Transaction or the Purchased Assets does 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 its 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 and its Affiliates and shall indemnify Buyer
and its Affiliates for (A) the amount (including in connection with the
enforcement of this Agreement) of all out of pocket losses, and costs and
expenses, including reasonable legal fees and expenses of outside counsel,
actually incurred by Buyer in connection with or as a consequence of an Event of
Default with respect to Seller and (B) all documented, actual costs incurred by
Buyer in connection with the termination of Hedging Transactions in the event
that Seller, from and after an Event of Default, takes any action to impede or
otherwise affect Buyer’s remedies under this Agreement.

(vi) 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 (where relevant), 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 as in effect from
time-to-time in the State of New York, to the extent that the UCC is applicable,
and the right to offset any mutual debt and claim), in equity, and under any
other agreement between Buyer and 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 under this
Agreement, without prejudice to Buyer’s right to recover any deficiency.

(vii) Subject to the applicable notice and cure periods set forth herein, Buyer
may exercise any or all of the remedies available to Buyer immediately upon the
occurrence of an Event of Default with respect to Seller 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.

 

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(viii) 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, to the extent permitted by law, 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.

(c) If at any time Buyer determines that (i) any Purchased Asset is not an
Eligible Asset (other than as a result of a breach of a Mark-to-Market
Representation, which shall in no event, in and of itself, cause an Early
Repurchase but may be used in connection with the determination of Market Value
in accordance with this Agreement) or (ii) has been released from the possession
of the Custodian for a period in excess of ten (10) calendar days, the related
Transaction shall terminate and an Early Repurchase Date shall be deemed to
occur with respect to such Purchased Asset. No later than three (3) Business
Days after receiving written notice from Buyer or Seller becoming otherwise
aware that such Purchased Asset is not an Eligible Asset, Seller shall
repurchase the affected Purchased Asset and Seller shall pay the applicable
Repurchase Price for such Purchased Asset to Buyer by depositing such amount in
immediately available funds at the direction of Buyer.

ARTICLE 13.

SINGLE AGREEMENT

Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction (including an Additional Purchase Transaction or Future Funding
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 (i) 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, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

ARTICLE 14.

RECORDING OF COMMUNICATIONS

EACH OF BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM TIME
TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS BETWEEN
ITS EMPLOYEES, IF ANY, AND THOSE OF THE OTHER PARTY WITH RESPECT TO
TRANSACTIONS; PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD COMMUNICATIONS

 

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SHALL BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING
FLOOR OF THE APPLICABLE PARTY. EACH OF BUYER AND SELLER HEREBY CONSENTS TO THE
ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER
PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE
RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES’
AGREEMENT.

ARTICLE 15.

NOTICES AND OTHER COMMUNICATIONS

Unless otherwise provided in this Agreement, 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 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 delivery or (d) by email, provided that
such emailed notice must also be delivered by one of the means set forth above,
to the address 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 Article 15. A notice shall be deemed to have been given: (w) in the case
of hand delivery, at the time of delivery, (x) in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day, (y) in the case of expedited prepaid delivery upon the first attempted
delivery on a Business Day, or (z) in the case of email, upon receipt of
confirmation, provided that such emailed notice was also delivered as required
in this Article 15. A party receiving a notice that does not comply with the
technical requirements for notice under this Article 15 may elect to waive any
deficiencies and treat the notice as having been properly given.

ARTICLE 16.

ENTIRE AGREEMENT; SEVERABILITY

This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.

ARTICLE 17.

NON-ASSIGNABILITY

(a) Subject to Article 17(b) below, Seller may not assign any of its respective
rights or obligations under this Agreement without the prior written consent of
Buyer (not to be unreasonably withheld or delayed) and 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. Buyer may, without consent of
Seller, sell to one or more banks, financial institutions or other entities
(“Participants”) (other than with respect to an assignment to a Prohibited

 

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Transferee, which shall be subject to the prior written consent of Seller)
participating interests in any Transaction, its interest in the Purchased
Assets, or any other interest of Buyer under this Agreement. Buyer may, at any
time and from time to time, upon prior written notice to Seller, assign to any
Person (other than Prohibited Transferees, so long as no Event of Default has
occurred and is continuing, in which case such limitation shall not apply) (an
“Assignee” and together with Participants, each a “Transferee” and collectively,
the “Transferees”) all or any part of its rights its interest in the Purchased
Assets, or any other interest of Buyer under this Agreement; provided, however,
that in all such circumstances (for the avoidance of doubt, including
participations) other than a sale, assignment, transfer or participation by
Buyer of one hundred percent (100%) of its rights and obligations under the
Transaction Documents (which sale, assignment, transfer or participation, if
Buyer does not retain control and authority over its rights and obligations
under the Transaction Documents, shall be subject to the prior written consent
of Seller, not to be unreasonably withheld, conditioned or delayed), (i) Buyer
shall retain control and authority over its rights and obligations under the
Transaction Documents and any Transaction, subject to major decision approval
rights, (ii) Seller shall not be obligated or required to deal directly or
indirectly with any Person other than Buyer, and (iii) Seller shall not be
charged for, incur or be required to reimburse Buyer or any other Person for any
costs or expense relating to any such sale, assignment, transfer or
participation. Each of Seller and Guarantor agrees to reasonably cooperate with
Buyer, at Buyer’s sole cost and expense, in connection with any such assignment,
transfer or sale of participating interest and to enter into such restatements
of, and amendments, supplements and other modifications to, this Agreement in
order to give effect to such assignment, transfer or sale. Seller agrees that
each properly registered Participant shall be entitled to the benefits of
Article 3(h), Article 3(i), and Articles 3(n) through (s) (subject to the
requirements and limitations therein, including, without limitation and for the
avoidance of doubt, the requirements under Article 3(o) or Article 3(p) (it
being understood that the documentation required under Article 3(p) shall be
delivered to the participating Buyer or Assignee, as applicable)) to the same
extent as if it were an Assignee and had acquired its interest by assignment
pursuant to this Article 17(a); provided that such Participant (A) agrees to be
subject to the provisions of Article 3 as if it were an Assignee under this
Article 17(a), and (B) shall not be entitled to receive any greater payment
under Article 3(o) or Article 3(q), with respect to any participation, than its
participating Buyer or Assignee, as applicable, would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by a Governmental Authority, in any case
which occurs after the Participant acquired the applicable participation. Each
Buyer or Assignee that sells a participation agrees to use reasonable efforts to
cooperate with Sellers to effectuate the provisions of Article 3 with respect to
the applicable Participant.

(b) Title to all Purchased Assets and Purchased Items shall pass to Buyer and
Buyer shall have free and unrestricted use of all Purchased Assets. Nothing in
this Agreement shall preclude Buyer from engaging in repurchase transactions
with the Purchased Assets and Purchased Items or otherwise selling, pledging,
repledging, transferring, hypothecating, or rehypothecating the Purchased Assets
and Purchased Items, all on terms that Buyer may determine in its sole
discretion other than with respect to repurchase transactions or sales, pledges,
repledges, transfers, hypothecations, or rehypothecations to Prohibited
Transferees, which shall be subject to the prior written consent of Seller;
provided, however, that Buyer shall transfer the Purchased Assets to Seller on
the applicable Repurchase Date free and clear of any

 

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pledge, lien, security interest, encumbrance, charge or other adverse claim on
any of the Purchased Assets. Nothing contained in this Agreement shall obligate
Buyer to segregate any Purchased Assets or Purchased Items transferred to Buyer
by Seller.

(c) Buyer, acting for this purpose as an agent of Seller, shall maintain at one
of its offices a register for the recordation of the names and addresses of
Buyer, and the percentage of the rights and obligations under this Agreement
owing to, Buyer and each Transferee pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and
Seller, Buyer, and each Transferee shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Buyer or Transferee,
as applicable, hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by Seller
at any reasonable time and from time to time upon reasonable prior notice;
provided that Buyer shall have no obligation to disclose all or any portion of
the Register regarding Participants (including the identity of any Participant
or any information relating to a Participant’s beneficial interest in this
Agreement) to any Person except to the extent that such disclosure is necessary
to establish that such beneficial interest in this Agreement or other obligation
is in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Register shall be conclusive absent manifest
error, and Buyer shall treat each Person whose name is recorded in the Register
as the owner of its respective interest for all purposes of this Agreement
notwithstanding any notice to the contrary. No sale, assignment, transfer or
participation pursuant to this Article 17 shall be effective until reflected in
the Register.

ARTICLE 18.

GOVERNING LAW

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

ARTICLE 19.

NO WAIVERS, ETC.

No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party 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 herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Articles 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.

 

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ARTICLE 20.

USE OF EMPLOYEE PLAN ASSETS

(a) If assets of an employee benefit plan subject to any provision of ERISA are
intended to be used by either party hereto (the “Plan Party”) in a Transaction,
the Plan Party shall so notify the other party prior to the Transaction. The
Plan Party shall represent in writing to the other party that the Transaction
does not constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not be
required so to proceed.

(b) Subject to the last sentence of subparagraph (a) of this Article 20, any
such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available audited statement of its financial condition and
its most recent subsequent unaudited statement of its financial condition.

(c) By entering into a Transaction or a related Additional Purchase Transaction
or Future Funding Transaction, pursuant to this Article 20, Seller shall be
deemed (i) to represent to Buyer that since the date of Seller’s latest such
financial statements, there has been no material adverse change in Seller’s
financial condition that Seller has not disclosed to Buyer, and (ii) to agree to
provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long as it is Seller in any outstanding
Transaction involving a Plan Party.

ARTICLE 21.

INTENT

(a) The parties intend and recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101(47) of the Bankruptcy Code
(except insofar as the type of Assets subject to such Transaction or the term of
such Transaction would render such definition inapplicable), and a “securities
contract” as that term is defined in Section 741 of the Bankruptcy Code (except
insofar as the type of assets subject to such Transaction would render such
definition inapplicable). The Parties intend (a) for each Transaction to qualify
for the safe harbor treatment provided by the Bankruptcy Code and for Buyer to
be entitled to all of the rights, benefits and protections afforded to Persons
under the Bankruptcy Code with respect to a “repurchase agreement” as defined in
Section 101(47) of the Bankruptcy Code and a “securities contract” as defined in
Section 741(7) of the Bankruptcy Code and that payments under this Agreement are
deemed “margin payments” or “settlement payments,” as defined in Section 741 of
the Bankruptcy Code, (b) for the grant of a security interest set forth in
Article 6 to also be a “securities contract” as defined in Section 741(7)(A)(xi)
of the Bankruptcy Code and a “repurchase agreement” as that term is defined in
Section 101(47)(A)(v) of the Bankruptcy Code, and (c) that each party (for so
long as each is either a “financial institution,” “financial participant,” “repo
participant,” “master netting participant” or other entity listed in
Section 546, 555, 559, 561, 362(b)(6) or 362(b)(7) of the Bankruptcy Code) shall
be entitled to the “safe harbor” benefits and protections afforded under the
Bankruptcy Code with respect to a “repurchase agreement” and a “securities
contract,” and a “master netting agreement,” including (x) the rights, set forth
in Article 12 and in Section 555, 559 and 561 of the Bankruptcy Code, to
liquidate the Purchased Assets and terminate this Agreement, and (y) the right
to offset or net out as set forth in Article 12 and in Sections 362(b)(6), 362
(b)(7), 362(b)(27), 362(o) and 546 of the Bankruptcy Code.

 

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(b) It is understood that either party’s right to accelerate or terminate this
Agreement or to liquidate Assets delivered to it in connection with the
Transactions hereunder or to exercise any other remedies pursuant to Article 12
hereof is a contractual right to accelerate, terminate or liquidate this
Agreement or the Transactions 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.

(c) The parties agree and acknowledge that if a party hereto is an “insured
depository institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“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).

(d) Each party hereto hereby further agrees that it shall not challenge the
characterization of (i) this Agreement or any Transaction as a “repurchase
agreement,” “securities contract” and/or “master netting agreement,” or
(ii) each party as a “repo participant” within the meaning of the Bankruptcy
Code except insofar as the type of Asset subject to the Transactions or, in the
case of a “repurchase agreement,” the term of the Transactions, would render
such definition inapplicable.

(e) It is understood that this Agreement constitutes a “netting contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“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).

(f) It is understood that this Agreement constitutes a “master netting
agreement” as defined in Section 101(38A) of the Bankruptcy Code, and as used in
Section 561 of the Bankruptcy Code.

(g) Notwithstanding anything herein to the contrary, it is the intention of the
parties that, for U.S. Federal, state and local income and franchise tax
purposes and for accounting purposes, each Transaction constitute a financing,
and that Seller be (except to the extent that Buyer shall have exercised its
remedies following an Event of Default) the owner of the Purchased Assets for
such purposes. Unless prohibited by applicable law, Seller and Buyer shall treat
the Transactions as described in the preceding sentence (including on any and
all filings with any U.S. Federal, state, or local taxing authority) and agree
not to take any action inconsistent with such treatment.

 

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ARTICLE 22.

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 Securities and Exchange Commission (“SEC”) under
Section 15 of the Securities Exchange Act of 1934, 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 Exchange 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.

ARTICLE 23.

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

(a) Each party irrevocably and unconditionally (i) 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 and (ii) waives, to the fullest extent it may effectively do so, any
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.

(b) 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.

 

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(c) The parties hereby irrevocably waive, to the fullest extent each may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding and irrevocably consent to the service of any summons
and complaint and any other process by the mailing of copies of such process to
them at their respective address specified herein. The parties hereby agree 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 Article 23 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.

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

ARTICLE 24.

NO RELIANCE

Each of Buyer and Seller 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:

(a) 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;

(b) It has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed 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 necessary and
not upon any view expressed by the other party;

(c) 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;

(d) 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; and

(e) 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, guarantee 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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ARTICLE 25.

INDEMNITY

Seller hereby agrees to indemnify Buyer, Buyer’s Affiliates and each of its
officers, directors, employees and agents (“Indemnified Parties”) from and
against any and all actual out-of-pocket liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, fees, costs, expenses (including
attorneys’ fees and disbursements) 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 hereunder 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 losses
resulting from the gross negligence, bad faith or willful misconduct of Buyer or
any other Indemnified Party. Without limiting the generality of the foregoing,
Seller agrees to hold Buyer harmless from and indemnify Buyer 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 the Real Estate Settlement Procedures Act; provided,
that Seller shall not be liable for losses resulting from the gross negligence,
bad faith or willful misconduct of Buyer or any other Indemnified Party. 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, Seller will save, indemnify and hold Buyer harmless from and
against all out-of-pocket expense (including reasonable attorneys’ fees of
outside counsel), loss or damage suffered 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 Buyer as and when
billed by Buyer for all Buyer’s reasonable out-of-pocket costs and expenses
incurred in connection with Buyer’s due diligence reviews with respect to the
Purchased Assets (including, without limitation, those incurred pursuant to
Article 26 and Article 3 (including, without limitation, all Due Diligence Legal
Expenses, even if the underlying prospective Transaction for which they were
incurred does not take place for any reason) and the enforcement or the
preservation of Buyer’s rights under this Agreement, any Transaction Documents
or Transaction contemplated hereby, including without limitation the reasonable
fees and disbursements of its outside counsel. Seller hereby acknowledges that
the obligation of Seller hereunder is a recourse obligation of Seller. This
Article 25 shall not apply with respect to Taxes other than any Taxes that
represent losses, claims or damages arising from any non-Tax claim.

 

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ARTICLE 26.

DUE DILIGENCE

Seller acknowledges that 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 otherwise, and Seller agrees that 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 such Purchased Assets in the
possession or under the control of Seller, any servicer or subservicer and/or
the Custodian. Seller agrees to reimburse Buyer for any and all reasonable
out-of-pocket costs and expenses incurred by Buyer with respect to the Purchased
Assets during the term of this Agreement, which shall be paid by Seller to Buyer
within five (5) days after receipt of an invoice therefor. Seller also shall
make available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Purchased Asset Files and the
Purchased Assets. Without limiting the generality of the foregoing, Seller
acknowledges that Buyer may enter into Transactions with Seller based solely
upon the information provided by Seller to Buyer and the representations,
warranties and covenants contained herein, and that Buyer, at its option, has
the right at any time to conduct a partial or complete due diligence review on
some or all of the Purchased Assets. Buyer may underwrite such Purchased Assets
itself or engage a third party underwriter to perform such underwriting. Seller
agrees to cooperate with Buyer and any third party underwriter 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 Seller. Seller further agrees that Seller
shall reimburse Buyer for any and all attorneys’ fees, costs and expenses
incurred by Buyer in connection with continuing due diligence on Eligible Assets
and Purchased Assets.

ARTICLE 27.

SERVICING

(a) Each servicer of any Purchased Asset (including the Interim Servicer) shall
service the Purchased Assets for the benefit of Buyer and Buyer’s successors and
assigns. Seller shall cause each such servicer (including the Interim Servicer)
to service the Purchased Assets at Seller’s sole cost and for the benefit of
Buyer in accordance with Accepted Servicing Practices; provided that, without
prior written consent of Buyer in its sole discretion as required by
Section 7(d), no servicer (including the Interim Servicer and the primary
servicer) of any of the Purchased Assets shall take any action with respect to
any Purchased Asset described in Section 7(d).

(b) Seller agrees that Buyer is the owner of all servicing records, including
but not limited to any and all servicing agreements and pooling and servicing
agreements (including, without limitation the Interim Servicing Agreement or any
other servicing agreement relating to the servicing of any or all of the
Purchased Assets) (collectively, the “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

 

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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 such Servicing Records
and to deliver them promptly to Buyer or its designee (including the Custodian)
at Buyer’s request.

(c) Upon the occurrence and during the continuance of an Event of Default, Buyer
may, in its sole discretion, (i) sell its right to the Purchased Assets on a
servicing released basis and/or (ii) terminate Seller (as the servicer), the
Interim Servicer or any other servicer or sub-servicer of the Purchased Assets
with or without cause, in each case without payment of any termination fee.

(d) Seller shall not employ sub-servicers or any other servicers other than the
Interim Servicer pursuant to the Interim Servicing Agreement to service the
Purchased Assets without the prior written approval of Buyer, in Buyer’s sole
discretion. If the Purchased Assets are serviced by a sub-servicer or any other
servicer, Seller shall, irrevocably assign all rights, title and interest (if
any) in the servicing agreements in the Purchased Assets to Buyer. Seller shall
cause all servicers (other than the Interim Servicer) and sub-servicers engaged
by Seller to execute the Servicer Notice with Buyer acknowledging Buyer’s
security interest and agreeing that each servicer and/or sub-servicer shall
immediately transfer all Income and other amounts with respect to the Purchased
Assets in accordance with the applicable Servicing Agreement and so long as any
Purchased Asset is owned by Buyer hereunder, following notice from Buyer to
Seller and each such servicer of an Event of Default under this Agreement, each
such servicer (including the Interim Servicer) or sub-servicer shall take no
action with regard to such Purchased Asset other than as specifically directed
by Buyer. Seller shall cause each Servicing Agreement (including the Interim
Servicing Agreement) to be consistent with the terms of this Agreement and each
Servicer (including the Interim Servicer) to comply with such terms.

(e) The payment of servicing fees shall be subordinate to payment of amounts
outstanding under any Transaction and this Agreement.

(f) For the avoidance of doubt, Seller retains no economic rights to the
servicing, other than Seller’s rights under the Interim Servicing Agreement or
any other servicing agreement related to the Purchased Assets. As such, Seller
expressly acknowledges that the Purchased Assets are sold to Buyer on a
“servicing released” basis with such servicing retained by the Servicer.

(g) Seller shall cause each servicer of a Purchased Asset to provide to Buyer
and to the Custodian via electronic transmission, promptly upon request by Buyer
a Servicing Tape for the month (or any portion thereof) prior to the date of
Buyer’s request; provided, that to the extent any servicer does not provide any
such Servicing Tape, Seller shall prepare and provide to Buyer and Custodian via
electronic transmission a remittance report containing the servicing information
that would otherwise be set forth in the Servicing Tape; and provided, further,
that regardless of whether Seller at any time delivers any such remittance
report, Seller shall at all times use commercially reasonable efforts to cause
each servicer to provide each Servicing Tape in accordance herewith.

 

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ARTICLE 28.

MISCELLANEOUS

(a) Seller hereby acknowledges and agrees that Buyer may either securitize
or participate, syndicate or otherwise sell interests in the Transactions, any
Transaction and/or any portion thereof (any such transaction, a “Secondary
Market Transaction”). To the extent Buyer desires to implement any Secondary
Market Transaction, Seller agrees to reasonably cooperate with Buyer, at Buyer’s
sole cost and expense (including, without limitation, Buyer’s attorneys’ fees
and costs and Seller’s reasonable attorneys’ fees and costs), to plan,
structure, negotiate, implement and execute such Secondary Market Transaction;
provided that such Secondary Market Transaction has no material adverse tax
consequence on Seller or their direct or indirect owners. Seller hereby further
acknowledges and agrees that (i) Buyer reserves the right to convert any
Transaction or Transactions (or any portion thereof) at any time (including in
connection with a Secondary Market Transaction) to components, pari passu
financing or subordinate financing, including one or more tranches of preferred
equity, subordinate debt, multiple notes, or participation interests, each
subordinate to such loan (“Subordinate Financing”, and the senior portion of any
such Subordinate Financing, the “Senior Tranche”), and (ii) any such Subordinate
Financing shall have individual coupon rates that, when blended with the Senior
Tranche in the aggregate, shall initially equal the Price Differential. Seller
acknowledges and agrees that the terms of any such Subordinate Financing will
provide that a default under the Senior Tranche shall be a default under the
respective Subordinate Financing. Seller consents to disclosure by Buyer or any
of its Affiliates of the Purchased Assets, collateral therefor and Seller’s and
its Affiliates’ and/or principals’ operating and financial statements in
connection with the servicing of any Purchased Assets and any Secondary Market
Transaction.

