Exhibit 10.1

 

EXECUTION

 

 

 

MASTER REPURCHASE AGREEMENT

 

Among:

 

UBS REAL ESTATE SECURITIES INC., as Buyer

 

and

 

ACRC LENDER U LLC and ACRC LENDER U TRS LLC, as Sellers

 

and

 

ACRC LENDER U MEZZ LLC, as Mezzanine Subsidiary

 

and

 

ARES COMMERCIAL REAL ESTATE CORPORATION, as Guarantor

 

Dated as of April 9, 2014

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

APPLICABILITY

4

 

 

 

SECTION 2.

DEFINITIONS

5

 

 

 

SECTION 3.

INITIATION; TERMINATION

29

 

 

 

SECTION 4.

MARGIN AMOUNT MAINTENANCE

37

 

 

 

SECTION 5.

COLLECTIONS; INCOME PAYMENTS

38

 

 

 

SECTION 6.

REQUIREMENT OF LAW

40

 

 

 

SECTION 7.

TAXES

42

 

 

 

SECTION 8.

SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

45

 

 

 

SECTION 9.

PAYMENT, TRANSFER; ACCOUNTS

48

 

 

 

SECTION 10.

RESERVED

49

 

 

 

SECTION 11.

REPRESENTATIONS

49

 

 

 

SECTION 12.

COVENANTS

54

 

 

 

SECTION 13.

EVENTS OF DEFAULT

61

 

 

 

SECTION 14.

REMEDIES

63

 

 

 

SECTION 15.

INDEMNIFICATION AND EXPENSES; RECOURSE

66

 

 

 

SECTION 16.

SERVICING

67

 

 

 

SECTION 17.

DUE DILIGENCE

70

 

 

 

SECTION 18.

ASSIGNABILITY

71

 

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SECTION 19.

TRANSFER AND MAINTENANCE OF REGISTER

72

 

 

 

SECTION 20.

HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

73

 

 

 

SECTION 21.

TAX TREATMENT

73

 

 

 

SECTION 22.

SET-OFF

73

 

 

 

SECTION 23.

TERMINABILITY

74

 

 

 

SECTION 24.

NOTICES AND OTHER COMMUNICATIONS

74

 

 

 

SECTION 25.

USE OF ELECTRONIC MEDIA

75

 

 

 

SECTION 26.

ENTIRE AGREEMENT; SEVERABILITY; SINGLE AGREEMENT

76

 

 

 

SECTION 27.

GOVERNING LAW

76

 

 

 

SECTION 28.

SUBMISSION TO JURISDICTION; WAIVERS

77

 

 

 

SECTION 29.

NO WAIVERS, ETC.

78

 

 

 

SECTION 30.

NETTING

78

 

 

 

SECTION 31.

CONFIDENTIALITY

78

 

 

 

SECTION 32.

INTENT

79

 

 

 

SECTION 33.

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

80

 

 

 

SECTION 34.

CONFLICTS

80

 

 

 

SECTION 35.

MISCELLANEOUS

80

 

 

 

SECTION 36.

GENERAL INTERPRETIVE PRINCIPLES

81

 

 

 

SECTION 37.

JOINT AND SEVERAL LIABILITY

81

 

2

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SCHEDULES AND EXHIBITS

 

 

SCHEDULE 1

Representations and Warranties

 

 

 

 

SCHEDULE 2

Responsible Officers

 

 

 

 

SCHEDULE 3

Scheduled Indebtedness

 

 

 

 

SCHEDULE 4

Schedule of Competitors

 

 

 

 

 

 

 

EXHIBIT A

Form of Release Letter

 

 

 

 

EXHIBIT B

Form of Distribution Worksheet

 

 

 

 

EXHIBIT C

Form of Power of Attorney

 

 

 

 

EXHIBIT D

Form of Tax Compliance Certificate

 

 

 

 

EXHIBIT E

Approved Underwriting Guidelines

 

 

 

 

EXHIBIT F

Form of Transaction Request/Purchase Price Increase and Confirmation

 

 

 

 

EXHIBIT G

Form of Notice to Obligor/Mezzanine Borrower

 

 

 

 

EXHIBIT H

Form of Request for Repurchase/Purchase Price Decrease and Confirmation

 

 

 

 

EXHIBIT I

Form of Custodial Delivery Letter

 

 

 

 

EXHIBIT J-1

Form of Collateral Administrator Notice and Pledge

 

 

 

 

EXHIBIT J-2

Form of Collateral Administrator Notice

 

 

 

 

EXHIBIT K

Form of Compliance Certificate

 

 

 

 

EXHIBIT L

Form of Escrow Instruction Letter

 

 

 

 

EXHIBIT M-1

Form of Initial Due Diligence Checklist

 

 

 

 

EXHIBIT M-2

Form of On-going Quarterly Due Diligence Checklist

 

3

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MASTER REPURCHASE AGREEMENT

 

This is a MASTER REPURCHASE AGREEMENT (the “Agreement”), dated as of April 9,
2014, among ACRC LENDER U LLC, a Delaware limited liability company, and ACRC
LENDER U TRS LLC, a Delaware limited liability company (each, a “Seller” and
collectively, the “Sellers”), ACRC LENDER U MEZZ LLC, a Delaware limited
liability company (“Mezzanine Subsidiary”), ARES COMMERCIAL REAL ESTATE
CORPORATION, a Maryland corporation (“Guarantor”), and UBS REAL ESTATE
SECURITIES INC., a Delaware corporation (the “Buyer”).

 

SECTION 1.                                   APPLICABILITY

 

From time to time at the request of any or all Sellers the parties hereto may
enter into transactions in which (a) (i) any or all Sellers agree to transfer to
Buyer Purchased Assets against the transfer of funds by Buyer to the applicable
Seller and (ii) ACRC agrees to transfer to Buyer Mezzanine Subsidiary Interests
(it being understood that Purchased Assets which consist of Mezzanine Subsidiary
Interests will be valued from time to time based on the applicable Mezzanine
Subsidiary Assets owned by the Mezzanine Subsidiary), and (b) Buyer
simultaneously agrees to transfer to the applicable Seller each of such
Purchased Assets on the applicable Repurchase Date against the transfer of funds
by the applicable Seller.  Each such transaction shall be referred to herein as
a “Transaction” and shall be governed by this Agreement (including any
supplemental terms or conditions contained in any annexes identified herein, as
applicable hereunder), unless otherwise agreed in writing.  For the avoidance of
doubt, upon receipt of the Repurchase Price (or Purchase Price Decrease, as
applicable) in each Transaction, Buyer shall be obligated to return to the
applicable Seller the same Purchased Assets such Seller originally transferred
to Buyer pursuant to such Transaction (or to release the same Mezzanine
Subsidiary Asset, as applicable).  This Agreement is a commitment by Buyer to
enter into Transactions with Sellers up to the Maximum Committed Purchase Price,
and sets forth the procedures to be used in connection with periodic requests
for Buyer to enter into Transactions with Sellers.  Each Seller hereby
acknowledges that Buyer is under no obligation to agree to enter into, or to
enter into, any Transaction pursuant to this Agreement in excess of the Maximum
Committed Purchase Price.  The commitment to enter into Transactions up to the
Maximum Committed Purchase Price, and in Buyer’s sole discretion up to the
Maximum Aggregate Purchase Price, shall be subject to satisfaction of all terms
and conditions of this Agreement.

 

The Pricing Letter is one of the Program Documents as defined below.  The
Pricing Letter is incorporated by reference into this Agreement and each Seller
Party and Buyer agree to adhere to all terms, conditions and requirements of the
Pricing Letter as incorporated herein.  In the event of a conflict or
inconsistency between this Agreement and the Pricing Letter, the terms of the
Pricing Letter shall govern.

 

On the initial Purchase Date, Buyer will purchase the Mezzanine Subsidiary
Interests from ACRC in connection with the initial Transaction.  After the
initial Purchase Date, as part of separate Transactions, ACRC may request and
Buyer will fund, subject to the terms and conditions of this Agreement, a
Purchase Price Increase for the Mezzanine Subsidiary

 

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Interests based upon the acquisition of additional Mezzanine Subsidiary Assets
by the Mezzanine Subsidiary.

 

After the initial Purchase Date, as part of separate Transactions, any Seller
may request, and Buyer will fund, subject to the terms and conditions of this
Agreement, an increase to the Purchase Price for a Purchased Asset based on an
increase in Asset Value solely resulting from the satisfaction, in whole, or in
part, of a Future Funding Obligation.

 

SECTION 2.                                   DEFINITIONS

 

As used herein, the defined terms set forth below shall have the meanings set
forth herein.  Any capitalized term used but not defined herein shall have the
meaning assigned to such term in the Pricing Letter.  Additionally, as used
herein, the following terms shall have the meanings defined in the Uniform
Commercial Code: accounts, chattel paper (including electronic chattel paper),
goods (including inventory and equipment and any accessions thereto),
instruments (including promissory notes), documents, investment property,
general intangibles (including payment intangibles and software), and supporting
obligations, products and proceeds.

 

“1934 Act” shall have the meaning set forth in Section 33 of the Agreement.

 

“A-Note” shall mean the original promissory note, if any, that was executed and
delivered in connection with the senior or pari passu senior position of a
Commercial Mortgage Loan.

 

 “Accepted Servicing Practices” shall mean, with respect to any Purchased Asset
or Mezzanine Subsidiary Asset, servicing (a) in accordance with (i) applicable
laws, (ii) the terms and provisions of the Asset File, (iii) the express terms
of the Collateral Administration Agreement, and (iv) the customary and usual
standards of practice of prudent institutional commercial mortgage loan and
mezzanine loan servicers, and (b) to the extent consistent with the foregoing
requirements, in the same manner in which Collateral Administrator services
commercial loans for its own account and for other third party portfolios of
loans similar to the Purchased Assets and Mezzanine Subsidiary Assets, whichever
is higher, but without regard to any relationship that Collateral Administrator
or any Affiliate of Collateral Administrator may have with the related Obligor
or any Affiliate of such Obligor or to Collateral Administrator’s right to
receive compensation for its services under the Collateral Administration
Agreement.

 

“Acquisition Cost” shall mean the total cost to the applicable Seller of
originating or acquiring a Purchased Asset or Mezzanine Subsidiary Asset, which
shall mean (i) with respect to an originated Purchased Asset or Mezzanine
Subsidiary Asset, the outstanding principal balance advanced by Sellers to the
related Obligor or Mezzanine Borrower, as applicable or (ii) with respect to an
acquired Purchased Asset or Mezzanine Subsidiary Asset, the purchase price paid
by Sellers for such Purchased Asset or Mezzanine Subsidiary Asset plus any
principal balance advanced by the Sellers to the related Obligor or Mezzanine
Borrower, as applicable, prior to the Purchase Date and any subsequently funded
Future Funding Amount.

 

“ACRC” shall mean ACRC Lender U LLC.

 

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“ACRC TRS” shall mean ACRC Lender U TRS LLC.

 

“Adjusted EBITDA” shall mean, with respect to any Person and for any Test
Period, an amount equal to the sum of (a) Net Income (or loss) of such Person
(prior to any impact from minority or non-controlling interests or joint venture
net income and before deduction of any dividends on preferred stock of such
Person), plus the following (but only to the extent actually included in
determination of such Net Income (or loss)): (i) depreciation and amortization
expense (other than those related to capital expenditures that have not been
included in the calculation of Fixed Charges), (ii) interest expense, (iii)
income tax expense, (iv) extraordinary or non-recurring gains, losses and
expenses, including but not limited to transaction expenses relating to business
combinations, other acquisitions and unconsummated transactions, (v) unrealized
loan loss reserves, impairments associated with owned real estate, and other
similar charges, including but not limited to reserves for loss sharing
arrangements associated with mortgage servicing rights, (vi) realized losses on
loans and loss sharing arrangements associated with mortgage servicing rights
and (vii) unrealized gains, losses and expenses associated with (A) derivative
liabilities including but not limited to convertible note issuances and (B)
mortgage servicing rights (other than the initial revenue recognition of
recording an asset), plus (b) such Person’s proportionate share of Net Income
(prior to any impact from minority or non-controlling interests or joint venture
net income and before deduction of any dividends on preferred stock of such
person) of the joint venture investments and unconsolidated Affiliates of such
Person, all with respect to such period.

 

“Affiliate” shall mean with respect to any Person, any “affiliate” of such
Person, as such term is defined in the Bankruptcy Code.

 

“Agreement” shall mean this Master Repurchase Agreement among Buyer and each
Seller Party, dated as of the date hereof, as the same may be amended,
supplemented or otherwise modified in accordance with the terms of the
Agreement.

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Annual Debt Service” shall mean, for any Purchased Asset or Mezzanine
Subsidiary Asset, as applicable (a) twelve (12) times the monthly payment in
effect on the date of determination with respect to (x) the related Purchased
Asset or (y) in the case of a Mezzanine Subsidiary Asset, such Mezzanine
Subsidiary Asset plus the related Commercial Mortgage Loan or (b) if the related
Purchased Asset or Mezzanine Subsidiary Asset or related Commercial Mortgage
Loan, as applicable provides for an initial interest-only period and provides
for scheduled amortization payments thereafter, twelve (12) times the average
monthly payment of principal and interest payable during the amortization
period.  Annual debt service and debt service coverage ratios are calculated
using the average of the interest payments for the twelve (12) month period
immediately preceding the date of determination or, if less than twelve (12)
monthly payments have occurred, the average of the interest payments for such
period; provided, that if a Future Funding Amount is paid by a party other than
Buyer in respect of such Purchased Asset or Mezzanine Subsidiary Asset with a
Future Funding Obligation, such Future Funding Amount shall not be included for
purposes of calculating the Annual Debt Service.

 

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“Annual Financial Statement Date” shall have the meaning set forth in the
Pricing Letter.

 

“Anti-Money Laundering Laws” shall have the meaning set forth in Section 11(x)
of the Agreement.

 

“Appraised Value” shall mean, with respect to any Purchased Asset or Mezzanine
Subsidiary Asset, the “as is” value set forth in a Qualified Appraisal of the
related Mortgaged Property.

 

“Approved Bailee” shall have the meaning assigned to such term in the Custodial
Agreement.

 

“Approved CPA” shall mean Ernst & Young LLP and its successors or any other “big
four” accounting firm.

 

“Approved Product” shall mean each Product approved by Buyer as identified in
the Pricing Letter.  Notwithstanding any reference to a Product herein, such
Product shall not be an Approved Product unless expressly identified as such in
the Pricing Letter or Transaction Request/Purchase Price Increase and
Confirmation.

 

“Approved Underwriting Guidelines” shall mean the underwriting guidelines
attached hereto as Exhibit E approved by Buyer in writing in its sole discretion
prior to the initial Purchase Date and any amendments thereto approved by Buyer
in accordance with Section 3(b)(x) hereof.

 

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

 

“Asset Diligence Cap” shall have the meaning set forth in the Pricing Letter.

 

 “Asset Manager” shall mean Situs Asset Management LLC, or any other asset
manager agreed among Sellers and Buyer, and as further set forth in Section
16(g) of the Agreement.

 

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

 

“Asset Schedule” shall mean with respect to any Transaction as of any date, an
Asset Schedule in the form of a computer tape or other electronic medium
generated by any or all Sellers and delivered to Buyer in accordance with the
terms of this Agreement and to Custodian as set forth in the Custodial
Agreement, which provides information relating to the Purchased Assets and
Mezzanine Subsidiary Assets in the form of Annex 1 to Exhibit F hereto.

 

“Asset Value” shall have the meaning set forth in the Pricing Letter.

 

“Assignment and Acceptance” shall have the meaning set forth in Section 18 of
the Agreement.

 

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“Assignment of Leases” shall mean, with respect to any Mortgage or other
security agreement, 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.

 

“Assignment of Mortgage” shall mean 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 sale of the Mortgage or other security agreement.

 

“ASTM” shall have the meaning set forth in Schedule 1 of the Agreement.

 

“B-Note” shall mean the original promissory note, if any, that was executed and
delivered in connection with the junior position of a Commercial Mortgage Loan.

 

 “Bailee Agreement” shall have the meaning assigned to such term in the
Custodial Agreement.

 

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

 

“Blank Assignment Documents” shall have the meaning set forth in Section
3(b)(vii) of the Agreement.

 

“Business Day” shall mean a day other than (i) a Saturday or Sunday, (ii) any
day on which banking institutions are authorized or required by law, executive
order or governmental decree to be closed in the State of New York, or (iii) any
day on which the New York Stock Exchange is closed.

 

“Buyer” shall mean UBS Real Estate Securities Inc., its permitted successors in
interest and assigns pursuant to Section 18 and, with respect to Section 7, its
participants.

 

“Capital Lease Obligations” shall mean, with respect to any Person, the amount
of all obligations of such Person to pay rent or other amounts under a lease of
property to the extent and in the amount that such obligations are required to
be classified and accounted for as a capital lease on a balance sheet of such
Person.

 

“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.

 

“Change in Control” shall mean the occurrence of any of the following events: 
(a) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become,
or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a percentage

 

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of the total voting power of all classes of Capital Stock of Guarantor entitled
to vote generally in the election of directors, of thirty-five percent (35%) or
more; (b) Guarantor shall cease to own and control, of record and beneficially,
directly or indirectly, one-hundred percent (100%) of the outstanding membership
interest of ACRC Lender U LLC; (c) Guarantor shall cease to own and control, of
record and beneficially, directly or indirectly, one-hundred percent (100%) of
the outstanding membership interest of ACRC Lender U TRS LLC; (d) ACRC Lender U
LLC shall cease to own and control, directly one-hundred percent (100%) of the
outstanding membership interest of ACRC Lender U Mezz LLC; (e) Collateral
Administrator shall cease to be one-hundred percent (100%) owned and controlled,
of record and beneficially, directly or indirectly by Ares Management LLC or
Guarantor, or one or more of their respective Affiliates; or (f) the sale,
transfer, or other disposition of all or substantially all of Guarantor’s
assets.

 

“CLTA” shall mean California Land Title Association, or any successor thereto.

 

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

 

“Collateral Administration Agreement” shall mean (i) that certain Collateral
Administration Agreement, dated April 9, 2014, among Collateral Administrator,
Buyer, Sellers and Mezzanine Subsidiary, amended from time to time with the
consent of Buyer, or (ii) any other collateral administrator agreement as
approved by Buyer in its sole discretion.

 

“Collateral Administrator” shall mean Ares Commercial Real Estate Servicer LLC,
or a nationally recognized third party, or any other party as agreed upon by
Sellers and Buyer.

 

“Collateral Administrator Default” shall mean any “event of default” under the
Collateral Administration Agreement.

 

“Collateral Administrator MAE” shall mean a material adverse effect on (a) the
Property, business, operations or condition (financial or otherwise) of the
Collateral Administrator, (b) the ability of the Collateral Administrator to
perform its obligations under any of the Program Documents to which it is a
party or the Collateral Administration Agreement or (c) the validity or
enforceability of any of the Program Documents or the Collateral Administration
Agreement.

 

“Collateral Administrator Notice” shall mean (i) the notice and pledge agreement
among Sellers and Mezzanine Subsidiary and Buyer and acknowledged by Collateral
Administrator, in the form of Exhibit J-1 hereto, if the Collateral
Administrator is an Affiliate of any Seller Party and (ii) the notice
acknowledged by a third-party Collateral Administrator substantially in the form
of Exhibit J-2 hereto, if the Collateral Administrator is not an Affiliate of
any Seller Party.

 

“Commercial Mortgage Loan” shall mean a fixed or floating rate senior mortgage
loan that is secured by a first mortgage lien (subject to customary permitted
liens as set forth on Schedule 1 hereto) on one or more properties that are each
used as an Approved Product.

 

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“Commercial Mortgage Loan Documents” shall mean the documentation governing a
Commercial Mortgage Loan and all ancillary documents related thereto.

 

“Commitment Fee” shall have the meaning set forth in the Pricing Letter.

 

“Competitor” shall mean each entity set forth on Schedule 4.

 

“Complete Submission” shall mean with respect to any Transaction, the Summary
Diligence Materials, which shall include the Schedule of Exceptions to be
attached to the applicable Transaction Request/Purchase Price Increase and
Confirmation (if any), together with the Asset Schedule to be attached thereto.

 

“Confidential Terms” shall have the meaning set forth in Section 31 of the
Agreement.

 

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

 

“Control Accounts” shall have the meaning set forth in Section 5(a) of the
Agreement.

 

“Control Agreement” shall mean a letter agreement relating to the Control
Account, in form and substance acceptable to Buyer, as the same may be amended
from time to time.

 

“Costs” shall have the meaning set forth in Section 15(a) of the Agreement.

 

“Credit Event” shall mean an event or circumstance relating to the Mortgaged
Property that could reasonably be expected to have a material adverse effect on
the value, operations or cash flows of the Mortgaged Property, as determined by
Buyer in its good faith discretion.

 

“Credit File” shall mean with respect to each Purchased Asset and Mezzanine
Subsidiary Asset, the documents and instruments relating to the origination and
administration of such Purchased Asset or Mezzanine Subsidiary Asset, as
applicable.

 

“Custodial Agreement” shall mean that certain Custodial Agreement dated as of
the date hereof, among each Seller, Mezzanine Subsidiary, Buyer and Custodian as
the same may be amended from time to time.

 

“Custodial Asset Transmission” shall have the meaning set forth in the Custodial
Agreement.

 

“Custodial Delivery Letter” shall have the meaning set forth in the Custodial
Agreement.

 

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“Custodial Fees” shall mean the fees charged by the Custodian under the
Custodial Agreement.

 

“Custodian” shall mean Wells Fargo Bank, National Association or any successor
thereto under the Custodial Agreement.

 

“Debt” shall mean, with respect to any Person: (i) all indebtedness, whether or
not represented by bonds, debentures, notes, securities, or other evidences of
indebtedness, for the repayment of money borrowed, (ii) all indebtedness
representing deferred payment of the purchase price of property or assets
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (iii) all indebtedness under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet purposes,
(iv) all indebtedness under guaranties, endorsements, assumptions, or other
contingent obligations, in respect of, or to purchase or otherwise acquire,
indebtedness of others, and (v) all indebtedness secured by a lien existing on
property owned, subject to such lien, whether or not the indebtedness secured
thereby shall have been assumed by the owner thereof.

 

“Debt Service” shall mean for any Test Period, the sum of (a) Interest Expense
for any Person for such period, determined on a consolidated basis, and (b) all
regularly scheduled principal payments made with respect to Debt of such Person
and its subsidiaries during such period, other than any voluntary prepayment or
prepayment occasioned by the repayment of an underlying asset, or any balloon,
bullet, margin or similar principal payment which repays such Debt in part or in
full.

 

“Debt Service Coverage Ratio” or “DSCR” shall mean, with respect to any
Purchased Asset or Mezzanine Subsidiary Asset, as applicable, as of any date of
determination, the Underwritten Net Cash Flow for the related Mortgaged Property
divided by the Annual Debt Service of such Purchased Asset or Mezzanine
Subsidiary Asset, as applicable.

 

“DSCR Requirement Failure” shall have the meaning set forth in the Pricing
Letter.

 

“Default” shall mean an Event of Default or an event that with notice or lapse
of time or both would become an Event of Default.

 

“Defaulting Party” shall have the meaning set forth in Section 30 of the
Agreement.

 

“Delinquent Asset” shall mean any Purchased Asset or Mezzanine Subsidiary Asset
as to which any Scheduled Payment, or part thereof, remains unpaid following the
date that is sixty (60) days after the original Due Date for such Scheduled
Payment (after giving effect to any applicable grace period, cure period and/or
notice period).

 

“Distribution Worksheet” shall mean a worksheet setting forth the amounts and
recipients of remittances to be made on the next succeeding Payment Date,
substantially in the form of Exhibit B.

 

“Dollars” and “$” shall mean lawful money of the United States of America.

 

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“Due Date” shall mean the day of the month on which the Scheduled Payment is due
on a Purchased Asset or Mezzanine Subsidiary Asset, as applicable, exclusive of
any days of grace.

 

“E-Sign” shall mean the federal Electronic Signatures in Global and National
Commerce Act, as amended from time to time.

 

“Effective Date” shall mean the date upon which the conditions precedent set
forth in Section 3(a) shall have been satisfied.

 

“Electronic Record” shall mean “Record” and “Electronic Record,” both as defined
in E-Sign, and shall include but not be limited to, recorded telephone
conversations, fax copies or electronic transmissions.

 

“Electronic Signature” shall have the meaning set forth in E-Sign.

 

“Electronic Transactions” shall mean transactions conducted using Electronic
Records and/or Electronic Signatures or fax copies of signatures.

 

“Eligible Asset” shall mean (a) a Commercial Mortgage Loan, (b) a senior or pari
passu Participation Interest in an Eligible Asset that is evidenced by a
Participation Certificate, (c) if a Commercial Mortgage Loan is in an A/B
structure (where the A-Note is senior to the B-Note), the A-Note thereof, (d) a
junior Participation Interest in a Commercial Mortgage Loan that is evidenced by
a Participation Certificate (provided that the senior Participation Interest
with respect thereto is a Purchased Asset), (e) if a Commercial Mortgage Loan is
in an A/B structure (where the A-Note is senior to the B-Note), a B-Note
(provided that the A-Note with respect thereto is a Purchased Asset), (f) if a
Commercial Mortgage Loan is in an A-1/A-2 structure (where the A-1 Note and A-2
Note are pari passu), a A-1 Note and/or a A-2 Note, (g) a Mezzanine Subsidiary
Interest, or (h) a Mezzanine Loan (provided that the related Commercial Mortgage
Loan is a Purchased Asset); and in each instance, conforms with the applicable
representations and warranties set forth on Schedule 1 hereto in all material
respects, subject to such Schedule of Exceptions relating thereto as shall be
acceptable to Buyer in its good faith discretion.

 

“Environmental Condition” shall mean recognized environmental conditions (as
such term is defined in ASTM E1527-05 or its successor).

