Exhibit 10.8

EXECUTION VERSION

PARTICIPATION AGREEMENT

(GKK/AFR Senior Mezzanine Loan)

THIS PARTICIPATION AGREEMENT (this “Agreement”) is made and entered into as of
August 22, 2008 by and among KBS DEBT HOLDINGS, LLC, a Delaware limited
liability company (the “Original Lender”), in its capacity as issuer of the
Participation Interests (as hereinafter defined) and as original lender under
the Loan Documents (as hereinafter defined), KBS GKK PARTICIPATION HOLDINGS I,
LLC, a Delaware limited liability company, as a participant (together with its
permitted successors and assigns, “Participant A”), KBS GKK PARTICIPATION
HOLDINGS II, LLC, a Delaware limited liability company, as a participant
(together with its permitted successors and assigns, “Participant B”; each of
Participant B and Participant A are sometimes individually referred to herein as
a “Participant” and collectively as the “Participants”), and ARCHON GROUP, L.P.,
a Delaware limited partnership, as servicer.

W I T N E S S E T H

WHEREAS, pursuant to that certain Amended and Restated Senior Mezzanine Loan
Agreement, with an original closing date of April 1, 2008 and amended as of
August 22, 2008 (as amended and as may be further amended, restated,
supplemented or otherwise modified, the “Loan Agreement”), Goldman Sachs
Mortgage Company, a New York limited partnership (as successor-in-interest to
Goldman Sachs Commercial Mortgage Capital, L.P.) (“GSMC”) and Citicorp North
America, Inc., a New York corporation (“Citicorp”; and together with GSMC,
collectively, the “Senior Mezzanine Lenders”) originated a certain senior
mezzanine loan in the original principal amount of $500,000,000 (the “Loan”) to
the entities named as borrowers in the Loan Agreement (and defined therein as
Senior Mezzanine Borrower) (collectively, the “Borrower”), which Loan is
evidenced by that certain Amended and Restated Mezzanine Promissory Note A-1
(Senior Mezzanine Loan), dated as of April 1, 2008 and amended as of August 22,
2008, and made by Borrower in favor of GSMC in the original principal amount of
$281,250,000 and endorsed by GSMC in favor of Original Lender, and that certain
Amended and Restated Mezzanine Promissory Note A-2 (Senior Mezzanine Loan),
dated as of April 1, 2008 and amended as of August 22, 2008, and made by
Borrower in favor of Citicorp in the original principal amount of $218,750,000
and endorsed by Citicorp in favor of Original Lender (collectively, and together
with any and all renewals, amendments, modifications, consolidations and
extensions thereof, the “Promissory Notes”);

WHEREAS, the Senior Mezzanine Lenders subsequently transferred their respective
interests in the Loan to Original Lender;

WHEREAS, pursuant to the terms of this Agreement, Original Lender is tranching
the Loan into the following components: (1) a pari passu Participation Interest
in the initial principal amount of $281,250,000 (“Participation A”) and (2) a
pari passu Participation Interest in the initial principal amount of
$218,750,000 (“Participation B”, and collectively with Participation A, the
“Participation Interests”);

 

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WHEREAS, pursuant to the terms of this Agreement, (1) Original Lender wishes to
sell, transfer and convey to Participant A, and Participant A wishes to
purchase, acquire and take from Original Lender, Participation A and
(2) Original Lender wishes to sell, transfer and convey to Participant B, and
Participant B wishes to purchase, acquire and take from Original Lender,
Participation B;

WHEREAS, in consideration for GSMC financing Participant A’s purchase and
acquisition of the interests issued hereunder by Original Lender to Participant
A, Participant A wishes to Transfer (as defined herein) all of its right, title
and interest in and to the Participation A to GSMC pursuant to the terms and
conditions of the Goldman Repurchase Agreement (as defined herein);

WHEREAS, in consideration for Citigroup (as defined herein) financing
Participant B’s purchase and acquisition of the interests issued hereunder by
Original Lender to Participant B, Participant B wishes to Transfer all of its
right, title and interest in and to the Participation B to Citigroup pursuant to
the terms and conditions of the Citigroup Repurchase Agreement (as defined
herein);

WHEREAS, Original Lender will deliver to LaSalle (as defined herein), in its
capacity as custodian pursuant to the Goldman Custodial Agreement (as defined
herein), (1) the original Promissory Notes together with endorsements in blank
executed by Original Lender, (2) the original Loan Agreement and (3) the
original Loan Documents and all other original documents and agreements relating
to the Loan (to the extent such originals of the Loan Documents and other
documents relating to the Loan were delivered to Original Lender in connection
with Original Lender’s acquisition of the Loan, otherwise, copies of such
documents) as reasonably requested by Servicer or GSMC, each to be held by
LaSalle on behalf of and for the benefit of the Participants and the Repurchase
Counterparties, not as additional security under the Repurchase Agreements (as
defined herein), but to enable the Participants, Repurchase Counterparties
and/or Servicer, as applicable, to execute and effectuate the remedies available
to Original Lender under the Promissory Notes, Loan Agreement and Loan Documents
in accordance with the Repurchase Agreements; and

WHEREAS, Original Lender and each of the Participants desire to enter into this
Agreement to memorialize the terms under which the Participants are purchasing
their respective Participation Interests in the Loan specified herein, as well
as the terms under which each Participant will hold its respective Participation
Interest and pursuant to which the Loan will be serviced by Servicer.

NOW, THEREFORE, in consideration of the mutual covenants, agreements and
provisions herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:

1.        Definitions. For purposes of this Agreement, all capitalized terms not
expressly defined herein have the meanings ascribed thereto in the Loan
Agreement. The meanings of all capitalized terms apply equally to the singular
and plural of the terms defined.

“Accredited Investor” has the meaning provided in Section 11(d).

 

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“Advance Interest” means interest at the Advance Rate on a Protective Advance
from and including the date on which such Protective Advance was made to but
excluding the date on which such Protective Advance is paid or reimbursed, less
the amount of interest previously paid thereon.

“Advance Rate” means, for any period, a rate per annum payable by Borrower
pursuant to the Loan Agreement with respect to the applicable Protective
Advances.

“Affiliate” means, with respect to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this definition, “control” when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning provided in the recitals hereto.

“Annex” has the meaning provided in the definition of “Embargoed Persons.”

“Approved Servicer” has the meaning provided in the definition of “Qualified
Transferee.”

“Borrower” has the meaning provided in the recitals hereto.

“Business Day” means any day, other than Saturday or Sunday, on which banks in
New York are open for business.

“Buy Response” has the meaning provided in Section 7(b).

“Buy/Sell Notice” has the meaning provided in Section 7(a).

“Buy/Sell Notice Deadline” has the meaning provided in Section 7(a).

“Buy/Sell Response Date” has the meaning provided in Section 7(b).

“Buy/Sell Withdrawal Notice” has the meaning provided in Section 7(b).

“CDO” has the meaning provided in the definition of the term “Qualified
Transferee”.

“CDO Asset Manager” means, with respect to any Securitization Vehicle which is a
CDO, the entity that is responsible for managing or administering a
Participation Interest as an underlying asset of such Securitization Vehicle or,
if applicable, as an asset of any Intervening Trust Vehicle (including, without
limitation, the right to exercise any consent and control rights available to
the holder of such Participation Interest).

“Citicorp” has the meaning provided in the recitals hereto.

 

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“Citigroup” means Citigroup Financial Products, Inc., a Delaware corporation.

“Citigroup Repurchase Agreement” means that certain Master Repurchase Agreement,
dated as of the date hereof, between Participant B, as seller, and Citigroup, as
buyer, as the same may be amended, restated, supplemented or otherwise modified
from time to time.

“Closing Date” has the meaning provided in Section 7(c).

“Conduit” has the meaning provided in Section 10(d).

“Conduit Credit Enhancer” has the meaning provided in Section 10(d).

“Conduit Inventory Loan” has the meaning provided in Section 10(d).

“Curing Holder” has the meaning provided in Section 6(e)(ii).

“Eligibility Requirements” means, with respect to any Person, that such Person,
together with its Affiliates, (i) has total assets (in name or under management)
in excess of $600,000,000 and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity of
$250,000,000 and (ii) is regularly engaged in the business of making or owning
(including indirectly through REMIC bonds and/or securitizations) commercial
real estate loans or interests therein or operating commercial properties.

“Embargoed Person” means any Person, entity or government that is (i) subject to
trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder with the result that the investment in the
Loan (whether directly or indirectly), is prohibited by law; (ii) a “blocked”
person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and
all modifications thereto or thereof (the “Annex”); (iii) is listed as a
Specially Designated Terrorist or as a “blocked” person on any lists maintained
by the Office of Foreign Assets Control, Department of the Treasury (the
“OFAC”); pursuant to the USA Patriot Act of 2001, 107 Public Law 56 (October 26,
2001) (together with all other statutes and all orders, rules and regulations of
the United States government and its various executive departments, agencies and
offices related to the subject matter of the Patriot Act, including Executive
Order 13224 effective September 24, 2001, the “Patriot Act”) or any other list
of terrorists or terrorist organizations maintained pursuant to any of the rules
and regulations of the OFAC issued pursuant to the Patriot Act or on any other
list of terrorists or terrorist organizations maintained pursuant to the Patriot
Act; (iv) a person who has been determined by competent authority to be subject
to any of the prohibitions contained in the Patriot Act; or (v) owned or
controlled by or now acting for or on behalf of any person named in the Annex or
any other list promulgated under the Patriot Act or any other person who has
been determined to be subject to the prohibitions contained in the Patriot Act.

“Fitch” has the meaning provided in the definition of “Rating Agencies.”

 

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“Foreclosed Participant” has the meaning provided in Section 5(g).

“Foreclosing Repurchase Counterparty” has the meaning provided in Section 5(g).

“Foreclosure Property Owning Entity” has the meaning provided in Section 8.

“Goldman Custodial Agreement” means that certain Custodial Agreement dated as of
August 22, 2008, by and among LaSalle, as custodian, GSMC, as buyer, and
Participant A, as seller.

“Goldman Repurchase Agreement” means that certain Master Repurchase Agreement,
dated as of the date hereof, between Participant A, as seller, and GSMC, as
buyer, as the same may be amended, restated, supplemented or otherwise modified
from time to time.

“GSMC” has the meaning provided in the recitals hereto.

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of August 22, 2008, by and among GSMC, Citicorp and SLG Stars Mortgage Loan LLC,
collectively as senior lender, GSMC and Citicorp, collectively as senior
mezzanine lender, and GSMC, Citicorp and SLG Stars Mezz Loan LLC, collectively
as junior mezzanine lender, as the same may be amended, restated, supplemented
or otherwise modified from time to time.

“Intervening Trust Vehicle” with respect to any Securitization Vehicle that is a
CDO, shall mean a trust vehicle or entity that holds the Participation Interest
as collateral securing (in whole or in part) any obligation or security held by
such Securitization Vehicle as collateral for the CDO.

“Investment Company Act” has the meaning provided in Section 11(d).

“Invoking Participant” has the meaning provided in Section 7(a).

“KBS Trust” means KBS Real Estate Investment Trust, Inc., a Maryland
corporation.

“LaSalle” means LaSalle Bank, National Association, a national banking
association.

“Lender” means the named lender under the Loan Documents.

“Loan” has the meaning provided in the recitals hereto.

“Loan Agreement” has the meaning provided in the recitals hereto.

“Loan Documents” means those documents listed on Exhibit A evidencing or
securing the Loan.

“Major Decision” has the meaning provided in Section 5(c).

 

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“Master Servicing Fee” has the meaning provided in Section 5(a).

“Material Disagreement” has the meaning provided in Section 7(a).