(b) 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 this Agreement is determined to create a
security interest, Buyer shall have all rights and remedies of a secured party
under the UCC.

(c) 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.

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

(e) Without limiting the rights and remedies of Buyer under the Transaction
Documents, Seller shall pay Buyer’s reasonable actual out-of-pocket costs and
expenses, including reasonable fees and expenses of accountants, attorneys and
advisors, incurred in connection with the preparation, negotiation, execution
and consummation of, and any amendment, supplement or modification to, the
Transaction Documents and the Transactions thereunder, whether or not such
Transaction Document (or amendment thereto) or Transaction is ultimately
consummated. Seller agrees to pay Buyer on demand all costs and expenses
(including reasonable expenses for legal services of every kind) of any
subsequent enforcement

 

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of any of the provisions hereof, or of the performance by Buyer of any
obligations of Seller in respect of the Purchased Assets, or any actual or
attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Purchased Items and for the custody, care or
preservation of the Purchased Items (including insurance costs) and defending or
asserting rights and claims of Buyer in respect thereof, by litigation or
otherwise. In addition, Seller agrees to pay Buyer on demand all reasonable
costs and expenses (including reasonable expenses for legal services) incurred
in connection with the maintenance of the Depository Account and registering the
Purchased Items in the name of Buyer or its nominee. All such expenses shall be
recourse obligations of Seller to Buyer under this Agreement. This Article 28(e)
shall not apply with respect to Taxes other than any Taxes that represent
losses, claims or damages arising from any non-Tax claim.

(f) In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of such rights, Seller hereby grants to
Buyer and its Affiliates a right of offset, to secure repayment of all amounts
owing to Buyer or its Affiliates by Seller under the Transaction Documents, upon
any and all monies, securities, collateral or other property of Seller and the
proceeds therefrom, now or hereafter held or received by Buyer or its Affiliates
or any entity under the Control of Buyer or its Affiliates and its respective
successors and assigns (including, without limitation, branches and agencies of
Buyer, wherever located), for the account of Seller, whether for safekeeping,
custody, pledge, transmission, collection, or otherwise, and also upon any and
all deposits (general or specified) and credits of Seller at any time existing.
Buyer and its Affiliates are hereby authorized at any time and from time to time
upon the occurrence and during the continuance of an Event of Default, without
notice to Seller, to offset, appropriate, apply and enforce such right of offset
against any and all items hereinabove referred to against any amounts owing to
Buyer or its Affiliates by Seller thereof under the Transaction Documents or any
other agreement, irrespective of whether Buyer or its Affiliates shall have made
any demand hereunder and although such amounts, or any of them, shall be
contingent or unmatured and regardless of any other collateral securing such
amounts. Seller shall be deemed directly indebted to Buyer and its Affiliates in
the full amount of all amounts owing to Buyer and its Affiliates by Seller under
the Transaction Documents or any other agreement, and Buyer and its Affiliates
shall be entitled to exercise the rights of offset provided for above. ANY AND
ALL RIGHTS TO REQUIRE BUYER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE
AMOUNTS OWING TO BUYER OR ITS AFFILIATES BY SELLER UNDER THE TRANSACTION
DOCUMENTS, PRIOR TO EXERCISING THEIR RIGHT OF OFFSET WITH RESPECT TO SUCH
MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

(g) 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.

 

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(h) This Agreement 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.

(i) The parties understand that this Agreement is a legally binding agreement
that may affect such party’s rights. Each party represents to the other that it
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.

(j) 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.

(k) Wherever pursuant to this Agreement, Buyer exercises any right given to it
to consent or not consent, or to approve or disapprove, or any arrangement or
term is to be satisfactory to, Buyer in its sole discretion, Buyer shall decide
to consent or not consent, or to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory, in its sole and
absolute discretion and such decision by Buyer shall be final and conclusive.

(l) Each Affiliated Hedge Counterparty is an intended third party beneficiary of
this Agreement and the parties hereto agree that this Agreement shall not be
amended or otherwise modified without the written consent of each Affiliated
Hedge Counterparty, such consent not to be unreasonably withheld.

 

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

 

BUYER:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association

By:  

/s/ Thomas N. Cassino

  Name:   Thomas N. Cassino   Title:   Vice President

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SELLER:

PARLEX 4 FINANCE, LLC, a Delaware limited liability company

By:  

/s/ Douglas Armer

  Name:   Douglas Armer   Title:   Principal, Head of Capital Markets

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEX I

   Names and Addresses for Communications between Parties

SCHEDULE I

   Prohibited Transferees

EXHIBIT I

   Form of Confirmation

EXHIBIT II

   Authorized Representatives of Seller

EXHIBIT III-A

   Monthly Reporting Package

EXHIBIT III-B

   Quarterly Reporting Package

EXHIBIT III-C

   Annual Reporting Package

EXHIBIT IV

   Form of Custodial Delivery Certificate

EXHIBIT V

   Form of Power of Attorney

EXHIBIT VI

   Representations and Warranties Regarding Individual Purchased Assets

EXHIBIT VII

   Asset Information

EXHIBIT VIII

   Purchase Procedures

EXHIBIT IX

   Form of Bailee Letter

EXHIBIT X

   Form of Margin Deficit Notice

EXHIBIT XI

   Form of Tax Compliance Certificates

EXHIBIT XII

   UCC Filing Jurisdictions

EXHIBIT XIII

   Form of Servicer Notice

EXHIBIT XIV

   Form of Release Letter

EXHIBIT XV

   Covenant Compliance Certificate

EXHIBIT XVI

   Form of Re-Direction Letter

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ANNEX I

Names and Addresses for Communications Between Parties

Buyer:

JPMorgan Chase Bank, National Association

4 New York Plaza, 20th Floor

New York, New York 10004

Attention: Ms. Nancy S Alto

Telephone: (212) 623-1989

Fax: (917) 546-2564

With copies to:

JPMorgan Chase Bank, National Association

270 Park Avenue, 10th Floor

New York, New York 10017-2014

Attention: Chuck Y. Lee

Telephone: (212) 834-5467

Fax: (212) 834-6593

and

Cadwalader Wickersham & Taft LLP

227 West Trade Street

Charlotte, North Carolina 28202

Attention: Stuart N. Goldstein, Esq.

Telephone: (704) 348-5258

Fax: (704) 348-5200

Seller:

Parlex 4 Finance, LLC

c/o Blackstone Mortgage Trust, Inc.

345 Park Avenue New York, NY 10154

Attention: Douglas Armer

Telephone: (212) 583-5000

Email: BXMTJPMRepo@blackstone.com

With a copy to:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, New York 10036-8704

Attention: David C. Djaha, Esq.

Telephone: (212) 841-0489

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SCHEDULE I

Prohibited Transferees

All Affiliates, successors and assigns of the entities listed on this Schedule I
and such other Persons indicated by Seller from time to time and approved by
Buyer, such approval not to be unreasonably withheld, shall be Prohibited
Transferees, as defined and used in the Agreement.

 

Angelo, Gordon & Co., L.P.    LoanCore Capital, LLC Annaly Capital Management,
Inc.    Lone Star U.S. Acquisitions, LLC Apollo Commercial Real Estate Finance,
Inc.    Macquarie Group Limited Arbor Realty Trust Inc.    Mesa West Capital,
LLC Ares Commercial Real Estate Corporation    NCH Capital Inc. Brookfield
Investment Management Inc.    Newcastle Investment Corp. Cantor Fitzgerald & Co.
   NorthStar Realty Finance Corp. CapitalSource Inc.    OZ Management LP
Children’s Investment Fund LP    Pacific Investment Management Company LLC
Colony Financial, Inc.    RAIT Financial Trust CreXus Investment Corp.   
Redwood Trust Inc. Fortress Credit Corp.    Rialto Capital Management, LLC
Guggenheim Partners, LLC    SL Green Realty Corp. H/2 Credit Manager LP   
Square Mile Capital Management, LLC iStar Financial Inc.    Starwood Capital
Group Invesco Ltd.    Starwood Property Trust, Inc. KKR & Co. L.P.    TPG
Capital Management, L.P. Ladder Capital Securities LLC    Winthrop Capital
Management, LLC

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EXHIBIT I

CONFIRMATION STATEMENT

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

Ladies and Gentlemen:

Parlex 4 Finance, LLC is pleased to deliver our written CONFIRMATION of our
agreement to enter into the Transaction pursuant to which JPMorgan Chase Bank,
National Association shall purchase from us the Purchased Assets identified on
the attached Schedule 1 to this Confirmation pursuant to the Master Repurchase
Agreement, dated as of June 28, 2013 (the “Agreement”), between JPMorgan Chase
Bank, National Association (the “Buyer”) and Parlex 4 Finance, LLC (the
“Seller”) on the following terms. Capitalized terms used herein without
definition have the meanings given in the Agreement.

 

Purchase Date:                        , 201   Name of Purchased Asset(s):   
[            ] Aggregate Principal Amount of Purchased Assets:   
$[            ] Repurchase Date:    Purchase Price:    $[            ] Market
Value:    $[            ] Pricing Rate:    one month LIBOR plus     % Maximum
Pricing Rate:    one month LIBOR plus     % Advance Rate:    [    ]% Maximum
Advance Rate:    [    ]% Governing Agreements:    [            ] Requested Wire
Amount:    $[        ] Requested Fund Date:    [                    ] [    ],
201[  ] Wiring Instructions:    [            ]1 Name and address for
communications:    Buyer:    JPMorgan Chase Bank, National Association    4 New
York Plaza, 20th Floor

 

1  If wire instructions are to an account other than as specified in
Section 3(b)(v) of the Agreement, the Confirmation shall require the signature
of two Responsible Officers of Seller.

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  New York, New York 10004   Attention: Ms. Nancy S. Alto   Telephone:
(212) 623-1989   Fax: (917) 546-2564   With copies to:   JPMorgan Chase Bank,
National Association   270 Park Avenue, 10th Floor   New York, New York
10017-2014   Attention: Chuck Y. Lee   Telephone: (212) 834-5467   Fax:
(212) 834-6593   and   Cadwalader Wickersham & Taft LLP   227 West Trade Street
  Charlotte, North Carolina 28202   Attention: Stuart N. Goldstein, Esq.  
Telephone: (704) 348-5258   Fax: (704) 348-5200   Seller:   Parlex 4 Finance,
LLC   [            ]   [            ]   Attn: [            ]   Telephone:
[            ]   Fax: [            ]   With a copy to:   Ropes & Gray LLP   1211
Avenue of the Americas   New York, New York 10036-8704   Attention: David C.
Djaha, Esq.   Telephone: (212) 841-0489   Fax: (212) [        ]-[            ]

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PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

 

AGREED AND ACKNOWLEDGED: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION By:  

 

  Name:   Title:

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Schedule 1 to Confirmation Statement

 

 

Purchased Assets:

Aggregate Principal Amount:

 

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EXHIBIT II

AUTHORIZED REPRESENTATIVES OF SELLER

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EXHIBIT III-A

MONTHLY REPORTING PACKAGE

The Monthly Reporting Package shall include, inter alia, the following:

 

•  

Any and all financial statements, rent rolls or other material information
received from the borrowers related to each Purchased Asset. To the extent that
Seller fails, after diligent efforts, to obtain on a monthly basis such
financial statements, rent rolls and other material information from the
borrowers, Seller shall provide such information to Buyer on a quarterly basis.

 

•  

A remittance report containing servicing information, including without
limitation, the amount of each periodic payment due, the amount of each periodic
payment received, the date of receipt, the date due, and whether there has been
any material adverse change to the real property, on a loan by loan basis and in
the aggregate, with respect to the Purchased Assets serviced by any servicer
(such remittance report, a “Servicing Tape”), or to the extent any servicer does
not provide any such Servicing Tape, a remittance report containing the
servicing information that would otherwise be set forth in the Servicing Tape.

 

•  

A listing of all Purchased Assets reflecting the payment status of each
Purchased Asset and any material changes in the financial or other condition of
each Purchased Asset.

 

•  

A listing of any existing Defaults.

 

•  

Trustee remittance reports.

 

•  

All other information as Buyer, from time to time, may reasonably request with
respect to Seller or any Purchased Asset, obligor or Underlying Mortgaged
Property.

 

•  

A certificate substantially in the form attached hereto as Exhibit XV to this
Agreement (the “Covenant Compliance Certificate”), from a Responsible Officer of
Seller.

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EXHIBIT III-B

QUARTERLY REPORTING PACKAGE

The Quarterly Reporting Package shall include, inter alia, the following:

 

•  

Consolidated unaudited financial statements of Guarantor presented fairly in
accordance with GAAP or, if such financial statements being delivered have been
filed with the SEC pursuant to the requirements of the Exchange Act, or similar
state securities laws, presented in accordance with applicable statutory and/or
regulatory requirements and delivered to Buyer within the same time frame as are
required to be filed in accordance with such applicable statutory or regulatory
requirements, in either case accompanied by a Covenant Compliance Certificate,
including a statement of operations and a statement of changes in cash flows for
such quarter and statement of net assets as of the end of such quarter, and
certified as being true and correct by a Covenant Compliance Certificate.

 

-2-

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EXHIBIT III-C

ANNUAL REPORTING PACKAGE

The Annual Reporting Package shall include, inter alia, the following:

 

•  

Guarantor’s consolidated audited financial statements, prepared by a nationally
recognized independent certified public accounting firm and presented fairly in
accordance with GAAP or, if such financial statements being delivered have been
filed with the SEC pursuant to the requirements of the Exchange Act, or similar
state securities laws, presented in accordance with applicable statutory and/or
regulatory requirements and delivered to Buyer within the same time frame as are
required to be filed in accordance with such applicable statutory and/or
regulatory requirements, in either case accompanied by a Covenant Compliance
Certificate, including a statement of operations and a statement of changes in
cash flows for such quarter and statement of net assets as of the end of such
quarter accompanied by an unqualified report of the nationally recognized
independent certified public accounting firm that prepared them.

 

-3-

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EXHIBIT IV

FORM OF CUSTODIAL DELIVERY CERTIFICATE

On this      day of                     , 201  , Parlex 4 Finance, LLC, a
Delaware limited liability company, as Seller (“Seller”) under that certain
Master Repurchase Agreement, dated as of June 28, 2013 (as amended, modified or
supplemented from time to time, the “Repurchase Agreement”) between JPMorgan
Chase Bank, National Association (“Buyer”) and Seller, does hereby deliver to
the documents comprising the Purchased Asset File and listed on Exhibit B hereto
with respect to the Purchased Asset identified in Exhibit A hereto to
(a) [            ] (the “Bailee”), for Bailee to hold for the benefit of Buyer
for delivery to the Custodian (as defined below) and pursuant to that certain
Bailee Agreement, dated as of the date hereof between Seller, Buyer, and Bailee,
and (b) U.S. Bank National Association (“Custodian”), as custodian under that
certain Custodial Agreement, dated as of June [    ], 2013 (as amended, modified
or supplemented from time to time, the “Custodial Agreement”), among Buyer,
Custodian and Seller. Seller hereby instructs the Bailee to comply with the
Bailee Letter and the Custodian to comply with the Custodial Agreement, in each
case, holding the Purchased Asset File for the benefit of Buyer.

With respect to the Purchased Asset Files delivered hereby, for the purposes of
issuing the Trust Receipt, the Custodian shall review the Purchased Asset Files
to ascertain delivery of the documents listed in Section 3 of the Custodial
Agreement.

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Custodial Agreement.

IN WITNESS WHEREOF, Seller has caused its name to be signed hereto by its
officer thereunto duly authorized as of the day and year first above written.

 

PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

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Exhibit A

PURCHASED ASSET SCHEDULE

For each Purchased Asset set forth below, Seller shall provide, as applicable,
the following information:

 

  A. Loan Number:

 

  B. Obligor Name:

 

  C. Property Name and Address:

 

  D. Original Balance:

 

  E. Maturity Date:

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Exhibit B

PURCHASED ASSET FILE

 

     

DOCUMENT NAME

  

REQ’D2

  

DEL’D3

  

STATUS4

  

COMMENTS5

1.                2.                3.                4.                5.      
        

 

2  Seller to indicate whether the document is required to be delivered.

3  Seller to indicate whether the document is being delivered (applies to this
delivery only – do not mark if documents were previously delivered).

4  Seller to indicate whether the document is an original, certified copy or
copy. For recordable documents, indicate if document is recorded, sent for
recordation, not sent for recordation.

5  Seller may indicate any relevant comments.

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EXHIBIT V

FORM OF POWER OF ATTORNEY

Know All Men by These Presents, that Parlex 4 Finance, LLC, a Delaware limited
liability company (“Seller”), does hereby appoint JPMorgan Chase Bank, National
Association (“Buyer”), its attorney-in-fact to act in Seller’s name, place and
stead in any way that Seller could do with respect to (i) complete the
endorsements of the Purchased Assets, including without limitation the Mortgage
Notes, Assignments of Mortgages, Mezzanine Notes, Participation Certificates and
assignments of participation interests and any transfer documents related
thereto, (ii) record the Assignments of Mortgages, (iii) prepare and file and
record each Assignment of Mortgage or other assignment, (iii) take any action
(including exercising voting and/or consent rights) with respect to any
participation interest, (iv) complete the preparation and filing, in form and
substance satisfactory to Buyer, of such financing statements, continuation
statements, and other UCC forms, as Buyer may from time to time, reasonably
consider necessary to create, perfect, and preserve Buyer’s security interest in
the Purchased Assets, (v) enforce Seller’s rights under the Purchased Assets
purchased by Buyer pursuant to this Agreement, and (vi) to take such other steps
as may be necessary or desirable to enforce Buyer’s rights against, under or
with respect to such Purchased Assets and the related Purchased Asset Files and
the Servicing Records and (iv) the enforcement of Seller’s rights under the
Purchased Assets purchased by Buyer pursuant to the Master Repurchase Agreement
dated as of June 28, 2013 (the “Repurchase Agreement”), between Buyer and
Seller, 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
and the Servicing Records to the extent that Seller is permitted by law to act
through an agent; provided that Buyer agrees not to exercise its rights under
this instrument unless a monetary Default, material non-monetary Default or an
Event of Default has occurred and is continuing.

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.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

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

IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed as a
deed this      day of June, 2013.

 

PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

 

-2-

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EXHIBIT VI

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A SENIOR MORTGAGE LOAN

(OTHER THAN A PARTICIPATION INTEREST)

(a) As applicable, each Purchased Asset is either a whole loan and not a
participation interest in a whole loan or an A-note interest in a whole loan.
The sale of the Purchased Assets to Buyer or its designee does not require
Seller to obtain any governmental or regulatory approval or consent that has not
been obtained. It being understood that B-notes secured by the same Mortgage as
a Senior Mortgage Loan are not subordinate mortgages or junior liens, there are
no subordinate mortgages or junior liens encumbering the related Underlying
Mortgaged Property. Seller has no knowledge of any mezzanine debt related to the
Underlying Mortgaged Property and secured directly by the ownership interests in
the Mortgagor.

(b) No Purchased Asset is 30 days or more delinquent in payment of principal and
interest (without giving effect to any applicable grace period) and no Purchased
Asset has been 30 days or more (without giving effect to any applicable grace
period in the related Mortgage Note) past due.

(c) Except with respect to the ARD Loans, which provide that the rate at which
interest accrues thereon increases after the Anticipated Repayment Date, the
Purchased Assets (exclusive of any default interest, late charges or prepayment
premiums) are fixed rate mortgage loans or floating rate mortgage loans with
terms to maturity, at origination or as of the most recent modification, as set
forth in the Purchased Asset Schedule.

(d) The information pertaining to each Purchased Asset set forth on the
Purchased Asset Schedule is true and correct in all material respects as of the
Purchase Date.

(e) At the time of the assignment of the Purchased Assets to Buyer, Seller had
good and marketable title to and was the sole owner and holder of, each
Purchased Asset, free and clear of any pledge, lien, encumbrance or security
interest and such assignment validly and effectively transfers and conveys all
legal and beneficial ownership of the Purchased Assets to Buyer free and clear
of any pledge, lien, charge, encumbrance, participation or security interest,
any other ownership interests and other interests on, in or to such Senior
Mortgage Loan other than any servicing rights appointment, subservicing or
similar agreement. Seller has full right and authority to sell, assign and
transfer each Senior Mortgage Loan, and the assignment to Buyer constitutes a
legal, valid and binding assignment of such Senior Mortgage Loan free and clear
of any and all liens, pledges, charges or security interests of any nature
encumbering such Senior Mortgage Loan subject to the rights and obligations of
Seller pursuant to the Agreement.

(f) To the extent required under applicable law, Seller is authorized to
transact and do business in the jurisdiction in which each Underlying Mortgaged
Property is located, or the failure to be so authorized does not materially and
adversely affect the enforceability of such Senior Mortgage Loan.

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

(g) In respect of each Purchased Asset, (A) the related Mortgagor 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 and (B) the Mortgagor is
not a debtor in any bankruptcy, receivership, conservatorship, reorganization,
insolvency, moratorium or similar proceeding.