 

“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 substances, materials or other
pollutants, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq.; the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act (“RCRA”), 42 U.S.C. § 6901 et seq.; 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

 

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seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. §
1801 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. § 651 et
seq.; and any state and local or foreign analogues, counterparts or equivalents,
in each case as amended from time to time.

 

“EO13224” shall have the meaning set forth in Section 11(y) of the Agreement.

 

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

 

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

 

“ESA” shall have the meaning set forth in Schedule 1 of the Agreement.

 

“Escrow Instruction Letter” shall mean, with respect to a Table-Funded Asset, an
instruction letter delivered to the applicable title insurance company
substantially in the form of Exhibit L hereto or as otherwise approved by Buyer
in its sole good faith discretion.

 

“Event of Default” shall have the meaning set forth in Section 13 of the
Agreement.

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with
respect to Buyer or other recipient of any payment hereunder or required to be
withheld or deducted from a payment to Buyer or such other recipient: (a) Taxes
based on (or measured by) net income or net profits, franchise Taxes and branch
profits Taxes that are imposed on Buyer or other recipient of any payment
hereunder as a result of (i) being organized under the laws of, or having its
principal office or its applicable lending office located in the jurisdiction
imposing such Tax (or any political subdivision thereof), or (ii) that are Other
Connection Taxes; (b) any Tax imposed on Buyer or other recipient of a payment
hereunder that is attributable to such Buyer’s or other recipient’s failure to
comply with relevant requirements set forth in Section 7; (c) any withholding
Tax that is imposed on amounts payable to or for the account of Buyer or other
recipient of a payment hereunder pursuant to a law in effect on the date such
person acquires an interest in a Purchased Asset, or such person changes its
lending office, except in each case to the extent that, pursuant to Section 7,
amounts with respect to Taxes were payable either to such person’s assignor
immediately before such person acquired an interest in a Purchased Asset or to
such person immediately before it changed its lending office; and (d) any
withholding Taxes imposed under FATCA.

 

“Exit Fee” shall have the meaning set forth in the Pricing Letter.

 

“Expenses” shall mean all present and future reasonable and documented expenses
incurred by or on behalf of the Buyer in connection with this Agreement or any
of the other Program Documents and any amendment, supplement or other
modification or waiver related hereto or thereto, whether incurred heretofore or
hereafter, which expenses shall include,

 

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without limitation, the cost of title, lien, judgment and other record searches;
reasonable and documented attorneys’ fees; and costs of preparing and recording
any UCC financing statements or other filings necessary to perfect the security
interest created hereby.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement
entered into in connection with the implementation of such Sections of the Code
and any fiscal or regulatory legislation, rules or practices adopted pursuant to
such intergovernmental agreement.

 

“Fee Cap” shall have the meaning set forth in the Pricing Letter.

 

“Fidelity Insurance” shall mean insurance coverage with respect to employee
errors, omissions, dishonesty, forgery, theft, disappearance and destruction,
robbery and safe burglary, property (other than money and securities) and
computer fraud in an aggregate amount acceptable to Buyer.

 

“Financial Statements” shall have the meaning set forth in Section 12(d) of the
Agreement.

 

“Fixed Charge Coverage Ratio” shall mean Adjusted EBITDA (as determined in
accordance with GAAP) for the immediately preceding twelve (12) month period
ending on the last date of the applicable Test Period, divided by the Fixed
Charges for the immediately preceding twelve (12) month period ending on the
last date of the applicable Test Period.

 

“Fixed Charge Ground Lease” shall mean a ground lease containing the following
terms and conditions: (a) a remaining term (exclusive of any unexercised
extension options) of twenty (20) years or more from date the Mortgaged Property
was financed, (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.

 

“Fixed Charges” shall mean, with respect to any Person, at any time, the sum of
(a) Debt Service, (b) all preferred dividends that such Person is required,
pursuant to the terms of the certificate of designation or other similar
document governing the rights of preferred shareholders, to pay and is not
permitted to defer, (c) Capital Lease Obligations paid or accrued during such
period, and (d) any amounts payable under any Fixed Charge Ground Lease.

 

“Future Funding Amount” means the aggregate dollar amount of all unfunded Future
Funding Obligations.

 

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“Future Funding Obligations” means, with respect to a Purchased Asset or
Mezzanine Subsidiary Asset, any amount required to be advanced by the holder
after the first disbursement under such Purchased Asset or Mezzanine Subsidiary
Asset, as applicable, which as of the date of determination has not yet been
advanced.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America, applied on a consistent basis and applied to both classification of
items and amounts, and shall include, without limitation, the official
interpretations thereof by the Financial Accounting Standards Board, its
predecessors and successors.

 

“GLB Act” shall have the meaning set forth in Section 12(u) of the Agreement.

 

“Governmental Authority” shall mean any nation or government, any state, county,
municipality or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority) or any instrumentality or officer of any of the foregoing
(including, without limitation, any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions over any Seller
Party or Buyer, as applicable.

 

“Ground Lease” shall mean a lease for all or any portion of the real property
comprising the Mortgaged Property, the lessee’s interest in which is held by the
Obligor of the related Mortgage Loan.

 

“Ground Lessee” shall mean the lessee under a Ground Lease.

 

“Guarantor” shall mean Ares Commercial Real Estate Corporation, or any
successors in interest thereto.

 

“Hedge Agreement” shall mean any short sale of a US Treasury Security, or
futures contract, or mortgage related security, or Eurodollar futures contract,
or options related contract, or interest rate swap, cap or collar agreement.

 

“Hospitality” shall mean a real estate development owned by the Obligor or for
which the Obligor is a Ground Lessee, the primary usage of which is as a hotel
or motel which is part of a national or regional chain or franchise (determined
by Buyer in its sole discretion), including all land, amenities and
improvements, with individual rooms principally for short-term rental to tenants
occupying same.

 

“Income” shall mean, with respect to any Purchased Asset or Mezzanine Subsidiary
Asset at any time, any principal thereof received and all interest, dividends or
other distributions received thereon, in each case, until (a) repurchased by a
Seller or (b) with respect to a Mezzanine Subsidiary Asset, released by Buyer
pursuant to a Purchase Price Decrease, in each case, excluding (i) payments
received with respect to any Purchased Asset or Mezzanine Subsidiary Asset which
are designated for payment of escrows required thereunder, (ii) to the extent no
Event of Default shall have occurred and be continuing, any amounts that the
Collateral Administrator, or any servicer or subservicer, is permitted to net
from collections or otherwise withdraw from the Control Account, and (iii) to
the extent no Event of Default shall have occurred and be continuing and to the
extent received by Buyer, any amounts in excess of

 

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the outstanding principal balance of such Purchased Asset or Mezzanine
Subsidiary Asset (a) repurchased by a Seller or (b) with respect to a Mezzanine
Subsidiary Asset, released by Buyer pursuant to a Purchase Price Decrease, in
each case, pursuant to Section 3(e) or any other provision of this Agreement.

 

“Income Producing Property” shall mean a Commercial Mortgage Loan or Mezzanine
Loan that produces positive annual Adjusted EBITDA.

 

“Indebtedness” shall mean (i) all indebtedness for borrowed money or for the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business) and
all obligations under leases which are or should be under GAAP, recorded as
capital leases, in respect of which a person is directly or contingently liable
as borrower, guarantor, endorser or otherwise, or in respect of which a person
otherwise assures a creditor against loss, (ii) all obligations for borrowed
money or for the deferred purchase price of a property or services secured by
(or for which the holder has an existing right, contingent or otherwise, to be
secured by) any lien upon property (including without limitation accounts
receivable and contract rights) owned by a person, whether or not such person
has assumed or become liable for the payment thereof (provided, that if recourse
is limited solely to such property, then the amount of such Indebtedness shall
in no event exceed the market value of such property), and (iii) all other
liabilities and obligations which would be classified in accordance with GAAP as
liabilities on a balance sheet.

 

“Indemnified Party” shall have the meaning set forth in Section 15(a) of the
Agreement.

 

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

 

“Industrial” shall mean a property owned by an Obligor or for which the Obligor
is a Ground Lessee, the primary usage of which is as an industrial property.

 

“Insolvency Event” shall mean, for any Person:

 

(a)                                 that such Person shall discontinue or
abandon operation of its business; or

 

(b)                                 that such Person shall fail generally to, or
admit in writing its inability to, pay its debts as they become due; or

 

(c)                                  a proceeding shall have been instituted in
a court having jurisdiction seeking a decree or order for relief in respect of
such Person in an involuntary case under any applicable bankruptcy, insolvency,
liquidation, reorganization or other similar Requirement of Law now or hereafter
in effect, or for the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator, conservator or other similar official of such Person,
or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, which proceeding shall not have been timely
contested and shall

 

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result in an order for relief which shall remain unstayed for a period of
forty-five (45) days; or

 

(d)                                 the commencement by such Person of a
voluntary case under any applicable bankruptcy, insolvency or other similar
Requirement of Law now or hereafter in effect, or such Person’s consent to the
entry of an order for relief in an involuntary case under any such Requirement
of Law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of such Person, or for any substantial part of its property, or
any general assignment for the benefit of creditors; or

 

(e)                                  if such Person is a corporation, such
Person shall take any corporate action in furtherance of, or the action of which
would result in any of the actions set forth in the preceding clauses (a), (b),
(c) or (d).

 

“Insurance Rating Requirements” shall mean, with respect to an insurer meeting
the requirements of the related Mortgage, a claims-paying or financial strength
rating of at least “A-:VIII” from A.M. Best Company or “A3” (or the equivalent)
from Moody’s or “A-” from S&P.

 

“Interest Expense” shall mean, with respect to any Person and for any Test
Period, the amount of total interest expense incurred by such Person, including
capitalized or accruing interest (but excluding interest funded under a
construction loan and the amortization of financing costs), plus such Person’s
proportionate share of interest expense from the joint venture investments and
unconsolidated Affiliates of such Person, all with respect to such period.

 

“IRS” shall have the meaning set forth in Section 7(b)(i) hereof.

 

“Lien” shall mean any lien, claim, charge, restriction, pledge, security
interest, mortgage, deed of trust or similar encumbrance.

 

“Litigation Threshold” shall have the meaning set forth in the Pricing Letter.

 

“LTV” shall mean with respect to any Purchased Asset or Mezzanine Subsidiary
Asset, as applicable, the ratio of the lesser of the Acquisition Cost or the
outstanding principal amount of such Purchased Asset or Mezzanine Subsidiary
Asset, as applicable, as of the date of determination, plus any other debt pari
passu or senior thereto secured directly or indirectly (including, without
limitation, Purchased Assets and Mezzanine Subsidiary Assets) by the Mortgaged
Property, to the Appraised Value of the Mortgaged Property.

 

“Margin Call” shall have the meaning set forth in Section 4(b) of the Agreement.

 

“Margin Deficit” shall have the meaning set forth in Section 4(b) of the
Agreement.

 

“Margin Threshold” shall mean $100,000.

 

“Market Value” shall have the meaning set forth in the Pricing Letter.

 

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“Material Adverse Effect” shall mean a material adverse effect on (a) the
Property, business, operations or condition (financial or otherwise) of any
Seller Party, (b) the ability of any Seller Party to perform its obligations
under any of the Program Documents to which it is a party, (c) the validity or
enforceability of any of the Program Documents, or (d) the rights and remedies
of Buyer under any of the Program Documents.

 

“Maximum Aggregate Purchase Price” shall have the meaning set forth in the
Pricing Letter.

 

“Maximum Committed Purchase Price” shall have the meaning set forth in the
Pricing Letter.

 

“Mezzanine Borrower” shall mean the borrower under the Mezzanine Loan Documents.

 

“Mezzanine Collateral” shall mean the collateral pledged in respect of a
Mezzanine Loan.

 

“Mezzanine Lender” shall have the meaning set forth in clause (35) on Schedule
1(c) of the Agreement.

 

“Mezzanine Loan” shall mean a loan to a Mezzanine Borrower that owns an interest
in a special purpose entity that directly owns real property and such loan is
secured by a pledge of equity interests in the owner of such real property.

 

“Mezzanine Loan Acquisition Agreement” shall mean with respect to each Mezzanine
Loan, the agreement, dated as of the date hereof, pursuant to which the
Mezzanine Subsidiary acquires such Mezzanine Loan from ACRC, as amended,
restated, supplemented or otherwise modified from time to time subject to
Buyer’s written consent.

 

“Mezzanine Loan Documents” shall mean the documentation governing a Mezzanine
Loan, and all ancillary documents related thereto, including, without
limitation, any intercreditor agreement.

 

“Mezzanine Loan Transfer Agreement” shall mean with respect to each Mezzanine
Subsidiary Asset, the agreement pursuant to which ACRC sells, assigns, transfers
and conveys all right, title and interest in such Mezzanine Subsidiary Asset to
the Mezzanine Subsidiary, in the form attached as Exhibit A to the Mezzanine
Loan Acquisition Agreement.

 

“Mezzanine Note” shall mean a note or other evidence of indebtedness of a
Mezzanine Borrower under a Mezzanine Loan.

 

“Mezzanine Property Owner” shall have the meaning set forth in clause (1) on
Schedule 1(c) of the Agreement.

 

“Mezzanine Repurchase Assets” shall have the meaning provided in
Section 8(c)(iii) of the Agreement.

 

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“Mezzanine Subsidiary” shall mean ACRC Lender U Mezz LLC, a wholly owned
Subsidiary of ACRC.

 

“Mezzanine Subsidiary Asset” shall mean the Mezzanine Loans owned by the
Mezzanine Subsidiary and shall include any Mezzanine Repurchase Asset related to
the foregoing subject to a Transaction, transferred by ACRC to, and owned by,
the Mezzanine Subsidiary, each as listed on the related Asset Schedule attached
to the related Transaction Request/Purchase Price Increase and Confirmation.

 

“Mezzanine Subsidiary Interests” means any and all of ACRC’s interests,
including Capital Stock, in Mezzanine Subsidiary including, without limitation,
all its rights to participate in the operation or management of Mezzanine
Subsidiary and all its rights to properties, assets, member interests and
distributions under the Mezzanine Subsidiary Organizational Documents in respect
of such member interests.  “Mezzanine Subsidiary Interests” also include (i) all
accounts receivable arising out of the applicable Mezzanine Subsidiary
Organizational Documents; (ii) all general intangibles arising out of the
applicable Mezzanine Subsidiary Organizational Documents; and (iii) to the
extent not otherwise included, all proceeds of any and all the foregoing
(including within proceeds, whether or not otherwise included therein, and any
and all contractual rights of ACRC under any revenue sharing or similar
agreement to receive all or any portion of the revenues or profits of such
Mezzanine Subsidiary).

 

“Mezzanine Subsidiary Organizational Documents” shall mean the certificate of
formation and operating agreement of the Mezzanine Subsidiary.

 

“Minimum Price Differential” shall have the meaning set forth in the Pricing
Letter.

 

“Minimum Purchase Price Debt Yield” shall have the meaning set forth in the
Pricing Letter.

 

“Mixed Use” shall mean a Mortgaged Property used for both residential and
non-residential purposes.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successors thereto.

 

“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
security interest in an estate in fee simple in real property and the
improvements thereon or a Ground Lease, securing a Mortgage Note or similar
evidence of indebtedness.

 

“Mortgage Loan” shall mean, with respect to any Purchased Asset, a mortgage loan
made in respect of the related Mortgaged Property.

 

“Mortgage Note” shall mean a note or other evidence of indebtedness of an
Obligor secured by a Mortgage that is a Purchased Asset, including an A-Note or
a B-Note.

 

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“Mortgaged Property” shall mean (a) with respect to a Commercial Mortgage Loan,
the real property or leasehold interest securing repayment of the debt evidenced
by a Mortgage Note; (b) with respect to a Participation Interest, the real
property securing the Commercial Mortgage Loan in which such Participation
Interest represents a participation and (c) with respect to a Mezzanine Loan,
the real property that is owned by the Mezzanine Property Owner.

 

“Multi-Family” shall mean a property owned by the Obligor or for which the
Obligor is a Ground Lessee, the primary usage of which is as a five-or-more
family residential property, including all land, amenities and improvements,
with individual units principally for lease to residential tenants occupying
same.

 

“Net Income” shall mean, for any Person for any period, the net income of such
Person for such period as determined in accordance with GAAP.

 

“Nondefaulting Party” shall have the meaning set forth in Section 30 of the
Agreement.

 

“Notice to Obligor/Mezzanine Borrower” shall mean a notice, substantially in the
form of Exhibit G hereto, which Buyer may send or cause to be sent to (a) each
Obligor of a Purchased Asset and (b) each Mezzanine Borrower with respect to a
Mezzanine Subsidiary Asset, in each case subject to a Transaction after the
occurrence and continuance of an Event of Default.

 

“Obligations” shall mean (a) any amounts owed by Sellers to Buyer in connection
with a Transaction hereunder, together with interest thereon (including interest
which would be payable as post-petition interest in connection with any
bankruptcy or similar proceeding) and all other fees or expenses which are
payable hereunder or under any of the Program Documents, and (b) all other
obligations or amounts owed by Sellers to Buyer or an Affiliate of Buyer under
any other contract or agreement relating to this Agreement, in each case,
whether such amounts or obligations owed are direct or indirect, absolute or
contingent, matured or unmatured.

 

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

 

“OFAC” shall have the meaning set forth in Section 11(y) of the Agreement.

 

“Office Building” shall mean a building owned by the Obligor or for which the
Obligor is a Ground Lessee, the primary usage of which is as an office building,
including all land, amenities and improvements, with individual office space
held principally for lease to commercial tenants and not principally for lease
to recreational or residential tenants.

 

“One-Month LIBOR” shall mean, with respect to each Pricing Rate Period during
which a Transaction is outstanding, the rate (calculated by Buyer, expressed as
a percentage per annum and rounded upward, if necessary, to the next nearest one
ten-thousandth of 1%) for deposits in United States Dollars for a one-month
period, which appears on Reuters ICE Libor Rates Page LIBOR01 (or such other
page as may replace that page on that service for the purpose of displaying
comparable rates or prices) as of 11:00 a.m., London time, on the Pricing

 

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Rate Determination Date or Reset Date, as applicable.  If such rate does not
appear on Reuters ICE Libor Rates Page LIBOR01 (or such other page as may
replace that page on that service for the purpose of displaying comparable rates
or prices) as of 11:00 a.m., London time on the Pricing Rate Determination Date
or Reset Date, as applicable, One-Month LIBOR for the next Pricing Rate Period
and such Pricing Rate Determination Date or Reset Date, as applicable, shall be
determined as follows.  Buyer shall request the principal London office of any
four (4) major reference banks in the London interbank market selected by Buyer
to provide such reference bank’s offered quotation to prime banks in the London
interbank market for deposits in United States dollars for a one (1) month
period as of 11:00 a.m., London time, on such Pricing Rate Determination Date or
Reset Date, as applicable, in a principal amount of not less than $1,000,000
that is representative for a single transaction in the relevant market at such
time.  If two (2) or more such offered quotations are so provided, One-Month
LIBOR shall be the arithmetic mean of such quotations.  If fewer than two
(2) such quotations are so provided, Buyer shall request any three (3) major
banks in New York City selected by Buyer to provide such bank’s rate for loans
in United States dollars to leading European banks for a one (1) month period as
of approximately 11:00 a.m., New York City time, on the Pricing Rate
Determination Date or Reset Date, as applicable, for deposits in a principal
amount of not less than $1,000,000 that is representative for a single
transaction in the relevant market at such time.  If two (2) or more such rates
are so provided, One-Month LIBOR shall be the arithmetic mean of such rates.  If
One-Month LIBOR cannot be determined in accordance with the foregoing provisions
for any Pricing Rate Period, then One-Month LIBOR for such Pricing Rate Period
shall be the One-Month LIBOR as determined for the immediately preceding Pricing
Rate Period.

 

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

 

“Other Taxes” shall mean any and all present or future stamp, court or
documentary, intangible, recording, filing or similar Taxes arising from any
payment made hereunder or from the execution, delivery, performance, enforcement
or registration of, from the receipt or perfection of a security interest under,
or otherwise with respect to, any Program Document, except any such Taxes that
are Other Connection Taxes imposed with respect to an assignment (other than an
assignment made pursuant to Section 18).

 

“Participant Register” shall have the meaning set forth in Section 19(c) of the
Agreement.

 

“Participation Certificate” shall mean the original participation certificate,
if any, that was executed and delivered in connection with a Participation
Interest.

 

“Participation Interest” shall mean a performing senior or pari passu senior or
junior participation interest in a performing Commercial Mortgage Loan evidenced
by a Participation Certificate.

 

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“Payment Date” shall mean the third (3rd) day of each calendar month (or the
succeeding Business Day if such day is not a Business Day).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

 

“Person” shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, unincorporated
association or government (or any agency, instrumentality or political
subdivision thereof).

 

“Plan” shall have the meaning set forth in Section 11(s) of the Agreement.

 

“PML” shall have the meaning set forth in Schedule 1 of the Agreement.

 

“Post-Default Rate” shall have the meaning set forth in the Pricing Letter.

 

“Power of Attorney” shall have the meaning set forth in Section 8(c) of the
Agreement.

 

“Price Differential” shall mean, with respect to any Transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing Rate
(or, during the continuation of an Event of Default, by daily application of the
Post-Default Rate) to the 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 Repurchase Date (reduced by any amount of such Price Differential previously
paid by Sellers to Buyer with respect to such Transaction).

 

“Price Differential Shortfall” shall have the meaning set forth in the Pricing
Letter.

 

“Pricing Letter” shall mean that certain letter agreement among Buyer and each
Seller Party, dated as of the date hereof, as the same may be amended from time
to time.

 

“Pricing Rate” shall have the meaning set forth in the Pricing Letter.

 

“Pricing Rate Determination Date” shall mean in the case of the first Pricing
Rate Period with respect to any Transaction, the first day on which such Pricing
Rate Period begins.

 

“Pricing Rate Period” shall mean (a) with respect to the first Payment Date, the
period from and including the applicable Purchase Date through and including the
last day of the calendar month in which such Purchase Date occurs, and (b) with
respect to any subsequent Payment Date, the period from and including the 1st
calendar day of the month preceding the applicable Payment Date through and
including the last calendar day of the month in which the applicable Payment
Date occurs.

 

“Pricing Spread” shall have the meaning set forth in the Pricing Letter.

 

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“Principal Payment” shall mean, for any Purchased Asset or Mezzanine Subsidiary
Asset, any amount applied to reduce the principal or other invested amount of
such Purchased Asset or Mezzanine Subsidiary Asset, as applicable, including,
without limitation, (i) a scheduled principal payment, (ii) principal
prepayments from any source and of any nature whatsoever, (iii) net insurance or
net condemnation proceeds, to the extent applied to reduce the principal amount
or other invested amount of the related Purchased Asset or Mezzanine Subsidiary
Asset, as applicable, or (iv) any net proceeds from any sale, refinancing,
liquidation or other disposition of the underlying real property or interest
relating to such Purchased Asset or Mezzanine Subsidiary Asset, as applicable to
the extent applied to reduce the principal amount or the invested amount of the
related Purchased Asset or Mezzanine Subsidiary Asset, as applicable.

 

“Private Pay Assisted Living Facility” shall mean a property owned by the
Obligor the primary usage of which is as an assisted living facility for senior
citizens whereby residents are required to pay for housing, care and other
services (excluding auxiliary services that comply with the immediately
succeeding sentence) out-of-pocket and not from Medicaid funds.  Auxiliary
services may be provided to such residents by one or more entities separate from
the Obligor who are subject to appropriate regulatory licenses governing such
services, provided that such auxiliary services shall not exceed 10% of gross
annual Income generated by such Mortgaged Property.

 

“Product” shall have the meaning set forth in the Pricing Letter.

 

“Program Documents” shall mean this Agreement, the Pricing Letter, the Custodial
Agreement, the Securitization Exclusivity Letter, the Program Guaranty, each
Control Agreement, the Collateral Administration Agreement, the Collateral
Administrator Notice, if any, the Mezzanine Loan Acquisition Agreement, each
Mezzanine Loan Transfer Agreement, the Mezzanine Subsidiary Organizational
Documents and the Power of Attorney.

 

“Program Guaranty” shall mean that certain guaranty made by Guarantor in favor
of Buyer, as amended from time to time.

 

“Prohibited Person” shall have the meaning set forth in Section 11(y) of the
Agreement.

 

“Property” shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

 

“Purchase Date” shall mean the date on which Purchased Assets are sold by any
Seller to Buyer, or, in the case of Mezzanine Subsidiary Assets, the date on
which such Mezzanine Subsidiary Assets are transferred by ACRC to the Mezzanine
Subsidiary subject to the lien granted to Buyer.

 

“Purchase Closing Statement” shall mean the form attached as Annex 2 to the
Transaction Request/Purchase Price Increase and Confirmation for each Eligible
Asset proposed to be sold to Buyer in accordance with, and subject to the terms
and conditions of, this Agreement.

 

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“Purchase Price” shall have the meaning set forth in the Pricing Letter.

 

“Purchase Price Decrease” shall mean a decrease in the Purchase Price for a
Purchased Asset that is a Mezzanine Subsidiary Interest equal to the Purchase
Price attributed to a Mezzanine Subsidiary Asset on the date such Mezzanine
Subsidiary Asset is transferred to a Person such that it is no longer subject to
a Transaction hereunder, and the decrease in value of the Purchase Price arising
from the Mezzanine Subsidiary Interests related thereto.

 

“Purchase Price Debt Yield” shall have the meaning set forth in the Pricing
Letter.

 

“Purchase Price Debt Yield Failure” shall have the meaning set forth in the
Pricing Letter.

 

“Purchase Price Increase” means (a) an increase in the Purchase Price, pursuant
to Section 3(c) hereof, for a Purchased Asset with a Future Funding Obligation
based upon the additional amount funded with respect to such Future Funding
Obligation (pursuant to Section 3(b)(xiii) hereof, for purposes of determining
the Purchase Price Increase with respect to a Purchased Asset with a Future
Funding Obligation) or (b) an increase in the Purchase Price for the Mezzanine
Subsidiary Interests equal to the Purchase Price attributed to a Mezzanine
Subsidiary Asset, on the Purchase Date of such Mezzanine Subsidiary Asset, as
requested by Sellers pursuant to Section 3(c) hereof.

