Exhibit 10.1

 

 

MASTER REPURCHASE AGREEMENT

Dated as of June 7, 2011

among

NEWSTAR CRE FINANCE I LLC,

as Seller,

MACQUARIE BANK LIMITED,

as Purchaser

and

NEWSTAR FINANCIAL INC.,

as Guarantor

 

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE 1

  

APPLICABILITY

     1   

ARTICLE 2

  

DEFINITIONS AND OTHER INTERPRETIVE PROVISIONS

     1   

ARTICLE 3

  

INITIATION; CONFIRMATION; TERMINATION; FEES

     24   

ARTICLE 4

  

ASSIGNED VALUE; MARGIN MAINTENANCE

     33   

ARTICLE 5

  

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

     35   

ARTICLE 6

  

SECURITY INTEREST

     37   

ARTICLE 7

  

PAYMENT, TRANSFER AND CUSTODY

     38   

ARTICLE 8

  

SALE OR TRANSFER

     40   

ARTICLE 9

  

REPRESENTATIONS AND WARRANTIES

     41   

ARTICLE 10

  

NEGATIVE COVENANTS OF SELLER

     48   

ARTICLE 11

  

AFFIRMATIVE COVENANTS OF SELLER

     50   

ARTICLE 12

  

SINGLE PURPOSE ENTITY

     54   

ARTICLE 13

  

EVENTS OF DEFAULT; REMEDIES

     55   

ARTICLE 14

  

SINGLE AGREEMENT

     61   

ARTICLE 15

  

INTENTIONALLY OMITTED

     61   

ARTICLE 16

  

NOTICES AND OTHER COMMUNICATIONS

     61   

ARTICLE 17

  

ENTIRE AGREEMENT; SEVERABILITY

     62   

ARTICLE 18

  

NON-ASSIGNABILITY

     62   

ARTICLE 19

  

GOVERNING LAW

     63   

ARTICLE 20

  

NO WAIVERS, ETC.

     63   

ARTICLE 21

  

INTENT

     63   

ARTICLE 22

  

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

     64   

ARTICLE 23

  

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     64   

ARTICLE 24

  

NO RELIANCE

     65   

ARTICLE 25

  

INDEMNITY

     66   

ARTICLE 26

  

DUE DILIGENCE

     67   

ARTICLE 27

  

SERVICING

     68   

ARTICLE 28

  

FUTURE ADVANCES

     69   

ARTICLE 29

  

WITHHOLDING TAXES

     70   

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE 30

  

ADMINISTRATIVE AGENT

     71   

ARTICLE 31

  

MISCELLANEOUS

     71   

 

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SCHEDULES AND EXHIBITS

 

SCHEDULE I

  

Names and Addresses for Communications between Parties

SCHEDULE II

  

Purchased Assets

SCHEDULE III

  

Purchased Asset File

SCHEDULE IV

  

Future Advance Assets

SCHEDULE V

  

Purchased Asset Documents

SCHEDULE VI

  

[Reserved]

EXHIBIT I

  

Form of Confirmation Statement

EXHIBIT II

  

Responsible Officers and Authorized Representatives of Seller

EXHIBIT III

  

[Reserved]

EXHIBIT IV

  

Form of Limited Power of Attorney (Seller)

EXHIBIT V

  

Representations and Warranties Regarding Individual Purchased Assets

EXHIBIT VI

  

Form of Release Letter

EXHIBIT VII

  

[Reserved]

EXHIBIT VIII

  

[Reserved]

EXHIBIT IX

  

Purchased Asset Servicer Report

EXHIBIT X

  

Exceptions to Representations and Warranties with Respect to Purchased Assets

EXHIBIT XI

  

Form of Limited Power of Attorney (Guarantor)

 

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MASTER REPURCHASE AGREEMENT

MASTER REPURCHASE AGREEMENT, dated as of June 7, 2011, (this “Agreement”) by and
among MACQUARIE BANK LIMITED, an Australian corporation (“Purchaser”), NEWSTAR
CRE FINANCE I LLC, a Delaware limited liability company, (“Seller”) and, solely
for purposes of Article 30 hereof, NEWSTAR FINANCIAL INC., a Delaware
corporation (“Guarantor”).

ARTICLE 1

APPLICABILITY

On the date hereof, the parties hereto shall enter into transactions in which
the Seller agrees to transfer to the Purchaser all of its rights, title and
interest to those Eligible Assets (as defined herein) set forth on Schedule II
hereto against the transfer of funds by Purchaser to Seller, with a simultaneous
agreement by Purchaser to transfer back to Seller such Eligible Assets at a date
certain or on demand, against the transfer of funds by Seller to Purchaser. From
time to time pursuant to Article 3(m) hereof, the parties hereto may enter into
substitution transactions in which the Seller agrees to transfer to the
Purchaser all of its rights, title and interest to certain Substitute Eligible
Assets (to the extent expressly set forth in Article 3(m), against the transfer
of funds by Purchaser to Seller) to replace existing Purchased Assets, with a
simultaneous agreement by Purchaser to transfer back to Seller such Substitute
Eligible Assets at a date certain or on demand, against the transfer of funds by
Seller to Purchaser. Each such transaction and substitute transaction shall be
referred to herein as a “Transaction” and, unless otherwise agreed in writing,
shall be governed by this Agreement, including any supplemental terms or
conditions contained in any schedules and exhibits identified herein as
applicable hereunder. Each individual transfer of an Eligible Asset or
Substitute Eligible Asset shall constitute a distinct Transaction.

ARTICLE 2

DEFINITIONS AND OTHER INTERPRETIVE PROVISIONS

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

“Accepted Servicing Practices” shall mean with respect to any Serviced Asset,
those mortgage loan servicing practices of prudent mortgage lending institutions
that service mortgage loans of the same type as such Serviced Asset in the state
where the related underlying real estate directly or indirectly securing or
supporting such Serviced Asset is located.

“Account Bank” shall mean U.S. Bank National Association, as Securities
Intermediary under the Account Control Agreement.

“Account Control Agreement” shall mean that certain Securities Account Control
and Paying Agency Agreement, dated as of the date hereof, among Purchaser,
Seller, Servicer and Account Bank.

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“Account Custodian” shall mean U.S. Bank National Association, as account
custodian of the Concentration Account pursuant to the Concentration Account
Agreement.

“Act of Insolvency” shall mean, with respect to any Person, (i) the filing of a
voluntary petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors; (ii) filing
an answer consenting to, or otherwise acquiescing in, or joining in, or
otherwise failing to timely contest, or an order of relief if entered with
respect to, any involuntary petition or case or proceeding against such Person
under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law relating to the protection of creditors; (iii) soliciting or
otherwise colluding with petitioning creditors for any involuntary petition,
case or proceeding against such Person under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law relating to the
protection of creditors; (iv) the seeking or consenting to the appointment of a
receiver, trustee, custodian or similar official for such Person or any
substantial part of the property of such Person; (v) the appointment of a
receiver, conservator, or manager for such Person by any governmental agency or
authority having the jurisdiction to do so; (vi) the making of a general
assignment for the benefit of creditors; (vii) the admission by such Person of
its inability to pay its debts or discharge its obligations as they become due
or mature; or (viii) that any Governmental Authority or agency or any person,
agency or entity acting or purporting to act under Governmental Authority shall
have taken any action to condemn, seize or appropriate, or to assume custody or
control of, all or any substantial part of the property of such Person, or shall
have taken any action to displace the management of such Person or to curtail
its authority in the conduct of the business of such Person.

“Additional Purchased Items” shall have the meaning specified in Article 4(b).

“Adjusted Purchase Price” shall mean, with respect to each Purchased Asset, an
amount equal to (i) the Purchase Price for such Purchased Asset minus (ii) the
sum of (a) any Margin Deficit Cure Amounts applied to such Purchased Asset in
accordance with Article 4 hereof, (b) any Principal Payments applied to reduce
the Adjusted Purchase Price of such Purchased Asset pursuant to Article 5 hereof
and (c) any Minimum Amortization Amounts applied to reduce the Adjusted Purchase
Price of such Purchased Asset pursuant to Article 5 hereof.

“Administrative Agent” shall mean NewStar Financial, Inc., as “administrative
agent”, “agent” or similar role or capacity for the applicable Purchased Assets
pursuant to the related Purchased Asset Documents.

“Administrative Agent Rights” shall mean rights of any Person to act as
“administrative agent”, “agent” or similar role or capacity for the applicable
Purchased Assets pursuant to the related Purchased Asset Documents.

“Affiliate” shall mean, when used with respect to any specified Person, (i) any
other Person directly or indirectly controlling, controlled by, or under common
control with, such Person. Control shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise and “controlling” and “controlled” shall have meanings
correlative thereto, or (ii) any “affiliate” of such Person, as such term is
defined in the Bankruptcy Code.

 

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

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

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

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

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

(i) so long as no Event of Default shall have occurred and be continuing, the
incremental per annum rate (expressed as a number of “basis points”, each basis
point being equivalent to 1/100 of 1%) equal to five (5) hundred basis points
(5.0%); or

(ii) after the occurrence and during the continuance of an Event of Default, the
applicable incremental per annum rate described in clause (i) of this
definition, plus two hundred basis points (2.0%).

“Assigned Value” shall mean, for each Purchased Asset on the Closing Date, the
amount set forth on Schedule II hereto or, in the case of any Substitute
Eligible Assets that become Purchased Assets hereunder, the amount set forth in
the related Confirmation as determined by Purchaser in its sole and absolute
discretion. The Assigned Value for each Purchased Asset shall be re-determined,
from time to time, by Purchaser in accordance with Article 4(a) hereof.

“Assigned Value Event” shall mean, with respect to any Purchased Asset, from and
after the Closing Date:

(i) the fifth (5th) Business Day following the occurrence of a payment default
(after all applicable cure or grace periods) or event of default (however
defined) on such Purchased Asset under the related Purchased Asset Documents;
provided, that the events of default existing as of the Closing Date (as
identified on Exhibit X hereto) with respect to each Purchased Asset and which
remain uncured after the Closing Date shall not constitute an “Assigned Value
Event” pursuant to this sub-clause (i);

(ii) the occurrence of a Material Casualty/Condemnation Event on the related
Mortgaged Property;

(iii) an Act of Insolvency of the related Mortgagor and/or any related guarantor
under the Purchased Asset Documents;

 

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(iv) as of the date of each Purchased Asset Servicer Report required pursuant to
Article 11(i)(iv) hereof, the Net Cash Flow on the related Mortgaged Property
has decreased by more than 25%, as compared to the related Closing Date
Underwritten Net Cash Flow (or, in the case of any Substitute Eligible Asset
that becomes a Purchased Asset hereunder, the related Substitution Date
Underwritten Net Cash Flow), as determined by Purchaser in its sole and absolute
discretion;

(v) the occurrence of an Enforcement Action;

(vi) the loss of a Material Tenant;

(vii) the creation or imposition of a material Lien upon the Mortgaged Property
(other than Liens created under, or expressly permitted by, or contested and
removed in accordance with, the underlying Purchased Asset Documents); or

(viii) any other event that has a Material Adverse Effect with respect to the
Mortgaged Property (in the aggregate) or the related Mortgagor or guarantor of
the Purchased Asset, as determined by Purchaser in its sole and absolute
discretion.

For the sake of clarity and the avoidance of doubt, under no circumstances may
the Assigned Value of any Purchased Asset be increased or decreased based in
whole or in part upon any changes in spread or interest rates.

“Assignee” shall have the meaning specified in Article 18 of this Agreement.

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

“Borrower Notice” shall have the meaning assigned thereto in sub-clause (m) of
the definition of Transaction Conditions Precedent under Article 3(b).

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

“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) a
day in which the New York Stock Exchange or banks in the State of New York are
authorized or obligated by law or executive order to be closed.

“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 membership, partnership
or other equivalent interests in any limited liability company or limited
partnership or other entity, and any and all warrants or options to purchase any
of the foregoing.

“Capitalized Lease Obligations” shall mean obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of
such obligation as would be required to be reflected on the balance sheet
prepared in accordance with GAAP of the applicable Person as of the applicable
date.

 

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“Change of Control” shall mean (x) with respect to the Seller, the Guarantor
shall fail to own, directly or indirectly, 100% of the equity securities of the
Seller or shall fail to control the Seller and (y) with respect to the
Guarantor, an event or series of events by which: (a) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, but excluding (i) Permitted Holders, and (ii) any employee benefit
plan of such person or its subsidiaries, and any Person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, except that a person or group shall be
deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time (such right, an “option right”)), directly or
indirectly, of 40% or more of the equity securities of the Guarantor entitled to
vote for members of the board of directors or equivalent governing body of the
Guarantor on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); (b) during any period of twelve (12) consecutive months commencing after
the Closing Date, a majority of the members of the board of directors or other
equivalent governing body of the Guarantor cease to be composed of individuals
(i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or by Permitted Holders holding 51% or
more of the voting Capital Stock of the Guarantor, or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors); or
(c) any Person or two or more Persons (other than Permitted Holders) acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Guarantor, or
control over the equity securities of the Guarantor entitled to vote for members
of the board of directors or equivalent governing body of the Guarantor on a
fully-diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 40% or more of the combined voting power of such securities.
Control shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise and “controlling”
and “controlled” shall have meanings correlative thereto.

“Closing Date” shall mean June 7, 2011.

 

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“Closing Date Underwritten Net Cash Flow” shall mean, for each Purchased Asset
purchased hereunder on the Closing Date, the “Underwritten Net Cash Flow” set
forth on Schedule II hereto.

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

“Collection Account” shall mean one or more segregated interest bearing accounts
(including related sub-accounts), in the name of Seller, established at the
Account Bank pursuant to the Account Control Agreement.

“Collection Period” shall mean with respect to the Remittance Date in any month,
the calendar month immediately preceding the calendar month in which the
Remittance Date occurs.

“Concentration Account” shall mean that certain Concentration Account
established under the Concentration Account Agreement in the name of the Account
Titleholder (as defined therein) for the benefit of each Financing SPE (as
defined therein).

“Concentration Account Agreement” shall mean that certain Intercreditor and
Concentration Account Administration Agreement (Wachovia Deposit Account), dated
as of February 15, 2007, by and among U.S. Bank National Association, Wachovia
Capital Markets, LLC, NewStar Financial, Inc., NewStar CP Funding LLC, U.S. Bank
National Association, NewStar Trust 2005-1, NewStar Short-Term Funding LLC,
NewStar Credit Opportunities Funding I Ltd., IXIS Financial Products Inc.,
NewStar Warehouse Funding 2005 LLC, NewStar Structured Finance Opportunities,
LLC, NewStar Commercial Loan Trust 2006-1, and NewStar Concentration LLC, which
Purchaser became a party to pursuant to that certain Joinder in Intercreditor
and Concentration Account Administration Agreement (Wachovia Deposit Account).

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

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

“Custodial Delivery” shall mean the form executed by the Seller in order to
deliver the Purchased Asset File to Purchaser or its designee (including the
Custodian) pursuant to Article 7 of this Agreement, a form of which is attached
to the Custodial Agreement as Annex 5.

“Custodian” shall mean U.S. Bank National Association, or any successor
custodian appointed by Purchaser, in its capacity as Custodian under the
Custodial Agreement.

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

“Document Rep Breach” shall have the meaning assigned thereto in Article 13(c).

“Document Rep Breach Repurchase Date” shall have the meaning assigned thereto in
Article 13(c).

 

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“DSCR” shall mean, for any Substitute Eligible Asset, a ratio calculated by
Purchaser in its sole and absolute discretion for the applicable period in
which: (a) the numerator is Net Operating Income for the related Mortgaged
Property for the twelve (12) calendar month period immediately preceding the
date of calculation and (b) the denominator is the projected interest payments
for such Substitute Eligible Asset that would be due and payable for the twelve
(12) calendar month period immediately following such date of calculation in
accordance with the underlying Purchased Asset Documents. If the applicable
interest rate in the underlying Purchased Asset Documents is determined based on
LIBOR, the calculation of the projected interest payments for such Substitute
Eligible Asset shall be based on the average LIBOR rate indicated for the next
12 monthly periods (based on a forward LIBOR curve for one-month LIBOR) as set
forth on Bloomberg page “Interest Rate Curves” displaying the forward analysis
of U.S. Dollar Swaps (30/360/S/A) curves [date/set] (the “Bloomberg Page”),
adjusted for a one-month tenor on such the date of calculation. If such
Bloomberg Page ceases to be published, Purchaser shall select a substitute
reference page that is reasonably acceptable to Seller.

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

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

“Eligible Assets” shall mean the commercial mortgage loans (or participations, A
notes or B notes therein) approved by Purchaser in its sole and absolute
discretion on or prior to the Closing Date, which commercial mortgage loans (or
participations, A notes or B notes therein) are set forth on Schedule II hereto,
each as subject to the exceptions to the representations and warranties relating
to the Purchased Asset set forth on Exhibit X hereto that were delivered to
Purchaser prior to the Closing Date.

“Enforcement Action” shall mean, with respect to any Purchased Asset, any
(i) judicial or non-judicial foreclosure proceeding, the exercise of any power
of sale, the taking of a deed or assignment in lieu of foreclosure, the
obtaining of a receiver or the taking of any other enforcement action against
the related Mortgaged Property, Mortgagor or applicable guarantor including,
without limitation, the taking of possession or control of the Mortgaged
Property, (ii) acceleration of, or action taken in order to collect, all or any
indebtedness secured by the related Mortgaged Property (other than giving of
notices of default and statements of overdue amounts) or (iii) exercise of any
right or remedy available to Seller under the related Purchased Asset Documents,
at law, in equity or otherwise with respect to related Mortgagor, guarantor
and/or the Mortgaged Property, in each case unless approved or deemed approved
by Purchaser.

“Enhanced Amortization Payment” shall mean, for each Purchased Asset on its
applicable Repurchase Date, an amount equal to the product of (i) 40% multiplied
by (ii) the excess of (a) the unpaid principal balance of such Purchased Asset
pursuant to the related Purchased Asset Documents over (b) the Adjusted Purchase
Price for such Purchased Asset.

“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,

 

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including any judicial or administrative order, consent decree or judgment,
relating to the environment or its effect on, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances
Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et
seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution
Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. § 1801 et seq. and the Occupational Safety and
Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.

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

“ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Article 414(b) or (c) of
the Internal Revenue Code of which Seller is a member and (ii) solely for
purposes of potential liability under Article 302(c)(11) of ERISA and Article
412(c)(11) of the Internal Revenue Code and the lien created under Article
302(f) of ERISA and Article 412(n) of the Internal Revenue Code, described in
Article 414(m) or (o) of the Internal Revenue Code of which Seller is a member.

“Event of Default” shall have the meaning specified in Article 13(a) of this
Agreement.

“Facility Amount” shall mean $68,000,000.

“Federal Funds Rate” shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day of such transactions received by Purchaser from three (3) federal funds
brokers of recognized standing selected by it; provided, that such selected
brokers shall be the same brokers as selected for all of Purchaser’s other
repurchase customers where the Federal Funds Rate is to be applied, to the
extent such brokers are available.

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

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

“Full Term Yield Target” shall mean $8,206,896.55.

“Future Advance Assets” shall mean those Eligible Assets set forth on Schedule
IV hereto.

“Future Advances” shall mean those future advance obligations of Seller under
the Purchased Asset Documents with respect to the Future Advance Assets.

 

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“Future Advance Reserve” shall mean the Upfront Future Advance Reserve Amounts
and any other amounts transferred to, and held by, Purchaser in accordance with
Article 28 hereof that have not been withdrawn by, or released to, Seller (or
the applicable Mortgagor) in accordance with Article 28 hereof.

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

“Governmental Authority” shall mean any national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

“Gross Revenue” shall mean, for each Purchased Asset for the relevant period,
all revenue actually received by or on behalf of the related Mortgagor from or
with respect to the Mortgaged Property for which the calculation of Gross
Revenue is being made for the relevant period, including, but not limited to,
the sum of (A) payments from tenants and other occupants in connection with
leases of any portion of the related Mortgaged Property or from the operation of
the related Mortgaged Property, including, without limitation, garage or parking
fees and payments received from insurance on account of business or rental
interruption and condemnation proceeds from any temporary use or occupancy, but
in each case only to the extent attributable to such period, and (B) interest on
Net Cash Flow, if any. Gross Revenue shall not include: (i) proceeds from any
condemnation of any part or all of the related Mortgaged Property (except for
temporary use or occupancy); (ii) proceeds on account of a casualty to the
related Mortgaged Property (other than payments from insurance on account of
business or rental interruption); (iii) other insurance proceeds (other than in
compensation of lost rent or its equivalent) to the extent applied to repair or
restoration of the related Mortgaged Property; (iv) security deposits paid under
leases of all or a part of the related Mortgaged Property, unless and until
applied by Mortgagor in accordance with the terms of such leases; (v) income
from tenants that is paid by Mortgagor to utility companies, taxing authorities
or others on a pass-through basis to the extent such pass-throughs are not
included within Operating Expenditures; or (vi) similar items or transactions
the proceeds of which, under GAAP, are deemed attributable to capital and are
not in the nature of rent or compensation therefor.

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

“Guarantor” shall mean NewStar Financial, Inc.

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

“Indebtedness” shall mean, for any Person, (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the

 

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sale of property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such property from such Person);
(b) obligations of such Person to pay the deferred purchase or acquisition price
of property or services, other than trade accounts payable (other than for
borrowed money) arising, and accrued expenses incurred, in the ordinary course
of business so long as such trade accounts payable are payable within ninety
(90) days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a lien on the
property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person;
(e) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (f) Indebtedness of others guaranteed by such
Person; (g) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; (h) Indebtedness of
general partnerships of which such Person is secondarily or contingently liable
(other than by endorsement of instruments in the course of collection), whether
by reason of any agreement to acquire such indebtedness to supply or advance
sums or otherwise; (i) Capitalized Lease Obligations of such Person; (j) all net
liabilities or obligations under any interest rate, interest rate swap, interest
rate cap, interest rate floor, interest rate collar, or other hedging instrument
or agreement; and (k) all obligations of such Person under Financing Leases;
provided, that, Indebtedness shall not include any borrowings by the Guarantor
or its Subsidiaries from the Federal Reserve Bank of New York’s Term
Asset-Backed Securities Loan Facility.

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

“Independent Manager” shall mean shall mean a natural Person who (a) is not at
the time of initial appointment and has never been, and will not while serving
as Independent Manager be: (i) a stockholder, director, officer, employee,
partner, member (other than a “special member” or “springing member”), manager
(with the exception of serving as the Independent Manager of Seller), attorney
or counsel of Seller, equity owners of Seller or Guarantor or any Affiliate of
Seller or Guarantor; (ii) a customer, supplier or other person who derives any
of its purchases or revenues from its activities with Seller or Guarantor,
equity owners of Seller or Guarantor or any Affiliate of Seller or Guarantor;
(iii) a Person controlling or under common control with any such stockholder,
director, officer, employee, partner, member, manager, attorney, counsel, equity
owner, customer, supplier or other Person of Seller, equity owners of Borrower
Seller or Guarantor or any Affiliate of Seller or Guarantor; or (iv) a member of
the immediate family of any such stockholder, director, officer, employee,
partner, member, manager, attorney, counsel, equity owner, customer, supplier or
other Person of Borrower, equity owners of Seller or Guarantor or any Affiliate
of Seller or Guarantor and (b) has (i) prior experience as an independent
director or independent manager for a corporation, a trust or limited liability
company whose charter documents required the unanimous consent of all
independent directors or independent managers thereof before such corporation,
trust or limited liability company could consent to the institution of
bankruptcy or insolvency proceedings against it or could file a petition seeking
relief under any applicable federal or state law relating to bankruptcy and
(ii) at least three (3) years of employment experience and who is provided by CT
Corporation, Corporation Service Company or National Registered Agents, Inc. or
if none of these companies is then providing professional independent directors,
another nationally

 

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recognized company acceptable to Purchaser, that is not an Affiliate of Seller
and that provides, inter alia, professional independent directors or independent
managers in the ordinary course of their respective business to issuers of
securitization or structured finance instruments, agreements or securities or
lenders originating commercial real estate loans for inclusion in securitization
or structured finance instruments, agreements or securities (a “Professional
Independent Manager”) and is an employee of such a company or companies at all
times during his or her service as an Independent Manager. A natural Person who
satisfies the foregoing definition except for being (or having been) the
independent director or independent manager of a “special purpose entity”
Affiliated with Seller or Guarantor (provided such Affiliate does not or did not
own a direct or indirect equity interest in Seller) shall not be disqualified
from serving as an Independent Manager, provided that such natural Person
satisfies all other criteria set forth above and that the fees such individual
earns from serving as independent director or independent manager of Affiliates
of Seller or in any given year constitute in the aggregate less than five
percent (5%) of such individual’s annual income for that year. A natural Person
who satisfies the foregoing definition other than subparagraph (a)(ii) shall not
be disqualified from serving as an Independent Manager if such individual is a
Professional Independent Manager and such individual complies with the
requirements of the previous sentence.