“Moody’s” has the meaning provided in the definition of “Rating Agencies.”

“Mortgage Loan” means that certain $250,000,000 senior loan made pursuant to
that certain Loan Agreement, dated as of April 1, 2008, by the borrowers named
therein and GSMC, Citicorp and SLG Stars Mortgage Loan LLC, collectively and
each as a lender, and evidenced by three promissory notes made by each borrower
in favor of the GSMC, Citicorp and SLG Stars Mortgage Loan LLC.

“Non-Curing Holder” has the meaning provided in Section 6(e)(ii).

“Non-Exempt Person” means any Person other than a Person who is either (i) a
U.S. Person or (ii) has provided to Servicer for the relevant year such
duly-executed form(s) or statement(s) which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (A) any income
tax treaty between the United States and the country of residence of such
Person, (B) the Internal Revenue Code of 1986, as amended from time to time and
any successor statute, or (C) any applicable rules or regulations in effect
under clauses (A) or (B) above, permit Servicer to make such payments free of
any obligation or liability for withholding.

“Non-Foreclosed Participant” has the meaning provided in Section 5(g).

“Non-Purchasing Holder” has the meaning provided in Section 6(e)(i).

“Notice Participant” has the meaning provided in Section 7(a).

“OFAC” has the meaning provided in the definition of “Embargoed Persons.”

“Original Lender” has the meaning provided in the introductory paragraph to this
Agreement.

“Participant” has the meaning provided in the introductory paragraph to this
Agreement.

“Participant A” has the meaning provided in the introductory paragraph to this
Agreement.

“Participant B” has the meaning provided in the introductory paragraph to this
Agreement.

“Participation” or “Participation Interest” means an undivided beneficial
participating interest in the Loan, the Loan Documents and the proceeds thereof,
equal to the percentage specified in Exhibit C to this Agreement, subject to the
terms of this Agreement.

“Participation A” has the meaning provided in the recitals hereto.

 

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“Participation B” has the meaning provided in the recitals hereto.

“Participation Rate” shall mean a rate per annum equal to LIBOR plus 5.2%
(actual/360) payable in respect of the Participation Interests held by the
Participants.

“Patriot Act” has the meaning provided in the definition of “Embargoed Person.”

“Permitted Fund Manager” means any Person that on the date of determination is
(i) one of the entities listed on Exhibit D or any other nationally-recognized
manager of investment funds investing in debt or equity interests relating to
commercial real estate, (ii) investing through a fund with committed capital of
at least $250,000,000 and (iii) not subject to a Proceeding.

“Person” means any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.

“Pricing Convention” has the meaning provided in Section 7(a).

“Promissory Notes” has the meaning provided in the recitals hereto.

“Pro Rata Share” means, as of any date, the ratio (expressed as a percentage) of
the principal balance of the Participation Interest of a Participant to the
aggregate principal balance of each of the Participation Interests, which is
initially as set forth on Exhibit C attached hereto.

“Protective Advance” has the meaning provided in Section 6(a).

“Purchase Price” has the meaning provided in Section 7(b).

“Purchasing Holder” has the meaning provided in Section 6(e)(i).

“Purchasing Participant” has the meaning provided in Section 7(b).

“Qualified Servicer” means any nationally recognized commercial mortgage loan
servicer that has a rating of “CSS2” or better by Fitch, is on the S&P Select
Servicer List, and is acting as servicer in a commercial mortgage loan
securitization that was rated by Moody’s within the twelve (12) month period
prior to the date of determination (provided Moody’s has not downgraded or
withdrawn the then-current rating on any class of commercial mortgage securities
or placed any class of commercial mortgage securities on watch citing the
continuation of such servicer as servicer of such commercial mortgage securities
as the cause for such downgrade, withdrawal or watch).

“Qualified Transferee” means (a) GSMC or any of its Affiliates, (b) Citigroup or
any of its Affiliates, (c) Citicorp or any of its Affiliates, (d) Participant A
or any of its Affiliates, (e) Participant B or any of its Affiliates, or (f) any
one or more of the following:

 

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(i)        a real estate investment trust, bank, saving and loan association,
investment bank, insurance company, trust company, commercial credit
corporation, pension plan, pension fund or pension advisory firm, mutual fund,
government entity or plan, real estate investment fund (including a fund
established for the purpose of purchasing real estate debt instruments) that
satisfies the Eligibility Requirements;

(ii)        an investment company, money management firm or “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, or an institutional “accredited investor” within the meaning
of Regulation D under the Securities Act of 1933, as amended, that satisfies the
Eligibility Requirements;

(iii)        an institution substantially similar to any of the foregoing
entities described in clauses (c)(i) or (c)(ii) that satisfies the Eligibility
Requirements;

(iv)        any entity Controlled by, Controlling or under common Control with,
one or more of any of the entities described in clause (a) or clauses (c)(i),
(c)(ii), or (c)(iii) above;

(v)        a Qualified Trustee (or in the case of a CDO, a single purpose
bankruptcy-remote entity which contemporaneously pledges its interest in the
Participation Interest to a Qualified Trustee) in connection with (A) a
securitization of, (B) the creation of collateralized debt obligations (“CDO”)
secured by, or (C) a financing through an “owner trust” of, a Participation
Interest (any of the foregoing, a “Securitization Vehicle”) provided that
(1) one or more classes of securities issued by such Securitization Vehicle is
initially rated at least investment grade by each of the Rating Agencies which
assigned a rating to one or more classes of securities issued in connection with
a Securitization; (2) in the case of a Securitization Vehicle that is not a CDO,
the special servicer of such Securitization Vehicle has a Required Special
Servicer Rating (such entity, an “Approved Servicer”) and such Approved Servicer
is required to service and administer such Participation Interest in accordance
with servicing arrangements for the assets held by the Securitization Vehicle
which require that such Approved Servicer act in accordance with a servicing
standard notwithstanding any contrary direction or instruction from any other
Person; or (3) in the case of a Securitization Vehicle that is a CDO, the CDO
Asset Manager (and, if applicable, each Intervening Trust Vehicle that is not
administered and managed by a Qualified Trustee, or a CDO Asset Manager which is
a Qualified Trustee) are each a Qualified Transferee under clauses (a), (b),
(c)(i), (c)(ii), (c)(iii), or (c)(iv) of this definition;

(vi)        an investment fund, limited liability company, limited partnership
or general partnership where a Permitted Fund Manager or an entity that is
otherwise a Qualified Transferee under clauses (c)(i), (ii), (iii) or (iv) of
this definition acts as the general partner, managing member or fund manager and
at least fifty percent (50%) of the equity interests in such investment fund are
owned, directly or indirectly, by one or more entities that are otherwise
Qualified Transferee under clauses (c)(i), (ii), (iii) or (iv) of this
definition;

 

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(vii)        any other lender or entity which has been approved as a Qualified
Transferee for purposes hereof by the Senior Lender (as such term is defined in
the Intercreditor Agreement) under the Intercreditor Agreement (prior to a
Securitization (as such terms is defined in the Intercreditor Agreement)) and,
if a Securitization has occurred, by the Rating Agencies; or

(viii)        any Qualified Transferee under any of the foregoing clauses that
is acting in an agency capacity for a syndicate of lenders, provided more than
50% of the committed loan amounts or outstanding loan balance are owned by
lenders in the syndicate that are themselves Qualified Transferees.

For purposes of this definition only, “Control” means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interests of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise (“Controlled” has the meaning correlative thereto).

“Qualified Trustee” means (i) a corporation, national bank, national banking
association or a trust company, organized and doing business under the laws of
any state or the United States of America, authorized under such laws to
exercise corporate trust powers and to accept the trust conferred, having a
combined capital and surplus of at least $100,000,000 and subject to supervision
and examination by federal or state authority, (ii) an institution insured by
the Federal Deposit Insurance Corporation or (iii) an institution whose
long-term senior unsecured debt is rate either of the then in effect top two
rating categories or each of the Rating Agencies.

“Rating Agencies” means Standard and Poor’s Ratings Services, a Division of The
McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”)
and Fitch Inc. (“Fitch”) or, if any of such entities shall for any reason no
longer perform the functions of a securities rating agency, any other nationally
recognized statistical rating agency designated by Servicer.

“Redirection Notice” has the meaning provided in Section 10(c).

“Regulation S” has the meaning provided in Section 11(d).

“Repurchase Agreements” means the Citigroup Repurchase Agreement and the Goldman
Repurchase Agreement.

“Repurchase Counterparty” means Citigroup or GSMC, as buyers, under the
respective Repurchase Agreements, or their respective successors or assigns
thereunder.

“S&P” has the meaning provided in the definition of “Rating Agencies.”

“SEC” has the meaning provided in Section 11(d).

“Securities Act” has the meaning provided in Section 11(b).

 

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“Securitization Vehicle” has the meaning provided in the definition of
“Qualified Transferee.”

“Selling Participants” has the meaning provided in Section 7(c).

“Sell Response” has the meaning provided in Section 7(b).

“Senior Mezzanine Lenders” has the meaning provided in the recitals hereto.

“Servicer” has the meaning provided in Section 5(a).

“Servicing Agreement” means that certain Second Amended and Restated Interim
Servicing Agreement, dated as of June 1, 2008, by and between GSMC, as owner,
and Archon Group, L.P., as servicer, as the same may be amended, restated,
supplemented or otherwise modified from time to time, and any replacement
servicing agreement which may be hereafter entered into with any successor
Servicer and approved by the Participants as provided hereunder.

“Servicing Standard” has the meaning provided in Section 5(a).

“Special Servicing Fee” has the meaning provided in Section 5(a).

“Successor Participant” has the meaning provided in Section 5(g).

“Super-Priority Protective Advance” has the meaning provided in Section 6(b).

“Transfer” means any assignment, pledge, conveyance, sale, transfer, mortgage,
encumbrance, grant of a security interest, issuance of a participation interest,
or other disposition, either directly or indirectly, by operation of law or
otherwise.

“Unanimous Decision” has the meaning provided in Section 5(d).

2.        Purchase of Participation Interest.

(a)        Participant A hereby purchases from Original Lender, and Original
Lender hereby sells and assigns to Participant A, Participation A in accordance
with the schedule annexed hereto as Exhibit C, for the purchase price set forth
in the closing statement executed by the parties on the date hereof.

(b)        Participant B hereby purchases from Original Lender, and Original
Lender hereby sells and assigns to Participant B, Participation B in accordance
with the schedule annexed hereto as Exhibit C, for the purchase price set forth
in the closing statement executed by the parties on the date hereof.

(c)        Original Lender shall deliver to each Participant a participation
certificate (a “Participation Certificate”) in the form of Exhibit B hereto to
evidence each Participant’s Participation Interest. The rights and obligations
of the Participants hereunder shall be subject to the terms and provisions of
this Agreement and to the terms of the Loan Documents.

 

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3.        Custody of Loan Documents. Custody of all documents evidencing or
securing the Loan (including the original Promissory Notes, together with
endorsements in blank executed by Original Lender) shall be held exclusively by
LaSalle, in its capacity as custodian pursuant to the Goldman Custodial
Agreement, on behalf of and for the benefit of the Participants and Repurchase
Counterparties, except that each Participant shall hold its own Participation
Certificate. Original Lender acknowledges that (a) it has no financial interest
in the Promissory Notes or the Loan and that Servicer or GSMC, each on behalf of
all Participants, may execute and effectuate any and all remedies available to
Original Lender under the Promissory Notes, Loan Agreement and any of the Loan
Documents and (b) upon a default or event of default under the Promissory Notes,
Loan Agreement, any of the Loan Documents or in connection with the Loan,
together with a default or event of default under either the Goldman Repurchase
Agreement and/or the Citigroup Repurchase Agreement, GSMC may, on behalf of
GSMC, Citigroup and the non-defaulting Participant, exercise all rights and
remedies available to Original Lender under the Promissory Notes, Loan
Agreement, Loan Documents or in connection with the Loan; provided, however,
that GSMC shall obtain Citigroup’s prior written consent prior to taking any
action constituting a Unanimous Decision in accordance with Section 5(d) hereof.

