Exhibit 10.1

 

MASTER REPURCHASE AGREEMENT

 

Dated as of July 18, 2012

 

between

 

NSREIT CB LOAN, LLC,

 

as Seller,

 

and

 

CITIBANK, N.A.,

 

as Buyer

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

APPLICABILITY

1

 

 

 

2.

DEFINITIONS

1

 

 

 

3.

INITIATION; CONFIRMATION; TERMINATION; FEES

18

 

 

 

4.

MARGIN MAINTENANCE

23

 

 

 

5.

INCOME PAYMENTS AND PRINCIPAL PAYMENTS; LIQUIDITY RESERVE ACCOUNT

24

 

 

 

6.

SECURITY INTEREST

26

 

 

 

7.

PAYMENT, TRANSFER AND CUSTODY

27

 

 

 

8.

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED LOANS

30

 

 

 

9.

[INTENTIONALLY OMITTED]

31

 

 

 

10.

REPRESENTATIONS

31

 

 

 

11.

NEGATIVE COVENANTS OF SELLER

35

 

 

 

12.

AFFIRMATIVE COVENANTS OF SELLER

36

 

 

 

13.

SINGLE-PURPOSE ENTITY

39

 

 

 

14.

EVENTS OF DEFAULT; REMEDIES

41

 

 

 

15.

SINGLE AGREEMENT

47

 

 

 

16.

RECORDING OF COMMUNICATIONS

47

 

 

 

17.

NOTICES AND OTHER COMMUNICATIONS

47

 

 

 

18.

ENTIRE AGREEMENT; SEVERABILITY

48

 

 

 

19.

NON-ASSIGNABILITY

48

 

 

 

20.

GOVERNING LAW

48

 

 

 

21.

NO WAIVERS, ETC.

49

 

 

 

22.

USE OF EMPLOYEE PLAN ASSETS

49

 

 

 

23.

INTENT

49

 

 

 

24.

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

50

 

 

 

25.

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

51

 

 

 

26.

NO RELIANCE

52

 

 

 

27.

INDEMNITY

52

 

 

 

28.

DUE DILIGENCE

53

 

 

 

29.

SERVICING

54

 

i

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30.

MISCELLANEOUS

55

 

ii

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ANNEXES AND EXHIBITS

 

 

 

 

 

ANNEX I

 

Names and Addresses for Communications between Parties

 

 

 

ANNEX II

 

Sponsor Competitors

 

 

 

EXHIBIT I

 

Form of Confirmation

 

 

 

EXHIBIT II

 

Authorized Representatives of Seller

 

 

 

EXHIBIT III

 

Form of Custodial Delivery

 

 

 

EXHIBIT IV

 

Eligible Loan Due Diligence Checklist

 

 

 

EXHIBIT V

 

Form of Power of Attorney

 

 

 

EXHIBIT VI

 

Representations and Warranties Regarding Each Individual Purchased Loan

 

 

 

EXHIBIT VII

 

Collateral Tape

 

 

 

EXHIBIT VIII

 

Form of Transaction Request

 

 

 

EXHIBIT IX

 

Form of Irrevocable Direction Letter

 

iii

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MASTER REPURCHASE AGREEMENT, dated as of July 18, 2012, by and among NSREIT CB
Loan, LLC, a Delaware limited liability company (“Seller”) and CITIBANK, N.A., a
national banking association (“Buyer”).

 

1.             APPLICABILITY

 

From time to time during the Facility Availability Period, the parties hereto
may enter into transactions in which Seller agrees to transfer to Buyer
Purchased Loans against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Seller such Purchased Loans at a date certain,
against the transfer of funds by Seller.  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.

 

2.             DEFINITIONS

 

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

 

“Acceptable Attorney” means Allen & Overy LLP or any other attorney-at-law
acceptable to Buyer in its reasonable discretion.

 

“Accepted Servicing Practices” shall mean with respect to any Purchased Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service whole mortgage loans (and senior interests in whole mortgage
loans) in the jurisdiction where the related Mortgaged Property is located.

 

“Account Control Agreement”  shall mean that certain Deposit Account Control
Agreement (Liquidity Reserve Account - Access Restricted after Notice), dated as
of the date hereof, among Buyer, Seller and the Depository, relating to the
Liquidity Reserve Account, as the same may be amended, modified and/or restated
from time to time.

 

“Act of Insolvency” shall mean with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or
similar law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of creditors
for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of 1970, which (A) is
consented to or not timely contested by such party, (B) results in the entry of
an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 60 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party’s inability to pay such party’s debts as they become
due.

 

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“Affiliate” shall mean, when used with respect to any specified Person, any
other Person directly or indirectly Controlling, Controlled by, or under common
Control with, such Person.

 

“Agreement” shall mean this Master Repurchase Agreement, dated as of July 18,
2012, by and between NSREIT CB Loan, LLC, and Citibank, N.A., as such agreement
may be modified or supplemented from time to time.

 

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

 

“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.

 

“Anti—Terrorism Laws” shall mean any Requirement of Law relating to money
laundering or terrorism, including Executive Order 13224 signed into law on
September 23, 2001, the regulations promulgated by the Office of Foreign Assets
Control and the Patriot Act.

 

“Applicable Spread” shall mean, with respect to each Transaction:

 

(i)            so long as no Event of Default shall have occurred and be
continuing, the number of  basis points (i.e. 1 basis point equals 0.01%)
determined in accordance with the Pricing Matrix, and set forth in the related
Confirmation; or

 

(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, as applicable, plus 400 basis points (4.00%).

 

“Appraisal” shall mean a FIRREA-compliant appraisal addressed to and reasonably
satisfactory to Buyer of the related Mortgaged Property from a third-party
appraiser.

 

“Asset Management Agreement” shall mean the Advisory Agreement, dated as of
March 17, 2010, by and among Guarantor, NorthStar Real Estate Income Trust
Operating Partnership, LP, Manager and NRFC, as amended by Amendment No. 1 to
Advisory Agreement, dated as of February 24, 2011 and Amendment No. 2 to
Advisory Agreement, dated as of November 8, 2011, or such other agreement
acceptable to Buyer in its reasonable discretion, in each case, as the same
shall be amended, modified, waived, supplemented, extended, replaced or restated
from time to time.

 

“Assignment Documents in Blank” shall mean, for each Purchased Loan, the
(i) allonge in blank, (ii) omnibus assignment in blank, (iii) Assignment of
Mortgage in blank, and (iv) assignment of Assignment of Leases in blank.

 

“Assignment of Leases” shall mean, with respect to any Mortgage, an assignment
of leases thereunder, notice of transfer or equivalent instrument in recordable
form, sufficient under the laws of the jurisdiction wherein the Mortgaged
Property is located to reflect the assignment of leases, subject to the terms,
covenants and provisions of this Agreement.

 

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“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 Mortgaged
Property is located to reflect the assignment and pledge of the Mortgage,
subject to the terms, covenants and provisions of this Agreement.

 

“Attorney’s Bailee Letter” shall mean a letter from an Acceptable Attorney, in
form and substance acceptable to Buyer, wherein such Acceptable Attorney in
possession of a Purchased Loan File (i) acknowledges receipt of such Purchased
Loan File, (ii) confirms that such Acceptable Attorney is holding the same as
bailee of Buyer under such letter and (iii) agrees that such Acceptable Attorney
shall deliver such Purchased Loan File to the Custodian by not later than the
third (3rd) Business Day following the Purchase Date for the related Purchased
Loan.

 

“Average Debt Yield” shall mean, with respect to the Purchased Loans, the
weighted average of the individual Debt Yield (Purchase Price) of each such
Purchased Loan, calculated as a portfolio and weighted according to each
Purchased Loan’s outstanding Purchase Price.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code (11 U.S.C.
§ 101, et seq.), as amended, modified or replaced from time to time.

 

“Blocked Account Agreement” shall mean that certain Deposit Account Control
Agreement (Cash Management Account - Access Restricted after Notice), dated as
of the date hereof, among Buyer, Seller and the Depository, relating to the Cash
Management Account, as the same may be amended, modified and/or restated from
time to time.

 

“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) a
day in which the New York Stock Exchange or banks in the State of New York are
authorized or obligated by law or executive order to be closed.  When used with
respect to a Pricing Rate Determination Date, “Business Day” shall mean any day
other than a Saturday, a Sunday or a day on which banks in London, England are
closed for interbank or foreign exchange transactions.

 

“Buyer” shall mean Citibank, N.A., or any successor or assign.

 

“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, and any and all warrants
or options to purchase any of the foregoing.

 

“Cash Management Account” shall mean a segregated interest bearing account, in
the name of Seller for the benefit of Buyer, established at the Depository and
subject to the Blocked Account Agreement.

 

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“Change of Control” shall mean any of the following events shall have occurred
without the prior approval of Buyer:

 

(i)            prior to an internalization of management by Guarantor, if
Manager is no longer the manager of Guarantor;

 

(ii)           after such time as Guarantor is internally managed, any “person”
or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, as
amended) 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 classes of Equity Interests of Guarantor entitled to
vote generally in the election of directors, of 49% or more;

 

(iii)          Guarantor shall cease to own and control, of record and
beneficially, 51% of the Equity Interests of Operating Partnership;

 

(iv)          Operating Partnership shall cease to own and control, of record
and beneficially, directly or indirectly 100% of the outstanding Equity
Interests of Seller; or

 

(v)           any conveyance, transfer, lease or disposal of all or
substantially all assets of Guarantor or Operating Partnership to any Person or
entity that does not result in the repurchase by Seller of all Purchased Loans.

 

Notwithstanding the foregoing, Buyer shall not (i) be deemed to approve or to
have approved any internalization of management by Guarantor or (ii) have waived
or be deemed to have waived Section 14(a)(xvii), in either case, as a result of
this definition or any other provision herein.

 

“Code”  shall mean the Internal Revenue Code of 1986 and the regulations
promulgated and rulings issued thereunder, in each case as amended, modified or
replaced from time to time.

 

“Collateral” shall have the meaning specified in Section 6 of this Agreement.

 

“Collateral Tape” shall mean, with respect to each Eligible Loan, the tape
containing the fields of information set forth in Exhibit VII attached hereto.

 

“Concentration Limit” shall mean, unless otherwise agreed to in writing by
Buyer, the aggregate outstanding Purchase Price with respect to any single
property type and the outstanding Purchase Price with respect to any single
Purchased Loan shall not exceed, in either case, 50% of the Facility Amount at
any time.

 

“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 or by contract and “controlling” and
“controlled” shall have meanings correlative thereto.

 

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

 

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“Current Appraisal” shall mean an Appraisal dated within six (6) months of the
date of determination which Appraisal shall be approved by Buyer.

 

“Custodial Agreement” shall mean the Custodial Agreement, dated as of July 18,
2012, by and among the Custodian, Seller and Buyer.

 

“Custodial Delivery” shall mean the form executed by Seller in order to deliver
the Purchased Loan Schedule and the Purchased Loan File to Buyer or its designee
(including the Custodian) pursuant to Section 7 hereof, a form of which is
attached hereto as Exhibit III.

 

“Custodian” shall mean Wells Fargo Bank, National Association, or any successor
Custodian appointed by Buyer with the prior written consent of Seller (which
consent shall not be unreasonably withheld or delayed).

 

“Debt Yield (Loan UPB)” shall mean, with respect to each Purchased Loan, the
percentage equivalent of the quotient obtained by dividing (a) the underwritten
net cash flow of the related Mortgaged Property, as determined by Buyer, by
(b) the sum of (x) the unpaid principal balance of such Purchased Loan plus
(y) the unpaid principal balance of any subordinate or mezzanine debt secured
directly or indirectly by the Mortgaged Property.

 

“Debt Yield (Purchase Price)” shall mean, with respect to each Purchased Loan,
the percentage equivalent of the quotient obtained by dividing (a) the
underwritten net cash flow of the related Mortgaged Property, as determined by
Buyer, by (b) the outstanding Purchase Price of such Purchased Loan.

 

“Debt Yield Test” shall mean, with respect to the Purchased Loans, the test that
shall be satisfied at any time the Average Debt Yield shall be 9.00% or greater.

 

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

 

“Defeasance” shall have the meaning specified in Exhibit VI.

 

“Depository” shall mean Wells Fargo Bank, National Association, or any successor
Depository appointed by Buyer with the prior written consent of Seller (which
consent shall not be unreasonably withheld or delayed).

 

“Due Diligence Package” shall mean (i) the Collateral Tape, (ii) the items on
the Eligible Loan Due Diligence Checklist, in each case to the extent applicable
and (iii) such other documents or information as Buyer or its counsel shall
reasonably deem necessary.

 

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

 

“Eligible Loan Due Diligence Checklist” shall mean the due diligence materials
set forth in Exhibit IV attached hereto.

 

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“Eligible Loans” shall mean floating or fixed rate whole mortgage loans (“Whole
Loans”) (or senior interests in such Whole Loans) which are secured by
stabilized or un-stabilized commercial or multi-family properties which have
been approved by Buyer in its sole discretion as a Purchased Loan and which
satisfy all of the following criteria:

 

(a) the Debt Yield (Loan UPB) is equal to or greater than 6.00%,

 

(b) the LTV (Loan UPB) is 75.00% or less,

 

(c) the LTV (Aggregate Loan UPB) is 80.00% or less,

 

(d) the term (inclusive of any extension periods, whether or not such periods
have yet to be exercised) is not longer than five years, and

 

(e) such whole mortgage loan (or senior interest) on the initial date of
inclusion in a Transaction would not cause the Debt Yield Test not to be met.

 

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

 

“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 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.