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

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

“Initial Purchase Price Percentage” shall mean 57.8%, which is the percentage
obtained by dividing (i) the aggregate Purchase Prices for all Purchased Assets
hereunder on the Closing Date by (ii) the aggregate Assigned Values for all
Purchased Assets hereunder on the Closing Date.

“Joinder to Concentration Account Agreement” shall mean that certain Joinder in
Intercreditor and Concentration Account Administration Agreement (Wachovia
Deposit Account) , dated as of the date hereof, executed by Purchaser.

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

 

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of rates which major banks in New York, New York selected by Purchaser are
quoting at approximately 11:00 a.m., New York City time, on the Pricing Rate
Determination Date for loans in U.S. dollars to leading European banks for a
period equal to the applicable Pricing Rate Period in amounts of not less than
U.S. $1,000,000.00; provided, that such selected banks shall be the same banks
as selected for all of Purchaser’s other repurchase customers where LIBOR is to
be applied, to the extent such banks are available. Purchaser’s determination of
LIBOR shall be binding and conclusive on Borrower absent manifest error. LIBOR
may or may not be the lowest rate based upon the market for U.S. Dollar deposits
in the London Interbank Eurodollar Market at which Purchaser prices loans on the
date which LIBOR is determined by Purchaser as set forth above.

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

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

“LTV” shall mean the ratio of the outstanding principal balance of such
Substitute Eligible Asset pursuant to the related Purchased Asset Documents over
the Market Value of such Substitute Eligible Asset.

“Major Decision” shall mean, for any Purchased Asset, any modification, waiver
or amendment of such Purchased Asset or any other action which, after the
Closing Date:

(i) increases or decreases the outstanding principal balance of such Purchased
Asset other than with respect to a principal payment or Future Advances;

(ii) modifies the regularly scheduled payments of principal and non contingent
interest of the Purchased Asset (except for such modifications expressly
contemplated by the Purchased Asset Documents);

(iii) changes the frequency of scheduled payments of principal and interest in
respect of a Purchased Asset;

(iv) changes the fully-extended maturity date of the Purchased Asset;

(v) subordinates the lien priority of the Purchased Asset or the payment
priority of the Purchased Asset other than subordinations expressly required
under the then existing terms and conditions of the related Purchased Asset
Document;

(vi) releases any collateral for the Purchased Asset other than releases
expressly required under the then existing terms and conditions of the related
Purchased Asset Documents;

 

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(vii) waives, amends or modifies any cash management or reserve account
requirements of the Purchased Asset other than changes expressly required under
the then existing terms and conditions of the related Purchased Asset Documents;

(viii) waives, amends or modifies any due on sale or due on encumbrance
provisions of the Purchased Asset;

(ix) approves a Material Tenant (to the extent approved thereof is required
under the terms of the Purchased Asset Documents);

(x) releases the related Mortgagor or applicable guarantor from any obligations
under the related Purchased Asset Documents (other than in connection with a
payment in full of the underlying obligations thereunder), or otherwise waives
enforcement of such obligations;

(xi) grants a forbearance with respect to enforcing the material terms and
conditions of the Purchased Asset Documents or otherwise exercising remedies;

(xii) results in an Enforcement Action not approved or deemed approved by
Purchaser against the Mortgagor or applicable guarantor; or

(xiii) causes an Act of Insolvency with respect to the Mortgagor or applicable
guarantor.

“Make-Whole Amount” shall have the meaning specified in Article 3(n).

“Margin Cushion Percentage” shall mean 115%.

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

“Margin Deficit Cure Amount” shall mean, as of any date of determination, an
amount necessary to cause the Margin Percentage to be less than the Margin
Cushion Percentage, as calculated by Purchaser in its sole and absolute
discretion.

“Margin Notice Deadline” shall mean 4:00 p.m. New York time.

“Margin Percentage” shall mean, as of any date of determination, the ratio of
(i) the Purchase Price Percentage on such date of determination over (ii) the
Initial Purchase Price Percentage.

“Market Value” shall mean, with respect to any Purchased Asset as of any
relevant date, the market value for such Purchased Asset on such date based
primarily on a New Appraisal with such adjustments as may be determined to be
appropriate by Purchaser in its sole and absolute discretion.

“Material Adverse Effect” shall mean (i) with respect to a Purchased Asset, a
material adverse affect on (a) the value, Net Operating Income, use or enjoyment
of the related Mortgaged Property or the operations thereof or (b) the ability
of the related Mortgagor or

 

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related guarantor (for the Purchased Asset) to perform their respective
obligations under the related Purchased Asset Documents, and (ii) with respect
to Seller, Servicer and Guarantor, a material adverse effect on (a) the
property, business, operations or financial condition of Seller, Servicer or
Guarantor, (b) the ability of Seller, Servicer or Guarantor to perform its
obligations in all material respects under any of the Transaction Documents,
(c) the validity or enforceability (in any material respect) of any of the
Transaction Documents, or (d) the material rights and remedies of Purchaser
under any of the Transaction Documents.

“Material Casualty/Condemnation Event” shall mean, with respect to any Purchased
Asset, any casualty or condemnation of the related Mortgaged Property in which
the “lender” or Administrative Agent, as applicable, under such related
Purchased Asset Documents is not required to apply any casualty or condemnation
proceeds or awards, as applicable, towards a restoration of the related Mortgage
Property in accordance with the related Purchased Asset Documents.

“Material Tenant” shall mean a tenant occupying more than the greater of
(x) 10,000 square feet or (y) ten percent (10%) of the total square feet for the
related Mortgaged Property.

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

“Maturity Date” shall mean June 7, 2016.

“Maximum Quarterly Facility Balance” shall mean, (i) on the Remittance Date
occurring in October, 2011, $65,500,000, (ii) on the Remittance Date occurring
in January 2012, $63,000,000, (iii) on the Remittance Date occurring in April,
2012, an amount equal to (a) the Outstanding Aggregate 2012 Purchase Price minus
(b) $2,500,000, (iv) on the Remittance Date occurring in July, 2012, an amount
equal to (a) the Outstanding Aggregate 2012 Purchase Price minus (b) $5,000,000,
(v) on the Remittance Date occurring in October, 2012, an amount equal to
(a) the Outstanding Aggregate 2012 Purchase Price minus (b) $7,500,000, (vi) on
the Remittance Date occurring in January, 2013, an amount equal to (a) the
Outstanding Aggregate 2012 Purchase Price minus (b) $10,000,000, (vii) on the
Remittance Date occurring in April, 2013, an amount equal to (a) the Outstanding
Aggregate 2013 Purchase Price minus (b) $2,500,000, (viii) on the Remittance
Date occurring in July, 2013, an amount equal to (a) the Outstanding Aggregate
2013 Purchase Price minus (b) $5,000,000, (ix) on the Remittance Date occurring
in October, 2013, an amount equal to (a) the Outstanding Aggregate 2013 Purchase
Price minus (b) $7,500,000, (x) on the Remittance Date occurring in January,
2014, an amount equal to (a) the Outstanding Aggregate 2013 Purchase Price minus
(b) $10,000,000, (xi) on the Remittance Date occurring in April, 2014, an amount
equal to (a) the Outstanding Aggregate 2014 Purchase Price minus (b) $2,500,000,
(xii) on the Remittance Date occurring in July, 2014, an amount equal to (a) the
Outstanding Aggregate 2014 Purchase Price minus (b) $5,000,000, (xiii) on the
Remittance Date occurring in October, 2014, an amount equal to (a) the
Outstanding Aggregate 2014 Purchase Price minus (b) $7,500,000, (xiv) on the
Remittance Date occurring in January, 2015, an amount equal to (a) the
Outstanding Aggregate 2014 Purchase Price minus (b)

 

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$10,000,000, (xv) on the Remittance Date occurring in April, 2015, an amount
equal to (a) the Outstanding Aggregate 2015 Purchase Price minus (b) $2,500,000,
(xvi) on the Remittance Date occurring in July, 2015, an amount equal to (a) the
Outstanding Aggregate 2015 Purchase Price minus (b) $5,000,000, (xvii) on the
Remittance Date occurring in October, 2015, an amount equal to (a) the
Outstanding Aggregate 2015 Purchase Price minus (b) $7,500,000, (xviii) on the
Remittance Date occurring in January, 2016, an amount equal to (a) the
Outstanding Aggregate 2015 Purchase Price minus (b) $10,000,000, (xix) on the
Remittance Date occurring in April, 2016, an amount equal to (a) the Outstanding
Aggregate 2016 Purchase Price minus (b) $2,500,000 and (xx) on the Maturity
Date, $0. In no event shall the Maximum Quarterly Facility Balance be less than
$0.

“Minimum Amortization Amount” shall mean a quarterly amortization payment due
and payable on the Remittance Date in each of September, December, March and
June of each calendar year during the term of this Agreement (beginning with the
Remittance Date occurring in September, 2011) in an amount necessary, if any, to
reduce the aggregate Adjusted Purchase Prices for all Purchased Assets to the
related Maximum Quarterly Facility Balance for such applicable Remittance Date.

“Minimum Tangible Net Worth Amount” shall have the meaning set forth in the
Guarantee Agreement.

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

“Mortgage Note” shall mean a note or other evidence of indebtedness of a
Mortgagor secured by a Mortgage.

“Mortgaged Property” shall mean, for each Purchased Asset, the underlying real
property (and improvements thereon) and other collateral securing such Purchased
Asset pursuant to the related Purchased Asset Documents.

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

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

“Net Cash Flow or Net Operating Income” shall mean, for each Purchased Asset,
Gross Revenue for the related Mortgaged Property on a trailing twelve (12) month
basis minus Operating Expenditures for the related Mortgaged Property for such
same period, each as reported by the related Mortgagor pursuant to the related
Purchased Asset Documents; provided, that solely with respect to the Purchased
Assets known as One South Executive Plaza and Wilton 372 Associates LLC and
until (and including) the delivery of the Purchased Asset Servicer Report due
for the calendar quarter ending March 31, 2012 in accordance with this
Agreement, the Net Cash Flow for the related Mortgaged Property shall be
calculated on a pro-forma basis for the next succeeding twelve months instead of
a trailing twelve (12) month basis.

 

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“New Appraisal” shall mean, for any Purchased Asset, an appraisal prepared by
(i) the same appraiser that performed an appraisal on such Purchased Asset for
Purchaser prior to the Closing Date or (ii) if such appraiser is no longer
actively engaged in the business of appraising commercial real estate of similar
size, quality and condition as the related Mortgaged Property or is otherwise no
longer a reputable appraiser, in each case as determined by Purchaser in its
sole and absolute discretion, an appraiser acceptable to Seller and Purchaser;
provided, that if Seller and Purchaser fail to agree in good faith on such
appraiser, Purchaser shall select such appraiser in its sole and absolute
discretion.

“Operating Expenditures” shall mean, for each Purchased Asset for the relevant
period, all ordinary and necessary operating expenditures of the operation of
the related Mortgaged Property for which the calculation of Operating
Expenditures is being made, actually paid by or on behalf of the related
Mortgagor and approved in advance by the “lender” under the related Purchased
Asset Documents, including, without limitation, (i) payments made to escrows
under the related Purchased Asset Documents, (ii) ordinary and customary
management fees, utility expenses, real estate taxes and other costs of
operation as designated in any approved budget under the related Purchased Asset
Documents (but excluding (x) debt service under the related Purchased Assets,
(y) tenant improvements and leasing commissions and (z) any expenditure not
involving a cash expenditure, such as depreciation), (iii) expenditures which
would be considered capital in nature under GAAP, and (iv) any expenditures not
permitted under the related Purchased Asset Documents.

“Outstanding Aggregate 2012 Purchase Price” shall mean the aggregate outstanding
Adjusted Purchase Price for all Purchased Assets as of January 31, 2012.

“Outstanding Aggregate 2013 Purchase Price” shall mean the aggregate outstanding
Adjusted Purchase Price for all Purchased Assets as of January 31, 2013.

“Outstanding Aggregate 2014 Purchase Price” shall mean the aggregate outstanding
Adjusted Purchase Price for all Purchased Assets as of January 31, 2014.

“Outstanding Aggregate 2015 Purchase Price” shall mean the outstanding aggregate
Adjusted Purchase Price for all Purchased Assets as of January 31, 2015.

“Outstanding Aggregate 2016 Purchase Price” shall mean the outstanding aggregate
Adjusted Purchase Price for all Purchased Assets as of January 31, 2016.

“Participant” shall have the meaning specified in Article 18 of this Agreement.

“Percentage Interest” shall mean, with respect to any Purchased Asset, the ratio
of (i) the Adjusted Purchase Price for such Purchased Asset over (ii) the
aggregate Adjusted Purchase Prices for all Purchased Assets.

“Permitted Holder” shall mean (i) any of Corsair Capital, LLC and Capital Z
Partners, Ltd., or (ii) any Person or group of Persons that controls, is
controlled by, or is under common

 

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control with, any of the foregoing, including without limitation, any fund that
is an Affiliate of Corsair Capital, LLC or Capital Z Partners, Ltd. and/or
managed by Corsair Capital, LLC or Capital Z Partners, Ltd. or any of their
Affiliates. Control shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise and
“controlling” and “controlled” shall have meanings correlative thereto.

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

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

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to
the sum of (i) LIBOR and (ii) the relevant Applicable Spread, in each case, for
the applicable Pricing Rate Period for the related Purchased Asset. The Pricing
Rate shall be subject to adjustment and/or conversion as provided in the
Transaction Documents (including, without limitation, as provided in Articles
3(g) and (h) of this Agreement) or the related Confirmation.

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

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

“Principal Payment” shall mean, with respect to any Purchased Asset, any payment
or prepayment of principal received or allocated as principal in respect
thereof.

“Prohibited Investor” shall mean (1) a person or entity whose name appears on
the list of Specially Designated Nationals and Blocked Persons by the Office of
Foreign Asset Control (“OFAC”), (2) any foreign shell bank, and (3) any person
or entity resident in or whose subscription funds are transferred from or
through an account in a jurisdiction that has been designated as a
non-cooperative with international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering (“FATF”), of which the U.S. is a member
and with which designation the U.S. representative to the group or organization
continues to concur. See http://www.fatf-gati.org for FATF’s list of
Non-Cooperative Countries and Territories.

 

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“Prohibited Transferee” shall mean, only so long as no Event of Default has
occurred and is continuing, any (a) commercial finance company or commercial
real estate finance company (including, without limitation, GE Capital, Golub,
Madison Capital, NXT Capital, CapitalSource, Wrightwood Capital, NorthStar
Realty Finance, Mesa West Capital, Ladder Capital, Gramercy) or any other such
company that at the time of any proposed assignment under Article 18 is deemed
to be a direct competitor of Guarantor with respect to “middle market” corporate
or real estate secured lending transactions, as determined by Guarantor in good
faith, in the reasonable exercise of its judgment, provided that “Prohibited
Transferee” shall not include any commercial bank, and (b) “vulture” fund or
hedge fund investing in real estate secured loan assets (including, without
limitation, Fortress, Citadel, Cerberus).

“Properties” shall have the meaning specified in Article 9(b)(xxvi)(A) of this
Agreement.

“Purchase Price” shall mean, with respect to any Purchased Asset, the price at
which such Purchased Asset is transferred by the Seller to Purchaser on the
Closing Date or, for any Substitute Eligible Asset that becomes a Purchased
Asset hereunder pursuant to Article 3(m) hereof, the amount set forth on the
related Confirmation, as established by Purchaser in its sole and absolute
discretion. The Purchase Price for each Purchased Asset on the Closing Date is
set forth on Schedule II hereto and in the related Confirmation.

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

“Purchase Price Percentage” shall mean, as of any date of determination, the
percentage obtained by dividing (i) the aggregate Adjusted Purchase Prices for
all Purchased Assets hereunder on such date of determination by (ii) the
aggregate Assigned Values for all Purchased Assets hereunder on such date of
determination.

“Purchased Asset” shall mean (i) with respect to any Transaction, the Eligible
Asset sold by, or the Substitute Eligible Asset transferred by, Seller to
Purchaser in such Transaction and (ii) with respect to the Transactions in
general, all Eligible Assets sold by, and/or Substitute Eligible Assets
transferred by, Seller to Purchaser. An Eligible Asset or Substitute Eligible
Asset that is repurchased by the Seller in accordance with this Agreement shall
cease to be a Purchased Asset.

“Purchased Asset Documents” shall mean, with respect to a Purchased Asset, the
documents listed on Schedule V hereto for such Purchased Asset.

“Purchased Asset File” shall mean the documents specified as the “Purchased
Asset File” in Article 7(b), together with any additional documents and
information reasonably required to

 

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be delivered to Purchaser or its designee (including the Custodian) pursuant to
this Agreement; provided that to the extent that Purchaser waives, including
pursuant to Article 7(c), receipt of any document in connection with the
purchase of an Eligible Asset or substitution of a Substitute Eligible Asset
(but not if Purchaser merely agrees to accept delivery of such document after
the Closing Date or, as applicable, the Substitution Date), such document shall
not be a required component of the Purchased Asset File until such time as
Purchaser determines in good faith that such document is necessary or
appropriate for the servicing of the applicable Purchased Asset.

“Purchased Asset Servicer Report” shall mean a report for each Purchased Asset
delivered by Seller as required under Article 11(i)(iv), a form of which is
attached hereto as Exhibit IX.

“Purchased Items” shall mean all of Seller’s right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located:

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

(ii) the Additional Purchased Items, if any;

(iii) the Purchased Asset Documents, Servicing Rights, Servicing Agreements,
Servicing Records, Administrative Agent Rights, mortgage guaranties and
insurance (issued by a Governmental Authority or otherwise) and claims, payments
and proceeds thereunder, insurance policies and certificates of insurance
relating to the Purchased Assets and claims, payments and proceeds thereof, and
collection and escrow accounts and letters of credit relating to the Purchased
Assets;

(iv) all Income in respect of the Purchased Assets;

(v) all related forward trades and takeout commitments placed on the Purchased
Assets;

(vi) all proceeds relating to the sale, securitization, liquidation, or other
disposition of the Purchased Assets;.

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

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

“Purchaser” shall have the meaning set forth in the introductory paragraph
hereto.

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

 

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established place of business in London. If any such Reference Bank should be
unwilling or unable to act as such or if Purchaser shall terminate the
appointment of any such Reference Bank or if any of the Reference Banks should
be removed from the Reuters Monitor Money Rates Service or in any other way fail
to meet the qualifications of a Reference Bank, Purchaser, in its sole and
absolute discretion, may designate alternative banks meeting the criteria
specified in clauses (i) and (ii) above.

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

“Remittance Date” shall mean the fifteenth (15th) calendar day of each month, or
if such day is not a Business Day, the immediately succeeding Business Day.

“Repurchase Date” shall mean, with respect to a Purchased Asset, the earliest to
occur of (i) the Termination Date, (ii) the Maturity Date, (iii) the Accelerated
Repurchase Date, (iv) the Early Repurchase Date or (v) the Document Rep Breach
Repurchase Date.

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

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any
Repurchase Date or any date on which the Repurchase Price is required to be
determined hereunder, the price at which such Purchased Asset is to be
transferred from Purchaser to the Seller; such price will be determined in each
case as the sum of the (i) Adjusted Purchase Price of such Purchased Asset;
(ii) accrued and unpaid Purchase Price Differential with respect to such
Purchased Asset as of the date of such determination; (iii) the Enhanced
Amortization Payment for such Purchased Asset as of the date of such
determination; (iv) all accrued and unpaid costs, expenses and other amounts
(including, without limitation, Breakage Costs, if any, due an payable on such
Purchased Asset pursuant to Article 3(l) hereof) due and payable with respect to
such Purchased Asset under any Transaction Document; and (v) any other amounts
(including, without limitation, Make-Whole Amounts) due and payable by Seller to
Purchaser and its Affiliates pursuant to the terms of this Agreement or any
other Transaction Document as of such date. Notwithstanding the foregoing,
(i) no Enhanced Amortization Payment shall be due and payable in the event that
Seller is repurchasing all Purchased Assets simultaneously and (ii) in no event
shall the Repurchase Price for a Purchased Asset exceed the sum of (a) the
aggregate Adjusted Purchase Prices for all Purchased Assets then subject to this
Agreement, (b) accrued and unpaid Purchase Price Differential for all Purchased
Assets as of such date of determination and (c) all other amounts due and
payable to Purchaser or its Affiliates under any Transaction Document.

The Repurchase Price paid by Seller to Purchaser for each Purchased Asset will
be applied by Purchaser on the applicable Repurchase Date as follows:

(i) first, to accrued and unpaid Purchase Price Differential as of such
Repurchase Date;

(ii) second, to reduce the Adjusted Purchase Price of such Purchased Asset to
zero;

 

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(iii) third, to all accrued and unpaid costs, expenses and other amounts
including Breakage Costs, if any, due an payable on such Purchased Asset
pursuant to Article 3(l) hereof) due and payable on such Purchased Asset under
any Transaction Document;

(iv) fourth, to any other amounts due and owing by Seller to Purchaser and its
Affiliates pursuant to the terms of this Agreement or any other Transaction
Document as of such date; and

(v) fifth, to Purchaser, the remainder to reduce each other Purchased Asset’s
Adjusted Purchase Price, pro rata (based on its Percentage Interest).

“Requirement of Law” shall mean any law, treaty, rule, regulation, code,
directive, policy, order or requirement or determination of an arbitrator or a
court or other Governmental Authority whether now or hereafter enacted or in
effect.

“Responsible Officer” shall mean any of the officers listed on Exhibit II
hereto, as the same may be amended from time to time.

“SEC” shall have the meaning specified in Article 22(a) of this Agreement.

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

“Seller Entities” shall have the meaning specified in Article 9(b)(xxv)(B) of
this Agreement.

“Serviced Asset” shall have the meaning specified in Article 27(a) of this
Agreement.

“Servicer” shall mean NewStar Financial, Inc. or any other servicer approved by
Purchaser in its sole and absolute discretion.

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

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

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

“SIPA” shall have the meaning specified in Article 22(a) of this Agreement.

“Structuring Fee” shall mean an up-front structuring fee in an amount equal to
one hundred basis points (1.0%) multiplied by the Facility Amount, such amount
to be paid as consideration for Purchaser’s agreement to enter into this
Agreement.

“Subsidiary” shall mean, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than

 

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stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in
this Agreement shall refer to a Subsidiary or Subsidiaries of Seller.

“Substitute Eligible Assets” shall mean a commercial mortgage loan (or
participation, A note or B note therein) approved by Purchaser in its sole and
absolute discretion in accordance with Article 3(m) hereto and that otherwise
satisfies the following criteria (as determined by Purchaser in its sole and
absolute discretion):

(i) it is fully closed, fully disbursed (unless Future Advances are permitted
thereunder) and performing;

(ii) it does not have an unexpired, fully extended term in excess of five
(5) years;

(iii) it has a minimum debt yield of 9.00%, as calculated by dividing (x) the
related Mortgaged Property’s most recent trailing twelve (12) months of Net Cash
Flow by (y) its outstanding principal balance;

(iv) it has a DSCR of 1.25x; and

(v) it has an LTV of less than or equal to 75.00%.

“Substitution Cut-off Date” shall have the meaning specified in Article 4(c)

“Substitution Date” shall have the meaning specified in Article 3(m) of this
Agreement.

“Substitution Date Underwritten Net Cash Flow” shall mean, for each Substitute
Eligible Asset that becomes a Purchased Asset hereunder, the “Underwritten Net
Cash Flow” set forth in the related Confirmation for such Substitute Eligible
Asset, as established by Purchaser in its sole and absolute discretion.

“Tangible Net Worth” shall mean, as to any Person as of any date of
determination, the amount which would be included under stockholders’ equity on
a consolidated balance sheet of such Person determined on a consolidated basis
in accordance with GAAP.

“Termination Date” means, with respect to any Transaction, three hundred
sixty-four (364) days from the Closing Date or, in the case of any Substitute
Eligible Asset that becomes a Purchased Asset hereunder, the applicable
Substitution Date; provided, that on each day during the term of this Agreement
until June 7, 2015 so long as no Default or Event of Default has occurred and
unless Seller provides written notice to Purchaser that it does not desire to
extend the Termination Date hereunder, the Termination Date for each such
Purchased Asset shall automatically be extended for one (1) day (and each such
Transaction shall be deemed to be a new Transaction for a maximum term of three
hundred sixty-four (364) days); provided, further, that in no event shall the
Termination Date extend beyond the Maturity Date.