(h) Each Purchased Asset is secured by (or in the case of a participation
interest, the Underlying Mortgage Loan is secured by) a Mortgage that
establishes and creates a valid and subsisting first priority lien on the
Underlying Mortgaged Property, free and clear of any liens, claims,
encumbrances, participation interests, pledges, charges or security interests
subject only to Permitted Encumbrances. Such Mortgage, together with any
separate security agreement, UCC financing statement or similar agreement, if
any, establishes and creates a first priority security interest in favor of
Seller in all personal property owned by the Mortgagor that is used in, and is
reasonably necessary to, the operation of the Underlying Mortgaged Property and,
to the extent a security interest may be created therein and perfected by the
filing of a UCC financing statement under the Uniform Commercial Code as in
effect in the relevant jurisdiction, the proceeds arising from the Underlying
Mortgaged Property and other collateral securing such Purchased Asset, subject
only to Permitted Encumbrances. Each UCC financing statement, if any, filed with
respect to personal property constituting a part of the Underlying Mortgaged
Property and each UCC financing statement assignment, if any, filed with respect
to such financing statement was in suitable form for filing in the filing office
in which such financing statement was filed. There exists with respect to such
Underlying Mortgaged Property an assignment of leases and rents provision,
either as part of the related Mortgage or as a separate document or instrument,
which establishes and creates a first priority security interest in and to
leases and rents arising in respect of the Underlying Mortgaged Property subject
only to Permitted Encumbrances. No person other than the related Mortgagor and
the mortgagee owns any interest in any payments due under the related leases.
The related Mortgage or such assignment of leases and rents provision provides
for the appointment of a receiver for rents or allows the holder of the related
Mortgage to enter into possession of the Underlying Mortgaged Property to
collect rent or provides for rents to be paid directly to the holder of the
related Mortgage in the event of a default beyond applicable notice and grace
periods, if any, under the related Purchased Asset Documents. As of the
origination date, there are no mechanics’ or other similar liens or claims that
have been filed for work, labor or materials affecting the Underlying Mortgaged
Property that are or may be prior or equal to the lien of the Mortgage, except
those that are insured against pursuant to the applicable Title Policy (as
defined below). As of the Purchase Date, there are no mechanics’ or other
similar liens or claims that have been filed for work, labor or materials
affecting the Underlying Mortgaged Property that are or may be prior or equal in
priority to the lien of the Mortgage, except those that are insured against
pursuant to the applicable Title Policy (as defined below). No (a) Underlying
Mortgaged Property secures any mortgage loan not represented on the Purchased
Asset Schedule, (b) Purchased Asset is cross-defaulted with any other mortgage
loan, other than a mortgage loan listed on the Purchased Asset Schedule, or
(c) Purchased Asset is secured by property that is not an Underlying Mortgaged
Property.

(i) The Purchased Asset Documents for each Senior Mortgage Loan 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 by the Trust against such franchisor,
either directly or as an assignee of the

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

originator. The Mortgage or related security agreement for each Mortgage Loan
secured by a hospitality property creates a security interest in the revenues of
such property for which a UCC financing statement has been filed in the
appropriate filing office.

(j) The related Mortgagor under each Purchased Asset has good and indefeasible
fee simple or, with respect to those Purchased Assets described in clause (cc)
hereof, leasehold title to the Underlying Mortgaged Property comprising real
estate subject to any Permitted Encumbrances.

(k) Seller has received an American Land Title Association (ALTA) lender’s title
insurance policy or a comparable form of lender’s title insurance policy (or
escrow instructions binding on the Title Insurer (as defined below) and
irrevocably obligating the Title Insurer to issue such title insurance policy, a
title policy commitment or pro-forma “marked up” at the closing of the related
Purchased Asset and countersigned by the Title Insurer or its authorized agent)
as adopted in the applicable jurisdiction (the “Title Policy”), which was issued
by a nationally recognized title insurance company (the “Title Insurer”)
qualified to do business in the jurisdiction where the Underlying Mortgaged
Property is located, covering the portion of each Underlying Mortgaged Property
comprised of real estate and insuring that the related Mortgage is a valid first
lien in the original principal amount of the related Purchased Asset on the
Mortgagor’s fee simple interest (or, if applicable, leasehold interest) in such
Underlying Mortgaged Property comprised of real estate subject only to Permitted
Encumbrances. Such Title Policy was issued in connection with the origination of
the related Purchased Asset. No claims have been made under such Title Policy.
Such Title Policy is in full force and effect and all premiums thereon have been
paid and will provide that the insured includes the owner of the Purchased Asset
and its successors and/or assigns. No holder of the related Mortgage has done,
by act or omission, anything that would, and Seller has no Knowledge of any
other circumstance that would, impair the coverage under such Title Policy. Each
Title Policy contains no exclusion for, or affirmatively insures (except for any
Underlying Mortgaged Property located in a jurisdiction where such affirmative
insurance is not available in which case such exclusion may exist), (i) that the
Underlying Mortgaged Property shown on the survey is the same as the property
legally described in the Mortgage, and (i) to the extent that the Underlying
Mortgaged Property consists of two or more adjoining parcels, such parcels are
contiguous.

(l) The related Assignment of Mortgage and the related assignment of the
assignment of leases executed in connection with each Mortgage, if any, have
been recorded in the applicable jurisdiction (or, if not recorded, have been
submitted for recording or are in recordable form) and constitute the legal,
valid and binding assignment of such Mortgage and the related assignment of
leases and rents from Seller to Buyer. The endorsement of the related Mortgage
Note by Seller constitutes the legal, valid, binding and enforceable (except as
such enforcement may be limited by anti-deficiency laws or bankruptcy,
receivership, conservatorship, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally, and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law)) assignment of such Mortgage
Note, and together with such Assignment of Mortgage and the related assignment
of assignment of leases and rents, legally and validly conveys all right, title
and interest in such Purchased Asset and (except in the case of an A-note or a
participation interest) the Purchased Asset Documents to Buyer.

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

(m) The Purchased Asset Documents for each Purchased Asset (or in the case of a
participation interest, the Underlying Mortgage Loan) provide that such
Purchased Asset (or Underlying Mortgage Loan) is non-recourse except that the
related Mortgagor and guarantor that has assets other than equity in the
Underlying Mortgaged Property that are not de minimis and at least one
individual or entity shall be fully liable for actual losses, liabilities, costs
and damages arising from at least the following acts of the related Mortgagor
and/or its principals: (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 by, consented to, or acquiesced in by, the
Mortgagor; (ii) Mortgagor or guarantor shall have colluded with other creditors
to cause an involuntary bankruptcy filing with respect to the Mortgagor or
(iii) transfers of either the Underlying Mortgaged Property or equity interests
in Mortgagor made in violation of the Purchased Asset Documents; and
(b) contains provisions providing for recourse against the Mortgagor and
guarantor (which is a natural person or persons, or an entity distinct from the
Mortgagor (but may be affiliated with the Mortgagor) that has assets other than
equity in the Underlying Mortgaged Property that are not de minimis), for losses
and damages sustained in the case of (i) (A) misapplication, misappropriation or
conversion of rents, insurance proceeds or condemnation awards, or (B) any
security deposits not delivered to lender upon foreclosure or action in lieu
thereof (except to the extent applied in accordance with leases prior to an
event of default under the Purchased Asset Documents); (ii) the Mortgagor’s
fraud or intentional misrepresentation; (iii) willful misconduct by the
Mortgagor or guarantor; (iv) breaches of the environmental covenants in the
Purchased Asset Documents; or (v) commission of material physical waste at the
Underlying Mortgaged Property, which may, with respect to this clause (v), in
certain instances, be limited to acts or omissions of the related Mortgagor,
guarantor, property manager or their affiliates, employees or agents.

(n) The Purchased Asset Documents for each Purchased Asset contain enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the practical realization against the Underlying Mortgaged Property
of the principal benefits of the security intended to be provided thereby,
including realization by judicial or, if applicable, non-judicial foreclosure,
and there is no exemption available to the related Mortgagor that would
interfere with such right of foreclosure except (i) any statutory right of
redemption or (ii) any limitation arising under anti deficiency laws or by
bankruptcy, receivership, conservatorship, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).

(o) Each of the related Mortgage Notes and Mortgages are the legal, valid and
binding obligations of the related Mortgagor named on the Purchased Asset
Schedule and each of the other related Purchased Asset Documents is the legal,
valid and binding obligation of the parties thereto (subject to any non-recourse
provisions therein), enforceable in accordance with its terms, except as such
enforcement may be limited by anti-deficiency laws or bankruptcy, receivership,
conservatorship, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), and except that certain provisions of such
Purchased Asset Documents are or may be unenforceable in whole or in part under
applicable state or federal laws, but the inclusion of such provisions does not
render any of the Purchased Asset Documents invalid as a whole, and such
Purchased Asset Documents taken as a whole are enforceable to the extent
necessary and customary for the practical realization of the principal rights
and benefits afforded thereby.

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(p) The terms of the Purchased Assets or the related Purchased Asset Documents,
(including, in the case of a participation, the documents evidencing the
Underlying Mortgage Loan) have not been altered, impaired, modified or waived in
any material respect, except prior to the Purchase Date by written instrument
duly submitted for recordation, to the extent required, and as specifically set
forth by a document in the related Purchased Asset File.

(q) With respect to each Mortgage that 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 no fees or expenses
are or will become payable to the trustee under the deed of trust, except in
connection with a trustee’s sale after default by the Mortgagor other than de
minimis fees paid in connection with the full or partial release of the
Underlying Mortgaged Property or related security for such Purchased Asset
following payment of such Purchased Asset in full. The material terms of such
Mortgage and related Purchased Asset Documents have not been waived, impaired,
modified, altered, satisfied, canceled, subordinated or rescinded in any
respect.

(r) No Purchased Asset has been satisfied, canceled, subordinated, released or
rescinded, in whole or in part, and the related Mortgagor has not been released,
in whole or in part, from its obligations under any related Purchased Asset
Document.

(s) Except with respect to the enforceability of any provisions requiring the
payment of default interest, late fees, additional interest, prepayment premiums
or yield maintenance charges, neither the Purchased Asset nor any of the related
Purchased Asset Documents is subject to any right of rescission, set-off,
abatement, diminution, valid counterclaim or defense, including the defense of
usury, including, without limitation, any valid offset, defense, counterclaim or
right based on intentional fraud by Seller in connection with the origination of
the Senior Mortgage Loan, nor will the operation of any of the terms of any such
Purchased Asset Documents, or the exercise (in compliance with procedures
permitted under applicable law) of any right thereunder, render any Purchased
Asset Documents subject to any right of rescission, set-off, abatement,
diminution, valid counterclaim or defense, including the defense of usury
(subject to anti-deficiency or one form of action laws and to bankruptcy,
receivership, conservatorship, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditor’s rights generally and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law)), and no such right of
rescission, set-off, abatement, diminution, valid counterclaim or defense has
been asserted with respect thereto. None of the Purchased Asset Documents
provides for a release of a portion of the Underlying Mortgaged Property from
the lien of the Mortgage except upon payment or defeasance in full of all
obligations under the Mortgage, provided that, notwithstanding the foregoing,
certain of the Purchased Assets may allow partial release (a) upon payment or
defeasance of an allocated loan amount which may be formula based, but in no
event less than 125% of the allocated loan amount, or (b) in the event the
portion of the Underlying Mortgaged Property being released was not given any
material value in connection with the underwriting or appraisal of the related
Purchased Asset.

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(t) As of the Purchase Date, there is no payment default, giving effect to any
applicable notice and/or grace period, and there is no other material default
under any of the related Purchased Asset Documents, giving effect to any
applicable notice and/or grace period; no such material default or breach has
been waived by Seller or on its behalf or, by Seller’s predecessors in interest
with respect to the Purchased Assets; and no event has occurred that, with the
passing of time or giving of notice would constitute a material default or
breach under the related Purchased Asset Documents. No Purchased Asset has been
accelerated and no foreclosure or power of sale proceeding has been initiated in
respect of the related Mortgage. Seller has not waived any material claims
against the related Mortgagor under any non-recourse exceptions contained in the
Mortgage Note.

(u) The principal amount of the Purchased Asset stated on the Purchased Asset
Schedule has been fully disbursed as of the Purchase Date (except for certain
amounts that were fully disbursed by the mortgagee, but escrowed pursuant to the
terms of the related Purchased Asset Documents) and there are no future advances
required to be made by the mortgagee under any of the related Purchased Asset
Documents. Any requirements under the related Purchased Asset Documents
regarding the completion of any on-site or off-site improvements and to
disbursements of any escrow funds therefor have been or are being complied with
or such escrow funds are still being held. The value of the Underlying Mortgaged
Property relative to the value reflected in the most recent appraisal thereof is
not materially impaired by any improvements that have not been completed. Seller
has not, nor, have any of its agents or predecessors in interest with respect to
the Purchased Assets, in respect of such Purchased Asset, directly or
indirectly, advanced funds or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor other than (a) interest
accruing on such Purchased Asset from the date of such disbursement of such
Purchased Asset to the date which preceded by thirty (30) days the first payment
date under the related Mortgage Note and (b) application and commitment fees,
escrow funds, points and reimbursements for fees and expenses, incurred in
connection with the origination and funding of the Purchased Asset.

(v) No Purchased Asset has capitalized interest included in its principal
balance, or provides for any shared appreciation rights or other equity
participation therein and no contingent or additional interest contingent on
cash flow or, except for ARD Loans, negative amortization accrues or is due
thereon.

(w) Each Purchased Asset identified in the Purchased Asset Schedule as an ARD
Loan substantially fully amortizes over its stated term, which term is at least
60 months after the related Anticipated Repayment Date. Each ARD Loan has an
Anticipated Repayment Date not less than seven years following the origination
of such Purchased Asset. If the related Mortgagor elects not to prepay its ARD
Loan in full on or prior to the Anticipated Repayment Date pursuant to the
existing terms of the Purchased Asset or a unilateral option (as defined in
Treasury Regulations under Article 1001 of the Code) in the Purchased Asset
exercisable during the term of the mortgage loan, (i) the Purchased Asset’s
interest rate will step up to an interest rate per annum as specified in the
related Purchased Asset Documents; provided, however, that payment of such
Excess Interest shall be deferred until the principal of such ARD Loan has been
paid in full; (ii) all or a substantial portion of the Excess Cash Flow
collected after the Anticipated Repayment Date shall be applied towards the
prepayment of such ARD Loan and once the principal balance of an ARD Loan has
been reduced to zero all Excess Cash Flow will be applied

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to the payment of accrued Excess Interest; and (iii) if the property manager for
the Underlying Mortgaged Property can be removed by or at the direction of the
mortgagee on the basis of a debt service coverage test, the subject debt service
coverage ratio shall be calculated without taking account of any increase in the
related Mortgage Interest Rate on such Purchased Asset’s Anticipated Repayment
Date. No ARD Loan provides that the property manager for the Underlying
Mortgaged Property can be removed by or at the direction of the mortgagee solely
because of the passage of the related Anticipated Repayment Date.

(x) Each Purchased Asset identified in the Purchased Asset Schedule as an ARD
Loan with a hard lockbox requires that tenants at the Underlying Mortgaged
Property shall (and each Purchased Asset identified in the Purchased Asset
Schedule as an ARD Loan with a springing lockbox requires that tenants at the
Underlying Mortgaged Property shall, upon the occurrence of a specified trigger
event, including, but not limited to, the occurrence of the related Anticipated
Repayment Date) make rent payments into a lockbox controlled by the holder of
the Purchased Asset and to which the holder of the Purchased Asset has a first
perfected security interest; provided however, with respect to each ARD Loan
that is secured by a multi-family property with a hard lockbox, or with respect
to each ARD Loan that is secured by a multi-family property with a springing
lockbox, upon the occurrence of a specified trigger event, including, but not
limited to, the occurrence of the related Anticipated Repayment Date, tenants
either pay rents to a lockbox controlled by the holder of the mortgage loan or
deposit rents with the property manager who will then deposit the rents into a
lockbox controlled by the holder of the Purchased Asset.

(y) The servicing and collection practices used by Seller in respect of each
Senior Mortgage Loan and the terms of the Purchased Asset Documents evidencing
such Purchased Asset comply in all material respects with all applicable local,
state and federal laws, and regulations and Seller has complied with all
material requirements pertaining to the origination, funding and servicing of
the Purchased Assets, including but not limited to, usury and any and all other
material requirements of any federal, state or local law to the extent
non-compliance would have a Material Adverse Effect on the Purchased Asset and
was in all material respects legal, proper and prudent, in accordance with
Seller’s customary commercial mortgage servicing practices.

(z) The Underlying Mortgaged Property is, in all material respects, in
compliance with, and is used and occupied in accordance with, all restrictive
covenants of record applicable to such Underlying Mortgaged Property and
applicable zoning laws and all material inspections, licenses, permits and
certificates of occupancy required by law, ordinance or regulation to be made or
issued with regard to the Underlying Mortgaged Property governing the occupancy,
use, and operation of such Underlying Mortgaged Property have been obtained and
are in full force and effect, except to the extent (a) any material
non-compliance with applicable zoning laws is insured by an ALTA lender’s title
insurance policy (or binding commitment therefor), or the equivalent as adopted
in the applicable jurisdiction, or a law and ordinance insurance policy that
provides coverage for additional costs to rebuild and/or repair the property to
current zoning regulations, (b) the inability to restore the Underlying
Mortgaged Property to the full extent of the use or structure immediately prior
to the casualty would not materially and adversely affect the use or operation
of such Underlying Mortgaged Property, or title insurance coverage has been
obtained for such nonconformity, the failure to obtain or maintain such
inspections,

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licenses, permits or certificates of occupancy does not materially impair or
materially and adversely affect the use and/or operation of the Underlying
Mortgaged Property as it was used and operated as of the date of origination of
the Purchased Asset or the rights of a holder of the related Purchased Asset, or
(c) no 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 Underlying Mortgaged Property or are insured by applicable
provisions of the Title Policy.

(aa) All (a) taxes, water charges, sewer rents, assessments or other similar
outstanding governmental charges and governmental assessments that became due
and owing prior to the Purchase Date in respect of the Underlying Mortgaged
Property (excluding any related personal property), and that if left unpaid,
would be, or might become, a lien on such Underlying Mortgaged Property having
priority over the related Mortgage and (b) insurance premiums or ground rents
that became due and owing prior to the Purchase Date in respect of the
Underlying Mortgaged Property (excluding any related personal property), have
been paid, or if any such items are disputed, an escrow of funds in an amount
sufficient (together with escrow payments required to be made prior to
delinquency) to cover such taxes and assessments and any late charges due in
connection therewith has been established. As of the date of origination, the
Underlying Mortgaged Property consisted of one or more separate and complete tax
parcels. For purposes of this representation and warranty, the items identified
herein shall not be considered due and owing until the date on which interest or
penalties would be first payable thereon.

(bb) None of the improvements that were included for the purpose of determining
the appraised value of the Underlying Mortgaged Property at the time of the
origination of such Purchased Asset lies outside the boundaries and building
restriction lines of such Underlying Mortgaged Property, except to the extent
that they are legally nonconforming as contemplated by the representation in
clause (48) below, and no improvements on adjoining properties encroach upon
such Underlying Mortgaged Property, with the exception in each case of
(a) immaterial encroachments that do not materially adversely affect the
security intended to be provided by the related Mortgage or the use, enjoyment,
value or marketability of such Underlying Mortgaged Property or
(b) encroachments affirmatively covered by the related Title Policy. With
respect to each Purchased Asset, the property legally described in the survey,
if any, obtained for the Underlying Mortgaged Property for purposes of the
origination thereof is the same as the property legally described in the
Mortgage. Seller has no knowledge of any material issues with the physical
condition of the Underlying Mortgaged Property that Seller believes would have a
material adverse effect on the use, operation or value of the Underlying
Mortgaged Property other than those disclosed in the engineering report and
those addressed in sub-clauses (a) and (b) of the preceding sentence.

(cc) As of the date of the applicable engineering report (which was performed
within 12 months prior to the Purchase Date) related to the Underlying Mortgaged
Property and, as of the Purchase Date, the Underlying Mortgaged Property is
either (i) in good repair, free and clear of any damage that would materially
adversely affect the value of such Underlying Mortgaged Property as security for
such Purchased Asset or the use and operation of the Underlying Mortgaged
Property as it was being used or operated as of the origination date or
(ii) escrows in an amount consistent with the standard utilized by Seller with
respect to similar loans it holds for its own account have been established,
which escrows will in all events be not less than 100% of

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the estimated cost of the required repairs. The Underlying Mortgaged Property
has not been damaged by fire, wind or other casualty or physical condition
(including, without limitation, any soil erosion or subsidence or geological
condition), which damage has not either been fully repaired or fully insured, or
for which escrows in an amount consistent with the standard utilized by Seller
with respect to loans it holds for its own account have not been established.

(dd) There are no proceedings pending or threatened, for the partial or total
condemnation of the Underlying Mortgaged Property.