4.        Priority of Participation Interests; Payments.

(a)        Each Participation Interest shall be of equal priority, and no
portion of such Participation Interest shall have priority or preference over
any portion of the other Participation Interest or security therefor.

(b)        Any amounts received by Original Lender or Servicer under the
Promissory Notes and in respect of the Loan shall be immediately distributed in
accordance with each Participant’s respective Pro Rata Share one (1) Business
Day after receipt thereof (or, if received after 1:00 p.m. New York time, within
two (2) Business Days after receipt thereof) and pursuant to the wire
instructions on Schedule II hereto (as the same may be modified upon five
(5) Business Days prior notice by the Repurchase Counterparties to Servicer).
Servicer shall not be deemed to have received any payments on the Loan until
such time as Servicer has immediately available funds reflecting such payment.
During such time as the distribution of any funds received by Original Lender in
accordance with the terms hereof are pending, the Original Lender shall hold
such funds in trust for the Participants and shall segregate the funds pending
distribution thereof and pursuant to the terms hereof. Notwithstanding anything
to the contrary herein, Servicer shall not be obligated to make any advances in
respect of the Loan. Servicer and Original Lender hereby represent that the
Borrower, together with any servicers or deposit account banks involved in the
administration and distribution of the Loan proceeds have been irrevocably
instructed to make all payments under the Promissory Notes and in connection
with the Loan and any amounts otherwise distributable to the Senior Mezzanine
Lenders directly to Servicer.

(c)        All payments and proceeds (of whatever nature) received with respect
to the Loan will be applied in the following order:

(i)        first, to Servicer in payment of the Master Servicing Fee, any
Special Servicing Fee, and any unreimbursed out-of-pocket costs and expenses
which are

 

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reasonably incurred by Servicer in administering the Loan and pursuing remedies
under the Loan Documents, including any such costs and expenses which are
reimbursable by Borrower pursuant to the terms of the Loan Documents which
remain unpaid, including fees charged by Servicer, enforcement costs and
reimbursement of previously advanced expenses due and owing to Servicer and any
other fees payable to Servicer in accordance with the Loan Documents (which
shall be deemed to include any assumption fees);

(ii)        next, to each of the Participants in the amount of any unreimbursed
Super-Priority Protective Advances made by the Participants and Advance Interest
with respect to such Super-Priority Protective Advances, which shall be paid to
the Participants with a priority in accordance with the respective dates such
Super-Priority Protective Advances were made, with the first Super-Priority
Protective Advances being reimbursed first and, to the extent Super-Priority
Protective Advances are made by more than one Participant, on a pro rata basis
in accordance with the amount of Super-Priority Protective Advances made by each
Participant;

(iii)        next, to each of the Participants, in the amount of any
unreimbursed Protective Advances (other than Super-Priority Protective Advances
reimbursed pursuant to the foregoing clause (ii)) made by the Participants and
Advance Interest with respect to such Protective Advances, which shall be paid
to the Participants with a priority in accordance with the respective dates such
Protective Advance were made, with the first Protective Advances being
reimbursed first and, to the extent Protective Advances are made by more than
one Participant, on a pro rata basis in accordance with the amount of Protective
Advances made by each Participant;

(iv)        next, an amount equal to the accrued and unpaid interest on the
outstanding principal balance of the Loan, to each Participant at the
Participation Rate on a pari passu basis in accordance with the respective
amounts of interest accrued at the Participation Rate, less in each case, such
Participant’s Pro Rata Share of any Special Servicing Fee and the Master
Servicing Fee;

(v)        next, an amount equal to any principal payments received on the Loan,
whether scheduled or extraordinary (including any payment of principal payable
on the Maturity Date and any Prepayment Amount), to each Participant on a pari
passu basis in accordance with the Pro Rata Share of each Participant; and

(vi)        next, any fees, default interest and other excess amounts allocable
to periods after the date hereof, to the extent actually paid by the Borrower,
to each Participant in accordance with its Pro Rata Share.

5.        Servicing of the Loan and Participation Interests.

(a)        The servicer of the Loan and Participation Interests shall be Archon
Group, L.P., or such other party as shall be selected by the Participants
pursuant to the terms hereof (the “Servicer”). Servicer shall have such powers
as are specifically designated to Servicer pursuant to this Agreement and the
Servicing Agreement (provided that if there shall be any conflict between the
terms of this Agreement and the Servicing Agreement, the terms of this

 

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Agreement shall control), together with such powers as are reasonably incidental
thereto. Servicer shall perform its duties hereunder in the best interests of
and for the sole benefit of the Participants as a collective whole (as
determined by Servicer in its good faith and reasonable judgment) in accordance
with applicable law, the terms of this Agreement and the terms of the Loan and
without regard to any other business relationship Servicer or its affiliates may
have with Borrower or its affiliates (or any other conflict-of-interest of
Servicer) and, to the extent consistent with the foregoing, the higher of the
following standards: (i) in the same manner in which it services and administers
commercial loans or REO property, as applicable, held in its own portfolio or in
the portfolio of any of its affiliates, and (ii) the same care, skill, prudence
and diligence with which Servicer services and administers similar loans or REO
property, as applicable for other third-parties (the “Servicing Standard”)
(except that under no circumstance shall Servicer have any liability arising
from any action or inaction by Servicer to the extent directed by Participants
exercising their voting rights hereunder or as a result of any failure by
Participants holding the required percentage of the Pro Rata Shares to reach
agreement where such an agreement is required as a condition to Servicer’s
taking a specified action hereunder). Servicer, in acting on behalf of all of
the Participants, shall not have any fiduciary duty to any Participant in
connection with the administration of the Loan. Each Participant shall, from
time to time, upon written request of Servicer, execute and deliver such
documents and instruments as may be reasonably necessary to enable Servicer
effectively to service, administer and enforce the Loan in the manner
contemplated by this Agreement and the Loan Documents. In consideration of the
performance of all of its duties hereunder, Servicer shall be entitled to deduct
from payments due to Participant A and Participant B on a pari passu basis in
accordance with the Pro Rata Share of each Participant, a monthly servicing fee
in an amount equal to one (1) basis point (0.01%) per annum of the aggregate
value of the Participations (the “Master Servicing Fee”). During the continuance
of any Event of Default, workout or exercise of remedies under the Loan
Documents, and following any foreclosure, Servicer shall also be entitled to
collect from Participant A and Participant B on a pari passu basis in accordance
with the Pro Rata Share of each Participant, an additional monthly servicing fee
in an amount to be agreed by the parties based on then-market special servicing
fee rates (the “Special Servicing Fee”), which shall be payable monthly from
amounts received by Servicer from or on account of borrower under the Loan in
accordance herewith. Other than with respect to the servicing of the
Participation Interests, Original Lender shall be solely responsible for all
fees incurred in connection with the servicing of the Loan and none of the
Participants, GSMC or Citigroup shall have any obligation to pay such servicing
fees incurred in connection with the servicing of the Loan.

(b)        Except as otherwise expressly provided in this Agreement, Servicer
shall take all such actions as are necessary to enforce and comply with the
terms of the Loan Documents (and other documents and instruments delivered in
connection with the purchase of the Loan on or about the date hereof), including
but not limited to the following:

(i)        Servicer shall keep, in all material respects, complete, accurate and
separate books of account and records at all times indicating all amounts due
and all payments made by Borrower with respect to the Loan, which books and
records shall be available for inspection by representatives of the Participants
during Servicer’s regular business hours upon at least one (1) Business Day
prior notice.

 

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(ii)        Servicer shall, within five (5) Business Days of its notification or
receipt, notify the Participants of any matter which Servicer believes would
have a material adverse effect on the Loan or the Loan Documents and the
interest of the Participants.

(iii)        Servicer shall handle all communications with Borrower or its
representatives on behalf of the Participants.

(iv)        Servicer shall use reasonable efforts to collect, and shall
distribute upon receipt, any quarterly and annual financial statements required
to be delivered by Borrower.

(v)        Subject to Sections 5(c) and (d) below, Servicer shall handle all
other miscellaneous servicing matters which arise during the term of the Loan,
including, without limitation, lease reviews and monitoring of compliance with
applicable covenants.

(vi)        Servicer shall prepare and send to Borrower demand letters for
reimbursement of all expenses properly incurred which are reimbursable from
Borrower and deliver same to the Participants in accordance herewith if not due
Servicer hereunder.

(c)        Servicer shall not take any of the following actions (each a “Major
Decision”) without the prior written consent of Participants holding more than
50% of the Pro Rata Shares in the Loan:

(i)        at any time after acceleration of the maturity of the Loan, accept
any late payment in respect of the Loan;

(ii)        approve any modification or termination of the property management
agreement, or approve any new property management agreement, in each case to the
extent consent is required under the Loan Documents;

(iii)        approve any leases or any renewals, amendments or modifications
thereof to the extent consent is required under the Loan Documents;

(iv)        approve any insurance not conforming to the requirements in the Loan
Documents;

(v)        make any decision with respect to any environmental or zoning matters
affecting the Borrower or any Property (other than the making and pursuing of a
claim under any environmental guarantees or indemnities);

(vi)        adjust, settle and administer any casualty insurance and/or
condemnation claims, proceeds and awards (or consent or approve any such matter)
to the extent consent is required under the Loan Documents; or

(vii)        make any other decision with respect to the Participants, the Loan
or otherwise, that are to be made by Original Lender and/or the Participants and
that are not Unanimous Decisions.

 

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(d)        Servicer shall not take any of the following actions (each a
“Unanimous Decision”) without the prior written consent of all Participants:

(i)        release, waive, forgive or reduce any claim for principal and/or
interest under the Loan Documents or increase the principal amount or interest
under the Loan Documents;

(ii)        extend the maturity date of the Note;

(iii)        consent to any material release, termination, modification or
amendment of any guaranty or indemnity under the Loan to the extent approval is
required under the Loan Documents;

(iv)        release any material lien created by the Loan Documents, or approve
or consent to any material release, substitution or exchange of any collateral
or security for the Loan, in each case to the extent consent is required under
the Loan Documents;

(v)        take any material action in the bankruptcy proceedings of Borrower,
including the release, settlement, compromise, voting on, or approval of any
claim, settlement, plan or payment relating to the Loan as a result of or in
connection with any bankruptcy, insolvency, reorganization or similar proceeding
relating to Borrower, any Person or entity related to or affiliated with
Borrower, or any guarantor of any of Borrower’s obligations;

(vi)        accelerate the maturity of the Note, commence foreclosure
proceedings upon or comparable conversion of the ownership of any of the
Collateral, commence any proceedings to collect any amounts owing or claimed to
be owing under any guaranty, appoint or request the appointment of a receiver of
the Collateral, collect proceeds from the Collateral, take possession of the
Collateral, determining the amount of any credit bid in any foreclosure action
or otherwise exercise enforcement remedies;

(vii)        approve any material amendment or material modification of the Note
or any other Loan Document;

(viii)        permit secondary financing or any other borrowing by Borrower not
expressly permitted by the Loan Documents;

(ix)        waive, defer or otherwise vary from enforcement of the terms of the
Loan Documents relating to payment of interest, principal, real estate taxes or
in the procurement of insurance;

(x)        approve or consent to the transfer, pledge or other encumbrance of
any direct or indirect ownership interests in Borrower or the Property not
permitted by the Loan Documents;

(xi)        approve the selection of a new property manager or franchisor, if
applicable;

 

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(xii)        waive or reduce any claim for any late payment charges or default
interest due under the Loan Documents;

(xiii)        decrease any fee payable by Borrower under the Loan Documents; or

(xiv)        approve any replacement or successor Servicer, whether or not such
proposed replacement or successor Servicer is a Qualified Servicer.