 

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“Total Indebtedness” shall mean, for any period, the aggregate Indebtedness of a
Person and its consolidated Subsidiaries during such period (including, without
limitation, off-balance sheet Indebtedness), less the amount of any nonspecific
balance sheet reserves maintained in accordance with GAAP.

“Transaction” shall mean a Transaction, as specified in Article 1 of this
Agreement.

“Transaction Documents” shall mean, collectively, this Agreement, any applicable
Schedules, Exhibits or Annexes to this Agreement, the Guarantee Agreement, the
Custodial Agreement, the Interim Servicing Agreement, the Account Control
Agreement, the Joinder to Concentration Account Agreement and all Confirmations
and assignment documentation executed by Seller pursuant to this Agreement in
connection with specific Transactions.

“Trust Receipt” shall mean a trust receipt issued by Custodian to Purchaser
confirming the Custodian’s possession of certain Purchased Asset Files held by
Custodian in accordance with the Custodial Agreement for the benefit of
Purchaser (or any other holder of such trust receipt) or a bailment arrangement
with counsel or other third party acceptable to Purchaser in its sole and
absolute discretion.

“Unfunded Future Advance Reserve Amount” shall mean, upon any date of
determination, the aggregate amount of unfunded Future Advances (which amount
shall not exceed $7,376,179.72) for any Future Advance Asset under the related
Purchased Asset Documents, less the amount on deposit in the Future Advance
Reserve.

“Upfront Future Advance Reserve Amount” shall mean $616,956.36.

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

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

FOR THE AVOIDANCE OF DOUBT, SELLER AND GUARANTOR ACKNOWLEDGE AND AGREE THAT
WHENEVER PURSUANT TO THIS AGREEMENT, PURCHASER MAY EXERCISE ANY RIGHT GIVEN TO
IT TO TAKE ANY ACTION OR NOT TAKE ANY ACTION IN ITS SOLE AND ABSOLUTE
DISCRETION, TO APPROVE OR DISAPPROVE IN ITS SOLE AND ABSOLUTE DISCRETION, TO
CONSENT OR NOT CONSENT IN ITS SOLE AND ABSOLUTE DISCRETION, OR ANY ARRANGEMENT
OR TERM IS TO BE SATISFACTORY OR ACCEPTABLE TO PURCHASER IN ITS SOLE AND
ABSOLUTE DISCRETION, PURCHASER MAY TAKE OR NOT TAKE SUCH ACTION, APPROVE OR
DISAPPROVE, CONSENT OR NOT CONSENT OR DECIDE WHETHER ARRANGEMENTS OR TERMS ARE
SATISFACTORY OR ACCEPTABLE OR NOT SATISFACTORY OR ACCEPTABLE, IN EACH CASE IN
ITS SOLE AND ABSOLUTE

 

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DISCRETION FOR ANY REASON OR FOR NO REASON, AND ANY SUCH DECISION SHALL BE FINAL
AND CONCLUSIVE AND BINDING ON SELLER AND GUARANTOR. SELLER AND GUARANTOR FURTHER
ACKNOWLEDGE AND AGREE THAT: (I) EACH OF SELLER AND GUARANTOR ARE SOPHISTICATED
PARTIES; (II) THE FOREGOING SENTENCE WAS NEGOTIATED BY THE PARTIES HERETO (WITH
THE ADVICE OF COUNSEL) ON AN ARM’S LENGTH BASIS IN GOOD FAITH; AND (III) THAT
THE NEGOTIATED STANDARDS SET FORTH IN THE FOREGOING SENTENCE WERE A MATERIAL
INDUCEMENT FOR PURCHASER TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.

ARTICLE 3

INITIATION; CONFIRMATION; TERMINATION; FEES

(a) Purchaser’s agreement to enter into each Transaction on the Closing Date is
subject to the terms and conditions in this Agreement and to the satisfaction,
immediately prior to or concurrently with the making of such Transactions, of
the “Transaction Conditions Precedent” specified in Article 3(b) of this
Agreement, each of which shall be satisfactory in form and substance to
Purchaser and its counsel in their sole and absolute discretion.

(b) Subject to the terms and conditions set forth in this Agreement (including,
without limitation, the “Transaction Conditions Precedent” specified below in
this Article 3(b) or, as applicable, the “Substitute Transaction Conditions
Precedent” specified below in Article 3(m)), an agreement to enter into a
Transaction shall be made in writing at the initiation of Seller; provided,
however, that the aggregate Purchase Price for all Transactions shall not exceed
the Facility Amount. Upon written request by Seller and upon Purchaser agreeing
to enter into the Transaction, provided each of the Transaction Conditions
Precedent or, as applicable, the Substitute Transaction Conditions Precedent
specified below in Article 3(m) shall have been satisfied (or waived by
Purchaser), Purchaser shall promptly deliver to Seller a written confirmation in
the form of Exhibit I attached hereto of each Transaction (a “Confirmation”).
Such Confirmation shall describe the Purchased Assets, shall identify Purchaser
and Seller, and shall set forth:

(i) the Purchase Price for such Purchased Asset,

(ii) the Assigned Value for such Purchased Asset,

(iii) the Termination Date for such Purchased Asset,

(iv) the Closing Date Underwritten Net Cash Flow (or, if applicable, the
Substitution Date Underwritten Net Cash Flow), and

(v) the initial Pricing Rate applicable to the Transaction (including the
Applicable Spread).

 

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For purposes of this Article 3(b), the “Transaction Conditions Precedent” shall
be deemed to have been satisfied if:

(A) Purchaser shall have received this Agreement, duly completed and executed by
each of the parties hereto (including all schedules, annexes and exhibits
hereto);

(B) Purchaser shall have received a Custodial Agreement, duly executed and
delivered by each of the parties thereto (including all schedules, annexes and
exhibits hereto);

(C) Purchaser shall have received an Account Control Agreement, duly completed
and executed by each of the parties thereto (including all schedules, annexes
and exhibits hereto);

(D) Purchaser shall have received a Joinder to Concentration Account Agreement,
duly completed and executed by each of the parties thereto;

(E) Purchaser shall have received a Guarantee Agreement, duly completed and
executed by each of the parties thereto (including all schedules, annexes and
exhibits hereto);

(F) Purchaser shall have received an Interim Servicing Agreement, duly completed
and executed by each of the parties thereto (including all schedules, annexes
and exhibits hereto);

(G) [Reserved.]

(H) Purchaser shall have received a UCC financing statement for filing with the
Secretary of State for the State of Delaware, naming the Seller as “Debtor” and
Purchaser as “Secured Party” and describing as “Collateral” all of the items set
forth in the definition of Collateral and Purchased Items in this Agreement,
together with any other documents necessary or requested by Purchaser to perfect
the security interests granted by Seller in favor of Purchaser under this
Agreement or any other Transaction Document;

(I) Purchaser shall have received limited powers of attorney in the forms
attached hereto as Exhibit IV and Exhibit XI, duly completed and executed by
each of the parties thereto, with respect to each Purchased Asset;

(J) Purchaser shall have received opinions of outside counsel to Seller and
Guarantor acceptable to Purchaser (including, but not limited to, those relating
to enforceability, corporate and UCC matters) in its sole and absolute
discretion;

(K) Purchaser shall have received good standing certificates and certified
copies of the charters and by-laws (or equivalent documents) of Seller, Servicer
and Guarantor and of all corporate or other authority for Seller, Servicer

 

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and Guarantor with respect to the execution, delivery and performance of the
Transaction Documents and each other document to be delivered by Seller,
Servicer and Guarantor from time to time in connection herewith;

(L) Purchaser shall have received payment from Seller, as consideration for
Purchaser’s agreement to enter into this Agreement, of the Structuring Fee in
immediately available funds, without deduction, set-off or counterclaim;

(M) Purchaser shall have received copies of notices for each Purchased Asset
(each, a “Borrower Notice”) in form and substance satisfactory to Purchaser in
its sole and absolute discretion, to be sent to the related Mortgagor and other
obligors under such Purchased Asset, informing such Mortgagor of this Agreement
and the Transactions contemplated hereunder and under the other Transaction
Documents with respect to such Purchased Asset;

(N) Purchaser shall have received payment from Seller of an amount equal to all
actual out-of-pocket costs and expenses (including, without limitation, the
reasonable fees and expenses of outside counsel to Purchaser and reasonable
costs and expenses associated with due diligence, recording or other
administrative expenses necessary or incidental to the execution of any
Transaction) incurred by Purchaser in connection with the development,
preparation and execution of this Agreement, the other Transaction Documents,
each Confirmation and any other documents prepared in connection herewith or
therewith;

(O) no Default or Event of Default (in each case, other than with respect to
Purchaser) under this Agreement shall have occurred and be continuing, and no
event shall have occurred which has, or would reasonably be expected to have, a
Material Adverse Effect;

(P) for each Purchased Asset, Seller shall have delivered to Purchaser a list of
all exceptions to the representations and warranties relating to the Purchased
Asset set forth on Exhibit V hereto, and Purchaser shall have waived all such
exceptions;

(Q) the representations and warranties made by Seller in any of the Transaction
Documents shall be true and correct in all material respects;

(R) Purchaser shall have received from Custodian an Asset Schedule and Exception
Report (as defined in the Custodial Agreement) with respect to each Purchased
Asset, dated as of the Closing Date, duly completed and with exceptions
acceptable to Purchaser in its sole and absolute discretion in respect of
Eligible Assets to be purchased hereunder;

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

 

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(T) Purchaser shall have received copies of any and all consents and waivers
applicable to Seller or to the Purchased Assets; and

(U) Purchaser shall have received all such other and further documents,
documentation and legal opinions as Purchaser in its sole and absolute
discretion shall reasonably require and which are customary in similar
transactions.

(c) Upon the satisfaction of all conditions set forth in Articles 3(a) and 3(b),
the Eligible Asset shall be transferred to Purchaser or the Custodian against
the transfer of the Purchase Price to an account of the Seller. With respect to
each Transaction entered into on the Closing Date, the Pricing Rate shall be
determined initially on the Closing Date, and shall be reset on each Pricing
Rate Determination Date for the next succeeding Pricing Rate Period for such
Transaction. Purchaser or its agent shall determine in accordance with the terms
of this Agreement the Pricing Rate on each Pricing Rate Determination Date for
the related Pricing Rate Period and notify Seller of such rate for such period
on such Pricing Rate Determination Date.

(d) Each Confirmation, together with this Agreement, shall be conclusive
evidence of the terms of the Transaction covered thereby. In the event of any
conflict between the terms of such Confirmation and the terms of this Agreement,
this Agreement shall prevail.

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

(i) Seller notifies Purchaser in writing of its intent to terminate such
Transaction and repurchase such Purchased Asset, setting forth the Early
Repurchase Date and identifying with particularity the Purchased Asset to be
repurchased on such Early Repurchase Date, no later than five (5) Business Days
(or, in the event the Seller is exercising its rights pursuant to
Section 2.03(d) of the Interim Servicing Agreement, one (1) Business Day) prior
to such Early Repurchase Date;

(ii) no payment Default or Event of Default (in each case, other than with
respect to Purchaser) under this Agreement shall have occurred and be continuing
both as of the date notice is delivered pursuant to Article 3(e)(i) above and as
of the applicable Early Repurchase Date, unless such Default or Event of Default
is cured by such repurchase;

(iii) on such Early Repurchase Date, Seller pays to Purchaser an amount equal to
the sum of the Repurchase Price for the applicable Purchased Asset and any other
amounts payable under this Agreement (including, without limitation, Article
3(l) of this Agreement) with respect to such Purchased Asset against transfer to
Seller or its agent of such Purchased Assets, and

(iv) if Seller is repurchasing all Purchased Assets on such Early Repurchase
Date, Seller pays to Purchaser an amount equal to the Make-Whole Amount.

 

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(f) On the Repurchase Date (including any Early Repurchase Date or Accelerated
Repurchase Date) for any Transaction, termination of the Transaction will be
effected by transfer to the Seller of the Purchased Assets being repurchased and
any Income in respect thereof received by Purchaser (and not previously credited
or transferred to, or applied to the obligations of, such Seller pursuant to
Article 5 of this Agreement) against the simultaneous transfer of the Repurchase
Price to an account of Purchaser. Promptly following such Repurchase Date,
Purchaser shall deliver to Seller such UCC termination statements and other
release documents and take any other actions as may be necessary to release its
security interest in such Purchased Asset.

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

(h) Notwithstanding any other provision herein, if the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof shall
make it unlawful for Purchaser to enter into or maintain Transactions as
contemplated by the Transaction Documents, the determination of such
unlawfulness to be made in the same manner as for all of Purchaser’s other
repurchase customers, (a) the commitment of Purchaser hereunder to enter into
new Transactions and to continue Transactions as such shall forthwith be
canceled, and (b) the Transactions then outstanding shall be converted
automatically to Alternative Rate Transactions on the last day of the then
current Pricing Rate Period or within such earlier period as may be required by
law. If any such conversion of a Transaction occurs on a day that is not the
last day of the then current Pricing Rate Period with respect to such
Transaction, the Seller shall pay to Purchaser such amounts, if any, as may be
required pursuant to Article 3(l) of this Agreement.

(i) Upon demand by Purchaser, Seller shall indemnify Purchaser and hold
Purchaser harmless from any loss, cost or expense (including, without
limitation, reasonable attorneys’ fees and disbursements) that Purchaser may
sustain or incur as a consequence of (i) default by Seller repurchasing any
Purchased Asset after Seller has given a notice in accordance with Article 3(e)
of an Early Repurchase, (ii) any payment of the Repurchase Price on any day
other than a Remittance Date, (iii) a default by Seller in selling Eligible
Assets after Seller has notified Purchaser of a proposed Transaction and
Purchaser has agreed to purchase such Eligible Assets in accordance with the
provisions of this Agreement, (iv) Purchaser’s enforcement of the terms of any
of the Transaction Documents, (v) any actions taken to perfect or continue any
lien created under any Transaction Documents, and/or (vi) Purchaser entering
into any of the Transaction Documents or owning any Purchased Item. A
certificate as to such costs, losses,

 

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damages and expenses, setting forth the calculations therefore, together with
reasonable supporting documentation, shall be submitted promptly by Purchaser to
Seller and shall be prima facie evidence of the information set forth therein.

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

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

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

(iii) shall impose on Purchaser any other condition;

and the result of any of the foregoing is to increase the cost to Purchaser, by
an amount that Purchaser deems, in the exercise of its reasonable business
judgment, to be material, of entering into, continuing or maintaining
Transactions or to reduce any amount receivable under the Transaction Documents
in respect thereof; then, in any such case, Seller shall promptly pay Purchaser,
upon its demand, any additional amounts necessary to compensate Purchaser for
such increased cost or reduced amount receivable. Such notification as to the
calculation of any additional amounts payable pursuant to this subsection shall
be submitted by Purchaser to Seller and shall be prima facie evidence of such
additional amounts. This covenant shall survive the termination of this
Agreement and the repurchase by Seller of any or all of the Purchased Assets.

(k) If Purchaser shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Purchaser or any corporation controlling
Purchaser 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 does or shall have the effect of reducing the rate of return on
Purchaser’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which Purchaser or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
Purchaser’s or such corporation’s policies with respect to capital adequacy) by
an amount deemed by Purchaser, in the exercise of its reasonable business
judgment, to be material, then from time to time, after submission by Purchaser
to Seller of a written request therefor, Seller shall pay to Purchaser such
additional amount or amounts as will compensate Purchaser for such reduction.
Such notification as to the calculation of any additional amounts payable
pursuant to this subsection shall be submitted by Purchaser to Seller and shall
be prima facie evidence of such additional amounts. This covenant shall survive
the termination of this Agreement and the repurchase by Seller of any or all of
the Purchased Assets.

 

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

(m) Seller shall be permitted to substitute a Substitute Eligible Asset for a
Purchased Asset if, and only if, (i) such substitution is approved by Purchaser
in its sole and absolute discretion and (ii) (a) such substitution is necessary
to cure a Margin Deficit for such Purchased Asset, (b) such substitution is
necessary to prevent or cure an Event of Default hereunder, (c) such
substitution is necessary to prevent a deadlock from continuing with respect to
a Major Decision for such Purchased Asset in accordance with Section 2.03(d) of
the Interim Servicing Agreement or (d) the outstanding principal balance of a
Purchased Asset pursuant to the related Purchased Asset Documents has been
reduced to zero and the aggregate Repurchase Price for all remaining Purchased
Assets is equal to an amount less than the Maximum Quarterly Facility Balance
for the next occurring Remittance Date on which a Minimum Amortization Payment
(if any) is scheduled to be due and payable in accordance with the definition
thereof. Unless otherwise approved by Purchaser, Seller shall provide Purchaser
with a written request to substitute a Substitute Eligible Asset for a Purchased
Asset at least thirty (30) days prior to the proposed date of substitution or
such shorter commercially reasonable time period as is necessary to prevent or
cure an Event of Default (the “Substitution Date”). Seller agrees to cooperate
with Purchaser and any third party underwriter in connection with Purchaser’s
underwriting and due diligence process for such proposed Substitute Eligible
Asset, including, without limitation, providing Purchaser and such third-party
underwriter will the following materials relating to such Substitute Eligible
Asset: (i) appraisals; (ii) environmental reports, (iii) engineering reports;
(iv) any other third-party reports; (v) a summary memorandum outlining the
proposed Substitute Eligible Asset including the benefits and all material
underwriting risks and issues and other material information; (vi) rent rolls,
historical cash flows and cash flow proforma(s) for such proposed Substitute
Eligible Asset; (vii) a description of and financial information relating to the
underlying borrower/obligor and sponsor; (viii) copies of the underlying loan
documents for the Mortgage Loan; (ix) exceptions to representations and
warranties set forth in the Facility Documents; and (x) such other documentation
as Purchaser or such third-party underwriter may reasonably request. Seller
agrees that Seller shall reimburse Purchaser for any and all reasonable
attorneys’ fees, costs and expenses incurred by Purchaser in connection with its
underwriting and due diligence performed under this Article 3(m), which amounts
shall be paid by Seller to Purchaser within ten (10) Business Days after receipt
of an invoice therefore. In the event that Purchaser approves the substitution
of a Substitute Eligible Asset for a Purchased Asset, such Transaction shall be
evidenced by a Confirmation in accordance with Article 3(b) hereof and, provided
the Substitution Transaction Conditions Precedents (as defined below) are
satisfied, such Substitute Eligible Asset shall constitute a Purchased Asset
hereunder.

 

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Purchaser’s agreement to enter into a Transaction on a Substitution Date is
subject to the terms and conditions in this Agreement and to the satisfaction,
immediately prior to or concurrently with the making of such Transactions, of
the Substitute Transaction Conditions Precedent, each of which shall be
satisfactory in form and substance to Purchaser and its counsel in their sole
and absolute discretion. In the event that Purchaser approves a substitution of
a Substitute Eligible Asset for a Purchased Asset pursuant to sub-clause (ii)(d)
of the first sentence of the immediately preceding paragraph, and provided the
Substitution Transaction Conditions Precedents are satisfied, such Substitute
Eligible Asset shall be transferred to Purchaser or the Custodian against the
transfer of the applicable Purchase Price (which Purchase Price, together will
the aggregate Repurchase Price for all other Purchased Assets then subject to
this Agreement may not exceed the Maximum Quarterly Facility Balance for the
next occurring Remittance Date on which a Minimum Amortization Payment (if any)
is scheduled to be due and payable in accordance with the definition thereof).

For purposes of this Article 3(m), the “Substitution Transaction Conditions
Precedent” shall be deemed to have been satisfied if:

(A) no Default or Event of Default that will not be cured by such Substitute
Transaction (in each case, other than with respect to Purchaser) under this
Agreement shall have occurred and be continuing as of such Substitution Date,
and no event shall have occurred which has, or would reasonably be expected to
have, a Material Adverse Effect;

(B) Purchaser shall have completed its due diligence review of the related
Purchased Asset File for such Substitute Eligible Asset, and such other
documents, records, agreements, instruments, mortgaged properties or information
relating to such Substitute Eligible Asset as Purchaser in its sole discretion
deems appropriate to review and such review shall be satisfactory to Purchaser
in its sole and absolute discretion and Purchaser has consented in writing to
the Substitute Eligible Asset becoming a Purchased Asset;

(C) Purchaser shall have obtained internal credit approval, to be granted or
denied in Purchaser’s sole and absolute discretion, for the inclusion of such
Substitute Eligible Asset as a Purchased Asset in a Transaction, without regard
for any prior credit decisions by Purchaser or any Affiliate of Purchaser, and
with the understanding that Purchaser shall have the absolute right to change
any or all of its internal underwriting criteria at any time, without notice of
any kind to Seller;

(D) Purchaser shall have received a UCC financing statement for filing with the
Secretary of State for the State of Delaware, naming the Seller as “Debtor” and
Purchaser as “Secured Party” and describing as “Collateral” the Substitute
Eligible Asset and the related Purchased Items, together with any other
documents necessary or requested by Purchaser to perfect the security interests
granted by Seller in favor of Purchaser under this Agreement or any other
Transaction Document;

 

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(E) Purchaser shall have received limited powers of attorney in the forms
attached hereto as Exhibit IV and Exhibit XI, duly completed and executed by
each of the parties thereto, with respect to each Substitute Eligible Asset;

(F) Purchaser shall have received payment from Seller of an amount equal to all
actual costs and expenses (including, without limitation, the reasonable fees
and expenses of counsel to Purchaser and costs and expenses associated with due
diligence, underwriting, recording or other administrative expenses necessary or
incidental to the execution of the Transaction for such Substitute Eligible
Asset) incurred by Purchaser in connection with approving the Substitute
Eligible Asset as a Purchased Asset and the development, preparation and
execution of the Confirmation and any other documents prepared in connection
herewith or therewith;

(G) for each Substitute Eligible Asset, Seller shall have delivered to Purchaser
a list of all exceptions to the representations and warranties relating to such
Substitute Eligible Asset set forth on Exhibit V hereto, and Purchaser shall
have agreed in writing to waive all such exceptions in its sole and absolute
discretion;

(H) the representations and warranties made by Seller in any of the Transaction
Documents shall be true and correct in all material respects as of the
Substitution Date;

(I) Purchaser shall have received copies of the related Borrower Notice in form
and substance satisfactory to Purchaser in its sole and absolute discretion, to
be sent to the related Mortgagor and other obligors under such Substitute
Eligible Asset, informing such Mortgagor of this Agreement and the Transactions
contemplated hereunder and under the other Transaction Documents with respect to
such Substitute Eligible Asset.

(J) Purchaser shall have received from Custodian on the Substitution Date an
Asset Schedule and Exception Report (as defined in the Custodial Agreement) with
respect to such Substitute Purchased Asset, dated the Substitution Date, duly
completed and with exceptions acceptable to Purchaser in its sole and absolute
discretion in respect of such Substitute Eligible Asset to be purchased
hereunder;

(K) Seller shall have taken such other action as Purchaser shall have requested
in its sole and absolute discretion in order to transfer the Substitute Eligible
Asset pursuant to this Agreement and to perfect all security interests granted
under this Agreement or any other Transaction Document in favor of Purchaser as
secured party under the UCC with respect to such Substitute Eligible Asset;

 

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(L) Purchaser shall have received copies of any and all consents and waivers
applicable to Seller or to the Substitute Eligible Asset; and

(M) Purchaser shall have received all such other and further documents,
documentation and legal opinions as Purchaser in its sole and absolute
discretion shall reasonably require.

With respect to each Transaction entered into in connection with a Substitute
Eligible Asset, the Pricing Rate applicable thereto shall be determined
initially on the date of substitution hereunder, and shall be reset on each
Pricing Rate Determination Date for the next succeeding Pricing Rate Period for
such Transaction. Purchaser or its agent shall determine in accordance with the
terms of this Agreement the Pricing Rate on each Pricing Rate Determination Date
for the related Pricing Rate Period and notify Seller of such rate for such
period on such Pricing Rate Determination Date.

(n) Purchaser shall earn a minimum yield under this Agreement (based solely on
the portion of the Purchase Price Differential that represents the Applicable
Spread accruing hereunder) at least equal to the Full Term Yield Target. In the
event that Seller repays the aggregate Adjusted Purchase Prices for all
Purchased Assets prior to Purchaser earning the Full Term Yield Target, Seller
shall pay to Purchaser the following amount (the “Make-Whole Amount”) necessary
to cause Purchaser to earn the Full Term Yield Target:

(i) except as provided below in sub-clause (ii) below, an amount equal to
(A) the Full Term Yield Target less (B) the portion of the aggregate Purchase
Price Differential representing Applicable Spread that has accrued and has been
paid by Seller in accordance with the Agreement; or

(ii) in connection with a repayment in full of the aggregate Adjusted Purchase
Prices for all Purchased Assets resulting from a Change of Control that occurs
within the first twenty-four (24) months following the Closing Date, an amount
equal to (A) if the repayment in full occurs within the first twelve (12) months
following the Closing Date, the product of (1) 2.00% multiplied by (2) the then
aggregate Repurchase Prices for all Purchased Assets, (B) if the repayment in
full occurs during the next twelve (12) months, the product of (1) 1.00%
multiplied by (2) the then aggregate Repurchase Prices for all Purchased Assets
or (C) if the repayment in full occurs after twenty-four (24) months, $0.