 

“Purchase Price Percentage” shall have the meaning set forth in the Pricing
Letter.

 

“Purchased Asset” shall mean each of the Commercial Mortgage Loans and Mezzanine
Subsidiary Interests (or other Eligible Assets), together with the related
Repurchase Assets and Mezzanine Repurchase Assets transferred by any Seller to
Buyer in a Transaction hereunder, listed on the related Asset Schedule attached
to the related Transaction Request/Purchase Price Increase and Confirmation.

 

“Qualified Appraisal” shall mean an appraisal of the related Mortgaged Property
signed by a qualified appraiser who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof; and whose
compensation was and is not affected by the approval or disapproval of the
Commercial Mortgage Loan or Mezzanine Loan, and such appraisal and appraiser
both satisfied either (i) the requirements of the “Uniform Standards of
Professional Appraisal Practice” as adopted by the Appraisal Standards Board of
the Appraisal Foundation, or (ii) the guidelines in Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in
effect on the date such Commercial Mortgage Loan was originated.

 

“Quarterly Financial Statement Date” shall have the meaning set forth in the
Pricing Letter.

 

“Records” shall mean all instruments, agreements and other books, records, and
reports and data stored in other media maintained by any Seller or any other
person or entity with respect to a Purchased Asset or Mezzanine Subsidiary
Asset.  Records shall include the Mortgage Notes, Mezzanine Notes, any
Mortgages, the Asset Files, the credit files related to the

 

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Purchased Asset or Mezzanine Subsidiary Asset and any other instruments
necessary to document or service a Purchased Asset or Mezzanine Subsidiary
Asset.

 

“Recourse Debt” shall mean, without duplication, (a) Debt of a consolidated
Subsidiary of Guarantor for which Guarantor has provided a payment guarantee and
(b) any Debt of Guarantor other than Debt in respect of which recourse for
payment (except for customary exceptions for fraud, misrepresentation,
misapplication of cash, waste, environmental claims and liabilities, prohibited
transfers, violations of single purpose entity covenants and other circumstances
customarily excluded by institutional lenders from exculpation provisions and/or
included in separate guaranty or indemnification agreements in non-recourse or
tax-exempt financings of real estate) is contractually limited to specific
assets of Guarantor (and not a majority of Guarantor’s assets) encumbered by a
Lien securing such Debt.

 

“Register” shall have the meaning set forth in Section 19(b) of the Agreement.

 

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

 

“REIT” shall mean a real estate investment trust, as defined in Section 856 of
the Code.

 

“REIT Distribution Requirement” shall mean for any taxable year, an amount of
dividends sufficient to meet the requirements of Section 857(a) of the Code.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .21, .22, .24, .26, .27 or .28 of PBGC Reg. § 4043.

 

“Reporting Date” shall mean the 20th day of each month, or if such day is not a
Business Day, the next succeeding Business Day.

 

“Reporting Period” shall have the meaning provided in Section 11(s) of the
Agreement.

 

“Repurchase Assets” shall have the meaning provided in Section 8(a) of the
Agreement.

 

“Repurchase Date” shall mean the date on which any or all Sellers are to
repurchase any or all Purchased Assets or Mezzanine Subsidiary Assets subject to
a Transaction from Buyer or the date on which a Purchased Asset or Mezzanine
Subsidiary Asset shall no longer be subject to a Transaction, which shall be the
earliest of (i) the Termination Date or (ii) any date determined by application
of the provisions of Sections 3(d) or 14.

 

“Repurchase Price” shall mean (a) the price at which Purchased Assets are to be
transferred from Buyer or its designee to the Sellers upon termination of a
Transaction or (b) the price at which Mezzanine Subsidiary Assets shall be
transferred from the Mezzanine Subsidiary and released from lien of Buyer,
which, in either case, will be determined in each case (including

 

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Transactions terminable upon demand) as the sum of the Purchase Price for the
related Purchased Asset or Mezzanine Subsidiary Asset, as applicable, and the
accrued but unpaid Price Differential for the related Purchased Asset or
Mezzanine Subsidiary Asset, as applicable, plus any fees due as of the date of
such determination in respect of the Repurchase Price for such Purchased Asset
or Mezzanine Subsidiary Asset, as applicable, les any amounts received by Buyer
to the date of such determination.

 

“Request for Repurchase/Purchase Price Decrease and Confirmation” shall mean a
request from a Seller to Buyer, in the form attached as Exhibit H hereto, to
repurchase Purchased Assets subject to a Transaction or cause a Purchase Price
Decrease with respect to a Transaction as a result of the release of a Mezzanine
Subsidiary Asset.

 

“Requirement of Law” shall mean as to any Person, any law, treaty, rule,
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its Property is subject.

 

“Requirement of Law Notice” shall have the meaning provided in Section 6(c) of
the Agreement.

 

“Requirement of Law Premium” shall have the meaning provided in Section 6(b) of
the Agreement.

 

“Re-Registration” shall mean the delivery of a Mezzanine Subsidiary Interests by
ACRC to Buyer and the registration of such Mezzanine Subsidiary Interests in the
name of the Buyer.

 

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

 

“Responsible Officer” shall mean an officer of a Seller Party listed on Schedule
2 hereto, as such Schedule 2 may be amended from time to time, or any other
officer deemed reasonably acceptable by Sellers and Buyer.

 

“Retail” shall mean a property owned by the Obligor or for which the Obligor is
a Ground Lessee, the primary usage of which is as one or more retail stores,
held principally for lease to one or more commercial retail tenants and not
principally for lease to recreational or residential tenants.

 

“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

 

“Schedule of Exceptions” shall mean the schedule attached to the Transaction
Request/Purchase Price Increase and Confirmation, which shall set forth any
exceptions to the representations and warranties (i) made pursuant to Section 11
of the Agreement, and (ii) set forth in Schedule 1, with respect to each
Purchased Asset or Mezzanine Subsidiary Asset covered thereby.

 

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“Scheduled Payment” shall mean the scheduled payment of principal and/or
interest on a Purchased Asset or Mezzanine Subsidiary Asset.

 

“SEC” shall have the meaning set forth in Section 33 of the Agreement.

 

“Section 4402” shall have the meaning set forth in Section 30 of the Agreement.

 

“Securitization Exclusivity Letter” shall mean the letter entered into among
Buyer and Seller Parties, and referencing, “Securitization Exclusivity Side
Letter: UBS-ARES”.

 

“Self-Storage” shall mean a property owned by an Obligor or for which the
Obligor is a Ground Lessee, the primary usage of which is a self-storage
facility.

 

“Seller” shall mean ACRC and ACRC TRS, or any of their respective successors in
interest thereto.

 

“Seller Party” shall mean each Seller, Mezzanine Subsidiary and Guarantor,
collectively, the “Seller Parties”.

 

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

 

“Servicing Term” shall have the meaning set forth in Section 16(a) of the
Agreement.

 

“SIPA” shall have the meaning set forth in Section 33 of the Agreement.

 

“Stockholders’ Equity” shall refer to that which is reflected as stockholders’
equity on a Person’s most recent unaudited quarterly statements or audited
annual balance sheet, as applicable, in each case prepared in accordance with
GAAP.

 

“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 with those of such Person
pursuant to GAAP.

 

“Summary Diligence Materials” shall mean the items described on Annex 3 to
Exhibit F hereto for each Eligible Asset proposed to be sold to Buyer in
accordance with, and subject to the terms and conditions of, this Agreement.

 

“Table-Funded Asset” shall mean an Eligible Asset for which any Seller has
delivered a Transaction Request/Purchase Price Increase and Confirmation
pursuant to Section 3 hereof, and for which a complete Asset File has not been
delivered to Custodian prior to the

 

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related Purchase Date.  For the avoidance of doubt, a Purchased Asset shall be
considered a Table-Funded Asset until such time as the related Asset File is
delivered to the Custodian and the Custodian has indicated receipt on a Trust
Receipt.

 

“Tangible Net Worth” shall mean, with respect to any Person, all amounts that
would be included under capital or shareholder’s equity (or any like caption) on
the balance sheet of such Person, minus (a) amounts owing to that Person from
any Affiliate thereof, or from officers, employees, partners, members,
directors, shareholders or other Persons similarly affiliated with such Person
or any Affiliate thereof, (b) intangible assets, and (c) prepaid taxes and/or
expenses, plus deferred origination fees, net of deferred origination costs, all
on or as of such date. For sake of clarity, mortgage servicing rights shall not
be deemed to be intangible assets.

 

“Tax Compliance Certificate” shall have the meaning set forth in
Section 7(b)(ii) hereof.

 

“Taxes” shall mean any and all present or future taxes (including social
security contributions and value added taxes), levies, imposts, duties
(including stamp duties), deductions, charges (including ad valorem charges),
withholdings (including backup withholding), assessments, fees or other charges
of any nature whatsoever imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.

 

“Termination Date” shall have the meaning set forth in the Pricing Letter.

 

“Test Period” shall mean the time period from the first day of each calendar
quarter through and including the last day of such calendar quarter.

 

“Third Party Participants” shall have the meaning set forth in Section 12(w) of
the Agreement.

 

“Third Party Transaction Parties” shall have the meaning set forth in Section 17
of the Agreement.

 

“Title Exception” shall have the meaning set forth in Schedule 1 of the
Agreement.

 

“Title Policy” shall have the meaning set forth in Schedule 1 of the Agreement.

 

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

 

“Transaction Request/ Purchase Price Increase and Confirmation” shall mean a
request from any or all Sellers to Buyer, in the form attached as Exhibit F
hereto, to enter into a Transaction, which shall not be binding upon Buyer
unless and until countersigned by Buyer and delivered to Sellers.

 

“TRIA” shall have the meaning set forth in Schedule 1 of the Agreement.

 

“Trust Receipt” shall have the meaning set forth in the Custodial Agreement.

 

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“UCC-9 Policy” shall have the meaning set forth in clause (11) of Schedule
1(c) of the Agreement.

 

“Underwritten Net Cash Flow” shall mean the net operating income for the
Mortgaged Property, less tenant improvements, leasing commissions, and
replacement reserves for capital items and offset by interest, tenant
improvement, leasing commission, replacement and other reserves in place and
loan holdbacks allocated for such purposes and increased by an amount
appropriate for rents attributable to executed leases for tenants not yet
occupying the Mortgaged Property or rent concessions under such executed leases,
as based on Collateral Administrator’s underwriting and adjusted by Buyer, in
its good faith discretion.

 

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

 

“Warehouse Fees” shall have the meaning set forth in the Pricing Letter.

 

SECTION 3.                                   INITIATION; TERMINATION

 

(a)                                 Conditions Precedent to Initial
Transaction.  Buyer’s agreement to enter into the initial Transaction hereunder
is subject to the satisfaction, immediately prior to or concurrently with the
making of such Transaction, of the condition precedent that Buyer shall have
received from Sellers all of the following, each of which shall be satisfactory
in form and substance to Buyer and its counsel:

 

(i)                                     Program Documents.  The Program
Documents, duly executed and delivered to Buyer.

 

(ii)                                  Organizational Documents.  Certified
copies of the organizational documents of each Seller Party.

 

(iii)                               Good Standing Certificate.  A certified copy
of a good standing certificate from the jurisdiction of organization of each
Seller Party, dated as of no earlier than the date fourteen (14) Business Days
prior to the Effective Date.

 

(iv)                              Officer’s Certificate.  An officer’s
certificate of each Seller Party in form and substance acceptable to Buyer in
its sole discretion.

 

(v)                                 Opinions of Counsel.  An opinion of each
Seller Party’s and Collateral Administrator’s counsel, setting forth corporate,
enforceability, perfection, safe harbor and an Investment Company Act of 1940,
as amended (the “Investment Company Act”) opinion (provided that with respect to
the Mezzanine Subsidiary, such opinion shall indicate that it is not necessary
to register the Mezzanine Subsidiary under the Investment

 

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Company Act for reasons other than the exemption provided by Section 3(c)(1) or
Section 3(c)(7) of the Investment Company Act), which shall be acceptable to
Buyer and its counsel in their sole discretion.

 

(vi)                              Security Interest.  Evidence that all other
actions necessary or, in the opinion of Buyer, desirable to perfect and protect
Buyer’s interest in the Purchased Assets and other Repurchase Assets and
Mezzanine Subsidiary Assets and other Mezzanine Repurchase Assets have been
taken, including, without limitation, UCC searches and duly authorized and filed
Uniform Commercial Code financing statements on Form UCC-1.

 

(vii)                           Insurance.  Evidence that Seller Parties have
added endorsements for theft of warehouse lender money and collateral, naming
Buyer as a loss payee under its Fidelity Insurance and as a direct loss
payee/right of action under its errors and omissions insurance policy.

 

(viii)                        Fees.  Payment of any fees and other costs and
expenses due to Buyer hereunder to the extent the applicable Seller Party has
received an invoice for such fees at least two (2) Business Days prior to the
Effective Date.

 

(ix)                              Other Documents.  Such other documents as
Buyer may reasonably request, in form and substance reasonably acceptable to
Buyer.

 

(b)                                 Conditions Precedent to all Transactions. 
Upon satisfaction of the conditions set forth in this Section 3(b), Buyer shall
enter into a Transaction with Sellers up to the Maximum Committed Purchase Price
and with respect to any Transaction in excess of the Maximum Committed Purchase
Price and up to the Maximum Aggregate Purchase Price, Buyer may enter into a
Transaction in Buyer’s sole discretion.  Buyer’s entering into each Transaction
(including the initial Transaction) is subject to the satisfaction of the
following further conditions precedent, both immediately prior to entering into
such Transaction and also after giving effect thereto to the intended use
thereof:

 

(i)                                     Due Diligence Review.  Without limiting
the generality of Section 17 of the Agreement, Buyer shall have completed, to
its satisfaction, its preliminary due diligence review of the related Purchased
Assets and Mezzanine Subsidiary Assets, including a review of the Schedule of
Exceptions; provided that if the Mortgage Loan or Mezzanine Loan documents
prohibit or restrict Buyer from performing such due diligence review to the
satisfaction of Buyer and therefore Buyer fails to confirm such asset as an
Eligible Asset, such asset shall be an ineligible asset.

 

(ii)                                  No Default.  No Default or Event of
Default shall have occurred and be continuing under the Program Documents.

 

(iii)                               Representations and Warranties.  Both
immediately prior to the Transaction and also after giving effect thereto and to
the intended use thereof, the representations and warranties made by each Seller
Party in Section 11 of the Agreement, shall be true, correct and complete in all
material respects with the same force and effect

 

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as if made as of such Purchase Date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such specific
date).

 

(iv)                              Maximum Aggregate Purchase Price.  After
giving effect to the requested Transaction, the aggregate outstanding Purchase
Price attributable to all Purchased Assets subject to then outstanding
Transactions under this Agreement shall not exceed the Maximum Committed
Purchase Price without the prior consent of Buyer, and, in any case, shall not
exceed the Maximum Aggregate Purchase Price.

 

(v)                                 No Margin Deficit.  After giving effect to
the requested Transaction, no Margin Deficit shall have occurred or be
continuing.

 

(vi)                              Transaction Request/Purchase Price Increase
and Confirmation.  Sellers shall have delivered (A) to Buyer, not later than
11:00 a.m., New York time, ten (10) Business Days’ prior to the requested
Purchase Date, and to Custodian, in accordance with the timeframes set forth in
the Custodial Agreement, (1) a Transaction Request/Purchase Price Increase and
Confirmation with a requested Purchase Price of not less than (x) $250,000 or
(y) such lesser amount as agreed to by Buyer in its sole discretion, and shall
be in increments of not less than $10,000, and (2) an Asset Schedule with
respect to all Purchased Assets and Mezzanine Subsidiary Assets subject to the
requested Transaction and (B) in addition, with respect to any Table-Funded
Assets, (1) to the Approved Bailee a copy of the related Transaction
Request/Purchase Price Increase and Confirmation no later than 12:00 noon New
York time on the requested Purchase Date, to be held in escrow by the Approved
Bailee on behalf of Buyer pending finalization of the Transaction and (2) to
Buyer copies of the fully executed Bailee Agreement and Escrow Instruction
Letter including the appropriate wire instructions for the Purchase Price of the
related Purchased Asset no later than 12:00 noon New York time on the requested
Purchase Date.

 

(vii)                           Delivery of Asset File.  On or before each
Purchase Date with respect to each Purchased Asset and Mezzanine Subsidiary
Asset, the applicable Seller shall deliver or cause to be delivered to Buyer or
its designee (initially, the Custodian) the Custodial Delivery Letter in the
form attached hereto as Exhibit I.  In connection with each sale, transfer,
conveyance and assignment of a Purchased Asset or a Mezzanine Subsidiary Asset,
as applicable, on or prior to each Purchase Date with respect to such Purchased
Asset or on or prior to the fifth (5th) Business Day following the Purchase Date
with respect to a Table-Funded Asset (provided, that, if Buyer’s diligence
review of the related Asset File for a Table-Funded Asset requires the delivery
of a document or instrument or the equivalent contained in the Asset File that
the applicable Seller cannot deliver, or cause to be delivered, to Custodian at
the time they are required to be delivered, solely because of a delay caused by
the public recording office where such document or instrument has been delivered
for recordation, the delivery requirements set forth in this Agreement and the
Custodial Agreement shall be deemed to have been satisfied as to such
non-delivered document or instrument if a copy thereof (certified by the
applicable Seller to be a true and complete copy of the original thereof
submitted for recording) is delivered to Custodian on or before the date on
which such original is required to be delivered, and either the original of such
non-delivered document or instrument, or a

 

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photocopy thereof, with evidence of recording thereon, is delivered to Custodian
within ninety (90) days of the related Purchase Date, and, provided, further,
that Buyer may, but is not obligated to, consent to a later date for delivery of
any part of the Asset File in its sole discretion), the applicable Seller shall
deliver or cause to be delivered and released to the Custodian the documents set
forth in the Asset File, pertaining to each of the Purchased Assets and
Mezzanine Subsidiary Assets identified in the related Custodial Delivery Letter;
it being agreed that any assignment documents related to the transfer of the
Purchased Assets to Buyer shall be delivered in blank (the “Blank Assignment
Documents”).

 

(viii)                        Delivery of Trust Receipt.  Except in the case of
a Table-Funded Asset, Custodian shall have delivered to Buyer, in accordance
with the timeframes set forth in the Custodial Agreement, a Trust Receipt
(accompanied by a Custodial Asset Transmission) with respect to each Purchased
Asset and Mezzanine Subsidiary Asset subject to the requested Transaction.

 

(ix)                              Collateral Administrator Notice.  To the
extent not previously delivered, a Collateral Administrator Notice.

 

(x)                                 Approved Underwriting Guidelines.  The Buyer
has received and approved, in its good faith discretion, any material changes to
the Approved Underwriting Guidelines.

 

(xi)                              Fees and Expenses.  Buyer shall have received
all fees and reasonable expenses then due to Buyer as contemplated by Sections 9
and 15(b) which amounts, at Buyer’s option, may be withheld from the proceeds
remitted by Buyer to Sellers pursuant to any Transaction hereunder; and with
respect to those fees and expenses that do not have a specific due date
hereunder shall be due within thirty (30) days following the date a Responsible
Officer of any Seller Party has received an invoice related thereto.

 

(xii)                           No Violation of Law.  If any Requirement of Law
(other than with respect to any amendment made to Buyer’s certificate of
incorporation and bylaws or other organizational or governing documents) or any
change in the interpretation or application of any Requirement of Law thereof or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof shall result in Buyer’s entering into any
Transaction to be a violation of such Requirement of Law.

 

(xiii)                        Purchase Price Increases for Future Funding
Obligations.  The applicable Seller shall have requested a Purchase Price
Increase with respect to amounts funded under a Future Funding Obligation in
accordance with the time frames set forth in Section 3(c).

 

(xiv)                       Delivery of Mezzanine Subsidiary Interests.  ACRC
shall deliver to the Buyer or its designee, or otherwise as mutually agreed upon
by Sellers and Buyer, the original of the Mezzanine Subsidiary Interests
registered in the name of the Buyer or its designee.

 

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(xv)                          Delivery of Asset Assignment Agreement.  ACRC
shall have delivered to Buyer a Mezzanine Loan Transfer Agreement with respect
to each Mezzanine Subsidiary Asset transferred from ACRC to the Mezzanine
Subsidiary that is subject to a Transaction under this Agreement.

 

(xvi)                       Collateral Administrator Certification.  With
respect to a Purchased Asset with a Future Funding Obligation, the Collateral
Administrator shall have certified that all conditions to such Future Funding
Obligation have been satisfied.

 

(xvii)                    No Material Adverse Change.  Since the Effective Date
(in the case of the initial Transaction) or the most recent Purchase Date (in
the case of any other Transaction), no material adverse change shall have
occurred with respect to any Seller as determined by Buyer in its sole good
faith discretion.

 

(xviii)                 Repo Market.  No event or events shall have occurred
and/or be continuing in the sole good faith determination of Buyer resulting in
the effective absence of a “repo market” or comparable “lending market” for
financing debt obligations secured by commercial mortgage loans, mezzanine loans
or interests in commercial mortgage loans.

 

(xix)                       Notice to Obligors/Mezzanine Borrowers.  Sellers
shall deliver to the Custodian a completed and signed Notice to
Obligor/Mezzanine Borrower, substantially in the form of Exhibit G hereto, with
respect to each Purchased Asset and Mezzanine Subsidiary Asset subject to a
Transaction, which Notice to Obligor/Mezzanine Borrower shall not be sent to
such Obligor or Mezzanine Borrower, as applicable, until the occurrence and
continuation of an Event of Default.

 

Each Transaction Request/Purchase Price Increase and Confirmation delivered by
any or all Sellers hereunder shall constitute a certification by such Seller
that all the conditions set forth in this Section 3(b) (other than clauses (i),
(viii), (xii), and (xviii) hereof) have been satisfied (both as of the date of
such notice or request and as of Purchase Date).

 

(c)                                  Initiation.

 

(i)                                     The applicable Seller shall give Buyer,
Collateral Administrator, Asset Manager, and Custodian notice of the proposed
Purchase Date, not later than 11:00 a.m., New York time, ten (10) Business Days’
in advance of the proposed Purchase Date (the date on which such notice is
given, the “Notice Date”).  On the Notice Date, the applicable Seller shall
request that Buyer enter into a Transaction by furnishing to Buyer, Collateral
Administrator, Asset Manager, and to Custodian as specified in the Custodial
Agreement, a Transaction Request/Purchase Price Increase and Confirmation (with
respect to each Eligible Asset) accompanied by a Complete Submission, including,
without limitation, a proposed Asset Schedule.  In the event the Asset Schedule
provided by a Seller contains erroneous computer data, is not formatted properly
or the computer fields are otherwise improperly aligned, Buyer shall provide
written or electronic notice to the applicable Seller describing such error and
such Seller shall correct the computer data, reformat the Eligible Assets or
properly align the computer fields.  Such

 

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Transaction Request/Purchase Price Increase and Confirmation shall include all
information required by Buyer pursuant to Exhibit F to this Agreement.

 

(ii)                                  Following receipt of a Transaction
Request/Purchase Price Increase and Confirmation (such Transaction
Request/Purchase Price Increase and Confirmation shall be free of any erroneous
computer data and improperly formatted information as described in Section
3(c)(i) above) and a Complete Submission, Buyer shall, as hereinafter provided,
inform the applicable Seller of its election to enter into a Transaction to (1)
purchase any Purchased Assets proposed to be sold to Buyer by such Seller
hereunder or (2) permit the Mezzanine Subsidiary to acquire a Mezzanine Loan
that is otherwise an Eligible Asset.

 

(iii)                               Buyer or its designee shall have the right
to review all Eligible Assets proposed to be sold to Buyer, or acquired by the
Mezzanine Subsidiary, and conduct its own due diligence of such Eligible Assets
as Buyer determines in accordance with Section 17.  Buyer or its designee shall
conduct its diligence review within the following time frame beginning on the
Business Day following receipt of the Complete Submission: in the case of a
proposed Transaction of (i) up to five (5) Eligible Assets, fifteen (15)
Business Days; (ii) more than five (5) but no more than twenty-five (25)
Eligible Assets, twenty-five (25) Business Days, and (iii) more than twenty-five
(25) Eligible Assets, a time frame to be mutually agreed upon by Buyer and the
applicable Seller.  Upon completion of its review, Buyer shall confirm the terms
for such proposed Transaction attributable to the Eligible Asset, including the
Purchase Price, Purchase Price Increase, Purchase Price Percentage, the Asset
Value, the Pricing Rate, and the Repurchase Date for such Transaction.  The
terms thereof shall be set forth in the Transaction Request/Purchase Price
Increase and Confirmation signed by the applicable Seller, and confirmed by
Buyer by countersigning the Transaction Request/Purchase Price Increase and
Confirmation, to be returned to the applicable Seller by the end of the day on
each Purchase Date.  To the extent any term in the Transaction Request/Purchase
Price Increase and Confirmation is incomplete, inconsistent with, or otherwise
adds terms to the agreement, Buyer shall have no obligation to execute and/or
deliver the Transaction Request/Purchase Price Increase and Confirmation to the
applicable Seller or enter into such Transaction.

 

(iv)                              Upon satisfaction of the applicable conditions
precedent set forth in Sections 3(a) and 3(b) hereof, and subject to due
diligence review and approval of the proposed Purchased Assets or Mezzanine
Subsidiary Assets, as applicable, in accordance with Section 17, Buyer shall
agree to enter into such requested Transaction so long as the conditions set
forth herein are satisfied and after giving effect to the requested Transaction
the aggregate outstanding Purchase Price does not exceed the Maximum Committed
Purchase Price, or, with the prior consent of Buyer, to the extent such
Transaction would cause the aggregate Purchase Price of all Transactions to
exceed the Maximum Committed Purchase Price, the Maximum Aggregate Purchase
Price, in which case Buyer shall fund the Purchase Price in accordance with this
Agreement.  Buyer’s funding the Purchase Price of the Transaction and the
applicable Seller’s acceptance thereof, will constitute the parties agreement to
enter into such Transaction.  Upon remittance of the Purchase Price to the
applicable Seller, such Seller hereby grants,

 

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assigns, conveys and transfers all rights, and a first priority security
interest in and to the Purchased Assets evidenced on the related Asset Schedule.

 

(v)                                 Each Transaction Request/Purchase Price
Increase and Confirmation together with this Agreement, shall be conclusive
evidence of the terms of the Transaction(s) covered thereby.

 

(vi)                              The Repurchase Date for each Transaction shall
not be later than the Termination Date.

 

(vii)                           No later than the date and time set forth in the
Custodial Agreement, the applicable Seller shall deliver to Custodian the Asset
File pertaining to each proposed Purchased Asset and Mezzanine Subsidiary Asset
to be purchased by Buyer or to be subject to a Purchase Price Increase, as
applicable.

 

(viii)                        Upon Buyer’s receipt of the Trust Receipt
(accompanied by a Custodial Asset Transmission) in accordance with the Custodial
Agreement and subject to the provisions of this Section 3, the Purchase Price or
Purchase Price Increase, as applicable, will then be made available to the
applicable Seller by Buyer transferring, via wire transfer, in the aggregate
amount of such Purchase Price in funds immediately available no later than 4:00
p.m., New York time on the date of its receipt of such Trust Receipt, provided
that such Trust Receipt and all other required documents are received by Buyer
or its designee no later than 11:00 a.m., New York time.

 

(ix)                              Upon (x) the sale of the Mezzanine Subsidiary
Interests to Buyer as set forth herein and (y) the pledge of the Mezzanine
Subsidiary Assets as set forth herein, and until termination of any related
Transactions as set forth herein, ownership of the Mezzanine Subsidiary
Interests is vested in the Buyer, and a first priority lien on the Mezzanine
Subsidiary Assets is given to Buyer; provided, that legal title to each
Mezzanine Subsidiary Asset shall be retained by the Mezzanine Subsidiary for
servicing purposes, for the benefit of Buyer.

 

(d)                                 Table-Funded Assets.  Notwithstanding any of
the foregoing provisions of this Section 3 or any contrary provisions set forth
in the Custodial Agreement, solely with respect to any Table-Funded Asset:

 

(i)                                     by 12:00 noon New York time on the
related Purchase Date, the applicable Seller or Approved Bailee shall deliver
signed .pdf copies of the documents constituting the Asset File to Custodian via
electronic mail, and the applicable Seller shall deliver the appropriate written
third-party wire transfer instructions to Buyer;

 

(ii)                                  not later than 12:00 noon New York time on
the related Purchase Date, (A) Approved Bailee shall deliver an executed .pdf
copy of the Bailee Agreement to the applicable Seller, Buyer and Custodian by
electronic mail and (B) Buyer shall fund the Purchase Price to the Approved
Bailee in accordance with Section 3(c)(iv) hereof; and

 

(iii)                               within five (5) Business Days after the
applicable Purchase Date with respect to any Table-Funded Asset, the applicable
Seller shall deliver, or cause to be

 

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delivered to Custodian, the complete Asset File with respect to such
Table-Funded Asset, pursuant to and in accordance with the terms of the
Custodial Agreement; provided, that, if Buyer’s diligence review of the related
Asset File requires the delivery of a document or instrument or the equivalent
contained in the Asset File that the applicable Seller cannot deliver, or cause
to be delivered, to Custodian at the time they are required to be delivered,
solely because of a delay caused by the public recording office where such
document or instrument has been delivered for recordation, the delivery
requirements set forth in this Agreement and the Custodial Agreement shall be
deemed to have been satisfied as to such non-delivered document or instrument if
a copy thereof (certified by the applicable Seller to be a true and complete
copy of the original thereof submitted for recording) is delivered to Custodian
on or before the date on which such original is required to be delivered, and
either the original of such non-delivered document or instrument, or a photocopy
thereof, with evidence of recording thereon, is delivered to Custodian within
ninety (90) days of the related Purchase Date, and, provided, further, that
Buyer may, but is not obligated to, consent to a later date for delivery of any
part of the Asset File in its sole discretion.

 

(e)                                  Repurchase or Purchase Price Decrease;
Purchase by a Third Party Investor

 

(i)                                     Provided that no Default (except for a
Default that would be cured by the making of such repurchase and application of
the proceeds thereof in accordance with the terms hereof) in respect of any
failure to make a payment hereunder or Event of Default has occurred and is
continuing, and no Default or Margin Deficit will result therefrom, Sellers may
voluntarily repurchase, and Buyer shall resell, Purchased Assets or request
release of a Mezzanine Subsidiary Asset on account of a Purchase Price Decrease
in the case of any Mezzanine Subsidiary Asset held by the Mezzanine Subsidiary,
and Buyer shall so release, without penalty or premium on any Business Day by
delivering to Buyer a Request for Repurchase/Purchase Price Decrease and
Confirmation no more than once per week unless consented to in writing by Buyer
in its sole discretion.  If Sellers intend to make such a repurchase or Purchase
Price Decrease, the applicable Seller shall give at least one (1) Business Day’s
prior written notice thereof to Buyer, designating the Purchased Assets to be
repurchased or Mezzanine Subsidiary Assets to be released.  If such notice is
given and not subsequently revoked, the amount specified in such notice shall be
due and payable on the date specified therein, and, on receipt, such amount
shall be applied to the Repurchase Price for the designated Purchased Assets or
Mezzanine Subsidiary Assets (and for the avoidance of doubt will decrease the
Repurchase Price for the Mezzanine Subsidiary Interests in the case of a release
of a Mezzanine Subsidiary Asset).  Any repurchase of a Purchased Asset or
release of Mezzanine Subsidiary Assets may occur simultaneously with a sale of
the Purchased Asset or Mezzanine Subsidiary Asset to a third-party investor.

 

(ii)                                  Provided that (A) no Event of Default has
occurred and is continuing, and no Default or Margin Deficit will result
therefrom, and (B) Buyer has received (x) 100% of the Repurchase Price upon
repurchase with respect to any Purchased Asset or (y) 100% of the applicable
Purchase Price Decrease (such that Buyer has been paid 100% of the Purchase
Price Increase attributable to any Mezzanine Subsidiary Asset), Buyer

 

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agrees to release its ownership interest and security interest hereunder and any
other Liens or encumbrances created by the Buyer on such Purchased Asset
(including the Repurchase Assets related thereto) or Mezzanine Subsidiary Asset
(including the Mezzanine Repurchase Assets related thereto) pursuant to a
release letter substantially in the form of Exhibit A hereto; provided that, in
the event of a partial remittance of the Repurchase Price or Purchase Price
Decrease without a request for repurchase or release, such payment will be
applied as directed by Sellers, or, in the absence of such direction, on a
weighted average, pro rata basis to the Repurchase Price or Purchase Price
Decrease of all Purchased Assets and Mezzanine Subsidiary Assets.

 

(iii)                               With respect to Principal Payments (other
than such payments of the type set forth in clause (i) of the definition of
“Principal Payments”) of a Purchased Asset or Mezzanine Subsidiary Asset, each
Seller agrees to (A) comply with Section 5 of this Agreement, (B) provide Buyer
a notice specifying any applicable Purchased Asset or Mezzanine Subsidiary Asset
that has been prepaid or defeased in accordance with the terms of the applicable
Purchased Asset or Mezzanine Subsidiary Asset, as applicable, and (C) in the
case of defeasance, deliver to the Custodian the defeasance collateral and upon
such delivery the Custodian shall be permitted to physically release and
transfer to the Collateral Administrator all of the collateral previously
pledged to secure payments in respect of the Purchased Asset or Mezzanine
Subsidiary Asset that was defeased.  Buyer agrees to release its ownership
interest and security interest hereunder and any other Liens or encumbrances
created by the Buyer on Purchased Assets and Mezzanine Subsidiary Assets which
have been prepaid or defeased in full after receipt of evidence of compliance
with clauses (A) through (C) of the immediately preceding sentence.

 

(f)                                   Extension of Termination Date.  Thirty
(30) days prior to any yearly anniversary of the date hereof and provided that
no Default or Event of Default has occurred and is continuing, Sellers may
request in writing that the Termination Date be extended and the Buyer may, in
its sole discretion, extend the Termination Date.  The Sellers shall remit to
Buyer a pro rata portion of the Commitment Fee in connection with the extension
of the Termination Date.

 

SECTION 4.                                   MARGIN AMOUNT MAINTENANCE

 

(a)                                 Buyer shall determine the Market Value of
each Purchased Asset and Mezzanine Subsidiary Asset at such intervals as
determined by Buyer in its sole discretion.

 

(b)                                 If at any time the aggregate Asset Value of
all Purchased Assets subject to Transactions is less than 98% of the aggregate
Purchase Price for such Purchased Assets (a “Margin Deficit”), then, provided
that such Margin Deficit in the aggregate is greater than the Margin Threshold,
Buyer may by written notice to Sellers (as such notice is more particularly set
forth below, a “Margin Call”), require Sellers to transfer to Buyer or its
designee, cash in the amount at least equal to the Margin Deficit, and Buyer
shall apply such cash to the outstanding Purchase Price of the Purchased Assets
(including the Mezzanine Subsidiary Assets) as directed by Sellers, or, in the
absence of such direction, on a weighted average, pro rata basis, with respect
to the Purchased Assets (including the Mezzanine Subsidiary Assets) that gave
rise to the Margin Call.

 

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(c)                                  Notice delivered pursuant to Section 4(b)
may be given by any written or electronic means.  Any notice given before 10:00
a.m. (New York City time) on a Business Day shall be met, and the related Margin
Call satisfied, no later than 10:00 a.m. (New York City time) on the following
Business Day; notice given after 10:00 a.m. (New York City time) on a Business
Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m.
(New York City time) on the Business Day following the date of such notice.

 

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

 

SECTION 5.                                   COLLECTIONS; INCOME PAYMENTS

 

(a)                                 Each Seller shall establish and maintain or
cause Collateral Administrator to establish and maintain a segregated time or
demand deposit account for the benefit of Buyer (individually and collectively,
the “Control Account”) with a financial institution reasonably satisfactory to
Buyer, which shall be subject to a Control Agreement, and shall deposit, or
cause the Collateral Administrator to deposit, into the Control Account, within
two (2) Business Days of receipt, all Income (other than reserve payments)
received with respect to each Purchased Asset and Mezzanine Subsidiary Asset
subject to a Transaction.  Under no circumstances shall Sellers deposit any of
their own funds into the Control Account.  Sellers shall name the Control
Accounts as directed by Buyer.

 

(b)                                 On or before 3:00 p.m. (New York time) on
the Business Day prior to the Payment Date, Sellers shall deliver to Buyer a
Distribution Worksheet.  On each Payment Date (or with respect to a Principal
Payment within one (1) Business Day of receipt by Buyer), upon approval of the
Distribution Worksheet, Buyer shall make the following payments in accordance
with the Distribution Worksheet (provided that Buyer may apply amounts from any
Control Account in any order subject to the following clauses (i) through
(xii)):

 

(i)                                     first, to the extent not paid by
Sellers, to the Custodian in payment of the Custodial Fee and any accrued and
unpaid fees and expenses;

 

(ii)                                  second, to Buyer in payment of any accrued
and unpaid fees (including, without limitation, any Commitment Fee) and expenses
to Buyer’s account set forth in Section 9(a) hereof;

 

(iii)                               third, following a Collateral Administrator
Default or a Collateral Administrator MAE which in either case results in the
replacement of the Collateral Administrator, to the replacement Collateral
Administrator in payment of any accrued and unpaid fees and expenses then due
and owing with respect to the transfer and performance of the Collateral
Administrator duties;

 

(iv)                              fourth, to Buyer in payment in full of that
portion of the Repurchase Price that represents any accrued and unpaid Price
Differential through the end of the Pricing

 

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Rate Period immediately preceding the related Payment Date to Buyer’s account
set forth in Section 9(a) hereof;

 

(v)                                 fifth, to Buyer, any Price Differential
Shortfall (which, for the avoidance of doubt, is only due and payable on the
Termination Date and in the event the Sellers terminate the Agreement prior to
the original scheduled Termination Date, the Price Differential Shortfall shall
be pro-rated based upon the number of days the Agreement was in effect divided
by the number of days in the original term of the Agreement) and any Exit Fee
(which, for the avoidance of doubt, is only due and payable on the Termination
Date and shall not be due in the event the Sellers terminated this Agreement
prior to the first anniversary of the date hereof);

 

(vi)                              sixth, to Buyer in payment of the Asset
Manager Fee and any unpaid fees and expenses;

 

(vii)                           seventh, without limiting the rights of Buyer
under Section 4 of this Agreement, to Buyer in the amount of any unpaid Margin
Deficit, without duplication, to Buyer’s account set forth in Section 9(a)
hereof;

 

(viii)                        eighth, if an Event of Default has occurred and is
continuing, to Buyer in an amount to reduce the Repurchase Price to zero and pay
all other Obligations accrued and unpaid;

 

(ix)                              ninth, to Buyer in an amount equal to 100% of
Income (including principal and interest) of any Purchased Asset or Mezzanine
Subsidiary Asset, as applicable, that, for a period in excess of ninety (90)
consecutive calendar days, (i) has had a Purchase Price Debt Yield Failure or
(ii) has had a DSCR Requirement Failure and (A) the Purchase Price Debt Yield
for such Purchased Asset or Mezzanine Subsidiary Asset, as applicable, is less
than the sum of (x) the applicable Minimum Purchase Price Debt Yield and (y)
0.50% or (B) the LTV exceeds 65% with respect to the related Mortgaged Property,
in each case applied to reduce the Purchase Price of such Purchased Asset or
Mezzanine Subsidiary Asset, as applicable, until the earlier of the date on
which (A) such Purchase Price equals zero or (B) such Purchased Asset or
Mezzanine Subsidiary Asset, as applicable, again satisfies the applicable
requirement;

 

(x)                                 tenth, to Buyer in an amount equal to the
product of (x) the applicable Purchase Price Percentage for such Purchased Asset
or Mezzanine Subsidiary Asset, as applicable, and (y) the Principal Payments
related to a Purchased Asset, to Buyer’s account set forth in Section 9(a)
hereof to be applied against the Repurchase Price of such Purchased Asset or
Mezzanine Subsidiary Asset, as applicable;

 

(xi)                              eleventh, any fees due to the Collateral
Administrator pursuant to the Collateral Administration Agreement;

 

(xii)                           twelfth, to Sellers, any remaining amounts.

 

(c)                                  Upon the occurrence and during the
continuation of an Event of Default, all amounts remitted to the Control Account
shall be held in trust for Buyer and shall be

 

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withdrawn from the Control Account only by Buyer in accordance with Buyer’s
rights under the Control Agreement and applied to the Obligations as determined
by Buyer in its sole discretion.

 

(d)                                 All Income received with respect to a
Purchased Asset or Mezzanine Subsidiary Asset subject to a Transaction, whether
or not deposited in the Control Account, shall be held in trust for the
exclusive benefit of Buyer and Sellers, as their interests may appear.

 

(e)                                  Sellers shall not change the identity or
location of the Control Account without Buyer’s written consent.  Sellers shall
from time to time, at its own cost and expense, execute such directions to
Buyer, and other papers, documents or instruments as may be reasonably requested
by Buyer.

 

(f)                                   If Buyer so requests and to the extent not
otherwise reflected on the applicable Distribution Worksheet, Sellers shall
promptly notify Buyer of each deposit in the Control Account.  Sellers shall
also promptly deliver to Buyer photocopies of all periodic bank statements and
other records relating to the Control Account as Buyer may from time to time
request.

 

(g)                                  The amount required to be paid or remitted
by Sellers to Buyer, not made when due shall bear interest from the due date
(or, in the case of Expenses due on demand or upon presentation of an invoice
thereof, the date thirty (30) days after the due date) until the remittance,
transfer or payment is made, payable by Sellers, at the lesser of the
Post-Default Rate or the maximum rate of interest permitted by law.  If there is
no maximum rate of interest specified by applicable law, interest on such sums
shall accrue at the Post-Default Rate.

 

(h)                                 Unless an Event of Default shall have
occurred and be continuing, all payments received by Buyer shall, after notice
to Buyer, be applied by Buyer on the date of such receipt or, if such receipt is
made and notice received after 3:00 p.m. (New York time), on the following
Business Day, to reduce the Purchase Price of the related Purchased Asset or
otherwise in accordance with Section 5(b) above.

 

SECTION 6.                                   REQUIREMENT OF LAW

 

(a)                                 If any change in any Requirement of Law
(other than with respect to any amendment made to Buyer’s certificate of
incorporation and bylaws or other organizational or governing documents)
including those regarding capital adequacy, or any change in the interpretation
or application of any Requirement of Law thereof or compliance by Buyer with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority, in each case, made subsequent to the date
hereof:

 

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

 

(ii)                                  shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities

 

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in or for the account of, advances, or other extensions of credit by, or any
other acquisition of funds by, any office of Buyer; or

 

(iii)                               shall impose on Buyer any other condition or
expense (other than Taxes) affecting any Program Document or any Transaction or
participation therein;

 

and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems in good faith to be material, of entering, continuing
or maintaining any Transaction or to reduce any amount due or owing hereunder in
respect thereof, or shall have the effect of reducing Buyer’s rate of return
then, in any such case, Sellers shall promptly pay Buyer such additional amount
or amounts as reasonably calculated by Buyer in good faith as will compensate
Buyer for such increased cost or reduced amount receivable on an after-tax
basis.

 

(b)                                 If Buyer shall have determined that the
adoption of or any change in any Requirement of Law (other than with respect to
any amendment made to Buyer’s certificate of incorporation and by-laws or other
organizational or governing documents) 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 shall have 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 in good faith by Buyer to be material, then from
time to time, Sellers shall promptly pay to Buyer such additional amount or
amounts as will compensate Buyer for such reduction (the “Requirement of Law
Premium”); provided that the computation of the Requirement of Law Premium shall
be made by Buyer in good faith, and shall not exceed the amount that would be
computed using a method consistent with that applied in Buyer’s computation of
similar amounts due from similarly situated parties for whom Buyer has
established credit facilities with comparable calculation of pricing rates
reasonably comparable to the facility governed by the Program Documents.

 

(c)                                  If Buyer becomes entitled to claim any
additional amounts pursuant to this Section 6, it shall promptly notify Sellers
of the event by reason of which it has become so entitled within one hundred and
twenty (120) days after becoming aware thereof (the “Requirement of Law
Notice”).  A certificate as to any additional amounts payable pursuant to this
Section submitted by Buyer to Sellers shall be included in the Requirement of
Law Notice and shall be conclusive in the absence of manifest error.

 

(d)                                 Within ten (10) Business Days after receipt
of the Requirement of Law Notice, Sellers will be entitled to notify Buyer of
its intention to repay all Obligations hereunder and terminate this Agreement,
and after payment of any Requirement of Law Premium and the outstanding
Repurchase Price and any other Obligations outstanding (i) Buyer will rebate to
Sellers the most recently paid installment of the Commitment Fee, pro-rated for
the portion of such three month period from the date Sellers terminated the
Agreement, (ii) Sellers shall pay the Exit Fee, pro-rated based on the period
the Agreement was in effect, and (iii) Sellers shall pay the Price Differential
Shortfall, if any, pro-rated based on the period the Agreement was in effect.

 

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(e)                                  The Requirement of Law Premium shall not
include any amounts calculated on account of any change in any Requirement of
Law or interpretation thereof for a period that is more than one hundred and
twenty (120) days prior to Sellers’ receipt of the Requirements of Law Notice.

 

SECTION 7.                                   TAXES.

 

(a)                                 Any payments made by any Seller Party to
Buyer or a Buyer assignee hereunder or under any Program Document shall be made
free and clear of and without deduction or withholding for any Taxes, except as
required by applicable law. If Seller Parties shall be required by applicable
law (as determined in the good faith discretion of the applicable withholding
agent) to deduct or withhold any Tax from any sums payable to Buyer or a Buyer
assignee, then (i) Seller Parties shall be entitled to make such deductions or
withholdings and pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law; (ii) to the extent the withheld or
deducted Tax is an Indemnified Tax, the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section 7) Buyer or Buyer assignee receives an amount equal to the
sum it would have received had no such deductions or withholdings been made; and
(iii) Sellers shall notify Buyer or Buyer assignee of the amount paid and shall
provide the original or a certified copy of a receipt issued by the relevant
Governmental Authority evidencing such payment within ten (10) days thereafter.
Seller Parties shall otherwise indemnify Buyer, within ten (10) days after
demand therefor, for any Indemnified Taxes imposed on Buyer (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 7) and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted by the relevant Governmental Authority.  For
purposes of this Section 7, the term “applicable law” includes FATCA.

 

(b)                                 Buyer and any Buyer assignee shall deliver
to each Seller Party, at the time or times reasonably requested by such Seller
Party, such properly completed and executed documentation reasonably requested
by such Seller Party as will permit payments made hereunder to be made without
withholding or at a reduced rate of withholding. In addition, Buyer and any
Buyer assignee, if reasonably requested by such Seller Party, shall deliver such
other documentation prescribed by applicable law or reasonably requested by such
Seller Party as will enable such Seller Party to determine whether or not such
Buyer or Buyer assignee is subject to backup withholding or information
reporting requirements. Notwithstanding anything to the contrary in this Section
7, the completion, execution and submission of such documentation (other than
such documentation in Section 7(b)(i), (ii)(A)-(C) and (iii) below) shall not be
required if in Buyer’s or Buyer’s assignee’s judgment such completion, execution
or submission would subject such Buyer or Buyer assignee to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Buyer or Buyer assignee. Without limiting the
generality of the foregoing, Buyer or Buyer assignee shall deliver to such
Seller Party, to the extent legally entitled to do so:

 

(i)                                     in the case of a Buyer or Buyer assignee
which is a “U.S. Person” as defined in section 7701(a)(30) of the Code, a
properly completed and executed Internal

 

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Revenue Service (“IRS”)  Form W-9 certifying that it is not subject to U.S.
federal backup withholding tax.

 

(ii)                                  in the case of a Buyer or Buyer assignee
which is not a “U.S. Person” as defined in Code section 7701(a)(30): (A) a
properly completed and executed IRS Form W-8BEN or W-8ECI, as appropriate,
evidencing entitlement to a zero percent or reduced rate of U.S. federal income
tax withholding on any payments made hereunder, (B) in the case of such non-U.S.
Person claiming exemption from the withholding of U.S. federal income tax under
Code sections 871(h) or 881(c) with respect to payments of “portfolio interest,”
a duly executed certificate (a “Tax Compliance Certificate”) to the effect that
such non-U.S. Person is not (x) a “bank” within the meaning of Code section
881(c)(3)(A), (y) a “10 percent shareholder” of any Seller Party or affiliate
thereof, within the meaning of Code section 881(c)(3)(B), or (z) a “controlled
foreign corporation” described in Code section 881(c)(3)(C), (C) to the extent
such non-U.S. person is not the beneficial owner, executed originals of IRS Form
W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a Tax Compliance
Certificate, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if such  non-U.S. person is a
partnership and one or more direct or indirect partners of such non-U.S. person
are claiming the portfolio interest exemption, such non-U.S. person may provide
a Tax Compliance Certificate on behalf of each such direct and indirect partner,
and (D) executed originals of any other form or supplementary documentation
prescribed by law as a basis for claiming exemption from or a reduction in
United States federal withholding tax together with such supplementary
documentation as may be prescribed by law to permit any Seller Party to
determine the withholding or deduction required to be made.

 

(iii)                               if a payment made to a Buyer or Buyer
assignee under any Program Document would be subject to U.S. federal withholding
tax imposed by FATCA if such Buyer or assignee were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in Section
1471(b) or 1472(b) of the Code, as applicable), such Buyer or Buyer assignee
shall deliver to such Seller Party at the time or times prescribed by law and at
such time or times reasonably requested by such Seller Party such documentation
prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by such Seller Party as may be necessary for such Seller Party to
comply with their obligations under FATCA and to determine that such Buyer or
assignee has complied with such Buyer’s or assignee’s obligations under FATCA or
to determine the amount to deduct and withhold from such payment. Solely for
purposes of this Section 7(b)(iii), “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

 

The applicable IRS forms referred to above shall be delivered by each applicable
Buyer or Buyer assignee on or prior to the date on which such person becomes a
Buyer or Buyer assignee under the Agreement, as the case may be, and upon the
obsolescence or invalidity of any IRS form previously delivered by it hereunder.

 

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(c)                                  Without duplication of any amounts paid
under clause (a) above, each Seller Party shall jointly and severally indemnify
Buyer or any Buyer assignee within ten (10) days after demand therefor for the
full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section 7) that are
imposed on Buyer or a Buyer assignee or required to be withheld or deducted from
a payment to Buyer or a Buyer assignee and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to Seller Party by Buyer or a Buyer assignee shall be conclusive
absent manifest error.

 

(d)                                 Any Seller Party shall timely pay Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(e)                                  If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 7 (including by the
payment of additional amounts pursuant to this Section 7), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section 7 with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 7(e) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority.  Notwithstanding anything to the contrary
in this Section 7(e), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this Section 7(e) the payment of
which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid.  This Section 7(e) shall not be
construed to require any indemnified party to make available its Tax returns (or
any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(f)                                   Notwithstanding anything to the contrary
in this Agreement or any other Program Document, each party to this Agreement
acknowledges that it is its intent for U.S. federal, state and local income and
franchise tax purposes to treat each (i) Transaction as indebtedness of any
Seller Party that is secured by the Purchased Assets or Mezzanine Subsidiary
Assets and (ii) the Purchased Assets or Mezzanine Subsidiary Assets  as owned by
any Seller Party in the absence of an Event of Default which is continuing.  All
parties to this Agreement agree to such treatment and agree to take no action
inconsistent with this treatment, unless required by any Requirement of Law (in
which case such party shall promptly notify the other party of such Requirement
of Law).

 

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SECTION 8.                                   SECURITY INTEREST; BUYER’S
APPOINTMENT AS ATTORNEY-IN-FACT

 

(a)                                 On each Purchase Date, in exchange for
receipt of the Purchase Price, and continuing until the Purchased Assets are
repurchased, each Seller hereby sells, assigns and conveys all rights and
interests in the Purchased Assets identified on the related Asset Schedule,
including the Mezzanine Subsidiary Interests and Repurchase Assets related to
such Purchased Assets to Buyer. Although the parties intend that all
Transactions hereunder be sales and purchases and not loans (other than as set
forth in Sections 7(f) and 21 for U.S. tax purposes), in the event any such
Transactions are deemed to be loans, and in any event, each Seller hereby
pledges to Buyer as security for the performance by each Seller of its
Obligations and hereby grants, assigns and pledges to Buyer a fully perfected
first priority security interest in the Purchased Assets (including all
Servicing Rights related to such Purchased Assets); the Records related to the
Purchased Assets; the Program Documents (to the extent such Program Documents
and each Seller’s right thereunder relate to the Purchased Assets); any Property
relating to any Purchased Asset; any escrow letter or settlement agreement
relating to any Purchased Asset; all insurance policies and insurance proceeds
relating to any property related to any Purchased Asset, including but not
limited to any payments or proceeds under any related hazard insurance; the
Control Account; any Hedge Agreements relating to any Purchased Asset; any
accounts, instruments (including promissory notes), chattel paper (including
electronic chattel paper), contract rights and other general intangibles
(including payment intangibles), payments, rights to payment (including payments
of interest or finance charges), goods (including equipment and inventory),
software, deposit accounts, investment property (including securities and
securities accounts) and documents, to the extent that the foregoing relates to
any Purchased Asset; the Mezzanine Subsidiary Assets (including the Mezzanine
Repurchase Assets); and any other assets relating to the Purchased Assets
(including, without limitation, any other accounts and Income relating thereto)
or any interest in the Purchased Assets; distributions with respect to any of
the foregoing; together with all accessions and additions thereto; substitutions
and replacements therefor; and all products and proceeds; in all instances,
whether now owned or hereafter acquired, now existing or hereafter created and
wherever located (collectively, the “Repurchase Assets”).

 

(b)                                 Each Seller acknowledges that it has sold
the Purchased Assets to Buyer on a servicing released basis and it has no rights
to service the Purchased Assets.  Without limiting the generality of the
foregoing and in the event that any Seller is deemed to retain any residual
Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns
and pledges to Buyer a security interest in the Servicing Rights and proceeds
related thereto and in all instances, whether now owned or hereafter acquired,
now existing or hereafter created and wherever located.  The foregoing provision
is intended to constitute a security agreement or other arrangement or other
credit enhancement related to the Agreement and Transactions hereunder as
defined under Sections 101(47)(v) and 741(7)(xi) of the Bankruptcy Code.

 

(c)                                  The parties (i) acknowledge and agree that
the Mezzanine Subsidiary Interests shall constitute and remain “securities” as
defined in Section 8-102 of the Uniform Commercial Code and (ii) covenant and
agree that the Mezzanine Subsidiary Interests are not and will not be dealt in
or traded on securities exchanges or securities markets.  ACRC covenants and
agrees that the Mezzanine Subsidiary Interests are not and will not be
investment company

 

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securities within the meaning of Section 8-103 of the Uniform Commercial Code. 
ACRC shall, at its sole cost and expense, take all steps as may be necessary in
connection with the indorsement, transfer, delivery and pledge of all the
Mezzanine Subsidiary Interests to Buyer.  In the event that any Seller Party
obtains possession or control of the Mezzanine Subsidiary Interests, such Seller
Party shall promptly deliver such the Mezzanine Subsidiary Interests to the
account designated by Buyer, and Buyer shall hold such the Mezzanine Subsidiary
Interests as Repurchase Assets hereunder.

 

(i)                If ACRC shall, as a result of its interest in the Mezzanine
Subsidiary Interests, become entitled to receive or shall receive any
certificate evidencing any limited liability company interest or other equity
interest, any option rights, or any equity interest in the Mezzanine Subsidiary,
whether representing, in addition to, in substitution for, as a conversion of,
in exchange for the Mezzanine Subsidiary Interests, or otherwise in respect
thereof, ACRC shall accept the same as the Buyer’s agent, hold the same in trust
for the Buyer and deliver the same forthwith to the Buyer in the exact form
received, duly endorsed by ACRC to the Buyer, or in blank, to be held by the
Buyer subject to the terms hereof as additional security for the Obligations
hereunder.  Any sums paid upon or in respect of the Mezzanine Subsidiary
Interests upon the liquidation or dissolution of the Mezzanine Subsidiary shall
be remitted to Buyer within one (1) Business Day with notice to Buyer of such
payment and shall be applied in accordance with Section 5, the date of such
application being deemed a Payment Date.  If any cash or other property so paid
or distributed in respect of the Mezzanine Subsidiary Interests shall be
received by any Seller Party, such Seller Party shall immediately remit such
amount to Buyer within one (1) Business Day with notice to Buyer of such payment
and such amount shall be applied in accordance with Section 5, the date of such
application being deemed a Payment Date, and, until such cash or other property
is paid or delivered to the Buyer, such Seller Party shall hold such cash or
other property in trust for the Buyer segregated from other funds of such
Seller, as additional security for the Obligations hereunder.

 

(ii)             Buyer shall receive all cash dividends or other cash
distributions paid in respect of the Mezzanine Subsidiary Interests and exercise
all voting and member rights with respect to the Mezzanine Subsidiary Interests,
and upon receipt of any such dividends or distributions shall apply such amounts
in accordance with Section 5; so long as no Event of Default shall have occurred
and be continuing, Buyer shall exercise such voting rights only in accordance
with ACRC’s instructions; provided, however, that no vote shall be cast or
member right exercised or other action taken which would impair the Mezzanine
Subsidiary Interests, or which would be inconsistent with or result in a
violation of any provision of this Agreement.  In no event shall Buyer be
required to (A) vote to enable, or take any other action to permit Mezzanine
Subsidiary to issue any membership interests of any nature or to issue any other
membership interests convertible into or granting the right to purchase or
exchange for any membership interests of Mezzanine Subsidiary, or (B) sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Mezzanine Subsidiary Interests (other than as otherwise
contemplated by the terms of this Agreement), or (C) create, incur or permit to
exist any Lien or

 

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option in favor of, or any claim of any Person with respect to, the Mezzanine
Subsidiary Interests, or any interest therein, except for the Lien provided for
by this Agreement, or (D) enter into any agreement (other than the Mezzanine
Subsidiary Organizational Documents and this Agreement and any agreements
contemplated hereunder) or undertaking restricting the right or ability of ACRC
to sell, assign or transfer any of the Mezzanine Subsidiary Interests.  On the
applicable Purchase Date, ACRC shall cause a Re-Registration of the related
Mezzanine Subsidiary Interests as contemplated by Section 3(b)(xiv).

 

(iii)          In order to further secure Sellers’ Obligations hereunder,
Mezzanine Subsidiary hereby pledges to Buyer as security for the performance by
each Seller of its Obligations hereunder and hereby grants, assigns and pledges
to Buyer a fully perfected first priority security interest in the Mezzanine
Subsidiary Assets (including all Servicing Rights related to such Mezzanine
Subsidiary Assets); the Records related to the Mezzanine Subsidiary Assets; the
Program Documents (to the extent such Program Documents and Mezzanine
Subsidiary’s rights thereunder relate to the Mezzanine Subsidiary Assets); any
Property relating to any Mezzanine Subsidiary Asset; any escrow letter or
settlement agreement relating to any Mezzanine Subsidiary Asset; all insurance
policies and insurance proceeds relating to any property related to any
Mezzanine Subsidiary Asset, including but not limited to any payments or
proceeds under any related hazard insurance; the Control Account; any Hedge
Agreements relating to any Mezzanine Subsidiary Asset; any accounts, instruments
(including promissory notes), chattel paper (including electronic chattel
paper), contract rights and other general intangibles (including payment
intangibles), payments, rights to payment (including payments of interest or
finance charges), goods (including equipment and inventory), software, deposit
accounts, investment property (including securities and securities accounts) and
documents, to the extent that the foregoing relates to any Mezzanine Subsidiary
Asset; and any other assets relating to the Mezzanine Subsidiary Assets
(including, without limitation, any other accounts and Income relating thereto)
or any interest in the Mezzanine Subsidiary Assets; distributions with respect
to any of the foregoing; together with all accessions and additions thereto;
substitutions and replacements therefor; and all products and proceeds; in all
instances, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located (collectively, the “Mezzanine Repurchase Assets”). 
All Mezzanine Repurchase Assets shall be deemed to be part of the Mezzanine
Subsidiary Assets conveyed to the Mezzanine Subsidiary.  Mezzanine Subsidiary
agrees to execute, deliver and/or file such documents and perform such acts as
may be reasonably necessary to fully perfect Buyer’s security interest created
hereby.  The foregoing paragraph is intended to constitute a security agreement
or other arrangement or other credit enhancement related to the Agreement and
transactions hereunder as defined under Section 101(47)(v) and 741(7)(xi) of the
Bankruptcy Code.

 

(d)                                 ACRC acknowledges that it has sold or
contributed the Mezzanine Subsidiary Assets to the Mezzanine Subsidiary (and
conveyed the Mezzanine Subsidiary Assets to Mezzanine Subsidiary on a
servicing-released basis but subject to the lien of Buyer) and it has no rights
to service the Mezzanine Subsidiary Assets.  Without limiting the generality of
the

 

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foregoing and in the event that ACRC is deemed to retain any residual Servicing
Rights, and for the avoidance of doubt, ACRC grants, assigns and pledges to the
Mezzanine Subsidiary a security interest in the Servicing Rights and proceeds
related thereto and in all instances, whether now owned or hereafter acquired,
now existing or hereafter created and wherever located.  The foregoing provision
is intended to constitute a security agreement or other arrangement or other
credit enhancement related to the Agreement and Transactions hereunder as
defined under Sections 101(47)(v) and 741(7)(xi) of the Bankruptcy Code.  Such
grant shall be subject to and subordinate to Buyer’s security interest in the
Mezzanine Subsidiary Assets in all respects.

 

(e)                                  The parties acknowledge and agree that
Mezzanine Subsidiary (A) is acquiring the Mezzanine Subsidiary Assets subject to
and subordinate to Buyer’s security interest, (B) is granting a lien to Buyer as
partial consideration for the acquisition of such Mezzanine Subsidiary Assets
from the Sellers and (C) hereby grants, assigns and pledges all rights and
interests to Buyer as security for the performance by Seller Parties of their
Obligations hereunder a security interest in all of its right, title and
interest in the Mezzanine Repurchase Assets.  The foregoing paragraph is
intended to constitute a security agreement or other arrangement or other credit
enhancement related to the Agreement and transactions hereunder as defined under
Section 101(47)(v) and 741(7)(xi) of the Bankruptcy Code.

 

(f)                                   Each Seller Party agrees to execute a
Power of Attorney, substantially in the form of Exhibit C hereto (the “Power of
Attorney”), to be delivered on the date hereof.

 

(g)                                  Each Seller and Mezzanine Subsidiary hereby
authorizes Buyer to file such financing statement or statements relating to the
Repurchase Assets and the Mezzanine Repurchase Assets as Buyer, at its option,
may deem appropriate.  Sellers shall pay the searching and filing costs for any
financing statement or statements prepared or searched pursuant to this
Agreement.

 

SECTION 9.                                   PAYMENT, TRANSFER; ACCOUNTS

 

(a)                                 Payments and Transfers of Funds.  Except in
accordance with Section 9(c) below, unless otherwise mutually agreed in writing,
all transfers of funds to be made by Sellers hereunder shall be made in Dollars,
in immediately available funds, without deduction, set off or counterclaim, to
Asset Manager at the following account maintained by Asset Manager, on the date
on which such payment shall become due: Account No. 412-150-4211, ABA
No.:121000248, Name of Bank: Wells Fargo Bank, N.A., Account Name: Situs Wire
Clearing, Reference: UBS-Ares Facility.

 

(b)                                 Remittance of Purchase Price and Purchase
Price Increase.  On the Purchase Date for each Transaction, (i) ownership of the
Purchased Assets shall be transferred to Buyer or its designee against the
simultaneous transfer of the Purchase Price to the applicable Seller at such
account designated by such Seller in writing or (ii) in the case of a Mezzanine
Subsidiary Asset, ownership of such Mezzanine Subsidiary Asset shall be
transferred from ACRC to the Mezzanine Subsidiary against the simultaneous
transfer of the applicable Purchase Price Increase.  With respect to the
Purchased Assets being sold by any Seller on a Purchase Date, such Seller hereby
sells, transfers, conveys and assigns to Buyer or its designee without recourse,
but subject to the terms of this Agreement, all the right, title and interest of
such Seller

 

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in and to the Purchased Assets together with all right, title and interest in
and to the proceeds of any related Repurchase Assets.  All transfers of cash and
assets shall be made in accordance with this Agreement.

 

(c)                                  Fees.  Sellers shall pay in immediately
available funds to Buyer all fees, including without limitation, the Warehouse
Fees, as and when required hereunder.  All such payments shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at such account designated by Buyer.  Without limiting
the generality of the foregoing or any other provision of this Agreement, Buyer
may withdraw and retain from the Control Account any Warehouse Fees due and
owing to Buyer and shall promptly notify the Seller Parties thereof.

 

SECTION 10.                            RESERVED

 

SECTION 11.                            REPRESENTATIONS

 

Each Seller Party, jointly and severally, represents and warrants to Buyer that
as of the Purchase Date for any Purchased Assets and as of the date of this
Agreement and any Transaction hereunder and on each date while the Program
Documents are in full force and effect and/or any Transaction hereunder is
outstanding:

 

(a)                                 Acting as Principal.  As of the applicable
Purchase Date, Sellers will engage in such Transactions as principal (or, if
agreed in writing in advance of any Transaction by the other party hereto, as
agent for a disclosed principal).

 

(b)                                 No Broker.  As of the applicable Purchase
Date, no Seller has dealt with any broker, investment banker, agent, or other
Person, except for Buyer, who may be entitled to any commission or compensation
in connection with the sale of Purchased Assets pursuant to this Agreement.

 

(c)                                  Financial Statements.  As of the date of
this Agreement, each Seller Party has heretofore furnished to Buyer a copy,
certified by its president or chief financial officer, of its (a) Financial
Statements for each Seller Party for the fiscal year ended the Annual Financial
Statement Date, setting forth in each case in comparative form the figures for
the previous year, with an unqualified opinion thereon of an Approved CPA and
(b) Financial Statements for each Seller Party for such quarterly period(s), of
each Seller Party following the Annual Financial Statement Date up until the
Quarterly Financial Statement Date.  As of the date of this Agreement and each
Purchase Date, all such Financial Statements fairly present, in all material
respects, the consolidated and consolidating financial condition of each Seller
Party and the consolidated and consolidating results of its operations as at the
dates and for the annual or quarterly periods, as applicable, specified therein,
all in accordance with GAAP, subject in the case of quarterly financials to the
absence of footnote and normal year-end adjustments.  As of the date of this
Agreement and each Purchase Date, since the Annual Financial Statement Date,
there has been no material adverse change in the consolidated business,
operations or financial condition of Seller Party from that set forth in said
Financial Statements nor is Seller Party aware of any state of facts which
(without notice or the lapse of time) would be reasonably likely to result in a
Material Adverse Effect.  No Seller Party had, as of the Annual Financial
Statement

 

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Date, any material liabilities, direct or indirect, fixed or contingent, matured
or unmatured, known or unknown, or material liabilities for taxes, long-term
leases or unusual forward or long-term commitments not disclosed by, or reserved
against in, said balance sheet and related statements, and as of the date of
this Agreement and each Purchase Date, there are no material unrealized or
anticipated losses from any loans, advances or other commitments of each Seller
Party except as heretofore disclosed promptly to Buyer in writing.

 

(d)                                 Organization, Etc.  Each Seller Party is
duly organized, validly existing and as of the date of this Agreement and each
Purchase Date, is in good standing under the laws of the jurisdiction of its
organization. Each Seller Party (a) has all requisite corporate or other power,
and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect; (b) as of the date of this Agreement and each Purchase
Date, is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect; and (c) has full power and authority to execute, deliver and
perform its obligations under the Program Documents.

 

(e)                                  Authorization, Compliance, Approvals.  The
execution and delivery of, and the performance by each Seller Party of its
obligations under, the Program Documents to which it is a party (a) are within
such Seller Party’s powers, (b) have been duly authorized by all requisite
action, (c) do not violate (i) any provision of applicable law, rule or
regulation, or any order, writ, injunction or decree of any court or other
Governmental Authority in any material respect or (ii) its organizational
documents, (d) do not violate any indenture, agreement, document or instrument
to which such Seller Party or any of its Subsidiaries is a party, or by which
any of them or any of their properties, any of the Repurchase Assets is bound or
to which any of them is subject, in any material respect, and (e) are not in
conflict with, do not result in a breach of, or constitute (with due notice or
lapse of time or both) a default under, in each case, in any material respect,
or except as may be provided by any Program Document, result in the creation or
imposition of any Lien (except for any Liens created pursuant to the Program
Documents) upon any of the property or assets of such Seller Party or any of its
Subsidiaries pursuant to, any such indenture, agreement, document or
instrument.  No Seller Party is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority in connection with or as a condition to the consummation
of the Transactions contemplated herein and the execution, delivery or
performance of the Program Documents to which it is a party other than those
that have been obtained.

 

(f)                                   Litigation.  As of the related Purchase
Date, there are no actions, suits, arbitrations, investigations (including,
without limitation, any of the foregoing which are pending or, to the best of
Seller Parties’ knowledge, threatened) or other legal or arbitrable proceedings
affecting any Seller Party or any of its respective Subsidiaries or affecting
any of the Repurchase Assets or any of the other properties of such Seller Party
before any Governmental Authority which (i) questions or challenges the validity
or enforceability of the Program Documents or any material action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims against any Seller Party not covered by insurance in an aggregate amount
greater

 

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than the Litigation Threshold, (iii) individually or in the aggregate would be
reasonably likely to have a Material Adverse Effect, or (iv) requires filing by
any Seller Party with the SEC in accordance with its regulations.

 

(g)                                  Purchased Assets and Mezzanine Subsidiary
Assets.

 

(i)                                     Neither Seller nor Mezzanine Subsidiary
has assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset
or Mezzanine Subsidiary  Asset to any other Person other than in accordance with
this Agreement, and immediately prior to the sale of such Purchased Asset to
Buyer or transfer of such Mezzanine Subsidiary Asset to Mezzanine Subsidiary,
such Seller was the sole owner of such Purchased Asset or Mezzanine Subsidiary
Asset, as the case may be, and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released simultaneously
with the sale to Buyer hereunder or created in favor of Buyer hereunder.

 

(ii)                                  The provisions of the Program Documents
are effective to either constitute a sale of Purchased Assets to Buyer or (upon
proper filing of a Uniform Commercial Code financing statement and delivery of
related instruments and endorsements in blank to the Custodian) to create in
favor of Buyer a valid first priority security interest in all right, title and
interest of each Seller in, to and under the Repurchase Assets.

 

(h)                                 Proper Names; Chief Executive
Office/Jurisdiction of Organization.  Sellers do not operate in any jurisdiction
under a trade name, division name or name other than those names previously
disclosed in writing by Sellers to Buyer.  On the Effective Date, each Seller’s
and Mezzanine Subsidiary’s chief executive office is, and has been, located as
specified on the signature page hereto.  Each Seller’s and Mezzanine
Subsidiary’s jurisdiction of organization, type of organization and
organizational identification number is as set forth in the Pricing Letter. 
Guarantor’s jurisdiction of organization, type of organization and
organizational identification number is as set forth in the Pricing Letter.

 

(i)                                     Location of Books and Records.  The
location where Sellers and Mezzanine Subsidiary keep their books and records,
including all computer tapes, computer systems and storage media and records
related to the Repurchase Assets to the extent not held by another party
pursuant to the Program Documents is its chief executive office.

 

(j)                                    Enforceability.  This Agreement and all
of the other Program Documents executed and delivered by each Seller Party in
connection herewith are legal, valid and binding obligations of such Seller
Party and are enforceable against such Seller Party in accordance with their
terms except as such enforceability may be limited by (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
Requirement of Law affecting creditors’ rights generally and (ii) general
principles of equity.

 

(k)                                 Ability to Perform.  As of the date of this
Agreement and each Purchase Date, no Seller Party believes that it cannot
perform each and every material covenant contained in the Program Documents to
which it is a party on its part to be performed.

 

(l)                                     No Default.  As of the date of this
Agreement and each Purchase Date, no Default or Event of Default has occurred
and is continuing.

 

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(m)                             No Adverse Selection.  As of the related
Purchase Date, no Seller has intentionally selected the Purchased Assets or
Mezzanine Subsidiary Assets in a manner so as to adversely affect Buyer’s
interests.

 

(n)                                 Scheduled Indebtedness. All Indebtedness of
each Seller Party which is in effect on the Effective Date and/or outstanding on
the Effective Date is listed on Schedule 3 hereto (the “Scheduled
Indebtedness”).

 

(o)                                 Accurate and Complete Disclosure.  As of the
date delivered, the information, reports, Financial Statements, exhibits and
schedules (other than any projections and information as to a general economic
or industry nature) furnished in writing by or on behalf of each Seller Party to
Buyer in connection with the negotiation, preparation or delivery of this
Agreement or performance hereof and the other Program Documents or included
herein or therein or delivered pursuant hereto or thereto, when taken as a
whole, do not contain any untrue statement of material fact or to any Seller
Party’s knowledge, omit to state any material fact in information provided to
Buyer necessary to make the statements herein or therein, as applicable, in
light of the circumstances in which they were made, not misleading.  All written
information furnished after the date hereof by or on behalf of each Seller Party
to Buyer in connection with this Agreement and the other Program Documents and
the transactions contemplated hereby and thereby including without limitation,
the information set forth in the related Asset Schedule, will, as of the date
delivered, be true, complete and accurate in every material respect, or (in the
case of projections) based on reasonable estimates, on the date as of which such
information is stated or certified.  There is no fact known to any Seller Party
after due inquiry, that could reasonably be expected to have a Material Adverse
Effect that has not been disclosed herein, in the other Program Documents or in
a report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to Buyer for use in connection with the transactions
contemplated hereby or thereby.

 

(p)                                 Margin Regulations.  The use of all funds
acquired by Sellers under this Agreement will not conflict with or contravene
any of Regulations T, U or X promulgated by the Board of Governors of the
Federal Reserve System as the same may from time to time be amended,
supplemented or otherwise modified.

 

(q)                                 Investment Company.  No Seller Party is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended and it is not
necessary to register the Mezzanine Subsidiary under the Investment Company Act,
for reasons other than the exemption provided by Section 3(c)(1) or
Section 3(c)(7) of the Investment Company Act.

 

(r)                                    Solvency.  As of the date hereof and
immediately after giving effect to each Transaction, the fair value of the
assets of each Seller and the Mezzanine Subsidiary is greater than the fair
value of the liabilities (including, without limitation, contingent liabilities
if and to the extent required to be recorded as a liability on the Financial
Statements of each Seller or Mezzanine Subsidiary, as applicable, in accordance
with GAAP) of such Seller or Mezzanine Subsidiary, as applicable, and each
Seller and Mezzanine Subsidiary is solvent and, after giving effect to the
transactions contemplated by this Agreement and the other Program Documents,
will not be rendered insolvent or left with an unreasonably small amount of
capital with which to

 

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conduct its respective business and perform its respective obligations.  As of
the date of this Agreement and each Purchase Date, neither Seller nor Mezzanine
Subsidiary intends to incur, nor does such Seller or Mezzanine Subsidiary, as
applicable, believe that it has incurred, debts beyond its ability to pay such
debts as they mature.  As of the date of this Agreement and each Purchase Date,
no Seller Party is contemplating the commencement of an insolvency, bankruptcy,
liquidation, or consolidation proceeding or the appointment of a receiver,
liquidator, conservator, trustee, or similar official in respect of itself or
any of its property.

 

(s)                                   ERISA.  From the fifth fiscal year
preceding the current year through the termination of this Agreement (the
“Reporting Period”) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, with respect to any
employee pension or employee benefit plan (as defined in Section 3(2) and
3(3) of ERISA, respectively), other than a multiemployer plan as defined in
Section 3(37) of ERISA (a “Multiemployer Plan”),  maintained by Seller Party or
any ERISA Affiliate, or to which Seller Party or any ERISA Affiliate contributes
or has contributed (each, a “Plan”), the benefits under which Plan are
guaranteed, in whole or in part, by the PBGC (A) Seller Party and each ERISA
Affiliate has funded and will continue to fund each Plan as required by the
provisions of Section 412 of the Code;  and (B) Seller Party and each ERISA
Affiliate has caused and will continue to cause each Plan to pay all benefits
when due.  From the fifth fiscal year preceding the current year through the
date of this Agreement, no Seller Party nor any ERISA Affiliate has been or is
obligated to contribute to any Multiemployer Plan. Seller Party (on behalf of
ERISA Affiliate, if applicable) will provide to Buyer (A) no later than the date
of submission to the PBGC, a copy of any notice of a Plan’s termination (B) no
later than the date of submission to the Department of Labor or to the Internal
Revenue Service, as the case may be, a copy of any request for waiver from the
funding standards or extension of the amortization periods required by
Section 412 of the Code and (C) notice of any Reportable Event as such term is
defined in ERISA (and has, prior to the date of this Agreement, provided to
Buyer a copy of any document described in clauses (A), (B) or (C) of this
sentence relating to any date in the Reporting Period prior to the date of this
Agreement).