 

“Equity Interests” shall mean, with respect to any Person, (a) any share,
interest, participation and other equivalent (however denominated) of capital
stock of (or other ownership, equity or profit interests in) such Person,
(b) any warrant, option or other right for the purchase or other acquisition
from such Person of any of the foregoing, (c) any security convertible into or
exchangeable for any of the foregoing, and (d) any other ownership or profit
interest in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such share, warrant,
option, right or other interest is authorized or otherwise existing on any date.

 

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

 

“ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a

 

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member and (ii) solely for purposes of potential liability under
Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien
created under Section 302(f) of ERISA and Section 412(n) of the Code, described
in Section 414(m) or (o) of the Code of which Seller is a member.

 

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

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
modified or replaced from time to time.

 

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

 

“Facility Amount” shall mean $50,000,000.

 

“Facility Availability Period” shall mean the two year period commencing on the
date of this Agreement and ending on July 18, 2014.

 

“Facility Expiration Date” shall mean the last day of the Facility Availability
Period; provided, that the Facility Expiration Date shall be extendable by
Seller for up to three consecutive one year periods, subject to the following:

 

(a) Seller delivers to Buyer a written request of the extension of the Facility
Expiration Date no earlier than ninety (90) nor later than thirty (30) days
before the then current Facility Expiration Date,

 

(b) no Default or Event of Default exists on the date of the request to extend
or on the then current Facility Expiration Date,

 

(c) no Margin Deficit exists that has not been satisfied on the then current
Facility Expiration Date,

 

(d) the Debt Yield Test for all Purchased Loans is satisfied, and

 

(e) Seller shall have paid to Buyer the Extension Fee on or before the then
current Facility Expiration Date.

 

“Fee Agreement” shall mean that certain fee letter agreement, dated as of
July 18, 2012, between Seller and Buyer.

 

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

 

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

 

“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

 

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jurisdiction exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Ground Lease” shall mean a ground lease containing the following terms and
conditions: (a) a remaining term (exclusive of any unexercised extension
options) of thirty (30) years or more from the Purchase Date of the Purchased
Loan; (b) the right of the lessee to mortgage and encumber its interest in the
leased property without the consent of the lessor or with such consent given;
(c) the obligation of the lessor to give the holder of any mortgage lien on such
leased property written notice of any defaults on the part of the lessee and
agreement of such lessor that such lease will not be terminated until such
holder has had a reasonable opportunity to cure or complete foreclosures, and
fails to do so; (d) reasonable transferability of the lessee’s interest under
such lease, including ability to sublease; and (e) such other rights customarily
required by mortgagees making a loan secured by the interest of the holder of
the leasehold estate demised pursuant to a ground lease.

 

“Guarantor” shall mean NorthStar Real Estate Income Trust, Inc., a Maryland
corporation.

 

“Guaranty” shall mean the Limited Guaranty, dated as of the date hereof, from
Guarantor in favor of Buyer.

 

“Hedging Transactions” shall mean, with respect to any or all of the Purchased
Loans, 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, either generally or under specific
contingencies, entered into by Seller with Buyer or an Affiliate of Buyer or one
or more other counterparties reasonably acceptable to Buyer.

 

“Income” shall mean, with respect to any Purchased Loan at any time, the sum of
(x) any principal thereof and all interest, dividends or other distributions
thereon and (y) all net sale proceeds received by Seller in connection with a
sale of such Purchased Loan to a Person other than Buyer.

 

“Indemnified Amounts” and “Indemnified Parties” shall have the meaning specified
in Section 27 of this Agreement.

 

“Independent Director” shall mean a duly appointed manager or member of the
board of directors (or managers) of the relevant entity who shall not have been,
at the time of such appointment or at any time while serving as a director or
manager of the relevant entity and may not have been at any time in the
preceding five (5) years, (a) a direct or indirect legal or beneficial owner in
such entity or any of its Affiliates, (b) a creditor, supplier, employee,
officer, director (other than in its capacity as Independent Director), family
member, manager or contractor of such entity or any of its Affiliates, or (c) a
Person who controls (directly, indirectly or otherwise) such entity or any of
its Affiliates or any creditor, supplier, employee, officer, director, family
member, manager or contractor of such Person or any of its Affiliates.

 

“Insurance Rating Requirements” shall have the meaning specified in Exhibit VI.

 

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“Irrevocable Direction Letter” shall have the meaning specified in Section 5(b).

 

“Junior Interest” shall mean a “B-note” in an “A/B” structure in a commercial
real estate loan.

 

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate
(expressed as a percentage per annum) for deposits in U.S. dollars, for a one
month period, that appears on Reuters Screen LIBOR01 (or the successor thereto)
as of 11:00 a.m., London time, on the related Pricing Rate Determination Date. 
If such rate does not appear on Reuters Screen LIBOR01 as of 11:00 a.m., London
time, on such Pricing Rate Determination Date, Buyer shall request the principal
London office of any four major reference banks in the London interbank market
selected by Buyer to provide such bank’s offered quotation (expressed as a
percentage per annum) to prime banks in the London interbank market for deposits
in U.S. dollars for a one month period as of 11:00 a.m., London time, on such
Pricing Rate Determination Date for amounts of not less than the Repurchase
Price of the applicable Transaction.  If at least two such offered quotations
are so provided, LIBOR shall be the arithmetic mean of such quotations.  If
fewer than two such quotations are so provided, Buyer shall request any three
major banks in New York City selected by Buyer to provide such bank’s rate
(expressed as a percentage per annum) for loans in U.S. dollars to leading
European banks for a one month period as of approximately 11:00 a.m., New York
City time on the applicable Pricing Rate Determination Date for amounts of not
less than the Repurchase Price of such Transaction.  If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates.  LIBOR shall
be determined by Buyer or its agent, which determination shall be conclusive
absent manifest error.

 

“LIBO Rate” shall mean, with respect to any Pricing Rate Period pertaining to a
Transaction, a rate per annum determined for such Pricing Rate Period in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

 

 

LIBOR

 

 

1 – Reserve Requirement

 

 

“Lien” shall mean any mortgage, lien, encumbrance, charge or other security
interest, whether arising under contract, by operation of law, judicial process
or otherwise.

 

“Liquidity Reserve Account” shall mean a segregated interest bearing account, in
the name of Seller for the benefit of Buyer, established at the Depository and
subject to the Account Control Agreement.

 

“LTV (Aggregate Loan UPB)” shall mean, with respect to any Eligible Loan, the
ratio, expressed as a percentage, the numerator of which shall equal the sum of
(x) the unpaid principal balance of such Purchased Loan plus (y) the unpaid
principal balance of any subordinate or mezzanine debt secured directly or
indirectly by the Mortgaged Property and the denominator of which shall equal
the value of the related Mortgaged Property as set forth in a Current Appraisal.

 

“LTV (Loan UPB)” shall mean, with respect to any Purchased Loan, the ratio,
expressed as a percentage, the numerator of which shall equal the unpaid
principal balance of the Purchased

 

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Loan and the denominator of which shall equal the value of the related Mortgaged
Property as set forth in a Current Appraisal.

 

“LTV (Purchase Price) shall mean, with respect to any Purchased Loan, the ratio,
expressed as a percentage, the numerator of which shall equal the outstanding
Purchase Price of the Purchased Loan and the denominator of which shall equal
the value of the related Mortgaged Property as set forth in a Current Appraisal.

 

“Manager” shall mean NS Real Estate Investment Trust Advisor, LLC, a Delaware
limited liability company.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, condition (financial or otherwise) or results of operations (or
prospects) of Seller, Operating Partnership or Guarantor, (b) the ability of
Seller, Operating Partnership or Guarantor to pay and perform its obligations
under any of the Transaction Documents, (c) the legality, validity or
enforceability of any of the Transaction Documents, (d) the rights and remedies
of Buyer under any of the Transaction Documents, or (e) the perfection or
priority of any Lien granted under any Purchased Loan Document.

 

“Margin Amount” shall mean, with respect to any Purchased Loan as of any date of
determination, an amount equal to the product of the applicable Margin
Percentage and the outstanding Purchase Price of such Purchased Loan as of such
date.

 

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

 

“Margin Percentage” shall mean, with respect to any Purchased Loan as of any
date of determination, the reciprocal of the applicable Purchase Price
Percentage.

 

“Market Value” shall mean, with respect to any Purchased Loan, the market value
for such Purchased Loan, as determined by Buyer in its good faith business
judgment on each Business Day in accordance with this definition.  On the
Purchase Date for each Purchased Loan, Buyer shall determine the market value of
such Purchased Loan in its good faith business judgment.  Thereafter, market
value of such Purchased Loan may be adjusted by Buyer only from credit events
with respect to any asset, borrower (including obligors, participants and
sponsors), or market related to such Purchased Loan, but not from price, yield
or spread movements.  In such event, market value may change based upon Buyer’s
determination in its good faith business judgment and consistently applied to
Buyer’s other master repurchase facilities for comparable assets that there has
been a material change in the credit characteristics of any asset, borrower
(including obligors, participants and sponsors), or related market, among other
factors. Notwithstanding the foregoing, as of the date of the third extension
with respect to any Non-Coterminous Purchased Loan, such loan’s market value
thereafter may be adjusted not only because of credit events with respect to any
asset, borrower (including obligors, participants and sponsors), or market
related to such Purchased Loan but also from changes in price, yield or spread
movements related to comparable financial assets as of the date of such third
extension.  The value (positive or negative) of any Hedging Transactions
assigned to Buyer or to which Seller and Buyer are parties in connection with
any such Purchased Loan that is a fixed rate loan shall be included in the
determination of Market Value.  The Market Value for any Purchased

 

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Loan may be deemed by Buyer to be zero in the event any of the following occurs
with respect to such Purchased Loan:  (i) a material breach of a representation
or warranty set forth on Exhibit VI; (ii) Buyer’s good faith determination that
the timely collectability of such Purchased Loan is impaired; or (iii) the
Repurchase Date with respect to such Purchased Loan occurs.

 

“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 in connection with a Purchased Loan.

 

“Mortgaged Property” shall mean the real property securing repayment of the debt
evidenced by a Mortgage Note.

 

“Mortgagee” shall mean the record holder of a Mortgage Note secured by a
Mortgage.

 

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the
related Mortgage.

 

“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 which is covered by Title
IV of ERISA.

 

“Non-Coterminous Purchased Loan” shall mean any Purchased Loan which has a final
maturity date (including any extension periods) after the then current Facility
Expiration Date (including any extension periods).

 

“Non-Recourse Carve Out Guaranty” shall mean the Non-Recourse Carve Out
Guaranty, dated as of the date hereof, from Guarantor to Buyer.

 

“NRFC” shall mean NorthStar Realty Finance Corp., a Delaware corporation.

 

“Office of Foreign Assets Control” shall mean the U.S. Department of the
Treasury’s Office of Foreign Assets Control.

 

“Operating Partnership” shall mean NorthStar Real Estate Income Trust Operating
Partnership, L.P.

 

“Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
amended, modified or replaced from time to time.

 

“Permitted Encumbrances” shall have the meaning specified in Exhibit VI.

 

“Permitted Purchased Loan Modification” shall mean any modification or amendment
of a Purchased Loan which is not a Significant Purchased Loan Modification.

 

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“Person” shall mean an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.

 

“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 specified in Section 22(a) of this
Agreement.

 

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

 

“Pricing Matrix” shall mean the matrix attached to the Fee Agreement which shall
be used to determine the Purchase Price Percentage and the Applicable Spread for
each Purchased Loan.  On the Purchase Date for each Purchased Loan, the Purchase
Price Percentage for such Purchased Loan shall equal the highest Purchase Price
Percentage for which such Purchased Loan is eligible under the Pricing Matrix
based upon its Debt Yield (Loan UPB), Debt Yield (Purchase Price), LTV (Loan
UPB) and LTV (Purchase Price); provided, that notwithstanding the foregoing,
Seller may request that the Purchase Price Percentage for any Purchased Loan
equal a percentage which is lower than the maximum based upon its Debt Yield
(Loan UPB), Debt Yield (Purchase Price), LTV (Loan UPB) and LTV (Purchase
Price).  The Applicable Spread for each Purchased Loan shall equal the number of
basis points set forth under the column heading “Applicable Spread (bps)” which
corresponds to the applicable Purchase Price Percentage for such Purchased Loan
from time to time.  It is understood and agreed that no improvement in the Debt
Yield (Loan UPB), Debt Yield (Purchase Price), LTV (Loan UPB) or LTV (Purchase
Price) after the applicable Purchase Date for a Purchased Loan shall result in
any adjustment to the Applicable Spread for such Purchased Loan.

 

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to
the LIBO Rate for such Pricing Rate Period plus the Applicable Spread for such
Transaction and shall be subject to adjustment and/or conversion as provided in
Sections 3(g) and 3(h) of this Agreement.

 

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

 

“Pricing Rate Period” shall mean, (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

 

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any subsequent Pricing Rate Period, the period commencing on and including such
Remittance Date and ending on and excluding the following Remittance Date;
provided, however, that in no event shall any Pricing Rate Period end subsequent
to the Repurchase Date.

 

“Prime Rate” shall mean the prime rate of U.S. commercial banks as published in
The Wall Street Journal (or, if more than one such rate is published, the
average of such rates).

 

“Principal Payment” shall mean, with respect to any Purchased Loan, any payment
or prepayment of principal received by the Depository in respect thereof.

 

“Purchase Date” shall mean any date on which a Purchased Loan is to be
transferred by Seller to Buyer.

 

“Purchase Price Percentage” shall mean, with respect to each Purchased Loan, the
percentage determined on the related Purchase Date for such Purchased Loan based
upon the procedure set forth in the definition of “Pricing Matrix” and set forth
in the related Confirmation equal to the quotient obtained by dividing the
Purchase Price for such Purchased Loan by the Market Value of such Purchase Loan
as of such date.  Notwithstanding the foregoing, (x) with respect to any
Non-Coterminous Purchased Loan, the Purchase Price Percentage shall be
automatically reduced by 10.00% as of the third extension of the Facility
Expiration Date (e.g. a Purchase Price Percentage of 75.00% will be reduced to
65.00%) and (y) in the event Seller elects to reduce the outstanding Purchase
Price of any Transaction pursuant to Section 3(f) of this Agreement, then as of
the date Seller makes such payment, Seller shall be entitled to a re-calculation
of the Purchase Price Percentage applicable to such Purchased Loan and to the
extent appropriate, a reduction in the corresponding Applicable Spread for such
Purchased Loan based upon the Pricing Matrix.  Upon request of Buyer or Seller,
the parties hereto shall execute amended and restated Confirmations reflecting
the adjustments to Purchase Price Percentage and Applicable Spread described in
clauses (x) and (y) of the preceding sentence.

 

“Purchase Price” shall mean, with respect to any Purchased Loan, (x) as of any
Purchase Date for such Purchased Loan an amount (expressed in dollars) equal to
the product obtained by multiplying (i) the lesser of (x) the Market Value of
such Purchased Loan and (y) the par amount of such Purchased Loan by (ii) the
Purchase Price Percentage and (y) thereafter, such amount referred to in clause
(x) reduced by (a) any amount applied to reduce the Purchase Price pursuant to
Section 3(f), 4(a), 4(b) or 5 of this Agreement.

 

“Purchased Loan File” shall mean the documents specified as the “Purchased Loan
File” in Section 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.

 

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

 

“Purchased Loans” shall mean (i) with respect to any Transaction, the Eligible
Loan sold by Seller to Buyer in such Transaction and (ii) with respect to the
Transactions in general, all Eligible Loans sold by Seller to Buyer.

 

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“Purchased Loan Schedule” shall mean a schedule of Purchased Loans attached to
each Trust Receipt and Custodial Delivery, which may but is not required to,
contain information substantially similar to the Collateral Tape.

 

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

 

“Remittance Date” shall mean the nineteenth (19th) calendar day of each month,
or the next 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 each Purchased Loan, the earlier
of: (x) the Facility Expiration Date, or (y) the maturity date of such Purchased
Loan (subject to extension, if applicable, in accordance with its Purchased Loan
Documents).

 

“Repurchase Price” shall mean, with respect to any Purchased Loan as of any
date, the price at which such Purchased Loan is to be transferred from Buyer to
Seller upon termination of the related Transaction; such price will be
determined in each case as the sum of (a) the outstanding Purchase Price of such
Purchased Loan, (b) the accrued but unpaid Price Differential thereon with
respect to such Purchased Loan as of such date, and (c) all other amounts due
and payable as of such date by Seller to Buyer under this Agreement or any
Transaction Document with respect to such Purchased Loan (including, but not
limited to, accrued and unpaid fees, expenses and indemnity amounts).

 

“Required Liquidity Amount” shall mean the amount set forth in the right hand
column below determined based upon the aggregate outstanding Purchase Price from
time to time set forth in the left hand column below:

 

Outstanding Purchase Prices
($MM)

 

Required Liquidity Amount
($MM)

 

0-15

 

3.75

 

>15-35

 

6.25

 

>35-50

 

7.50

 

 

“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.

 

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“Sanctioned Entity” shall mean (a) a country or a government of a country,
(b) an agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, that (in the case of the preceding
clauses (a), (b), (c) and this clause (d)) is subject to a country sanctions
program administered and enforced by the Office of Foreign Assets Control, or
(e) a Person named on the list of Specially Designated Nationals maintained by
the Office of Foreign Assets Control.

 

“Seller” shall mean NSREIT CB Loan, LLC, a Delaware limited liability company.

 

“Servicer” shall mean Wells Fargo Bank, National Association, or any other
servicer approved by Buyer in its sole discretion.

 

“Servicing Agreement” shall mean the Servicing Agreement, dated as of the date
hereof, by and among Seller, Buyer and Servicer, or any other servicing
agreement entered into by Seller, Buyer and any successor servicer approved by
Buyer for the servicing of Purchased Loans.

 

“Servicing Account” shall mean the segregated account established at the
Servicer, in the name of Buyer, pursuant to the Servicing Agreement.

 

“Servicing Rights” shall mean Seller’s right, title and interest in and to any
and all of the following:  (a) any and all rights to service the related
Purchased Loan; (b) any payments to or monies received by such Seller or any
other Person for servicing such Purchased Loan; (c) any late fees, penalties or
similar payments with respect to such Purchased Loan; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of such Seller or any
other Person thereunder; (e) escrow payments or other similar payments with
respect to such Purchased Loan and any amounts actually collected by such Seller
or any other Person with respect thereto; (f) the right, if any, to appoint a
special servicer or liquidator of such Purchased Loan; and (g) all accounts and
other rights to payment related to the servicing of such Purchased Loan.

 

“Servicing Records” shall have the meaning specified in Section 29(b).

 

“Significant Purchased Loan Modification” means any modification or amendment of
a Purchased Loan which

 

(i)                                     reduces the principal amount of the
Purchased Loan in question other than (1) with respect to a dollar-for-dollar
principal payment or (2) reductions of principal to the extent of deferred,
accrued or capitalized interest added to principal which additional amount was
not taken into account by Buyer in determining the related Purchase Price,

 

(ii)                                  increases the principal amount of a
Purchased Loan other than increases which are derived from accrual or
capitalization of deferred interest which is added to principal or protective
advances,

 

(iii)                               modifies the amount or timing of any
regularly scheduled payments of principal and non-contingent interest of the
Purchased Loan in question,

 

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(iv)                              changes the frequency of scheduled payments of
principal and interest in respect of a Purchased Loan,

 

(v)                                 subordinates the lien priority of the
Purchased Loan in question or the payment priority of the Purchased Loan in
question other than subordinations required under the then existing terms and
conditions of the Purchased Loan in question (provided, however, the foregoing
shall not preclude the execution and delivery of subordination, nondisturbance
and attornment agreements with tenants, subordination to tenant leases,
easements, plats of subdivision and condominium declarations and similar
instruments which in the commercially reasonable judgment of Seller do not
materially adversely affect the rights and interest of the holder of the
Purchased Loan in question),

 

(vi)                              releases any collateral for the Purchased Loan
in question other than releases required under the then existing Purchased Loan
documents or releases in connection with eminent domain or under threat of
eminent domain,

 

(vii)                           waives, amends or modifies any cash management
or reserve account requirements of the Purchased Loan other than changes
required under the then existing Purchased Loan documentation,

 

(viii)                        waives any due-on-sale or due-on-encumbrance
provisions of the Purchased Loan in question other than waivers required to be
given under the then existing Purchased Loan documents, or

 

(ix)                                waives, amends or modifies the underlying
insurance requirements of the Purchased Loan.

 

“Single-Purpose Entity” shall mean a Person, other than an individual, which is
formed or organized solely for the purpose of holding, directly and subject to
this Agreement, the Purchased Loans, does not engage in any business unrelated
to the Purchased Loans and the financing thereof, does not have any assets other
than the Purchased Loans and the financing thereof, or any indebtedness other
than as permitted by this Agreement, has its own separate books and records and
its own accounts, in each case which are separate and apart from the books and
records and accounts of any other Person, and holds itself out as being a
Person, separate and apart from any other Person.

 

“Solvent” shall mean with respect to any Person at any time, having a state of
affairs such that all of the following conditions are met at such time:  (a) the
fair value of the assets and property of such Person is greater than the amount
of such Person’s liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section 101(32) of the Bankruptcy Code, (b) the present fair salable value of
the assets and property of such Person in an orderly liquidation of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured, (c) such Person
is able to realize upon its assets and property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business, (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as

 

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such debts and liabilities mature, and (e) such Person is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person’s assets and property would constitute
unreasonably small capital.

 

“Standard Qualifications” shall have the meaning specified in Exhibit VI.

 

“Subsidiary” shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity (heretofore, now or
hereafter established) of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
of such corporation, partnership, limited liability company or other entity
(without regard to the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person, and
shall include all Persons the accounts of which are consolidated with those of
such Person pursuant to GAAP.

 

“Survey” shall mean a certified ALTA/ACSM (or applicable state standards for the
state in which the Collateral is located) survey of a Mortgaged Property
prepared by a registered independent surveyor or engineer and in form and
content satisfactory to Buyer in its commercially reasonable discretion and the
company issuing the Title Policy for such Mortgaged Property.

 

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

 

“Trading with the Enemy Act” shall mean The Trading with the Enemy Act of the
United States of America (50 U.S.C. App. §§ 1 et seq.), as amended, modified or
replaced from time to time.

 

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

 

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

 

“Transaction Documents” shall mean, collectively, this Agreement, any applicable
Annexes to this Agreement, the Guaranty, the Non-Recourse Carve Out Guaranty,
the Custodial Agreement, the Blocked Account Agreement, the Account Control
Agreement, the Servicing Agreement, all Confirmations executed pursuant to this
Agreement in connection with specific Transactions, any other documents or
instruments relating to any such documents executed by Seller, Operating
Partnership or Guarantor, and any written modifications, extensions, renewals,
restatements, or replacements of any of the foregoing.

 

“Transaction Request” shall mean a request to enter into a Transaction, in the
form of Exhibit VIII attached hereto.

 

“Trust Receipt” shall mean a trust receipt issued by Custodian to Buyer
confirming the Custodian’s possession of certain Purchased Loan Files which 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.

 

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“UCC” shall have the meaning specified in Section 6 of this Agreement.

 

“Zoning Regulations” shall have the meaning specified in Exhibit VI.

 

3.                                      INITIATION; CONFIRMATION; TERMINATION;
FEES

 

(a)                                  Subject to the terms and conditions set
forth in this Agreement (including, without limitation, the “Transaction
Conditions Precedent” specified in Section 3(b) of this Agreement), an agreement
to enter into a Transaction shall be made in writing at the initiation of Seller
as provided below; provided, however, that (i) the aggregate outstanding
Purchase Price at any time for all Transactions shall not exceed the Facility
Amount and (ii) Buyer shall not have any obligation to enter into Transactions
with Seller after the occurrence and during the continuance of a Default or an
Event of Default or after the Facility Availability Period.  Seller may, from
time to time, submit to Buyer a Transaction Request, in the form of Exhibit VIII
attached hereto, for Buyer’s review and approval in order to enter into a
Transaction with respect to any Eligible Loan that Seller proposes to be
included as Collateral under this Agreement.  Upon Buyer’s receipt of a complete
Due Diligence Package, Buyer shall have the right to request, in Buyer’s good
faith business judgment, additional diligence materials and deliveries with
respect to the applicable Eligible Loan, to the extent necessary for Buyer’s
underwriting of such Eligible Loan.  Upon Buyer’s receipt of the Transaction
Request, Due Diligence Package and additional diligence materials, Buyer shall
use commercially reasonable efforts to within ten (10) Business Days and
following receipt of internal credit approval, either (i) notify Seller of the
Purchase Price and the Market Value for the Eligible Loan or (ii) deny Seller’s
request for a Transaction.  Buyer’s failure to respond to Seller within ten
(10) Business Days shall be deemed to be a denial of Seller’s request for a
Transaction, unless Buyer and Seller have agreed otherwise in writing.  Buyer
shall have the right to review all Eligible Loans proposed to be sold to Buyer
in any Transaction and to conduct its own due diligence investigation of such
Eligible Loans as Buyer reasonably determines.  Buyer shall be entitled to make
a determination, in its sole discretion, that it shall or shall not purchase any
or all of the Eligible Loans proposed to be sold to Buyer by Seller.  On the
Purchase Date for the Transaction which shall be on a date mutually agreed upon
by Buyer and Seller following the approval of an Eligible Loan by Buyer, the
Purchased Loan shall be transferred to Buyer against the transfer of the
Purchase Price to an account of Seller.  Notwithstanding anything to the
contrary in this Agreement, Seller shall have the right to revoke its request
for a Transaction at any time up to the Business Day prior to the proposed
Purchase Date for such Transaction which Purchase Date was mutually agreed upon
by Buyer and Seller.

 

(b)                                 Upon agreeing to enter into a Transaction
hereunder, provided each of the Transaction Conditions Precedent shall have been
satisfied (or waived by Buyer), Buyer shall promptly deliver to Seller a written
confirmation in the form of Exhibit I attached hereto of each Transaction (a
“Confirmation”).  Such Confirmation shall describe the Purchased Loans, shall
identify Buyer and Seller, and shall set forth:

 

(i)                                     the Purchase Date,

 

(ii)                                  the Purchase Price Percentage and the
Purchase Price for such Purchased Loan,

 

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(iii)                               the Repurchase Date,

 

(iv)                              the Pricing Rate, and

 

(v)                                 any additional terms or conditions not
inconsistent with this Agreement.