ARTICLE 4

ASSIGNED VALUE; MARGIN MAINTENANCE

(a) The initial Assigned Values for all Purchased Assets are set forth on
Schedule II hereto or, in the case of each Substitute Eligible Asset that
becomes a Purchased Asset hereunder, as set forth on the related Confirmation.
Upon the occurrence of a Assigned Value Event for a Purchased Asset or upon the
request of Seller, Purchaser shall re-determine the Assigned Value for such
Purchased Asset. In connection therewith, Purchaser shall order, at Seller’s
sole cost and expense, a New Appraisal for such Purchased Asset, and the
re-determined Assigned Value for such Purchased Asset shall be the lesser of
(x) the amount set forth in the

 

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New Appraisal (or in any case where the Purchased Asset does not represent 100%
of the beneficial interests in the entire related whole mortgage loan, such
Purchased Asset’s pro rata portion thereof) and (y) the outstanding principal
balance of such Purchased Asset pursuant to the Purchased Asset Documents (or in
any case where the Purchased Asset does not represent 100% of the beneficial
interests in the entire related whole mortgage loan, such Purchased Asset’s pro
rata portion thereof). Purchaser shall promptly (and in no event later than five
(5) Business Days after the Assigned Value for such Purchased Asset is
re-determined by Purchaser) deliver notice to Seller of the re-determined
Assigned Value for such Purchased Asset.

(b) If at any time the Margin Percentage is greater than or equal to the Margin
Cushion Percentage (a “Margin Deficit”), then Purchaser may, by notice to
Seller, require Seller to cure such Margin Deficit by, at Seller’s option,
(i) transferring cash to Purchaser in an amount equal to the Margin Deficit Cure
Amount, (ii) repurchasing one or more Purchased Assets in accordance with
Article 3(e) hereof to the extent necessary to cure such Margin Deficit,
(iii) transferring additional financial assets acceptable to Purchaser in its
sole and absolute discretion (“Additional Purchased Items”) in an amount
sufficient to cure such Margin Deficit or (iv) adding or substituting a
Substitute Eligible Asset in accordance with Article 3(m) hereof. In the event
that Seller transfers cash to Purchaser in accordance with sub-clause (i) of
this Article 4(b), unless otherwise agreed to by Purchaser and Seller, each
Purchased Asset’s Adjusted Purchase Price will be reduced by its pro rata
portion (based on its Percentage Interest) of any such Margin Deficit Cure
Amounts received by Purchaser in connection with the related Margin Deficit.

(c) If any notice is given by Purchaser under Article 4(b) of this Agreement on
any Business Day by the Margin Notice Deadline, then Seller shall, by no later
than 5:00 p.m. New York Time on the third (3rd) Business Day after receipt of
such notice, either (i) cure such Margin Deficit by transferring cash to
Purchaser in an amount equal to the Margin Deficit Cure Amount, (ii) cure such
Margin Deficit by repurchasing one or more Purchased Assets in accordance with
Article 3(e) hereof to the extent necessary to cure such Margin Deficit,
(iii) cure such Margin Deficit by transferring Additional Purchased Items to
Purchaser to the extent necessary to cure such Margin Deficit or (iv) deliver
notice, in good faith, to Purchaser that Seller intends to deliver a Substitute
Eligible Asset in accordance with Article 3(m) hereof. In the event that Seller
delivers notice to Purchaser pursuant to sub-clause (iv) of the immediately
preceding sentence, Seller shall complete such substitution within thirty
(30) days thereafter (unless Purchase agrees to a longer period of time in its
sole and absolute discretion) (the “Substitution Cut-Off Date”) and, if Seller
fails to complete such substitution prior to the Substitution Cut-Off Date, then
Seller shall, by no later than 5:00 p.m. New York Time on the third
(3rd) Business Day after the applicable Substitution Cut-Off Date, cure such
Margin Deficit by transferring cash to Purchaser in an amount equal to the
Margin Deficit Cure Amount. The failure of Purchaser, 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
Purchaser to do so a later date. Seller and Purchaser each agree that a failure
or delay by Purchaser to exercise its rights hereunder shall not limit or waive
Purchaser’s rights under this Agreement or otherwise existing by law or in any
way create additional rights for Seller.

 

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ARTICLE 5

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

(a) The Collection Account shall be established at the Account Bank pursuant to
the Account Control Agreement concurrently with the execution and delivery of
this Agreement by Seller and Purchaser. The Collection Account shall be subject
to the Account Control Agreement after the transfer thereof to the Account Bank
pursuant to Article 5(b) below. Prior to the date hereof, the Guarantor
established the Concentration Account pursuant to the Concentration Account
Agreement for the purpose of collection and concentrating certain remittances
and other income relating to securitization, financing or repurchase
transactions of the Guarantor or its Affiliates.

(b) All Income in respect of each Purchased Asset shall be remitted by Servicer
directly into the Concentration Account. In the event that Seller, Guarantor,
Servicer or any Affiliate of the foregoing, receives any such Income, such party
shall (and Servicer and Seller shall cause such party to) immediately remit such
Income to the Concentration Account within two (2) Business Days of receipt
thereof. In the event that the Concentration Account is terminated or ceases to
exist, all Income in respect of each Purchased Asset shall be remitted directly
into the Collection Account. Within two (2) Business Days after any Income in
respect of any Purchased Asset is deposited into the Concentration Account,
Seller and Servicer shall cause all such Income in respect of the Purchased
Assets, as well as any interest received from the reinvestment of such Income,
on deposit in the Concentration Account to be deposited directly from the
Concentration Account into the Collection Account in accordance with the
Concentration Account Agreement, this Agreement and the Interim Servicing
Agreement. All amounts on deposit in the Collection Account received by the
Account Bank during the related Collection Period shall be remitted by the
Account Bank in accordance with the applicable provisions of Articles 5(c) and
5(d) of this Agreement.

(c) So long as no Event of Default shall have occurred and be continuing, all
Income received by the Account Bank in respect of the Purchased Assets during
each Collection Period (net of fees and expenses then due and payable to the
Account Bank and the Custodian pursuant to the Account Control Agreement and the
Custodial Agreement, respectively) shall be applied by the Account Bank on the
related Remittance Date in the following order of priority:

(i) first, to Purchaser, to cure any outstanding Margin Deficits, up to the
amount of any outstanding Margin Deficit Cure Amounts, to reduce each Purchased
Asset’s Adjusted Purchase Price, pro rata (based on its Percentage Interest);

(ii) second, to Purchaser, to cure any outstanding Minimum Amortization Amounts
then due and payable, up to the amount of any Minimum Amortization Amounts, to
reduce each Purchased Asset’s Adjusted Purchase Price, pro rata (based on its
Percentage Interest);

(iii) third, to Purchaser, an amount equal to all accrued and unpaid Purchase
Price Differential as of such Remittance Date;

 

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(iv) fourth, to the extent Principal Payments are received for a particular
Purchased Asset, to Purchaser to reduce the Adjusted Purchase Price of such
Purchased Asset to zero;

(v) fifth, to the extent Principal Payments are received for a particular
Purchased Asset and the Adjusted Purchase Price for such Purchased Asset has
been reduced to zero, to Purchaser, in an amount necessary, if any, to reduce
the aggregate Adjusted Purchase Prices for all Purchased Assets to the Maximum
Quarterly Facility Balance for such Remittance Date (or, if no Minimum
Amortization Payment (if any) is scheduled to be due and payable on such
Remittance Date in accordance with the definition of Minimum Amortization
Payment, the next occurring Remittance Date on which a Minimum Amortization
Payment (if any) is scheduled to be due and payable in accordance with the
definition thereof), to reduce each Purchased Asset’s Adjusted Purchase Price,
pro rata (based on its Percentage Interest);

(vi) sixth, to the extent Principal Payments are received for a particular
Purchased Asset and the Adjusted Purchase Price for such Purchased Asset has
been reduced to zero and the aggregate Adjusted Purchase Prices for all
Purchased Assets is less than or equal to the Maximum Quarterly Facility Balance
for such Remittance Date (or, if no Minimum Amortization Payment (if any) is
scheduled to be due and payable on such Remittance Date in accordance with the
definition of Minimum Amortization Payment, the next occurring Remittance Date
on which a Minimum Amortization Payment (if any) is scheduled to be due and
payable in accordance with the definition thereof), to Purchaser, in an amount
equal to 40% of such Principal Payments, to reduce each Purchased Asset’s
Adjusted Purchase Price, pro rata (based on its Percentage Interest);

(vii) seventh, to Purchaser, an amount equal to any other amounts then due and
payable to Purchaser or its Affiliates under any Transaction Document; and

(viii) eighth, to Seller, the remainder, if any.

(d) If an Event of Default shall have occurred and be continuing, all Income
received by the Account Bank in respect of a Purchased Asset (net of fees and
expenses then due and payable to the Account Bank and the Custodian pursuant to
the Account Control Agreement and the Custodial Agreement, respectively) shall
be applied by the Account Bank on the Business Day next following the Business
Day on which such funds are deposited in the Collection Account in the following
order of priority:

(i) first, to Purchaser, an amount equal to all accrued and unpaid Purchase
Price Differential as of such Business Day;

(ii) second, to the extent Principal Payments are received for a particular
Purchased Asset, to Purchaser to reduce the Adjusted Purchase Price of such
Purchased Asset to zero;

(iii) third, to Purchaser, to reduce each Purchased Asset’s Adjusted Purchase
Price, pro rata (based on its Percentage Interest), to zero;

 

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(iv) fourth, to Purchaser, an amount equal to any other amounts then due and
payable to Purchaser or its Affiliates under any Transaction Document; and

(v) fifth, to Seller, the remainder, if any.

(e) Notwithstanding the insufficiency of the funds on deposit or otherwise
received in the Collection Account, Seller’s obligation to make the payments
required to be made under this Article 5 shall be absolute without regard to the
adequacy of available funds.

ARTICLE 6

SECURITY INTEREST

(a) Purchaser and Seller intend that the Transactions hereunder be sales to
Purchaser of the Purchased Assets and not loans from Purchaser to Seller secured
by the Purchased Assets. However, in order to preserve Purchaser’s rights under
this Agreement in the event that a court or other forum re-characterizes the
Transactions hereunder as loans and as security for the performance by Seller of
all of Seller’s obligations to Purchaser under the Transaction Documents and the
Transactions entered into hereunder, or in the event that a transfer of a
Purchased Asset is otherwise ineffective to effect an outright transfer of such
Purchased Asset to Purchaser, Seller hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under the
Purchased Items and the other Collateral (as defined below), whether now owned
or hereafter acquired, now existing or hereafter created and wherever located,
to Purchaser to secure the payment of the Repurchase Price on all Transactions
to which it is a party and all other amounts (including, without limitation, any
Make-Whole Amounts) owing by it to Purchaser hereunder and to the Custodian and
Account Bank under the Custodial Agreement and the Account Control Agreement,
including, without limitation, amounts owing pursuant to Purchaser under
Article 25 hereof and under the other Transaction Documents (collectively, the
“Repurchase Obligations”). Seller agrees to mark its books and records to
evidence the interests granted to Purchaser hereunder. For purposes of this
Agreement, “Collateral” shall mean:

(i) the Collection Account and all monies from time to time on deposit in the
Collection Account;

(ii) all monies from time to time on deposit in the Concentration Account to the
extent such monies constitute Income on the Purchased Assets;

(iii) the Purchased Items; and

(iv) any and all replacements, substitutions, distributions on, income relating
to or proceeds of any and all of the foregoing.

(b) Purchaser’s security interest in the Collateral shall terminate only upon
satisfaction of the Repurchase Obligations. Upon such satisfaction and upon
request by Seller, Purchaser shall deliver to Seller such UCC termination
statements and other release documents as may be commercially reasonable and
return the Purchased Assets to the Seller and reconvey the Purchased Items to
the Seller and release its security interest in the Collateral, such release to
be effective automatically without further action by any party. For purposes of
the grant of the

 

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security interest pursuant to this Article 6, this Agreement shall be deemed to
constitute a security agreement under the New York Uniform Commercial Code (the
“UCC”). Purchaser shall have all of the rights and may exercise all of the
remedies of a secured creditor under the UCC and the other laws of the State of
New York. In furtherance of the foregoing, (a) Purchaser, at Seller’s sole cost
and expense, as applicable, shall cause to be filed in such locations as may be
necessary to perfect and maintain perfection and priority of the security
interest granted hereby, UCC financing statements and continuation statements
(collectively, the “Filings”), and shall forward copies of such Filings to
Seller upon completion thereof, and (b) Seller shall from time to time take such
further actions as may be requested by Purchaser to maintain and continue the
perfection and priority of the security interest granted hereby (including
marking its records and files to evidence the interests granted to Purchaser
hereunder).

(c) Seller acknowledges that it has no rights to service the Purchased Assets
but only has rights as a party to the Interim Servicing Agreement. Without
limiting the generality of the foregoing and the grant of a security interest in
Article 6(a) hereof, and in the event that Seller is deemed by a court, other
forum or otherwise to retain any residual Servicing Rights (notwithstanding that
such Servicing Rights are Purchased Items hereunder), and for the avoidance of
doubt, Seller hereby acknowledges and agrees that the Servicing Rights
constitute Collateral hereunder for all purposes. The foregoing provision is
intended to constitute a security agreement or other arrangement or other credit
enhancement related to the Agreement and Transactions hereunder as defined under
Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.

ARTICLE 7

PAYMENT, TRANSFER AND CUSTODY

(a) On the Closing Date, ownership of the Purchased Asset and other Purchased
Items shall be transferred to Purchaser or its designee (including the
Custodian) against the simultaneous transfer of the related Purchase Price in
immediately available funds to an account of the Seller specified in the
Confirmation relating to such Transaction. On each Substitution Date, ownership
of the applicable Substitute Eligible Asset (which will become a Purchased Asset
hereunder) and the other related Purchased Items shall be transferred to
Purchaser or its designee (including the Custodian) against (x) the simultaneous
release of the Purchased Asset being substituted on such Substitution Date in
connection with such Transaction and (y) solely to the extent expressly
permitted pursuant to Article 3(m) hereof, against the simultaneous transfer of
the related Purchase Price in immediately available funds to an account of the
Seller specified in the Confirmation relating to such Transaction.

(b) On or before the Closing Date or, as applicable, the Substitution Date,
Seller shall deliver or cause to be delivered to Purchaser or its designee the
Custodial Delivery in the form attached to the Custodial Agreement as Annex 5.
Subject to Article 7(c), in connection with each sale, transfer, conveyance and
assignment of a Purchased Asset, on or prior to the Closing Date with respect to
such Purchased Asset, Seller shall deliver or cause to be delivered and released
to the Custodian an original (or, to the extent an original counterpart is not
required as specified on the related Custodial Delivery, copies of such
documents) of each document listed on Schedule III hereto (collectively, each a
“Closing Date Purchased Asset File”), pertaining to

 

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each Purchased Asset identified in the Custodial Delivery delivered therewith,
together with any other documentation in respect of such Purchased Asset
reasonably requested by Purchaser. Subject to Article 7(c), in connection with
each sale, transfer, conveyance and assignment of a Purchased Asset, on or prior
to a Substitution Date with respect to such Purchased Asset, Seller shall
deliver or cause to be delivered and released to the Custodian an original (or,
to the extent an original counterpart is not required as specified on the
related Confirmation, copies of such documents) of each document listed in the
related Confirmation (collectively, each a “Substitution Date Purchased Asset
File” and, together with each Closing Date Purchased Asset File, each a
“Purchased Asset File”), pertaining to each Purchased Asset identified in the
Custodial Delivery delivered therewith, together with any other documentation in
respect of such Purchased Asset reasonably requested by Purchaser.

(c) From time to time, Seller shall forward to the Custodian additional original
documents or additional documents evidencing any assumption, modification,
consolidation or extension of a Purchased Asset approved in accordance with the
terms of this Agreement, and upon receipt of any such other documents, the
Custodian shall hold such other documents as Purchaser shall request from time
to time (and Seller shall identify such documents with sufficient specificity as
to which Purchased Asset File such documents relate to). With respect to any
documents that have been delivered or are being delivered to recording offices
for recording and have not been returned to Seller in time to permit their
delivery hereunder at the time required, in lieu of delivering such original
documents, Seller shall deliver to Purchaser and Custodian a true copy thereof
with a certificate from an Authorized Representative of Seller certifying that
such copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to the
Custodian promptly when they are received. With respect to all of the Purchased
Assets delivered by Seller to Purchaser or its designee (including the
Custodian), the Seller shall execute a limited power of attorney substantially
in the form of Exhibit IV attached hereto irrevocably appointing Purchaser its
attorney-in-fact with full power to (i) complete the endorsements of the
Purchased Assets, including without limitation the Mortgage Notes and
Assignments of Mortgages and any transfer documents related thereto, (ii) record
the Assignments of Mortgages and other applicable assignment documents,
(iii) prepare and file, in form and substance reasonably satisfactory to
Purchaser, such financing statements, continuation statements, and other uniform
commercial code forms, as Purchaser may from time to time, reasonably consider
necessary to create, perfect, and preserve Purchaser’s security interest in the
Purchased Assets and (iv) enforce Seller’s rights under the Purchased Assets
purchased by Purchaser pursuant to this Agreement and to take such other steps
as may be necessary to enforce Purchaser’s rights against such Purchased Assets,
the related Purchased Asset Files and the Servicing Records to the extent that
Seller is permitted by law to act through an agent. Purchaser shall deposit the
Purchased Asset Files representing the Purchased Assets, or direct that the
Purchased Asset Files be deposited directly, with the Custodian. The Purchased
Asset Files shall be maintained by the Custodian in accordance with the
Custodial Agreement. Notwithstanding the terms of Article 8(b) below, if a
Purchased Asset File is not delivered to Purchaser or its designee (including
the Custodian), such Purchased Asset File shall be held in trust by the Seller
or its designee for the benefit of Purchaser as the owner thereof. Seller or its
designee shall maintain a copy of the Purchased Asset File and the originals of
the Purchased Asset File not delivered to Purchaser or its designee (including
the Custodian). The possession of the Purchased Asset File by Seller or its
designee is at the will of Purchaser for the sole purpose of servicing the
related Purchased Asset, and such

 

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retention and possession by Seller or its designee is in a custodial capacity
only. The books and records (including, without limitation, any computer records
or tapes) of Seller or its designee shall be marked appropriately to reflect
clearly the sale of the related Purchased Asset to Purchaser. Seller or its
designee (including the Custodian) shall release its custody of the Purchased
Asset File only in accordance with written instructions from Purchaser, unless
such release is required as incidental to the servicing of the Purchased Assets
(at the request of the Seller or Servicer with notice to the Purchaser), is in
connection with a repurchase of any Purchased Asset by Seller or as otherwise
required by law.

(d) Subject to the rights of Purchaser under Articles 10 and 27 hereof and under
the Interim Servicing Agreement (including, without limitation, all consent,
approval and consultation rights hereunder and thereunder), Purchaser hereby
grants to Seller a revocable option to exercise all voting and corporate rights
with respect to the Purchased Assets and to vote, take corporate actions and
exercise any rights in connection with the Purchased Assets, so long as no Event
of Default has occurred and is continuing. Such revocable option is not evidence
of any ownership or other interest or right of Seller in any Purchased Asset.
Upon the occurrence of an Event of Default, and subject to the provisions of the
Purchased Asset Documents, Purchaser shall be entitled to exercise all voting
and corporate rights with respect to the Purchased Assets without regard to the
Seller’s instructions (including, but not limited to, if an Act of Insolvency
shall occur with respect to Seller, to the extent Seller controls or is entitled
to control selection of any servicer, Purchaser may transfer any or all of such
servicing to an entity reasonably satisfactory to Purchaser).

(e) On the Closing Date and on each Substitution Date, Seller shall provide
evidence acceptable to Purchaser that Seller sent the related Borrower Notice to
each Mortgagor and other obligor for each related Purchased Asset purchased by
Purchaser on the Closing Date or Substitution Date, as applicable. Seller shall
use commercially reasonably efforts to obtain, within thirty (30) days of the
Closing Date or Substitute Date, as applicable, a written acknowledgment from
such Mortgagor and other obligor acknowledging receipt of such Borrower Notice.

ARTICLE 8

SALE OR TRANSFER

(a) Title to all Purchased Assets shall pass to Purchaser on the Closing Date
or, as applicable, the Substitution Date, and Purchaser shall have free and
unrestricted use of all Purchased Assets, subject, however, to the terms of this
Agreement.

(b) Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, no Purchased Asset shall remain in the custody of Seller
or any Affiliate of Seller.

 

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ARTICLE 9

REPRESENTATIONS AND WARRANTIES

(a) Each of Seller and Purchaser hereby represents and warrants (as to itself)
to the other that (i) it is duly authorized to execute and deliver this
Agreement, to enter into Transactions contemplated hereunder and to perform its
obligations hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (ii) it will engage in such Transactions as
principal, (iii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf (or on behalf of any such disclosed
principal), (iv) it has obtained all authorizations of any Governmental
Authority required in connection with this Agreement and the Transactions
hereunder and such authorizations are in full force and effect and (v) the
execution, delivery and performance of this Agreement and the Transactions
hereunder will not violate any Requirement of Law applicable to it or its
organizational documents or any agreement by which it is bound or by which any
of its assets are affected. On the Closing Date, each Substitution Date and at
all times while this Agreement and any Transaction thereunder is in effect,
Purchaser and Seller shall each be deemed to repeat all the foregoing
representations made by it under this Article 9(a).

(b) In addition to the representations and warranties in subsection (a) above,
Seller represents and warrants to Purchaser as of the date of this Agreement and
covenants that at all times while this Agreement and any Transaction thereunder
is in effect, unless otherwise stated herein:

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

(ii) Due Execution; Enforceability. The Transaction Documents have been or will
be duly executed and delivered by Seller, for good and valuable consideration.
The Transaction Documents constitute the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms
subject to bankruptcy, insolvency, and other limitations on creditors’ rights
generally and to equitable principles.

(iii) Ability to Perform. Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
the Transaction Documents applicable to it to which it is a party.

(iv) Non-Contravention. Neither the execution and delivery of the Transaction
Documents, nor consummation by Seller of the transactions contemplated by the
Transaction Documents (or any of them), nor compliance by Seller with the terms,
conditions and provisions of the Transaction Documents (or any of them) will
conflict with or result in a breach of any of the terms, conditions or
provisions of (i) the organizational documents of Seller, (ii) any contractual
obligation to which Seller is now

 

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a party or the rights under which have been assigned to Seller or the
obligations under which have been assumed by Seller or to which the assets of
Seller is subject or constitute a default thereunder, or result thereunder in
the creation or imposition of any lien upon any of the assets of Seller, other
than pursuant to the Transaction Documents, (iii) any judgment or order, writ,
injunction, decree or demand of any court applicable to Seller, or (iv) any
applicable Requirement of Law, in the case of clauses (ii) or (iii) above, to
the extent that such conflict or breach would have a Material Adverse Effect.
Seller has all necessary licenses, permits and other consents from Governmental
Authorities necessary to acquire, originate, own and sell the Purchased Assets
and for the performance of its obligations under the Transaction Documents.

(v) Litigation; Requirements of Law. As of the Closing Date, there is no action,
suit, proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened in writing against Servicer or Seller or any of
their respective assets, in each case that could reasonably be expected to
result in any Material Adverse Effect. Seller is in compliance in all material
respects with all Requirements of Law. As of the Closing Date, neither Seller
nor Servicer are in default in any material respect with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any arbitrator
or Governmental Authority that could reasonably be expected to result in any
Material Adverse Effect.

(vi) [reserved].