 

(t)                                    Reserved.

 

(u)                                 No Reliance.  Each Seller Party has made its
own independent decisions to enter into the Program Documents and each
Transaction and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors (including
without limitation, legal counsel and accountants) as it has deemed necessary.
No Seller Party is relying upon any advice from Buyer as to any aspect of the
Transactions, including without limitation, the legal, accounting or tax
treatment of such Transactions.

 

(v)                                 Plan Assets.  No Seller Party is an
“employee benefit plan” as defined in Section 3(3) of ERISA that is subject to
Title I of ERISA, or a “plan” described in Section 4975(e)(1) of the Code that
is subject to Section 4975 of the Code, and the Purchased Assets and Mezzanine
Subsidiary  Assets are not “plan assets” within the meaning of 29 CFR
§2510.3-101, as modified by Section 3(42) of ERISA, in such Seller Party’s hands
and transactions by or with any Seller Party are not subject to any state or
local statute regulating investments of, or fiduciary obligations with respect
to, governmental plans within the meaning of Section 3(32) of ERISA.

 

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(w)                               Real Estate Investment Trust.  Guarantor has
not engaged in any material “prohibited transactions” as defined in
Section 857(b)(6)(B)(iii) and (C) of the Code.  Guarantor for its current “tax
year” (as defined in the Code) is entitled to a dividends paid deduction as
described in Section 857 of the Code for any dividends paid by it with respect
to each such year for which it claims a deduction in its Form 1120-REIT filed
with the IRS for such year.

 

(x)                                 Anti-Money Laundering Laws.  Each Seller
Party has complied with all applicable anti-money laundering laws and
regulations, including without limitation the USA Patriot Act of 2001
(collectively, the “Anti-Money Laundering Laws”); each Seller Party has
established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Purchased Asset and Mezzanine Subsidiary
Asset for purposes of the Anti-Money Laundering Laws, including with respect to
the legitimacy of the applicable Obligor and Mezzanine Borrower and the origin
of the assets used by the said Obligor and Mezzanine Borrower to purchase the
property in question, and maintains, and will maintain, sufficient information
to identify the applicable Obligor and Mezzanine Borrower for purposes of the
Anti-Money Laundering Laws.

 

(y)                                 No Prohibited Persons. None of Seller
Parties nor any of their respective Affiliates, officers, directors, partners or
members, is an entity or person (or to the Sellers’ knowledge, owned or
controlled by an entity or person): (i) that is listed in the Annex to, or is
otherwise subject to the provisions of Executive Order 13224 issued on
September 24, 2001 (“EO13224”); (ii) whose name appears on the United States
Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current
list of “Specifically Designated National and Blocked Persons” (which list may
be published from time to time in various mediums including, but not limited to,
the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits,
threatens to commit or supports “terrorism”, as that term is defined in EO13224;
or (iv) who is otherwise affiliated with any entity or person listed above (any
and all parties or persons described in clauses (i) through (iv) above are
herein referred to as a “Prohibited Person”). None of Seller Parties nor any of
their respective Affiliates, officers, directors, partners or members is
currently subject to any economic sanctions administered or imposed by OFAC, the
United Nations Security Council, the European Union or other relevant sanctions
authority, and no Seller nor any of its respective Affiliates will directly or
indirectly use the proceeds of any Transactions contemplated hereunder, or lend,
contribute or otherwise make available such proceeds to or for the benefit of
any person or entity for the purpose of financing or supporting the activities
of any person or entity currently subject to any such sanctions by such
authorities.

 

SECTION 12.                            COVENANTS

 

On and as of the date of this Agreement and each Purchase Date and at all times
until this Agreement is no longer in force, each Seller Party covenants, jointly
and severally, as follows:

 

(a)                                 Preservation of Existence; Compliance with
Law.  Each Seller Party shall (i) preserve and maintain its legal existence and
all of its material rights, privileges, licenses and franchises necessary for
the operation of its business; (ii) comply in all material respects with any
applicable Requirement of Law, rules, regulations and orders, whether now in
effect or

 

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hereafter enacted or promulgated by any applicable Governmental Authority
(including, without limitation, all environmental laws); (iii) maintain all
material licenses, permits or other approvals necessary for Seller Party, as
applicable, to conduct its business and to perform its obligations under the
Program Documents; and (iv) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied.

 

(b)                                 Taxes.

 

(i)                                     Seller Party and its Subsidiaries shall
timely file all income, franchise and other material Tax returns that are
required to be filed by them and shall timely pay all material Taxes due and
payable by them or imposed with respect to any of their property and all other
material fees and other charges imposed on them or any of their property by any
Governmental Authority, except for any such Taxes the amount or validity of
which is currently being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided in accordance with GAAP.

 

(ii)                                  There are no Liens for Taxes with respect
to any assets of any Seller Party or its Subsidiaries, and no claim is being
asserted with respect to Taxes of any Seller Party or its Subsidiaries, except
for statutory Liens for Taxes not yet delinquent or for Taxes the amount or
validity of which is currently being contested in good faith by appropriate
proceedings diligently conducted and, in each case, with respect to which
adequate reserves have been provided in accordance with GAAP.

 

(iii)                               Guarantor is and will be treated as a REIT,
ACRC Lender U TRS LLC will be treated as an association taxable as a corporation
for U.S. federal income tax purposes, and ACRC Lender U LLC will be treated as a
disregarded entity for U.S. federal income tax purposes.

 

(c)                                  Notice of Proceedings or Adverse Change. 
Seller Party shall give notice to Buyer after a Responsible Officer of Seller
Party has any knowledge of the occurrence of any of the following within the
timeframe specified below:

 

(i)                                     promptly following the occurrence of any
Default, Event of Default, Collateral Administrator Default or Collateral
Administrator MAE;

 

(ii)                                  within (a) one (1) Business Day following
any event of default that has occurred under any Indebtedness of any Seller
Party, or (b) three (3) Business Days following any (x) default that has
occurred under any Indebtedness of any Seller Party, (y) litigation,
investigation, regulatory action or proceeding that is pending or threatened in
writing by or against a Seller Party in any federal or state court or before any
Governmental Authority which, if not cured or if adversely determined, would
reasonably be expected to have a Material Adverse Effect or constitute a Default
or Event of Default, and (z) any Material Adverse Effect with respect to a
Seller Party;

 

(iii)                               within five (5) Business Days following any
litigation or proceeding that is pending or threatened in writing against
(a) Seller Party in which the amount involved exceeds the Litigation Threshold
and is not covered by insurance, in which injunctive or

 

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similar relief is sought which if adversely determined would reasonably be
expected to have a Material Adverse Effect, and (b) any litigation or proceeding
that is pending or threatened in writing in connection with any of the
Repurchase Assets, which, if adversely determined, would reasonably be expected
to have a Material Adverse Effect; and

 

(iv)                              within five (5) Business Days, notice of any
of the following events: (A) a material and adverse change in the insurance
coverage of Seller Party, with a copy of evidence of same attached; (B) any
material change in accounting policies or financial reporting practices of
Seller Party; (C) promptly upon receipt of notice or knowledge of any Lien or
security interest (other than security interests created hereby or under any
other Program Document) on, or claim asserted against, any of the Repurchase
Assets; (D) [reserved]; (E) any Change in Control; and (F) any other event,
circumstance or condition that has resulted, or is reasonably likely to result,
in a Material Adverse Effect.

 

(d)                                 Financial Reporting.  Seller Party shall
maintain a system of accounting established and administered in accordance with
GAAP consistently applied, and furnish to Buyer, with a certification by the
president or chief financial officer of the Guarantor (the following in clauses
(i) and (ii) hereinafter referred to as the “Financial Statements”):

 

(i)                                     Within one hundred and twenty (120) days
after the close of each fiscal year, (A) audited consolidated balance sheets and
the related audited consolidated statements of income and retained earnings and
of cash flows as at the end of such year for the Guarantor and its consolidated
subsidiaries for the fiscal year, setting forth in each case in comparative form
the figures for the previous year, with an unqualified opinion on such audited
statements of an Approved CPA (provided that the public posting of Guarantor’s
Annual Report on Form 10-K on the official web site of Guarantor shall be deemed
sufficient to satisfy the requirements of this Section 12(d)(i) with respect to
Guarantor) and (B) unaudited balance sheet and related statements of income and
retained earnings and cash flows as at the end of such year for the Sellers;

 

(ii)                                  Within sixty (60) days after the end of
each of the first three (3) fiscal quarters of the Guarantor’s fiscal year,
(A) the unaudited consolidated balance sheets and the related unaudited
consolidated statements of income and retained earnings and of cash flows for
the Guarantor and its consolidated subsidiaries for such quarterly period(s) 
(provided that the public posting of Guarantor’s Annual Report on Form 10-K on
the official web site of Guarantor shall be deemed sufficient to satisfy the
requirements of this Section 12(d)(ii) with respect to Guarantor) and
(B) unaudited balance sheet and related statements of income and retained
earnings and cash flows for such quarterly period for the Sellers;

 

(iii)                               Simultaneously with the furnishing of each
of the Financial Statements to be delivered pursuant to subsection
(i)-(ii) above, a certificate in the form of Exhibit K hereto and certified by
the president, chief financial officer, treasurer, assistant treasurer or chief
accounting officer of Seller Parties;

 

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(iv)                              Promptly, such other information regarding the
business affairs, operations and financial condition of Seller Party as Buyer
may reasonably request;

 

(v)                                 Promptly, to the extent delivered to Sellers
(provided that Sellers have used commercially reasonable efforts to obtain
delivery thereof) from time to time annual financial statements of the Obligor
or Mezzanine Borrower, as applicable, with respect to each Eligible Asset
consistent with the terms of the provisions of the loan documents relating to
the Mortgaged Property; provided, that notwithstanding the foregoing the Buyer
may reduce the Market Value of the Purchased Asset to the extent it deems
necessary due to the failure to receive such information;

 

(vi)                              With respect to each Eligible Asset, promptly,
but in any event within (a) one (1) Business Day of receipt thereof by a
Responsible Officer of the applicable Seller, notices of events of default and
(b) two (2) Business Days of receipt thereof by a Responsible Officer of the
applicable Seller, a notice of any material events, material litigation or
licensing issues;

 

(vii)                           Within thirty (30) days after the end of each
calendar quarter, the applicable Seller’s internal summary of the performance of
each Eligible Asset;

 

(viii)                        Within two (2) Business Days of receipt by Sellers
or Guarantor, each material report, summary, exhibit or other data required to
be delivered to Sellers, Guarantor or any Affiliate pursuant to the
documentation governing the Eligible Assets.

 

(e)                                  Further Assurances.  Seller Party shall
execute and deliver to Buyer all further documents, financing statements,
agreements and instruments, and take all further actions that may be required
under any applicable Requirement of Law, or that Buyer may reasonably request,
in order to effectuate the transactions contemplated by this Agreement and the
Program Documents or, without limiting any of the foregoing, to grant, preserve,
protect and perfect the validity and first-priority of the security interests
created or intended to be created hereby.

 

(f)                                   True and Correct Information.  As of the
date of delivery, all information, reports, exhibits, schedules, Financial
Statements or certificates of Seller Party or any of its Affiliates thereof or
any of their officers furnished to Buyer hereunder and during Buyer’s diligence
of Seller Party will be true and complete as of the date of delivery thereof and
to any Seller’s knowledge, will not omit to disclose any material facts in
information provided to Buyer.  All required Financial Statements, information
and reports delivered by Seller Party to Buyer pursuant to this Agreement shall
be prepared in accordance with GAAP, or as applicable to SEC filings, the
appropriate SEC accounting requirements.

 

(g)                                  ERISA Events.  Except as, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect, (i) Seller Party shall not incur any liability, contingent or otherwise,
with respect to any Plan (whether sponsored or maintained by such Seller Party
or any ERISA Affiliate), (ii) Seller Party shall not be in violation of
Section 11(v) of this Agreement, (iii) neither any Seller Party nor any ERISA
Affiliate shall fail to make any required contribution to a Multiemployer Plan,
(iv) neither any Seller Party nor any ERISA Affiliate shall incur any liability
with respect to the withdrawal from any Multiemployer Plan

 

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and (v) neither any Seller Party nor any ERISA Affiliate shall receive a notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA.

 

(h)                                 Financial Condition Covenants.  The
Guarantor shall comply with the following covenants:

 

(i)                                     Maintenance of Minimum Tangible Net
Worth.  At the end of each Test Period, Guarantor shall maintain a minimum
Tangible Net Worth of at least the sum of (i) eighty percent (80%) of
Guarantor’s Tangible Net Worth as of September 30, 2013, plus (ii) eighty
percent (80%) of the net proceeds (after deducting transaction costs) Guarantor
receives from subsequent equity issuances after September 30, 2013.

 

(ii)                                  Ratio of Recourse Debt to Tangible Net
Worth.  At the end of each Test Period, Guarantor shall maintain its ratio of
Recourse Debt to Tangible Net Worth to not more than 3.00 to 1.00.

 

(iii)                               Ratio of Debt to Tangible Net Worth.  At the
end of each Test Period, Guarantor (on a consolidated basis) shall maintain its
ratio of Debt to Tangible Net Worth to not more than 4.00 to 1.00.

 

(iv)                              Fixed Charge Coverage Ratio. Guarantor shall
maintain a Fixed Charge Coverage Ratio for the immediately preceding twelve (12)
month period ending on the last day of the applicable Test Period of at least
1.25 to 1.00, with compliance to be tested as of the end of each Test Period.

 

(i)                                     Reserved.

 

(j)                                    Collateral Administrator Approval. 
Sellers shall not cause the Purchased Assets or Mezzanine Subsidiary  Assets to
be serviced or administered by any servicer or administrator other than a
servicer or administrator expressly approved in writing by Buyer, which approval
shall be deemed granted by Buyer with respect to the Collateral Administrator,
any Seller, and all subservicers subservicing the Purchased Assets and Mezzanine
Subsidiary  Assets on the date such Purchased Asset and Mezzanine Subsidiary 
Asset becomes subject to a transaction with the execution of this Agreement.

 

(k)                                 Insurance.  Sellers shall cause Ares
Commercial Real Estate Management LLC to maintain Fidelity Insurance and errors
and omissions insurance in respect of its officers, employees and agents in such
amounts acceptable to Buyer, which shall include a provision that such policies
cannot be terminated or materially modified without at least thirty (30) days’
prior notice to Buyer.  Sellers shall notify Buyer of any material change in the
terms of any such insurance.  Sellers shall cause Ares Commercial Real Estate
Management LLC to maintain endorsements for theft of warehouse lender money and
collateral, naming Buyer as a loss payee under its Fidelity Insurance and as a
direct loss payee/right of action under its errors and omissions insurance
policy.

 

(l)                                     Books and Records.  Each Seller or its
agent shall, to the extent practicable, maintain and implement administrative
and operating procedures (including, without

 

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limitation, an ability to recreate records evidencing the Repurchase Assets in
the event of the destruction of the originals thereof), and keep and maintain or
obtain, as and when required, all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Repurchase Assets.

 

(m)                             Illegal Activities.  No Seller Party shall
engage in any conduct or activity that could subject its assets to forfeiture or
seizure.

 

(n)                                 Material Change in Business.  No Seller
Party shall make any material change in the nature of its business as carried on
at the date hereof and reasonable extensions thereof related to the commercial
real estate business.

 

(o)                                 Limitation on Dividends and Distributions. 
Following an Event of Default, no Seller nor Guarantor shall make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
interest of any Seller or Guarantor, whether now or hereafter outstanding, or
make any other distribution or dividend in respect of any of the foregoing or to
any shareholder or equity owner of any Seller or Guarantor, either directly or
indirectly, whether in cash or property or in obligations of any Seller or
Guarantor; provided that notwithstanding the existence of any Event of Default,
Guarantor shall be permitted to pay dividends solely in order to meet its REIT
Distribution Requirements.

 

(p)                                 Reserved.

 

(q)                                 Disposition of Assets; Liens.  No Seller
shall create, incur, assume or suffer to exist any mortgage, pledge, Lien,
charge or other encumbrance of any nature whatsoever on any of the Repurchase
Assets, whether real, personal or mixed, now or hereafter owned, other than the
Liens created in connection with the transactions contemplated by this
Agreement; nor shall any Seller cause any of the Purchased Assets or Mezzanine
Subsidiary Assets to be sold, pledged, assigned or transferred except as
permitted hereunder.

 

(r)                                    Transactions with Affiliates.  No Seller
Party shall enter into any transaction, including, without limitation, the
purchase, sale, lease or exchange of property or assets or the rendering or
accepting of any service with any Affiliate unless such transaction is (i) not
otherwise prohibited in this Agreement, (ii) in the ordinary course of such
Seller Party’s business, and (iii) upon fair and reasonable terms no less
favorable to Seller Party, as the case may be, than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate.

 

(s)                                   Organization.  No Seller Party shall
(i) cause or permit any change to be made in its name, organizational
identification number, identity or corporate structure, each as described in
Section 11(h) or (ii) change its jurisdiction of organization, unless it shall
have provided Buyer thirty (30) days’ prior written notice of such change and
shall have first taken all action required by Buyer for the purpose of
perfecting or protecting the lien and security interest of Buyer established
hereunder.

 

(t)                                    Collateral Administrator Reports.  On the
Reporting Date, Sellers shall or shall cause, to the extent the Collateral
Administrator is an Affiliate of any Seller Party, the

 

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Collateral Administrator (to the extent reasonably available to the Collateral
Administrator) to furnish to Buyer a report on the Purchased Assets and
Mezzanine Subsidiary Assets in form and substance acceptable to Buyer.

 

(u)                                 Approved Underwriting Guidelines.  No Seller
Party shall submit to Buyer for purchase, and Buyer shall have no obligation to
purchase, any Commercial Mortgage Loan or Mezzanine Subsidiary Asset that is not
underwritten in accordance with the Approved Underwriting Guidelines.

 

(v)                                 Amendments.  No Seller Party nor the
Collateral Administrator is authorized on behalf of Buyer to amend, modify,
supplement, clarify or waive any provision in a document relating to the
Mortgage Loan or Mezzanine Loan without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, conditioned or delayed unless
otherwise set forth in the Collateral Administrator Agreement.  Without limiting
the foregoing, the applicable Seller shall provide prompt written notice to
Buyer of any amendments, modifications or waivers relating to the Mortgage Loan
and Mezzanine Loan, together with a copy thereof.

 

(w)                               Mezzanine Subsidiary Separateness. Mezzanine
Subsidiary shall (a) own no assets, and will not engage in any business, other
than the assets and transactions specifically contemplated by this Agreement;
(b) not incur any Indebtedness or obligation, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than pursuant to the Program Documents or in connection with the making of
Mezzanine Loans; (c) not make any loans or advances to any third party (for the
avoidance of doubt, the foregoing shall not be deemed to include the purchase of
assets and the payment of any Future Funding Obligation), and shall not acquire
obligations or securities of its affiliates; (d) pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) only from its
own assets; (e) comply with the provisions of its organizational documents;
(f) do all things necessary to observe organizational formalities and to
preserve its existence, and will not amend, modify or otherwise change its
organizational documents, or suffer same to be amended, modified or otherwise
changed, without the prior written consent of Buyer; (g) maintain all of its
books, records, financial statements and bank accounts separate from those of
its Affiliates except as contemplated by the Program Documents; (h) 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 and shall maintain and utilize separate
stationery, invoices and checks; (i) 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; (j) not engage in or suffer
any change of ownership, dissolution, winding up, liquidation, consolidation or
merger in whole or in part; (k) not commingle its funds or other assets with
those of any Affiliate or any other Person except as contemplated by the Program
Documents; (l) 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 affiliate or any other person; (m) not and will not hold itself out
to be responsible for the debts or obligations of any other Person; (n) cause
each of its direct owners to agree not to (i) file or consent to the filing of
any bankruptcy, insolvency or reorganization case or proceeding with respect to
Mezzanine Subsidiary; institute any proceedings under any applicable insolvency
law

 

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or otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally with respect to Mezzanine Subsidiary;
(ii) seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for Seller or a
substantial portion of its properties; or (iii) make any assignment for the
benefit of Mezzanine Subsidiary’s creditors except as contemplated by the
Program Documents.

 

SECTION 13.                            EVENTS OF DEFAULT

 

If any of the following events (each an “Event of Default”) occur, Buyer shall
have the rights set forth in Section 14, as applicable:

 

(a)                                 Payment Default.  A Seller Party shall
default in the payment of  (i)  any payment of Price Differential which has
become due on a Payment Date and such payment is not received within three
(3) Business Days; (ii) any Repurchase Price or Exit Fee which has become due;
(iii) any Asset Manager Fee or Commitment Fee which has become due and such
payment is not received within three (3) Business Days; (iv) any Margin Deficit
when due pursuant to Section 6 hereof or (v) make any payment on account of
Expenses that are due on demand or upon presentation of an invoice thereof
within thirty (30) days after demand or presentment thereof; or

 

(b)                                 Representation and Warranty Breach.  Any
representation, warranty or certification made or deemed made herein or in any
other Program Document by a Seller Party or any certificate furnished to Buyer
pursuant to the provisions hereof or thereof or any information with respect to
the Purchased Assets or Mezzanine Subsidiary Assets furnished in writing by on
behalf of Seller Party shall prove to have been untrue or misleading in any
material respect as of the time made or furnished (other than the
representations and warranties set forth in Schedule 1, which shall be
considered solely for the purpose of determining the Market Value of the
Purchased Assets or Mezzanine Subsidiary Assets, as applicable; unless (i) any
Seller or Mezzanine Subsidiary shall have made any such representations and
warranties with actual knowledge that they were materially false or misleading
at the time made; or (ii) any such representations and warranties have been
determined by Buyer in its good faith discretion to be materially false or
misleading on a regular basis); or

 

(c)                                  Immediate Covenant Default.  The failure of
a Seller Party to perform, comply with or observe any term, covenant or
agreement applicable to a Seller Party contained in any of
Sections 12(a)(i) (Preservation of Existence; Compliance with Law);
(b)(ii) (Real Estate Investment Trust); (d)(i) or (ii) (Financial Reporting);
(f) (True and Correct Information); (g) (ERISA Events); (h) (Financial Condition
Covenants); (m) (Illegal Activities.); (n) (Material Change in Business);
(o) (Limitation on Dividends and Distributions); (q) (Disposition of Assets;
Liens); (r) (Transactions with Affiliates); (s) (Organization); (u) (Approved
Underwriting Guidelines); (v) (Amendments); or (w) (Mezzanine Subsidiary
Separateness); or

 

(d)                                 Additional Covenant Defaults.  A Seller
Party shall fail to observe or perform any other covenant or agreement contained
in this Agreement (and not identified in Section 13(c)) or any other Program
Document, and if such default shall be capable of being remedied, and such
failure to observe or perform shall continue unremedied for a period of five
(5) Business Days after notice or actual knowledge thereof; or

 

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(e)                                  Judgments.  A judgment or judgments for the
payment of money in excess of the Litigation Threshold in the aggregate shall be
rendered against a Seller Party by one or more courts, administrative tribunals
or other bodies having jurisdiction and the same shall not be satisfied,
discharged (or provision shall not be made for such discharge) or bonded, or a
stay of execution thereof shall not be procured, within forty-five (45) days
from the date of entry thereof; or

 

(f)                                   Collateral Administrator.  A Collateral
Administrator Default or a Collateral Administrator MAE shall occur and Sellers
have not (A) appointed a successor Collateral Administrator reasonably
acceptable to Buyer and (B) delivered a fully executed Collateral Administrator
Notice with such successor Collateral Administrator, in each case within thirty
(30) days following the occurrence of such Collateral Administrator Default or
Collateral Administrator MAE, as applicable; or

 

(g)                                  Cross-Default.  Any Seller, Mezzanine
Subsidiary or Guarantor shall be in default (beyond any and all applicable
periods of notice and cure) under (i) (A) any note, indenture, loan agreement,
guaranty or Hedge Agreement or (B) any payment obligation of any Seller,
Mezzanine Subsidiary or Guarantor to Buyer or its Affiliates, in the aggregate
with respect to clauses (A) and (B), in excess of $100,000 with respect to any
Seller or Mezzanine Subsidiary or $15,000,000 with respect to Guarantor, which
default (1) involves the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness, or (ii) (A) any note, indenture, loan
agreement, guaranty or Hedge Agreement or (B) any payment obligation of any
Seller, Mezzanine Subsidiary or Guarantor to Buyer or its Affiliates, in the
aggregate with respect to clauses (A) and (B), in excess of $0 with respect to
any Seller or $5,000,000 with respect to Guarantor and enforcement actions
thereunder have commenced or there has been an  acceleration of the maturity of
obligations of any Seller, Mezzanine Subsidiary or Guarantor by any other party
to or beneficiary of such contract; or

 

(h)                                 Insolvency Event.  An Insolvency Event shall
have occurred with respect to a Seller Party; or

 

(i)                                     Enforceability.  For any reason, this
Agreement or any Program Document at any time shall not be in full force and
effect in all material respects or shall not be enforceable in all material
respects in accordance with its terms, or any Lien granted pursuant thereto
shall fail to be perfected and of first priority, or any party thereto (other
than Buyer) shall contest in writing the validity, enforceability, perfection or
priority of any Lien granted pursuant to this Agreement or any party thereto
(other than Buyer) shall seek in writing to disaffirm, terminate, limit or
reduce its obligations hereunder or under any Program Document; or

 

(j)                                    Liens.  Any Seller Party shall grant, or
suffer to exist, any Lien on any Repurchase Asset (except any Lien in favor of
Buyer); or at least one of the following fails to be true and, in either event,
any Seller shall fail to repurchase such violating Purchased Assets within one
(1) Business Day: (A) the Repurchase Assets shall have been sold to Buyer, or
(B) the Liens contemplated hereby are first priority perfected Liens on any
Repurchase Assets in favor of Buyer; or

 

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(k)                                 Material Adverse Effect.  A Material Adverse
Effect shall occur as determined by Buyer in its good faith discretion; or

 

(l)                                     Change in Control.  A Change in Control
shall have occurred; or

 

(m)                             Going Concern.  Guarantor’s audited Financial
Statements or notes thereto or other opinions or conclusions stated therein
shall be qualified or limited by reference to the status of Seller Party as a
“going concern” or reference of similar import; or

 

(n)                                 Inability to Perform.  A Responsible Officer
of any Seller, Mezzanine Subsidiary or Guarantor, as applicable, shall admit in
writing (i) its inability to, or its intention not to, perform any of such
Seller’s, Mezzanine Subsidiary’s or Guarantor’s, as applicable, obligations
under this Agreement or any Program Document or (ii) its breach of any Seller’s,
Mezzanine Subsidiary’s or Guarantor’s, as applicable, obligations under this
Agreement or any Program Document; or

 

(o)                                 REIT Qualification.  Guarantor shall fail to
maintain its status as a REIT or fail to be entitled to claim dividends paid
deductions as described in Section 857 of the Code; or

 

(p)                                 Governmental Action.  Any Seller Party shall
become the subject of a cease and desist order of any Governmental Authority or
enter into a memorandum of understanding or consent agreement with the
Governmental Authority, any of which, would have, or is purportedly the result
of any condition which would be reasonably likely to have, a Material Adverse
Effect.

 

SECTION 14.                            REMEDIES

 

(a)                                 If an Event of Default occurs and is
continuing, the following rights and remedies are available to Buyer; provided,
that an Event of Default shall be deemed to be continuing unless expressly
waived by Buyer in writing.

 

(i)                                     At the option of Buyer, exercised by
written or electronic notice to Sellers (which option shall be deemed to have
been exercised, even if no notice is given, immediately upon the occurrence of
an Insolvency Event of a Seller Party), the Repurchase Date for each Transaction
hereunder, if it has not already occurred, shall be deemed immediately to occur.

 

(ii)                                  If Buyer exercises or is deemed to have
exercised the option referred to in subsection (a)(i) of this Section,

 

(A)                               Sellers’ obligations in such Transactions to
repurchase all Purchased Assets, at the Repurchase Price therefor on the
Repurchase Date determined in accordance with subsection (a)(i) of this Section,
(1) shall thereupon become immediately due and payable and (2) all Income paid
after such exercise or deemed exercise shall be retained by Buyer and applied to
the aggregate unpaid Repurchase Price and any other amounts owed by Sellers
hereunder;

 

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(B)          to the extent permitted by any applicable Requirement of Law, the
Repurchase Price with respect to each such Transaction shall be increased to an
amount equal to 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 date of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price as so increased, (x) the
Post-Default Rate in effect following an Event of Default to (y) the Repurchase
Price for such Transaction as of the Repurchase Date as determined pursuant to
subsection (a)(i) of this Section (decreased as of any day by (i) any amounts
applied by Buyer pursuant to clause (C) of this subsection, and (ii) any
proceeds from the sale of Purchased Assets applied to the Repurchase Price
pursuant to subsection (a)(iv) of this Section; and

 

(C)          all Income actually received by Buyer pursuant to Section 5 shall
be applied to the aggregate unpaid Obligations hereunder owed by Seller Parties.

 

(iii)          Upon the occurrence of one or more Events of Default, Buyer shall
have the right to obtain (A) a physical transfer of the servicing of the
Purchased Assets or Mezzanine Subsidiary Assets in accordance with
Section 16(c) and (B) physical possession of all files of Sellers or Mezzanine
Subsidiary relating to the Purchased Assets, Mezzanine Subsidiary Assets and the
Repurchase Assets and all documents relating to the Purchased Assets and
Mezzanine Subsidiary Assets which are then or may thereafter come in to the
possession of a Seller, Mezzanine Subsidiary or any third party acting for
Sellers or Mezzanine Subsidiary (including any Collateral Administrator) and
Sellers and Mezzanine Subsidiary shall deliver to Buyer such assignments as
Buyer shall request in good faith.  Buyer shall be entitled to specific
performance of all agreements of Sellers and Mezzanine Subsidiary contained in
the Program Documents.

 

(iv)          At any time on the Business Day following notice to Sellers (which
notice may be the notice given under subsection (a)(i) of this Section), in the
event Sellers have not repurchased all Purchased Assets, Buyer may
(A) immediately sell, without demand or further notice of any kind, at a public
or private sale, without any representations or warranties of Buyer and at such
price or prices as Buyer may deem satisfactory any or all Purchased Assets and
the Repurchase Assets subject to a such Transactions hereunder and apply the
proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts
owing by Sellers hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Assets or Repurchase Assets, to give
Sellers credit for such Purchased Assets and the Repurchase Assets in an amount
equal to the Market Value of the Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by Sellers hereunder.  The proceeds
of any disposition of Purchased Assets and the Repurchase Assets shall be
applied as determined by Buyer in its sole discretion.

 

(v)           Sellers shall be liable to Buyer for (A) the amount of all
reasonable and documented legal or other expenses (including, without
limitation, all reasonable and documented out-of-pocket costs and expenses of
Buyer in connection with the enforcement of this Agreement or any other
agreement evidencing a Transaction, whether

 

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in action, suit or litigation or bankruptcy, insolvency or other similar
proceeding affecting creditors’ rights generally, further including, without
limitation, the reasonable fees and expenses of counsel incurred in connection
with or as a result of an Event of Default which is continuing, (B) damages in
an amount equal to the reasonable and documented cost (including all reasonable
fees, expenses and commissions) of Buyer entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a
result of an Event of Default which is continuing, and (iii) any other loss,
damage, cost or expense directly arising or resulting from the occurrence and
continuation of an Event of Default in respect of a Transaction.

 

(vi)          Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or any applicable
Requirement of Law.

 

(b)           Buyer may exercise one or more of the remedies available hereunder
immediately upon the occurrence of an Event of Default that is continuing on
such date and at any time thereafter without notice to Sellers.  All rights and
remedies arising under this Agreement as amended from time to time hereunder are
cumulative and not exclusive of any other rights or remedies which Buyer may
have.

 

(c)           Seller Parties recognize that the market for the Purchased Assets
and/or Repurchase Assets may not be liquid and as a result it may not be
possible for Buyer to sell all of the Purchased Assets and/or Repurchase Assets
on a particular Business Day, or in a transaction with the same purchaser, or in
the same manner.  In view of the nature of the Purchased Assets and Repurchase
Assets, Seller Parties agree that liquidation of any Purchased Asset and/or
Repurchase Asset may be conducted in a private sale.  Seller Parties acknowledge
and agree that any such private sale may result in prices and other terms less
favorable to Buyer than if such sale were a public sale, and notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner.  Seller Parties further agree
that it would not be commercially unreasonable for Buyer to dispose of any
Purchased Asset and/or Repurchase Asset by using internet sites that provide for
the auction or sale of assets similar to the Purchased Assets and/or Repurchase
Assets, or that have the reasonable capability of doing so, or that match buyers
and Sellers of assets.

 

(d)           Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and each Seller Party hereby expressly waives any
defenses such Seller Party might otherwise have to require Buyer to enforce its
rights by judicial process.  Each Seller Party also waives any defense (other
than a defense of payment or performance) such Seller Party might otherwise have
arising from the use of nonjudicial process, enforcement and sale of all or any
portion of the Repurchase Assets, or from any other election of remedies.  Each
Seller Party 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.

 

(e)           To the extent permitted by any applicable Requirement of Law,
Sellers shall be liable to Buyer for interest on any amounts owing by Sellers
hereunder, from the date Sellers become liable for such amounts hereunder until
such amounts are (i) paid in full by Sellers or (ii) satisfied in full by the
exercise of Buyer’s rights hereunder.  Interest on any sum

 

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payable by Sellers to Buyer that accrued after the related Event of Default
under this Section 14(e) shall be at a rate equal to the Post-Default Rate.

 

(f)            Without limiting the rights of Buyer hereto to pursue all other
legal and equitable rights available to Buyer for any Seller Party’s failure to
perform its obligations under this Agreement, each Seller Party acknowledges and
agrees that the remedy at law for any failure to perform obligations hereunder
would be inadequate and Buyer shall be entitled to seek specific performance,
injunctive relief, or other equitable remedies in the event of any such failure.
The availability of these remedies shall not prohibit Buyer from pursuing any
other remedies for such breach, including the recovery of monetary damages.

 

SECTION 15.                            INDEMNIFICATION AND EXPENSES; RECOURSE

 

(a)           Each Seller agrees to hold Buyer, and its Affiliates and their
officers, directors, employees, agents and advisors (each an “Indemnified
Party”) harmless from and indemnify, any Indemnified Party against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, “Costs”), relating to or arising out of this Agreement
(including, without limitation, as a result of a breach of any representation or
warranty contained on Schedule 1, subject to the related Schedule of
Exceptions), any other Program Document or any transaction contemplated hereby
or thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, any other Program Document or
any transaction contemplated hereby or thereby, that, in each case, results from
anything other than, and to the extent of, any Indemnified Party’s gross
negligence or willful misconduct.  Without limiting the generality of the
foregoing, each Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party, on an after-Tax basis, against all Costs
incurred or assessed as a result of or otherwise in connection with the holding
of the Purchased Assets, including any Mezzanine Subsidiary Assets, or any
environmental issue or liability, or any failure by any Seller Party to pay when
due any Taxes for which such Person is liable.  In any suit, proceeding or
action brought by an Indemnified Party in connection with this Agreement, any
Purchased Asset including any Mezzanine Subsidiary Assets for any sum owing
thereunder, or to enforce any provisions of any Purchased Asset, including any
Mezzanine Subsidiary Assets, Seller Party will save, indemnify on an after-Tax
basis and hold such Indemnified Party harmless from and against all expense,
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 Party 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 Party.  Each Seller also agrees to reimburse an Indemnified Party as and
when billed by such Indemnified Party for all the Indemnified Party’s reasonable
and documented costs and expenses incurred in connection with the enforcement or
the preservation of Buyer’s rights under this Agreement, any other Program
Document or any transaction contemplated hereby or thereby, including without
limitation the reasonable and documented fees and disbursements of its counsel. 
This Section 15(a) shall not apply with respect to Taxes other than Taxes that
represent Costs arising from any non-Tax claim.

 

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(b)           Sellers agree to pay as and when billed by Buyer all of the
reasonable and documented out-of-pocket costs and expenses incurred by Buyer in
connection with the development, preparation and execution of this Agreement,
any other Program Document or any other documents prepared in connection
herewith or therewith.  In connection therewith, Sellers shall reimburse Buyer
for any of Buyer’s reasonable and documented attorney’s fees and expenses (but
excluding any expenses with respect to due diligence which shall be reimbursed
pursuant to Section 17) incurred by Buyer in connection with the preparation of
the Program Documents such amounts not to exceed the Fee Cap; provided that such
Fee Cap shall only apply to the extent of reasonable negotiation of the Program
Documents, no extensive delays and no unforeseen issues; provided further that
should such fees reach the Fee Cap, Sellers and Buyer shall have a reasonable
discussion with respect to increasing the Fee Cap so long as the circumstances
provide for the need to increase such Fee Cap.  Sellers shall pay as and when
billed all of the reasonable and documented out-of-pocket costs and expenses
incurred by Buyer in connection with any amendment, supplement or modification
to, this Agreement, any other Program Document or any other documents prepared
in connection herewith or therewith.  Sellers agree to pay as and when billed by
Buyer all of the reasonable and documented out-of-pocket costs and expenses
incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without limitation search
and filing fees and all the reasonable and documented fees, disbursements and
expenses of one set of counsel to Buyer.  Sellers agree to pay Buyer all the
reasonable and documented out of pocket due diligence, inspection, testing and
review costs and expenses incurred by Buyer with respect to Mortgage Loans and
Mezzanine Loans submitted by Sellers for purchase under this Agreement,
including, but not limited to, those out of pocket costs and expenses incurred
by Buyer pursuant to Sections 15(a) and 17 hereof.

 

(c)           Without limiting any rights or remedies at law, the Sellers shall
only be responsible hereunder for actual out-of-pockets costs and expenses
incurred by an Indemnified Party.

 

(d)           The obligations of Sellers from time to time to pay the Repurchase
Price, the Price Differential, the Obligations hereunder and all other amounts
due under this Agreement shall be full recourse obligations of Sellers.

 

SECTION 16.                            SERVICING

 

(a)           As a condition of entering into a Transaction with respect to any
Purchased Asset or Mezzanine Subsidiary Asset, Buyer may require a Seller Party
to cause such Purchased Asset and Mezzanine Subsidiary Asset to be administered
by Collateral Administrator or its agents for Seller Parties for a term of
thirty (30) days (the “Servicing Term”).  If the Servicing Term expires with
respect to any Purchased Asset or Mezzanine Subsidiary Asset (i) for any reason
other than such Purchased Asset or Mezzanine Subsidiary Asset no longer being
subject to a Transaction hereunder, or (ii) at any time other than during the
occurrence and continuation of an Event of Default, then Collateral
Administrator shall continue to service the Purchased Asset or Mezzanine
Subsidiary Asset for an additional thirty (30) days.  Each thirty (30) day
extension period shall automatically be deemed to be extended (subject to the
limitations above) without notice unless Buyer notifies Seller Parties in
writing of such termination.  Collateral Administrator shall service or cause to
be serviced the applicable

 

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Purchased Asset and Mezzanine Subsidiary Asset in accordance with Accepted
Servicing Practices and in accordance with all applicable Requirements of Law
and the provisions of any applicable servicing agreement.  Each Seller Party
acknowledges that Buyer shall retain an Asset Manager with respect to the
Purchased Assets and Mezzanine Subsidiary Assets, and in such events Seller
Parties shall pay to Buyer a non-refundable Asset Manager Fee.  Seller Parties
may appoint a successor Collateral Administrator acceptable to Buyer in its
reasonable discretion.  If Buyer does not appoint an Asset Manager or consents
to terminate the obligation to pay the Asset Manager Fee, the Asset Manager Fee
shall cease to be an obligation of Seller Parties.

 

(b)           The Collateral Administrator may delegate to any Person any of its
obligations hereunder; provided, however, that the Collateral Administrator
shall cause the performance of all subcontracted services and any subservicing
agreement to be consistent with the provisions of this Agreement. 
Notwithstanding any such subservicing agreement, the Collateral Administrator
shall be obligated to the same extent and under the same terms and conditions as
if the Collateral Administrator alone was servicing the Purchased Assets and
Mezzanine Subsidiary Assets in accordance with the terms of this Agreement. 
Notwithstanding any other provision of this Agreement, any fees or other
compensation payable to any subservicer shall be the responsibility of Seller
Parties.  Any subservicing agreement that may be entered into and any
transactions or services relating to the Purchased Assets and Mezzanine
Subsidiary Assets involving a subservicer in its capacity as such shall be
deemed to be between the subservicer and the Collateral Administrator alone, and
Buyer shall not be deemed a party thereto and shall have no obligations, duties
or liabilities with respect to the subservicer.  Buyer agrees that it will not
deliver any instructions to a subservicer servicing a Purchased Asset or
Mezzanine Subsidiary Asset on behalf of the Collateral Administrator unless an
Event of Default has occurred or is continuing or the Collateral Administrator
is terminated.

 

(c)           At Buyer’s request, Seller Parties shall cause the transfer of
servicing from Collateral Administrator to Asset Manager of each Purchased Asset
and each Mezzanine Subsidiary Asset, together with all of the related Records in
its possession, to Buyer’s designee upon the earliest of (i) the occurrence and
continuation of an Event of Default hereunder, (ii) the occurrence and
continuation of a Collateral Administrator Default, (iii) the occurrence of a
Collateral Administrator MAE or (iv) the termination of the Servicing Term.

 

(d)           During the period a Collateral Administrator or its agent is
servicing the Purchased Asset or Mezzanine Subsidiary Asset, Collateral
Administrator shall agree that Buyer is entitled to the related Credit Files and
Records and Collateral Administrator shall at all times maintain and safeguard
(or cause to be maintained and safeguarded) the Credit File for the Purchased
Asset or Mezzanine Subsidiary Asset (including photocopies or images of the
documents delivered to Buyer), and accurate and complete records of its (or its
agent’s) servicing of the Purchased Asset; such Collateral Administrator’s (or
its agent’s) possession of the Credit Files and Records being for the sole
purpose of servicing such Purchased Asset or such Mezzanine Subsidiary Asset and
such retention and possession by Collateral Administrator (or its agent’s) being
in a custodial capacity only.

 

(e)           At Buyer’s request, Seller Parties shall promptly deliver to Buyer
reports regarding the status of any Purchased Asset and any Mezzanine Subsidiary
Asset being serviced by or on behalf of a Seller Party, which reports shall
include, but shall not be limited to, a

 

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description of any default thereunder for more than thirty (30) days or such
other circumstances that could cause a material adverse effect on such Purchased
Asset or such Mezzanine Subsidiary Asset, Buyer’s rights to such Purchased
Asset, such Mezzanine Subsidiary Asset or the collateral securing such Purchased
Asset or Mezzanine Subsidiary Asset as applicable; Seller Parties may be
required to deliver such reports until the release of the Purchased Asset or
Mezzanine Subsidiary Assets by Buyer.  Seller Parties shall promptly notify
Buyer if it becomes aware of any payment default that occurs under the Purchased
Asset, the Mezzanine Subsidiary Asset or any default under any Collateral
Administration Agreement that would materially and adversely affect any
Purchased Asset or any Mezzanine Subsidiary Asset subject thereto.

 

(f)            Seller Parties shall release its custody of the contents of any
Credit File or Asset File only (i) in accordance with the written instructions
of Buyer, (ii) upon the consent of Buyer when such release is required as
incidental to Seller Parties’ or their agent’s servicing of the Purchased Asset
and the Mezzanine Subsidiary Asset, or (iii) as required by any applicable
Requirement of Law.

 

(g)           Buyer reserves the right to appoint a successor Collateral
Administrator at any time following an Event of Default that is continuing to
service any Purchased Asset or any Mezzanine Subsidiary Asset (each, an “Asset
Manager”) in its sole discretion.  If Buyer elects to make such an appointment,
Seller Parties shall be assessed all costs and expenses incurred by Buyer
associated with transferring the servicing of the Purchased Asset and Mezzanine
Subsidiary Asset to the Asset Manager.  In the event of such an appointment,
Seller Parties shall perform all acts and take all action so that any part of
the Credit File and related Records held by Seller Parties, together with all
receipts relating to such Purchased Asset and Mezzanine Subsidiary Asset, are
promptly delivered to Asset Manager, and shall otherwise reasonably cooperate
with Buyer in effectuating such transfer.  Seller Parties shall have no claim
for lost servicing income, lost profits or other damages if Buyer appoints an
Asset Manager hereunder and the servicing fee is reduced or eliminated.  For the
avoidance of doubt, any termination of the Asset Manager’s rights to service by
the Buyer as a result of an Event of Default shall be deemed part of an exercise
of the Buyer’s rights to cause the liquidation, termination or acceleration of
this Agreement.

 

(h)           Seller Parties shall provide promptly to Buyer a Collateral
Administrator Notice addressed to and agreed to by the Collateral Administrator
of the related Purchased Assets and Mezzanine Subsidiary Asset, advising such
Collateral Administrator of such matters as Buyer may reasonably request,
including, without limitation, recognition by the Collateral Administrator of
Buyer’s interest in such Purchased Assets and Mezzanine Subsidiary Assets and
the Collateral Administrator’s agreement that upon receipt of notice of an Event
of Default from Buyer, it will follow the instructions of Buyer with respect to
the Purchased Assets and Mezzanine Subsidiary Assets and any related Income with
respect thereto.

 

(i)            For the avoidance of doubt, subject to the terms of the
Collateral Administration Agreement and this Agreement, Sellers shall not retain
the economic rights to the servicing of the Purchased Asset and the Mezzanine
Subsidiary Asset which are indivisible from such Purchased Asset and Mezzanine
Subsidiary Asset, as applicable.

 

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SECTION 17.                            DUE DILIGENCE

 

Each Seller Party acknowledges that Buyer has the right to perform initial and
continuing due diligence reviews with respect to the Purchased Assets, Mezzanine
Subsidiary Assets, Seller Parties, Collateral Administrator and other parties
which may be involved in or related to Transactions (collectively, “Third Party
Transaction Parties”), as deemed appropriate by Buyer in its sole discretion,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder and obtaining the information set forth in
Exhibits M-1 and M-2 hereto, and Seller Parties and Collateral Administrator
each agree that upon reasonable prior notice to Seller Parties or Collateral
Administrator, as applicable, unless an Event of Default shall have occurred and
be continuing, in which case no notice is required, Buyer or its authorized
representatives will be permitted at reasonable times to examine, inspect, and
make copies and extracts of, the Asset Files and any and all documents, records,
agreements, instruments or information relating to such Purchased Assets and
Mezzanine Subsidiary Assets in the possession or under the control of any Seller
Party or Collateral Administrator; provided however, that unless (a) an Event of
Default has occurred and is continuing or (b) a Credit Event (and in such case,
solely with respect to the Purchased Asset and Mezzanine Subsidiary Assets
related to such Credit Event) has occurred and is continuing in the case of this
clause (b), for at least thirty (30) days, Buyer does not expect to conduct more
than one (1) such review during any one (1) year period.  Seller Parties will
use commercially reasonable efforts to cause Third Party Transaction Parties to
cooperate with any due diligence requests of Buyer.  Seller Parties and
Collateral Administrator shall also make available to Buyer at reasonable times
and upon reasonable prior notice a knowledgeable financial or accounting officer
for the purpose of answering questions respecting the Asset Files, the Purchased
Assets and the Mezzanine Subsidiary Assets.  Without limiting the generality of
the foregoing, each Seller acknowledges that Buyer may purchase Purchased Assets
from Sellers based solely upon the information provided by Sellers to Buyer in
the Asset Schedule and the representations, warranties and covenants contained
herein, and that Buyer, at its option, has the right at any time to cause
Collateral Administrator or its agent to conduct a partial or complete due
diligence review on some or all of the Purchased Assets and Mezzanine Subsidiary
Assets purchased in a Transaction, including, without limitation, ordering new
Qualified Appraisals on the related Mortgaged Properties and otherwise
re-generating the information used to originate such Purchased Asset and
Mezzanine Subsidiary Asset and reviewing intercreditor agreements, property
management agreements, formation documents of the property owners and their
direct and indirect owners, financial statements, environmental and engineering
reports, underlying title policies including owner’s and UCC-9 title insurance
policies to the extent applicable, legal opinions and other documents as may be
mutually agreed among Sellers and Buyer.  For the avoidance of doubt, Collateral
Administrator’s obligation to provide such due diligence to Buyer shall not
preclude Buyer’s right to perform due diligence on the Purchased Assets and
Mezzanine Subsidiary Assets prior to the Purchase Date and as necessary during
the term of the Agreement, as determined by Buyer in is sole discretion, subject
to the terms of the Mortgage Loan documents or Mezzanine Loan documents, as
applicable.  Buyer may underwrite such Purchased Assets and Mezzanine Subsidiary
Assets itself or engage a mutually agreed upon third party underwriter to
perform such underwriting.  Each Seller and Collateral Administrator agree to
cooperate with Buyer and any third party underwriter in connection with such
underwriting, including, but not limited to, providing Buyer and any third party
underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Purchased

 

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Assets and Mezzanine Subsidiary Assets in the possession, or under the control,
of Seller Parties or Collateral Administrator.  Each Seller further agrees that
it shall pay, to the extent Sellers have received an invoice therefor, all
reasonable and documented out-of-pocket costs and expenses incurred by Buyer in
connection with Buyer’s activities pursuant to this Section 17 for one
(1) review during any one (1) year period; provided that (i) such limitation
shall not apply upon the occurrence and continuance of an Event of Default or
the occurrence and continuance of a Credit Event for at least thirty (30) days
(and in such case, solely with respect to the Purchased Asset or Mezzanine
Subsidiary Asset related to such Credit Event), (ii) such amounts shall not
exceed the Asset Diligence Cap for each Eligible Asset reviewed, unless (x) an
Event of Default or (y) a Credit Event (solely with respect to the Purchased
Asset related to such Credit Event) has occurred and is continuing in the case
of this clause (y), for at least thirty (30) days, in which case such Asset
Diligence Cap shall not apply, and (iii) Sellers and Buyer agree that additional
expenses may be incurred for complex transactions, Buyer shall notify Sellers
before exceeding the Asset Diligence Cap and Buyer and Sellers shall endeavor in
good faith to agree to a revised limitation on diligence expenses for any such
complex transaction.

 

SECTION 18.                            ASSIGNABILITY

 

(a)           The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by any Seller Party without the
prior written consent of Buyer.  Buyer may from time to time, with the written
consent of Sellers (not to be unreasonably withheld), assign all or a portion of
its rights and obligations under this Agreement and the Program Documents to any
party pursuant to an executed assignment and acceptance by Buyer and assignee
(“Assignment and Acceptance”) specifying the percentage or portion of such
rights and obligations assigned; provided that Sellers’ consent shall not be
required in the event (i) such assignee is an Affiliate of Buyer with a credit
rating equal to the lesser of (x) investment grade and (y) the credit rating of
the Buyer; or (ii) an Event of Default has occurred and is continuing.  Upon
such assignment, (a) such assignee shall be a party hereto and to each Program
Document to the extent of the percentage or portion set forth in the Assignment
and Acceptance, and shall succeed to the applicable rights and obligations of
Buyer hereunder and under the other Program Documents, (b) Buyer shall, to the
extent that such rights and obligations have been so assigned by it be released
from its obligations hereunder and under the Program Documents and (c) such
assignee shall be subject to the terms and conditions under the Program
Documents and shall expressly assume such terms and conditions in writing. 
Subject to the foregoing, this Agreement and any Transactions shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns.  Nothing in this Agreement express or implied, shall
give to any Person, other than the parties to this Agreement and their
successors hereunder, any benefit of any legal or equitable right, power, remedy
or claim under this Agreement.  Unless otherwise stated in the Assignment and
Acceptance, Sellers shall continue to take directions solely from Buyer unless
otherwise notified by Buyer in writing.

 

(b)           Buyer may sell participations to one or more Persons in or to all
or a portion of its rights and obligations under this Agreement; provided,
however, that (i) Buyer’s obligations under this Agreement shall remain
unchanged, (ii) Buyer shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) except during the
occurrence and continuance of an Event of Default, such participant is not a
Competitor; and (iv) Sellers shall continue to deal solely and directly with
Buyer in connection with Buyer’s

 

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rights and obligations under this Agreement and the other Program Documents
except as provided in Section 7.

 

(c)           Buyer may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 18, disclose to
the assignee or participant or proposed assignee or participant, as the case may
be, any information relating to any Seller Party or to any aspect of the
Transactions that has been furnished to Buyer by or on behalf of any Seller
Party; provided that such assignee or participant agrees to hold such
information subject to the confidentiality provisions of this Agreement and any
confidentiality provisions applicable to any of the documents related thereto.

 

(d)           In the event Buyer assigns all or a portion of its rights and
obligations under this Agreement, the parties hereto agree to, at Buyer’s sole
expense, negotiate in good faith an amendment to this Agreement to add agency
provisions similar to those included in agreements for similar syndicated
repurchase facilities.

 

SECTION 19.                            TRANSFER AND MAINTENANCE OF REGISTER.

 

(a)           Subject to acceptance and recording thereof pursuant to
Section 19(b), from and after the effective date specified in each Assignment
and Acceptance the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of Buyer under this Agreement.  Any assignment or
transfer by Buyer of rights or obligations under this Agreement that does not
comply with Section 18(a) shall to the extent it otherwise complies with
Section 18(b), be treated for purposes of this Agreement as a sale by such Buyer
of a participation in such rights and obligations in accordance with
Section 18(b) hereof (so long as such transfer would be permitted as a
participation under the terms of Section 18(b)).

 

(b)           Buyer shall maintain, acting solely for this purpose as agent of
Sellers, a register (the “Register”) on which it will record each Assignment and
Acceptance.  The Register shall include the names and addresses of Buyer
(including all assignees and successors) and the percentage or portion of such
rights and obligations assigned.  Failure to make any such recordation, or any
error in such recordation shall not affect Sellers’ obligations in respect of
such rights.

 

(c)           Each Buyer that sells a participation shall, acting solely for
this purpose as an agent of Seller, maintain a register on which it enters the
name and address of each participant and the principal amounts (and stated
interest) of each participant’s interest in the Transactions or other
obligations under the Program Documents (the “Participant Register”); provided
that no Buyer shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any participant or any
information relating to a participant’s interest in any commitments or its other
obligations under any Program Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations.  The entries in the Participant Register
shall be conclusive absent manifest error, and such Buyer shall treat each
Person whose name is recorded in the Participant Register

 

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as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

(d)           Sellers agree that each participant shall be entitled to the
benefits of Sections 6 and 7 (subject to the requirements and limitations
therein, including the requirements under Section 7(b) (it being understood that
the documentation required under Section 7(b) shall be delivered to the
participating Buyer)) to the same extent as if it were a Buyer and had acquired
its interest by assignment pursuant to Section 18; provided that a participant
shall not be entitled to receive any greater payment under Sections 6 or 7, with
respect to any participation, than the participating Buyer would have been
entitled to receive.

 

SECTION 20.                            HYPOTHECATION OR PLEDGE OF PURCHASED
ASSETS

 

Title to all Purchased Assets and Repurchase Assets shall pass to Buyer and
Buyer shall have free and unrestricted use of all Purchased Assets and Mezzanine
Subsidiary Assets.  Nothing in this Agreement shall preclude Buyer from engaging
in repurchase transactions with the Purchased Assets or Mezzanine Subsidiary
Assets or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Purchased Assets or Mezzanine Subsidiary Assets to any
Person; provided Buyer shall remain obligated to fulfill all of its obligations
hereunder, including its obligation to cause the release of its ownership
interest and any encumbrances upon the repurchase of any of the Repurchase
Assets.  Nothing contained in this Agreement shall obligate Buyer to segregate
any Purchased Assets (and Mezzanine Repurchase Assets) delivered to Buyer by
Sellers.

 

SECTION 21.                            TAX TREATMENT

 

Notwithstanding anything to the contrary in this Agreement or any other Program
Documents, each party to this Agreement acknowledges that it is its intent for
U.S. federal, state and local income and franchise tax purposes to treat each
(i) Transaction as indebtedness of Sellers that is secured by the Purchased
Assets (and Mezzanine Subsidiary Assets) and (ii) the Purchased Assets (and
Mezzanine Subsidiary Assets) as owned by Sellers or Mezzanine Subsidiary, as
applicable, in the absence of an Event of Default which is continuing.  All
parties to this Agreement agree to such treatment and agree to take no action
inconsistent with this treatment, unless required by any Requirement of Law (in
which case such party shall promptly notify the other party of such Requirement
of Law).

 

SECTION 22.                            SET-OFF

 

In addition to any rights and remedies of Buyer hereunder and by law, after the
occurrence and during the continuance of an Event of Default, Buyer shall have
the right, without prior notice to any Seller Party, any such notice being
expressly waived by each Seller Party to the extent permitted by applicable law,
to set-off and appropriate and apply against any Obligation from the Sellers to
Buyer or any of its Affiliates any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other obligation
(including to return excess margin), credits, indebtedness or claims or cash, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by or due from Buyer or any
Affiliate thereof to or for the credit or the account of

 

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the Sellers.  Buyer agrees promptly to notify Seller Parties after any such
set-off and application made by Buyer; provided that the failure to give such
notice shall not affect the validity of such set-off and application.

 

Buyer shall at any time have the right, in each case until such time as Sellers
have satisfied all Obligations hereunder and this Agreement has terminated, to
retain, to suspend payment or performance of, or to decline to remit, any amount
or property that Buyer would otherwise be obligated to pay, remit or deliver to
Sellers hereunder if an Event of Default or Default has occurred and is
continuing; provided that during a Default such amounts shall not be applied and
any such suspension shall terminate upon the cure or waiver of the related
Default.

 

SECTION 23.                            TERMINABILITY

 

Each representation and warranty made or deemed to be made by entering into a
Transaction, herein or pursuant hereto shall survive the making of such
representation and warranty, and Buyer shall not be deemed to have waived any
Default or Event of Default that may arise because any such representation or
warranty shall have proved to be false or misleading, notwithstanding that Buyer
may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time the Transaction was made. 
Notwithstanding any such termination or the occurrence and continuation of an
Event of Default, all of the representations and warranties and covenants
hereunder shall continue and survive (other than the representations and
warranties set forth in Schedule 1, which shall survive with respect to the
Purchased Assets and Mezzanine Subsidiary Assets until each such Purchased Asset
or Mezzanine Subsidiary Asset is repurchased in accordance with this
Agreement).  The obligations of each Seller Party under Sections 6, 7, 15, and
31 hereof shall survive the termination of this Agreement.

 

SECTION 24.                            NOTICES AND OTHER COMMUNICATIONS

 

Except as otherwise expressly permitted by this Agreement, all notices, requests
and other communications provided for herein (including without limitation any
modifications of, or waivers, requests or consents under, this Agreement) shall
be given or made in writing (including without limitation by electronic
transmission) delivered to the intended recipient at the “Address for Notices”
specified below its name on the signature pages hereof or thereof); and as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. In all cases, to the extent that the related
individual set forth in the respective “Attention” line is no longer employed by
the respective Person, such notice may be given to the attention of a
Responsible Officer of the respective Person or to the attention of such
individual or individuals as subsequently notified in writing by a Responsible
Officer of the respective Person. Except as otherwise provided in this Agreement
and except for notices given under Section 3 (which shall be effective only on
receipt), all such communications shall be deemed to have been duly given when
transmitted electronically or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.

 

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SECTION 25.                            USE OF ELECTRONIC MEDIA

 

Each Seller acknowledges and agrees that Buyer may require or permit certain
transactions with Buyer be conducted electronically using Electronic Records
and/or Electronic Signatures. Each Seller consents to the use of Electronic
Records and/or Electronic Signatures whenever expressly required or permitted by
Buyer and acknowledges and agrees that such Seller shall be bound by their
respective Electronic Signature and by the terms, conditions, requirements,
information and/or instructions contained in any such Electronic Records.

 

Each Seller agrees to adopt as its Electronic Signature its user identification
codes, passwords, personal identification numbers, access codes, a facsimile
image of a written signature and/or other symbols or processes as provided or
required by Buyer from time to time (as a group, any subgroup thereof or
individually, hereinafter referred to as such Seller’s Electronic Signature).
Each Seller acknowledges that Buyer will rely on any and all Electronic Records
and on such Seller’s Electronic Signature transmitted or submitted to Buyer.

 

Buyer shall not be liable for the failure of either its or any Seller’s internet
service provider, or any other telecommunications company, telephone company,
satellite company or cable company to timely, properly and accurately transmit
any Electronic Record or fax copy.

 

Before engaging in Electronic Transactions with Sellers, Buyer may provide
Sellers, or require Sellers to create, user identification codes, passwords,
personal identification numbers and/or access codes, as applicable, to permit
access to Buyer’s computer information processing system.  Each Seller shall be
fully responsible for protecting and safeguarding any and all user
identification codes, passwords, personal identification numbers and access
codes provided or required by Buyer. Each Seller shall adopt and maintain
security measures to prevent the loss, theft or unauthorized or improper
disclosure or use of any and all user identification codes, passwords, personal
identification numbers and/or access codes by Persons other than the individual
Person who is authorized to use such information.

 

Each Seller understands and agrees that they shall be fully responsible for
protecting and safeguarding their computer hardware and software from any and
all (a) computer “viruses,” “time bombs,” “trojan horses” or other harmful
computer information, commands, codes or programs that may cause or facilitate
the destruction, corruption, malfunction or appropriation of, or damage or
change to, any of such Seller’s or Buyer’s computer information processing
systems, including without limitation, all hardware, software, Electronic
Records, information, data and/or codes and (b) computer “worms,” “trap doors”
or other harmful computer information, commands, codes or programs that enable
unauthorized access to such Seller’s and/or Buyer’s computer information
processing systems, including without limitation, all hardware, software,
Electronic Records, information, data and/or codes.

 

Each Seller agrees that Buyer may, in its sole discretion and from time to time,
without limiting such Seller’s liability set forth herein, establish minimum
security standards that such Seller must, at a minimum, comply with in an effort
to (x) protect and safeguard any and all user identification codes, passwords,
personal identification numbers and/or access codes from loss, theft or
unauthorized disclosure or use; and (y) prevent the infiltration and “infection”
of

 

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such Seller’s hardware and/or software by any and all computer “viruses,” “time
bombs,” “trojan horses,” “worms,” “trapdoors” or other harmful computer codes or
programs.

 

If Buyer, from time to time, establishes minimum security standards, Sellers
shall comply with such minimum security standards within the time period
established by Buyer. Buyer shall have the right to confirm any Seller’s
compliance with any such minimum security standards. Each Seller’s compliance
with such minimum security standards shall not relieve such Seller from any of
its liability set forth herein.

 

Whether or not Buyer establishes minimum security standards, each Seller shall
continue to be fully responsible for adopting and maintaining security measures
that are consistent with the risks associated with conducting electronic
transactions with Buyer. Any Seller’s failure to adopt and maintain appropriate
security measures or to comply with any minimum security standards established
by Buyer may result in, among other things, termination of such Seller’s access
to Buyer’s computer information processing systems.

 

SECTION 26.                            ENTIRE AGREEMENT; SEVERABILITY; SINGLE
AGREEMENT

 

This Agreement, together with the Program Documents, constitute the entire
understanding between Buyer and Seller Parties with respect to the subject
matter they cover and shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions
involving Purchased Assets and Mezzanine Subsidiary Assets.  By acceptance of
this Agreement, Buyer and Seller Parties each acknowledge that they have not
made, and are not relying upon, any statements, representations, promises or
undertakings not contained in this Agreement.  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.

 

Buyer and each 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 that each has been entered into in consideration of
the other Transactions.  Accordingly, each of Buyer and each Seller Party 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 Buyer shall be
entitled to set off claims and apply property held by it in respect of any
Transaction against obligations owing to it in respect of any other Transaction
hereunder; (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 and
(iv) to promptly provide notice to the other after any such set off or
application.

 

SECTION 27.                            GOVERNING LAW

 

THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT

 

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OF LAW PRINCIPLES THEREOF.  NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE
EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF ELECTRONIC CONTRACTS, OTHER
RECORDS, ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES USED IN CONNECTION WITH
ANY ELECTRONIC TRANSACTION BETWEEN BUYER AND SELLER PARTY SHALL BE GOVERNED BY
E-SIGN.

 

SECTION 28.                            SUBMISSION TO JURISDICTION; WAIVERS

 

BUYER AND EACH SELLER PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(i)            SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER PROGRAM DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS
OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;

 

(ii)           CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

(iii)         AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER
PARTY SHALL HAVE BEEN NOTIFIED;

 

(iv)          AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION; AND

 

(v)           WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

 

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SECTION 29.                            NO WAIVERS, ETC.

 

No failure on the part of Buyer to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under any
Program Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any Program Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.  An Event of Default shall be deemed
to be continuing unless expressly waived by Buyer in writing.

 

SECTION 30.                            NETTING

 

If Buyer and any Seller are “financial institutions” as now or hereinafter
defined in Section 4402 of Title 12 of the United States Code (“Section 4402”)
and any rules or regulations promulgated thereunder (a) all amounts to be paid
or advanced by one party to or on behalf of the other under this Agreement or
any Transaction hereunder shall be deemed to be “payment obligations” and all
amounts to be received by or on behalf of one party from the other under this
Agreement or any Transaction hereunder shall be deemed to be “payment
entitlements” within the meaning of Section 4402, and this Agreement shall be
deemed to be a “netting contract” as defined in Section 4402; (b) the payment
obligations and the payment entitlements of the parties hereto pursuant to this
Agreement and any Transaction hereunder shall be netted as follows.  In the
event that either party (the “Defaulting Party”) shall fail to honor any payment
obligation under this Agreement or any Transaction hereunder, the other party
(the “Nondefaulting Party”) shall be entitled to reduce the amount of any
payment to be made by the Nondefaulting Party to the Defaulting Party by the
amount of the payment obligation that the Defaulting Party failed to honor.

 

SECTION 31.                            CONFIDENTIALITY

 

Buyer and each Seller Party hereby acknowledge and agree that all written or
computer-readable information provided by one party to any other regarding the
terms set forth in any of the Program Documents, the Seller Parties, the
Purchased Assets and the Repurchase Assets or otherwise provided in connection
with the transactions contemplated by the Program Documents (the “Confidential
Terms”) shall be kept confidential and shall not be divulged to any party
without the prior written consent of such other party except to the extent that
(i) it is necessary to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies or regulatory bodies or in order to
comply with any applicable federal or state laws or regulations, rules of
self-regulatory organizations or court orders, (ii) any of the Confidential
Terms is in the public domain other than due to a breach of this covenant, or
(iii) in the event of an Event of Default Buyer determines such information to
be necessary or desirable to disclose in connection with the marketing and sales
of the Purchased Assets or Mezzanine Subsidiary Assets or otherwise to enforce
or exercise Buyer’s rights hereunder.

 

Notwithstanding the foregoing or anything to the contrary contained herein or in
any other Program Document, the parties hereto may disclose to any and all
Persons, without limitation of any kind, the federal, state and local tax
treatment and tax structure of the Transactions, any fact relevant to
understanding the federal, state and local tax treatment of the

 

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Transactions, and all materials of any kind (including opinions or other tax
analyses) relating to such federal, state and local tax treatment and that may
be relevant to understanding such tax treatment and tax structure; provided that
no Seller Party or Subsidiary of Affiliate thereof may disclose the name of or
identifying information with respect to Buyer, its Affiliates or any other
Indemnified Party, or any pricing terms (including, without limitation, the
Pricing Rate, Warehouse Fees and, Purchase Price) or other nonpublic business or
financial information (including any sublimits and financial covenants) that is
unrelated to the federal, state and local tax treatment of the Transactions and
is not relevant to understanding the federal, state and local tax treatment of
the Transactions, without the prior written consent of Buyer.  The provisions
set forth in this Section 31 shall survive the termination of this Agreement.

 

SECTION 32.                            INTENT

 

(a)           The parties recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of the United
States Code, as amended, a “securities contract” as that term is defined in
Section 741 of Title 11 of the United States Code, as amended, and a “master
netting agreement” as that term is defined in Section 101(38A)(A) of the
Bankruptcy Code, that all payments hereunder are deemed “margin payments” or
“settlement payments” as defined in Title 11 of the United States Code, and that
the pledge of the Repurchase Assets constitutes “a security agreement or other
arrangement or other credit enhancement” that is “related to” the Agreement and
Transactions hereunder within the meaning of Sections 101(38A)(A),
101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.  Each Seller and Buyer
further recognize and intend that this Agreement is an agreement to provide
financial accommodations and is not subject to assumption pursuant to Bankruptcy
Code Section 365(a).

 

(b)           Buyer’s right to liquidate the Purchased Assets delivered to it in
connection with the Transactions hereunder or to accelerate or terminate this
Agreement or otherwise exercise any other remedies pursuant to Section 14 hereof
is a contractual right to liquidate, accelerate or terminate such Transaction as
described in Bankruptcy Code Sections 555, 559 and 561; any payments or
transfers of property made with respect to this Agreement or any Transaction to
satisfy a Margin Deficit shall be considered a “margin payment” as such term is
defined in Bankruptcy Code Section 741(5).

 

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

 

(d)           It is understood that this Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA).

 

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(e)           This Agreement is intended to be a “repurchase agreement” and a
“securities contract,” within the meaning of Section 101(47), Section 555,
Section 559 and Section 741 under the Bankruptcy Code.

 

(f)            Each party agrees that this Agreement is intended to create
mutuality of obligations among the parties, and as such, the Agreement
constitutes a contract which (i) is between all of the parties and (ii) places
each party in the same right and capacity.

 

SECTION 33.                            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, as amended from time to time (“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 and (b) 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.

 

SECTION 34.                            CONFLICTS

 

In the event of any conflict between the terms of this Agreement, any other
Program Document and any Transaction Request/Purchase Price Increase and
Confirmation, the documents shall control in the following order of priority: 
first, the terms of the Transaction Request/Purchase Price Increase and
Confirmation shall prevail, then the terms of the Pricing Letter shall prevail,
then the terms of this Agreement shall prevail, and then the terms of the other
Program Document shall prevail.

 

SECTION 35.                            MISCELLANEOUS

 

(a)           Counterparts.  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.  Delivery of an executed counterpart of a signature
page of this Agreement in Portable Document Format (PDF) or by facsimile shall
be effective as delivery of a manually executed original counterpart of this
Agreement.

 

(b)           Captions.  The captions and headings appearing herein are for
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

 

(c)           Acknowledgment.  Each Seller Party hereby acknowledges that (i) it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Program Documents; (ii) Buyer has no fiduciary
relationship to any Seller Party; and (iii) no joint venture exists between
Buyer and any Seller Party.

 

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(d)           Documents Mutually Drafted.  Seller Parties and Buyer agree that
this Agreement each other Program Document prepared in connection with the
Transactions set forth herein have been mutually drafted and negotiated by each
party, and consequently such documents shall not be construed against either
party as the drafter thereof.

 

(e)           Amendments.  This Agreement and each other Program Document may be
amended from time to time only by prior written agreement of Buyer and Sellers.

 

(f)            Authorizations.  Any of the persons whose signatures and titles
appear on Schedule 2 are authorized, acting singly, to act for such Seller
Party, under this Agreement.  Any of the persons whose signatures and titles
appear on Schedule 2 are authorized, acting singly, to act for Buyer under this
Agreement.

 

SECTION 36.                            GENERAL INTERPRETIVE PRINCIPLES

 

For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires: (a) the terms defined in this Agreement have the
meanings assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to include the
other gender; (b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; (c) references herein to “Articles”, “Sections”, “Subsections”,
“Paragraphs”, and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement; (d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions; (e) the words “herein”, “hereof”, “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; (f) the term “include” or “including” shall mean without
limitation by reason of enumeration; (g) all times specified herein or in any
other Program Document (unless expressly specified otherwise) are local times in
New York, New York unless otherwise stated; and (h) all references herein or in
any Program Document to “good faith” means good faith as defined in
Section 1-201(19) of the UCC as in effect in the State of New York.

 

SECTION 37.                            JOINT AND SEVERAL LIABILITY

 

Each Seller shall be jointly and severally liable for the full, complete and
punctual performance and satisfaction of all obligations of any Seller under
this Agreement.  Accordingly, each Seller waives any and all notice of creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by Buyer upon such Seller’s joint and several liability.  Each
Seller waives diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon such Seller with respect to the Obligations. 
When pursuing its rights and remedies hereunder against any Seller, Buyer may,
but shall be under no obligation, to pursue such rights and remedies hereunder
against any Seller or any other Person or against any collateral security for
the Obligations or any right of offset with respect thereto, and any failure by
Buyer to pursue such other rights or remedies or to collect any payments from
such Seller or any such other Person to realize upon any such collateral
security or to exercise any such right of offset, or any release of such Seller
or any such other Person or any such collateral security, or

 

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right of offset, shall not relieve such Seller of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of Buyer against such Seller.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
set forth above.

 

 

 

BUYER:

 

 

 

 

 

UBS REAL ESTATE SECURITIES INC.

 

 

 

 

 

By:

/s/David Schell

 

 

Name: David Schell

 

 

Title: Executive Director

 

 

 

 

 

By:

/s/ Siho Ham

 

 

Name: Siho Ham

 

 

Title: Director

 

 

 

 

 

Address for Notices:

 

 

 

UBS Real Estate Securities Inc.

 

1285 Avenue of the Americas, 8th Floor

 

New York, New York 10019

 

Attention: David Schell

 

Telephone No: 212-713-3375

 

E-mail: david.schell@ubs.com

 

 

 

With a copy to:

 

 

 

UBS Real Estate Securities Inc.

 

299 Park Avenue

 

New York, New York 10171

 

Attention: Chad Eisenberger

 

Telephone No: 212-821-4885

 

E-mail: chad.eisenberger@ubs.com

 

Signature Page to Master Repurchase Agreement

 

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SELLERS:

 

 

 

 

 

ACRC LENDER U LLC, as a Seller

 

 

 

 

 

By:

/s/ Thomas A. Jaekel

 

 

Name: Thomas A. Jaekel

 

 

Title: Vice President

 

 

 

 

 

Address for Notices:

 

 

 

ACRC Lender U LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL 60606

 

Attention: Todd Schuster, CEO

 

Telephone: 310-921-7244

 

Telecopy: 310-432-8892

 

E-mail: tschuster@aresmgmt.com

 

 

 

With a copy to:

 

 

 

ACRC Lender U LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL  60606

 

Attention:  Legal Department

 

Telephone: 312-252-7500

 

Telecopy: 312-252-7501

 

E-mail: mscherer@aresmgmt.com

 

Signature Page to Master Repurchase Agreement

 

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ACRC LENDER U TRS LLC, as a Seller

 

 

 

 

 

By:

/s/ Thomas A. Jaekel

 

 

Name: Thomas A. Jaekel

 

 

Title: Vice President

 

 

 

 

 

Address for Notices:

 

 

 

ACRC Lender U TRS LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL 60606

 

Attention: Todd Schuster, CEO

 

Telephone: 310-921-7244

 

Telecopy: 310-432-8892

 

E-mail: tschuster@aresmgmt.com

 

 

 

With a copy to:

 

 

 

ACRC Lender U TRS LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL  60606

 

Attention:  Legal Department

 

Telephone: 312-252-7500

 

Telecopy: 312-252-7501

 

E-mail: mscherer@aresmgmt.com

 

Signature Page to Master Repurchase Agreement

 

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MEZZANINE SUBSIDIARY:

 

 

 

 

 

ACRC LENDER U MEZZ LLC, as Mezzanine Subsidiary

 

 

 

 

 

By:

/s/ Thomas A. Jaekel

 

 

Name: Thomas A. Jaekel

 

 

Title: Vice President

 

 

 

 

 

Address for Notices:

 

 

 

ACRC Lender U Mezz LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL 60606

 

Attention: Todd Schuster, CEO

 

Telephone: 310-921-7244

 

Telecopy: 310-432-8892

 

E-mail: tschuster@aresmgmt.com

 

 

 

With a copy to:

 

 

 

ACRC Lender U Mezz LLC

 

One North Wacker Drive, 48th Floor

 

Chicago, IL  60606

 

Attention:  Legal Department

 

Telephone: 312-252-7500

 

Telecopy: 312-252-7501

 

E-mail: mscherer@aresmgmt.com

 

Signature Page to Master Repurchase Agreement

 

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GUARANTOR:

 

 

 

 

 

ARES COMMERCIAL REAL ESTATE CORPORATION

 

 

 

 

 

 

By:

/s/ Todd Schuster

 

 

Name: Todd Schuster

 

 

Title: Chief Executive Officer

 

 

 

 

 

Address for Notices:

 

 

 

Ares Commercial Real Estate Corporation

 

One North Wacker Drive, 48th Floor

 

Chicago, IL 60606

 

Attention: Todd Schuster, CEO

 

Telephone: 310-921-7244

 

Telecopy: 310-432-8892

 

E-mail: tschuster@aresmgmt.com

 

 

 

With a copy to:

 

 

 

Ares Commercial Real Estate Corporation

 

One North Wacker Drive, 48th Floor

 

Chicago, IL  60606

 

Attention:  Legal Department

 

Telephone: 312-252-7500

 

Telecopy: 312-252-7501

 

E-mail: mscherer@aresmgmt.com

 

Signature Page to Master Repurchase Agreement

 

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