(ee) The Purchased Assets that are identified as being secured in whole or in
part by a leasehold estate (a “Ground Lease”) (except with respect to any
Purchased Asset also secured by the related fee interest in the Underlying
Mortgaged Property), satisfy the following conditions:

 

I. such Ground Lease or a memorandum thereof has been or will be duly recorded
or submitted for recordation in a form that is acceptable for recording in the
applicable jurisdiction; such Ground Lease, or other agreement received by the
originator of the Purchased Asset from the ground lessor, provides that the
interest of the lessee thereunder may be encumbered by the related Mortgage and
does not restrict the use of the Underlying Mortgaged Property by such lessee,
its successors or assigns, in a manner that would adversely affect the security
provided by the Mortgage; as of the date of origination of the Purchased Asset
(or in the case of a participation interest, the Underlying Mortgage Loan),
there was no material change of record in the terms of such Ground Lease with
the exception of written instruments that are part of the related Purchased
Asset File and there has been no material change in the terms of such Ground
Lease since the recordation of the related Purchased Asset, with the exception
of written instruments that are part of the related Purchased Asset File;

 

II. such Ground Lease is not subject to any liens or encumbrances superior to,
or of equal priority with, the related Mortgage, other than the related fee
interest and Permitted Encumbrances and such Ground Lease is, and shall remain,
prior to any mortgage or other lien upon the related fee interest unless a
nondisturbance agreement is obtained from the holder of any mortgage on the fee
interest that is assignable to or for the benefit of the related lessee and the
related mortgagee;

 

III. such Ground Lease provides that upon foreclosure of the related Mortgage or
assignment of the Mortgagor’s interest in such Ground Lease in lieu thereof, the
mortgagee under such Mortgage is entitled to become the owner of such interest
upon notice to, but without the consent of, the lessor thereunder and, in the
event that such mortgagee becomes the owner of such interest, such interest is
further assignable by such mortgagee and its successors and assigns upon notice
to such lessor, but without a need to obtain the consent of such lessor;

 

IV. such Ground Lease is in full force and effect and no default of tenant or
ground lessor was in existence at origination, or is currently in existence
under such Ground Lease, nor at origination was, or is there any condition that,
but for the passage of time or the giving of notice, would result in a default
under the terms of such Ground Lease; either such Ground Lease or a separate
agreement contains the ground lessor’s covenant that it shall not amend, modify,
cancel or terminate such Ground Lease without the prior written consent of the
mortgagee under such Mortgage and any amendment, modification, cancellation or
termination of the Ground Lease without the prior written consent of the related
mortgagee, or its successors or assigns is not binding on such mortgagee, or its
successor or assigns;

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V. such Ground Lease or other agreement requires that the lessor thereunder will
supply an estoppel and give written notice of any material default by the lessee
to the mortgagee under the related Mortgage, provided that such mortgagee has
provided the lessor with notice of its lien in accordance with the provisions of
such Ground Lease; and such Ground Lease or other agreement provides that no
such notice of default and no termination of the Ground Lease in connection with
such notice of default shall be effective against such mortgagee unless such
notice of default has been given to such mortgagee and any related Ground Lease
contains the ground lessor’s covenant that it will give to the related
mortgagee, or its successors or assigns, any notices it sends to the Mortgagor;

 

VI. either (i) the related ground lessor has subordinated its interest in the
Underlying Mortgaged Property to the interest of the holder of the Purchased
Asset (or in the case of a participation interest, the Underlying Mortgage Loan)
or (ii) such Ground Lease or other agreement provides that (A) the mortgagee
under the related Mortgage is permitted a reasonable opportunity to cure any
default under such Ground Lease that is curable, including reasonable time to
gain possession of the interest of the lessee under the Ground Lease, after the
receipt of notice of any such default before the lessor thereunder may terminate
such Ground Lease; (B) in the case of any such default that is not curable by
such mortgagee, or in the event of the bankruptcy or insolvency of the lessee
under such Ground Lease, such mortgagee has the right, following termination of
the existing Ground Lease or rejection thereof by a bankruptcy trustee or
similar party, to enter into a new ground lease with the lessor on substantially
the same terms as the existing Ground Lease; and (C) all rights of the Mortgagor
under such Ground Lease may be exercised by or on behalf of such mortgagee under
the related Mortgage upon foreclosure or assignment in lieu of foreclosure;

 

VII. such Ground Lease has an original term (or an original term plus one or
more optional renewal terms that under all circumstances may be exercised, and
will be enforceable, by the mortgagee or its assignee) that extends not less
than 20 years beyond the stated maturity date of the related Purchased Asset (or
in the case of a participation interest, of the Underlying Mortgage Loan);

 

VIII. under the terms of such Ground Lease 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 in respect of a
total or substantially total loss or taking or the portion of the condemnation
award allocable to the ground lessee’s interest (other than in respect of a
total or substantially total loss or taking as addressed in subpart (IX))) will
be applied either to the repair or restoration of all or part of the Underlying
Mortgaged Property, with the mortgagee under such Mortgage or a financially
responsible institution acting as trustee appointed by it, or consented to by
it, or by the lessor having the right to hold and disburse such proceeds as the
repair or restoration progresses (except in such cases where a provision
entitling another party to hold and disburse such proceeds would not be viewed
as commercially unreasonable by a prudent institutional lender), or to the
payment in whole or in part of the outstanding principal balance of such
Purchased Asset together with any accrued and unpaid interest thereon;

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IX. in the case of a total or substantial 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 Underlying Mortgaged Property to the extent not
applied to restoration, will be applied first to the payment of the outstanding
principal balance of the Senior Mortgage Loan, together with any accrued
interest;

 

X. Seller has not received any written notice of default under or notice of
termination of such ground lease. To Seller’s Knowledge, there is no default
under such ground lease and no condition that, but for the passage of time or
giving of notice, would result in a default under the terms of such ground lease
and such ground lease is in full force and effect; and

 

XI. such Ground Lease does not impose any restrictions on subletting that would
be viewed as commercially unreasonable by Seller; such Ground Lease contains a
covenant (or applicable laws provide) that the lessor thereunder is not
permitted, in the absence of an uncured default, to disturb the possession,
interest or quiet enjoyment of any lessee in the relevant portion of such
Underlying Mortgaged Property subject to such Ground Lease for any reason, or in
any manner, which would materially adversely affect the security provided by the
related Mortgage.

(ff) An Environmental Site Assessment (an “ESA”) meeting ASTM requirements
conducted by a reputable environmental consultant relating to each Underlying
Mortgaged Property and prepared no earlier than 12 months prior to the Purchase
Date was obtained and reviewed by Seller in connection with the origination of
such Purchased Asset and a copy is included in the Purchased Asset File.

(gg) There are no adverse circumstances or conditions with respect to or
affecting the Underlying Mortgaged Property that would constitute or result in a
material violation of any applicable federal, state or local environmental laws,
rules and regulations (collectively, “Environmental Laws”) and such ESA (i) did
not reveal any known circumstance or condition that rendered the Underlying
Mortgaged Property at the date of the ESA in material noncompliance with
applicable Environmental Laws or the existence of recognized environmental
conditions (as such term is defined in ASTM E1527-05 or its successor,
hereinafter “Environmental Condition”) or the need for further investigation, or
(ii) if any material noncompliance with Environmental Laws or the existence of
an Environmental Condition or need for further investigation was indicated in
any such ESA, other than with respect to an Underlying Mortgaged Property
(A) for which environmental insurance is maintained, or (B) that would require
(x) any expenditure less than or equal to 5% of the outstanding principal
balance of the mortgage loan to achieve or maintain compliance in all material
respects with any Environmental Laws or (y) any expenditure greater than 5% of
the outstanding principal balance of such Purchased Asset to achieve or maintain
compliance in all material respects with any Environmental Laws for which, in
connection with this clause (y), adequate sums, but in no event less than 125%
of the estimated cost as set forth in the Environmental Site Assessment, were
reserved in connection with the origination of the Purchased Asset and for which
the related Mortgagor has covenanted to perform, or (iii) as to which the
related Mortgagor or one of its affiliates is currently taking or required to
take such actions, if any, with respect to such conditions or circumstances as
have been recommended by the Environmental Site Assessment or required by the
applicable Governmental Authority, or

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(iv) as to which another responsible party not related to the Mortgagor with
assets reasonably estimated by Seller at the time of origination to be
sufficient to effect all necessary or required remediation identified in a
notice or other action from the applicable Governmental Authority is currently
taking or required to take such actions, if any, with respect to such regulatory
authority’s order or directive, or (v) as to which the conditions or
circumstances identified in the Environmental Site Assessment were investigated
further and based upon such additional investigation, an environmental
consultant recommended no further investigation or remediation, or (vi) as to
which a party with financial resources reasonably estimated to be adequate to
cure the condition or circumstance that would give rise to such material
violation provided a guarantee or indemnity to the related Mortgagor or to the
mortgagee to cover the costs of any required investigation, testing, monitoring
or remediation, or (vii) as to which the related Mortgagor or other responsible
party obtained a “No Further Action” letter or other evidence reasonably
acceptable to a prudent commercial mortgage lender that applicable federal,
state, or local Governmental Authorities had no current intention of taking any
action, and are not requiring any action, in respect of such condition or
circumstance, or (viii) that would not require substantial cleanup, remedial
action or other extraordinary response under any Environmental Laws reasonably
estimated to cost in excess of 5% of the outstanding principal balance of such
Purchased Asset;

(hh) Such Senior Mortgage Loan is the subject of an environmental insurance
policy, issued by the issuer set forth on Schedule I (the “Policy Issuer”) and
effective as of the date thereof (the “Environmental Insurance Policy”),
(ii) the Environmental Insurance Policy is in full force and effect, there is no
deductible and the trustee is a named insured under such policy, (iii)(a) a
property condition or engineering report was prepared, if the Underlying
Mortgaged Property was constructed prior to 1985, with respect to
asbestos-containing materials (“ACM”) and, if the 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
Underlying Mortgaged Property, the related Mortgagor (A) was required to
remediate the identified condition prior to closing the Senior Mortgage Loan or
provide additional security or establish with the mortgagee a reserve in an
amount deemed to be sufficient by the Mortgage Loan Seller, for the remediation
of the problem, and/or (B) agreed in the Purchased Asset Documents to establish
an operations and maintenance plan after the closing of the Senior Mortgage Loan
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, the Mortgage Loan 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) 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
Senior Mortgage Loan.

(ii) Except for any hazardous materials being handled in accordance with
applicable Environmental Laws, (A) there exists either (i) environmental
insurance with respect to such Underlying Mortgaged Property or (ii) an amount
in an escrow account pledged as security for

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such Purchased Asset under the relevant Purchased Asset Documents equal to no
less than 125% of the amount estimated in such Environmental Site Assessment as
sufficient to pay the cost of such remediation or other action in accordance
with such Environmental Site Assessment or (B) one of the statements set forth
in clause (A)(ii) above is true, (i) such Underlying Mortgaged Property is not
being used for the treatment or disposal of hazardous materials; (ii) no
hazardous materials are being used or stored or generated for off-site disposal
or otherwise present at such Underlying Mortgaged Property other than hazardous
materials of such types and in such quantities as are customarily used or stored
or generated for off-site disposal or otherwise present in or at properties of
the relevant property type; and (iii) such Underlying Mortgaged Property is not
subject to any environmental hazard (including, without limitation, any
situation involving hazardous materials) that under the Environmental Laws would
have to be eliminated before the sale of, or that could otherwise reasonably be
expected to adversely affect in more than a de minimis manner the value or
marketability of, such Underlying Mortgaged Property.

(jj) The related Mortgage or other Purchased Asset Documents contain covenants
on the part of the related Mortgagor requiring its compliance with any present
or future federal, state and local Environmental Laws and regulations in
connection with the Underlying Mortgaged Property. The related Mortgagor (or an
affiliate thereof) has agreed to indemnify, defend and hold Seller, and its
successors and assigns (or in the case of a participation interest, the lender
of record), harmless from and against any and all losses, liabilities, damages,
penalties, fines, expenses and claims of whatever kind or nature (including
attorneys’ fees and costs) imposed upon or incurred by or asserted against any
such party resulting from a breach of the environmental representations,
warranties or covenants given by the related Mortgagor in connection with such
Purchased Asset.

(kk) For each of the Purchased Assets that is covered by environmental
insurance, each environmental insurance policy is in an amount equal to 125% of
the outstanding principal balance of the related Purchased Asset and has a term
ending no sooner than the date that is five years after the maturity date (or,
in the case of an ARD Loan, the final maturity date) of the related Purchased
Asset. All environmental assessments or updates that were in the possession of
Seller and that relate to an Underlying Mortgaged Property as being insured by
an environmental insurance policy have been delivered to or disclosed to the
environmental insurance carrier issuing such policy prior to the issuance of
such policy.

(ll) As of the date of origination of the related Purchased Asset, and, as of
the Purchase Date, the Underlying Mortgaged Property is covered by insurance
policies providing the coverage described below and the Purchased Asset
Documents permit the mortgagee to require the coverage described below. All
premiums with respect to the insurance policies insuring each Underlying
Mortgaged Property have been paid in a timely manner or escrowed to the extent
required by the Purchased Asset Documents, and Seller has not received any
notice of cancellation or termination. The relevant Purchased Asset File
contains the insurance policy required for such Purchased Asset or a certificate
of insurance for such insurance policy. Each Mortgage requires that the
Underlying Mortgaged Property and all improvements thereon be covered by
insurance policies providing (a) coverage in the amount of the lesser of full
replacement cost of such Underlying Mortgaged Property and the outstanding
principal balance of the related Purchased Asset (subject to customary
deductibles) for fire and extended perils included within the classification
“All Risk of Physical Loss” in an amount sufficient to prevent

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the Mortgagor from being deemed a co-insurer and to provide coverage on a full
replacement cost basis of such Underlying Mortgaged Property (in some cases
exclusive of foundations and footings) with an agreed amount endorsement to
avoid application of any coinsurance provision; such policies contain a standard
mortgagee clause naming mortgagee and its successor in interest as additional
insureds or loss payee, as applicable; (b) business interruption or rental loss
insurance in an amount at least equal to (i) 12 months of operations or (ii) in
some cases all rents and other amounts customarily insured under this type of
insurance of the Underlying Mortgaged Property; (c) flood insurance (if any
portion of the improvements on the Underlying Mortgaged Property is located in
an area identified by the Federal Emergency Management Agency (“FEMA”), with
respect to certain Purchased Assets and the Secretary of Housing and Urban
Development with respect to other mortgage loans, as having special flood
hazards) in an amount not less than amounts prescribed by FEMA; (d) workers’
compensation, if required by law; (e) comprehensive general liability insurance
in an amount equal to not less than $1,000,000; all such insurance policies
contain clauses providing they are not terminable and may not be terminated
without thirty (30) days prior written notice to the mortgagee (except where
applicable law requires a shorter period or except for nonpayment of premiums,
in which case not less than ten (10) days prior written notice to the mortgagee
is required). In addition, each Mortgage permits the related mortgagee to make
premium payments to prevent the cancellation thereof and shall entitle such
mortgagee to reimbursement therefor. Any insurance proceeds in respect of a
casualty, loss or taking will be applied either to the repair or restoration of
all or part of the Underlying Mortgaged Property or the payment of the
outstanding principal balance of the related Purchased Asset together with any
accrued interest thereon. The Underlying Mortgaged Property is insured by an
insurance policy, issued by an insurer meeting the requirements of such
Purchased Asset (or in the case of a participation interest, of the Underlying
Mortgage Loan) and having a claims-paying or financial strength rating of at
least A:X from A.M. Best Company or “A” (or the equivalent) from S&P, Fitch or
Moody’s. 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 the probable maximum loss (“PML”) for the Underlying
Mortgaged Property in the event of an earthquake. In such instance, the PML was
based on a return period of not less than 100 years, an exposure period of 50
years and a 10% probability of exceedence. If the resulting report concluded
that the PML would exceed 20% of the amount of the replacement costs of the
improvements, earthquake insurance on such Underlying Mortgaged Property was
obtained by an insurer rated at least A:X by A.M. Best Company or “A” (or the
equivalent) from S&P, Fitch or Moody’s. The insurer issuing each of the
foregoing insurance policies is qualified to write insurance in the jurisdiction
where the Underlying Mortgaged Property is located.

(mm) All amounts required to be deposited by each Mortgagor at origination under
the related Purchased Asset Documents have been deposited at origination and
there are no deficiencies with regard thereto.

(nn) Whether or not a Purchased Asset was originated by Seller, with respect to
each Purchased Asset originated by Seller and each Purchased Asset originated by
any Person other than Seller, as of the date of origination of the related
Purchased Asset, and, with respect to each Purchased Asset originated by Seller
and any subsequent holder of the Purchased Asset, as of the Purchase Date, there
are no actions, suits, arbitrations or governmental investigations or

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proceedings by or before any court or other Governmental Authority or agency now
pending against or affecting the Mortgagor or guarantor under any Purchased
Asset or any of the Mortgaged Properties that, if determined against such
Mortgagor or such Underlying Mortgaged Property, would materially and adversely
affect the value of such Underlying Mortgaged Property, the security intended to
be provided with respect to the related Purchased Asset, the ability of such
Mortgagor and/or the current use or operation of such Underlying Mortgaged
Property to generate net cash flow to pay principal, interest and other amounts
due under the related Purchased Asset, title to the Underlying Mortgaged
Property, the validity or enforceability of the Mortgage, such guarantor’s
ability to perform under the related guaranty, ; and there are no such actions,
suits or proceedings threatened against such Mortgagor.

(oo) Each Purchased Asset complied at origination, in all material respects,
with all of the terms, conditions and requirements of Seller’s underwriting
standards applicable to such Purchased Asset and since origination, the
Purchased Asset has been serviced in all material respects in a legal manner in
conformance with Seller’s servicing standards.

(pp) The originator of the Purchased Asset or Seller has inspected or caused to
be inspected each Underlying Mortgaged Property within the 12 months prior to
the Purchase Date.

(qq) The Purchased Asset Documents require the Mortgagor to provide the holder
of the Purchased Asset with quarterly and annual operating statements, financial
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 (i) with
respect to each Senior Mortgage Loan 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 and (ii) for each Senior
Mortgage Loan with an original principal balance greater than $50 million shall
be audited by an independent certified public accountant upon the request of the
owner or holder of the Mortgage.

(rr) All escrow deposits and payments required by the terms of each Purchased
Asset are in the possession, or under the control of Seller (or in the case of a
participation interest, the servicer of the related mortgage loan), and all
amounts required to be deposited by the applicable Mortgagor under the related
Purchased Asset Documents have been deposited, and there are no deficiencies
with regard thereto (subject to any applicable notice and cure period). All of
Seller’s interest in such escrows and deposits will be conveyed by Seller to
Buyer hereunder.

(ss) Each Mortgagor with respect to a Purchased Asset is an entity whose
organizational documents or related Purchased Asset Documents provide that it
is, and at least so long as the Purchased Asset is outstanding will continue to
be, a Single Purpose Entity. Both the Purchased Asset Documents and the
organizational documents of the Mortgagor with respect to each Senior Mortgage
Loan with a principal balance as of the Purchase Date in excess of $5,000,000
provide that the Mortgagor is a Single Purpose Entity, and each Senior Mortgage
Loan with a principal balance as of the Purchase Date of $20,000,000 or more has
a counsel’s opinion regarding non-consolidation of the Mortgagor. For this
purpose, “Single Purpose Entity” shall mean a Person, other than an individual,
whose organizational documents provide

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that it shall engage solely in the business of owning and operating the
Underlying Mortgaged Property and that does not engage in any business unrelated
to such property and the financing thereof, does not have any assets other than
those related to its interest in the Underlying Mortgaged Property or the
financing thereof or any indebtedness other than as permitted by the related
Mortgage or other Purchased Asset Documents, and the organizational documents of
which require that it have its own separate books and records and its own
accounts, in each case that are separate and apart from the books and records
and accounts of any other Person, except as permitted by the related Mortgage or
other Purchased Asset Documents, and that it holds itself out as a legal entity,
separate and apart from any other person or entity.

(tt) Each of the Purchased Assets contain a “due on sale” clause, which provides
for the acceleration of the payment of the unpaid principal balance of the
Purchased Asset (or in the case of a participation interest, of the related
mortgage loan) if, without the prior written consent of the holder of the
Purchased Asset (or in the case of an A-note or a participation interest, of the
holder of title to the Underlying Mortgage Loan), the property subject to the
Mortgage, or any controlling interest therein, is directly or indirectly
transferred or sold (except that it may provide for transfers by devise, descent
or operation of law upon the death of a member, manager, general partner or
shareholder of a Mortgagor and that it may provide for assignments subject to
the Purchased Asset holder’s approval of transferee, transfers to affiliates,
transfers to family members for estate planning purposes, transfers among
existing members, partners or shareholders in Mortgagors or transfers of passive
interests so long as the key principals or general partner retains control). The
Purchased Asset Documents contain a “due on encumbrance” clause, which provides
for the acceleration of the payment of the unpaid principal balance of the
Purchased Asset if the property subject to the Mortgage or any controlling
interest in the Mortgagor is further pledged or encumbered, unless the prior
written consent of the holder of the Purchased Asset is obtained (except that it
may provide for assignments subject to the Purchased Asset holder’s approval of
transferee, transfers to affiliates or transfers of passive interests so long as
the key principals or general partner retains control). The Mortgage requires
the Mortgagor to pay, to the extent any Rating Agency fees are incurred in
connection with the review of and consent to any transfer or encumbrance, such
fees, along with all other reasonable fees and expenses incurred by the
Mortgagee relative to such transfer or encumbrance all reasonable fees and
expenses associated with securing the consent or approval of the holder of the
Mortgage for a waiver of a “due on sale” or “due on encumbrance” clause or a
defeasance provision. As of the Purchase Date, Seller holds no preferred equity
interest in any Mortgagor and Seller holds no mezzanine debt related to such
Underlying Mortgaged Property.