(vii) Good Title to Purchased Assets. Immediately prior to the purchase of any
Purchased Assets and other Purchased Items (or substitution of any Substitute
Eligible Asset as a Purchased Asset hereunder and other related Purchased Items)
by Purchaser from Seller, such Purchased Assets and other Purchased Items are
free and clear of any lien, encumbrance or impediment to transfer (including any
“adverse claim” as defined in Article 8-102(a)(1) of the UCC), and Seller is the
record and beneficial owner of and has good and marketable title to and the
right to sell (or, as applicable, substitute) and transfer such Purchased Assets
and other Purchased Items to Purchaser and, upon transfer of such Purchased
Assets and other Purchased Items to Purchaser, Purchaser shall be the owner of
such Purchased Assets and other Purchased Items free of any adverse claim. The
provisions of the Transaction Documents are effective to constitute a sale of
Purchased Assets and other Purchased Items to Purchaser. In the event the
related Transaction is recharacterized as a secured financing of the Purchased
Assets and other Purchased Items, the provisions of this Agreement are effective
to create in favor of Purchaser a valid “security interest” (as defined in
Section 1-201(b)(35) of the UCC) in all rights, title and interest of Seller in,
to and under the Collateral and Purchaser shall have a valid, perfected first
priority security interest in the Collateral (and without limitation on the
foregoing, Purchaser, as entitlement holder, shall have a “security entitlement”
to the Collateral, as applicable).

(viii) No Margin Deficit; No Defaults. To Seller’s knowledge, as of the Closing
Date, no Margin Deficit Exists and no Default or Event of Default has occurred
or exists under or with respect to the Transaction Documents.

 

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

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

(A) Seller has not assigned, pledged, or otherwise conveyed or encumbered any
Purchased Asset or other Purchased Item to any other Person.

(B) Each of the representations and warranties made in respect of the Purchased
Assets pursuant to Exhibit V are true, complete and correct in all material
respects, except to the extent disclosed by Seller in an exception report
attached hereto as Exhibit X delivered to Purchaser prior to the Closing Date
or, as applicable, prior to the Substitution Date.

(C) Upon the filing of financing statements on Form UCC-1 naming Purchaser as
“Secured Party”, Seller as “Debtor” and describing the Purchased Assets and
other Purchased Items, in the proper jurisdiction and recording office, the
security interests granted hereunder in that portion of the Purchased Assets and
other Purchased Items which can be perfected by filing under the UCC will
constitute fully perfected security interests under the UCC in all right, title
and interest of Seller in, to and under such Purchased Assets and other
Purchased Items.

(D) Upon execution and delivery of the Account Control Agreement, Purchaser
shall either be the owner of, or have a valid and fully perfected first priority
security interest in, the Collection Account and all monies or other “financial
assets” (as defined in the UCC) at any time credited thereto, respectively

(E) As of the Closing Date, the Purchased Asset Documents listed on Schedule V
hereto are a true, accurate and complete list, in all material respects, of the
underlying loan documents evidencing the related commercial mortgage loan which
contain all the material terms and conditions evidencing the rights and
obligations of the related Mortgagor (and any other obligor), the related
guarantor (if applicable), the related lender and the Administrative Agent (if
applicable) with respect to such Purchased Asset.

(xi) Adequate Capitalization; No Fraudulent Transfer. Seller has adequate
capital for the normal obligations foreseeable in a business of its size and
character and in light of its contemplated business operations. Seller is
generally able to pay, and as of the date hereof is paying, its debts as they
come due.

(xii) Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, or other action of, any Governmental Authority or any third party
is required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any

 

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Transaction Document to which Seller is or will be a party, (ii) the legality,
validity, binding effect or enforceability of any such Transaction Document
against Seller or (iii) the consummation of the transactions contemplated by
this Agreement (other than the filing of certain financing statements in respect
of certain security interests).

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

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

(xv) Federal Regulations. Seller is not required to register as an “investment
company,” or a company “controlled by an investment company,” within the meaning
of the Investment Company Act of 1940, as amended. Seller is not a “holding
company,” or a “subsidiary company of a holding company,” or an “affiliate” of
either a “holding company” or a “subsidiary company of a holding company,” as
such terms are defined in the Public Utility Holding Company Act of 2005, as
amended.

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

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

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

(xix) Solvency. Neither the Transaction Documents nor any Transaction thereunder
are entered into in contemplation of insolvency or with intent to hinder, delay
or defraud any of Seller’s creditors. The transfer of the Purchased Assets
subject hereto and the obligation to repurchase such Purchased Assets is not
undertaken with the intent to hinder, delay or defraud any of Seller’s
creditors. Seller is not insolvent within the meaning of 11 U.S.C.
Section 101(32) or any successor provision thereof and the transfer

 

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and sale of the Purchased Assets pursuant hereto and the obligation to
repurchase such Purchased Asset (i) will not cause the liabilities of Seller to
exceed the assets of Seller, (ii) will not result in Seller having unreasonably
small capital, and (iii) will not result in debts that would be beyond Seller’s
ability to pay as the same mature. Seller received reasonably equivalent value
in exchange for the transfer and sale of the Purchased Assets and the Purchased
Items subject hereto. No petition in bankruptcy has been filed against Seller in
the last ten (10) years, and Seller has not in the last ten (10) years made an
assignment for the benefit of creditors or taken advantage of any debtors relief
laws. Seller has only entered into agreements on terms that would be considered
arm’s length and otherwise on terms consistent with other similar agreements
with other similarly situated entities.

(xx) Use of Proceeds; Margin Regulations. All proceeds of each Transaction shall
be used by Seller for purposes permitted under Seller’s governing documents,
provided that no part of the proceeds of any Transaction will be used by Seller
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. Neither the entering into of
any Transaction nor the use of any proceeds thereof will violate, or be
inconsistent with, any provision of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

(xxi) Full and Accurate Disclosure. No information contained in the Transaction
Documents, or any written statement furnished by or on behalf of Seller pursuant
to the terms of the Transaction Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.

(xxii) Financial Information. All financial data concerning Seller, the
Purchased Assets and the other Purchased Items prepared by, or on behalf of,
Seller, Guarantor or Servicer that has been delivered by or on behalf of Seller
to Purchaser is true, complete and correct in all material respects, and all
other financial data concerning the Purchased Assets and the other Purchased
Items delivered by, or on behalf of, Seller to Purchaser is, to Seller’s
knowledge, true, complete and correct in all material respects. All financial
data concerning Seller has been prepared fairly in accordance with GAAP. Since
the delivery of such data, except as otherwise disclosed in writing to
Purchaser, there has been no change in the financial position of Seller or in
the results of operations of Seller, or to Seller’s knowledge, the Purchased
Assets or other Purchased Items, which change is reasonably likely to have a
Material Adverse Effect on Seller.

(xxiii) [reserved].

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

 

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(xxv) Patriot Act.

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

(B) Seller agrees that, from time to time upon the prior written request of
Purchaser, it shall (i) execute and deliver such further documents, provide such
additional information and reports and perform such other acts as Purchaser may
reasonably request in order to insure compliance with the provisions hereof
(including, without limitation, compliance with the USA Patriot Act of 2001 and
to fully effectuate the purposes of this Agreement and (ii) provide such
opinions of counsel concerning matters relating to this Agreement as Purchaser
may reasonably request; provided, however, that nothing in this Article
9(b)(xxv) shall be construed as requiring Purchaser to conduct any inquiry or
decreasing Seller’s responsibility for its statements, representations,
warranties or covenants hereunder. In order to enable Purchaser and its
Affiliates to comply with any anti-money laundering program and related
responsibilities including, but not limited to, any obligations under the USA
Patriot Act of 2001 and regulations thereunder, Seller on behalf of itself and
its Affiliates makes the following representations and covenants to Purchaser
and its Affiliates (for purposes of this Article 9(b)(xxv), the “Seller
Entities”) that Seller, or, to Seller’s actual knowledge, any of its Affiliates,
is not a Prohibited Investor, and Seller is not acting on behalf of or for the
benefit of any Prohibited Investor. Seller agrees to promptly notify Purchaser
or a person appointed by Purchaser to administer their anti-money laundering
program, if applicable, of any change in information affecting this
representation and covenant.

(xxvi) Environmental Matters.

(A) To Seller’s knowledge, no properties owned or leased by Seller and no
properties formerly owned or leased by Seller, its predecessors, or any former
Subsidiaries or predecessors thereof (the “Properties”), contain, or have
previously contained, any Materials of Environmental Concern in amounts or
concentrations which constitute or constituted a violation of, or reasonably
could be expected to give rise to liability under, Environmental Laws;

 

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(B) To Seller’s knowledge, Seller is in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Laws which
reasonably would be expected to interfere with the continued operations of
Seller;

(C) Seller has not received any notice of violation, alleged violation,
non-compliance, liability or potential liability under any Environmental Law,
nor does Seller have knowledge that any such notice will be received or is being
threatened;

(D) To Seller’s knowledge, Materials of Environmental Concern have not been
transported or disposed by Seller in violation of, or in a manner or to a
location which reasonably would be expected to give rise to liability under, any
applicable Environmental Law, nor has Seller generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that reasonably would be expected to give rise to liability under, any
applicable Environmental Law;

(E) No judicial proceedings or governmental or administrative action is pending,
or, to the knowledge of Seller, threatened, under any Environmental Law which
Seller is or will be named as a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements arising out of judicial proceedings or
governmental or administrative actions, outstanding under any Environmental Law
to which Seller is a party;

(F) To Seller’s knowledge, there has been no release or threat of release of
Materials of Environmental Concern in violation of or in amounts or in a manner
that reasonably would be expected to give rise to liability under any
Environmental Law for which Seller may become liable; and

(G) To Seller’s knowledge, each of the representations and warranties set forth
in the preceding clauses (A) through (F) is true and correct with respect to
each parcel of real property owned or operated by Seller.

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

(xxviii) Office of Foreign Assets Control. Seller is not a person (i) whose
property or interest in property is blocked or subject to blocking pursuant to
Section 1 of

 

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Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or transactions
prohibited by Section 2 of such executive order, or to the best of Seller’s
knowledge, is otherwise associated with any such person in any manner in
violation of Section 2 of such executive order, or (iii) on the current list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

(xxix) Notice Address; Jurisdiction of Organization. On the date of this
Agreement, Seller’s address for notices is as specified on Schedule I. Seller’s
jurisdiction of organization is Delaware. The location where Seller keeps its
books and records, including all computer tapes and records relating to the
Collateral and Purchased Items, is its notice address. Seller may change its
address for notices and for the location of its books and records by giving
Purchaser written notice of such change.

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

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

ARTICLE 10

NEGATIVE COVENANTS OF SELLER

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

(a) take any action that would directly or indirectly impair or adversely affect
Purchaser’s title to the Purchased Assets and the other Purchased Items;

(b) transfer, assign, convey, grant, bargain, sell, set over, deliver or
otherwise dispose of, or pledge or hypothecate, directly or indirectly, any
interest in the Purchased Assets or other Purchased Items to any Person other
than Purchaser, or engage in repurchase transactions or similar transactions
with respect to the Purchased Assets or any other Purchased Items with any
Person other than Purchaser;

(c) create, incur, assume or suffer to exist any Lien, encumbrance or security
interest in or on any of its property, assets, revenue, the Purchased Assets,
the other Collateral or Purchased Items, whether now owned or hereafter
acquired, other than the Liens and security interest granted by Seller pursuant
to the Transaction Documents;

 

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(d) create, incur, assume or suffer to exist any Indebtedness or other
obligation, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation (except as otherwise permitted under this
Agreement);

(e) permit (through the giving of consent, waiver, failure to object or
otherwise) any Mortgaged Property or Mortgagor to create, incur, assume or
suffer to exist any Liens or Indebtedness (in each case, unless expressly
permitted by the applicable Purchased Asset Documents and excluding
non-consensual Liens against the related Mortgaged Property);

(f) enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution), sell all or substantially all of its assets without the consent of
Purchaser in its sole and absolute discretion;

(g) consent or assent to any amendment, modification, waiver or supplement to,
or termination of, any note, loan agreement, mortgage or guarantee relating to
the Purchased Assets or other agreement or instrument relating to the Purchased
Assets, or consent or assent to any other action with respect to the Purchased
Assets, the related Purchased Asset Documents, the related Mortgaged Property or
related Mortgagor other than in accordance with Section 2.03 of the Interim
Servicing Agreement;

(h) permit the organizational documents or organizational structure of Seller to
be amended without the prior written consent of Purchaser in its sole and
absolute discretion;

(i) permit a Change of Control of Seller;

(j) after the occurrence and during the continuance of a Default or an Event of
Default, make any distribution, payment on account of, or set apart assets for,
a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any Capital Stock of Seller, whether no or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Seller;

(k) [reserved];

(l) [reserved];

(m) acquire or maintain any right or interest in any Purchased Asset that is
senior to or pari passu with the rights and interests of Purchaser therein under
this Agreement and the other Transaction Documents;

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

 

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(o) permit the Concentration Account Agreement to be amended or the
Concentration Account to be terminated in any way that could reasonably be
expected to result in a Material Adverse Effect.

ARTICLE 11

AFFIRMATIVE COVENANTS OF SELLER

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

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

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

(d) Seller shall notify Purchaser, the Account Bank, the Servicer and the
Account Custodian of the occurrence of any Default or Event of Default with
respect to Seller as soon as possible but in no event later than the immediately
succeeding Business Day after obtaining actual knowledge of such event.

(e) Seller shall promptly (and in any event not later than two (2) Business Days
following receipt) deliver to Purchaser: (i) any notice of the occurrence of an
event of default under, or report received by Seller pursuant to, the Purchased
Asset Documents; (ii) any notice of transfer of servicing under the Purchased
Asset Documents; (iii) any request, notice or other relevant information that
relates to a Major Decision hereunder; and (iv) any other information with
respect to the Purchased Assets that may be reasonably requested by Purchaser
from time to time. Seller shall promptly (and in any event not later than two
(2) Business Days after knowledge thereof, notify Purchaser: (i) of any default
or event of default under any Purchased Asset; (ii) any default or event of
default (or similar event) on the part of Seller, Servicer or Guarantor under
any Indebtedness or other contractual obligations; and (iii) of the commencement
of, settlement of or judgment in any litigation, action, suit, arbitration,
investigation or other legal or arbitrable proceeding involving the Seller, the
Servicer or the Guarantor.

(f) Subject to Article 26 hereof, Seller will permit Purchaser or its designated
agents or representative to inspect Seller’s records with respect to the
Collateral and the Purchased Items and the conduct and operation of its business
related thereto upon reasonable prior written notice from Purchaser or its
designated representative, during normal business hours and at such reasonable
times, and to make copies of extracts of any and all thereof, subject to the
terms of any confidentiality agreement between Purchaser and Seller.

 

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

(h) At any time from time to time upon the reasonable request of Purchaser, at
the sole expense of Seller, Seller will promptly and duly execute and deliver
such further instruments and documents and take such further actions as
Purchaser may deem reasonably necessary to (i) obtain or preserve the security
interest granted hereunder, (ii) ensure that such security interest remains
fully perfected at all times and remains at all times first in priority as
against all other creditors of Seller (whether or not existing as of the Closing
Date or in the future) and (iii) obtain or preserve the rights and powers herein
granted (including, among other things, filing such UCC financing statements as
Purchaser may request). If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note, other
instrument or certificated security, such note, instrument or certificated
security shall be promptly delivered to Purchaser, duly endorsed in a manner
reasonably satisfactory to Purchaser, to be itself held as Collateral pursuant
to the Transaction Documents.

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

(i) Purchased Asset Information. Without limiting any of Seller’s other
obligations under this Agreement (including, without limitation, any other
notice requirements under this Article 11), Seller shall grant Purchaser access
to a data room on Seller’s website (or any website provided by or on behalf of
Seller), which data room shall be updated monthly (by no later than the 10th
calendar day of each calendar month) to include copies of all amendments to any
Purchased Asset Document and any required reports, operating statements, rent
rolls, financial statements, certificates and notices it receives (or Guarantor
or Servicer receives) pursuant to any Purchased Asset Document relating to any
Purchased Asset;

(ii) Concentration Account. Seller shall provide to Purchaser, within two
(2) Business Days after receipt thereof, copies of all notices it receives
pursuant to the Concentration Account Agreement;

(iii) Annual Reporting. Seller shall provide, within ninety (90) days after the
end of each fiscal year of Seller and Guarantor, (A) an unaudited balance sheet
for Seller

 

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together with the related statements of income, retained earnings, stockholder’s
equity and cash flows for such year and (B) an audited balance sheet for
Guarantor together with the related audited statements of income, retained
earnings, stockholder’s equity and cash flows for such year, on a consolidated
basis, which audited statements shall be accompanied by an opinion thereon of
independent certified public accountants of recognized national standing, which
opinion shall not be qualified as to scope of audit or going concern and shall
state that said financial statements fairly present the financial condition and
results of operations of Guarantor as at the end of and for such fiscal year in
accordance with GAAP; and

(iv) Quarterly Compliance Certificate. Seller shall, within forty-five (45) days
after each of March 31st, June 30th, September 30th and December 31st of each
year, provide (or cause to be provided) to Purchaser an officer’s certificate
from a Responsible Officer of Guarantor certifying that (A) Guarantor, Seller
and Servicer are in compliance, in all material respects, with all terms,
conditions and requirements of this Agreement and the other Transaction
Documents applicable to Guarantor, Seller and Servicer and (B) no Default or
Event of Default exists (or if a Default or Event of Default does exist,
specifying the cause of such event with particularity). Concurrently with the
delivery of such certificate, Seller shall deliver an updated Purchased Asset
Servicer Report for each Purchased Asset, in the form attached hereto as Exhibit
IX, certified by Guarantor that such Purchased Asset Servicer Report is true,
accurate and complete in all material respects.

(j) [reserved].

(k) Subject to Article 28, Seller shall make all Future Advances as and when
required under the Purchased Asset Documents for each Future Advance Asset.

(l) Seller shall make a representative available to Purchaser from time to time
for participation at a telephone conference, the date of which to be mutually
agreed upon by Purchaser and Seller, regarding the status of each Purchased
Asset, Seller’s compliance with the requirements of Articles 11 and 12, and any
other matters relating to the Transaction Documents or Transactions that
Purchaser reasonably wishes to discuss with Seller.

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

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

 

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(o) Seller shall observe, perform and satisfy, in all material respects, all the
terms, provisions, covenants and conditions required to be observed, performed
or satisfied by it, and shall pay when due all costs, fees and expenses required
to be paid by it, under the Transaction Documents. Seller shall pay and
discharge all taxes, levies, liens and other charges on its assets and on the
Collateral that, in each case, in any manner would create any lien or charge
upon the Collateral, other than any such taxes that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided in accordance with GAAP.

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

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

(r) Seller shall:

(i) continue to engage in business of the same general type as now conducted by
it or otherwise as approved by Purchaser prior to the date hereof;

(ii) not (a) cause or permit any change to be made in its name, organizational
identification number, identity or corporate structure or (b) change its
jurisdiction of organization, unless it shall have provided Purchaser thirty
(30) days’ prior written notice of such change and shall have first taken all
action Purchaser reasonably deems necessary for the purpose of perfecting or
protecting the lien and security interest of Purchaser established hereunder;
and

(iii) pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its Property prior
to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained.

(s) Seller shall be solely responsible for the fees and expenses of the
Custodian, Account Bank and Servicer.

 

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ARTICLE 12

SINGLE PURPOSE ENTITY

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

(a) Seller shall own no assets, and shall not engage in any business, other than
the assets and transactions specifically contemplated by this Agreement and any
other Transaction Document;

(b) Seller shall not make any loans or advances to any Affiliate or third party
and shall not acquire obligations or securities of its Affiliates;

(c) Seller shall pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) only from its own assets;

(d) Seller shall comply with the provisions of its organizational documents;

(e) Seller shall do all things necessary to observe organizational formalities
and to preserve its existence;

(f) Seller shall maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates (except that such financial
statements may be consolidated to the extent consolidation is required under
GAAP or as a matter of Requirements of Law; provided, that (i) appropriate
notation shall be made on such financial statements to indicate the separateness
of the Seller from such Affiliate and to indicate that the Seller’s assets and
credit are not available to satisfy the debts and other obligations of such
Affiliate or any other Person and (ii) such assets shall also be listed on the
Seller’s own separate balance sheet) and file its own tax returns (except to the
extent consolidation is required or permitted under Requirements of Law);

(g) Seller shall be, and at all times shall 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, and shall not identify
itself or any of its Affiliates as a division of the other;

(h) Seller shall 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 and shall remain solvent;

(i) Seller shall not commingle its funds or other assets with those of any
Affiliate or any other Person and shall maintain its properties and assets in
such a manner that it would not be costly or difficult to identify, segregate or
ascertain its properties and assets from those of others;

(j) Seller shall maintain its properties, assets and accounts separate from
those of any Affiliate or any other Person;

 

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(k) Seller shall not hold itself out to be responsible for the debts or
obligations of any other Person;

(l) Seller shall not, without the prior unanimous written consent of all of its
Independent Managers, take any action that will result in an Act of Insolvency;

(m) Seller shall, at all times, have at least one (1) Independent Manager;

(n) Seller’s organizational documents shall provide (i) that Purchaser be given
at least two (2) Business Days prior notice of the removal and/or replacement of
any Independent Manager, together with the name and contact information of the
replacement Independent Manager and evidence of the replacement’s satisfaction
of the definition of Independent Manager and (ii) that any Independent Manager
of Seller shall not have any fiduciary duty to anyone including the holders of
the equity interest in Seller and any Affiliates of Seller except Seller and the
creditors of Seller with respect to taking of, or otherwise voting on, any Act
of Insolvency; provided, that the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing;

(o) Seller shall not enter into any transaction with an Affiliate of the Seller
except on commercially reasonable terms similar to those available to
unaffiliated parties in an arm’s length transaction;

(p) Seller shall maintain a sufficient number of employees in light of
contemplated business operations;

(q) Seller shall use separate stationary, invoices and checks bearing its own
name, and (t) allocate fairly and reasonably any overhead for shared office
space and for services performed by an employee of an Affiliate;

(r) Seller shall not pledge its assets to secure the obligations of any other
Person; and

(s) Seller shall not form, acquire or hold any Subsidiary or own any equity
interest in any other entity.

ARTICLE 13

EVENTS OF DEFAULT; REMEDIES

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

(i) Seller shall fail to repurchase Purchased Assets upon the applicable
Repurchase Date;

(ii) Purchaser shall fail to receive on any Remittance Date the accrued and
unpaid Purchase Price Differential, any scheduled payment (whether full or
partial) of the Adjusted Purchase Price for a Purchased Asset in accordance with
Article 5 hereof or any Minimum Amortization Payment (in each case, including,
without limitation, in the event

 

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the Income paid or distributed on or in respect of the Purchased Assets is
insufficient to make such payment and Seller does not make such payment or cause
such payment to be made);

(iii) Seller shall fail to cure any Margin Deficit within the period specified
in Article 4;

(iv) Seller shall fail to make any payment not otherwise enumerated that is
owing to Purchaser that has become due, whether by acceleration or otherwise,
which failure is not remedied within three (3) business days of notice thereof;

(v) Seller shall fail to make any Future Advance as and when required under the
Purchased Asset Documents for each Future Advance Asset, which failure is not
remedied within the period of time required thereunder;

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

(vii) Seller or Guarantor shall admit to any Person its inability to, or its
intention not to, perform any of its respective obligations under any
Transaction Document;

(viii) any Transaction Document or a replacement therefor acceptable to
Purchaser shall for whatever reason be terminated or cease to be in full force
and effect, or the enforceability of any material provision thereof shall be
contested by Seller, Guarantor or Servicer;

(ix) Seller or Guarantor shall be in continuing default under (i) any
Indebtedness of Seller or Guarantor, as applicable, which default (1) involves
the failure to pay a matured obligation in excess of $500,000, with respect to
Seller or $5,000,000 with respect to Guarantor or (2) permits the acceleration
of the maturity of obligations by any other party to or beneficiary with respect
to such Indebtedness, if the aggregate amount of the Indebtedness in respect of
which such default or defaults shall have occurred is at least $500,000, with
respect to Seller or $5,000,000, with respect to Guarantor; or (ii) any other
material contract to which Seller or Guarantor is a party 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
of such contract if the aggregate amount of such obligations is $500,000, with
respect to Seller or $5,000,000, with respect to Guarantor;

(x) (A) Seller or an ERISA Affiliate shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan that is not exempt from such Sections of ERISA and the
Internal Revenue Code, (B) any material “accumulated funding deficiency” (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of Seller or any ERISA Affiliate, (C) a Reportable Event (as
referenced in Section 4043(b)(3) of ERISA) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which Reportable Event or

 

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commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of Purchaser, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (D) any Plan shall terminate for purposes of
Title IV of ERISA, or (E) Seller or any ERISA Affiliate shall, or in the
reasonable opinion of Purchaser is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan; and in each case in clauses (A) through (E) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect;

(xi) either (A) the Transaction Documents shall for any reason not cause, or
shall cease to cause, Purchaser to be the owner free of any adverse claim of any
of the Purchased Assets and other Purchased Items, and such condition is not
cured by Seller within five (5) Business Days after the earlier of receipt of
notice thereof from Purchaser to Seller or actual knowledge thereof of Seller
(provided, if such condition cannot be cured within such five (5) Business Day
period and Seller is diligently pursuing the same, Seller shall have such
additional amount of time commercially reasonably necessary to cure the same
(not to exceed an additional fifteen (15) Business Days)), or (B) if a
Transaction is recharacterized as a secured financing, and the Transaction
Documents with respect to any Transaction shall for any reason cease to create
and maintain a valid first priority security interest in favor of Purchaser in
any of the Collateral;

(xii) any governmental, regulatory, or self regulatory authority shall have
taken any action to remove, limit, restrict, suspend or terminate the rights,
privileges, or operations of Seller or Guarantor, which suspension has a
Material Adverse Effect in the determination of Purchaser;

(xiii) Guarantor and its Subsidiaries, on a consolidated basis, shall fail to
have a Tangible Net Worth at least equal to the Minimum Tangible Net Worth
Amount as required under the Guarantee Agreement;

(xiv) a Change of Control, without the consent of Purchaser, shall occur with
respect to Seller;

(xv) [reserved];

(xvi) any representation made by Seller to Purchaser (other than the
representation made in Article 9(b)(x)(E) hereof) shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been made
or repeated;

(xvii) a final non appealable judgment by any competent court in the United
States of America for the payment of money (a) rendered against Seller in an
amount greater than $500,000 or (b) rendered against Guarantor in an amount
greater than $5,000,000, and remained undischarged or unpaid for a period of
sixty (60) days, during which period execution of such judgment is not
effectively stayed by bonding over or other means acceptable to Purchaser;

(xviii) if Seller shall breach or fail to perform any of the terms, covenants,
obligations or conditions under this Agreement, other than as specifically
otherwise

 

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referred to in this definition of “Event of Default”, and such breach or failure
to perform is not remedied within the earlier of thirty (30) days after
(a) receipt of notice thereof by Seller from Purchaser, or (b) actual knowledge
on the part of Seller of such breach or failure to perform; provided, that if
such breach or failure to perform is curable by Seller but cannot be reasonably
cured within such thirty (30) day period, Seller shall have such additional
amount of time as is reasonably necessary to cure such breach or failure to
perform (not to exceed sixty (60) days or such longer period of time as approved
by Purchaser in its sole and absolute discretion).