(e)        If Servicer shall request in writing the approval or consent of any
Participant and such approval or consent (or the denial of same) is not received
by Servicer in writing within ten (10) Business Days of such request (or within
such lesser time period as may be specified by Servicer if such lesser time
period is required under the Loan Documents or if circumstances otherwise
reasonably require a shorter time period), then, provided that such request was
marked in bold lettering with the following language: “PARTICIPANT’S RESPONSE IS
REQUIRED WITHIN TEN (10) BUSINESS DAYS AFTER RECEIPT OF THIS NOTICE IN
ACCORDANCE WITH THE TERMS OF THE PARTICIPATION AGREEMENT”, with the blank in
such language replaced by the applicable number, such Participant shall be
deemed to have granted the requested approval or consent. If the Participants
fail to reach any Unanimous Decision or any Major Decision during such ten
(10) Business Day period (or such lesser time period as was specified by
Servicer) within five (5) days after the expiration of such ten (10) Business
Day period (or lesser time period as was specified by Servicer), Servicer shall
deliver a written notice to each of the Participants stating that no Unanimous
Decision or Major Decision, as applicable, has been reached. Notwithstanding
anything to the contrary contained in this Agreement, if a particular provision
of a Loan Document imposes a reasonableness standard on the Participant, then
such standard shall also be applicable to each of the Participants in the
exercise of their rights pursuant to Sections 5(c) and (d) to approve or consent
to such matter.

(f)        Servicer may resign at any time by giving sixty (60) days’ prior
written notice thereof to the Participants; provided, however, that any such
voluntary resignation by Servicer shall not be effective until a successor
Servicer has been approved and appointed by the Participants in accordance with
the terms hereof and approved in writing by the Repurchase Counterparties. Upon
any such resignation or removal of Servicer, Participant A shall appoint a
successor Servicer with Participant B’s prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed. In the event of the
occurrence of any gross negligence or willful misconduct of Servicer hereunder,
then Servicer may be removed as the Servicer hereunder with the approval of all
of the Participants (other than any Participant that is an Affiliate of
Servicer) and Repurchase Counterparties, and Participant A shall appoint a
successor Servicer with Participant B’s prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed.

(g)        Notwithstanding the foregoing or anything to the contrary contained
herein, in the event that a Repurchase Counterparty (the “Foreclosing Repurchase
Counterparty”), its Affiliate, assignee or designee or any third party (such
Foreclosing Repurchase Counterparty or other party, a “Successor Participant”)
shall succeed to the right, title and interest in and to the Participation of
the Participant that is the seller under the

 

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Foreclosing Repurchase Counterparty’s Repurchase Agreement (such Participant,
the “Foreclosed Participant”) by foreclosure, transfer-in-lieu thereof or other
exercise of remedies by such Foreclosing Repurchase Counterparty under the
Foreclosing Repurchase Counterparty’s Repurchase Agreement but the other
Repurchase Counterparty (the “Non-Foreclosing Repurchase Counterparty”) has not
yet exercised its remedies under the Non-Foreclosing Repurchase Counterparty’s
Repurchase Agreement and succeeded to the right, title and interest in and to
the Participation of the Participant that is the seller under the
Non-Foreclosing Repurchase Counterparty’s Repurchase Agreement (such
Participant, the “Non-Foreclosed Participant”), the Non-Foreclosed Participant
shall have no further right to exercise any consent or approval rights under
this Section 5 or otherwise hereunder and from and after the date that the
Successor Participant shall succeed to the interests of the Foreclosed
Participant hereunder, such consent and approval rights of the Non-Foreclosed
Participant shall instead be exercisable solely by the Non-Foreclosing
Repurchase Counterparty (it being acknowledged and agreed that the exercise of
any such rights by the Non-Foreclosing Repurchase Counterparty under this
Section 5 or otherwise under this Agreement, shall be in addition to and shall
not modify or affect any of such Non-Foreclosing Counterparty’s rights under its
Repurchase Agreement.).

6.        Protective Advances.

(a)        If, during the continuance of an Event of Default, the holder of more
than 50% of the Pro Rata Shares determines that it is necessary to make a
protective advance in order to protect and preserve the security for the Loan,
or to pay real property taxes or insurance premiums not paid by the Borrower
(any such amount, a “Protective Advance”), then such Participant shall give
written notice thereof to Servicer and the other Participant, which notice shall
set forth the amount of such Protective Advance, the portion thereof payable by
each Participant (which shall be such Participant’s Pro Rata Share thereof) and
the date (which shall not be less than five (5) Business Days after such notice)
on which each Participant shall remit its proportionate share thereof to
Servicer, and shall describe in reasonable detail the purposes for such
Protective Advance. Servicer shall not be required to make any Protective
Advances (but if it elects to do so in accordance with the Servicing Standard at
any time prior to receipt of the notice specified above, same shall be
reimbursed in accordance with Section 4(c)(i)).

(b)        If any Participant fails to make its proportionate share of any such
Protective Advance when due, then (A) Servicer shall notify all of the
Participants of the identity of the Participant that failed to make its
proportionate share of a Protective Advance; (B) the proportionate share of such
Protective Advance made by the contributing Participant shall constitute a
“Super-Priority Protective Advance”; and (C) the Participant that has made a
Super-Priority Protective Advance may, on notice to the other Participant within
two (2) Business Days following the notice from Servicer set forth in clause
(A) above, commit to making an additional Protective Advance, which also shall
constitute a Super-Priority Protective Advance, equal to the amount of the
Protective Advance which was not timely made.

(c)        Upon receipt of the entire amount of any Protective Advance
(including any Super-Priority Protective Advances) from the contributing
Participant, Servicer shall take all commercially reasonable action to remedy
the event for which the Protective Advance is being made on behalf of the
Participants.

 

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(d)        No Participant shall have any personal liability to fund any
Protective Advance or Super-Priority Protective Advance. All Protective Advances
and Super-Priority Protective Advances shall only be reimbursed to the
Participant which made such Protective Advances and Super-Priority Protective
Advances in accordance with Section 4 and shall not change the Principal
Indebtedness or the Pro-Rata Share of any Participant.

(e)        Exercise of Mortgage Loan Purchase Options; Cure Rights.

(i)        In the event that the Mortgage Loan becomes subject to a Purchase
Option Event (as such term is defined in the Intercreditor Agreement), the
Servicer shall notify each Participant (with a simultaneous copy to GSMC and
Citigroup) of such event and each Participant shall have the right, but not the
obligation, to participate in the purchase of the Mortgage Loan by providing
written notice to the Servicer (with a simultaneous copy to the other
Participant, GSMC and Citigroup) within two (2) Business Days of receipt of such
notice (each Participant who elects to exercise such right, a “Purchasing
Holder” and each Participant who does not elect to exercise such right, a
“Non-Purchasing Holder”). Upon the earlier to occur of (A) receipt by the
Servicer of responses from each of the Participants with respect to the notice
of such event and (B) the expiration of the aforementioned two (2) Business Day
period, the Servicer shall provide each Participant with notice (with a
simultaneous copy to GSMC and Citigroup) as to whether the other Participant is
a Purchasing Holder. Each Purchasing Holder will be required to remit, within
one (1) Business Day of receipt of such notice from the Servicer, an amount
equal to its pro rata share of the Loan Purchase Price (as such term is defined
in the Intercreditor Agreement) based upon the outstanding principal balance of
the Participation held by such Purchasing Holder relative to the aggregate of
the outstanding principal balances of the Participations held by all Purchasing
Holders. Upon the determination of the amount of each Purchasing Holder’s pro
rata share of the Loan Purchase Price, any Purchasing Holder may elect not to
participate in the purchase of the Mortgage Loan (and thereby become a
Non-Purchasing Holder), in which case the amounts required to be paid by the
remaining Purchasing Holders shall be adjusted accordingly. Any Purchasing
Holder may elect not to participate in the purchase following any readjustment
of the amount it is required to pay, and so long as there is a Purchasing Holder
who so elects not to participate in the purchase, the amount required to be paid
by the remaining Purchasing Holder shall continue to be readjusted. The Servicer
shall be required, as directed by the Purchasing Holder, to deliver to lender(s)
of the Mortgage Loan the Purchase Option Notice (as such term is defined in the
Intercreditor Agreement) pursuant to Section 13 of the Intercreditor Agreement.

(ii)        In the event that the Servicer receives a Senior Loan Default Notice
(as such term is defined in the Intercreditor Agreement) triggering the cure
rights of the holder of the Loan as provided in Section 11 of the Intercreditor
Agreement, the Servicer shall notify each Participant of such cure right within
one (1) Business Day of receipt of such Senior Loan Default Notice and each
Participant shall have the right to participate in the cure of the Mortgage Loan
by providing written notice to the Servicer (with a copy simultaneously to the
other Participant, GSMC and Citigroup) within two (2) Business Days of receipt
of such notice (each Participant who elects to exercise such right, a “Curing
Holder” and each Participant who does not elect to exercise such right, a
“Non-Curing Holder”). Upon the earlier to occur of (A) receipt by the Servicer
of the responses from each of the Participants with respect to the notice of the
aforementioned cure rights and (B) the expiration of the aforementioned two
(2) Business

 

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Day period, the Servicer shall provide each of the Participants (with a
simultaneous copy to GSMC and Citigroup) with a written list of all such Curing
Holders. In the case of a monetary cure, each Curing Holder will be required to
remit, within two (2) Business Days or receipt of notice of the list of Curing
Holders from the Servicer, an amount equal to its pro rata share of the cure
payment based upon the outstanding principal balance of the Participation held
by such Curing Holder relative to the aggregate of the outstanding principal
balances of the Participations held by all Curing Holders. Upon the
determination of the amount of each Curing Holder’s pro rata share of the cure
payment to be made, any Curing Holder may elect not to participate in such cure
(and thereby become a Non-Curing Holder), in which case the amounts required to
be paid by the remaining Curing Holders shall be adjusted accordingly. Any
Curing Holder may elect not to participate in the cure following any
readjustment of the amount it is required to pay, and so long as there is a
Curing Holder who elects not to participate in the cure, the amount required to
be paid by the remaining Curing Holders shall continue to be readjusted. In the
case of a non-monetary cure, any Participant may cure such default in the manner
elected by such Participant.

7.        Buy-Sell.

(a)        If the Participants are unable to reach a Unanimous Decision in
accordance with Sections 5(d) hereof, which failure continues for ten (10) days
after written notice from either Participant to the other Participant (a
“Material Disagreement”), then either Participant (the “Invoking Participant”)
may deliver, by written notice to the other Participant (the “Notice
Participant”), a written notice (the “Buy/Sell Notice”) specifying a price for
the Participations (which price shall be expressed as a percentage of par (the
“Pricing Convention”)). Prior to 5:00 p.m., New York time, on the tenth
(10th) Business Day after delivery of the initial Buy/Sell Notice (the “Buy/Sell
Notice Deadline”), each Participant (including the initial Invoking Participant)
shall have the right to deliver to the other Participant one or more subsequent
Buy/Sell Notices specifying (in accordance with the Pricing Convention) a higher
price for the Participations than was specified in the preceding Buy/Sell
Notice, in which case the Buy/Sell Notice containing the highest price for the
Participations shall remain in effect and the party delivering such Buy/Sell
Notice shall thereafter be deemed to be the “Invoking Participant” hereunder;
and the other Buy/Sell Notice(s) shall cease to have any further force and
effect, and the party delivering such Buy/Sell Notice(s) shall be deemed to be
the Notice Participant hereunder.