(uu) Each Purchased Asset containing provisions for defeasance of mortgage
collateral requires either (a) the prior written consent of, and compliance with
the conditions set by, the holder of the Purchased Asset to any defeasance, or
(b)(i) the replacement collateral consist of U.S. “government securities,”
within the meaning of Treasury Regulations Article 1.860 G-2(a)(8)(i), in an
amount sufficient to make all scheduled payments under the Mortgage Note when
due (up to the maturity date for the related Purchased Asset, the Anticipated
Repayment Date for ARD Loans or the date on which the Mortgagor may prepay the
related Purchased Asset without payment of any prepayment penalty); (ii) the
loan may be assumed by a Single Purpose Entity approved by the holder of the
Purchased Asset; (iii) counsel provide an opinion that the trustee has a
perfected security interest in such collateral prior to any other claim or
interest; and (iv) such other documents and certifications as the mortgagee may
reasonably require, which

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may include, without limitation, (A) a certification that the purpose of the
defeasance is to facilitate the disposition of the mortgaged real property or
any other customary commercial transaction and not to be part of an arrangement
to collateralize a REMIC offering with obligations that are not real estate
mortgages and (B) a certification from an independent certified public
accountant that the collateral is sufficient to make all scheduled payments
under the Mortgage Note when due. Each Purchased Asset containing provisions for
defeasance provides that, in addition to any cost associated with defeasance,
the related Mortgagor shall pay, as of the date the mortgage collateral is
defeased, all scheduled and accrued interest and principal due as well as an
amount sufficient to defease in full the Purchased Asset. In addition, if the
related Purchased Asset permits defeasance, then the Purchased Asset Documents
provide that the related Mortgagor shall (x) pay all reasonable fees associated
with the defeasance of the Purchased Asset and all other reasonable expenses
associated with the defeasance, or (y) provide all opinions required under the
related Purchased Asset Documents, including a REMIC opinion, and any applicable
rating agency letters confirming that no downgrade or qualification shall occur
as a result of the defeasance. If the Senior Mortgage Loan permits partial
releases of real property in connection with partial defeasance, the revenues
from the collateral will be sufficient to pay all such scheduled payments
calculated on a principal amount equal to a specified percentage at least equal
to 115% of the allocated loan amount for the real property to be released and
the defeasance collateral is not permitted to be subject to prepayment, call, or
early redemption. If the Mortgagor would continue to own assets in addition to
the defeasance collateral, the portion of the Senior Mortgage Loan secured by
defeasance collateral is required to be assumed by a Single Purpose Entity
and the Mortgagor is required to deliver an opinion of counsel that Buyer has a
perfected security interest in such collateral prior to any other claim or
interest.

(vv) In the event that a Purchased Asset is secured by more than one Underlying
Mortgaged Property, then, in connection with a release of less than all of such
Mortgaged Properties, an Underlying Mortgaged Property may not be released as
collateral for the related Purchased Asset unless, in connection with such
release, an amount equal to not less than 125% of the Allocated Loan Amount for
such Underlying Mortgaged Property is prepaid or, in the case of a defeasance,
an amount equal to 125% of the Allocated Loan Amount is defeased through the
deposit of replacement collateral (as contemplated in clause (34) hereof)
sufficient to make all scheduled payments with respect to such defeased amount,
or such release is otherwise in accordance with the terms of the Purchased Asset
Documents. With respect to any partial release, either: (x) such release of
collateral (i) would not constitute a “significant modification” of the Senior
Mortgage Loan within the meaning of Treasury Regulations Section 1.860G-2(b)(2)
and (ii) would not cause the subject Senior Mortgage Loan to fail to be a
“qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the Code; or
(y) the mortgagee or servicer can, in accordance with the related Purchased
Asset Documents, condition such release of collateral on the related Mortgagor’s
delivery of an opinion of tax counsel to the effect specified in the immediately
preceding clause (x). For purposes of the preceding clause (x), for any Senior
Mortgage Loan originated after December 6, 2010, if the fair market value of the
real property constituting such Underlying Mortgaged Property after the release
is not equal to at least 80% of the principal balance of the Senior Mortgage
Loan outstanding after the release, the Mortgagor is required to make a payment
of principal in an amount not less than the amount required by the REMIC
provisions of the Code.

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In the case of any Senior Mortgage Loan originated after December 6, 2010, in
the event of a taking of any portion of an Underlying Mortgaged Property by a
State or any political subdivision or authority thereof, whether by legal
proceeding or by agreement, the Mortgagor can be required to pay down the
principal balance of the Senior Mortgage Loan in an amount not less than the
amount required by the REMIC provisions of the Code and, to such extent, the
award for any such taking may not be required to be applied to the restoration
of the Underlying Mortgaged Property or released to the Mortgagor, if,
immediately after the release of such portion of the Underlying Mortgaged
Property from the lien of the Mortgage (but taking into account the planned
restoration) the fair market value of the real property constituting the
remaining Underlying Mortgaged Property is not equal to at least 80% of the
remaining principal balance of the Senior Mortgage Loan.

In the case of any Senior Mortgage Loan originated after December 6, 2010, no
such Senior Mortgage Loan that is secured by more than one Underlying Mortgaged
Property or that is cross-collateralized with another Senior Mortgage Loan
permits the release of cross-collateralization of the related Mortgaged
Properties or a portion thereof, including due to a partial condemnation, other
than in compliance with the loan-to-value ratio and other requirements of the
REMIC provisions of the Code.

(ww) Each Underlying Mortgaged Property is owned in fee by the related
Mortgagor, with the exception of (i) Mortgaged Properties that are secured in
whole or in a part by a Ground Lease and (ii) out-parcels, and is used and
occupied for commercial or multifamily residential purposes in accordance with
applicable law.

(xx) Any material non-conformity with applicable zoning laws constitutes a legal
non-conforming use or structure that, in the event of casualty or destruction,
may be restored or repaired to the full extent of the use or structure at the
time of such casualty, or for which law and ordinance insurance coverage has
been obtained in amounts consistent with the standards utilized by Seller.

(yy) Neither Seller nor any affiliate thereof has any obligation to make any
capital contributions to the related Mortgagor under the Purchased Asset. The
Purchased Asset was not originated for the sole purpose of financing the
construction of incomplete improvements on the Underlying Mortgaged Property.

(zz) The following statements are true with respect to the Underlying Mortgaged
Property: (a) the Underlying Mortgaged Property is located on or adjacent to a
dedicated road or has access to an irrevocable easement permitting ingress and
egress and (b) the Underlying Mortgaged Property is served by public or private
utilities, water and sewer (or septic facilities) and otherwise appropriate for
the use in which the Underlying Mortgaged Property is currently being utilized.

(aaa) None of the Purchased Asset Documents contain any provision that expressly
excuses the related borrower from obtaining and maintaining insurance coverage
for acts of terrorism and, in circumstances where terrorism insurance is not
expressly required, the mortgagee is not prohibited from requesting that the
related borrower maintain such insurance, in each case, to the extent such
insurance coverage is generally available for like properties in such

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jurisdictions at commercially reasonable rates. Each Underlying Mortgaged
Property is insured by an “all-risk” casualty insurance policy and such policy
did not, as of the date of origination of the Senior Mortgage Loan, and, to
Seller’s Knowledge, do not contain an express exclusion for (or, alternatively,
is covered by a separate policy that insures against property damage resulting
from) acts of terrorism.

(bbb) An appraisal of the Underlying Mortgaged Property was conducted in
connection with the origination of such Purchased Asset (or in the case of a
participation interest, the date of origination of the Underlying Mortgage
Loan), and such appraisal satisfied the guidelines in Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, in either case as in
effect on the date such Purchased Asset (or in the case of a participation
interest, the Underlying Mortgage Loan) was originated. The appraisal date is
within 6 months of the Senior Mortgage Loan 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 (“MAI”) and, to Seller’s Knowledge, had no
interest, direct or indirect, in the Underlying Mortgaged Property or the
Mortgagor or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Senior Mortgage Loan. 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.

(ccc) The Senior Mortgage Loan is a “qualified mortgage” within the meaning of
Section 860G(a)(3) of the Code (but determined without regard to the rule in
Treasury Regulations Section 1.860G-2(f)(2) that treats certain defective
mortgage loans as qualified mortgages), and, accordingly, (A) the issue price of
the Senior Mortgage Loan to the related Mortgagor at origination did not exceed
the non-contingent principal amount of the Senior Mortgage Loan and (B) either:
(a) such Senior Mortgage Loan is secured by an interest in real property
(including buildings and structural components thereof, but excluding personal
property) having a fair market value (i) at the date the Senior Mortgage Loan
was originated at least equal to 80% of the adjusted issue price of the Senior
Mortgage Loan on such date or (ii) at the Closing Date at least equal to 80% of
the adjusted issue price of the Senior Mortgage Loan on such date, provided that
for purposes hereof, the fair market value of the real property interest must
first be reduced by (A) the amount of any lien on the real property interest
that is senior to the Senior Mortgage Loan and (B) a proportionate amount of any
lien that is in parity with the Senior Mortgage Loan; or (b) substantially all
of the proceeds of such Senior Mortgage Loan were used to acquire, improve or
protect the real property which served as the only security for such Senior
Mortgage Loan (other than a recourse feature or other third-party credit
enhancement within the meaning of Treasury Regulations
Section 1.860G-2(a)(1)(ii)). If the Senior Mortgage Loan was “significantly
modified” prior to the Closing Date so as to result in a taxable exchange under
Section 1001 of the Code, it either (x) was modified as a result of the default
or reasonably foreseeable default of such Senior Mortgage Loan or (y) satisfies
the provisions of either sub-clause (B)(a)(i) above (substituting the date of
the last such modification for the date the Senior Mortgage Loan was originated)
or sub-clause (B)(a)(ii), including the proviso thereto. Any prepayment premium
and yield maintenance charges applicable to the Senior Mortgage Loan constitute
“customary prepayment penalties” within the meaning of Treasury Regulations
Section 1.860G-(b)(2). All terms used in this paragraph shall have the same
meanings as set forth in the related Treasury Regulations.

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(ddd) Seller has obtained a 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 Senior Mortgage Loan. Seller has obtained
operating histories with respect to each Underlying 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 Senior Mortgage Loan. The 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 Mortgagor or an affiliate for less than three years then for
such shorter period of time, it being understood that for Mortgaged Properties
acquired with the proceeds of a Senior Mortgage Loan, operating histories may
not have been available.

(eee) 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 (i.e., the “Major Sponsors”). Seller (1) 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 for at least 10 years regarding any bankruptcies or other insolvencies,
any felony convictions, and (2) 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 for at least 10 years regarding any bankruptcies or other
insolvencies, any felony convictions, and provided, however, that records
searches were limited to the last 10 years. ((1) and (2) 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 of 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.

(fff) With respect to each Senior Mortgage Loan predominantly secured by a
retail, office or industrial property leased to a single tenant, the Mortgage
Loan Seller reviewed such estoppel obtained from such tenant no earlier than 90
days prior to the origination date of the related Senior Mortgage Loan, and to
the Mortgage Loan Seller’s knowledge based solely on the related estoppel
certificate, the related lease is in full force and effect or if not in full
force and effect the related space was underwritten as vacant, subject to
customary reservations of tenant’s rights, such as, without limitation, with
respect to common area maintenance and pass-through audits and verification of
landlord’s compliance with co-tenancy provisions. With respect to each Mortgage
Loan predominantly secured by a retail, office or industrial property, the
Mortgage Loan Seller has received lease estoppels executed within 90 days of the
origination date of the related Senior Mortgage Loan that collectively account
for at least 65% of the in-place base rent for the Underlying Mortgaged Property
or set of cross-collateralized properties that secure a Senior Mortgage Loan
that is represented on the certified rent roll. To the Mortgage Loan Seller’s
knowledge, each lease represented on the certified rent roll is in full force
and effect, subject to customary reservations of tenant’s rights, such as with
respect to common area maintenance and pass-through audits and verification of
landlord’s compliance with co-tenancy provisions.

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(ggg) Such Senior Mortgage Loan is not cross-collateralized or cross-defaulted
with any other Asset that is not subject to a Transaction.

(hhh) No advance of funds has been made by Seller to the related Mortgagor, and
no funds have been received from any person other than the related Mortgagor or
an affiliate, directly, or, to the Knowledge of Seller, indirectly for, or on
account of, payments due on the Senior Mortgage Loan. Neither Seller nor any
Affiliate thereof has any obligation to make any capital contribution to any
Mortgagor under the Senior Mortgage Loan, other than contributions made on or
prior to the Purchase Date.

(iii) Seller has complied with its internal procedures with respect to all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 in connection with the origination of the
Senior Mortgage Loan.

Defined Terms

As used in this Exhibit:

The term “Allocated Loan Amount” shall mean, for each Underlying Mortgaged
Property, the portion of principal of the related Purchased Asset allocated to
such Mortgaged Property for certain purposes (including determining the release
prices of properties, if permitted) under such Purchased Asset as set forth in
the related loan documents. There can be no assurance, and it is unlikely, that
the Allocated Loan Amounts represent the current values of individual Mortgaged
Properties, the price at which an individual Underlying Mortgaged Property could
be sold in the future to a willing buyer or the replacement cost of the
Mortgaged Properties.

The term “Anticipated Repayment Date” shall mean, with respect to any Purchased
Asset that is indicated on the Purchased Asset Schedule as having a Revised
Rate, the date upon which such Purchased Asset commences accruing interest at
such Revised Rate.

The term “Assignment of Leases” shall have the meaning specified in paragraph 10
of this Exhibit VI.

The term “Assignment of Mortgage” shall mean, with respect to any Mortgage, 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, covenants and provisions of this Agreement.

The term “ARD Loan” shall mean any Purchased Asset that provides that if the
unamortized principal balance thereof is not repaid on its Anticipated Repayment
Date, such Purchased Asset will accrue Excess Interest at the rate specified in
the related Mortgage Note and the Mortgagor is required to apply excess monthly
cash flow generated by the Underlying Mortgaged Property to the repayment of the
outstanding principal balance on such Purchased Asset.

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The term “Due Date” shall mean the day of the month set forth in the related
Mortgage Note on which each monthly payment of interest and/or principal thereon
is scheduled to be first due.

The term “Environmental Site Assessment” shall mean a Phase I environmental
report meeting the requirements of the American Society for Testing and
Materials, and, if in accordance with customary industry standards a reasonable
lender would require it, a Phase II environmental report, each prepared by a
licensed third party professional experienced in environmental matters.

The term “Excess Cash Flow” shall mean the cash flow from the Underlying
Mortgaged Property securing an ARD Loan after payments of interest (at the
Mortgage Interest Rate) and principal (based on the amortization schedule), and
(a) required payments for the tax and insurance fund and ground lease escrows
fund, (b) required payments for the monthly debt service escrows, if any,
(c) payments to any other required escrow funds and (d) payment of operating
expenses pursuant to the terms of an annual budget approved by the servicer and
discretionary (lender approved) capital expenditures.

The term “Excess Interest” shall mean any accrued and deferred interest on an
ARD Loan in accordance with the following terms. Commencing on the respective
Anticipated Repayment Date each ARD Loan (pursuant to its existing terms or a
unilateral option, as defined in Treasury Regulations under Article 1001 of the
Code, in the Purchased Assets exercisable during the term of the Purchased
Asset) generally will bear interest at a fixed rate (the “Revised Rate”) per
annum equal to the Mortgage Interest Rate plus a percentage specified in the
related Purchased Asset Documents. Until the principal balance of each such
Purchased Asset has been reduced to zero (pursuant to its existing terms or a
unilateral option, as defined in Treasury Regulations under Article 1001 of the
Code, in the Purchased Assets exercisable during the term of the mortgage loan),
such Purchased Asset will only be required to pay interest at the Mortgage
Interest Rate and the interest accrued at the excess of the related Revised Rate
over the related Mortgage Interest Rate will be deferred (such accrued and
deferred interest and interest thereon, if any, is “Excess Interest”).

The term “Mortgage Interest Rate” shall mean the fixed rate, or the formula
applicable to determine the floating rate, of interest per annum that each
Purchased Asset bears as of the Purchase Date.

The term “Permitted Encumbrances” shall mean:

 

  I. the lien of current real property taxes, water charges, sewer rents and
assessments not yet delinquent or accruing interest or penalties;

 

  II. covenants, conditions and restrictions, rights of way, easements and other
matters of public record acceptable to mortgage lending institutions generally
and referred to in the related mortgagee’s title insurance policy;

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  III. other matters to which like properties are commonly subject and which are
acceptable to mortgage lending institutions generally, and

 

  IV. the rights of tenants, as tenants only, whether under ground leases or
space leases at the Underlying Mortgaged Property

that together do not materially and adversely affect the related Mortgagor’s
ability to timely make payments on the related Purchased Asset, which do not
materially interfere with the benefits of the security intended to be provided
by the related Mortgage or the use, for the use currently being made, the
operation as currently being operated, enjoyment, value or marketability of such
Underlying Mortgaged Property, provided, however, that, for the avoidance of
doubt, Permitted Encumbrances shall exclude all pari passu, second, junior and
subordinated mortgages but shall not exclude mortgages that secure Purchased
Assets that are cross-collateralized with other Purchased Assets.

The term “Revised Rate” shall mean, with respect to those Purchased Assets on
the Purchased Asset Schedule indicated as having a revised rate, the increased
interest rate after the Anticipated Repayment Date (in the absence of a default)
for each applicable Purchased Asset, as calculated and as set forth in the
related Purchased Asset.

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REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A JUNIOR MORTGAGE LOAN

(OTHER THAN A PARTICIPATION INTEREST)

(a) The information set forth in the Purchased Asset Schedule is complete, true
and correct in all material respects.

(b) There exists no material default, breach, violation or event of acceleration
(and no event that, with the passage of time or the giving of notice, or both,
would constitute any of the foregoing) under the documents evidencing or
securing the Purchased Asset, in any such case to the extent the same materially
and adversely affects the value of the Purchased Asset and the related
underlying real property.

(c) Except with respect to the enforceability of any provisions requiring the
payment of default interest, late fees, additional interest, prepayment premiums
or yield maintenance charges, neither the Purchased Asset nor any of the related
Purchased Asset Documents is subject to any right of rescission, set-off,
abatement, diminution, valid counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any such Purchased Asset
Documents, or the exercise (in compliance with procedures permitted under
applicable law) of any right thereunder, render any Purchased Asset Documents
subject to any right of rescission, set-off, abatement, diminution, valid
counterclaim or defense, including the defense of usury (subject to
anti-deficiency or one form of action laws and to bankruptcy, receivership,
conservatorship, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditor’s rights generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law)), and no such right of rescission, set-off,
abatement, diminution, valid counterclaim or defense has been asserted with
respect thereto.

(d) The Purchased Asset Documents have been duly and properly executed by the
originator of the Purchased Asset, and each is the legal, valid and binding
obligation of the parties thereto, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Asset is not usurious.

(e) The terms of the related Purchased Asset Documents have not been impaired,
waived, altered or modified in any material respect (other than by a written
instrument that is included in the related Purchased Asset File).

(f) The assignment of the Purchased Asset constitutes the legal, valid and
binding assignment of such Purchased Asset from Seller to or for the benefit of
Buyer enforceable in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws relating to or affecting the rights of creditors generally and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).

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(g) All representations and warranties in the Purchased Asset Documents and in
the underlying documents for the performing commercial mortgage loan secured by
a first lien on a multifamily or commercial property to which such Purchased
Asset relates are true and correct in all material respects.

(h) The servicing and collection practices used by Seller for the Purchased
Asset have complied with applicable law in all material respects and are
consistent with those employed by prudent servicers of comparable Purchased
Assets.

(i) Seller is not a debtor in any state or federal bankruptcy or insolvency
proceeding.

(j) As of the Purchase Date, there is no payment default, giving effect to any
applicable notice and/or grace period, and there is no other material default
under any of the related Purchased Asset Documents, giving effect to any
applicable notice and/or grace period; no such material default or breach has
been waived by Seller or on its behalf or, by Seller’s predecessors in interest
with respect to the Purchased Assets; and no event has occurred that, with the
passing of time or giving of notice would constitute a material default or
breach; provided, however, that the representations and warranties set forth in
this sentence do not cover any default, breach, violation or event of
acceleration that specifically pertains to or arises out of any subject matter
otherwise covered by any other representation or warranty made by Seller in this
Exhibit VI. No Purchased Asset has been accelerated and no foreclosure or power
of sale proceeding has been initiated in respect of the related Mortgage. Seller
has not waived any material claims against the related Mortgagor under any
non-recourse exceptions contained in the Mortgage Note.

(k) No Purchased Asset has been satisfied, canceled, subordinated (except to the
senior mortgage loan from which the Purchased Asset is derived), released or
rescinded, in whole or in part, and the related Mortgagor has not been released,
in whole or in part, from its obligations under any related Purchased Asset
Document.

(l) There are no circumstances or conditions with respect to the Purchased
Asset, the Underlying Mortgaged Property, the related Mortgage, the related
Mortgagor, the Purchased Asset File or the Mortgagor’s credit standing that can
reasonably be expected to cause private institutional investors to regard the
Purchased Asset as an unacceptable investment, cause the Purchased Asset to
become delinquent or adversely affect the value or marketability of the
Purchased Asset.

(m) The Purchased Asset was underwritten strictly in accordance with each
Seller’s underwriting standards and conforms to the standards that would be
required by Buyer and the Rating Agencies for Buyer to effect one or more sales
or assignments of the Purchased Asset or participation interests therein or
securitizations of highly-rated single or multi-class securities secured by or
evidencing ownership interests in the Purchased Asset and the related Mortgage.