(xix) the breach by Guarantor of any term or condition set forth in the
Guarantee Agreement or of any representation, warranty, certification or
covenant made or deemed made in the Guarantee Agreement by Guarantor or if any
certificate furnished by Guarantor to Purchaser pursuant to the provisions
hereof or thereof or any information with respect to the Purchased Assets
furnished in writing on behalf of Guarantor shall prove to have been false or
misleading in any respect as of the time made or furnished;

(xx) the breach by Servicer of any term or condition set forth in the Interim
Servicing Agreement or of any representation, warranty, certification or
covenant made or deemed made in the Interim Servicing Agreement by Servicer or
if any certificate furnished by Servicer to Purchaser pursuant to the provisions
hereof or thereof or any information with respect to the Purchased Assets
furnished in writing on behalf of Servicer shall prove to have been false or
misleading in any respect as of the time made or furnished; and

(xxi) Guarantor resigns or otherwise fails to be the sole Administrative Agent
for all Purchased Assets in accordance with the related Purchased Asset
Documents.

(b) After the occurrence and during the continuance of an Event of Default and
for purposes of each limited power of attorney (in the form attached hereto as
Exhibit IV) executed and delivered in connection with each Transaction, Seller
hereby appoints Purchaser as attorney-in-fact of Seller for the purpose of
carrying out the provisions of this Agreement and taking any action specified in
such limited power of attorney, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. If an Event of Default shall occur and
be continuing with respect to Seller, the following rights and remedies shall be
available to Purchaser:

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

(ii) If Purchaser exercises or is deemed to have exercised the option referred
to in Article 13(b)(i) of this Agreement:

(A) Seller’s obligations hereunder to repurchase all Purchased Assets shall
become immediately due and payable on and as of the Accelerated

 

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Repurchase Date (provided, that Purchaser may not exercise its rights under
Article 13(b)(iii), (vi), (vii) and (viii) below until five (5) days after
receipt by Seller of written notice of the Accelerated Repurchase Date); and

(B) to the extent permitted by applicable law, the Repurchase Price with respect
to each Transaction (determined as of the Accelerated Repurchase Date) shall be
increased by the aggregate amount obtained by daily application of, on a 360 day
per year basis for the actual number of days during the period from and
including the Accelerated Repurchase Date to but excluding the date of payment
of the Repurchase Price (as so increased), (x) the Pricing Rate for such
Transaction multiplied by (y) the Repurchase Price for such Transaction
(decreased by (I) any amounts actually remitted to Purchaser by the Account Bank
or Seller from time to time pursuant to Article 5 of this Agreement and applied
to such Repurchase Price, and (II) any amounts applied to the Repurchase Price
pursuant to Article 13(b)(iii) of this Agreement); and

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

(iii) Upon the occurrence of an Event of Default with respect to Seller and
after Purchaser exercises or is deemed to exercise the option referred to in
Article 13(b)(i) of this Agreement, Purchaser may, from and after five (5) days
following receipt by Seller of written notice of the Accelerated Repurchase Date
and provided Seller has not paid to Purchaser the aggregate Repurchase Price for
all Purchased Assets, (A) immediately sell, at a public or private sale in a
commercially reasonable manner and at such price or prices as Purchaser may deem
satisfactory any or all of the Purchased Assets, and/or (B) in its sole and
absolute discretion elect, in lieu of selling all or a portion of such Purchased
Assets, to give Seller credit for such Purchased Assets in an amount equal to
the Market Value of such Purchased Assets against the aggregate unpaid
Repurchase Price for such Purchased Assets and any other amounts owing by Seller
under the Transaction Documents. The proceeds of any disposition of Purchased
Assets effected pursuant to this Article 13(b)(iii) shall be applied, (w) first,
to the costs and expenses incurred by Purchaser in connection with Seller’s
default; (x) second, to actual, out-of-pocket damages incurred by Purchaser in
connection with Seller’s default, (y) third, to the Repurchase Price; and
(z) fourth, to return any excess to Seller.

(iv) The parties acknowledge and agree that (1) the Purchased Assets subject to
any Transaction hereunder are not instruments traded in a recognized market,
(2) in the absence of a generally recognized source for prices or bid or offer
quotations for any Purchased Asset, the Purchaser may establish the source
therefor in its sole and absolute discretion and (3) all prices, bids and offers
shall be determined together with accrued Income (except to the extent contrary
to market practice with respect to the relevant Purchased Assets). The parties
recognize that it may not be possible to purchase or sell all of the Purchased
Assets on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Assets
may not be liquid. In view of the nature of the Purchased Assets, the parties
agree that liquidation

 

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of a Transaction or the Purchased Assets does not require a public purchase or
sale and that a good faith private purchase or sale shall be deemed to have been
made in a commercially reasonable manner. Accordingly, Purchaser may elect, in
its sole and absolute discretion, the time and manner of liquidating any
Purchased Assets, and nothing contained herein shall (A) obligate Purchaser to
liquidate any Purchased Assets on the occurrence and during the continuance of
an Event of Default or to liquidate all of the Purchased Assets in the same
manner or on the same Business Day or (B) constitute a waiver of any right or
remedy of Purchaser.

(v) [reserved].

(vi) Purchaser shall have, in addition to its rights and remedies under the
Transaction Documents, all of the rights and remedies provided by applicable
federal, state, foreign (where relevant), and local laws (including, without
limitation, if the Transactions are recharacterized as secured financings, the
rights and remedies of a secured party under the UCC, to the extent that the UCC
is applicable, and the right to offset any mutual debt and claim), in equity,
and under any other agreement between Purchaser and Seller. Without limiting the
generality of the foregoing, Purchaser shall be entitled to set off the proceeds
of the liquidation of the Purchased Assets against all of Seller’s obligations
to Purchaser under this Agreement, without prejudice to Purchaser’s right to
recover any deficiency.

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

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

(c) Without limiting the foregoing, in the event that, with respect to any
Purchased Asset, the representation made by Seller to Purchaser pursuant to
Article 9(b)(x)(E) shall have been incorrect or untrue in any material respect
when made (a “Document Rep Breach”), the Repurchase Price for such Purchased
Asset shall, at the option of Purchaser upon ten (10) Business Days notice to
Seller, be immediately due and payable and the Repurchase Date for such
Purchased Asset shall, if it has not already occurred, be deemed immediately to
occur (the date on which such option is exercised by Purchaser being referred to
hereinafter as the “Document Rep Breach Repurchase Date”). If Seller fails to
pay the Repurchase Price for such Purchased Asset on or before the Document Rep
Breach Repurchase Date, such failure shall be an Event of Default under this
Agreement.

 

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ARTICLE 14

SINGLE AGREEMENT

Purchaser and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Purchaser and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.

ARTICLE 15

INTENTIONALLY OMITTED

ARTICLE 16

NOTICES AND OTHER COMMUNICATIONS

Unless otherwise provided in this Agreement, all notices, consents, approvals
and requests required or permitted hereunder shall be given in writing and shall
be effective for all purposes if sent by (a) hand delivery, with proof of
delivery, (b) certified or registered United States mail, postage prepaid,
(c) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of delivery, (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a), (b) or (c) above OR (e) by electronic mail
provided that such electronic mail notice must also be delivered by one of the
means set forth in (a), (b) or (c) above, to the address specified in Schedule I
hereto or at such other address and person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Article 16. A notice shall be
deemed to have been given: (v) in the case of hand delivery, at the time of
delivery, (w) in the case of registered or certified mail, when delivered,
(x) in the case of expedited prepaid delivery upon delivery, (y) in the case of
telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Article 16 or (z) in
the case of electronic mail, upon receipt of a verbal or electronic
communication confirming receipt thereof, provided that such electronic mail
notice was also delivered as required in this Article 16. A party receiving a
notice that does not comply with the technical requirements for notice under
this Article 16 may elect to waive any deficiencies and treat the notice as
having been properly given.

 

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ARTICLE 17

ENTIRE AGREEMENT; SEVERABILITY

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

ARTICLE 18

NON-ASSIGNABILITY

Seller may not assign any of its rights or obligations under this Agreement
without the prior written consent of Purchaser and any attempt by Seller to
assign any of its rights or obligations under this Agreement without the prior
written consent of Purchaser shall be null and void. Prior to an Event of
Default, Purchaser may, with the consent of Seller (which consent shall not be
unreasonably withheld, conditioned or delayed, unless such proposed Transferee
is a Prohibited Transferee), sell to one or more banks, financial institutions
or other entities (“Participants”) participating interests under this Agreement
and the other Transaction Documents. Prior to an Event of Default, Purchaser
may, with the consent of Seller (which consent shall not be unreasonably
withheld, conditioned or delayed, unless such proposed Transferee is a
Prohibited Transferee), at any time and from time to time, assign to any Person
(an “Assignee” and together with Participants, each a “Transferee” and
collectively, the “Transferees”) all or any part of its rights or its interest
in this Agreement and the other Transaction Documents. After the occurrence of
an Event of Default, Purchaser may, without the consent of Seller, at any time
or from time to time either (i) sell to one or more Participants (including,
without limitation any Prohibited Transferee) participating interests under this
Agreement and the other Transaction Documents or (ii) assign to any Assignee
(including, without limitation any Prohibited Transferee) all or any part of its
rights or its interest in this Agreement and the other Transaction Documents.
Seller agrees to cooperate with Purchaser in connection with any such
assignment, transfer or sale and to enter into such restatements of, and
amendments, supplements and other modifications to, this Agreement in order to
give effect to such assignment, transfer or sale; provided, however, that, in
connection with a sale of a participating interest, (i) Purchaser shall act as
exclusive agent for all Transferees in any dealings with Seller in connection
with any such proposed transactions and (ii) Seller shall not be obligated to
deal directly with any party other than Purchaser in connection with such
transactions, or to pay or reimburse Purchaser for any costs that would not have
been incurred by Purchaser had no interest in such proposed transaction been
issued. Notwithstanding the foregoing, Purchaser shall be permitted, without the
consent of Seller, to sell participating interests in, or otherwise assign, to
any Affiliate of Purchaser any interest of Purchaser in this Agreement or the
Transaction Documents.

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

 

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ARTICLE 19

GOVERNING LAW

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT
OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-140 1 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

ARTICLE 20

NO WAIVERS, ETC.

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

ARTICLE 21

INTENT

(a) The parties recognize that each Transaction is a “repurchase agreement” as
that term is defined in Section 101(47) of Title 11 of the United States Code,
as amended (except insofar as the type of Assets subject to such Transaction or
the term of such Transaction would render such definition inapplicable), and a
“securities contract” as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets subject to
such Transaction would render such definition inapplicable).

(b) It is understood that either party’s right to liquidate Assets delivered to
it in connection with Transactions hereunder or to exercise any other remedies
pursuant to Article 13 hereof is a contractual right to liquidate such
Transaction as described in Sections 555, 559 and 561 of Title 11 of the United
States Code, as amended.

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

 

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(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).

(e) It is understood that this Agreement constitutes a “master netting
agreement” as defined in Section 101(38A) of Title 11 of the United States Code,
as amended, and as used in Section 561 of Title 11 of the United States Code, as
amended.

(f) It is the intention of the parties that, for U.S. Federal, state and local
income and franchise tax purposes and for accounting purposes, each Transaction
constitute a financing to the Seller, and that the Seller be (except to the
extent that Purchaser shall have exercised its remedies following an Event of
Default) the owner of the Purchased Assets for such purposes. Unless prohibited
by applicable law, Seller and Purchaser agree to treat the Transactions as
described in the preceding sentence on any and all filings with any U.S.
Federal, state, or local taxing authority.

ARTICLE 22

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

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

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

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

ARTICLE 23

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

(a) Each party irrevocably and unconditionally (i) submits to the non-exclusive
jurisdiction of any United States Federal or New York State court sitting in
Manhattan, and any appellate court from any such court, solely for the purpose
of any suit, action or proceeding

 

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brought to enforce its obligations under this Agreement or relating in any way
to this Agreement or any Transaction under this Agreement and (ii) waives, to
the fullest extent it may effectively do so, any defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court and any
right of jurisdiction on account of its place of residence or domicile.

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

(c) The parties hereby irrevocably waive, to the fullest extent each may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding and irrevocably consent to the service of any summons
and complaint and any other process by the mailing of copies of such process to
them at their respective address specified herein. The parties hereby agree that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Article 23 shall affect the right of Purchaser
to serve legal process in any other manner permitted by law or affect the right
of Purchaser to bring any action or proceeding against Seller or its property in
the courts of other jurisdictions, and nothing in this Article 23 shall affect
the right of Seller to serve legal process in any other manner permitted by law
or affect the right of Seller to bring any action or proceeding against
Purchaser or its property in the courts of other jurisdictions.

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

ARTICLE 24

NO RELIANCE

Seller and Purchaser hereby acknowledges, represents and warrants (as to itself)
to the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and each Transaction
thereunder:

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

(b) It has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and it has made its own

 

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investment, hedging and trading decisions (including decisions regarding the
suitability of any Transaction) based upon its own judgment and upon any advice
from such advisors as it has deemed necessary and not upon any view expressed by
the other party;

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

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

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

ARTICLE 25

INDEMNITY

Seller hereby agrees to indemnify Purchaser, Purchaser’s designee, Purchaser’s
Affiliates and each of its officers, directors, employees and agents
(“Indemnified Parties”) from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, taxes (including stamp,
excise, sales or other taxes that may be payable or determined to be payable
with respect to any of the Purchased Assets, Purchased Items or Collateral or in
connection with any of the transactions contemplated by this Agreement and the
documents delivered in connection herewith, other than income, withholding or
other taxes imposed upon Purchaser), fees, costs, expenses (including attorneys’
fees and disbursements) or disbursements (all of the foregoing, collectively
“Indemnified Amounts”) that may at any time (including, without limitation, such
time as this Agreement shall no longer be in effect and the Transactions shall
have been repaid in full) be imposed on or asserted against any Indemnified
Party in any way whatsoever arising out of or in connection with, or relating
to, or as a result of, this Agreement or any Transactions hereunder, the other
Transaction Documents, an Event of Default with respect to Seller or any action
taken or omitted to be taken by any Indemnified Party under or in connection
with any of the foregoing; provided that Seller shall not be liable for
Indemnified Amounts resulting from the gross negligence illegal acts, fraud or
willful misconduct of any Indemnified Party. Without limiting the generality of
the foregoing, Seller agrees to hold Purchaser harmless from and indemnify
Purchaser against all Indemnified Amounts with respect to all Purchased Assets
relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation ERISA, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
Purchaser’s gross negligence or willful misconduct. In any suit, proceeding or
action brought by Purchaser in connection with any Purchased Asset for any sum
owing thereunder, or to enforce any provisions of any

 

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Purchased Asset, Seller will save, indemnify and hold Purchaser harmless from
and against all expense (including attorneys’ fees), loss or damage suffered by
reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by Seller of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from Seller. Seller also agrees to
reimburse Purchaser as and when billed by Purchaser for all Purchaser’s
reasonable costs and out-of-pocket expenses incurred in connection with
Purchaser’s due diligence reviews with respect to the Purchased Assets
(including, without limitation, those incurred pursuant to Article 26 and in
connection with the approving the Eligible Assets (including, without
limitation, all due diligence expenses, even if the underlying prospective
Transaction for which they were incurred does not take place for any reason) and
the enforcement or the preservation of Purchaser’s rights under this Agreement,
any Transaction Documents or Transaction contemplated hereby, including without
limitation the reasonable fees and disbursements of its counsel. Seller hereby
acknowledges that the obligation of Seller hereunder is a recourse obligation of
Seller.

If an Indemnified Party claims indemnification under this Agreement, the
Indemnified Party shall promptly notify Seller of such indemnification claim.
After notice by any Indemnified Party, Seller shall defend such Indemnified
Party against such indemnification claim (if requested by any Indemnified Party,
in the name of the Indemnified Party) by attorneys and other professionals
approved, in writing, by the Indemnified Party, which approval shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
any Indemnified Party may, in its sole discretion and at the expense of Seller,
engage its own attorneys and other professionals to defend or assist it if such
Indemnified Party determines that the defense as conducted by Seller is not
proceeding or being diligently conducted in a commercially reasonable manner or
that a conflict of interest exists between any of the parties represented by
Seller’s counsel in such action or proceeding.

ARTICLE 26

DUE DILIGENCE

Seller acknowledges that Purchaser has the right to perform continuing due
diligence reviews with respect to the Purchased Assets, the Seller, the Servicer
and the Guarantor for purposes of verifying compliance with the representations,
warranties and specifications made hereunder, or otherwise. Seller agrees that,
upon reasonable request from Purchaser, Seller shall provide Purchaser will
copies of the Purchased Asset Files, Servicing Records and any and all
documents, records, agreements, instruments or information relating to the
Purchased Assets and the Seller, the Servicer and the Guarantor in the
possession or under the control of Seller, Guarantor and/or Servicer in order to
allow Purchaser to complete any continuing due diligence referenced above.
Furthermore, Seller agrees that, upon reasonable prior notice to Seller,
Purchaser or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and extracts of, the
Purchased Asset Files, Servicing Records and any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession or under the control of Seller, Guarantor, Servicer and/or the
Custodian (with respect to Custodian, subject to the terms of the Custodial
Agreement); provided, that Seller shall only be required to grant Purchaser
access to its facilities one (1) time

 

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in any twelve (12) month period unless (x) a Default or Event of default has
occurred and is continuing or (y) Purchaser determines, based upon its
commercially reasonable business judgment exercised in good faith, that Seller’s
existence or business operations are in jeopardy. Seller also shall make
available to Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Purchased Asset Files and the
Purchased Assets. Without limiting the generality of the foregoing, Seller
acknowledges that Purchaser may enter into Transactions with Seller based solely
upon the information provided by Seller to Purchaser and the representations,
warranties and covenants contained herein, and that Purchaser, at its option,
has the right at any time to conduct a partial or complete due diligence review
on some or all of the Purchased Assets. Purchaser may underwrite such Purchased
Assets itself or engage a third party underwriter to perform such underwriting.
Seller agrees to cooperate with Purchaser and any third party underwriter in
connection with such underwriting, including, but not limited to, providing
Purchaser and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Purchased
Assets in the possession, or under the control, of Seller. Seller agrees to
cause Servicer and Guarantor to comply with the terms and provisions of this
Article 26. Seller further agrees that Seller shall reimburse Purchaser for any
and all attorneys’ fees, costs and expenses incurred by Purchaser in connection
with continuing due diligence performed under this Article 26 during the term of
this Agreement, which amounts shall be paid by Seller to Purchaser within five
(5) days after receipt of an invoice therefor.

ARTICLE 27

SERVICING

(a) Notwithstanding the purchase and sale of the Purchased Assets hereby,
Seller, Servicer or a third party servicer approved by Purchaser shall service
the Purchased Assets (such Purchased Assets, “Serviced Assets”) pursuant to the
Interim Servicing Agreement (or any other Servicing Agreement approved by
Purchaser) for the benefit of Purchaser. Seller shall service or cause Servicer
to service the Serviced Assets at Seller’s sole cost and for the benefit of
Purchaser in accordance with the Interim Servicing Agreement and Accepted
Servicing Practices approved by Purchaser in the exercise of its sole and
absolute business judgment and maintained by other prudent mortgage lenders with
respect to mortgage loans similar to the Serviced Assets, provided, however,
that the obligations of Seller to service any of the Serviced Assets shall
cease, at Purchaser’s option in its sole and absolute discretion, upon the
earliest of (i) the occurrence and continuance of an Event of Default, (ii) with
respect to any Purchased Asset, the delivery by Purchaser to Seller of at least
ten (10) days’ prior written notice of the decision by Purchaser to transfer the
servicing rights of such Purchased Asset to either Purchaser or another third
party servicer selected by Purchaser upon the occurrence and continuance of any
event of default (however defined) under the related Purchased Asset Documents
(other than the events of default existing as of the Closing Date (as identified
on Exhibit X hereto) with respect to each Purchased Asset and which remain
uncured after the Closing Date) for such Purchased Asset (provided, that Seller
shall have the right, during such ten (10) day period after written notice, to
repurchase such Purchased Asset in accordance with Article 3(e) hereof or
exercise its right to substitute a Substitute Eligible Asset for the related
Purchased Asset in accordance with Article 3(m)) or (iii) the delivery by
Purchaser to Seller of at least ten (10) days’ prior written notice of the
decision by Purchaser to transfer the servicing rights of any or all of the
Serviced Assets to

 

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either Purchaser or another third party servicer selected by Purchaser upon the
occurrence of a “Servicing Termination Event” (as defined in the applicable
Servicing Agreement). In each case, Seller shall take all actions necessary to
effectuate the underlying servicing transfer as expeditiously as possible.

(b) Seller agrees that Purchaser is the owner of all servicing records,
including but not limited to any and all servicing agreements (including,
without limitation the Interim Servicing Agreement with Servicer) (collectively,
the “Servicing Agreements”), files, documents, records, data bases, computer
tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and
any other records relating to or evidencing the servicing of Purchased Assets
(the “Servicing Records”) so long as the Purchased Assets are subject to this
Agreement. Seller grants Purchaser a security interest in all servicing fees and
rights relating to the Purchased Assets and all Servicing Records to secure the
obligation of Seller or its designee to service in conformity with this Article
27 and any other obligation of Seller to Purchaser. Seller covenants to
safeguard such Servicing Records and to deliver them promptly to Purchaser or
its designee (including the Custodian) at Purchaser’s request. For the avoidance
of doubt, Seller does not retain economic or other beneficial rights to the
Servicing Rights, other than Seller’s rights under the Servicing Agreement. As
such, Seller expressly acknowledges that the Purchased Assets are sold to
Purchaser on a “servicing released” basis.

(c) During the continuance of an Event of Default, Purchaser may, in its sole
discretion, (i) sell its right to the Purchased Assets on a servicing released
basis to any Person (including a Prohibited Transferee) or (ii) terminate
Seller, Servicer or any sub-servicer of the Purchased Assets with or without
cause, in each case without payment of any termination fee.

(d) Neither Seller nor Servicer shall employ sub-servicers to service the
Purchased Assets without the prior written approval of Purchaser. If the
Purchased Assets are serviced by a sub-servicer, Seller shall, irrevocably
assign all rights, title and interest (if any) in the Servicing Agreements in
the Purchased Assets to Purchaser.

(e) The payment of servicing fees shall be the sole and exclusive responsibility
of Seller and such fees shall be subordinate to payment of amounts outstanding
under any Transaction and this Agreement.