(b)        Prior to the later of (x) the Buy/Sell Notice Deadline or (y) 5:00
p.m., New York time, on the second (2nd) Business Day after receipt by the
Notice Participant of the final Buy/Sell Notice (the “Buy/Sell Response Date”),
the Notice Participant shall deliver to the Invoking Participant a written
response irrevocably offering either (x) to purchase all right, title and
interest of the Invoking Participant in and to its Participation (a “Buy
Response”), (y) to sell to the Invoking Participant all of such Notice
Participant’s right, title and interest in and to its Participation (a “Sell
Response”), in each case on a servicing released basis for an amount determined
in accordance with the Pricing Convention and the respective Pro Rata Shares,
plus accrued interest (the “Purchase Price”), or (z) to withdraw from the
Material Disagreement, and the buy-sell process, by agreeing that the matter in
dispute will be determined by the Invoking Participant (a “Buy/Sell Withdrawal
Notice”). If the Notice Participant does not deliver a Buy Response, a Sell
Response or a Buy/Sell Withdrawal Notice in a timely manner, the Notice
Participant shall be deemed for purposes hereof to have delivered a Buy/Sell
Withdrawal Notice.

 

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The “Purchasing Participant” shall be determined in the following manner: (i) if
the Notice Participant delivers a Buy/Sell Withdrawal Notice, then there shall
be no Purchasing Participant, and the Material Disagreement will be resolved by
the Invoking Participant; (ii) if the Notice Participant delivers a Sell
Response, then the Invoking Participant shall be the Purchasing Participant; and
(iii) if the Notice Participant delivers a Buy Response, then the Notice
Participant shall be the Purchasing Participant.

(c)        On the fifth (5th) Business Day after the Buy/Sell Response Date (the
“Closing Date”), the selling Participant (the “Selling Participant”) shall
transfer and assign to the Purchasing Participant, pursuant to an assignment and
assumption agreement reasonably acceptable to the Participants, all right, title
and interest of the Selling Participant in respect of its Participation, and
shall each make customary representations as to authority, authorization, and
good title to the transferred interest; and the Purchasing Participant shall pay
to the Selling Participant the applicable Purchase Price by wire transfer of
immediately available funds to the account designated by the Selling
Participant. At such closing, each Participant shall, at the request of the
other, execute and deliver such documents and instruments as the requesting
Participant shall reasonably require in order to effect such transfer. All
payments received by the Selling Participant on or after the Closing Date in
respect of the ownership interest of the Selling Participants in its
Participation shall be for the account of the Purchasing Participant. The
Selling Participant shall cooperate in facilitating the assignment of its
Participation, and the administration thereof, including, without limitation,
(i) transferring any funds (including reserves) held in accounts maintained or
controlled by the Selling Participant, (ii) delivering Loan related documents,
(iii) causing servicing documents to be delivered, and (iv) such other
cooperation as the Purchasing Participant reasonably requests to effectuate the
intent of this Agreement.

(d)        The Purchasing Participant will assume all obligations of the Selling
Participant arising from and after the Closing Date under and in connection with
the Loan by written instrument delivered and reasonably satisfactory in form to
Selling Participant. To the extent any loss, cost, liability or expense relates
to an obligation of the Selling Participant arising prior to the Closing Date,
the same shall be borne solely by the Selling Participant, and the Selling
Participant shall indemnify, defend, reimburse and hold the Purchasing
Participant harmless against any and all such losses, costs, obligations,
damages, penalties, actions, judgments, suits, liabilities and expenses which
may be asserted against or sustained or incurred by the Purchasing Participant
as a result thereof. To the extent any loss, cost, liability or expense relates
to an obligation of the Purchasing Participant arising on or subsequent to the
Closing Date, the same shall be borne solely by the Purchasing Participant, and
the Purchasing Participant shall indemnify, defend, reimburse and hold the
Selling Participant harmless against any and all such losses, costs,
obligations, damages, penalties, actions, judgments, suits, liabilities and
expenses (including reasonable attorneys’ fees) which may be asserted against or
sustained or incurred by the Selling Participant as a result thereof.

(e)        If the Purchasing Participant does not pay the Purchase Price when
and as required by the terms of this Agreement, interest shall accrue thereon
both before and after judgment, to the extent permitted by applicable law, at a
rate per annum for each day from and including the day the Purchase Price was
due to but excluding the day the amount is paid in full equal to the sum of
(x) the Prime Rate from time to time plus (y) five percent (5%), and the

 

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Purchasing Participant shall thereafter have no voting or consent rights
hereunder. Such interest shall be payable on demand from time to time and shall
be computed on the basis of a 360-day year and actual days elapsed, and shall
itself bear interest at the foregoing rate if not paid on demand.

(f)        Notwithstanding the foregoing or anything herein to the contrary, if
any Successor Participant shall succeed to the right, title and interest of a
Foreclosed Participant hereunder as a result of the exercise of remedies by a
Foreclosing Repurchase Counterparty, the Non-Foreclosed Participant shall have
no further right to exercise any of its rights under this Section 7 and, from
and after the date of transfer of the Foreclosed Participant’s Participation to
the Successor Participant, the Non-Foreclosing Repurchase Counterparty shall be
entitled to exercise any and all rights of the Non-Foreclosed Participant under
this Section 7. If the Non-Foreclosing Repurchase Counterparty shall be the
Selling Participant, then the Non-Foreclosed Participant shall be required to
sell its Participation to the Purchasing Participant in accordance with the
Non-Foreclosing Repurchase Counterparty’s instructions.

8.        Foreclosure; Possession of Pledged Collateral. In the event of a
foreclosure sale and subject to the provisions of this Agreement, the Servicer
shall have the sole right to bid at the sale on behalf of the Participants and
the amount of the bid shall be a Unanimous Decision. Any bid entered by the
Servicer in an amount not in excess of the total indebtedness due under the Loan
Documents (including, without limitation interest, expenses and all other
amounts which are recoverable from the proceeds of the sale) shall be deemed to
have been entered on behalf of the Participants. Any acquisition of the
Collateral pursuant to the exercise of remedies under the Loan Documents
(including, without limitation, by assignment in lieu of foreclosure) shall be
taken in a Delaware limited liability company (or any other structure as
reasonably required by either Participant so long as such structure does not
adversely effect, from a tax perspective or otherwise, the other Participant),
the sole members of which shall be the Participants and which limited liability
company shall be structured so as to comply with the applicable requirements of
the Intercreditor Agreement and the Senior Mortgage Loan Documents (as such term
is defined in the Intercreditor Agreement) (the “Foreclosure Property Owning
Entity”). The operating agreement for the Foreclosure Property Owning Entity
shall be reasonably approved by the Participants and from that time forward,
each Participation Interest shall constitute an undivided beneficial interest in
the membership interest in the Foreclosure Property Owning Entity with the same
rights, interests and priorities (including, without limitation, buy/sell
provisions) related to the interests of the Participants provided in this
Agreement with respect to the Participants’ Participation Interests.
Notwithstanding anything to the contrary contained herein, any Participant will
have the right to enter a bid in an amount in excess of the total indebtedness
due under the Loan Documents (including, without limitation, interest, expenses
and all other amounts which are recoverable from the proceeds of sale) and, if
such bid is the successful bid, such Participant shall acquire the collateral
for its own account and the other Participant shall have no further interest in
the collateral.

9.        Return of Funds. If a court of competent jurisdiction orders, at any
time, that any amount received or collected in respect of the Loan must,
pursuant to any insolvency, bankruptcy, fraudulent conveyance, preference or
similar law, be returned to the Borrower, or paid to any other Person, then,
notwithstanding any other provision of this Agreement, Servicer

 

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shall not be required to distribute any portion thereof to any Participant
(unless otherwise so directed by such court), and, to the extent necessary to
comply with such court order, each applicable Participant will promptly on
demand by Servicer repay to Servicer any portion of any such amounts that
Servicer shall have theretofore distributed to such Participant, together with
interest thereon at the Participation Rate, which Servicer shall have been
required to pay to the Borrower, or such other Person. If, for any reason,
Servicer makes any payment to any Participant before Servicer has received the
corresponding payment (it being understood that Servicer is under no obligation
to do so), and Servicer does not receive the corresponding payment within one
(1) Business Day of its payment to the applicable Participant, the applicable
Participant will, at Servicer’s request, promptly and, in any event, within five
(5) Business Days, return that payment to the Participant (together with
interest on such payment paid at the interest rate actually received by such
Participant on its Participation Interest for such advance for each day from the
making of that payment to the Participant until it is returned to Servicer).
Each Participant agrees that if at any time it shall receive from any sources
whatsoever any payment on account of the Loan in excess of its distributable
share thereof, it will promptly after notice remit such excess to Servicer. Upon
prior notice, Servicer shall have the right to offset such amounts against any
future payments due to the applicable Participant under the Loan, provided that
Servicer shall have no right to deduct or set-off any amounts which may be owed
on account of other dealings between Servicer and any Participant or unrelated
to the Loan or this Agreement, and provided, further, that each such
Participant’s obligations under this Section 9 are separate and distinct
obligations from one another and in no event shall Servicer enforce the
obligations of any Participant against any other Participant. Each Participant’s
obligation under this Section 9 constitutes absolute, unconditional and
continuing obligations.

10.        Transfer.

(a)        Each Participant may from time to time Transfer its Participation
Interest or any interest therein, except that no Participant may Transfer more
than 49% of its Participation Interest to any transferee that is not a Qualified
Transferee, nor shall any Participant Transfer any portion of its Participation
Interest to a transferee that such Participant has reason to believe, based on
reasonable diligence, is an Embargoed Person (or an Affiliate of an Embargoed
Person, or controlled by or under common control with an Embargoed Person),
Borrower or an Affiliate of Borrower. Following any such Transfer that is
permitted hereunder, the transferring Participant shall have no further
liability hereunder with respect to the interest so Transferred. Within five
(5) Business Days following any such Transfer, the transferring Participant
shall provide written notice of such Transfer to the other Participant, which
notice shall include the name, address and other notice information for such
transferee (“Transfer Notice”). Upon receipt of the Transfer Notice, Servicer
shall update Schedule I hereto to include such transferee and notice information
relating thereto and distribute such revised Schedule I to each Participant, and
such transferee shall be deemed to be a Participant under this Agreement. Until
receipt of the Transfer Notice, Servicer will not consider any Transfer valid
and may continue to make distributions and service the Loan as if no such
Transfer had occurred. The ownership of each Participation Interest shall be
registered on a record of ownership maintained by the Servicer. Notwithstanding
anything else in this Agreement to the contrary, the right to receive principal
or interest payments with respect to a Participation Interest hereunder may be
transferred only if the transfer is registered on such record of ownership and
the transferee is identified as the owner of an interest in the obligation. The
Servicer and the Participants shall be entitled to treat the

 

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registered holder of each Participation Interest (as recorded on such record of
ownership) as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in a Participation
Interest or hereunder on the part of any other Person or entity.

(b)        Intentionally omitted.

(c)        Notwithstanding anything to the contrary herein and in accordance
with Section 15 of the Intercreditor Agreement, each Participant shall have the
right to freely pledge or hypothecate all or any portion of its interest in the
Loan or to sell all or any portion of its interest in the Loan through a
repurchase or other similar arrangement (each such transaction is referred to
herein as a “Pledge”; the pledgee or purchaser, as the case may be, is referred
to herein as a “Loan Pledgee”), provided the same does not interfere with such
Participant’s ability to comply with its obligations hereunder. Original Lender
hereby represents and warrants that, with respect to (i) Original Lender’s
acquisition of the Promissory Notes, (ii) Original Lender’s issuance of the
Participation Interests and (iii) the pledges by Participant A to GSMC pursuant
to the Goldman Repurchase Agreement and by Participant B to Citigroup pursuant
to the Citigroup Repurchase Agreement, Original Lender has sent a notice
substantially in the form of Exhibit E attached hereto and pursuant to the
requirements of the Intercreditor Agreement. Upon written notice by a
Participant (the “Pledging Participant”) to the other Participant, with a copy
to Servicer, that the Pledge has been effected (it being acknowledged by the
parties hereto that this provision shall constitute notice of the initial Pledge
by Participant A to GSMC and by Participant B to Citigroup), the other
Participant agrees to acknowledge receipt of such notice and thereafter agree
(a) to give Loan Pledgee written notice of any default by such Pledging
Participant under this Agreement or under any of the Loan Documents of which
default the other Participant has actual knowledge; (b) to allow Loan Pledgee a
period of at least ten (10) days (in respect of a monetary default) and a
reasonable period of not less than thirty (30) days (in respect of a
non-monetary default) to cure a default by such Pledging Participant in respect
of its obligations to the other Participant hereunder or under any of the Loan
Documents, but Loan Pledgee shall not be obligated to cure any such default;
(c) that no amendment, modification, waiver or termination of any of such
Pledging Participant’s rights under this Agreement shall be effective without
the written consent of Loan Pledgee which consent shall not be unreasonably
withheld; provided, however, that the consent of Loan Pledgee shall not be
required unless such Pledging Participant’s consent was required pursuant to the
terms of this Agreement to effect such amendment, modification, waiver or
termination; (d) that the other Participant shall deliver to Loan Pledgee such
estoppel certificate(s) as Loan Pledgee shall reasonably request (substantially
in the form required by Section 24 hereof), provided, that any such
certificate(s) shall be in form and substance reasonably satisfactory to the
other Participant; and (e) that, upon written notice (a “Redirection Notice”) to
the other Participant by Loan Pledgee that the Pledging Participant is in
default, beyond applicable cure periods, under the Pledging Participant’s
obligations to Loan Pledgee pursuant to the applicable credit agreement between
such Pledging Participant and Loan Pledgee, and until such Redirection Notice is
withdrawn or rescinded by Loan Pledgee, the other Participant shall remit to
Loan Pledgee and not to the Pledging Participant, any payments that the other
Participant would otherwise be obligated to pay to such Pledging Participant
from time to time pursuant to this Agreement or any other agreement between the
other Participant and such Pledging Participant that relates to the Loan. Unless
a Redirection Notice has been issued and not withdrawn or rescinded, such
Pledging Participant

 

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shall continue to be entitled to exercise all voting and consent rights under
this Agreement, subject to any restrictions contained in the Repurchase
Agreements. Participants hereby unconditionally and absolutely release each
other from any liability on account of the other Participant’s compliance with
any Redirection Notice reasonably believed by such Participant to have been
delivered by Loan Pledgee in good faith. Loan Pledgee shall be permitted to
fully exercise its rights and remedies against a Pledging Participant, and
realize on any and all collateral granted by such Pledging Participant to Loan
Pledgee (and accept an assignment in lieu of foreclosure as to such collateral),
in accordance with applicable law and subject to all of the other Participant’s
rights and interests in the Loan and this Agreement, it being expressly
understood that while the Loan shall be subject to the Pledge, any exercise of
rights under the Pledge shall be subject to the other Participant’s interests in
the Loan. In such event, the other Participant shall recognize Loan Pledgee (and
any transferee which is also a Qualified Transferee at any foreclosure or
similar sale held by Loan Pledgee or any transfer in lieu of such foreclosure),
and its successors and assigns, as the successor to the Pledging Participant’s
rights, remedies and obligations under this Agreement, the Loan Documents and
any such Loan Pledgee or Qualified Transferee shall assume in writing the
obligations of the Pledging Participant hereunder accruing from and after such
Transfer and agrees to be bound by the terms and provisions hereof (it being
agreed that, notwithstanding anything to the contrary contained herein, such
Loan Pledgee shall not be required to so assume the Pledging Participant’s
obligations hereunder prior to such realization on such collateral). The rights
of a Loan Pledgee under this paragraph shall remain effective unless and until
such Loan Pledgee shall have notified the other Participant in writing that its
interest in the Loan has terminated. All costs and expenses incurred by a party
hereto in connection with a Transfer of the other party’s interest in the Loan
shall be reimbursed by such transferring party or the Loan Pledgee. All costs
and expenses incurred by Participants related to a Pledge shall, to the extent
not reimbursed by Borrower, be reimbursed by the Pledging Participant or the
Loan Pledgee to such Participant.

(d)        Notwithstanding any provisions herein to the contrary, if a conduit
(“Conduit”) which is not a Qualified Transferee provides financing to a
Participant then such Conduit will be a permitted “Loan Pledgee” despite the
fact it is not a Qualified Transferee if the following conditions are satisfied:

    (i)        The loan (the “Conduit Inventory Loan”) made by the Conduit to
such Participant to finance the acquisition and holding of its Participation
Interest and/or interest in the Loan will require a third party (the “Conduit
Credit Enhancer”) to provide credit enhancement;

    (ii)        the Conduit Credit Enhancer will be a Qualified Transferee;

    (iii)        such Participant will pledge its Participation Interest to the
Conduit as collateral for the Conduit Inventory Loan;

    (iv)        the Conduit Credit Enhancer and the Conduit will agree that, if
such Participant defaults under the Conduit Inventory Loan, or if the Conduit is
unable to refinance its outstanding commercial paper even if there is no default
by such Participant, the Conduit Credit Enhancer will purchase the Conduit
Inventory Loan from the Conduit,

 

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and the Conduit will assign the pledge of such Participant’s Participation
Interest and/or interest in the Loan to the Conduit Credit Enhancer; and

    (v)        unless the Conduit is in fact then a Qualified Transferee, the
Conduit will not without obtaining a Rating Agency Confirmation from each Rating
Agency have any greater right to acquire the interests in the Participation
Interest and/or interest in the Loan pledged by such Participant, by foreclosure
or otherwise, than would any other purchaser that is not a Qualified Transferee
at a foreclosure sale conducted by a Loan Pledgee.

(e)        Notwithstanding anything to the contrary contained herein, each
Participant agrees that it will not Transfer its Participation Interest except,
in the case of Participant A, to GSMC (or GSMC’s designee), and in the case of
Participant B, to Citigroup (or Citigroup’s designee), and that each such
Transfer shall only be made pursuant to and in accordance with the applicable
Repurchase Agreement. Following the Transfer of a Participation Interest to a
Successor Participant resulting from a foreclosure or other exercise of remedies
available to a Repurchase Counterparty under its Repurchase Agreement, the
Transfer restrictions contained in this Section 10(e) shall no longer apply to
the subject Participation Interest; provided, however, that any further Transfer
of such Participation Interest by the Successor Participant shall be subject to
the remaining terms and conditions of this Section 10.

11.        Representations, Warranties and Agreements.

(a)        Each Participant represents and warrants to the other Participants
that (i) the execution, delivery and performance of this Agreement is within its
corporate powers, has been duly authorized by all necessary corporate action,
and does not contravene in any material respect its organizational documents or
any law or contractual restriction binding upon it; (ii) this Agreement is the
legal, valid and binding obligation of such Participant enforceable against it
in accordance with the terms hereof except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and except that the enforcement of rights
with respect to indemnification and contribution obligations may be limited by
applicable law; (iii) the individual or individuals executing this Agreement and
any and all documents contemplated hereby on behalf of such Participant has or
have the legal, right, and actual authority to bind such Participant to the
terms and conditions contained in this Assignment and in such documents;
(iv) the execution and delivery of this Agreement by such Participant, and
performance of, and compliance with, the terms of this Agreement by such
Participant, will not violate such Participant’s organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or that is applicable to it
or any of its assets; (v) such Participant is not an Embargoed Person; and
(vi) such Participant has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in
connection with the consummation of any of the transactions contemplated hereby.

(b)        Each Participant agrees that:

 

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(i)        its Participation shall at all times be in certificated form in
substantially the same form set forth in Exhibit B hereto;

(ii)       its Participation is, and shall at all times be treated as, a
“security” for purposes of the United States Securities Act of 1933, as amended
(the “Securities Act”); and

(iii)       its Participation is, and shall at all times be treated as, a
“financial asset” for purposes of Article 8 of the Uniform Commercial Code as is
in effect in the State of New York as of the date hereof.

(c)        Each Participant represents to the Original Lender that, as of the
date hereof, it is:

(i)                 a “qualified institutional buyer” as defined in Rule 144A
under the Securities Act, it is acquiring its Participation in reliance on an
exemption from registration pursuant to Rule 144A of the Securities Act and it
is acquiring its Participation for its own account or for one or more accounts,
each of which is a qualified institutional buyer and as to each of which it
exercises sole investment discretion;

(ii)          X    an “accredited investor” as defined in Rule 501(a) of
Regulation D under the Securities Act (an “Accredited Investor”), it is
acquiring its Participation in reliance on an exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof and
Regulation D thereunder, and it is acquiring its Participation (i) for its own
account (and not for the account of any family or other trust, any family member
or any other person), except to the extent of any Transfer of such Participation
pursuant to the Citigroup Repurchase Agreement or the Goldman Repurchase
Agreement, as applicable, (ii) for the account of a trust that is an Accredited
Investor and the signatory hereto is the trustee of such trust or (iii) for one
or more accounts, each of which is an Accredited Investor and the signatory
hereto is an agent of each such account with express authority to execute this
Agreement on behalf of each such account; or

(iii)        a person that is not a “U.S. person” as defined in Regulation S
under the Securities Act (“Regulation S”), it is acquiring its Participation in
reliance on an exemption from registration pursuant to Regulation S and it is
acquiring its Participation for its own account or for one or more accounts,
each of which is a non-U.S. Person and as to each of which it exercises sole
investment discretion.

(d)        Each Participant represents that if it is a “U.S. person” (as defined
in Regulation S):

(i)        it is (please check the appropriate category):

  (1)                 a “qualified purchaser” or a “knowledgeable employee” for
purposes of the United States Investment Company Act of 1940, as amended (the
“Investment Company Act”), purchasing for its own account; or

  (2)          X   a company beneficially owned exclusively by one or more
“qualified purchasers” or “knowledgeable employees” with respect to Original
Lender;

 

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(ii)      if it has checked (1) in clause (i) above, it has done so because it
is:

    (1)               a natural person who owns not less than $5,000,000 in
“investments,” as such term has been defined in (and as the value of such
investments are calculated pursuant to) 17 C.F.R. § 270.2a51-1 and other
relevant rules promulgated by the U.S. Securities and Exchange Commission (the
“SEC”) as of the date hereof;

    (2)             a company that owns not less than $5,000,000 in
“investments” and that is owned directly or indirectly by or for two or more
natural persons who are related as siblings or spouses (including former
spouses), or direct lineal descendants by birth or adoption, spouses of such
persons, the estates of such persons, or foundations, charitable organizations,
or trusts established by or for the benefit of such persons;

    (3)             a trust that is not covered by clause (2) and that was not
formed for the specific purpose of acquiring the securities offered, as to which
the trustee or other person authorized to make decisions with respect to the
trust, and each settlor or other person who contributed assets to the trust, is
a person described in clause (1), (2) or (4); or

    (4)             a person, acting for its own account or the accounts of
other qualified purchasers, who in the aggregate owns and invests on a
discretionary basis, not less than $25,000,000 in “investments”;

(iii)      if it would be an investment company but for the exclusions from the
Investment Company Act provided by Section 3(c)(1) or Section 3(c)(7) thereof,
(i) all of the beneficial owners of its outstanding securities (other than
short-term paper) that acquired such securities on or before April 30, 1996
(“pre-amendment beneficial owners”) have consented to its treatment as a
“qualified purchaser” and (ii) all of the pre-amendment beneficial owners of a
company that would be an investment company but for the exclusions from the
Investment Company Act provided by Section 3(c)(1) or Section 3(c)(7) thereof
and that directly or indirectly owned any of its outstanding securities (other
than short-term paper) have consented to its treatment as a “qualified
purchaser”;

(iv)      if it is a private investment company that was formed before April 30,
1996, all of its beneficial owners have consented to its treatment as a
“qualified purchaser”; and

(v)        (1) it (or if it is acquiring its Participation for any other
account, each such account) (A) has made investments prior to the date hereof
and was not formed or recapitalized solely for the purpose of investing in its
Participation; (B) is not a partnership, common trust fund, or special trust,
pension, profit sharing or other retirement trust fund or plan in which the
partners, beneficiaries or participants may designate the particular investments
to be made; and (C) represents that its Participation (together with any other
securities of Original Lender purchased and held directly or indirectly by it)
constitute in the aggregate an investment of no more than 40% of its assets or
capital; or

 

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(2) it has delivered an opinion of counsel acceptable to Original Lender and its
counsel that such purchase will not cause Original Lender to be required to
register as an investment company under the Investment Company Act.

(e)         Each Participant agrees that it will provide Original Lender from
time to time such information as Original Lender may reasonably request in order
to ascertain compliance with clauses (c) and (d) above.

(f)         Each Participant understands that its Participation is being offered
only in a transaction not involving any public offering in the United States
within the meaning of the Securities Act.

(g)         In connection with its purchase of its Participation, each
Participant (or, if it is acquiring its Participation for any other account,
each such account) acknowledges and agrees that:

  (i)        Original Lender is not acting as a fiduciary or financial or
investment adviser for it;

  (ii)        its purchase of its Participation will comply with all applicable
laws in any jurisdiction in which it resides or is located; and

  (iii)        it is acquiring its Participation as principal solely for
investment and not with a view to the resale, distribution or other disposition
thereof in violation of the Securities Act, except to the extent of any Transfer
of such Participation pursuant to the Citigroup Repurchase Agreement or the
Goldman Repurchase Agreement, as applicable.

(h)      Each Participant represents that it not a broker-dealer that in the
aggregate owns and invests on a discretionary basis less than $25,000,000 in
securities of unaffiliated issuers.

(i)        Each Participant understands and agrees that:

  (i)        an investment in its Participation involves certain risks,
including the risk of loss of all or a substantial part of its investment under
certain circumstances;

  (ii)        its Participation is highly illiquid and is not suitable for
short-term trading and that no secondary market for such Participation is likely
to develop;

  (iii)        distributions on its Participation are not guaranteed, but are
dependent on the performance of the Loan and other assets or investments held by
the Borrower; and

  (iv)        due to the structure of the transaction and the performance of the
Loan and other assets or investments held by the Borrower, it is possible that
payments on its Participation may be deferred, reduced or eliminated entirely.

(j)        Each Participant understands and agrees that:

  (i)        its Participation has not been and will not be registered under the
Securities Act;

  (ii)        significant restrictions apply to transfers of its Participation
(as set forth in Section 10), and such restrictions could adversely affect its
ability to sell or otherwise dispose of such Participation;

 

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(iii)        it is familiar with such restrictions and confirms that its
acquisition of its Participation complies with such restrictions;

(iv)        any purchaser or other transferee of its Participation from it will
be required to comply with such restrictions, and that any purported transfer of
its Participation to a purchaser that does not comply with the transfer
restrictions set forth in Section 10 shall be void ab initio; and

(iv)        it will provide notice of such restrictions to any prospective
purchaser or other transferee.

(k)        Each Participant acknowledges that no representation is made as to
the availability of any exemption under the Securities Act or any State
securities laws for resale of its Participation.

(l)        Each Participant agrees that it will not, at any time, offer to buy
or offer to sell its Participation by any form of general solicitation or
advertising, including, but not limited to, any advertisement, article, notice
or other communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or seminar or meeting whose attendees have
been invited by general solicitations or advertising.

(m)        Each Participant confirms that, if it is acquiring its Participation
for any other account (assuming that such Participant is not doing so solely by
reason of any Transfer of such Participation pursuant to the applicable
Repurchase Agreements):

   (i)        it has sufficient compliance and other internal control systems to
ensure that each account for which it is acting:

      (1)        is a sophisticated investor;

      (2)        has such knowledge and experience in financial and business
matters that such account is capable of evaluating the merits, risks and
suitability (including for tax, legal, regulatory, accounting and other
financial purposes) of its prospective investment in such Participation and/or
has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisers to the extent it has deemed necessary;

      (3)        has made its own investment decisions based upon its own
judgment and upon any advice from such advisers as it has deemed necessary and
has determined that an investment in such Participation is suitable and
appropriate for it;

      (4)        understands that an investment in such Participation is an
investment in the Loan;

      (5)        has no need for liquidity with respect to such Participation
and no need to dispose of its interest in such Participation or portion thereof
to satisfy any existing or contemplated indebtedness, obligations or other
undertaking, and the aggregate amount to be paid by such account to purchase
such Participation (or any interest therein) is not disproportionate to such
account’s net worth;

      (6)        is able to bear any loss in connection with such Participation
(including loss of the entirety of such account’s original principal investment)
and is otherwise capable and willing to assume such risks; and

 

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      (7)        in making such investment is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Borrower, each other
Participant or any of their agents other than any representations expressly set
forth in a written agreement with such party;

(ii)        it is responsible for ensuring that, prior to its investment in its
Participation, each account for which it is acting has adequate access to such
financial and other information concerning the Borrower, each other Participant
and such Participation as such account has deemed necessary to make its own
independent decision to purchase such Participation (or an interest therein) and
is adequately informed of all risks relating to investment in its Participation;

(iii)        each investment in its Participation by an account for which it is
acting will, at the time of making such investment, be in compliance with all
laws and regulations of any jurisdiction applicable to the investment by such
account; and

(iv)        it has obtained representations, warranties and agreements in the
terms set forth in this Agreement from each account for which it is acting as if
each reference to “the Participant” herein were a reference to such account.

12.        Intentionally Omitted.

13.        Independent Analysis of Each Participant. Each Participant
acknowledges that it has, independently and without reliance upon
representations made by any other Participant (except to the extent expressly
set forth herein) and each Participant acknowledges and agrees that any
information provided to such Participant and based on such documents and
information as such Participant has deemed appropriate, made its own credit
analysis and decision to purchase its Participation Interest. Each Participant
acknowledges that neither Original Lender, Servicer nor any other Participant
shall have any responsibility for (i) the collectability of the Loan, (ii) the
execution, validity, enforceability or legal effect of any of the Loan
Documents, (iii) the validity, sufficiency, priority or effectiveness of the
lien created or to be created by the Loan Documents, or (iv) the financial
condition of Borrower or any guarantor; and that except as expressly set forth
herein, no other Participant has made any representations or warranties with
respect to the Loan, the Property or Borrower. Each Participant assumes all risk
of loss in connection with its Participation Interest from the failure or
refusal of Borrower to pay interest, principal or other amounts due under the
Loan, defaults by Borrower under the Loan Documents or the unenforceability of
any of the Loan Documents.

14.        Holders. Servicer may deem and treat the Participants as the absolute
owner or purchaser of its related Participation Interest for all purposes hereof
until it shall have been furnished with a Transfer Notice in accordance with
Section 10. Servicer may rely on each Transfer Notice without investigation.

15.        Limited Liability; Indemnity. Neither Servicer nor any of their
Affiliates nor any of the directors, officers, employees or agents thereof shall
be under any liability to any Participant or any third party for taking or
refraining from taking any action, in good faith pursuant to or in connection
with this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect Servicer against any liability which would otherwise
be imposed on Servicer by reason of Servicer’s willful misfeasance, bad faith or
gross negligence in

 

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the performance of its duties as servicer hereunder. Servicer and any director,
officer, employee or agent thereof may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any appropriate
Person respecting any matters arising hereunder. Servicer and any director,
officer, employee or agent thereof shall be indemnified and held harmless by
each Participant on a pro rata basis according to their respective Pro Rata
Shares against any claim, action, suit, damage, loss, liability, cost or expense
incurred (including reasonable attorneys’ fees, in connection with any claim,
action, suit, investigation or proceeding and any expense for which Servicer has
not been reimbursed by Borrower) arising out of or relating to this Agreement,
the Note or any other Loan Document, Servicer’s performance hereunder, or any
specific action which the Participants authorizing or requesting Servicer to
perform pursuant to this Agreement, as such are incurred, except for any loss,
liability or expense incurred by reason of Servicer’s willful misfeasance, bad
faith or gross negligence. Notwithstanding the exception set forth in the
preceding sentence, in the event that Servicer sustains any loss, liability or
expense by reason of such exception and which results from any overcharges to
Borrower under the Loan, to the extent that such overcharges were collected by
Servicer and remitted to the Participants, the Participants shall promptly remit
such overcharge to Borrower after the Participants’ receipt of written notice
from Servicer regarding such overcharge. In the case of any matter indemnified
hereunder, Servicer shall, upon prior notice to each Participant, be indemnified
first from amounts available to be distributed to the Participants and then from
the Participants in accordance with their respective Pro Rata Share.

The Participants and any director, officer, employee or agent thereof shall be
indemnified and held harmless by Servicer against any loss, liability or expense
incurred, including reasonable attorneys’ fees, by reason of Servicer’s willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder or breach of the Servicing Standard.

No Participant shall have any liability to the other Participant with respect to
their respective Participation Interests, except with respect to acts or
omissions caused by or resulting from the gross negligence or willful misconduct
of such Participant.

The provisions of this Section shall survive any termination of the rights and
obligations of Servicer hereunder.

16.        Termination; Survival. During such time as the performance of any
obligations of the Participants under each of the Repurchase Agreements and
Transaction Documents (as such term is defined in each Repurchase Agreement) are
outstanding (including, but not limited to, the repayment by the Participants to
the Repurchase Counterparties of all Repurchase Obligations (as such term is
defined in each Repurchase Agreement)), this Agreement shall not be terminated
by the Participants and/or Original Lender. Subject to the preceding sentence,
this Agreement shall terminate upon the earlier to occur of (i) the full and
final payment of the Loan, together with the satisfaction in full of all the
obligations hereunder; or (ii) the written agreement of each Participant;
provided, however, that the provisions of Sections 9, 13 and 15 shall survive
such termination. Provided that no default or event of default shall exist under
this Agreement or each Repurchase Agreement and upon (i) the termination of each
Repurchase Agreement, (ii) the performance of all obligations by the
Participants under their respective Repurchase Agreements and Transaction
Documents and (iii) the repayment by the Participants to the Repurchase
Counterparties of all Repurchase Obligations, all rights of the

 

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Repurchase Counterparties under this Agreement, including, but not limited to,
any notice or approval rights, shall terminate; provided, however, that in the
event either or both of the Repurchase Agreements are terminated but
subsequently reinstated (either as a result of a bankruptcy of either
Participant or otherwise), then all of the rights of the Repurchase
Counterparties under this Agreement, together with any representations,
warranties and covenants hereunder, shall also be reinstated.

17.        Withholding Taxes. Each Participant represents that it is entitled to
receive any payments to be made to it hereunder without the withholding of any
tax and will furnish to Servicer such forms, certifications, statements and
other documents as Servicer may reasonably request from time to time to evidence
such Participant’s exemption from the withholding of any tax imposed by any
jurisdiction or to enable Servicer to comply with any applicable laws relating
thereto. Servicer shall not be obligated to make any payments hereunder to such
Participant in respect of the Loan until such Participant shall have furnished
to Servicer the requested form, certification, statement or document. Each
Participant represents and warrants that it is responsible for paying and
withholding any tax it is required to pay in connection with payments and
distributions made hereunder and acknowledges that Servicer does not have any
obligation to make such withholding. To the extent Participant is required to
make such withholding or pay a tax and fails, Participants shall indemnify
Servicer as provided in Section 15 hereunder.

18.        No Joint Venture. Neither the execution of this Agreement, nor any of
the arrangements provided for herein including, without limitation, any
agreement to share in payments or losses as provided herein, is intended to be,
nor shall it be construed to be, the formation of a partnership or joint venture
between the parties to this Agreement.

19.        Acknowledgement by Parties Hereto. The agreement to and acceptance of
this Agreement by the parties hereto, indicated by the execution of this
Agreement, shall evidence each party’s acceptance of all the terms and
conditions of this Agreement.

20.        Right to Transact Other Business. Each Participant and/or any of
their respective affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
Borrower, their partners, or any other Person without any duty to account
therefor to the other Participants, as the case may be, provided that no such
transaction with Borrower shall be permitted if same is in violation of the Loan
Documents.

21.        Notices. Except as otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing, and shall be deemed to have been duly given or made when
delivered by hand, or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, or, in the case of a nationally
recognized overnight courier service, one (1) Business Day after delivery to
such courier service, addressed at the addresses specified on Schedule I hereto
as updated and distributed to all parties hereto from time to time.

22.        Entire Agreement. This Agreement supersedes all previous agreements,
oral or written, among the parties hereto with respect to the subject matter
hereof.

 

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23.        Modifications and Amendments. This Agreement may not be modified or
amended orally or waived or modified in any manner except as expressly set forth
herein. All modifications or amendments shall be by an agreement in writing
signed by the party against whom enforcement is sought.

24.        Estoppels. Each Participant shall, upon the request of any of the
other Participants, deliver to the requesting Participant a written
certification certifying the amount of each Participant’s Participation Interest
in the Loan, whether the Participant providing the certification has transferred
or encumbered its Participation Interest and if so, the details relating to such
transfer or encumbrance, and such other matters regarding such Participant’s
Participation Interest and this Agreement as any such Participant may reasonably
request.

25.        Prohibition of Fundamental Changes.

(a)        Neither Participant shall voluntarily 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) or sell all or
substantially all of its assets; provided, that either Participant may merge or
consolidate with any other Person if (a) such Participant is the surviving
entity, (b) after giving effect thereto, one hundred percent (100%) of the legal
and beneficial membership interest in such Participant continues to be owned
directly or indirectly by KBS Trust, and (c) after giving effect thereto, no
default or event of default would exist hereunder or under the Repurchase
Agreements. Neither Participant shall issue any membership interests in itself
nor permit KBS Trust to allow Original Lender to assign or transfer all or any
portion of its membership interests in either Participant, except to an entity
that is a direct or indirect wholly owned subsidiary of KBS Trust and that
assumes the obligations of Original Lender under this Agreement, and further
provided that no such assignment or transfer shall affect the legal status of
either Participant or KBS Trust. Anything in this Agreement to the contrary
notwithstanding, one hundred percent (100%) of the legal and beneficial
membership interest in each Participant shall at all times be owned directly or
indirectly by KBS Trust, and KBS Capital Markets Group LLC and KBS Capital
Advisors LLC shall at all times respectively serve as dealer manager and advisor
to KBS Trust.

(b)        The subject Participant shall give written notice to the Servicer,
the other Participant and each of the Repurchase Counterparties no later than
five (5) Business Days prior to effecting any change in the organizational
structure of either Participant, to the extent permitted under Section 25(a)
hereof and under each Participant’s respective Repurchase Agreement, whereby
(i) one hundred percent (100%) of the legal and beneficial membership interest
in such Participant shall no longer be owned by Original Lender, or (ii) one
hundred percent (100%) of the legal and beneficial membership interest in
Original Lender shall no longer be owned by KBS Limited Partnership, a Delaware
limited partnership, or (iii) one hundred percent (100%) of the legal and
beneficial partnership interest in KBS Limited Partnership shall no longer be
owned by KBS Trust.

26.        Miscellaneous.

(a)        This Agreement and the rights and obligations of the parties hereto
shall be construed in accordance with and be governed by the laws of the State
of New York.

 

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(b)        Any legal action or proceeding with respect to this Agreement and any
action for enforcement of any judgment in respect thereof may be brought in the
courts of the State of New York, Borough of Manhattan, or of the United States
of America for the Southern District of New York and, by execution and delivery
of this Agreement, each party hereby accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts and appellate courts for any such action or proceeding. Each
party hereby irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any of the aforesaid actions or proceedings arising
out of or in connection with this Agreement brought in the courts referred to
above and hereby further irrevocably waives the right, and agrees not, to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of any Participant or any holder of the Note to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Borrower in any other jurisdiction.

(c)        It is the intent of the parties hereto that the Participation
Interests are participating beneficial ownership interests of the type and
nature contemplated by 11 U.S.C. Section 541(d) of the United States Bankruptcy
Code.

(d)        This Agreement may be executed in any number of duplicates and
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.

(e)        In case any provision in or obligation under this Agreement, the Loan
Agreement, the Note or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.

ORIGINAL LENDER:

 

KBS DEBT HOLDINGS, LLC, a Delaware limited liability company, By:       KBS
LIMITED PARTNERSHIP,  

    a Delaware limited partnership,

    its manager

      By:       KBS REAL ESTATE INVESTMENT TRUST, INC.,         a Maryland
corporation,         its sole general partner         By:       /s/ Charles J.
Schreiber, Jr.       Name:   Charles J. Schreiber, Jr.       Title:  
Chief Executive Officer

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.

PARTICIPANT A:

 

KBS GKK PARTICIPATION HOLDINGS I, LLC,

a Delaware limited liability company

By:

  KBS DEBT HOLDINGS, LLC,  

a Delaware limited liability company,

its sole member

 

By:

  

KBS LIMITED PARTNERSHIP,

     a Delaware limited partnership,      its manager     

By:

   KBS REAL ESTATE INVESTMENT TRUST, INC.,         a Maryland corporation,     
   its sole general partner        

By:

      /s/ Charles J. Schreiber, Jr.          

Name:  Charles J. Schreiber, Jr.

         

Title:    Chief Executive Officer

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.

PARTICIPANT B:

 

KBS GKK PARTICIPATION HOLDINGS II, LLC,

a Delaware limited liability company

By:

  KBS DEBT HOLDINGS, LLC,   a Delaware limited liability company,   its sole
member  

By:

  KBS LIMITED PARTNERSHIP,     a Delaware limited partnership     its manager  
 

By:

  KBS REAL ESTATE INVESTMENT TRUST, INC.,       a Maryland corporation,      
its sole general partner      

By:

      /s/ Charles J. Schreiber, Jr.        

Name:

  Charles J. Schreiber, Jr.        

Title:

  Chief Executive Officer

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.

SERVICER:

 

ARCHON GROUP, L.P.

a Delaware limited partnership

By:

  /s/ Authorized Signatory   Name:   Title:

 

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EXECUTIVE VERSION

EXHIBIT A

Inventory of Loan Documents Held by Participant A

(All documents are dated as of April 1, 2008 unless otherwise indicated. All
defined terms used in this Exhibit A shall have the meanings ascribed to them
for purposes of this Exhibit A only.)

1.        Amended and Restated Senior Mezzanine Loan Agreement between the
borrowers named therein (“Senior Mezzanine Borrower”), Goldman Sachs Mortgage
Company (“Goldman”) and Citicorp North America, Inc. (“Citigroup”; together with
Goldman, collectively, “Senior Mezzanine Lender”), effective as of August 22,
2008;

2.        Amended and Restated Mezzanine Promissory Note A-1 (Senior Mezzanine
Loan) made by Senior Mezzanine Borrower in favor of Goldman, effective as of
August 22, 2008;

3.        Allonge to Amended and Restated Mezzanine Promissory Note A-1 from
Goldman to KBS Debt Holdings, LLC (“KBS”), dated August 22, 2008;

4.        Allonge to Amended and Restated Mezzanine Promissory Note A-1 by KBS,
in blank;

5.        Amended and Restated Mezzanine Promissory Note A-2 (Senior Mezzanine
Loan) made by Senior Mezzanine Borrower in favor of Citigroup, effective as of
August 22, 2008;

6.        Allonge to Amended and Restated Mezzanine Promissory Note A-2 from
Citigroup to KBS, dated August 22, 2008;

7.        Allonge to Amended and Restated Mezzanine Promissory Note A-2 by KBS,
in blank;

8.        Intercreditor Agreement, dated as of August 22, 2008, by and among
Senior Mezzanine Lender and SLG (as defined below), as senior lender and junior
mezzanine lender, and Senior Mezzanine Lender, as senior mezzanine lender;

9.        Collateral Assignment of Interest Rate Cap Agreement (Mezzanine)
between GKK Stars Acquisition LLC and Senior Mezzanine Lender as
successor-in-interest to Goldman Sachs Commercial Mortgage Capital, L.P.
(“GSCMC”), Citigroup and SL Green Realty Corp. (“SLG”; together with GSCMC and
Citigroup, collectively, “Original Senior Mezzanine Lender”);

10.        Environmental Indemnity Agreement (Mezzanine) by Gramercy Capital
Corp. (“Gramercy”) and Senior Mezzanine Borrower in favor of Senior Mezzanine
Lender as successor in interest to Original Senior Mezzanine Lender;

11.        Consent and Agreement of Manager and Subordination of Management
Agreement (Mezzanine) by First States Management Corp., L.P. (“Property
Manager”) for the benefit of Senior Mezzanine Lender as successor in interest to
Original Senior Mezzanine Lender;

12.        Contribution Agreement by Senior Mezzanine Borrower and Senior
Mezzanine Lender as successor in interest to Original Senior Mezzanine Lender;

13.        Cash Management Agreement (Mezzanine) among LaSalle Bank National
Association, Senior Mezzanine Borrower and Senior Mezzanine Lender as successor
in interest to Original Senior Mezzanine Lender;

 

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14.        Pledge and Security Agreement (Upper Tier) by GKK Stars Acquisition
LLC and First States Group, L.P. (“FSG”) in favor of Senior Mezzanine Lender as
successor in interest to Original Senior Mezzanine Lender;

15.        Pledge and Security Agreement (Lower Tier) by the pledgors listed
therein in favor of Senior Mezzanine Lender as successor in interest to Original
Senior Mezzanine Lender;

16.        Deposit Account Control Agreement among Bank of America, N.A.
(“Lockbox Bank”), FSG, Gramercy and Senior Mezzanine Lender as successor in
interest to Original Senior Mezzanine Lender;

17.        Cooperation Agreement (Mezzanine) by Senior Mezzanine Borrower and
Gramercy in favor of Senior Mezzanine Lender as successor in interest to
Original Senior Mezzanine Lender;

18.        Guaranty (Mezzanine) by Gramercy in favor of Senior Mezzanine Lender
as successor in interest to Original Senior Mezzanine Lender; and

19.        Assignment and Assumption Agreement by Senior Mezzanine Lender, as
assignor, to KBS, as assignee, dated August 22, 2008.

 

E-2