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REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A PARTICIPATION INTEREST

IN A SENIOR MORTGAGE LOAN

OR JUNIOR MORTGAGE LOAN

(a) The representations and warranties set forth in this Exhibit VI regarding
the Senior Mortgage Loan or Junior Mortgage Loan from which the Purchased Asset
is derived shall be deemed incorporated herein in respect of such senior
mortgage loan, provided, however, that, in the event that such senior mortgage
loan was not originated by Seller or an Affiliate of Seller, Seller shall be
deemed to be making the representations set forth in this Exhibit VI with
respect to such senior mortgage loan to Seller’s Knowledge.

(b) The information set forth in the Purchased Asset Schedule is complete, true
and correct in all material respects.

(c) There exists no material default, breach, violation or event of acceleration
(and no event that, with the passage of time or the giving of notice, or both,
would constitute any of the foregoing) under the documents evidencing or
securing the Purchased Asset, in any such case to the extent the same materially
and adversely affects the value of the Purchased Asset and the related
underlying real property.

(d) Except with respect to the enforceability of any provisions requiring the
payment of default interest, late fees, additional interest, prepayment premiums
or yield maintenance charges, neither the Purchased Asset nor any of the related
Purchased Asset Documents is subject to any right of rescission, set-off,
abatement, diminution, valid counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any such Purchased Asset
Documents, or the exercise (in compliance with procedures permitted under
applicable law) of any right thereunder, render any Purchased Asset Documents
subject to any right of rescission, set-off, abatement, diminution, valid
counterclaim or defense, including the defense of usury (subject to
anti-deficiency or one form of action laws and to bankruptcy, receivership,
conservatorship, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditor’s rights generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law)), and no such right of rescission, set-off,
abatement, diminution, valid counterclaim or defense has been asserted with
respect thereto.

(e) The Purchased Asset Documents have been duly and properly executed by the
originator of the Purchased Asset, and each is the legal, valid and binding
obligation of the parties thereto, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Asset is not usurious.

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(f) The terms of the related Purchased Asset Documents have not been impaired,
waived, altered or modified in any material respect (other than by a written
instrument that is included in the related Purchased Asset File).

(g) The assignment of the Purchased Asset constitutes the legal, valid and
binding assignment of such Purchased Asset from Seller to or for the benefit of
Buyer enforceable in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws relating to or affecting the rights of creditors generally and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).

(h) All representations and warranties in the Purchased Asset Documents and in
the underlying documents for the performing commercial mortgage loan secured by
a first lien on a multifamily or commercial property to which such Purchased
Asset relates are true and correct in all material respects.

(i) The servicing and collection practices used by Seller for the Purchased
Asset have complied with applicable law in all material respects and are
consistent with those employed by prudent servicers of comparable Purchased
Assets.

(j) Seller is not a debtor in any state or federal bankruptcy or insolvency
proceeding.

(k) As of the Purchase Date, there is no payment default, giving effect to any
applicable notice and/or grace period, and there is no other material default
under any of the related Purchased Asset Documents, giving effect to any
applicable notice and/or grace period; no such material default or breach has
been waived by Seller or on its behalf or by Seller’s predecessors in interest
with respect to the Purchased Assets; and no event has occurred that, with the
passing of time or giving of notice would constitute a material default or
breach; provided, however, that the representations and warranties set forth in
this sentence do not cover any default, breach, violation or event of
acceleration that specifically pertains to or arises out of any subject matter
otherwise covered by any other representation or warranty made by Seller in this
Exhibit VI. No Purchased Asset has been accelerated and no foreclosure or power
of sale proceeding has been initiated in respect of the related Mortgage. Seller
has not waived any material claims against the related Mortgagor under any
non-recourse exceptions contained in the Mortgage Note.

(l) No Purchased Asset has been satisfied, canceled, subordinated (except to the
senior mortgage loan from which the Purchased Asset is derived), released or
rescinded, in whole or in part, and the related Mortgagor has not been released,
in whole or in part, from its obligations under any related Purchased Asset
Document.

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REPRESENTATIONS AND WARRANTIES

REGARDING PURCHASED ASSETS CONSISTING

OF MEZZANINE LOANS

(a) The Mezzanine Loan is a performing mezzanine loan secured by a pledge of all
of the Capital Stock of a Mortgagor that owns income producing commercial real
estate.

(b) As of the Purchase Date, such 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.

(c) Immediately prior to the sale, transfer and assignment to Buyer thereof,
Seller had good and marketable title to, and was the sole owner and holder of,
such Mezzanine Loan, and Seller is transferring such Mezzanine Loan free and
clear of any and all liens, pledges, encumbrances, charges, security interests
or any other ownership interests of any nature encumbering such Mezzanine Loan.
Upon consummation of the purchase contemplated to occur in respect of such
Mezzanine Loan on the Purchase Date therefor, Seller will have validly and
effectively conveyed to Buyer all legal and beneficial interest in and to such
Mezzanine Loan free and clear of any pledge, lien, encumbrance or security
interest.

(d) No fraudulent acts were committed by Seller in connection with its
acquisition or origination of such Mezzanine Loan nor were any fraudulent acts
committed by any Person in connection with the origination of such Mezzanine
Loan.

(e) All information contained in the related Due Diligence Package (or as
otherwise provided to Buyer) in respect of such Mezzanine Loan is accurate and
complete in all material respects.

(f) Except as included in the Due Diligence Package, Seller is not a party to
any document, instrument or agreement, and there is no document, that by its
terms modifies or affects the rights and obligations of any holder of such
Mezzanine Loan and Seller has not consented to any material change or waiver to
any term or provision of any such document, instrument or agreement and no such
change or waiver exists.

(g) Such Mezzanine Loan is presently outstanding, the proceeds thereof have been
fully and properly disbursed and, except for amounts held in escrow by Seller,
there is no requirement for any future advances thereunder.

(h) Seller has full right, power and authority to sell and assign such Mezzanine
Loan and such Mezzanine Loan or any related Mezzanine Note has not been
cancelled, satisfied or rescinded in whole or part nor has any instrument been
executed that would effect a cancellation, satisfaction or rescission thereof.

(i) Other than consents and approvals obtained as of the related Purchase Date
or those already granted in the documentation governing such Mezzanine Loan (the
“Mezzanine

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Loan 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.

(j) The Mezzanine Collateral is secured by a pledge of equity ownership
interests in the related borrower under the Underlying Mortgage Loan or a direct
or indirect owner of the related borrower and the security interest created
thereby has been fully perfected in favor of Seller as lender under the
Mezzanine Loan.

(k) The Underlying Property Owner has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
organization, with requisite power and authority to own its assets and to
transact the business in which it is now engaged, the sole purpose of the
Underlying Property Owner under its organizational documents is to own, finance,
sell or otherwise manage the Properties and to engage in any and all activities
related or incidental thereto, and the Mortgaged Properties constitute the sole
assets of the Underlying Property Owner.

(l) The Underlying Property Owner has good and marketable title to the
Underlying Mortgaged Property, no claims under the title policies insuring the
Underlying Property Owner’s title to the Properties have been made, and the
Underlying Property Owner has not received any written notice regarding any
material violation of any easement, restrictive covenant or similar instrument
affecting the Underlying Mortgaged Property.

(m) The representations and warranties made by the borrower (the “Mezzanine
Borrower”) in the Mezzanine Loan Documents were true and correct in all material
respects as of the date such representations and warranties were stated to be
true therein, and there has been no adverse change with respect to the Mezzanine
Loan, the Mezzanine Borrower, the Underlying Mortgaged Property or the
Underlying Property Owner that would render any such representation or warranty
not true or correct in any material respect as of the Purchase Date.

(n) The Mezzanine Loan Documents provide for the acceleration of the payment of
the unpaid principal balance of the Mezzanine Loan if (i) the related borrower
voluntarily transfers or encumbers all or any portion of any related Mezzanine
Collateral, or (ii) any direct or indirect interest in the related borrower is
voluntarily transferred or assigned, other than, in each case, as permitted
under the terms and conditions of the related loan documents.

(o) Pursuant to the terms of the Mezzanine Loan Documents: (a) no material terms
of any related Mortgage 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 may be taken by the Underlying Property
Owner with respect to the Underlying Mortgaged Property without the consent of
the holder of the Mezzanine Loan; (c) the holder of the Mezzanine Loan is
entitled to approve the budget of the Underlying Property Owner as it relates to
the Underlying Mortgaged Property; and (d) the holder of the Mezzanine Loan’s
consent is required prior to the Underlying Property Owner incurring any
additional indebtedness.

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(p) There is no (i) monetary default, breach or violation with respect to such
Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the
owner of the Underlying Mortgaged Property (the “Underlying Property Owner”),
(ii) material non-monetary default, breach or violation with respect to such
Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the
Underlying Property Owner or (iii) event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration.

(q) No default or event of default has occurred under any agreement pertaining
to any lien or other interest that ranks pari passu with or senior to the
interests of the holder of such Mezzanine Loan or with respect to any Underlying
Mortgage Loan or other indebtedness in respect of the related Underlying
Mortgaged Property and there is no provision in any agreement related to any
such lien, interest or loan which would provide for any increase in the
principal amount of any such lien, other interest or loan.

(r) Seller’s security interest in the Mezzanine Loan is covered by a UCC-9
insurance policy (the “UCC-9 Policy”) in the maximum principal amount of the
Mezzanine Loan insuring that the related pledge is a valid first priority lien
on the collateral pledged in respect of such Mezzanine Loan (the “Mezzanine
Collateral”), subject only to the exceptions stated therein (or a pro forma
title policy or marked up title insurance commitment on which the required
premium has been paid exists which evidences that such UCC-9 Policy will be
issued), such UCC-9 Policy (or, if it has yet to be issued, the coverage to be
provided thereby) is in full force and effect, no material claims have been made
thereunder and no claims have been paid thereunder, Seller has not done, by act
or omission, anything that would materially impair the coverage under the UCC-9
Policy and as of the Purchase Date, the UCC-9 Policy (or, if it has yet to be
issued, the coverage to be provided thereby) will inure to the benefit of Buyer
without the consent of or notice to the insurer.

(s) The Mezzanine Loan, and each party involved in the origination of the
Mezzanine Loan, complied as of the date of origination with, or was exempt from,
applicable state or federal laws, regulations and other requirements pertaining
to usury.

(t) Seller has delivered to Buyer or its designee the original promissory note
made in respect of such Mezzanine Loan, together with an original assignment
thereof executed by Seller in blank.

(u) Seller has not received any written notice that the Mezzanine Loan may be
subject to reduction or disallowance for any reason, including without
limitation, any setoff, right of recoupment, defense, counterclaim or impairment
of any kind.

(v) Seller has no obligation to make loans to, make guarantees on behalf of, or
otherwise extend credit to, or make any of the foregoing for the benefit of, the
Mezzanine Borrower or any other person under or in connection with the Mezzanine
Loan.

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(w) The servicing and collection practices used by the servicer of the Mezzanine
Loan, and the origination practices of the related originator, have been in all
respects legal, proper and prudent and have met customary industry standards by
prudent institutional commercial mezzanine lenders and mezzanine loan servicers
except to the extent that, in connection with its origination, such standards
were modified as reflected in the documentation delivered to Buyer.

(x) 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 and (iv) it
would accept cure from Mezzanine Lender on behalf of the ground lessee.

(y) To the extent Buyer was granted a security interest with respect to the
Mezzanine Loan, such interest (i) was given for due consideration, (ii) has
attached, (iii) is perfected, (iv) is a first priority Lien, and (v) has been
appropriately assigned to Buyer by the Underlying Property Owner.

(z) No consent, approval, authorization or order of, or registration or filing
with, or notice to, any court or governmental agency or body having jurisdiction
or regulatory authority is required for any transfer or assignment by the holder
of such Mezzanine Loan.

(aa) Seller has not received written notice of any outstanding liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind for which the holder of such Mezzanine
Loan is or may become obligated.

(bb) Seller has not advanced funds, or knowingly received any advance of funds
from a party other than the borrower relating to such Mezzanine Loan, directly
or indirectly, for the payment of any amount required by such Mezzanine Loan.

(cc) All real estate taxes and governmental assessments, or installments
thereof, which would be a lien on any related Underlying Mortgaged Property and
that prior to the Purchase Date for the related Purchased Asset have become
delinquent in respect of such Underlying Mortgaged Property have been paid, or
an escrow of funds in an amount sufficient to cover such payments has been
established. For purposes of this representation and warranty, real estate taxes
and governmental assessments 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.

(dd) As of the Purchase Date for the related Purchased Asset, each related
Underlying Mortgaged Property was free and clear of any material damage (other
than deferred maintenance for which escrows were established at origination)
that would affect materially and adversely the value of such Underlying
Mortgaged Property as security for the related Underlying Mortgage Loan and
there was no proceeding pending or, based solely upon the delivery of written
notice thereof from the appropriate condemning authority, threatened for the
total or partial condemnation of such Underlying Mortgaged Property.

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(ee) As of the Purchase Date of the Mezzanine Loan, all insurance coverage
required under the Mezzanine Loan Documents and/or any mortgage loan related to
the Underlying Mortgaged Property, which insurance covered such risks as were
customarily acceptable to prudent commercial and multifamily mortgage lending
institutions lending on the security of property comparable to the related
Underlying Mortgaged Property in the jurisdiction in which such Underlying
Mortgaged Property is located, and with respect to a fire and extended perils
insurance policy, is in an amount (subject to a customary deductible) at least
equal to the lesser of (i) the replacement cost of improvements located on such
Underlying Mortgaged Property, or (ii) the outstanding principal balance of the
Underlying Mortgage Loan, and in any event, the amount necessary to prevent
operation of any co-insurance provisions; and, except if such Underlying
Mortgaged Property is operated as a mobile home park, is also covered by
business interruption or rental loss insurance, in an amount at least equal to
12 months of operations of the related Underlying Mortgaged Property, all of
which was in full force and effect with respect to each related Underlying
Mortgaged Property; and, as of the Purchase Date for the related Purchased
Asset, all insurance coverage required under the Mezzanine Loan Documents and/or
any Underlying Mortgage Loan related to the Underlying Mortgaged Property, which
insurance covers such risks and is in such amounts as are customarily acceptable
to prudent commercial and multifamily mortgage lending institutions lending on
the security of property comparable to the related Underlying Mortgaged Property
in the jurisdiction in which such Underlying Mortgaged Property is located, is
in full force and effect with respect to each related Underlying Mortgaged
Property; all premiums due and payable through the Purchase Date for the related
Purchased Asset have been paid; and no notice of termination or cancellation
with respect to any such insurance policy has been received by Seller; and
except for certain amounts not greater than amounts which would be considered
prudent by an institutional commercial and/or multifamily mortgage lender with
respect to a similar mortgage loan and which are set forth in the Mezzanine Loan
Documents and/or any Underlying Mortgage Loan related to the Underlying
Mortgaged Property, any insurance proceeds in respect of a casualty loss, will
be applied either (i) to the repair or restoration of all or part of the related
Underlying Mortgaged Property or (ii) the reduction of the outstanding principal
balance of the Underlying Mortgage Loan, subject in either case to requirements
with respect to leases at the related Underlying Mortgaged Property and to other
exceptions customarily provided for by prudent institutional lenders for similar
loans. The Underlying Mortgaged Property is also covered by comprehensive
general liability insurance against claims for personal and bodily injury, death
or property damage occurring on, in or about the related Underlying Mortgaged
Property, in an amount customarily required by prudent institutional lenders. An
architectural or engineering consultant has performed an analysis of the
Underlying Mortgaged Properties located in seismic zone 3 or 4 in order to
evaluate the structural and seismic condition of such property, for the sole
purpose of assessing the probable maximum loss (“PML”) for the Underlying
Mortgaged Property in the event of an earthquake. In such instance, the PML was
based on a 475 year lookback with a 10% probability of exceedance in a 50 year
period. If the resulting report concluded that the PML would exceed 20% of the
amount of the replacement costs of the improvements, earthquake insurance on
such Underlying Mortgaged Property was obtained by an insurer rated at least
A-:V by A.M. Best Company or “BBB-” (or the equivalent) from S&P and Fitch or
“Baa3” (or the equivalent) from Moody’s. If the Underlying Mortgaged Property is
located in Florida or within 25 miles of the

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coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or
South Carolina such Underlying Mortgaged Property is insured by windstorm
insurance in an amount at least equal to the lesser of (i) the outstanding
principal balance of such Underlying Mortgage Loan and (ii) 100% of the full
insurable value, or 100% of the replacement cost, of the improvements located on
the related Underlying Mortgaged Property.

(ff) The insurance policies contain a standard Mortgagee clause naming the
Mortgagee, its successors and assigns as loss payee, in the case of a property
insurance policy, and additional insured in the case of a liability insurance
policy and provide that they are not terminable without 30 days prior written
notice to the Mortgagee (or, with respect to non-payment, 10 days prior written
notice to the Mortgagee) or such lesser period as prescribed by applicable law.
Each Mortgage requires that the Mortgagor maintain insurance as described above
or permits the Mortgagee to require insurance as described above, and permits
the Mortgagee to purchase such insurance at the Mortgagor’s expense if Mortgagor
fails to do so.

(gg) There is no material and adverse environmental condition or circumstance
affecting the Underlying Mortgaged Property; there is no material violation of
any applicable Environmental Law with respect to the Underlying Mortgaged
Property; neither Seller nor the Underlying Property Owner has taken any actions
which would cause the Underlying Mortgaged Property not to be in compliance with
all applicable Environmental Laws; the underlying mortgage loan documents
require the borrower to comply with all Environmental Laws; and each Mortgagor
has agreed to indemnify the Mortgagee for any losses resulting from any
material, adverse environmental condition or failure of the Mortgagor to abide
by such Environmental Laws or has provided environmental insurance.

(hh) No borrower under the Mezzanine Loan nor any Mortgagor under any Underlying
Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency
proceeding.

(ii) Each related Underlying Mortgaged Property was inspected by or on behalf of
the related originator or an affiliate during the 12 month period prior to the
related origination date.

(jj) There are no material violations of any applicable zoning ordinances,
building codes and land laws applicable to the Underlying Mortgaged Property or
the use and occupancy thereof which (i) are not insured by an ALTA lender’s
title insurance policy (or a binding commitment therefor), or its equivalent as
adopted in the applicable jurisdiction, or a law and ordinance insurance policy
or (ii) would have a material adverse effect on the value, operation or net
operating income of the Underlying Mortgaged Property. The Purchased Asset
Documents and the underlying mortgage loan documents require the Underlying
Mortgaged Property to comply with all applicable laws and ordinances.

(kk) None of the material improvements which were included for the purposes of
determining the appraised value of any related Underlying Mortgaged Property at
the time of the origination of the Mezzanine Loan or any related Underlying
Mortgage Loan lies outside of the boundaries and building restriction lines of
such property (except Underlying Mortgaged Properties which are legal
non-conforming uses), to an extent which would have a material adverse affect on
the value of the Underlying Mortgaged Property or the related Mortgagor’s use
and operation of such Underlying Mortgaged Property (unless affirmatively
covered by title

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insurance) and no improvements on adjoining properties encroached upon such
Underlying Mortgaged Property to any material and adverse extent (unless
affirmatively covered by title insurance).

(ll) As of the Purchase Date for the related Purchased Asset, there was no
pending action, suit or proceeding, or governmental investigation of which
Seller, the Mezzanine Borrower or the Underlying Property Owner has received
notice, against the Mortgagor or the related Underlying Mortgaged Property the
adverse outcome of which could reasonably be expected to materially and
adversely affect the Mezzanine Loan or the Underlying Mortgage Loan.

(mm) The improvements located on the Underlying Mortgaged Property are either
not located in a federally designated special flood hazard area or, if so
located, the Mortgagor is required to maintain or the Mortgagee maintains, flood
insurance with respect to such improvements and such policy is in full force and
effect in an amount no less than the lesser of (i) the original principal
balance of the Underlying Mortgage Loan, (ii) the value of such improvements on
the related Underlying Mortgaged Property located in such flood hazard area or
(iii) the maximum allowed under the related federal flood insurance program.

(nn) Except for Mortgagors under Underlying Mortgage Loans the Underlying
Mortgaged Property with respect to which includes a Ground Lease, the related
Mortgagor (or its affiliate) has title in the fee simple interest in each
related Underlying Mortgaged Property.

(oo) The related Underlying Mortgaged Property is not encumbered, and none of
the Purchased Asset Documents or any underlying mortgage loan documents permits
the related Underlying Mortgaged Property to be encumbered subsequent to the
Purchase Date of the related Purchased Asset without the prior written consent
of the holder thereof, by any lien securing the payment of money junior to or of
equal priority with, or superior to, the lien of the related Mortgage (other
than title exceptions, taxes, assessments and contested mechanics and
materialmen’s liens that become payable after such Purchase Date).

(pp) Each related Underlying Mortgaged Property constitutes one or more complete
separate tax lots (or the related Mortgagor has covenanted to obtain separate
tax lots and a Person has indemnified the Mortgagee for any loss suffered in
connection therewith or an escrow of funds in an amount sufficient to pay taxes
resulting from a breach thereof has been established) or is subject to an
endorsement under the related title insurance policy.

(qq) An appraisal of the related Underlying Mortgaged Property was conducted in
connection with the origination of the Underlying Mortgage Loan; and such
appraisal satisfied either (A) the requirements of the “Uniform Standards of
Professional Appraisal Practice” as adopted by the Appraisal Standards Board of
the Appraisal Foundation, or (B) the guidelines in Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in
effect on the date such Underlying Mortgage Loan was originated.