ARTICLE 28

FUTURE ADVANCES

(a) Notwithstanding the purchase and sale of the Purchased Assets hereby, Seller
hereby agrees to make all Future Advances as, when and if required under the
related Purchased Asset Documents for Future Advance Assets. The obligation to
make Future Advances shall be the sole and exclusive obligation of Seller, and
Seller acknowledges and agrees that it shall not be entitled to any additional
advances hereunder (other than disbursements from the Future Advance Reserve in
accordance with Articles 28(b) hereof) in connection with any Future Advance.

 

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(b) On the Closing Date, Seller shall transfer an amount equal to the Upfront
Future Advance Reserve Amount to Purchaser to be deposited in the Future Advance
Reserve. Upon the occurrence of an Event of Default, Seller shall immediately
transfer an amount equal to the Unfunded Future Advance Reserve Amount to
Purchaser to be deposited in the Future Advance Reserve. Amounts on deposit in
the Future Advance Reserve are to be used solely for the purpose of paying, in
full, any Future Advance which becomes due in accordance with the related
Purchased Asset Documents. Provided Seller provides a certificate from a
Responsible Officer of Seller (or Servicer) certifying that Future Advances are
currently due and payable under the related Purchased Asset Documents and the
conditions for such Future Advances under the related Purchased Asset Documents
have been satisfied, Purchaser shall, upon receiving written request from Seller
delivered not later than five (5) Business Days (or such shorter period of time
provided in the related Purchased Asset Documents) prior to the date such Future
Advance is required to be made, disburse (or cause such amounts to be disbursed)
to Seller (or, if an Event of Default has occurred and is continuing, at
Purchaser’s option directly to the Mortgagor under the related Purchased Asset
Documents) funds from the Future Advance Reserve to pay such Future Advances in
accordance with the related Purchased Asset Documents. Seller acknowledges that
Purchaser has no obligation to disburse more than the remaining balance of the
Future Advance Reserve if such amount is less than the full Future Advance
requested, and any shortfall shall be the sole and exclusive payment obligation
of Seller.

(c) Upon (x) the payment in full of the Repurchase Price for a Purchased Asset
or (y) if Seller is no longer obligated under any circumstances to make any
further Future Advances for a Purchased Asset in accordance with the related
Purchased Asset Documents, then in each case Purchaser shall refund to Seller
any amounts on deposit in the Future Advance Reserve relating solely to such
Purchased Asset. Notwithstanding the foregoing, in the event that Purchaser
exercised remedies pursuant to Articles 13(b)(iii) hereof, Seller shall have no
further rights to any amounts on deposit in the Future Advance Reserve.

ARTICLE 29

WITHHOLDING TAXES

All payments made by Seller to Purchaser or any other Indemnified Party under
this Agreement and the other Transaction Documents shall be made free and clear
of and without deduction or withholding for or on account of any taxes. If any
taxes are required to be withheld from any amounts payable to Purchaser and/or
any other Indemnified Party, then the amount payable to such Person will be
increased (such increase, the “Additional Amount”) such that every net payment
made under this Agreement or other Transaction Document after withholding for or
on account of any taxes (including any taxes on such increase and any penalties)
is not less than the amount that would have been paid absent such deduction or
withholding. The foregoing obligation to pay Additional Amounts, however, will
not apply with respect to net income or franchise taxes imposed on Purchaser
and/or any other Indemnified Party, with respect to payments required to be made
by Seller under the Transaction Documents, by a taxing jurisdiction in which
Purchaser and/or any other Indemnified Party is organized, conducts business or
is paying taxes (as the case may be). Promptly after Seller pays any taxes
referred to in this Article 29, Seller shall send Purchaser appropriate evidence
of such payment.

 

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ARTICLE 30

ADMINISTRATIVE AGENT

(a) The Guarantor is executing this Agreement solely to acknowledge and agree to
the terms and provisions of this Article 30. Guarantor acknowledges and agrees
that (i) Guarantor directly or indirectly owns one hundred percent (100%) of the
legal and beneficial interests in Seller and (ii) Guarantor will derive
benefits, directly and indirectly, from the execution, delivery and performance
by Seller of this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby.

(b) Guarantor acknowledges and agrees that, with respect to each Purchased
Asset, the Administrative Agent Rights for each Purchased Asset are Purchased
Items hereunder. Notwithstanding the foregoing and subject to Article 30(c)
below, Guarantor shall continue to act as Administrative Agent for each
Purchased Asset.

(c) Upon the occurrence of an Event of Default and at the option of Purchaser
upon written notice to Guarantor and Seller, Guarantor and Seller shall take all
actions reasonably necessary to promptly cause Purchaser (or its designee) to be
appointed as Administrative Agent under all Purchased Assets. In connection with
the foregoing, Guarantor shall execute a limited power of attorney substantially
in the form of Exhibit XI attached hereto irrevocably appointing Purchaser its
attorney-in-fact with full power to (i) complete the endorsements of the
Purchased Assets, including without limitation the Mortgage Notes and
Assignments of Mortgages and any transfer documents related thereto (in each
case solely to the extent the Administrative Agent is the named holder thereof)
and any transfer documents relating to the Administrative Agent Rights,
(ii) record the Assignments of Mortgages and other applicable assignment
documents (solely to the extent the Administrative Agent is the named holder
thereof), (iii) prepare and file, in form and substance reasonably satisfactory
to Purchaser, such financing statements, continuation statements, and other
uniform commercial code forms, as Purchaser may from time to time, reasonably
consider necessary to create, perfect, and preserve Purchaser’s security
interest in the Purchased Assets (solely to the extent the Administrative Agent
is the named holder thereof) and (iv) take such other steps as may be necessary
to cause Purchaser (or its designee) to be appointed as Administrative Agent for
each Purchased Asset, to the extent that Guarantor is permitted by law to act
through an agent. For purposes of the foregoing, Guarantor hereby appoints
Purchaser as attorney-in-fact of Guarantor or the purpose of carrying out the
provisions of this Article 30 and taking any action specified in the limited
power of attorney delivered in accordance herewith, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.

ARTICLE 31

MISCELLANEOUS

(a) All rights, remedies and powers of Purchaser hereunder and in connection
herewith are irrevocable and cumulative, and not alternative or exclusive, and
shall be in addition to all other rights, remedies and powers of Purchaser
whether under law, equity or agreement. In addition to the rights and remedies
granted to it in this Agreement, to the extent this Agreement is determined to
create a security interest, Purchaser shall have all rights and remedies of a
secured party under the UCC.

 

71

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

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

(d) Without limiting the rights and remedies of Purchaser under the Transaction
Documents, Seller shall pay Purchaser’s reasonable actual out-of-pocket costs
and expenses, including reasonable fees and expenses of accountants, attorneys
and advisors, incurred in connection with the preparation, negotiation,
execution and consummation of, and any amendment, supplement or modification to,
the Transaction Documents and the Transactions thereunder, whether or not such
Transaction Document (or amendment thereto) or Transaction is ultimately
consummated. Seller agrees to pay Purchaser on demand all costs and expenses
(including reasonable expenses for legal services of every kind) of any
subsequent enforcement of any of the provisions hereof, or of the performance by
Purchaser of any obligations of Seller in respect of the Purchased Assets, or
any actual or attempted sale, or any exchange, enforcement, collection,
compromise or settlement in respect of any of the Collateral or Purchased Items
and for the custody, care or preservation of the Collateral or Purchased Items
(including insurance costs) and defending or asserting rights and claims of
Purchaser in respect thereof, by litigation or otherwise. In addition, Seller
agrees to pay Purchaser on demand all reasonable costs and expenses (including
reasonable expenses for legal services) incurred in connection with the
maintenance of the Collection Account and registering the Collateral and
Purchased Items in the name of Purchaser or its nominee. All such expenses shall
be recourse obligations of Seller to Purchaser under this Agreement.

(e) In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of such rights, Seller hereby grants to
Purchaser and its Affiliates a right of offset, to secure repayment of all
amounts owing to Purchaser or its Affiliates by Seller under the Transaction
Documents, upon any and all monies, securities, collateral or other property of
Seller and the proceeds therefrom, now or hereafter held or received by
Purchaser or its Affiliates or any entity under the control of Purchaser or its
Affiliates and its respective successors and assigns (including, without
limitation, branches and agencies of Purchaser, wherever located), for the
account of Seller, whether for safekeeping, custody, pledge, transmission,
collection, or otherwise, and also upon any and all deposits (general or
specified) and credits of Seller at any time existing. Purchaser and its
Affiliates are hereby authorized at any time and from time to time upon the
occurrence and during the continuance of an Event of Default, without notice to
Seller, to offset, appropriate, apply and enforce such right of offset against
any and all items hereinabove referred to against any amounts owing to Purchaser
or its Affiliates by Seller under the Transaction Documents, irrespective of
whether Purchaser or its Affiliates shall have made any demand hereunder and
although such amounts, or any of them, shall be contingent or unmatured and
regardless of any other collateral securing such amounts. Seller shall be deemed
directly indebted to Purchaser and its Affiliates in the full amount of all
amounts owing to Purchaser and its Affiliates by Seller under the

 

72

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Transaction Documents, and Purchaser and its Affiliates shall be entitled to
exercise the rights of offset provided for above. ANY AND ALL RIGHTS TO REQUIRE
PURCHASER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO
PURCHASER OR ITS AFFILIATES BY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO
EXERCISING THEIR RIGHT OF OFFSET WITH RESPECT TO SUCH MONIES, SECURITIES,
COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

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

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

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

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

[REMAINDER OF PAGE LEFT BLANK]

 

73

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

 

PURCHASER:

MACQUARIE BANK LIMITED,
an Australian corporation

By:  

/s/ MARK WONG

  Name: Mark Wong   Title: Executive Director By:  

/s/ MELANIE LINCOLN

  Name: Melanie Lincoln   Title: Senior Manager

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

SELLER:

NEWSTAR CRE FINANCE I LLC, a Delaware limited liability company

By:   NewStar Financial, Inc.,   its Designated Manager By:  

/s/ JOHN J. FRISHKOPF

  Name: John J. Frishkopf   Title: Treasurer

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

GUARANTOR

(solely for purposes of Article 30 hereof):

NEWSTAR FINANCIAL, INC., a Delaware corporation

By:  

/s/ JOHN J. FRISHKOPF

  Name: John J. Frishkopf   Title: Treasurer

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

SCHEDULES AND EXHIBITS

 

SCHEDULE I

   Names and Addresses for Communications between Parties

SCHEDULE II

   Purchased Assets

SCHEDULE III

   Purchased Asset File

SCHEDULE IV

   Future Advance Assets

SCHEDULE V

   Purchased Asset Documents

SCHEDULE VI

   [Reserved]

EXHIBIT I

   Form of Confirmation Statement

EXHIBIT II

   Responsible Officers and Authorized Representatives of Seller

EXHIBIT III

   [Reserved]

EXHIBIT IV

   Form of Limited Power of Attorney (Seller)

EXHIBIT V

   Representations and Warranties Regarding Individual Purchased Assets

EXHIBIT VI

   Form of Release Letter

EXHIBIT VII

   [Reserved]

EXHIBIT VIII

   [Reserved]

EXHIBIT IX

   Purchased Asset Servicer Report

EXHIBIT X

   Exceptions to Representations and Warranties with Respect to Purchased Assets

EXHIBIT XI

   Form of Limited Power of Attorney (Guarantor)

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

SCHEDULE I

NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES

 

Purchaser:    Macquarie Bank Limited    ABN (if applicable): 46 008 583 542   

No. 1 Martin Place

Sydney, NSW, 2000

Australia

   Attention:   Phil Castro    Telephone:   + 61 2 8232 4033    Telecopy:   + 61
2 8232 6353    Email:   mcafdebtops@macquarie.com With copies to:   

Macquarie Bank Limited

c/o Macquarie Bank Limited – Representative Office

125 West 55th Street

   New York, NY 10019    Attention:   Hayden Jones / Jeff Cheng / David Prince
   Telephone:   (212) 231-0552 / (212) 231-1633 / (212) 231-6175    Telecopy:  
(212) 231-1870    Email:   hayden.jones@macquarie.com / jeff.cheng@macquarie.com
/ david.prince@macquarie.com    and    DECHERT LLP    Cira Centre    2929 Arch
Street    Philadelphia, PA 19104-2808    Attention:   Richard D. Jones, Esq.   
Telephone:   (212) 698-3844    Telecopy:   (215) 655-2501    Email:  
richard.jones@dechert.com Seller:    NewStar CRE Finance I LLC    c/o NewStar
Financial, Inc.    500 Boylston Street, Suite 1250    Boston, MA 02116   
Attention:   Brian Forde    Telephone:   (617) 848-2550    Telecopy:   (617)
848-4390    Email:   bforde@newstarfin.com

 

Sch. I-1

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

With copies to:    Edwards Angell Palmer & Dodge LLP    111 Huntington Avenue   
Boston, MA 02199    Attention:   George Ticknor    Telephone:   (617) 239-0357
   Telecopy:   (617) 239-4420    Email:   gticknor@eapdlaw.com Guarantor:   
NewStar Financial, Inc.    500 Boylston Street, Suite 1250    Boston, MA 02116
   Attention:   Brian Forde    Telephone:   (617) 848-2550    Telecopy:   (617)
848-4390    Email:   bforde@newstarfin.com With copies to:    Edwards Angell
Palmer & Dodge LLP    111 Huntington Avenue    Boston, MA 02199    Attention:  
George Ticknor    Telephone:   (617) 239-0357    Telecopy:   (617) 239-4420   
Email:   gticknor@eapdlaw.com Servicer:    NewStar Financial, Inc.    500
Boylston Street, Suite 1250    Boston, MA 02116    Attention:   Brian Forde   
Telephone:   (617) 848-2550    Telecopy:   (617) 848-4390    Email:  
bforde@newstarfin.com With copies to:    Edwards Angell Palmer & Dodge LLP   
111 Huntington Avenue    Boston, MA 02199    Attention:   George Ticknor   
Telephone:   (617) 239-0357    Telecopy:   (617) 239-4420    Email:  
gticknor@eapdlaw.com

 

Sch. I-2

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

SCHEDULE VI

[Reserved]

 

Sch. VI-1

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

EXHIBIT I

CONFIRMATION STATEMENT

MACQUARIE BANK LIMITED

Ladies and Gentlemen:

NEWSTAR CRE FINANCE I LLC (“Seller”) is pleased to deliver our written
CONFIRMATION of our agreement to enter into the Transaction pursuant to which
MACQUARIE BANK LIMITED, an Australian corporation (“Purchaser”) shall purchase
from us the Purchased Asset identified on the attached Schedule 1 pursuant to
the Master Repurchase Agreement, dated as of June 7, 2011 (the “Agreement”), by
and among Purchaser, Seller and, solely for purposes of Article 30 thereof,
NewStar Financial Inc. on the following terms. Capitalized terms used herein
without definition have the meanings given in the Agreement.

 

Purchased Asset:    [                                         Name]: As
identified on attached Schedule 1 Outstanding Principal
Amount of Purchased Assets:    [$        ] Termination Date:    As defined in
the Agreement. Purchase Price:    [$        ] Assigned Value:    [$        ]
Underwritten Net Cash Flow:    [$        ] Seller Account Information:   
[                    ] Pricing Rate:    As defined in the Agreement. Purchased
Asset Documents:    As identified on attached Schedule 1 Name and address for
communications:    Purchaser:    Macquarie Bank Limited       ABN (if
applicable): 46 008 583 542       No. 1 Martin Place       Sydney, NSW, 2000   
   Australia       Attention:    Phil Castro       Telephone:    + 61 2 8232
4033       Telecopy:    + 61 2 8232 6353       Email:   
mcafdebtops@macquarie.com

 

Ex. I-1

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

      With a copy to:       Macquarie Bank Limited       c/o Macquarie Bank
Limited – Representative Office       125 West 55th Street       New York, NY
10019       Attention:    Hayden Jones / Jeff Cheng       Telephone:    (212)
231-0552 / (212) 231-1633       Telecopy:    (212) 231-1870       Email:   
hayden.jones@macquarie.com /
jeff.cheng@macquarie.com       and       DECHERT LLP       Cira Centre      
2929 Arch Street       Philadelphia, PA 19104-2808       Attention:    Richard
D. Jones, Esq.       Telephone:    (212) 698-3844       Telecopy:    (215)
655-2501       Email:    richard.jones@dechert.com    Seller:    NewStar CRE
Finance I LLC       c/o NewStar Financial, Inc.       500 Boylston Street, Suite
1250       Boston, MA 02116       Attention:    Brian Forde       Telephone:   
(617) 848-2550       Telecopy:    (617) 848-4390       Email:   
bforde@newstarfin.com    With
copies to:    Edwards Angell Palmer & Dodge LLP       111 Huntington Avenue   
   Boston, MA 02199       Attention:    George Ticknor       Telephone:    (617)
239-0357       Telecopy:    (617) 239-4420       Email:    gticknor@eapdlaw.com

 

Ex. I-2

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

NEWSTAR CRE FINANCE I LLC By:  

 

  Name:   Title:

 

Ex. I-3

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

AGREED AND ACKNOWLEDGED:

 

MACQUARIE BANK LIMITED, an Australian corporation By:  

 

  Name:   Title: By:  

 

  Name:   Title:

 

Ex. I-4

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

Schedule 1 to Confirmation Statement

 

Purchased Assets:

Aggregate Principal Amount:

 

Ex. I-5

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

EXHIBIT II

RESPONSIBLE OFFICERS AND

AUTHORIZED REPRESENTATIVES OF SELLER

 

Name

    

Specimen Signature

John Bray, Chief Financial Officer

of NewStar Financial, Inc,

Designated Manager of Seller

    

 

John Frishkopf, Treasurer

of NewStar Financial, Inc,

Designated Manager of Seller

    

 

Daniel Crowley, Controller

of NewStar Financial, Inc,

Designated Manager of Seller

    

 

 

Ex. II-1

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

EXHIBIT III

[Reserved]

 

Ex. III-1

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

EXHIBIT IV

FORM OF LIMITED POWER OF ATTORNEY

Know All Men by These Presents, that NEWSTAR CRE FINANCE I LLC, a Delaware
limited liability company (“Seller”), does hereby appoint MACQUARIE BANK
LIMITED, an Australian corporation (“Purchaser”), its attorney-in-fact to act in
Seller’s name, place and stead, upon the occurrence of an Event of Default, in
any way that Seller could do with respect to (i) the completion of the
endorsements of the Purchased Assets, including without limitation the Mortgage
Notes and Assignments of Mortgages and any transfer documents related thereto,
(ii) the recordation of the Assignments of Mortgages and other applicable
assignment documents, (iii) the preparation and filing, in form and substance
satisfactory to Purchaser, of such financing statements, continuation
statements, and other uniform commercial code forms, as Purchaser may from time
to time, reasonably consider necessary to create, perfect, and preserve
Purchaser’s security interest in the Purchased Assets and (iv) the enforcement
of Seller’s rights under the Purchased Assets purchased by Purchaser pursuant to
the Master Repurchase Agreement, dated as of June 7, 2011 (the “Repurchase
Agreement”), by and among Purchaser, Seller and, solely for purposes of Article
30 thereof, NewStar Financial Inc., and to take such other steps as may be
necessary or desirable to enforce Purchaser’s rights against such Purchased
Assets, the related Purchased Asset Files and the Servicing Records to the
extent that Seller is permitted by law to act through an agent.

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

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

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed as a
deed this 7th day of June, 2011.

[SIGNATURES ON THE FOLLOWING PAGE]

 

Ex. VI-1

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

NEWSTAR CRE FINANCE I LLC By:  

 

  Name:   Title:

 

Ex. VI-2

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

EXHIBIT V

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

 

1. Each Purchased Asset is a whole loan.

 

2. Guarantor has been appointed as the sole Administrative Agent for each
Purchased Asset in accordance with the related Purchased Asset Documents.

 

3. No Purchased Asset is 30 days or more delinquent in payment of principal and
interest (without giving effect to any applicable grace period).

 

4. No default or event of default (however defined) under the related Purchased
Asset Documents has occurred and is continuing for any Purchased Asset.

 

5. At the time of the assignment of the Purchased Assets and related Purchased
Items to Purchaser, Seller had good and marketable title to and was the sole
owner and holder of, each Purchased Asset and related Purchased Items, free and
clear of any pledge, lien, encumbrance or security interest and such assignment
validly and effectively transfers and conveys all legal and beneficial ownership
of the Purchased Assets and Purchased Items to Purchaser free and clear of any
pledge, lien, encumbrance or security interest, subject to the rights and
obligations of Seller pursuant to the Agreement. Seller has full right and
authority to sell, assign and transfer each Purchased Asset and related
Purchased Items to Purchaser.

 

6. Each related Mortgagor or other obligor is an entity organized under the laws
of a state of the United States of America, the District of Columbia or the
Commonwealth of Puerto Rico and such Mortgagor or other obligor is not a debtor
in any bankruptcy, receivership, conservatorship, reorganization, insolvency,
moratorium or similar proceeding.

 

7.

Each Purchased Asset is secured by a mortgage, deed of trust or deed to secure
debt (a “Mortgage”) that establishes and creates a valid and subsisting first
priority lien on the related Mortgagor’s fee simple interest on the related
Mortgaged Property securing such Purchased Asset, free and clear of any liens,
claims, encumbrances, participation interests, pledges, charges or security
interests. No Purchased Asset is secured, in whole or in part, solely by
Mortgagor’s leasehold estate in the related Mortgaged Property. Such Mortgage,
together with any separate security agreement, UCC financing statement or
similar agreement, if any, establishes and creates a first priority security
interest in favor of Seller in all personal property owned by the related
Mortgagor that is used in, and is reasonably necessary to, the operation of the
related Mortgaged Property. There exists with respect to such Mortgaged Property
an assignment of leases and rents provision, either as part of the related
Mortgage or as a

 

Ex. V-1

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

 

separate document or instrument, which establishes and creates a first priority
security interest in and to leases and rents arising in respect of the related
Mortgaged Property. No person other than the related Mortgagor and the mortgagee
owns any interest in any payments due under the related leases. The related
Mortgagor under each Purchased Asset has good and indefeasible fee simple title
to the related Mortgaged Property.

 

8. Seller has received, for each Purchased Asset, an American Land Title
Association (ALTA) lender’s title insurance policy or a comparable form of
lender’s title insurance policy as adopted in the applicable jurisdiction (the
“Title Policy”), which was issued by a nationally recognized title insurance
company (the “Title Insurer”) qualified to do business in the jurisdiction where
the applicable Mortgaged Property is located, covering the portion of each
Mortgaged Property comprised of real estate and insuring that the related
Mortgage is a valid first lien in the original principal amount of the related
Purchased Asset on the Mortgagor’s fee simple interest in such Mortgaged
Property. No claims have been made under such Title Policy. Such Title Policy is
in full force and effect and all premiums thereon have been paid and provides
that the insured includes the owner of the Purchased Asset and its successors
and/or assigns. No holder of the related Mortgage has done, by act or omission,
anything that would, and Seller has no actual knowledge of any other
circumstance that would, impair the coverage under such Title Policy.

 

9. Except as included in each Purchased Asset File, the terms and conditions of
related Purchased Asset Documents for each Purchased Asset have not been
altered, impaired, modified or waived.

 

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

 

11. To Seller’s knowledge, neither the Purchased Asset nor any of the related
Purchased Asset Documents is subject to any right of rescission, set off,
abatement, diminution, valid counterclaim or defense, including the defense of
usury, and no such right of rescission, set off, abatement, diminution, valid
counterclaim or defense has been asserted with respect thereto.

 

12. No Purchased Asset has been accelerated and no foreclosure or power of sale
proceeding has been initiated in respect of the related Mortgage. Neither Seller
nor its Affiliates have waived any material claims against the related
Mortgagor.

 

13. Except for advances for interest or debt service made in accordance with the
related Purchased Asset Documents, no Purchased Asset has capitalized interest
included in its principal balance, or provides for any shared appreciation
rights or other equity participation therein and no contingent or additional
interest contingent on cash flow.

 

Ex. V-2

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

14. To Seller’s knowledge, the related Mortgaged Property is, in all material
respects, in compliance with, and is used and occupied in accordance with, all
restrictive covenants of record applicable to such Mortgaged Property and
applicable zoning laws and all inspections, licenses, permits and certificates
of occupancy required by law, ordinance or regulation to be made or issued with
regard to the Mortgaged Property have been obtained and are in full force and
effect.

 

15. To Seller’s knowledge, all (a) taxes, water charges, sewer rents,
assessments or other similar outstanding governmental charges and governmental
assessments that became due and owing prior to the Purchase Date in respect of
the related Mortgaged Property (excluding any related personal property), and
that if left unpaid, would be, or might become, a lien on such Mortgaged
Property having priority over the related Mortgage and (b) insurance premiums or
ground rents that became due and owing prior to the Purchase Date in respect of
the related Mortgaged Property (excluding any related personal property), have
been paid.