 

With respect to any 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 each subsequent Pricing Rate
Determination Date for the next succeeding Pricing Rate Period 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 and notify Seller of such rate for such period on
such subsequent Pricing Rate Determination Date.  For purposes of this
Section 3(b), the “Transaction Conditions Precedent” shall be deemed to have
been satisfied with respect to any proposed Transaction if:

 

(A)                              no Default or Event of Default under this
Agreement shall have occurred and be continuing as of the Purchase Date for such
proposed Transaction;

 

(B)                                the representations and warranties made by
Seller in any of the Transaction Documents shall be true and correct in all
material respects as of the Purchase Date for such Transaction, before and after
giving effect to such Transaction, as though made on such Purchase Date (except
to the extent such representations and warranties are made as of a particular
date and except with respect to the representations and warranties for each
individual Purchased Loan set forth in Exhibit VI hereto which are made as of
the related Purchase Date only);

 

(C)                                Buyer shall have received from Seller all
corporate and governmental approvals and closing documentation as Buyer may
reasonably request,

 

(D)                               Seller shall have paid all of Buyer’s
out-of-pocket costs and expenses pursuant to Section 30(d) of this Agreement;

 

(E)                                 Buyer shall have (A) determined, in
accordance with the applicable provisions of Section 3(a) of this Agreement,
that the Assets proposed to be sold to Buyer by Seller in such Transaction are
Eligible Loans and (B) obtained internal credit approval for the inclusion of
such Eligible Loan as a Purchased Loan in a Transaction;

 

(F)                                 Buyer shall have determined that no Material
Adverse Change has occurred and is continuing;

 

(G)                                as of the applicable Purchase Date, the Debt
Yield Test is satisfied and the Concentration Limit is not breached or violated
(or, if as of

 

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the applicable Purchase Date, the Debt Yield Test is not satisfied or the
Concentration Limit is breached or violated, then after the proposed Transaction
is consummated the Debt Yield Test is satisfied and the Concentration Limit is
not breached or violated); and

 

(H)                               at least two of Messrs. David Hamamoto, Daniel
Gilbert or Albert Tylis are in the employ of NRFC (unless Buyer in its sole
discretion accepts a replacement at the time two or more of such Persons are not
in the employ of NRFC).

 

(c)                                  Each Confirmation, together with this
Agreement, shall be conclusive evidence of the terms of the
Transaction(s) covered thereby unless specific objection is made no less than
three (3) Business Days after the date thereof.  In the event of any conflict
between the terms of such Confirmation and the terms of this Agreement, the
Confirmation shall prevail.  An objection sent by Seller with respect to any
Confirmation must state specifically that the writing is an objection, must
specify the provision(s) of such Confirmation being objected to by Seller, must
set forth such provision(s) in the manner that Seller believes such provisions
should be stated, and must be sent by Seller no more than five (5) Business Days
after such Confirmation is received by Seller.

 

(d)                                 No Transaction shall be terminable on demand
by Buyer (other than upon the occurrence and during the continuance of an Event
of Default).  Seller shall be entitled to terminate a Transaction on demand, in
whole only, and repurchase the Purchased Loan subject to a Transaction 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 Loan no later
than three (3) Business Days prior to such Early Repurchase Date (or such
shorter period of time as Buyer may agree to); provided, that Seller shall have
the right to revoke such notice at any time up to the Business Day prior to such
Early Repurchase Date,

 

(ii)                                  on such Early Repurchase Date Seller pays
to Buyer an amount equal to the sum of the Repurchase Price for such
Transaction, the amount, if any, payable by Seller in the event any Hedging
Transaction related to such Purchased Loan is being terminated as of such date
and any other amounts payable under this Agreement (including, without
limitation, Section 3(i) of this Agreement) with respect to such Transaction
against transfer to Seller or its agent of such Purchased Loan,

 

(iii)                               on such Early Repurchase Date, following the
payment of the amounts set forth in subclause (ii) above, no Margin Deficit
exists, and

 

(iv)                              no Default exists or will exist as a result of
such early repurchase.

 

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Such notice shall set forth the Early Repurchase Date and shall identify with
particularity the Purchased Loans to be repurchased on such Early Repurchase
Date.

 

(e)                                  On the Repurchase Date, termination of the
applicable Transaction will be effected by transfer to Seller or its agent of
the applicable Purchased Loan and any Income in respect thereof received by
Buyer (and not previously credited or transferred to, or applied to the
obligations of, Seller pursuant to Section 5 of this Agreement) against the
simultaneous transfer to an account of Buyer of the Repurchase Price, the
amount, if any, payable by Seller in the event any Hedging Transaction related
to such Purchased Loan is being terminated as of such date and any other amounts
payable under this Agreement with respect to such Transaction.

 

(f)                                    On any Remittance Date before the
Repurchase Date, Seller shall have the right, from time to time, to transfer
cash to Buyer for the purpose of reducing the Purchase Price of, but not
terminating, a Transaction and without the release of any Collateral and without
any prepayment fee or penalty.

 

(g)                                 If prior to the first day of any Pricing
Rate Period with respect to any Transaction, Buyer shall have determined in the
exercise of its reasonable business judgment (which determination shall be
conclusive and binding upon Seller) that, (i) by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate
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 telecopy or telephonic notice (with written notice to follow the next
Business Day) thereof to Seller as soon as practicable thereafter.  If such
notice is given and provided Buyer shall be making the same determination
generally on all of its similarly situated customers, 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 Prime Rate plus 100 basis points (1.00%) (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 for Buyer to effect
Transactions as contemplated by the Transaction Documents, (a) the commitment of
Buyer hereunder to enter into new Transactions shall forthwith be canceled, and
(b) 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 which 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
Section 3(i) of this Agreement.

 

(i)                                     Upon written demand by Buyer, Seller
shall indemnify Buyer and hold Buyer harmless from any net actual, out-of-pocket
loss or expense (not to include any lost profit or opportunity) (including,
without limitation, reasonable actual attorneys’ fees and disbursements) which
Buyer sustains or incurs as a consequence of (i) default by Seller in
terminating any Transaction after Seller has given a notice in accordance with
Section 3(d) hereof of a termination of a Transaction, (ii) any payment of the
Repurchase Price on any day other than a Remittance Date or the Repurchase Date
(including, without limitation, any such actual, out-of-

 

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pocket loss or expense arising from the reemployment of funds obtained by Buyer
to maintain Transactions hereunder or from customary and reasonable fees payable
to terminate the deposits from which such funds were obtained) or (iii) a
default by Seller in selling Eligible Loans after Seller has notified Buyer of a
proposed Transaction and Buyer has agreed to purchase such Eligible Loans in
accordance with the provisions of this Agreement.  A certificate as to such
actual costs, losses, damages and expenses, setting forth the calculations
therefor shall be submitted promptly by Buyer to Seller.

 

(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 from
any central bank or other Governmental Authority having jurisdiction over Buyer
made subsequent to the date hereof:

 

(i)

shall subject Buyer to any tax of any kind whatsoever with respect to the
Transaction Documents, any Purchased Loan or any Transaction, or change the
basis of taxation of payments to Buyer in respect thereof (except for income
taxes and any changes in the rate of tax on Buyer’s overall net income); or

 

 

(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 which is
not otherwise included in the determination of the LIBO Rate hereunder;

 

and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems, in the exercise of its reasonable business judgment,
to be material, of entering into, continuing or maintaining Transactions or to
reduce in a material manner any amount receivable under the Transaction
Documents in respect thereof; then, in any such case and provided Buyer imposes
such additional costs generally on all of its similarly situated customers,
Seller shall promptly pay Buyer any additional amounts necessary to compensate
Buyer for such increased cost or reduced amount receivable.  If Buyer becomes
entitled to claim any additional amounts pursuant to this Section 3(j), it shall
notify Seller in writing of the event by reason of which it has become so
entitled.  Such notification as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller.  This
covenant shall survive the termination of this Agreement and the repurchase by
Seller of any or all of the Purchased Loans.

 

(k)                                  If Buyer shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by Buyer or any
corporation controlling Buyer with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof has the effect of reducing the rate
of return on Buyer’s or such corporation’s capital as a consequence of its
obligations hereunder to a level below that which Buyer or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration Buyer’s or such corporation’s policies with respect to capital
adequacy) by an amount deemed by Buyer, in the exercise of its reasonable
business

 

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judgment, to be material, then from time to time, after submission by Buyer to
Seller of a written request therefor, and provided Buyer imposes such additional
costs generally on all of its similarly situated customers, Seller shall pay to
Buyer such additional amount or amounts as will compensate Buyer for such
reduction.  Such notification as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller.  This
covenant shall survive the termination of this Agreement and the repurchase by
Seller of any or all of the Purchased Loans.

 

4.                                      MARGIN MAINTENANCE

 

(a)                                  If, at any time, the aggregate Market Value
of the Purchased Loans shall be less than the sum of the Margin Amounts
calculated individually with respect to each Purchased Loan (a “Margin
Deficit”), then Buyer may by notice to Seller in writing (including therein a
description of the Market Value calculation for each Purchased Loan) require
Seller to cure such Margin Deficit by either:

 

(i)

transferring to Buyer additional cash collateral in an amount (or an additional
Eligible Loan with a Market Value) equal to or greater than the sum of the
products, calculated individually for each Purchased Loan, of (x) the difference
between the Margin Amount with respect to such Purchased Loan and the Market
Value of such Purchased Loan multiplied by (y) the applicable Purchase Price
Percentage for such Purchased Loan,

 

 

(ii)

reducing the outstanding Purchase Price of one or more Purchased Loans, as
applicable, such that the aggregate Market Value of the Purchased Loans is equal
to the sum of the Margin Amounts of the Purchased Loans, or

 

 

(iii)

doing an early repurchase on an Early Repurchase Date pursuant to
Section 3(d) of this Agreement and paying the related Repurchase Price in order
to cure such Margin Deficit.

 

Any cash transferred to Buyer pursuant to clause (ii) of this Section 4(a) of
this Agreement with respect to any Purchased Loan shall be applied to reduce the
Purchase Price for each Purchased Loan on a dollar-for-dollar basis for which
there was a Margin Deficit.

 

(b)                                 If, at any time, Buyer notifies Seller in
writing that the Debt Yield Test is not satisfied (including therein a
calculation of the Debt Yield (Purchase Price) for each Purchased Loan), then
Buyer may, by notice to Seller in writing, require Seller to cure such
non-satisfaction of the Debt Yield Test by reducing the outstanding Purchase
Price of the Purchased Loans in the necessary amount.  Any cash transferred to
Buyer pursuant to this Section 4(b) shall be applied to reduce the Purchase
Price of the Purchased Loans as designated by Seller with respect to any
non-satisfaction of the Debt Yield Test.

 

(c)                                  If any notice is given by Buyer under
Section 4(a) of this Agreement on any Business Day, Seller shall transfer cash
(or additional collateral) as provided in Section 4(a) by no later than the
close of business on the Business Day following the Business Day on which such
notice is given.  The failure of Buyer, on any one or more occasions, to
exercise its rights

 

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under Section 4(a) of this Agreement 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.  Buyer and Seller agree that any failure or delay by Buyer
to exercise its rights under Section 4(a) of this Agreement shall not limit such
party’s rights under this Agreement or otherwise existing by law or in any way
create additional rights for such party.

 

(d)                                 If any notice is given by Buyer under
Section 4(b) of this Agreement on any Business Day, Seller shall transfer cash
as provided in Section 4(b) by no later than the close of business on the second
(2nd) Business Day following the Business Day on which such notice is given,
provided, however, that if the non-satisfaction of the Debt Yield Test is caused
through no action of Seller (e.g., the Debt Yield Test failure is triggered by a
Principal Payment on a Purchased Loan or a decrease in the net cash flow of the
underlying Mortgaged Property), Seller shall have until the close of business on
the thirtieth (30th) day following the Business Day on which such notice is
given (or if such thirtieth day is not a Business Day, the next succeeding
Business Day), or such other later date as Buyer may agree in its sole
discretion, to transfer cash as provided in Section 4(b) or transfer to Buyer
another Eligible Loan, unless the Average Debt Yield is less than 8.5% in which
event this proviso shall not be of any force or effect.  The failure of Buyer,
on any one or more occasions, to exercise its rights under 4(b) of this
Agreement 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. 
Buyer and Seller agree that any failure or delay by Buyer to exercise its rights
under Section 4(b) of this Agreement shall not limit such party’s rights under
this Agreement or otherwise existing by law or in any way create additional
rights for such party.

 

5.                                      INCOME PAYMENTS AND PRINCIPAL PAYMENTS;
LIQUIDITY RESERVE ACCOUNT

 

(a)                                  The Servicing Account shall be established
at the Servicer.  The Cash Management Account shall be established at the
Depository concurrently with the execution and delivery of this Agreement by
Seller and Buyer.  Buyer shall have sole dominion and control over the Servicing
Account (subject to the terms of the Servicing Agreement) and the Cash
Management Account subject to the terms of this Agreement.  All Income in
respect of the Purchased Loans and any payments in respect of associated Hedging
Transactions, as well as any interest received from the reinvestment of such
Income, shall be deposited directly into the Servicing Account, shall remain on
deposit therein in accordance with the Servicing Agreement until transferred
from the Servicing Account to the Cash Management Account, and upon such
transfer, shall be remitted by the Depository in accordance with the applicable
provisions of Sections 5(d), 5(e), 5(f) and 14(b)(iii) of this Agreement.

 

(b)                                 With respect to each Purchased Loan, Seller
shall deliver or cause to be delivered to each Mortgagor or issuer of a
participation under a Purchased Loan an irrevocable direction letter (the
“Irrevocable Direction Letter”) (which shall not be changed without the prior
written approval of Buyer) in the form attached as Exhibit IX to this Agreement
instructing the Mortgagor or issuer of a participation to pay all amounts
payable under the related Purchased Loan to the Servicing Account and shall
provide to Buyer proof of such delivery.  If a Mortgagor or issuer of a
participation forwards any Income with respect to a Purchased Loan to Seller
rather than directly to the Servicing Account, Seller shall (i) deliver an
additional Irrevocable Direction Letter to the Mortgagor or issuer of a
participation and make other commercially reasonable

 

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efforts to cause such Mortgagor or issuer of a participation to forward such
amounts directly to the Servicing Account and (ii) deposit in the Servicing
Account any such amounts within one Business Day of Seller’s receipt thereof.

 

(c)                                  On each Remittance Date, Seller shall pay
to Buyer an amount equal to the Price Differential which has accrued during the
related Pricing Rate Period for each Transaction to the extent not previously
paid to Buyer.  Notwithstanding anything in this Agreement to the contrary, in
the event and to the extent on any Remittance Date the amount of Price
Differential to be paid pursuant to the preceding sentence would equal less than
an annual rate equal to the LIBO Rate for the applicable Pricing Rate Period
plus two hundred twenty five basis points (2.25%), calculated on an aggregate
basis for all Transactions and determined on a weighted average basis based upon
the outstanding Purchase Price of each individual Transaction, then on such
Remittance Date Seller shall pay to Buyer an additional amount equal to the
positive difference between (x) the amount which would have accrued during such
Pricing Rate Period for all Transactions to the extent the Pricing Rate was
deemed equal to the LIBO Rate for the applicable Pricing Rate Period plus two
hundred twenty five basis points (2.25%) and (y) the amount of Price
Differential actually accrued for such Pricing Rate Period pursuant to the
immediately preceding sentence.

 

(d)                                 So long as no Event of Default shall have
occurred and be continuing, all Income received by the Depository in respect of
the Purchased Loans and the associated Hedging Transactions (other than
Principal Payments and net sale proceeds) and any deposits to reserve accounts
made pursuant to the terms of the Purchased Loan Documents during each
Collection Period shall be remitted by the Depository, pursuant to the
withdrawal instructions of Seller, on the next Business Day to the account of
Seller specified in Seller’s withdrawal instructions.

 

(e)                                  So long as no Event of Default shall have
occurred and be continuing, (i) all partial Principal Payments in respect of
each Purchased Loan (whether scheduled or unscheduled) received by the
Depository shall be paid, pursuant to the withdrawal instructions of Seller that
have been approved by Buyer after Buyer and Seller have reconciled the amount of
any partial Principal Payment, to Buyer either (x) with respect to any such
partial Principal Payment equal to $500,000 or more, on the next Business Day or
(y) with respect to any such partial Principal Payment less than $500,000, on
the next Remittance Date and, in each instance, applied toward the reduction of
the Purchase Price of such Purchased Loan to the extent necessary to cause the
outstanding Purchase Price with respect to such Purchased Loan to equal the
product of the related Market Value and the applicable Purchase Price
Percentage.  So long as no Event of Default shall have occurred and be
continuing, any Principal Payment in respect of each Purchased Loan in full
(whether scheduled or unscheduled) received by the Depository shall be paid,
pursuant to the withdrawal instructions of Seller that have been approved by
Buyer after Buyer and Seller have reconciled the amount of any such Principal
Payment, to Buyer on the next Remittance Date first in the amount necessary to
reduce the Purchase Price of such Purchased Loan to zero and then to the extent
necessary to cause the Purchase Price with respect to each other Purchased Loan
to equal the product of the related Market Value and the applicable Purchase
Price Percentage.  Any Principal Payments received by the Depository and not
paid to Buyer pursuant to the preceding two sentences on each Remittance Date
shall be remitted to Seller.

 

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(f)                                    If an Event of Default shall have
occurred and be continuing, all Income received by the Depository in respect of
the Purchased Loans and the associated Hedging Transactions shall be applied,
upon the direction and instruction of Buyer, by the Depository on the Business
Day next following the Business Day on which such funds are deposited in the
Cash Management Account as follows:

 

(i)

first, to the Depository and Custodian an amount equal to the depository and
custodial fees due and payable;

 

 

(ii)

second, to Buyer an amount equal to its out-of-pocket costs and expenses and any
other amounts due and payable under this Agreement;

 

 

(iii)

third, to Buyer an amount equal to the Price Differential which has accrued and
is outstanding in respect of all of the Purchased Loans as of such Business Day
(together with any additional amounts payable pursuant to the second sentence of
Section 5(c) of this Agreement);

 

 

(iv)

fourth, to make a payment to Buyer in reduction of the outstanding Purchase
Price of the Purchased Loans, such payment to be allocated amongst the Purchased
Loans as determined by Buyer in its sole discretion, until the outstanding
Purchase Price for all of the Purchased Loans has been reduced to zero;

 

 

(v)

fifth, to pay, the amount, if any, payable by Seller in the event any Hedging
Transaction related to such Purchased Loan is being terminated as of such date;
and

 

 

(vi)

sixth, the surplus, if any, to whoever may be lawfully entitled to receive such
surplus.

 

(g)                                 On or before the date of this Agreement,
Seller shall establish the Liquidity Reserve Account at the Depository.  The
Liquidity Reserve Account shall be subject to the Account Control Agreement.  On
the date of this Agreement, Seller shall deposit into the Liquidity Reserve
Account an amount in the form of unrestricted cash equal to the Required
Liquidity Amount, if any.  At all times, Seller shall be obligated to maintain
on deposit in the Liquidity Reserve Account an amount not less than the Required
Liquidity Amount.  Upon the occurrence of an Event of Default, Buyer may, in its
discretion, apply the funds on deposit in the Liquidity Reserve Account to the
aggregate outstanding Repurchase Price in accordance with Section 5(f).

 

(h)                                 Buyer acknowledges that the partial
Principal Payments it receives in accordance with this Article 5 may be in
connection with partial releases of collateral in accordance with the Purchased
Loan Documents.

 

6.                                      SECURITY INTEREST

 

Buyer and Seller intend that all Transactions hereunder be sales to Buyer of the
Purchased Loans and not loans from Buyer to Seller secured by the Purchased
Loans.  However,

 

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in the event any such Transaction is deemed to be a loan, Seller hereby pledges
all of its right, title, and interest in, to and under and grants a first
priority lien on, and security interest in, all of the following property,
whether now owned or hereafter acquired, now existing or hereafter created and
wherever located (collectively, the “Collateral”) to Buyer to secure the payment
and performance of all other amounts or obligations owing to Buyer pursuant to
this Agreement and the related documents described herein:

 

(a)                                  the Purchased Loans, the Servicing Rights,
Servicing Agreements, Servicing Records, insurance relating to the Purchased
Loans, and collection and escrow accounts relating to the Purchased Loans;

 

(b)                                 the Hedging Transactions entered into
pursuant to this Agreement;

 

(c)                                  the Cash Management Account, the Liquidity
Reserve Account and all financial assets (including, without limitation, all
security entitlements with respect to all financial assets) from time to time on
deposit in the Cash Management Account and the Liquidity Reserve Account;

 

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

 

(e)                                  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.

 

Buyer’s security interest in the Collateral shall terminate only upon
termination of Seller’s obligations under this Agreement and the documents
delivered in connection herewith and therewith.  Upon such termination, Buyer
shall deliver to Seller such UCC termination statements and other release
documents as may be commercially reasonable and to return the Purchased Loans to
Seller.  For purposes of the grant of the security interest pursuant to this
Section 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, shall cause to be filed
in such locations as may be reasonably necessary to perfect and maintain
perfection and 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 completion 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).

 

7.                                      PAYMENT, TRANSFER AND CUSTODY

 

(a)                                  On the Purchase Date for each Transaction,
ownership of the Purchased Loans shall be transferred to Buyer or its designee
(including the Custodian) against the simultaneous transfer of the Purchase
Price to an account of Seller specified in the Blocked Account Agreement
relating to such Transaction.

 

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(b)                                 On or before each Purchase Date, Seller
shall deliver or cause to be delivered to Buyer or its designee the Custodial
Delivery in the form attached hereto as Exhibit III; provided, that
notwithstanding the foregoing, upon request of Seller, Buyer in its sole
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 to deliver to Buyer and the Custodian an
Attorney’s Bailee Letter on or prior to such Purchase Date.  In connection with
each sale, transfer, conveyance and assignment of a Purchased Loan, on or prior
to the Purchase Date with respect to such Purchased Loan, Seller shall deliver
or cause to be delivered and released the following documents (collectively, the
“Purchased Loan File”) pertaining to such Purchased Loan to the Custodian on or
prior to the Purchase Date with respect to such Purchased Loan (or, pursuant to
the proviso in the immediately preceding sentence, by not later than the third
(3rd) Business Day after the related Purchase Date):

 

With respect to each Purchased Loan that is a whole mortgage loan, to the extent
applicable:

 

(i)

The original Mortgage Note (or senior Mortgage Note in an “A/B” structure)
bearing all intervening endorsements.

 

 

(ii)

An original or copy of any loan agreement and any guarantee executed in
connection with the Mortgage Note.

 

 

(iii)

An original or copy of the Mortgage with evidence of recordation, or submission
for recordation, from the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.

 

 

(iv)

Originals or copies of all assumption, modification, consolidation or extension
agreements with evidence of recordation, or submission for recordation, from the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.

 

 

(v)

An original of the Assignment Documents in Blank.

 

 

(vi)

Originals or copies of all intervening assignments of mortgage with evidence of
recordation, or submission for recordation, from the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is located.

 

 

(vii)

An original or copy of the attorney’s opinion of title and abstract of title or
the original mortgagee title insurance policy, or if the original mortgagee
title insurance policy has not been issued, the irrevocable marked commitment to
issue the same (or irrevocable signed proforma policy).

 

 

(viii)

An original or copy of any security agreement, chattel mortgage or equivalent
document executed in connection with the Purchased Loan.

 

 

(ix)

An original or copy of the assignment of leases and rents, if any, with evidence
of recordation, or submission for recordation, from the

 

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appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.

 

 

(x)

Originals or copies of all intervening assignments of assignment of leases and
rents, if any, or copies thereof, with evidence of recordation, or submission
for recordation, from the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.

 

 

(xi)

A copy of the UCC financing statements and all necessary UCC continuation
statements with evidence of filing or submission for filing thereon, and UCC
assignments prepared by Seller in blank, which UCC assignments shall be in form
and substance acceptable for filing.

 

 

(xii)

An environmental indemnity agreement (if any).

 

 

(xiii)

A disbursement letter from the Mortgagor to the original mortgagee (if any).

 

 

(xiv)

Mortgagor’s certificate or title affidavit (if any).

 

 

(xv)

A survey of the Mortgaged Property (if any) as accepted by the title company for
issuance of the Title Policy.

 

 

(xvi)

A copy of the Mortgagor’s opinion of counsel.

 

 

(xvii)

An assignment of permits, contracts and agreements (if any).

 

With respect to each Purchased Loan which is a senior interest in a whole
mortgage loan:

 

(i)

the original or a copy of all of the documents described above with respect to a
Purchased Loan which is a whole mortgage loan;

 

 

(ii)

if applicable, an original participation certificate bearing all intervening
endorsements, endorsed “Pay to the order of              without recourse” and
signed in the name of the Last Endorsee by an authorized Person;

 

 

(iii)

an original or copy of any participation agreement and an original or copy of
any intercreditor agreement, co—lender agreement and/or servicing agreement
executed in connection with the Purchased Loan; and

 

 

(iv)

the omnibus assignment of Purchased Loan sufficient to transfer to Buyer all of
Seller’s rights, title and interest in and to the Purchased Loan.

 

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 Loan approved in accordance with the
terms of this Agreement, 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 which have been delivered or are being

 

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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 Loans
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 and record the Assignment of Mortgage, (ii) complete
the endorsement of the Mortgage Note and (iii) after the occurrence and during
the continuance of an Event of Default, take such other steps as may be
reasonably necessary or desirable to enforce Buyer’s rights against such
Purchased Loans and the related Purchased Loan Files and the Servicing Records. 
Buyer shall deposit the Purchased Loan Files representing the Purchased Loans,
or direct that the Purchased Loan Files be deposited directly, with the
Custodian.  The Purchased Loan Files shall be maintained in accordance with the
Custodial Agreement.  Any Purchased Loan Files not delivered to Buyer or its
designee (including the Custodian) are and shall be held in trust by Seller or
its designee for the benefit of Buyer as the owner thereof.  Seller or its
designee shall maintain a copy of the Purchased Loan File and the originals of
the Purchased Loan File not delivered to Buyer or its designee.  The possession
of the Purchased Loan File by Seller or its designee is at the will of Buyer for
the sole purpose of servicing the related Purchased Loan, and such retention and
possession by Seller or its designee is in a custodial capacity only.  Seller or
its designee (including the Custodian) shall release its custody of the
Purchased Loan File only in accordance with written instructions from Buyer,
unless such release is required as incidental to the servicing of the Purchased
Loans, is in connection with a repurchase of any Purchased Loan by Seller or as
otherwise required by law.

 

(c)                                  Unless an Event of Default shall have
occurred and be continuing, subject to Sections 11(f) and 29, all voting and
corporate rights with respect to the Purchased Loans shall be exercised in
accordance with Seller’s written instructions; provided, however, that no such
instructions with respect to any vote or corporate right shall be exercised in a
manner which is reasonably likely to, in Buyer’s good faith business judgment,
be inconsistent with or result in any violation of any provision of the
Transaction Documents or any Requirement of Law.  Upon the occurrence and during
the continuation of an Event of Default, Buyer shall be entitled to exercise all
voting and corporate rights with respect to the Purchased Loans without regard
to Seller’s instructions.

 

8.                                      SALE, TRANSFER, HYPOTHECATION OR PLEDGE
OF PURCHASED LOANS

 

(a)                                  Title to all Purchased Loans shall pass to
Buyer on the applicable Purchase Date, and Buyer shall have free and
unrestricted use of all Purchased Loans, 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 Loans
or otherwise selling, transferring, pledging, repledging, hypothecating, or
rehypothecating the Purchased Loans, but no such transaction shall relieve Buyer
of its obligations to transfer the Purchased Loans to Seller pursuant to
Section 3 of this Agreement or of Buyer’s obligation to credit or pay Income to,
or apply Income to the obligations of, Seller pursuant to Section 5 hereof.

 

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(b)           Nothing contained in this Agreement or any other Transaction
Document shall obligate Buyer to segregate any Purchased Loans delivered to
Buyer by Seller.  Notwithstanding anything to the contrary in this Agreement or
any other Transaction Document, no Purchased Loan shall remain in the custody of
Seller or an Affiliate of Seller.

 

9.                                      [INTENTIONALLY OMITTED]

 

10.                               REPRESENTATIONS

 

(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 and (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.

 

(b)           In addition to the representations and warranties in subsection
(a) above, Seller represents and warrants to Buyer that as of the Purchase Date
for the purchase of any Purchased Loans by Buyer from Seller and any Transaction
thereunder and as of the date of this Agreement and at all times while this
Agreement and any Transaction thereunder is in full force and effect:

 

(i)            Organization.  Seller is duly formed, validly existing and in
good standing under the laws and regulations of the state of Seller’s formation
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.  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

 

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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 or provisions of
(i) the organizational documents of Seller, (ii) 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, (iii) any judgment or
order, writ, injunction, decree or demand of any court applicable to Seller, or
(iv) any applicable Requirement of Law, in the case of clauses (ii)-(iv) above,
to the extent that such conflict or breach would have a Material Adverse
Effect.  Seller has all necessary licenses, permits and other consents from
Governmental Authorities necessary to acquire, own and sell the Purchased Loans
and for the performance of its obligations under the Transaction Documents.

 

(iv)          Litigation; Requirements of Law.  Except as disclosed in writing
to Buyer, there is no action, suit, proceeding, investigation, or arbitration
pending or, to the best knowledge of Seller, threatened against Seller or any of
its assets, nor is there any action, suit, proceeding, investigation, or
arbitration pending or, to the best knowledge of Seller, threatened against
Seller which is reasonably likely to have a Material Adverse Effect.  Seller is
in compliance in all material respects with all Requirements of Law.  Seller is
not in default in any material respect with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any arbitrator or Governmental
Authority.

 

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

 

(vi)          Good Title to Purchased Loans.  Immediately prior to the purchase
of any Purchased Loans by Buyer from Seller, such Purchased Loans are free and
clear of any lien, encumbrance or impediment to transfer (including any “adverse
claim” as defined in Section 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 Loans to Buyer and, upon transfer of such
Purchased Loans to Buyer, Buyer shall be the owner of such Purchased Loans free
of any adverse claim, subject to the rights of Seller pursuant to the terms of
this Agreement.  In the event the related Transaction is recharacterized as a
secured financing of the Purchased Loans, 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

 

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and under the Collateral and Buyer shall have a valid, perfected first priority
security interest in the Purchased Loans.

 

(vii)         No Default.  No Default or Event of Default exists under or with
respect to the Transaction Documents.

 

(viii)        Representations and Warranties Regarding Purchased Loans; Delivery
of Purchased Loan File.  Seller represents and warrants to Buyer that each
Purchased Loan sold in a Transaction hereunder, as of each Purchase Date for a
Transaction conforms to the applicable representations and warranties set forth
in Exhibit VI attached hereto in all material respects, except as disclosed to
Buyer in writing.  With respect to each Purchased Loan, the Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under this Agreement and the Custodial Agreement for such Purchased
Loan have been delivered to Buyer or the Custodian on its behalf (or shall be
delivered in accordance with the time periods set forth herein).

 

(ix)          Adequate Capitalization; No Fraudulent Transfer.  Seller has
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations. 
Seller is generally able to pay, and 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 does not
intend to, and does not believe that it will, incur debts beyond its ability to
pay such debts as they mature, taking into account the timing of and amounts of
cash anticipated to be received by it and the timing of the amounts of cash
anticipated to be payable on or in respect of its debt.  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)            Consents.  No consent, approval or other action of, or filing by
Seller with, any Governmental Authority or any other Person is required to
authorize, or is otherwise required in connection with, the execution, delivery
and performance of any of the Transaction Documents (other than consents,
approvals and filings that have been obtained or made, as applicable).

 

(xi)           Members.  Seller does not have any members other than the
Operating Partnership.

 

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

 

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(xiii)        No Encumbrances.  Except to the extent expressly set forth in this
Agreement, there are (i) no outstanding rights, options, warrants or agreements
on the part of Seller for a purchase, sale or issuance, in connection with the
Purchased Loans, (ii) no agreements on the part of Seller to issue, sell or
distribute the Purchased Loans, and (iii) no obligations on the part of Seller
(contingent or otherwise) to purchase, redeem or otherwise acquire any
securities or any interest therein or to pay any dividend or make any
distribution in respect of the Purchased Loans.

 

(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, Operating Partnership and Guarantor have filed or
caused to be filed all tax returns which would be delinquent if they had not
been filed on or before the date hereof and have paid all taxes shown to be due
and payable on or before the date hereof on such returns or on any assessments
made against it or any of its respective property and all other taxes, fees or
other charges imposed on it and any of its respective assets by any Governmental
Authority except for any such taxes as are being appropriately contested in good
faith by appropriate proceedings diligently conducted and with respect to which
adequate reserves have been provided in accordance with GAAP; no tax liens have
been filed against any of its or its respective assets and no claims are being
asserted with respect to any such taxes, fees or other charges.

 

(xvi)        ERISA.  Seller does not have any Plans or any ERISA Affiliates and
makes no contributions to any Plans or any Multiemployer Plans.

 

(xvii)       Judgments/Bankruptcy.  Except as disclosed in writing to Buyer,
there are no judgments against Seller, Operating Partnership or the Guarantor
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,
Operating Partnership or Guarantor.

 

(xviii)      Full and Accurate Disclosure.  No information contained in the
Transaction Documents, or any written statement furnished by Seller, Operating
Partnership or Guarantor 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.

 

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(xix)        Financial Information.  All financial data concerning Seller,
Operating Partnership and Guarantor that has been delivered by or on behalf of
Seller to Buyer is true, complete and correct in all material respects and,
other than the financial models and projections with respect to which GAAP is
inapplicable, has been prepared in accordance with GAAP.  To the actual
knowledge of Seller, all financial data concerning the Purchased Loans that has
been delivered by or on behalf of Seller to Buyer is true, complete and correct
in all material respects. 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, Operating Partnership and Guarantor or in the operations of
Seller, Operating Partnership and Guarantor or, to the actual knowledge of
Seller, the financial position of the Purchased Loans, which change is
reasonably likely to have in a Material Adverse Effect.

 

(xx)         Notice Address; Jurisdiction of Organization.  On the date of this
Agreement, Seller’s address for notices is located at c/o NorthStar Realty
Finance Corp., 399 Park Avenue, 18th Floor, New York, New York 10022.  Seller’s
jurisdiction of organization is Delaware.  The location where Seller keeps its
books and records, including all computer tapes and records relating to the
Collateral, is its notice address.

 

(xxi)        Sanctioned Entity.  Neither Seller nor any Affiliate of Seller
(a) is an “enemy” or an “ally of the enemy” as defined in the Trading with the
Enemy Act, (b) is in violation of any Anti-Terrorism Laws, (c) is a blocked
person described in Section 1 of Executive Order 13224 or to its knowledge
engages in any dealings or transactions or is otherwise associated with any such
blocked person, (d) is in violation of any country or list based economic and
trade sanction administered and enforced by the Office of Foreign Assets
Control, (e) is a Sanctioned Entity, (f) has more than 10% of its assets located
in Sanctioned Entities, or (g) derives more than 10% of its operating income
from investments in or transactions with Sanctioned Entities.  The proceeds of
any Transaction have not been and will not be used to fund any operations in,
finance any investments or activities in or make any payments to a Sanctioned
Entity.

 

11.                               NEGATIVE COVENANTS OF SELLER

 

On and as of the date hereof 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)           take any action which would directly or indirectly impair or
adversely affect Buyer’s title to the Purchased Loans;

 

(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 Loans (or any of them) to any Person other than Buyer,
or engage in repurchase transactions or similar transactions with respect to the
Purchased Loans (or any of them) with any Person other than

 

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Buyer, unless and until such Purchased Loans are repurchased by Seller in
accordance with this Agreement;

 

(c)           create, incur or permit to exist any lien, encumbrance or security
interest in or on the Purchased Loans, except as described in Section 6 of this
Agreement;

 

(d)           create, incur or permit to exist any lien, encumbrance or security
interest in or on any of the other Collateral subject to the security interest
granted by Seller pursuant to Section 6 of this Agreement;

 

(e)           modify or terminate any of the organizational documents of Seller
(except Buyer shall not unreasonably withhold or delay any request for a consent
to such modification to the organizational documents (excluding the special
purpose entity provisions));

 

(f)            consent or assent to any amendment or supplement to, or
termination of, any note, loan agreement, mortgage or guaranty relating to the
Purchased Loans or other material agreement or instrument relating to the
Purchased Loans (other than Permitted Purchased Loan Modifications), unless and
until such Purchased Loans are repurchased by Seller in accordance with this
Agreement (except Buyer shall not unreasonably withhold or delay any request for
a consent to a Significant Purchased Loan Modification);

 

(g)           admit any additional members in Seller, or permit the sole member
of Seller to assign or transfer all or any portion of its membership interest in
Seller;

 

(h)           after the occurrence and during the continuation of an Event of
Default, make any distribution, payment on account of, or set apart assets for,
a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any Capital Stock of Seller, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Seller
(unless the same is necessary for Guarantor to maintain its status as a real
estate investment trust (REIT) under the Code).

 

12.                               AFFIRMATIVE COVENANTS OF SELLER

 

(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 Section 12 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 Section 10.

 

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

 

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(d)           Seller shall notify Buyer and the Depository of the occurrence of
any Default or Event of Default with respect to Seller as soon as possible but
in no event later than the second (2nd) Business Day after obtaining actual
knowledge of such event.  Buyer acknowledges and agrees that the representations
and warranties with respect to each individual Purchased Loan set forth on
Exhibit VI attached hereto shall be made by Seller only on the related Purchase
Date for such Purchased Loan.  Notwithstanding the foregoing, Seller shall
disclose to Buyer any such representation and warranty with respect to each
individual Purchased Loan set forth on Exhibit VI attached hereto regarding
which it has knowledge that such representation and warranty shall no longer be
true and correct in any material respect after the related Purchase Date or
which could no longer be made on a subsequent date after such Purchase Date
(except to the extent such untrue representation and warranty was disclosed to
Buyer as an exception to the representations and warranties with respect to such
Purchased Loan made on the related Purchase Date and was accepted by Buyer in
connection with the approval of such Purchased Loan for inclusion in a
Transaction).

 

(e)           With respect to each fixed rate Purchased Loan, Seller shall enter
into Hedging Transactions pursuant to a hedging strategy acceptable to Buyer in
Buyer’s good faith business judgment and pledge such Hedging Transactions to
Buyer as Collateral (including, without limitation, to the extent such Hedging
Transactions are entered into with a party other than Buyer, delivering a
collateral assignment of such Hedging Transactions in form and substance
acceptable to Buyer).  Seller acknowledges Buyer will mark to market such
Hedging Transactions from time to time in accordance with and subject to the
terms of this Agreement.

 

(f)            Seller shall promptly (and in any event not later than three
(3) Business Days following receipt) deliver to Buyer (i) any written notice of
the occurrence of an event of default received by Seller pursuant to the
Purchased Loan Documents and (ii) any other information with respect to the
Purchased Loans as may be reasonably requested by Buyer from time to time.

 

(g)           Seller will permit Buyer or its designated representative to
inspect Seller’s records with respect to the Collateral and the conduct and
operation of its business related thereto upon reasonable prior written notice
from Buyer or its designated representative, at such reasonable times and with
reasonable frequency, and to make copies of extracts of any and all thereof,
subject to the terms of any confidentiality agreement between Buyer and Seller,
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.  Buyer shall act in a commercially reasonable manner
in requesting and conducting any inspection relating to the conduct and
operation of Seller’s business.

 

(h)           At any time from time to time upon the reasonable request of
Buyer, at the sole expense of Seller, Seller will 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 first priority security interest
granted hereunder and of 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
Collateral shall be or become evidenced by any promissory note, other instrument
or chattel paper, such note, instrument or chattel paper shall be immediately
delivered to Buyer, duly endorsed in a manner reasonably satisfactory to Buyer,
to

 

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be held as Collateral pursuant to this Agreement, and the documents delivered in
connection herewith.

 

(i)            Seller shall provide Buyer with the following financial and
reporting information:

 

(i)            Within 45 days after the last day of each of the first three
fiscal quarters in any fiscal year, Guarantor’s and Seller’s unaudited
consolidated balance sheets as of the end of such quarter, in each case
certified as being true and correct by an officer’s certificate;

 

(ii)           Within 90 days after the last day of its fiscal year, Guarantor’s
audited and Seller’s unaudited (or, if generated by Seller, Seller’s audited)
consolidated statements of income and statements of changes in cash flow for
such year and balance sheets as of the end of such year, in each case presented
fairly in accordance with GAAP, and accompanied, in the case of Guarantor, by an
unqualified report of a nationally recognized independent certified public
accounting firm or any other accounting firm consented to by Buyer in its
reasonable discretion;

 

(iii)          Within 30 days after the last day of each calendar month, any and
all property level financial information (including, without limitation,
operating and financial statements) with respect to the Purchased Loans that was
received during the preceding calendar month and is in the possession of Seller
or an Affiliate, including, without limitation, rent rolls and income
statements;

 

(iv)          Within 45 days after the last day of each calendar quarter in any
fiscal year, an officer’s certificate from Seller addressed to Buyer certifying
that, as of such calendar month, (x) Seller and Guarantor are in compliance in
all material respects with all of the terms and requirements of this Agreement,
(y) Guarantor is in compliance with the financial covenants set forth in the
Guaranty (including therein detailed calculations demonstrating such compliance)
and (z) no Event of Default exists; and

 

(v)           With respect to the Purchased Loans and related Mortgaged
Properties:  (x) within 30 days after the last day of each calendar month,
Seller’s monthly operations report covering occupancy, collections,
delinquencies, losses, recoveries, cash flows and such other property level
information as may reasonably be requested by Buyer and (y) within 30 days after
the last day of each calendar quarter in any fiscal year, an asset management
report prepared by Seller or Guarantor.

 

Notwithstanding the foregoing, the requirement to deliver financial statements
will be satisfied at any such time as such financial statements are publicly
posted on the official web site of the Guarantor or appropriately filed with the
United States Securities and Exchange Commission.

 

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(j)            Seller shall at all times comply in all material respects with
all laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.

 

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

 

(l)            Seller shall observe, perform and satisfy all the terms,
provisions and covenants 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 shall pay and discharge all taxes,
levies, liens and other charges on its assets and on the Collateral that, in
each case, in any manner would create any lien or charge upon the Collateral,
except for any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided, in all material respects, in accordance with GAAP.

 

(m)          Seller will maintain records with respect to the Collateral and the
conduct and operation of its business with no less a degree of prudence than if
the Collateral 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
Collateral and the conduct and operation of its business.

 

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

 

13.                               SINGLE-PURPOSE ENTITY

 

Seller hereby represents and warrants to Buyer, and covenants with Buyer, that
as of the date hereof and so long as any of the Transaction Documents shall
remain in effect:

 

(a)           It is and intends to remain solvent and it has paid and shall pay
its debts and liabilities (including employment and overhead expenses) from its
own assets as the same shall become due; provided, that it is understood and
agreed that nothing contained in this Section 13 or elsewhere in this Agreement
shall obligate the direct or indirect owners of Seller to make capital
contributions to Seller from time to time to enable Seller to meet its
obligations under this Agreement.

 

(b)           It has complied and will comply with the provisions of its
organizational documents.

 

(c)           It has done or caused to be done and will, to the extent under its
control, do all things necessary to observe corporate formalities and to
preserve its existence.

 

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(d)           It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its members and any other Person, and it will file its own tax returns, if any,
which are required by law (except to the extent consolidation is required under
GAAP or as a matter of law).

 

(e)           It has been, is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name, shall
not identify itself or any of its Affiliates as a division or part of the other,
shall maintain and utilize separate stationery, invoices and checks, and
allocate fairly and reasonably any overhead for shared office space and for
services performed by an employee of an Affiliate.

 

(f)            It has not owned and will not own any property or any other
assets other than Purchased Loans, cash and its interest under any associated
Hedging Transactions.

 

(g)           It has not engaged and will not engage in any business other than
the acquisition, origination, ownership, financing and disposition of Purchased
Loans in accordance with the applicable provisions of the Transaction Documents.

 

(h)           It has not entered into, and will not enter into, any contract or
agreement with any of its Affiliates, except upon terms and conditions that are
substantially similar to those that would be available on an arm’s-length basis
with Persons other than such Affiliate.

 

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

 

(j)            It has not made and will not make any loans or advances to any
other Person, except as permitted under this Agreement, and shall not acquire
obligations or securities of any member or any Affiliate of any member or any
other Person.

 

(k)           It will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations; provided, that it is understood and agreed
that nothing contained in this Section 13 or elsewhere in this Agreement shall
obligate the direct or indirect owners of Seller to make capital contributions
to Seller from time to time to enable Seller to meet its obligations under this
Agreement.

 

(l)            It shall not seek its dissolution, liquidation or winding up, in
whole or in part, or suffer any Change of Control or consolidation or merger
with respect to Seller.

 

(m)          It will not commingle its funds and other assets with those of any
of its Affiliates or any other Person.

 

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

 

(o)           It has not held and will not hold itself out to be responsible for
the debts or obligations of any other Person.

 

(p)           Seller shall not take any of the following actions without the
affirmative vote of the Independent Director:  (i) permit its members to
dissolve or liquidate Seller, in whole or in part; (ii) consolidate or merge
with or into any other entity or convey or transfer all or substantially all of
its properties and assets to any entity; or (iii) institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or answer or
consent seeking reorganization or relief under the Bankruptcy Code, or effect
any similar procedure under any similar law, or consent to the filing of any
such petition or to the appointment of a receiver, rehabilitator, conservator,
liquidator, assignee, trustee or sequestrator (or other similar official) of
Seller or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, or make an assignment for the benefit of creditors,
or admit in writing its inability to pay its debts generally as they become due,
or take any action in furtherance of any of the foregoing.

 

(q)           It has no liabilities, contingent or otherwise, other than those
normal and incidental to the acquisition, origination, ownership, financing and
disposition of Purchased Loans.

 

(r)            It has conducted and shall conduct its business consistent with
the requirements of being a Single-Purpose Entity.

 

(s)           It shall not maintain any employees.

 

(t)            It shall at all times maintain at least one Independent
Director.  For so long as Seller’s obligations under this Agreement and the
other Transaction Documents are outstanding, Seller shall not take any of the
actions contemplated by Section 13(p) above (including when applicable without
the affirmative vote of such Independent Director).

 

14.          EVENTS OF DEFAULT; REMEDIES

 

(a)           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.  With respect to
each Transaction, each of the following clauses (i) through (xviii) shall be an
Event of Default under this Agreement:

 

(i)            Seller fails to repurchase the Purchased Loans upon the
applicable Repurchase Date;

 

(ii)           Seller fails to comply in all material respects with Section 4
hereof;

 

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(iii)          an Act of Insolvency occurs with respect to Seller, Operating
Partnership, Guarantor or Manager;

 

(iv)          Seller, Operating Partnership or Guarantor makes a public
disclosure or otherwise admits in writing that it is not Solvent or is not able
or not willing to perform any of its obligations hereunder or under any other
agreement to which it is a party;

 

(v)           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 Loans, or (B) if a Transaction is recharacterized as a
secured financing, the Transaction Documents with respect to any Transaction
shall for any reason cease to create a valid first priority security interest in
favor of Buyer in any of the Purchased Loans (in each case, other than due to
the act or omission of Buyer);

 

(vi)          if an event occurs which would constitute (a) an “event of
default” under any Hedging Transaction or (b) a “termination event” or an
“additional termination event” under any Hedging Transaction (and, in the case
of this clause (b), Seller has failed to meet its obligation to pay the Early
Termination Amount, if any, pursuant to the terms of such Hedging Transaction);

 

(vii)         failure of Buyer to receive within one (1) Business Day after any
Remittance Date the accreted value of the Price Differential (less any amount of
such Price Differential previously paid by Seller to Buyer);

 

(viii)       failure of Seller to make any other payment owing to Buyer which
has become due, whether by acceleration or otherwise under the terms of this
Agreement which failure is not remedied within the applicable period (in the
case of a failure pursuant to Section 4) or three (3) Business Days (in the case
of any other such failure);

 

(ix)          any governmental, regulatory, or self-regulatory authority shall
have removed, suspended or terminated the material rights, privileges, or
operations of Seller, Operating Partnership, Guarantor or Manager;

 

(x)           a Change of Control shall have occurred;

 

(xi)          any representation made by Seller, Operating Partnership or
Guarantor in any Transaction Document shall have been incorrect or untrue in any
material respect when made or repeated or deemed to have been made or repeated
(other than the representations and warranties set forth in
Section 10(b)(viii) of this Agreement made by Seller, which shall not be
considered an Event of Default if incorrect or untrue in any material respect
and which incorrect or untrue representation shall be solely used by Buyer as a
basis to adjust the Market Value of the applicable Purchased Loan and to make
determinations pursuant to Section 4(a) of this

 

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Agreement; provided further Seller shall not have made any such representation
with actual knowledge that it was materially incorrect or untrue at the time
made) and such representation breach continues unremedied for ten (10) Business
Days after the earlier of receipt of notice thereof from Buyer or the discovery
of such failure by the applicable Person;

 

(xii)         Guarantor shall fail to observe any of the financial covenants set
forth in the Guaranty or shall have defaulted or failed to perform under the
Guaranty in any material respect;

 

(xiii)        a final non-appealable judgment by any competent court in the
United States of America having jurisdiction over Seller for the payment of
money in an amount greater than $100,000 (in the case of Seller) or $5,000,000
(in the case of the Operating Partnership or Guarantor) shall have been rendered
against Seller, Operating Partnership or Guarantor, unless execution of such
judgment is stayed by the posting of cash or a bond or other collateral
acceptable to Buyer in the amount of the judgment or otherwise is discharged (or
provision is made for such discharge);

 

(xiv)        Seller, Operating Partnership or Guarantor shall have defaulted or
failed to perform under any note, indenture, loan agreement, guaranty, swap
agreement or any other contract, agreement or transaction to which it is a
party, which default (A) involves the failure to pay a monetary obligation in
excess of $100,000 (in the case of Seller) or $5,000,000 (in the case of
Operating Partnership or Guarantor), or (B) permits the acceleration of the
maturity of obligations in excess of $100,000 (in the case of Seller) or
$5,000,000 (in the case of Operating Partnership or Guarantor) by any other
party to or beneficiary of such note, indenture, loan agreement, guaranty, swap
agreement or other contract agreement or transaction; provided, however, that
any such default, failure to perform or breach shall not constitute an Event of
Default if Seller, Operating Partnership or Guarantor cures such default,
failure to perform or breach, as the case may be, within the grace notice and/or
cure period, if any, provided under the applicable agreement;

 

(xv)         Seller shall fail to maintain on deposit in the Liquidity Reserve
Account at least the Required Liquidity Amount;

 

(xvi)        Manager resigns or is removed, terminated or otherwise no longer
serves or is unable to serve as the asset manager and investment advisor of
Guarantor pursuant to that certain Asset Management Agreement or Manager is in
material breach of its duties or obligations under the Asset Management
Agreement beyond any applicable notice and cure period and such Manager is not
replaced with a successor manager reasonably acceptable to Buyer pursuant to an
Asset Management Agreement acceptable to Buyer in its reasonable discretion
within 60 days;

 

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(xvii)       any condition or circumstance shall exist which causes, constitutes
or could reasonably be expected to cause or constitute a Material Adverse
Effect; or

 

(xviii)     if Seller or Guarantor shall breach or fail to perform any of the
terms, agreements, conditions, covenants or obligations applicable to such
Person under this Agreement, any other Transaction Document or any Purchased
Loan Document to which such Person is a party, 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 twenty (20) Business Days after
written notice thereof to Seller from the applicable party or its successors or
assigns (each of (i) through (xviii), an “Event of Default”).

 

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

 

(i)            At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if no notice is
given, immediately upon the occurrence of an Act of Insolvency), 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 Section 14(b)(i) of this Agreement:

 

(A)          Seller’s obligations hereunder to repurchase all Purchased Loans
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 outstanding Purchase Price for such
Transaction (decreased by (I) any amounts actually remitted to Buyer by the
Depository or Seller from time to time pursuant to Sections 4 or 5 of this
Agreement and applied to such Repurchase Price, and (II) any amounts applied to
the Repurchase Price pursuant to Section 14(b)(iii) of this Agreement); and

 

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(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 Loans.

 

(iii)          Upon the occurrence of an Event of Default with respect to
Seller, Buyer may, upon giving prior notice to Seller, (A) immediately sell, at
a public or private sale in a commercially reasonable manner and at such price
or prices as Buyer may reasonably deem satisfactory any or all of the Purchased
Loans or (B) in its sole discretion elect, in lieu of selling all or a portion
of such Purchased Loans, to give Seller credit for such Purchased Loans in an
amount equal to the market value of such Purchased Loans as determined by Buyer
in its sole discretion against the aggregate unpaid Repurchase Price for such
Purchased Loans and any other amounts owing by Seller under the Transaction
Documents.  The proceeds of any disposition of Purchased Loans effected pursuant
to this Section 14(b)(iii) shall be applied, (v) first, to the actual,
out-of-pocket costs and expenses reasonably incurred by Buyer in connection with
Seller’s default; (w) second, the amount, if any, payable by Seller in the event
any Hedging Transactions related to such Purchased Loans are being terminated;
(x) third, to the Repurchase Price; (y) fourth, to any other outstanding
obligation of Seller to Buyer or its Affiliates pursuant to this Agreement; and
(z) fifth, to pay the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.

 

(iv)          The parties recognize that it may not be possible to purchase or
sell all of the Purchased Loans on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner because the market
for such Purchased Loans may not be liquid.  In view of the nature of the
Purchased Loans, the parties agree that liquidation of a Transaction or the
Purchased Loans 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 Loans, and nothing contained herein
shall (A) obligate Buyer to liquidate any Purchased Loans on the occurrence and
during the continuance of an Event of Default or to liquidate all of the
Purchased Loans in the same manner or on the same Business Day or (B) constitute
a waiver of any right or remedy of Buyer.

 

(v)           Seller shall be liable to Buyer for (A) the amount of all actual
out-of-pocket expenses, including reasonable legal fees and expenses, actually
incurred by Buyer in connection with or as a consequence of an Event of Default
with respect to Seller, (B) all actual costs incurred in connection with the
termination of Hedging Transactions, and (C) any other actual loss, damage, cost
or expense directly arising or resulting from the occurrence of an Event of
Default with respect to Seller.

 

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(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, and local laws (including, without limitation, if the
Transactions are recharacterized as secured financings, the rights and remedies
of a secured party under the UCC of the State of New York, 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 Loans against all of Seller’s
obligations to Buyer pursuant to this Agreement, whether or not such obligations
are then due, without prejudice to Buyer’s right to recover any deficiency.

 

(vii)         Subject to the notice and grace 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 (other than with respect to Buyer) 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 which Buyer may have.

 

(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 any defense Seller might otherwise have arising
from the use of nonjudicial process, disposition of any or all of the Purchased
Loans, 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.

 

(ix)          Upon the designation of any Accelerated Repurchase Date, Buyer
may, without prior notice to Seller, set off any sum or obligation (whether or
not arising under this Agreement, whether matured or unmatured, whether or not
contingent and irrespective of the currency, place of payment or booking office
of the sum or obligation) owed by Seller to Buyer or any Affiliate of Buyer
against any sum or obligation (whether or not arising under this Agreement,
whether matured or unmatured, whether or not contingent and irrespective of the
currency, place of payment or booking office of the sum or obligation) owed by
Buyer or any Affiliate of Buyer to Seller.  Buyer will give written notice to
the other party of any set off effected under this Section 14(b)(ix).  If a sum
or obligation is unascertained, Buyer may in good faith estimate that obligation
and set-off in respect of the estimate, subject to the relevant party accounting
to the other when the obligation is ascertained.  Nothing in this
Section 14(b)(ix) shall be effective to create a charge or other security
interest.  This Section 14(b)(ix) shall be without prejudice and in addition to
any right of set-off,

 

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combination of accounts, lien or other rights to which any party is at any time
otherwise entitled (whether by operation of law, contract or otherwise).

 

15.          SINGLE AGREEMENT

 

Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other.  Accordingly,
each of Buyer and Seller agrees (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.

 

16.          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 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, IF AND TO THE EXTENT CONSISTENT WITH APPLICABLE LAW AND THE RULES
OF COURT AND EVIDENCE.

 

17.          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 attempted delivery, (b) certified or registered United States
mail, postage prepaid, (c) expedited prepaid delivery service, either commercial
or United States Postal Service, with proof of attempted delivery, or (d) by
telecopier (with answerback acknowledged) or email provided that such telecopied
notice or notice sent by email must also be delivered by one of the means set
forth in (a), (b) or (c) 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 Section.  A notice shall be deemed to
have been given: (a) in the case of hand delivery, at the time of delivery,
(b) in the case of registered or certified mail, when delivered or the first
attempted delivery on a Business Day, (c) in the case

 

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of expedited prepaid delivery upon the first attempted delivery on a Business
Day, or (d) in the case of telecopier or email, upon receipt of answerback
confirmation or upon transmission, respectively, provided that such telecopied
notice or notice sent by email was also delivered as required in this Section. 
A party receiving a notice which does not comply with the technical requirements
for notice under this Section may elect to waive any deficiencies and treat the
notice as having been properly given.

 

18.          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.

 

19.          NON-ASSIGNABILITY

 

(a)           The rights and obligations of Seller under the Transaction
Documents and under any Transaction shall not be assigned by Seller without the
prior written consent of Buyer.

 

(b)           Buyer shall be entitled to assign its rights and obligations under
the Transaction Documents and/or under any Transaction to any other Person or
issue one or more participation interests with respect to any or all of the
Transactions and, in connection therewith, may bifurcate or allocate (i.e.
senior/subordinate) amounts due to Buyer; provided, however, with respect to
participations, Seller shall not be obligated to deal directly with any party
other than Buyer or to pay or reimburse Buyer for any costs that would not have
been incurred by Buyer had no participation interests in such Transactions been
issued; provided, further, that without limiting Buyer’s right to assign or
participate the Transactions, in the event of any such assignment or
participation, Buyer shall remain as the agent for all assignees or participants
and Seller shall not be obligated to interact with any party other than Buyer
regarding this Agreement and the Transaction Documents.  Notwithstanding
anything to the contrary in this Agreement, so long as no Event of Default shall
have occurred and be continuing, Buyer shall not assign or participate the
Transactions to any Person specified in Annex II.

 

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

 

20.          GOVERNING LAW

 

This Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of law principles thereof.

 

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21.          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 Section 4(a) or 4(b) hereof will not constitute a waiver of
any right to do so at a later date.

 

22.          USE OF EMPLOYEE PLAN ASSETS

 

(a)           If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 (“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 Section,
any such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available unaudited statement of its financial condition.

 

(c)           By entering into a Transaction pursuant to this Section, 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 which 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 a Seller in any outstanding
Transaction involving a Plan Party.

 

23.          INTENT

 

(a)           The parties recognize and agree that:  (i) each Transaction is a
“repurchase agreement” as that term is defined in Section 101 of the Bankruptcy
Code and a “securities contract” as that term is defined in Section 741 of the
Bankruptcy Code and (ii) the grant of a security interest set forth in Sections
6 and 29(b) hereof to secure the rights of Buyer hereunder also constitutes a
“repurchase agreement” as contemplated by Section 101(47)(A)(v) of the
Bankruptcy Code and a “securities contract” as contemplated by
Section 741(7)(A)(xi) of the Bankruptcy Code.  It is further understood that
this Agreement constitutes a “master netting agreement” as defined in
Section 101(38A) of the Bankruptcy Code, as amended, with respect to the
Transaction so constituting a “repurchase agreement” or “securities contract”. 
Each party hereto hereby further agrees that it shall not challenge the
characterization of this Agreement as a “repurchase agreement”, “securities
contract” and/or “master netting agreement” 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.

 

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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
Section 14 or 29 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 the Transactions hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to the Transactions would render such definition inapplicable).

 

(d)           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 the Transactions 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).

 

(e)           In light of the intent set forth above in this Section 23, Seller
agrees that, from time to time upon the written request of Buyer, Seller will
execute and deliver any supplements, modifications, addendums or other documents
as may be necessary or desirable, in Buyer’s good faith discretion, in order to
cause this Agreement and the Transactions contemplated hereby to qualify for,
comply with the provisions of, or otherwise satisfy, maintain or preserve the
criteria for safe harbor treatment under the Bankruptcy Code for “repurchase
agreements”, “securities contracts” and “master netting agreements”; provided,
however, that Buyer’s failure to request, or Buyer’s or Seller’s failure to
execute, such supplements, modifications, addendums or other documents does not
in any way alter or otherwise change the intention of the parties hereto that
this Agreement and the Transactions hereunder constitute “repurchase
agreements”, “securities contracts” and/or a “master netting agreement” as such
terms are defined in the Bankruptcy Code.

 

24.          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 (“1934 Act”), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not
protect the other party with respect to any Transaction hereunder;

 

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

 

(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.

 

25.          CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)           Each party irrevocably and unconditionally (i) submits to the
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.

 

(c)           The parties hereby irrevocably waive, to the fullest extent it 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 Section 25 shall affect the right of
Buyer or Seller to serve legal process in any other manner permitted by law or
affect the right of Buyer or Seller to bring any action or proceeding against
the other party 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.

 

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26.          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, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.

 

27.          INDEMNITY

 

Seller hereby agrees to indemnify Buyer and each of its officers, directors,
employees and agents (“Indemnified Parties”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
taxes (including stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement and the documents
delivered in connection herewith, other than income or similar taxes of Buyer),
fees, costs or expenses (including reasonable attorneys fees and disbursements)
(all of the foregoing, collectively “Indemnified Amounts”) which may at any time
(including, without limitation, such time as this Agreement shall no longer be
in effect and the Transactions shall have been repaid in full) be imposed on or
asserted against any Indemnified Party in any way whatsoever arising out of or
in connection with, or relating to, this Agreement or any Transactions
thereunder or any action taken or omitted to be taken by any Indemnified Party
under or in connection with any of the foregoing; provided, that Seller shall
not be liable for Indemnified Amounts resulting from the gross negligence or
willful misconduct of any Indemnified Party.  Without limiting the

 

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generality of the foregoing, Seller agrees to hold Buyer harmless from and
indemnify Buyer against all Indemnified Amounts with respect to all Purchased
Loans 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, that, in each case, results from anything other than
Buyer’s gross negligence or willful misconduct.  In any suit, proceeding or
action brought by Buyer in connection with any Purchased Loan for any sum owing
thereunder, or to enforce any provisions of any Purchased Loan, Seller will
save, indemnify and hold Buyer harmless from and against all actual
out-of-pocket expense (including reasonable attorneys’ fees), actual
out-of-pocket 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 actual costs and out-of-pocket expenses incurred
in connection with Buyer’s due diligence reviews with respect to the Purchased
Loans (including, without limitation, those incurred pursuant to Section 28
hereof) and the enforcement or the preservation of Buyer’s rights under this
Agreement or any Transaction contemplated hereby, including without limitation
the reasonable fees and disbursements of its counsel; provided, that
notwithstanding the foregoing, Seller’s obligation to reimburse Buyer for legal
fees incurred by Buyer in connection with each individual Eligible Loan which
Seller proposes pursuant to Section 3(a) of this Agreement that Buyer approve
for inclusion in a proposed Transaction shall not exceed $7,500 without the
prior approval of Seller.  Seller hereby acknowledges that, the obligation of
Seller under this Agreement is a recourse obligation of Seller.

 

28.          DUE DILIGENCE

 

Seller acknowledges that, at reasonable times and upon reasonable notice to
Seller, Buyer has the right to perform continuing due diligence reviews with
respect to the Purchased Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
Seller agrees that upon reasonable prior written 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 Loan Files,
Servicing Records and any and all documents, records, agreements, instruments or
information relating to such Purchased Loans in the possession or under the
control of Seller, any other servicer or subservicer of Seller and/or the
Custodian.  Seller also shall make available to Buyer a knowledgeable financial
or accounting officer for the purpose of answering financial or accounting
questions respecting the Purchased Loan Files and the Purchased Loans.  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 Loans. 
Buyer may underwrite such Purchased Loans itself or engage a third party
underwriter to perform such underwriting.  Seller agrees to reasonably cooperate
with Buyer and any third party underwriter reasonably acceptable to Seller 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

 

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Loans in the possession, or under the control, of Seller.  Seller further agrees
that Seller shall reimburse Buyer for any and all actual costs and expenses
reasonably incurred by Buyer in connection with Buyer’s activities pursuant to
this Section 28.

 

29.          SERVICING

 

(a)           Seller and Buyer agree that all Servicing Rights with respect to
the Purchased Loans are being transferred hereunder to Buyer on the applicable
Purchase Date and such Servicing Rights shall be transferred by Buyer to Seller
upon Seller’s payment of the Repurchase Price for such applicable Purchased
Loan.  Notwithstanding the purchase and sale of the Purchased Loans and
Servicing Rights hereby, Servicer shall be granted a revocable license to
exercise the Servicing Rights with respect to the Purchased Loans for the
benefit of Buyer and, if Buyer shall exercise its rights to pledge or
hypothecate a Purchased Loan prior to the Repurchase Date pursuant to Section 8,
Buyer’s assigns (which license shall be deemed automatically revoked upon the
occurrence and during the continuance of an Event of Default); provided,
however, that the obligations of Servicer to service the Purchased Loans shall
cease, at Seller’s option, upon the payment by Seller to Buyer of the Repurchase
Price therefor.  Seller shall cause Servicer to service the Purchased Loans
pursuant to the Servicing Agreement and in accordance with Accepted Servicing
Practices approved by Buyer in the exercise of its reasonable business judgment
and maintained by other prudent mortgage lenders with respect to senior
interests in mortgage loans similar to the Purchased Loans.  Seller shall obtain
the written consent of Buyer prior to appointing any third party servicer for a
Purchased Loan (other than Wells Fargo Bank, National Association).

 

(b)           Seller agrees that Buyer is the owner of all servicing records,
files, documents, records, data bases, computer tapes, copies of computer tapes,
proof of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Purchased Loans (collectively, the “Servicing
Records”) so long as the Purchased Loans are subject to this Agreement.  Seller
grants Buyer a security interest in all servicing fees and rights relating to
the Purchased Loans and all Servicing Records to secure the obligation of the
Servicer to service in conformity with this Section and any other obligation of
Seller to Buyer.  Seller covenants to safeguard such Servicing Records which are
in Seller’s possession 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
Loans on a servicing released basis or (ii) terminate any Servicer of the
Purchased Loans with or without cause, in each case without payment of any
termination fee.

 

(d)           Seller shall not employ sub-servicers to service the Purchased
Loans without the prior written approval of Buyer in its sole discretion;
provided, this Section 29(d) shall not apply to an Affiliate of Seller,
Operating Partnership and Guarantor.

 

(e)           The payment of servicing fees under the Servicing Agreement shall
be solely the obligation of Seller.

 

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30.          MISCELLANEOUS

 

(a)           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.

 

(b)           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.

 

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

 

(d)           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. 
Seller agrees to pay Buyer promptly all costs and expenses (including reasonable
expenses for legal services of every kind) of any subsequent enforcement of any
of the provisions hereof, or of the performance by Buyer of any obligations of
Seller in respect of the Purchased Loans, or any actual or attempted sale, or
any exchange, enforcement, collection, compromise or settlement in respect of
any of the Collateral and for the custody, care or preservation of the
Collateral (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 promptly all reasonable costs and expenses (including
reasonable expenses for legal services) incurred in connection with the
maintenance of the Cash Management Account and the Liquidity Reserve Account and
registering the Collateral in the name of Buyer or its nominee.  All such
expenses shall be recourse obligations of Seller to Buyer under this Agreement.

 

(e)           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.

 

(f)            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.

 

(g)           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

 

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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.

 

(h)           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.

 

(i)            The parties recognize that each Transaction is a “securities
contract” as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.

 

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

 

 

BUYER:

 

 

 

CITIBANK, N.A.

 

 

 

By:

/s/ Richard B. Schlenger

 

Name: Richard B. Schlenger

 

Title: Authorized Signatory

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

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SELLER:

 

 

 

NSREIT CB LOAN, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

NorthStar Real Estate Income Trust Operating

 

 

 

Partnership, L.P., a Delaware limited

 

 

 

partnership, its sole equity member

 

 

 

 

 

 

 

By:

NorthStar Real Estate Income Trust, Inc.,

 

 

 

 

a Maryland corporation, its general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Daniel R. Gilbert

 

 

 

 

Name: Daniel R. Gilbert

 

 

 

 

Title: President & Chief Investment Officer

 

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