(rr) The related Underlying Mortgaged Property is served by public utilities,
water and sewer (or septic facilities) and otherwise appropriate for the use in
which the Underlying Mortgaged Property is currently being utilized.

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

(ss) With respect to each related Underlying Mortgaged Property consisting of a
Ground Lease, Seller represents and warrants the following with respect to the
related Ground Lease:

I. Such Ground Lease or a memorandum thereof has been or will be duly recorded
no later than 30 days after the Purchase Date of the related Purchased Asset and
such Ground Lease permits the interest of the lessee thereunder to be encumbered
by the related Mortgage or, if consent of the lessor thereunder is required, it
has been obtained prior to the Purchase Date.

II. Upon the foreclosure of the Underlying Mortgage Loan (or acceptance of a
deed in lieu thereof), the Mortgagor’s interest in such Ground Lease is
assignable to the Mortgagee under the leasehold estate and its assigns without
the consent of the lessor thereunder (or, if any such consent is required, it
has been obtained prior to the Purchase Date).

III. Such Ground Lease may not be amended, modified, canceled or terminated
without the prior written consent of the Mortgagee and any such action without
such consent is not binding on the Mortgagee, its successors or assigns, except
termination or cancellation if (i) an event of default occurs under the Ground
Lease, (ii) notice thereof is provided to the Mortgagee and (iii) such default
is curable by the Mortgagee as provided in the Ground Lease but remains uncured
beyond the applicable cure period.

IV. Such Ground Lease is in full force and effect, there is no material default
under such Ground Lease, and there is no event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a material default under such Ground Lease.

V. The Ground Lease or ancillary agreement between the lessor and the lessee
requires the lessor to give notice of any default by the lessee to the
Mortgagee. The Ground Lease or ancillary agreement further provides that no
notice given is effective against the Mortgagee unless a copy has been given to
the Mortgagee in a manner described in the Ground Lease or ancillary agreement.

VI. The Ground Lease (i) is not subject to any liens or encumbrances superior
to, or of equal priority with, the Mortgage, subject, however, to only the Title
Exceptions 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.

VII. A Mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the lessee
under the Ground Lease) to cure any curable default under such Ground Lease
before the lessor thereunder may terminate such Ground Lease.

VIII. Such Ground Lease has an original term (together with any extension
options, whether or not currently exercised, set forth therein all of which can
be exercised by the Mortgagee if the Mortgagee acquires the lessee’s rights
under the Ground Lease) that extends not less than 20 years beyond the stated
maturity date.

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IX. Under the terms of such Ground Lease, any estoppel or consent letter
received by the Mortgagee from the lessor, and the related Mortgage, taken
together, any related insurance proceeds or condemnation award (other than in
respect of a total or substantially total loss or taking) will be applied either
to the repair or restoration of all or part of the related Underlying Mortgaged
Property, with the Mortgagee or a trustee appointed by it having the right to
hold and disburse such proceeds as repair or restoration progresses, or to the
payment or defeasance of the outstanding principal balance of the Underlying
Mortgage Loan, together with any accrued interest (except in cases where a
different allocation would not be viewed as commercially unreasonable by any
commercial mortgage lender, taking into account the relative duration of the
Ground Lease and the related Mortgage and the ratio of the market value of the
related Underlying Mortgaged Property to the outstanding principal balance of
such Underlying Mortgage Loan).

X. The Ground Lease does not impose any restrictions on subletting that would be
viewed as commercially unreasonable by a prudent commercial lender.

XI. The ground lessor under such Ground Lease is required to enter into a new
lease upon termination of the Ground Lease for any reason, including the
rejection of the Ground Lease in bankruptcy.

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EXHIBIT VII

ASSET INFORMATION

Loan ID #:

Borrower Name:

Borrower Address:

Borrower City:

Borrower State:

Borrower Zip Code:

Recourse?

Guaranteed?

Related Borrower Name(s):

Original Principal Balance:

Note Date:

Loan Date:

Loan Type (e.g. fixed/arm):

Current Principal Balance:

Current Interest Rate (per annum):

Paid to date:

Annual P&I:

Next Payment due date:

Index (complete whether fixed or arm):

Gross Spread/Margin (complete whether fixed or arm):

Life Cap:

Life Floor:

Periodic Cap:

Periodic Floor:

Rounding Factor:

Lookback (in days):

Interest Calculation Method (e.g., Actual/360):

Interest rate adjustment frequency:

P&I payment frequency:

First P&I payment due:

First interest rate adjustment date:

First payment adjustment date:

Next interest rate adjustment date:

Next payment adjustment date:

Conversion Date:

Converted Interest Rate Index:

Converted Interest Rate Spread:

Maturity date:

Loan term:

Amortization term:

Hyper-Amortization Flag:

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ASSET INFORMATION (continued)

 

Hyper-Amortization Term:

Hyper-Amortization Rate Increase:

Balloon Amount:

Balloon LTV:

Prepayment Penalty Flag:

Prepayment Penalty Text:

Lockout Period:

Lien Position:

Fee/Leasehold:

Ground Lease Expiration Date:

CTL (Yes/No):

CTL Rating (Moody’s):

CTL Rating (Duff):

CTL Rating (S&P):

CTL Rating (Fitch):

Lease Guarantor:

CTL Lease Type (NNN, NN, Bondable):

Property Name:

Property Address:

Property City:

Property Zip Code:

Property Type (General):

Property Type (Specific):

Cross-collateralized (Yes/No)††:

Property Size:

Year built:

Year renovated:

Actual Average Occupancy:

Occupancy Rent Roll Date:

Underwritten Average Occupancy:

Largest Tenant:

Largest Tenant SF:

Largest Tenant Lease Expiration:

2nd Largest Tenant:

2nd Largest Tenant SF:

2nd Largest Tenant Lease Expiration:

3rd Largest Tenant:

3rd Largest Tenant SF:

3rd Largest Tenant Lease Expiration:

Underwritten Average Rental Rate/ADR:

 

††

If yes, give property information on each property covered and in aggregate as
appropriate. Loan ID’s should be denoted with a suffix letter to signify
loans/collateral.

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ASSET INFORMATION (continued)

 

Underwritten Vacancy/Credit Loss:

Underwritten Other Income:

Underwritten Total Revenues:

Underwritten Replacement Reserves:

Underwritten Management Fees:

Underwritten Franchise Fees:

Underwritten Total Expenses:

Underwritten Leasing Commissions:

Underwritten Tenant Improvement Costs:

Underwritten NOI:

Underwritten NCF:

Underwritten Debt Service Constant:

Underwritten DSCR at NOI:

Underwritten DSCR at NCF:

Underwritten NOI Period End Date:

Hotel Franchise:

Hotel Franchise Expiration Date:

Appraiser Name:

Appraised Value:

Appraisal Date:

Appraisal Cap Rate:

Appraisal Discount Rate:

Underwritten LTV:

Environmental Report Preparer:

Environmental Report Date:

Environmental Report Issues:

Architectural and Engineering Report Preparer:

Architectural and Engineering Report Date:

Deferred Maintenance Amount:

Ongoing Replacement Reserve Requirement per A&E Report:

Immediate Repairs Escrow % (e.g. [    ]%):

Replacement Reserve Annual Deposit:

Replacement Reserve Balance:

Tenant Improvement/Leasing Commission Annual Deposits:

Tenant Improvement/Leasing Commission Balance:

Taxes paid through date:

Monthly Tax Escrow:

Tax Escrow Balance:

Insurance paid through date:

Monthly Insurance Escrow:

Insurance Escrow Balance:

Reserve/Escrow Balance as of Date:

Probable Maximum Loss %:

Covered by Earthquake Insurance (Yes/No):

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ASSET INFORMATION (continued)

 

Number of times 30 days late in last 12 months:

Number of times 60 days late in last 12 months:

Number of times 90 days late in last 12 months:

Servicing Fee:

Notes:

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EXHIBIT VIII

PURCHASE PROCEDURES

(a) Submission of Due Diligence Package. No less than fifteen (15) Business Days
prior to the proposed Purchase Date or date of an Additional Purchase
Transaction or Future Funding Transaction, as applicable, Seller shall deliver
to Buyer a due diligence package for Buyer’s review and approval, which shall
contain the following items (the “Due Diligence Package”):

 

  1. Delivery of Purchased Asset Documents. With respect to a New Asset that is
a Pre-Existing Asset, each of the Purchased Asset Documents and, with respect to
a Purchased Asset that is the subject of a proposed Additional Purchase
Transaction or Future Funding Transaction, any Purchased Asset Document that has
been modified or amended in any manner since the related Purchase Date.

 

  2. Transaction-Specific Due Diligence Materials. With respect to any New Asset
or Purchased Asset that is the subject of a proposed Additional Purchase
Transaction or Future Funding Transaction, a summary memorandum outlining the
proposed transaction or advance, as applicable, including potential benefits and
all material underwriting risks, all Underwriting Issues and all other
characteristics of the proposed transaction or advance, as applicable, that a
reasonable buyer would consider material, together with the following due
diligence information relating to the New Asset or, with respect to a Purchased
Asset that is the subject of a proposed Additional Purchase Transaction or
Future Funding Transaction, any updates to the following due diligence
information reflecting changes from the related Purchase Date:

(i) the Asset Information and, if available, maps and photos;

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

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

(iv) copies of appraisal, environmental, engineering and any other third-party
reports; provided, that, if same are not available to Seller at the time of
Seller’s submission of the Due Diligence Package to Buyer, Seller shall deliver
such items to Buyer promptly upon Seller’s receipt of such items;

(v) a description of the underlying real estate directly or indirectly securing
or supporting such Purchased Asset and the ownership structure of the borrower
and the sponsor (including, without limitation, the board of directors, if
applicable) and, to the extent that real property does not secure such Eligible
Asset, the related collateral securing such Eligible Asset, if any;

(vi) indicative debt service coverage ratios;

(vii) indicative loan-to-value ratios;

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

(viii) a term sheet outlining the transaction generally;

(ix) a description of the Mortgagor, including experience with other projects
(real estate owned), its ownership structure and financial statements;

(x) a description of Seller’s relationship with the Mortgagor, if any;

(xi) copies of documents evidencing such New Asset, or current drafts thereof,
including, without limitation, underlying debt and security documents,
guaranties, the underlying borrower’s and guarantor’s organizational documents,
warrant agreements, and loan and collateral pledge agreements, as applicable,
provided that, if same are not available to Seller at the time of Seller’s
submission of the Due Diligence Package to Buyer, Seller shall deliver such
items to Buyer promptly upon Seller’s receipt of such items;

(xii) in the case of Subordinate Eligible Assets, all information described in
this section 2(A) that would otherwise be provided for the Underlying Mortgage
Loan if it were an Eligible Asset, and in addition, all documentation evidencing
such Subordinate Eligible Asset; and

(xiii) any exceptions to the representations and warranties set forth in
Exhibit VI to this Agreement.

 

  3. Environmental and Engineering. A “Phase 1” (and, if requested by Buyer,
“Phase 2”) environmental report, an asbestos survey, if applicable, and an
engineering report, each in form reasonably satisfactory to Buyer, by an
engineer or environmental consultant reasonably approved by Buyer.

 

  4. Credit Memorandum. A credit memorandum, asset summary or other similar
document that details cash flow underwriting, historical operating numbers,
underwriting footnotes, rent roll and lease rollover schedule.

 

  5. Appraisal. Either an appraisal approved by Buyer or a draft appraisal, each
by an MAI appraiser, if applicable. If Buyer receives only a draft appraisal
prior to entering into a Transaction, Seller shall deliver an appraisal approved
by Buyer by an MAI appraiser on or before ten (10) calendar days after the
Purchase Date. The related appraisal shall (i) be dated less than twelve
(12) months prior to the proposed financing date and (ii) not be ordered by the
related borrower or an Affiliate of the related borrower.

 

  6. Opinions of Counsel. An opinion to Seller and its successors and assigns
from counsel to the underlying obligor on the underlying loan transaction, as
applicable, as to enforceability of the loan documents governing such
transaction and such other matters as Buyer shall require (including, without
limitation, opinions as to due formation, authority, choice of law and
perfection of security interests).

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

  7. Additional Real Estate Matters. To the extent obtained by Seller from the
Mortgagor or the underlying obligor relating to any Eligible Asset at the
origination of the Eligible Asset, such other real estate related certificates
and documentation as may have been requested by Buyer, such as abstracts of all
leases in effect at the real property relating to such Eligible Asset.

 

  8. Other Documents. Any other documents as Buyer or its counsel shall
reasonably deem necessary.

(b) Submission of Legal Documents. With respect to a New Asset that is an
Originated Asset, no less than seven (7) calendar days prior to the proposed
Purchase Date, Seller shall deliver, or cause to be delivered, to counsel for
Buyer the following items, where applicable:

 

  1. Copies of all draft Purchased Asset Documents in substantially final form,
blacklined against the approved form Purchased Asset Documents.

 

  2. Certificates or other evidence of insurance demonstrating insurance
coverage in respect of the underlying real estate directly or indirectly
securing or supporting such Purchased Asset of types, in amounts, with insurers
and otherwise in compliance with the terms, provisions and conditions set forth
in the Purchased Asset Documents. Such certificates or other evidence shall
indicate that Seller (or, as to Subordinate Eligible Assets, the lead lender on
the whole loan in which Seller is a participant or holder of a note or has an
equity interest in the Mortgagor, as applicable), 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.

 

  3. All surveys of the underlying real estate directly or indirectly securing
or supporting such Purchased Asset that are in Seller’s possession.

 

  4. As reasonably requested by Buyer, satisfactory reports of UCC, tax lien,
judgment and litigation searches and title updates conducted by search firms
and/or title companies reasonably acceptable to Buyer with respect to the
Eligible Asset, underlying real estate directly or indirectly securing or
supporting such Eligible Asset, Seller and Mortgagor, such searches to be
conducted in each location Buyer shall reasonably designate.

 

  5. An unconditional commitment to issue a Title Policy in favor of Buyer and
Buyer’s successors and/or assigns with respect to Buyer’s interest in the
related real property and insuring the assignment of the Eligible Asset to
Buyer, with an amount of insurance that shall be not less than the maximum
principal amount of the Eligible Asset (taking into account the proposed
advance), or an endorsement or confirmatory letter from the title insurance
company that issued the existing title insurance policy, in favor of Buyer and
Buyer’s successors and/or assigns, that amends the existing title insurance
policy by stating that the amount of the insurance is not less than the maximum
principal amount of the Eligible Asset (taking into account the proposed
advance).

 

  6. Certificates of occupancy and letters certifying that the property is in
compliance with all applicable zoning laws, each issued by the appropriate
Governmental Authority.

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

(c) Approval of Eligible Asset, Additional Purchase Transaction or Future
Funding Transaction. Conditioned upon the timely and satisfactory completion of
Seller’s requirements in clauses (a) and (b) above, Buyer shall, no less than
five (5) calendar days prior to the proposed Purchase Date, date of Additional
Purchase Transaction or date of Future Funding Transaction, as applicable,
(i) in the case of the proposed purchase of an Eligible Asset, (A) notify Seller
in writing (which may take the form of electronic mail format) that Buyer has
not approved the proposed Eligible Asset as a Purchased Asset or (B) notify
Seller in writing (which may take the form of electronic mail format) that Buyer
has approved the proposed Eligible Asset as a Purchased Asset or (ii) in the
case of a proposed Additional Purchase Transaction or Future Funding
Transaction, (A) notify Seller in writing (which may take the form of electronic
mail format) that Buyer has not approved the proposed Additional Purchase
Transaction or Future Funding Transaction or (B) notify Seller in writing (which
may take the form of electronic mail format) that Buyer has approved the
proposed Additional Purchase Transaction or Future Funding Transaction. Buyer’s
failure to respond to Seller on or prior to five (5) calendar days prior to the
proposed Purchase Date, shall be deemed to be a denial of Seller’s request that
Buyer approve the proposed Eligible Asset or proposed Additional Purchase
Transaction or Future Funding Transaction, as applicable, unless Buyer and
Seller has agreed otherwise in writing.

(d) Assignment Documents. No less than two (2) business days prior to the
proposed Purchase Date, Seller shall have executed and delivered to Buyer, in
form and substance reasonably satisfactory to Buyer and its counsel, all
applicable assignment documents assigning to Buyer the proposed Eligible Asset
(and in any Hedging Transactions held by Seller with respect thereto) that shall
be subject to no liens except as expressly permitted by Buyer. Each of the
assignment documents shall contain such representations and warranties in
writing concerning the proposed Eligible Asset and such other terms as shall be
satisfactory to Buyer in its sole discretion.

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EXHIBIT IX

FORM OF BAILEE LETTER

                 , 201  

 

     

     

     

 

  Re: Bailee Agreement (the “Bailee Agreement”) in connection with the pledge by
[                    ] (“Seller”) to JPMorgan Chase Bank, National Association
(“Buyer”)

Ladies and Gentlemen:

In consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller, Buyer and [                    ] (the “Bailee”) hereby
agree as follows:

(a) Seller shall deliver to the Bailee in connection with any Purchased Assets
delivered to the Bailee hereunder the Custodial Delivery Certificate to which
shall be attached a Purchased Asset Schedule identifying which Purchased Assets
are being delivered to the Bailee hereunder.

(b) On or prior to the date indicated on the Custodial Delivery Certificate
delivered by Seller (the “Funding Date”), Seller shall have delivered to the
Bailee, as bailee for hire, the original documents set forth on Exhibit B
attached thereto (collectively, the “Purchased Asset File”) for each of the
Purchased Assets (each a “Purchased Asset” and collectively, the “Purchased
Assets”) listed in Exhibit A attached thereto.

(c) The Bailee shall issue and deliver to Buyer and U.S. Bank National
Association (the “Custodian”) on or prior to the Funding Date by facsimile
(a) in the name of Buyer, an initial trust receipt and certification in the form
of Attachment 2 attached hereto (the “Bailee’s Trust Receipt and Certification”)
which Bailee’s Trust Receipt and Certification shall state that the Bailee has
received the documents comprising the Purchased Asset File as set forth in the
Custodial Delivery Certificate.

(d) On the applicable Funding Date, in the event that Buyer fails to purchase
from Seller the Purchased Assets identified in the related Custodial Delivery
Certificate, Buyer shall deliver by facsimile to the 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, the Bailee shall release the Purchased
Asset Files to Seller in accordance with Seller’s instructions.

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

(e) Following the Funding Date, the Bailee shall forward the Purchased Asset
Files to the Custodian at [        ], by insured overnight courier for receipt
by the Custodian no later than 1:00 p.m. on the third (3rd) Business Day
following the applicable Funding Date (the “Delivery Date”).

(f) From and after the applicable Funding Date until the time of receipt of the
Facsimile Authorization or the applicable Delivery Date, as applicable, the
Bailee (a) shall maintain continuous custody (and will forward in accordance
with clause (e) above) and control of the related Purchased Asset Files as
bailee for Buyer and (b) is holding the related Purchased Assets as sole and
exclusive bailee for Buyer unless and until otherwise instructed in writing by
Buyer.

(g) Seller agrees to indemnify and hold the Bailee and its partners, directors,
officers, agents and employees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, including reasonable
attorneys 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 the Bailee) were
imposed on, incurred by or asserted against the Bailee because of the breach by
the Bailee of its obligations hereunder, which breach was caused by gross
negligence or willful misconduct on the part of the Bailee or any of its
partners, directors, officers, agents or employees. The foregoing
indemnification shall survive any resignation or removal of the Bailee or the
termination or assignment of this Bailee Agreement.

(h) In the event that the Bailee fails to produce a Mortgage Note, assignment of
collateral or any other document related to a Purchased Asset that was in its
possession within ten (10) business days after required or requested by Seller
or Buyer (a “Delivery Failure”), the Bailee shall indemnify Seller or Buyer in
accordance with the paragraph (g) above.

(i) Seller agrees to indemnify and hold Buyer and its respective affiliates and
designees harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including reasonable attorneys fees, that may
be imposed on, incurred by, or asserted against it or them in any way relating
to or arising out of a Custodial Delivery Failure or the Bailee’s negligence,
lack of good faith or willful misconduct. The foregoing indemnification shall
survive any termination or assignment of this Bailee Agreement.

(j) Seller hereby represents, warrants and covenants that the Bailee is not an
affiliate of or otherwise controlled by Seller. Notwithstanding the foregoing,
the parties hereby acknowledge that the Bailee hereunder may act as

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

counsel to Seller in connection with a proposed transaction and
[                    ], if acting as Bailee, has represented Seller in
connection with negotiation, execution and delivery of the Repurchase Agreement.

(k) [Arrangements to be discussed with respect to a pledge of Purchased Assets
as collateral for an obligation of Buyer held by the Bailee, such arrangements
to be agreed to by Bailee in its sole discretion without obligation.]

(l) The agreement set forth in this Bailee Agreement may not be modified,
amended or altered, except by written instrument, executed by all of the parties
hereto.

(m) This Bailee Agreement may not be assigned by Seller or the Bailee without
the prior written consent of Buyer.

(n) 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.

(o) 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.

(p) Capitalized terms used herein and defined herein shall have the meanings
ascribed to them in the Repurchase Agreement.