 

16. To Seller’s knowledge, the Mortgaged Property has not been damaged by fire,
wind or other casualty or physical condition (including, without limitation, any
soil erosion or subsidence or geological condition), which damage has not either
been fully repaired or fully insured, subject to policy deductibles. To Seller’s
knowledge, there are no proceedings pending or threatened, for the partial or
total condemnation of the relevant Mortgaged Property.

 

17. To Seller’s knowledge, there are no adverse circumstances or conditions with
respect to or affecting the related Mortgaged Property that would constitute or
result in a material violation of any applicable federal, state or local
environmental laws, rules and regulations.

 

18. The related Mortgagor is in compliance with all insurance requirements under
the related Purchased Asset Documents.

 

19. To Seller’s knowledge, there are no actions, suits, arbitrations or
governmental investigations or proceedings by or before any court or other
Governmental Authority or agency now pending against or affecting the Mortgagor
under any Purchased Asset or any of the Mortgaged Properties.

 

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

 

21. Neither Seller nor any Affiliate thereof has any obligation to make any
capital contributions to the related Mortgagor under the Purchased Asset.

 

Ex. V-3

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

22. Each Purchased Asset, prior to the related Purchase Date, has been serviced
and administered in accordance with Seller’s, Servicer’s and Guarantor’s credit
and collection policy.

 

23. With respect to the Purchased Asset knows as Bell Plaza, the related
subordinate mezzanine indebtedness secured indirectly by the related Mortgaged
Property has been paid in full, and there currently exist no subordinate
indebtedness secured directly or indirectly by the related Mortgaged Property.

 

Ex. V-4

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

EXHIBIT VI

FORM OF RELEASE LETTER

[Date]

 

Macquarie Bank Limited ABN (if applicable): 46 008 583 542 No. 1 Martin Place
Sydney, NSW, 2000 Australia Attention:    Phil Castro Telephone:    + 61 2 8232
4033 Telecopy:    + 61 2 8232 6353 Email:    mcafdebtops@macquarie.com

Macquarie Bank Limited

c/o Macquarie Bank Limited – Representative Office

125 West 55th Street New York, NY 10019 Attention:    Hayden Jones / Jeff Cheng
Telephone:    (212) 231-0552 / (212) 231-1633 Telecopy:    (212) 231-1870 Email:
   hayden.jones@macquarie.com / jeff.cheng@macquarie.com Re:    Master
Repurchase Agreement, dated as of June 7, 2011 by and among MACQUARIE BANK
LIMITED, an Australian corporation (“Purchaser”) and NEWSTAR CRE FINANCE I LLC,
a Delaware limited liability company (“Seller”) and, solely for purposes of
Article 30 thereof, NewStar Financial Inc. (as amended, restated, supplemented,
or otherwise modified and in effect from time to time, the “Master Repurchase
Agreement”); (capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto in the Master Repurchase Agreement).

Ladies and Gentlemen:

With respect to the Purchased Assets described in the attached Schedule A (the
“Purchased Assets”) (a) we hereby certify to you that the Purchased Assets and
related Purchased Items are not subject to a lien of any third party, and (b) we
hereby release all right, interest or claim of any kind other than any rights
under the Master Repurchase Agreement with respect to such Purchased Assets and
related Purchased Items, such release to be effective automatically without
further action by any party upon payment by Purchaser of the amount of the
Purchase Price contemplated under the Master Repurchase Agreement (calculated in
accordance with the terms thereof) in accordance with the wiring instructions
set forth in the Master Repurchase Agreement.

 

Ex. VI-1

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Very truly yours, NEWSTAR CRE FINANCE I LLC By:  

 

  Name:   Title:

 

Ex. VI-2

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Schedule A

[List of Purchased Asset Documents]

 

Ex. VI-3

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EXHIBIT VII

[Reserved]

 

Ex. VII-1

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EXHIBIT VIII

[Reserved]

 

Ex. VIII-1

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EXHIBIT IX

PURCHASED ASSET SERVICER REPORT

[NEWSTAR TO PROVIDE]

 

Ex. IX-1

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EXHIBIT X

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO PURCHASED ASSETS

The Purchased Asset known as 3600 West Bayshore (herein the “3600 West Bayshore
Purchased Asset”)

As a result of the borrower’s change in asset strategy, NewStar informed the
borrower on the 3600 West Bayshore Purchased Asset on December 17, 2008 that
NewStar had determined that the borrower had insufficient capital to complete
the leasing of the property and that NewStar would therefore not fund additional
loan advances under the Purchased Asset Documents. Subsequently from time to
time a partner in the borrower has made loans to the borrower to cover capital
needs. Borrower represents to NewStar that the debt is not secured by the
collateral to the 3600 West Bayshore Purchased Asset. The borrower represents
that on March 31, 2011 the outstanding balance of these loans was $165,000.00.
The borrower has informed NewStar that the tenant Nicira Networks will be
vacating the property on or before the expiration of its lease in February 2012.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 4: The existence of the indebtedness described above of the
borrower on the 3600 West Bayshore Purchased Asset provides grounds for the
declaration of a default under the Purchased Asset Documents.

 

  •  

Representation 9: NewStar has not declared a default under the Purchased Asset
Documents for the existence of indebtedness of the borrower other than the 3600
West Bayshore Purchased Asset.

The Purchased Asset known as Centennial (herein the “Centennial Purchased
Asset”)

The Centennial Purchased Asset is a participation interest in a B note that is
secured by a subordinated interest in a leasehold mortgage on the collateral
property. The Total Centennial Loan, as distinct from the Centennial Purchased
Asset, consisting of an A Note and B Note, is serviced pursuant to an
Intercreditor and Servicing Agreement that is part of the Purchased Asset
Documents for the Centennial Purchased Asset. Because the A Note was
securitized, the Total Centennial Loan is further serviced pursuant to the
Pooling and Servicing Agreement for the Wachovia 2005-C19 CMBS issue for which
Wells Fargo Bank, N.A. acts as Trustee, Wachovia Bank National Association (now
Wells Fargo Bank, N.A.) acts as Master Servicer and Clarion Partners, LLC (now
Torchlight Investors) acts as Special Servicer.

 

Ex. XI-1

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The term of the Centennial Purchased Asset was extended and its terms modified
in 2010. The terms of the modification provide for accrual and pay rates on the
notes. The borrower continues to make all required monthly debt service payments
to the A and B Notes. Pursuant to the terms of the Intercreditor and Servicing
Agreement the Special Servicer has instructed the Trustee to apply all debt
service received under the B Note to additional amortization of the A Note.
Therefore while the borrower is continuing to make monthly debt service payments
on the B Note, Seller does not contemplate that it will receive the cash flow
from those payments.

The borrower under the Centennial Purchased Asset has informed NewStar that the
collateral property sustained damage during a wind storm. The borrower
represents that the replacement of glass structurally damaged by the storm has
been completed and was covered by insurance proceeds. An insurance settlement
for cosmetic damage to windows is pending in the amount of three million
dollars.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 1: The Centennial Purchased Asset is not a whole loan.

 

  •  

Representation 2: The Guarantor is not the sole Administrative Agent for the
Centennial Purchased Asset.

 

  •  

Representation 3: The Seller has not received monthly payments of principal and
interest on the Centennial Purchased Asset in more than 30 days.

 

  •  

Representation 5: The Seller is not the sole owner of the Mortgage Loan relating
to the Purchased Asset and Purchased Items relating to the Centennial Purchased
Asset free and clear of any pledge, lien, encumbrance or security interest and
therefore cannot convey all legal and beneficial ownership in the Mortgage Loan
relating to the Purchased Asset and Purchased Items relating to the Centennial
Purchased Asset free and clear of any pledge, lien, encumbrance or security
interest.

 

  •  

Representation 7: The Centennial Purchased Asset is a participation interest
(“B-1 Interest”) in the B note that is secured by a subordinated interest in a
leasehold mortgage on the collateral property and a subordinated interest in an
assignment of leases and rents. It is specifically contractually subordinate to
another loan known as the A Note.

 

  •  

Representation 13: The Centennial Purchased Asset and the A Note and the balance
of the B Note that together with the Centennial Purchased Asset constitute the
Total Centennial Loan each have features that provide for the accrual of
interest. In addition the Centennial Purchased Asset continues to accrue
interest not sent to Seller by the Trustee at the instruction of the Special
Servicer.

 

Ex. XI-2

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  •  

Representation 16: The borrower under the Centennial Purchased Asset has
informed NewStar that the collateral property sustained damage during a wind
storm. The borrower has represented to NewStar that all replacement of glass
structurally damaged by the storm has been completed and was covered by
insurance proceeds. The borrower has further represented to NewStar that an
insurance settlement for cosmetic damage to windows sustained during the storm
is pending in the amount of three million dollars.

 

  •  

Representation 20: No escrow deposits or payments relating to the Centennial
Purchased Asset are in the possession of or under the control of Seller or
Servicer.

 

  •  

Representation 22: The Centennial Purchased Asset is serviced by the Master
Servicer and Special Servicer pursuant to the Intercreditor and Servicing
Agreement and the relevant Pooling and Servicing Agreement and therefore Seller
Servicer and Guarantor specifically do not represent that the Centennial
Purchased Asset has been serviced and administered in accordance with the
Seller’s Servicer’s or Guarantor’s credit and collection policy.

The Purchased Asset known as Fulcrum NWP (herein the “Fulcrum NWP Purchased
Asset”)

The Seller does not hold the entire interest in the loan (the “Fulcrum NWP Whole
Loan”) of which the Fulcrum NWP Purchased Asset represents only a portion.
$22,696,736.75 of the commitment and $17,664,002.16 of the loan outstanding
representing 66.59% of the total commitment and outstanding amounts are held by
other entities currently affiliated with NewStar.

In November 2010 the Borrower requested and NewStar approved the disbursement of
up to $225,000 from the tenant Improvements facility to fund the improvement of
several vacant spaces for which no signed leases were pending.

In August 2009, the borrower sold the outparcel leased to TGIF. NewStar released
the parcel from the collateral in return for a partial loan repayment in the
amount of $1,934.850.07. Of the repayment $1,000,000 was a permanent repayment
and the balance could be re-borrowed, $675,169.50 under the tenant improvement
subfacility and $259,680.57 under the leasing commission subfacility.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 1: The Fulcrum NWP Purchased Asset is not a whole loan.

 

  •  

Representation 5: Because there is a portion of the Fulcrum NWP Whole Loan that
is not owned by Seller, the Seller is not the sole owner of the Purchased Asset
and Purchased Items relating to the Fulcrum NWP Purchased Asset free and clear
of any pledge lien encumbrance or security interest and therefore cannot convey

 

Ex. XI-3

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all legal and beneficial ownership in the Purchased Asset and Purchased Items
relating to the Fulcrum NWP Purchased Asset free and clear of any pledge lien
encumbrance or security interest.

 

  •  

Representation 7: Because there is a portion of the Fulcrum NWP Whole Loan that
is not owned by Seller, the Fulcrum NWP Purchased Asset shares its interest in
the collateral on a pari passu basis with the other holder of the Fulcrum NWP
Whole Loan.

 

  •  

Representation 9: As indicated above, NewStar has agreed to make certain
advances to the borrower that were not required to be made pursuant to the
Purchased Asset Documents. As indicated above the loan was partially repaid and
a portion of the repayment was made available for the borrower to re-borrow.

 

  •  

Representation 10: As described above a portion of the loan was repaid in August
2009.

 

  •  

Representation 20: No escrow deposits or payments relating to the Fulcrum NWP
Purchased Asset are in the possession of or under the control of Seller or
Servicer.

The Purchased Asset known as Birchtree (herein the “Birchtree Purchased Asset”)

Two of the buildings which represent the collateral to the Birchtree Purchased
Asset were found to be structurally damaged and were declared uninhabitable by
the Raleigh NC building department. Borrower is in the process of repairing the
buildings. During the repairs to one of the structurally damaged buildings
borrower represents that it discovered asbestos contaminated materials (“ACM”)
in certain of the materials being removed from the building. Borrower represents
that it immediately suspended demolition and that it is preparing a disposal
plan for approval by the North Carolina Department of Health and Human Services.

The pool at the property was also unable to get necessary operating permits. The
borrower represents that pool is being repaired and that it will receive
operating permits soon.

In December 2010 the loan was amended and increased to fund the cost of the
repair and restoration of certain buildings and units at the collateral
property. That amendment is part of the Purchased Asset Documents. In the
Purchased Asset Documents the scope of the repairs was specified, the timeframe
for completion established and the funding specified in subcategories. The
Purchased Asset Documents also provide that NewStar will receive an equity
participation equal to 20% of the value of the property above a basis equivalent
to the loan outstanding and the equity invested to date.

At the closing of the amendment the borrower requested and NewStar agreed to
advance funds for the payment of past due payables which were not part of the
approved budget in the Purchased Asset Documents. Since the closing of the
amendment the borrower made NewStar aware of other units in need of repair and
requested that NewStar fund those repairs from the reserve in the Purchased
Asset Documents established for the repair of the two structurally

 

Ex. XI-4

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damaged buildings. NewStar has agreed to the use of proceeds funded under the
Purchased Asset Documents for these purposes. The date for borrower’s completion
of all repair work to the two structurally damaged buildings pursuant to the
Purchased Asset Documents was December 31, 2010. That date has passed and
borrower has not completed all work. Beginning in December 2010, the Purchased
Asset Documents required that cash flow from the property be paid into an escrow
account at NewStar, and NewStar was to disburse from the escrow for various
approved expenses. NewStar has not yet required borrower to make escrow deposits
because the renovations have not been completed and therefore leasing and
property cash flow are behind the original expectations.

The collateral property has suffered some soil erosion around the entrances of
two buildings. Borrower represents that it is repairing the erosion.

The collateral property suffered a fire on January 6, 2011. The borrower
represents that the casualty was covered by insurance and that the repairs and
restoration of the property is nearly complete.

The Seller is in the process of approving and documenting an additional
amendment to the Birchtree Purchased Asset which will increase the commitment
amount by $500,000 with those funds to be disbursed to fund additional repair
and renovation costs. This amendment is not part of the Purchased Asset
Documents of the Birchtree Purchased Asset. Seller anticipates that the
incremental loan proceeds will carry interest payable monthly on a current basis
at LIBOR plus 600bp with a 2.00% LIBOR floor and that the amendment will be
approved, negotiated and documented by July 31, 2011.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 4: Borrower’s failure to complete the work prior to the date
required in the amendment is a default under the amendment.

 

  •  

Representation 9: As indicated above, NewStar has agreed to make certain
advances to the borrower that were not required to be made pursuant to the
Purchased Asset Documents. As indicated above NewStar has not declared or
enforced against the borrower the default for failure to complete the repair
work on time as provided in the Purchased Asset Documents. As indicated above
NewStar has not required the creation of an escrow account as provided in the
Purchased Asset Documents. As indicated above, Seller is in the process of
approving and documenting an additional amendment to the Birchtree Purchased
Asset which will increase the commitment amount by $500,000 with those funds to
be disbursed to fund additional repair and renovation costs. This amendment is
not part of the Purchased Asset Documents of the Birchtree Purchased Asset.

 

  •  

Representation 13: As described above the Purchased Asset Documents provides
NewStar with shared appreciation rights and other equity participation.

 

Ex. XI-5

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

  •  

Representation 14: As described above a portion of the property is not in
compliance with local codes for the two structurally damaged buildings and the
pool. Also as described above because its initial demolition was not made with
knowledge of the existence of ACM in the building, borrower’s initial demolition
protocol was not compliant with environmental code requirements.

 

  •  

Representation 16: The Birchtree Purchased Asset has damage to its physical
condition as noted above including the finding by the building department that
two buildings were uninhabitable and the soil erosion.

 

  •  

Representation 17: As described above because its initial demolition was not
made with knowledge of the existence of ACM in the building, borrower’s initial
demolition protocol was not compliant with environmental code requirements.

 

  •  

Representation 19: As described above two buildings representing a portion of
the collateral to the Birchtree Purchased Asset have been cited by the Raleigh
NC building department as uninhabitable. As described above the borrower
represents that it is working with the North Carolina Department of Health and
Human Services regarding the removal of ACM at a portion of the property that is
collateral to the Birchtree Purchased Asset.

 

  •  

Representation 20: As described above NewStar has not yet required the borrower
to make, and the borrower has not yet made, escrow deposits as required under
the Purchased Asset Documents.

The Purchased Asset known as Two South Executive (herein the “Two South
Executive Purchased Asset”)

As a part of the modification of the Purchased Asset Documents of the Two South
Executive Purchased Asset, NewStar reduced the principal balance of the loan by
two million dollars. As part of that agreement, a participation interest was
created in which the holder of the Two South Executive Purchased Asset will
receive a participation equal to thirty percent of the sale proceeds of the
property after repayment of debt up to a maximum total payment of two million
dollars. This interest (herein the “Two South Executive Participation Interest”)
is not secured by the same senior interest in the Two South Executive Purchased
Asset collateral of the first mortgage loan.

In August-September 2010 in connection with the renewal of the tenant SOC
Sandlake the borrower requested and NewStar agreed to fund $12.50 per square
foot of tenant improvement costs on the renewal space which is above the $7.50
per square foot maximum disbursement amount for renewal space as provided in the
Purchased Asset Documents.

In August 2010 the borrower requested and NewStar agreed to fund $17,500
representing fifty percent of the cost associated with partially finishing
several office suites for which there were no leases at the time. NewStar was
not required to make these disbursements pursuant to the Purchased Asset
Documents.

 

Ex. XI-6

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Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 5: The Two South Executive Participation Interest is not secured
by a senior interest in the Two South Executive Purchased Asset collateral.

 

  •  

Representation 7: The Two South Executive Participation Interest is not secured
by a senior interest in the Two South Executive Purchased Asset collateral.

 

  •  

Representation 9: As indicated above, NewStar has agreed to make certain
advances to the borrower that were not required to be made pursuant to the
Purchased Asset Documents.

 

  •  

Representation 13: The Two South Executive Participation Interest represents a
shared appreciation right and equity participation contingent additional
interest in the property.

The Purchased Asset known as One South Executive (herein the “One South
Executive Purchased Asset”)

In August 2010 the borrower and NewStar approved the execution of an easement
with the City of Charlotte, North Carolina relating to storm drain improvements.

In March 2011 the borrower requested and NewStar approved the use of $73,785
representing fifty percent of the monthly cash flow sweep to partially fund
tenant improvement costs in connection with the leases to Southeast
Psychological Services and Lewis & Roberts which were in excess of the maximum
tenant improvements disbursement amount pursuant to the Purchased Asset
Documents.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 9: As indicated above, NewStar has agreed to the borrower
executing an easement for the collateral property and to allow the application
of excess cash flow in a manner not required pursuant to the Purchased Asset
Documents.

 

Ex. XI-7

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The Purchased Asset known as Wilton Plaza (herein the “Wilton Plaza Purchased
Asset”)

On November 2, 2009 NewStar entered into a Compromise and Settlement Agreement
with Wilton 372 Associates, LLC for the discounted payoff of the loan. The
agreement expired by its own terms on January 8, 2010 and is no longer of force
and effect.

The Purchased Asset Documents specifies limitations on the disbursements
required to be made for tenant improvements in connections with new leases. The
borrower has entered into leases under which the actual cost of tenant
improvements were less than the maximum disbursement amount established in the
Purchased Asset Documents. From time to time the borrower has requested and
NewStar has agreed to utilize the savings on tenancy costs relative to the
maximum disbursement amount on some leases to increase the actual disbursed
amount on subsequent leases with tenancy costs in excess of the maximum
disbursement amount.

The borrower requested and NewStar agreed to apply $41,173.25 of the property
renovation reserve to reimburse the borrower for building a corridor on the
second floor of the south wing of the property. This project was not part of the
original approved scope of property renovations.

From time to time the borrower has requested and NewStar has funded
disbursements for tenant improvement costs for a leasing and management office
at the property which is not required pursuant to the Purchased Asset Documents.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 9: As indicated above, NewStar had agreed to an alteration of the
loan repayment that is no longer of force and effect and has agreed to make
certain advances to the borrower that were not required to be made pursuant to
the Purchased Asset Documents.

 

  •  

Representation 20: No escrow deposits or payments relating to the Wilton Plaza
Purchased Asset are in the possession of or under the control of Seller or
Servicer.

The Purchased Asset known as Registry (herein the “Registry Purchased Asset”)

In January 2010 the borrower chose to exercise the first of its one year
extension options resulting in new maturity date of January, 31, 2011. Borrower
paid an extension fee in the amount of $82,701.85, or 0.50% of the outstanding
loan balance. Borrower requested and NewStar agreed to apply fifty percent of
the extension fee ($41,350.92) to repayment of loan principal. At the same time,
the unfunded portion of the interest reserve was eliminated and the borrower’s
right to draw on the interest sub-facility was terminated. This was documented
formally in the First Loan Modification dated January 27, 2010. The Borrower
also paid NewStar $77,495, the amount of the extension fee for the second
extension period. Borrower requested and NewStar agreed to apply the payment to
repayment of loan principal while acknowledging that the Borrower satisfied the
requirements of 5(f) of the Note that is part of the Purchased Asset Documents
(the payment of the extension fee) with respect to the potential extension of
the Maturity Date of the Loan to January 31, 2012.

 

Ex. XI-8

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In April 2010 the borrower repaid $1,000,000 in loan principal in exchange for
NewStar agreeing to eliminate provisions 2.1(a)(i) (the repayment guaranty
limited to one million dollars ) and 3.8 (the liquidity requirement of
Guarantor) of the Guaranty that is part of the Purchased Asset Documents. These
changes were documented in the Second Loan Modification and First Modification
of Guaranty dated April 6, 2010.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 9: As indicated above, NewStar has agreed to modifications to the
loan terms and the application of funds in ways not required pursuant to the
Purchased Asset Documents.

 

  •  

Representation 10: As indicated above the loan has been partially satisfied.

The Purchased Asset known as Bell Plaza (herein the “Bell Plaza Purchased
Asset”)

In January 2011 borrower requested that it be allowed to exercise all remaining
extension options and that the interest rate cap requirement only apply to the
then outstanding principal balance of the loan and not to the total outstanding
commitment as provided in the Purchased Asset Documents. NewStar agreed to these
requests.

Therefore the following exceptions are made to the REPRESENTATIONS AND
WARRANTIES REGARDING EACH INDIVIDUAL PURCHASED ASSET under EXHIBIT V:

 

  •  

Representation 9: As described above NewStar agreed to allow for the extension
of the loan in ways not in concordance with the Purchased Asset Documents.

 

  •  

Representation 20: No escrow deposits or payments relating to the Bell Plaza
Purchased Asset are in the possession of or under the control of Seller or
Servicer.

 

Ex. XI-9

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EXHIBIT XI

FORM OF LIMITED POWER OF ATTORNEY

Know All Men by These Presents, that NEWSTAR FINANCIAL, INC., a Delaware
corporation (“Guarantor”), does hereby appoint MACQUARIE BANK LIMITED, an
Australian corporation (“Purchaser”), its attorney-in-fact to act in Guarantor’s
name, place and stead, upon the occurrence of an Event of Default, in any way
that Guarantor could do with respect to (i) the completion of the endorsements
of the Purchased Assets, including without limitation the Mortgage Notes and
Assignments of Mortgages and any transfer documents related thereto (in each
case solely to the extent the Administrative Agent is the named holder thereof)
and any transfer documents relating to the Administrative Agent Rights, (ii) the
recordation of the Assignments of Mortgages and other applicable assignment
documents (solely to the extent the Administrative Agent is the named holder
thereof), (iii) the preparation and filing, in form and substance satisfactory
to Purchaser, of such financing statements, continuation statements, and other
uniform commercial code forms, as Purchaser may from time to time, reasonably
consider necessary to create, perfect, and preserve Purchaser’s security
interest in the Purchased Assets (solely to the extent the Administrative Agent
is the named holder thereof) and (iv) the enforcement of Purchaser’s rights
under Article 30 of that certain Master Repurchase Agreement, dated as of
June 7, 2011 (the “Repurchase Agreement”), by and among Purchaser, NewStar CRE
Finance I LLC and Guarantor, and to take such other steps as may be necessary to
cause Purchaser (or its designee) to be appointed as Administrative Agent for
each Purchased Asset to the extent that Guarantor is permitted by law to act
through an agent.

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

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

IN WITNESS WHEREOF, Guarantor has caused this Power of Attorney to be executed
as a deed this 7th day of June, 2011.

[SIGNATURES ON THE FOLLOWING PAGE]

 

Ex. XI-1

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NEWSTAR FINANCIAL, INC. By:  

 

  Name:   Title:

 

Ex. XI-2