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

Very truly yours,

 

PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

 

ACCEPTED AND AGREED: [BAILEE] By:  

 

  Name: ACCEPTED AND AGREED:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

Buyer By:  

 

  Name:   Title:

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

Schedule A

[List of Purchased Asset Documents]

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

Attachment 1

IDENTIFICATION CERTIFICATE

On this      day of             , 201  , PARLEX 4 FINANCE, LLC (the “Seller”),
under that certain Bailee Agreement of even date herewith (the “Bailee
Agreement”), among Seller, [                    ] (the “Bailee”), and JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION, as Buyer, does hereby instruct the Bailee to
hold, in its capacity as Bailee, the Purchased Asset Files with respect to the
Purchased Assets listed on Exhibit A hereto, which Purchased Assets shall be
subject to the terms of the Bailee Agreement as of the date hereof.

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Bailee Agreement.

IN WITNESS WHEREOF, Seller has caused this Identification Certificate to be
executed and delivered by its duly authorized officer as of the day and year
first above written.

 

PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

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

Exhibit A to Attachment 1

PURCHASED ASSET SCHEDULE

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

Attachment 2

FORM OF BAILEE’S TRUST RECEIPT AND CERTIFICATION

            , 201  

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

270 Park Avenue, 7th Floor

New York, New York 10017-2014

Attention:    Ms. Nancy S. Alto Telephone:    (212) 834-9271 Telecopy:    (212)
834-6565

 

  Re: Bailee Agreement, dated as of                  , 201   (the “Bailee
Agreement”) among Parlex 4 Finance, LLC (the “Seller”), JPMorgan Chase Bank,
National Association (the “Buyer”) and [                    ] (the “Bailee”)

Ladies and Gentlemen:

In accordance with the provisions of Paragraph 3 of the above-referenced Bailee
Agreement, the undersigned, as the Bailee, hereby certifies that as to each
Purchased Asset described in the Purchased Asset Schedule (Exhibit A to
Attachment 1), a copy of which is attached hereto, it has reviewed the Purchased
Asset File 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 such
Purchased Asset, and (iii) based on its examination, the foregoing documents on
their face satisfy the requirements set forth in Paragraph 2 of the Bailee
Agreement.

The Bailee hereby confirms that it is holding each such Purchased Asset File as
agent and bailee for the exclusive use and benefit of Buyer pursuant to the
terms of the Bailee Agreement.

All initially capitalized terms used herein shall have the meanings ascribed to
them in the above-referenced Bailee Agreement.

 

[                    ], BAILEE By:  

 

  Name:   Title:

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EXHIBIT X

FORM OF MARGIN DEFICIT NOTICE

[DATE]/[TIME]

VIA ELECTRONIC TRANSMISSION

PARLEX 4 FINANCE, LLC

[                    ]

[                    ]

Attn: [                    ]

 

  Re: Master Repurchase Agreement, dated as of June 28, 2013 (as amended,
restated, supplemented, or otherwise modified and in effect from time to time,
the “Master Repurchase Agreement”; capitalized terms used but not otherwise
defined herein shall have the meanings assigned thereto in the Master Repurchase
Agreement) by and between JPMorgan Chase Bank, National Association (“Buyer”)
and Parlex 4 Finance, LLC (“Seller”).

Pursuant to Article 4(a) of the Master Repurchase Agreement, Buyer hereby
notifies Seller of the existence of a Margin Deficit as of the date hereof as
follows:

 

[Repurchase Price for specific Purchased Asset:

   $                

Asset Value of such Purchased Asset:

   $                

MARGIN DEFICIT:

   $              ] 

[Aggregate Repurchase Price of all Purchased Assets:

   $                

Maximum Amount:

   $                

MARGIN DEFICIT:

   $              ] 

SELLER IS REQUIRED TO CURE THE MARGIN DEFICIT SPECIFIED ABOVE IN ACCORDANCE WITH
THE MASTER REPURCHASE AGREEMENT AND WITHIN THE TIME PERIOD SPECIFIED ARTICLE
4(a) THEREOF.

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

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

By:  

 

  Name:   Title:

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EXHIBIT XI

EXHIBIT XI-1

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Assignees That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to Article 3(t) of the Master Repurchase Agreement,
dated as of October 11, 2012 (the “Master Repurchase Agreement”), by and between
JPMorgan Chase Bank, National Association, a national banking association
organized under the laws of the United States, as Buyer, and JLC Warehouse III
LLC, a Delaware limited liability company, as Seller. Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Master Repurchase Agreement.

The undersigned hereby certifies that (i) it is the sole record and beneficial
owner of the ownership interest in the Transaction(s) in respect of which it is
providing this certificate, (ii) it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of
the applicable Seller(s) within the meaning of Section 871(h)(3)(B) of the Code
and (iv) it is not a controlled foreign corporation related to the applicable
Seller(s) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the applicable Seller(s) with a correct, complete,
and accurate executed IRS Form W-8BEN. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the applicable Seller(s), and
(2) the undersigned shall have at all times furnished the applicable Seller(s)
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

 

[NAME OF ASSIGNEE] By:  

 

  Name:   Title: Date:  

 

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

EXHIBIT XI-2

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to Article 3(t) of the Master Repurchase Agreement,
dated as of October 11, 2012 (the “Master Repurchase Agreement”), by and between
JPMorgan Chase Bank, National Association, a national banking association
organized under the laws of the United States, as Buyer, and JLC Warehouse III
LLC, a Delaware limited liability company, as Seller. Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Master Repurchase Agreement.

The undersigned hereby certifies that (i) it is the sole record and beneficial
owner of the ownership interest in the Transaction(s) in respect of which it is
providing this certificate, (ii) it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of
the applicable Seller(s) within the meaning of Section 871(h)(3)(B) of the Code,
and (iv) it is not a controlled foreign corporation related to the applicable
Seller(s) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the applicable Buyer or Assignee with a correct,
complete, and accurate executed IRS Form W-8BEN. By executing this certificate,
the undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Buyer or Assignee in
writing, and (2) the undersigned shall have at all times furnished such Buyer or
Assignee with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

 

[NAME OF PARTICIPANT] By:  

 

  Name:   Title: Date:  

 

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

EXHIBIT XI-3

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to Article 3(t) of the Master Repurchase Agreement,
dated as of October 11, 2012 (the “Master Repurchase Agreement”), by and between
JPMorgan Chase Bank, National Association, a national banking association
organized under the laws of the United States, as Buyer, and JLC Warehouse III
LLC, a Delaware limited liability company, as Seller. Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Master Repurchase Agreement.

The undersigned hereby certifies that (i) it is the sole record owner of the
ownership interest in the Transaction(s) in respect of which it is providing
this certificate, (ii) its direct or indirect partners/members are the sole
beneficial owners of such interest, (iii) with respect to such interest, neither
the undersigned nor any of its direct or indirect partners/members is a bank
extending credit pursuant to a loan agreement entered into in the ordinary
course of its trade or business within the meaning of Section 881(c)(3)(A) of
the Code, (iv) none of its direct or indirect partners/members is a ten percent
shareholder of the applicable Seller(s) within the meaning of
Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a controlled foreign corporation related to the applicable
Seller(s) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the applicable Buyer or Assignee with a correct,
complete, and accurate executed IRS Form W-8IMY accompanied by one of the
following forms from each of its partners/members that is claiming the portfolio
interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY
accompanied by an IRS Form W-8BEN from each of such partner’s/member’s
beneficial owners that is claiming the portfolio interest exemption. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
such Buyer or Assignee and (2) the undersigned shall have at all times furnished
such Buyer or Assignee with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

 

[NAME OF PARTICIPANT] By:  

 

  Name:   Title: Date:  

 

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

EXHIBIT XI-4

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Assignees That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to Article 3(t) of the Master Repurchase Agreement,
dated as of October 11, 2012 (the “Master Repurchase Agreement”), by and between
JPMorgan Chase Bank, National Association, a national banking association
organized under the laws of the United States, as Buyer, and JLC Warehouse III
LLC, a Delaware limited liability company, as Seller. Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Master Repurchase Agreement.

The undersigned hereby certifies that (i) it is the sole record owner of the
ownership interest in the Transaction(s) in respect of which it is providing
this certificate, (ii) its direct or indirect partners/members are the sole
beneficial owners of such interest, (iii) with respect to such interest, neither
the undersigned nor any of its direct or indirect partners/members is a bank
extending credit pursuant to a loan agreement entered into in the ordinary
course of its trade or business within the meaning of Section 881(c)(3)(A) of
the Code, (iv) none of its direct or indirect partners/members is a ten percent
shareholder of the applicable Seller(s) within the meaning of
Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a controlled foreign corporation related to the applicable
Seller(s) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the applicable Seller(s) with a correct, complete,
and accurate executed IRS Form W-8IMY accompanied by one of the following forms
from each of its partners/members that is claiming the portfolio interest
exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an
IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the applicable Seller(s), and
(2) the undersigned shall have at all times furnished the applicable Seller(s)
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

 

[NAME OF ASSIGNEE] By:  

 

  Name:   Title: Date:  

 

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

EXHIBIT XII

UCC FILING JURISDICTIONS

Delaware

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

EXHIBIT XIII

FORM OF SERVICER NOTICE

[DATE]

[SERVICER], as Special Servicer

[ADDRESS]

Attention:                     

 

  Re: Master Repurchase Agreement, dated as of June 28, 2013 by and between
JPMorgan Chase Bank, National Association (“Buyer”) and Parlex 4 Finance, LLC
(“Seller”) (as amended, restated, supplemented, or otherwise modified and in
effect from time to time, the “Master Repurchase Agreement”); (capitalized terms
used but not otherwise defined herein shall have the meanings assigned thereto
in the Master Repurchase Agreement).

Ladies and Gentlemen:

[SERVICER] (the “Servicer”) is servicing certain mortgage assets sold by Seller
to Buyer pursuant to the Master Repurchase Agreement (the “Purchased Assets”)
pursuant to a servicing agreement dated as of [                    ] between
Servicer and Seller (the “Servicing Agreement”). Servicer is hereby notified
that, pursuant to the Master Repurchase Agreement, Seller has sold the Purchased
Assets to Buyer on a servicing-released basis, and has granted a security
interest to Buyer in the Purchased Assets.

In accordance with Seller’s requirements under the Master Repurchase Agreement,
Seller hereby notifies and instructs Servicer, and Servicer hereby agrees that
Servicer shall (a) segregate all amounts collected on account of the Purchased
Assets, (b) hold the Purchased Assets in trust for Buyer, (c) in accordance with
the terms of the Servicing Agreement, remit all such income to the Depository
Account at [PNC Bank, National Association], ABA # 043000096, Account #
[                    ]. Upon receipt of a notice of Event of Default under the
Master Repurchase Agreement from Buyer, Servicer shall only follow the
instructions of Buyer with respect to the Purchased Assets, and shall deliver to
Buyer any information with respect to the Purchased Assets reasonably requested
by Buyer.

Servicer hereby agrees that, notwithstanding any provision to the contrary in
the Servicing Agreement or in any other agreement which exists between Servicer
and Seller in respect of any Purchased Asset, (i) Servicer is servicing the
Purchased Assets for the joint benefit of Seller and Buyer, (ii) Buyer is
expressly intended to be a third-party beneficiary under the Servicing
Agreement, and (iii) Buyer may, at any time after the occurrence and during the
continuance of an Event of Default under the Master Repurchase Agreement,
terminate the

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

Servicing Agreement and any other such agreement immediately upon the delivery
of written notice thereof to Servicer and/or in any event transfer servicing to
Buyer’s designee, at no cost or expense to Buyer, it being agreed that Seller
will pay any and all fees required to terminate the Servicing Agreement and any
other such agreement and to effectuate the transfer of servicing to the designee
of Buyer in accordance with this Servicer Notice.

Notwithstanding any contrary information or direction which may be delivered to
Servicer by Seller, Servicer may conclusively rely on any information, direction
or notice of an Event of Default under the Master Repurchase Agreement delivered
by Buyer, and, so long as an Event of Default under the Master Repurchase
Agreement exists at such time, Seller shall indemnify and hold Servicer harmless
for any and all claims asserted against Servicer for any actions taken in good
faith by Servicer in connection with the delivery of such information, direction
or notice of any such Event of Default.

No provision of this letter or any Servicing Agreement may be amended,
countermanded or otherwise modified without the prior written consent of Buyer.
Buyer is an intended third party beneficiary of this letter.

Please acknowledge receipt and your agreement to the terms of this instruction
letter by signing in the signature block below and forwarding an executed copy
to Buyer promptly upon receipt. Any notices to Buyer should be delivered to the
following address: Parlex 4 Finance, LLC, c/o Blackstone Mortgage Trust, Inc.,
345 Park Avenue, New York, NY 10154, Attention: Douglas Armer, Telephone:
(212) 583-5000, Email: BXMTJPMRepo@blackstone.com.

 

Very truly yours, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION By:  

 

  Name:   Title:

 

ACKNOWLEDGED AND AGREED TO: PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

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

[SERVICER] By:  

 

  Name:   Title:

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

EXHIBIT XIV

FORM OF RELEASE LETTER

[Date]

JPMorgan Chase Bank, National Association

4 New York Plaza, 20th Floor

New York, New York 10004

Attention: Ms. Nancy S. Alto

 

  Re: Master Repurchase Agreement, dated as of June 28, 2013 by and between
JPMorgan Chase Bank, National Association (“Buyer”) and Parlex 4 Finance, LLC
(“Seller”) (as amended, restated, supplemented, or otherwise modified and in
effect from time to time, the “Master Repurchase Agreement”); (capitalized terms
used but not otherwise defined herein shall have the meanings assigned thereto
in the Master Repurchase Agreement).

Ladies and Gentlemen:

With respect to the Purchased Assets described in the attached Schedule A (the
“Purchased Assets”) (a) we hereby certify to you that the Purchased Assets are
not subject to a lien of any third party, and (b) we hereby release all right,
interest or claim of any kind other than any rights under the Master Repurchase
Agreement with respect to such Purchased Assets, such release to be effective
automatically without further action by any party upon payment by Buyer of the
amount of the Purchase Price contemplated under the Master Repurchase Agreement
(calculated in accordance with the terms thereof) in accordance with the wiring
instructions set forth in the Master Repurchase Agreement.

 

Very truly yours, PARLEX 4 FINANCE, LLC By:  

 

  Name:   Title:

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

Schedule A

[List of Purchased Asset Documents]

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

EXHIBIT XV

FORM OF COVENANT COMPLIANCE CERTIFICATE

[            ] [    ], 201[  ]

JPMorgan Chase Bank, National Association

270 Park Avenue, 7th Floor

New York, New York 10017-2014

Attention: Chuck Y. Lee

This Covenant Compliance Certificate is furnished pursuant to that certain
Master Repurchase Agreement, dated as of June 28, 2013 (as amended, restated,
supplemented, or otherwise modified and in effect from time to time, the “Master
Repurchase Agreement”) by and between JPMorgan Chase Bank, National Association
(“Buyer”) and Parlex 4 Finance, LLC (“Seller”). Unless otherwise defined herein,
capitalized terms used in this Covenant Compliance Certificate have the
respective meanings ascribed thereto in the Master Repurchase Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

  1. I am a duly elected Responsible Officer of Seller.

 

  2. All of the financial statements, calculations and other information set
forth in this Covenant Compliance Certificate, including, without limitation, in
any exhibit or other attachment hereto, are true, complete and correct as of the
date hereof.

 

  3. I have reviewed the terms of the Master Repurchase Agreement and I have
made, or have caused to be made under my supervision, a detailed review of the
transactions and financial condition of Seller during the accounting period
covered by the financial statements attached (or most recently delivered to
Buyer if none are attached).

 

  4. I am not aware of any facts, or pending developments that have caused, or
may in the future cause the Market Value of any Purchased Asset to decline at
any time within the reasonably foreseeable future.

 

  5. As of the date hereof, and since the date of the certificate most recently
delivered pursuant to Article 12(j) of the Master Repurchase Agreement, Seller
has observed or performed all of its covenants and other agreements in all
material respects, and satisfied in all material respects, every condition,
contained in the Master Repurchase Agreement and the related documents to be
observed, performed or satisfied by it.

 

  6.

The examinations described in Paragraph 3 above did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes an Event
of

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

  Default or Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Covenant Compliance
Certificate (including after giving effect to any pending Transactions requested
to be entered into), except as set forth below.

 

  7. As of the date hereof, each of the representations and warranties made by
Seller in the Master Repurchase Agreement are true, correct and complete in all
material respects with the same force and effect as if made on and as of the
date hereof, except as to the extent of any exceptions approved by Buyer in
writing.

 

  8. No condition or event that constitutes a “Termination Event”, “Event of
Default”, “Potential Event of Default” or any similar event by Seller, however
denominated, has occurred or is continuing under any Hedging Transaction.

 

  9. Attached as Exhibit 2 hereto is a description of all interests of
Affiliates of Seller in any Underlying Mortgaged Property (including without
limitation, any lien, encumbrance or other debt or equity position or other
interest in the Underlying Mortgaged Property that is senior or junior to, or
pari passu with, a Purchased Asset in right of payment or priority).

 

  10. Attached as Exhibit 3 hereto are the financial statements required to be
delivered pursuant to Article 12 of the Master Repurchase Agreement (or, if none
are required to be delivered as of the date of this Covenant Compliance
Certificate, the financial statements most recently delivered pursuant to
Article 12 of the Master Repurchase Agreement), which financial statements, to
the best of my knowledge after due inquiry, fairly and accurately present in all
material respects, the financial condition and operations of Seller as of the
date or with respect to the period therein specified, determined in accordance
with the requirements set forth in Article 12.

 

  11. Attached as Exhibit 4 hereto are the calculations demonstrating compliance
with the financial covenants set forth in Article 11 of the Master Repurchase
Agreement.

To the extent that financial statements are being delivered in connection with
this Covenant Compliance Certificate, Seller hereby makes the following
representations and warranties: (i) it is in compliance with all of the terms
and conditions of the Master Repurchase Agreement and (ii) it has no claim or
offset against Buyer under the Transaction Documents.

To the best of my knowledge, Seller has, during the period since the delivery of
the immediately preceding Covenant Compliance Certificate, observed or performed
all of its covenants and other agreements in all material respects, and
satisfied in all material respects every condition, contained in the Master
Repurchase Agreement and the related documents to be observed, performed or
satisfied by it, and I have no knowledge of the occurrence during such period,
or present existence, of any condition or event which constitutes an Event of
Default or Default (including after giving effect to any pending Transactions
requested to be entered into), except as set forth below.

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

Described below are the exceptions, if any, to paragraph 10, listing, in detail,
the nature of the condition or event, the period during which it has existed and
the action which Guarantor or Seller has taken, is taking, or proposes to take
with respect to each such condition or event:

 

 

  

 

 

 

    

The foregoing certifications, together with the financial statements, updates,
reports, materials, calculations and other information set forth in any exhibit
or other attachment hereto, or otherwise covered by this Covenant Compliance
Certificate, are made and delivered this [    ] day of [            ], 201[  ].

 

 

Name: Title:

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

EXHIBIT XVI

FORM OF RE-DIRECTION LETTER

[SELLER LETTERHEAD]

RE-DIRECTION LETTER

AS OF [                    ]

Ladies and Gentlemen:

Please refer to: (a) that certain [Loan Agreement], dated [            ] [    ],
201[  ], by and between [                    ] (the “Borrower”), as borrower,
and [                    ] (the “Lender”), as lender; and (b) all documents
securing or relating to that certain $[        ] loan made by the Lender to the
Borrower on [            ] [    ], 201[  ] (the “Loan”).

You are advised as follows, effective as of the date of this letter.

Assignment of the Loan. The Lender has entered into a Master Repurchase
Agreement, dated as of June 28, 2013 (as the same may be amended and/or restated
from time to time, the “Repurchase Agreement”), with JPMorgan Chase Bank,
National Association (“JPMorgan”), 270 Park Avenue, 10th Floor, New York, New
York 10017, and has assigned its rights and interests in the Loan (and all of
its rights and remedies in respect of the Loan) to JPMorgan, subject to the
terms of the Repurchase Agreement. This assignment shall remain in effect unless
and until JPMorgan has notified Borrower otherwise in writing.

Direction of Funds. In connection with Borrower’s obligations under the Loan,
Lender hereby directs Borrower to disburse, by wire transfer, any and all
payments to be made under or in respect of the Loan to the following account,
for the benefit of JPMorgan:

ABA # 121000248

Account # [                    ]

Attn: [Insert information regarding Depository Account]

Acct Name: “Midland Loan Services, a Division of PNC Bank, National Association
on behalf of Parlex 2 Finance, LLC for the benefit of JPMorgan Chase Bank,
National Association, as Repurchase Agreement Buyer”

This direction shall remain in effect unless and until JPMorgan has notified
Borrower otherwise in writing.

Modifications, Waivers, Etc. No modification, waiver, deferral, or release (in
whole or in part) of any party’s obligations in respect of the Loan, or of any
collateral for any obligations in respect of the Loan, shall be effective
without the prior written consent of JPMorgan. Notwithstanding the foregoing,
neither Seller nor Servicer shall take any action or effect any modification or
amendment to any Purchased Asset without first having given prior notice thereof
to Buyer in each such instance and receiving the express prior written consent
of Buyer, if such notice and consent is required by the Repurchase Agreement.

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

Please acknowledge your acceptance of the terms and directions contained in this
correspondence by executing a counterpart of this correspondence and returning
it to the undersigned.

 

Very truly yours,

Parlex 4 Finance, LLC,

a Delaware limited liability company

By:  

 

Name:  

 

Title:  

 

Date: [            ] [    ], 201[  ]

 

Agreed and accepted this [    ] day of [            ], 201[  ] By:  

 

Name:  

 

Title: