Exhibit 10.11


 


EXECUTION COPY


 


 


ANNEX I to 

MASTER REPURCHASE AGREEMENT


(GOLDMAN SACHS MORTGAGE COMPANY)


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  APPLICABILITY;
  OTHER APPLICABLE ANNEXES

  	
   

  
	
  2.

  	
  ADDITIONAL AND
  SUBSTITUTE DEFINITIONS

  	
   

  
	
  3.

  	
  INITIATION;
  CONFIRMATION; TERMINATION; FEES

  	
   

  
	
  4.

  	
  MANDATORY
  PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

  	
   

  
	
  5.

  	
  INCOME PAYMENTS
  AND PRINCIPAL PAYMENTS

  	
   

  
	
  6.

  	
  CAUTIONARY SECURITY
  INTEREST

  	
   

  
	
  7.

  	
  PAYMENT, TRANSFER AND
  CUSTODY

  	
   

  
	
  8.

  	
  CERTAIN
  RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS

  	
   

  
	
  9.

  	
  RESERVED

  	
   

  
	
  10.

  	
  REPRESENTATIONS

  	
   

  
	
  11.

  	
  NEGATIVE COVENANTS OF
  SELLER

  	
   

  
	
  12.

  	
  AFFIRMATIVE
  COVENANTS OF SELLER

  	
   

  
	
  13.

  	
  SINGLE-PURPOSE ENTITY

  	
   

  
	
  14.

  	
  EVENTS OF DEFAULT;
  REMEDIES

  	
   

  
	
  15.

  	
  SINGLE AGREEMENT

  	
   

  
	
  16.

  	
  NOTICES AND OTHER
  COMMUNICATIONS

  	
   

  
	
  17.

  	
  NON-ASSIGNABILITY

  	
   

  
	
  18.

  	
  GOVERNING
  LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

  	
   

  
	
  19.

  	
  NO RELIANCE; DISCLAIMERS

  	
   

  
	
  20.

  	
  INDEMNITY AND EXPENSES

  	
   

  
	
  21.

  	
  DUE DILIGENCE

  	
   

  
	
  22.

  	
  SERVICING

  	
   

  
	
  23.

  	
  TREATMENT FOR TAX
  PURPOSES

  	
   

  
	
  24.

  	
  INTENT

  	
   

  
	
  25.

  	
  MISCELLANEOUS

  	
   

  



 


i





















 


Supplemental
Terms and Conditions


 


This Annex I forms a part of the Master
Repurchase Agreement dated as of January 3, 2005 between Gramercy Warehouse
Funding II LLC, as seller, and Goldman Sachs Mortgage Company, as buyer
(together with Annex I, the “Agreement”).  Capitalized terms used in this Annex I
without definition shall have the respective meanings assigned to such terms in
the Agreement.  This Annex I is
intended to supplement the Agreement and shall, wherever possible, be
interpreted so as to be consistent with the Agreement; however, in the event of
any conflict or inconsistency between the provisions of this Annex I, on
the one hand, and the provisions of the Agreement, on the other, the provisions
of this Annex I shall govern and control. 
All references in the Agreement and in this Annex I to “the Agreement”
shall be deemed to mean and refer to the Agreement, as supplemented and
modified by this Annex I or as otherwise modified after the date hereof.


 


1.                                      APPLICABILITY;
OTHER APPLICABLE ANNEXES


 


(a)                                  Paragraph
1 of the Agreement (“Applicability”) is hereby deleted and replaced with the
following:


 


From time to time the parties hereto may enter into
transactions in which Seller agrees to transfer to Buyer one or more Eligible
Loans against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller such Eligible Loans at a date certain (or such
earlier date, in accordance with the terms hereof), against the transfer of
funds by Seller.  Each such transaction
shall be referred to herein as a “Transaction” and, unless otherwise agreed in
writing, shall be governed by the Agreement, including any supplemental terms
or conditions contained in this Annex I and in any other annexes identified
herein or therein as applicable hereunder.


 


(b)                                 In
addition to this Annex I and the Schedules hereto, the following Annexes
and any Schedules thereto shall form a part of the Agreement and shall be
applicable thereunder:


 


Annex II – Names and Addresses for Communications
Between Parties.


 


2.                                      ADDITIONAL
AND SUBSTITUTE DEFINITIONS


 


(a)                                  The
following capitalized terms in Paragraph 2 of the Agreement (“Definitions”) are
hereby deleted in their entirety:


 


(i)                                     “Additional
Purchased Securities”;


 


(ii)                                  “Buyer’s
Margin Amount”;


 


(iii)                               “Buyer’s
Margin Percentage”;


 


(iv)                              “Margin
Notice Deadline”;


 


(v)                                 “Prime
Rate”;


 


(vi)                              “Seller’s
Margin Amount”; and


 


(vii)                           “Seller’s
Margin Percentage”.


 





















 


(b)                                 The
following capitalized terms shall have the respective meanings set forth below,
in lieu of the meanings for such terms set forth in Paragraph 2 of the
Agreement (“Definitions”):


 


“Act of Insolvency” shall mean, with respect to
any party, (i) the commencement by such party as debtor of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
moratorium, dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian or
similar official for such party or any substantial part of its property, or the
convening of any meeting of creditors for purposes of commencing any such case
or proceeding or seeking such an appointment or election, (ii) the making by
such party of a general assignment for the benefit of creditors, or (iii) the
admission in writing by such party of such party’s inability to pay such party’s
debts as they become due.


 


“Confirmation” shall have the meaning specified
in Section 3(d) of this Annex I.


 


“Income” shall mean, with respect to any
Purchased Loan at any time, any payment or other cash distribution thereon of
principal, interest, dividends, fees, reimbursements or proceeds or other cash
distributions thereon (including casualty or condemnation proceeds).


 


“Margin Deficit” shall have the meaning
specified in Section 4(a) of this Annex I.


 


“Margin Excess” shall
have the meaning specified in Section 4(b) of this Annex I.


 


“Market Value” shall mean, with respect to any
Purchased Loan as of any relevant date, the lesser of (x) market value of
such Purchased Loan on such date, as determined by Buyer in its good faith but
sole discretion, and (y) the par amount of such Purchased Loan.


 


For purposes of Buyer’s determination, (i) the
Market Value may be determined by reference to an Appraisal, discounted cash
flow analysis or other method (which method shall be selected by Buyer in good
faith), (ii) any amounts or claims secured by related Eligible Property or
Properties ranking senior to or pari passu with the lien of the Purchased Loan
may be deducted from the Market Value of the Purchased Loan, (iii) the
Market Value of any Defaulted Loan or Delinquent Loan shall be zero (unless
Buyer otherwise specifies), (iv) Buyer may consider the representations and
warranties set forth in Exhibit V (including a breach thereof), and
exceptions thereto in its determination of the Market Value of the Purchased
Loans and (iv) for the avoidance of doubt, Buyer may reduce Market Value
for any actual or potential risks (including risk of delay) posed by any liens
or claims on the related Eligible Property or Properties.  Seller shall cooperate in good faith with
Buyer in its in good faith determination of the market value of each item of
underlying collateral (including, without limitation, providing all information
and documentation in the possession of Seller regarding such item of underlying
collateral or otherwise required by Buyer).


 


“Pricing Rate” shall mean, for any Purchased
Loan and any Pricing Rate Period, an annual rate equal to the LIBOR Rate for
such Pricing Rate Period plus the Applicable Spread for the applicable Loan
Type and shall be subject to adjustment and/or conversion as provided in
Sections 3(j), 3(k) and 3(s) of this Annex I. 
The Pricing Rate shall be computed on the basis of a 360-day year and
the actual number of days elapsed.


 


“Purchase Price” shall mean, with respect to
any Purchased Loan the price at which such Purchased Loan is transferred by
Seller to Buyer on the applicable Purchase Date.  The Purchase Price as of any Purchase Date
for any Purchased Loan of a particular Loan Type shall be an amount (expressed
in dollars) equal to the product obtained by multiplying (i) the Market Value
of such Purchased Loan by (ii) the Purchase Percentage for the related Loan
Type.


 


2





















 


“Purchase Date” shall mean, with respect to any
Purchased Loan, the date on which such Purchased Loan is transferred by Seller
to Buyer.


 


“Purchased Securities” shall mean, the “Purchased
Securities” as defined in the Securities Repurchase Agreement.


 


“Repurchase Date” with respect to any Purchased
Loan shall mean the Facility Termination Date or such earlier date specified in
the related Confirmation, or if applicable, the related Early Repurchase Date
or Accelerated Repurchase Date.


 


“Repurchase Price” shall mean, with respect to
any Purchased Loan as of any date, the price at which such Purchased Loan is to
be transferred from Buyer to Seller upon termination of the related
Transaction; in each case, such price shall equal the sum of the Purchase Price
of such Purchased Loan and the accrued Price Differential with respect to such
Purchased Loan as of the date of such determination, minus all Income and cash
actually received by Buyer in respect of such Transaction and applied towards
the Repurchase Price and/or Price Differential pursuant to this Annex I.


 


(c)                                  In
addition to the terms defined in Paragraph 2 of the Agreement  (“Definitions”) not otherwise deleted
pursuant to Section 2(a) of this Annex I and the terms defined in Section 2(b)
of this Annex I, the following capitalized terms shall have the respective
meanings set forth below:


 


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


 


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


 


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


 


“Aggregate Repurchase Price” shall mean, as of
any date of determination, the aggregate Repurchase Price (excluding any
accrued and unpaid Price Differential) of all Transactions outstanding as of
such date.


 


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


 


“Alternative Rate” shall have the meaning
specified in Section 3(k) of this Annex I.


 


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


 


“Applicable Spread” shall mean, (i) with
respect to a Purchased Loan, so long as no Event of Default shall have occurred
and be continuing, the per annum rate specified in Schedule 1 attached hereto
as being the “Applicable Spread” for the Purchased Loans in such Loan Type, and
(ii) in each case, after


 


3





















 


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


 


“Appraisal” shall mean an appraisal of any Eligible Property prepared by a licensed appraiser
approved by Buyer in its reasonable discretion, in accordance with the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation, in
compliance with the requirements of Title 11 of the Financial Institution
Reform, Recovery and Enforcement Act and utilizing customary valuation methods
such as the income, sales/market or cost approaches, as any of the same may be
updated by recertification from time to time by the appraiser performing such
Appraisal.


 


“Asset Base” shall mean,
as of any date of determination, the aggregate Asset Base Components of all
Purchased Loans transferred by the Seller to the Buyer hereunder as of such
date.


 


“Asset Base Component”
shall mean, as of any date of determination, with respect to each Purchased
Loan, the product of its Market Value multiplied by the Purchase Percentage
applicable to such Purchased Loan as of such date.


 


“Assignment of Leases” shall mean, with respect
to any Purchased Loan which is a mortgage loan, any assignment of leases, rents
and profits or equivalent instrument, whether contained in the related Mortgage
or executed separately, assigning to the holder or holders of such Mortgage all
of the related Mortgagor’s interest in the leases, rents and profits derived
from the ownership, operation, leasing or disposition of all or a portion of
the related Mortgaged Property as security for repayment of such Purchased
Loan.


 


“Assignment of Mortgage” shall mean, with
respect to any Mortgage, an assignment of the mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related property is located to reflect the assignment
and pledge of the Mortgage.


 


“Bailee” shall mean Dechert LLP or such other
third party as Buyer and Seller shall mutually approve in their sole
discretion.


 


“Bailee Agreement” shall mean the Bailee
Agreement among Seller, Buyer and Bailee in the form of Exhibit VII hereto.


 


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


 


“Blocked Account” shall have the meaning
specified in Section 5 of this Annex I.


 


“Blocked Account Agreement” shall mean the
Blocked Account Agreement, in the form attached hereto as Exhibit VI (or
such other form as shall have been approved by Buyer, such approval not to be
unreasonably withheld, delayed or conditioned), dated as of the date hereof and
executed by Buyer, Seller and the Depository Bank (and any successor thereto or
replacement thereof executed by Buyer, Seller and the Depository Bank).


 


“Business Day” shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank
of New York or the Custodian is authorized or obligated by law or executive
order to be closed.


 


“Buyer” shall mean Goldman Sachs Mortgage
Company, and any successor or assign.


 


4





















 


“Capital Lease Obligations” shall mean, for any
Person, all obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) property to the extent
such obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of the
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.


 


“Change of Control” shall mean the occurrence
of any of the following with respect to any Person:


 


(i)                                     a
Transfer of all or substantially all of such Person’s assets (excluding any
such Transfer in connection with any securitization transaction involving, or
the sale of,  Repurchased Loans or
Repurchased Securities or other assets of Seller used in other repurchase or
other similar transactions in the ordinary course of such Person’s business);
or


 


(ii)                                  a
merger, consolidation or other transaction in which more than 50% of the voting
common equity of such Person or the surviving entity immediately after such
merger, consolidation or such other transaction is not owned, directly or
indirectly, by persons who were, directly or indirectly, equityholders of such
Person immediately prior thereto; or


 


(iii)                               a
majority of the members of the board of directors of such Person changes during
any twelve (12) month period after the date hereof.


 


“Collection Period” shall mean with respect to
the Remittance Date in any month, the period beginning on but excluding the
Cut-off Date in the month preceding the month in which such Remittance Date
occurs and continuing to and including the Cut-off Date immediately preceding
such Remittance Date.


 


“Costs” shall mean,
with respect to any Purchased Loan, all out-of-pocket obligations, costs, fees,
indemnities and expenses in respect of such Purchased Loan actually incurred by
Buyer.


 


“Custodial Agreement” shall mean the Custodial
Agreement entered into by and among Custodian, Seller and Buyer.


 


“Custodial Delivery Certificate” shall mean the
delivery certificate, a form of which is attached hereto as Exhibit III,
executed by Seller in connection with its delivery of a Purchased Loan File to
Buyer or its designee (including the Custodian) pursuant to Section 7 of
this Annex I.


 


“Custodian” shall mean Wells Fargo Bank, N.A.
or any successor Custodian appointed by Buyer.


 


“Cut-off Date” shall mean the last Business Day
of the calendar month preceding each Remittance Date.


 


“Debt to Equity Ratio” shall mean the ratio of
Total Indebtedness to Tangible Net Worth without regard to the application of
FAS 140 or FIN 46).


 


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


 


“Defaulted Loan” shall mean any Purchased Loan
as to which (A) there is a material breach beyond any applicable cure
period of a material representation, warranty or covenant by the related
borrower or obligor under the applicable Purchased Loan Documents or by Seller
under Exhibit V,


 


5





















 


(B) there is a material default beyond any
applicable cure period under the related Purchased Loan Documents in the
payment when due of interest, principal or any other amounts which material
default continues, (C) any other material “Event of Default” under the
related Purchased Loan Document, (D) to the extent that the related
Transaction is deemed a loan under federal, state or local law Buyer ceases to
have a first priority perfected security interest or (E) the related
Purchased Loan File or any portion thereof has been released from the
possession of the Custodian under the Custodial Agreement to anyone other than
Buyer or any Affiliate of Buyer except in accordance with the terms of the
Custodial Agreement.


 


“Delinquent Loan” shall mean any Purchased Loan
as to which the payment of principal and/or interest owed thereunder by the
underlying obligor is 30 days or more past due.


 


“Depository Bank” shall mean such depository
bank appointed by Seller with the prior written consent of Buyer which delivers
a deposit account agreement in the form of the Blocked Account Agreement or
another form reasonably acceptable to Buyer.


 


“Diligence Fee” shall mean fees (so long as no
Event of Default is continuing, not to exceed $50,000 annually with respect to
this Agreement and the Securities Repurchase Agreement) payable by Seller to
Buyer in respect of Buyer’s out-of-pocket expenses (other than legal expenses)
incurred in connection with its review of the Diligence Materials hereunder and
under the Securities Repurchase Agreement.


 


“Diligence Materials” shall mean the
Preliminary Due Diligence Package together with the Supplemental Due Diligence
List.


 


“Draft Appraisal” shall mean a short form
appraisal, “letter opinion of value,” or any other form of draft appraisal
reasonably acceptable to Buyer.


 


“Early Repurchase Date” shall have the meaning
specified in Section 3(g) of this Annex I.


 


“Early Repurchase Deposit” shall have the
meaning specified in Section 3(j) of this Annex I.


 


“Early Repurchase Deposit Application Date”
shall have the meaning specified in Section 3(j) of this Annex I.


 


“Early Repurchase Deposit Funding Date” shall
have the meaning specified in Section 3(j) of this Annex I.


 


“EBITDA” shall mean, for each fiscal quarter,
with respect to Guarantor and its consolidated Subsidiaries, an amount equal to
(a) Net Income for such period (excluding the effect of any extraordinary gains
or losses resulting from the sale of property or non-cash gains or losses
outside the ordinary course of business) plus (b), without duplication,
an amount which, in the determination of Net Income for such period, has been
deducted for (i) interest expense for such period, (ii) total federal, state,
foreign or other income or franchise taxes for such period, and (iii) all
depreciation and amortization for such period, all as determined with respect
to any consolidated Subsidiary in accordance with the methodology specified in
the definition of Net Income, plus (c) any nonrecurring fees and
expenses incurred on or prior to the date of the execution and delivery of the
Agreement, less (d) any non-cash reserve activity.


 


“Eligible Loans” shall mean any of the
following types of transitional or stabilized loans listed in (i) through (iv)
below, (v) acceptable to Buyer in the exercise of its sole and absolute
discretion, (w)


 


6





















 


secured directly or indirectly by an Eligible
Property, (x) which has a loan term equal to or less than 10 years (assuming
exercise of all extension options), (y) as to which the applicable
representations and warranties set forth in Exhibit V are true and correct in
all material respects as of the applicable Purchase Date, and (z) has a maximum
LTV  specified in Schedule 1 for the
related Loan Type:


 


(i)                                     performing
Mezzanine Loans (or participation interests therein).


 


(ii)                                  performing
Mortgage Loans secured by first liens on Eligible Properties (“First
Mortgage Loans”).


 


(iii)                               senior
subordinate participation interests (or a senior subordinate promissory note
that is, in effect, similar in nature to a senior subordinate participation
interest) in performing First Mortgage Loans that also secures a senior
promissory note (or senior interest) in such loan and may also secure a junior
subordinate promissory note (or junior subordinate interest) in such loan (“Senior
First Mortgage B Notes”).


 


(iv)                              junior
participation interests (or a junior promissory note that is, in effect,
similar in nature to a junior participation interest) in performing First
Mortgage Loans that also secure a senior (or senior subordinate) promissory
note (or senior (or senior subordinate) interest) in such loan (“Junior
First Mortgage B Notes”).


 


Buyer may, in its sole and absolute discretion,
consider sub-performing and non-performing loans of the types listed in (i)
through (iv) above.


 


“Eligible Property” shall mean a property that
is a multifamily, retail, office, industrial, warehouse, condominium or
hospitality property or such other property type acceptable to Buyer in the
exercise of its good faith business judgment; provided, however, that
healthcare related properties, such as assisted living, nursing homes, acute
care, rehabilitation centers, diagnostic centers and psychiatric centers, shall
not qualify as an Eligible Property.


 


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


 


“ERISA Affiliate” means any corporation or
trade or business (whether or not incorporated) that is a member of any group
of organizations described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA of which Seller is a member at any relevant time.


 


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


 


“Extended Repurchase Monthly Amount” means the
quotient of (i) the aggregate Repurchase Price of the Purchased Loans as of the
Facility Termination Date, divided by (ii) 6; provided, that to the extent
Seller pays the aggregate Repurchase Price in an amount in excess of the
Extended Repurchase Monthly Amount in any month, Seller shall receive a credit
against the next month’s required payment amount (and any subsequent months’
payments, if applicable) in an aggregate amount equal to such excess.


 


“Facility Amount” shall mean, as of any date of
determination, $200,000,000 less the Securities Aggregate Repurchase Price
outstanding under the Securities Repurchase Agreement as of such date.


 


7





















 


“Facility Termination Date” shall mean January
3, 2008 unless extended pursuant to Section 3(q) of this Annex I.


 


“Federal Funds Rate” shall mean, for any day,
an interest rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day, (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10 a.m. (New York time) on such day or such transactions received
by the Buyer from three Federal funds brokers of recognized standing selected
by the Buyer in its sole discretion.


 


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


 


“Filings” shall have the meaning specified in
Section 6(b) of this Annex I.


 


“Financial Covenant Compliance Certificate”
shall mean an Officer’s Certificate to be delivered by Guarantor within 45 days
after the end of each fiscal quarter confirming that: (i) as of the fiscal
quarter most recently ended, (w) Guarantor’s Debt to Equity Ratio is less than
or equal to 5:1; (x) Guarantor’s Tangible Net Worth is equal to or greater than
the sum of (i) $129,750,000 and (ii) 75% of the proceeds of any equity
issuances after Guarantor’s initial public offering, (y) Guarantor’s Fixed Charge
Coverage Ratio equals or exceeds 1.50:1, and 
(z) Guarantor’s Minimum Liquidity equals or exceeds, during the first
two years after the date of this Agreement, $10,000,000 and, thereafter,
$15,000,000; and (ii) Guarantor has cumulative positive EBITDA for the three
fiscal quarters most recently ended.


 


“Financing Transaction” shall mean a repurchase
transaction or a financing transaction between Buyer (or an Affiliate of Buyer)
and any counterparty.


 


“First Mortgage B Note” shall mean any Senior
First Mortgage B Note or Junior First Mortgage B Note.


 


“Fitch” means Fitch Inc.


 


“Fixed Charge Coverage Ratio” shall mean, with
respect to any Person and any period of determination, the quotient of (i)
EBITDA of such Person for such period of determination divided by (ii) the
Fixed Charges for such period.


 


“Fixed Charges” shall mean, with respect to any
Person and any period of determination, the sum of (a) debt service (including
interest expense and principal payments), (b) preferred dividends on any
preferred securities and all distributions due to the holders of any preferred
limited partnership interests, (c) the amortized portion of any capital lease
obligations paid or accrued during such period, (d) capital expenditures, and
(e) any amounts payable under any ground lease. 
Fixed Charges shall include a proportionate share of items (a), (b),
(c), (d) and (e) of all unconsolidated affiliates.


 


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


 


“Governmental Authority” shall mean any
national or federal government, any state, regional, local or other political
subdivision thereof with jurisdiction and any Person with jurisdiction
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.


 


8





















 


“Guarantee” shall mean, as to any Person, any
obligation of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, or
to take-or-pay or otherwise); provided that the term “Guarantee” shall not
include endorsements for collection or deposit in the ordinary course of
business.  The amount of any Guarantee of
a Person shall be deemed to be an amount equal to the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith in accordance with GAAP.  The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.


 


“Guarantor” shall mean Gramercy Capital Corp.,
a Maryland corporation.


 


“Guaranty” shall mean that certain Guaranty
dated as of the date hereof, made by Guarantor in favor of Buyer, as the same
may be amended, supplemented or otherwise modified from time to time.


 


“Hedging Transactions” shall mean, with respect
to any or all of the Purchased Loans, any short sale of U.S. Treasury
Securities or mortgage-related securities, futures contract (including
Eurodollar futures) or options contract or any interest rate swap, cap or
collar agreement or similar arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies, entered into by Seller or the
underlying obligor with respect to any Purchased Loan and pledged to Seller as
collateral for such Purchased Loan, with one or more counterparties whose
unsecured debt is rated at least AA (or its equivalent) by any Rating Agency
or, with respect to any Hedging Transaction pledged to Seller as additional
collateral for a Purchased Loan, such other rating requirement applicable to
such Hedging Transaction set forth in the related Purchased Loan Documents or
which is otherwise reasonably acceptable to Buyer; provided that Seller
shall not grant or permit any liens, security interests, charges, or
encumbrances with respect to any such hedging arrangements for the benefit of
any Person other than Buyer.


 


“Indebtedness” shall
mean, for any Person: 
(a) obligations created, issued or incurred by such Person for
borrowed money (whether by loan, the issuance and sale of debt securities or
the sale of property to another Person subject to an understanding or
agreement, contingent or otherwise, to repurchase such property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a lien on the
property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise)
of such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person;
(e) Capital Lease Obligations of such Person; (f) obligations of such
Person under repurchase agreements or like arrangements; (g) Indebtedness of
others Guaranteed by such Person; (h) all obligations of such Person
incurred in connection with the acquisition or carrying of fixed assets by such
Person; and (i) Indebtedness of general partnerships of which such Person
is a general partner.


 


“Indemnified Amounts” and “Indemnified
Parties” shall have the meaning specified in Section 20 of this Annex I.


 


“Independent Director” of any corporation or
limited liability company means an individual who is duly appointed as a member
of the board of directors or board of managers of such corporation or limited
liability company and who is not, and has never been, and will not while
serving as Independent Director, be any of the following:


 


9





















 


(i)                                     a
member, partner, equityholder, manager, director, officer or employee of Seller
or any of its equityholders or affiliates (other than as an independent
director or manager of an affiliate of Seller that is not in the direct chain
of ownership of Seller and that is required by a creditor to be a single
purpose bankruptcy remote entity, provided that such independent director or
manager is employed by a company that routinely provides professional
independent directors or managers);


 


(ii)                                  a
creditor, supplier or service provider (including provider of professional
services) to Seller or any of its equityholders or affiliates (other than a
company that routinely provides professional independent managers or directors
and which also provides lien search and other similar services to Seller or any
of its equityholders or affiliates in the ordinary course of business);


 


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


 


(iv)                              a
Person that controls (whether directly, indirectly or otherwise) any of (i),
(ii) or (iii) above.


 


“Insured Closing Letter and Escrow Instructions”
shall mean a letter addressed to Seller and Buyer from the title insurance
underwriter (or any agent thereof) acting as an agent for each Table Funded
Purchased Loan and related escrow instructions, which letter and instructions
shall be in form and substance reasonably acceptable to Buyer and Seller.


 


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


 


LIBOR










1 - Reserve Requirement


 


“LIBOR” shall mean the rate per annum
calculated as set forth below:


 


(i)                                     On
each Pricing Rate Determination Date, LIBOR for the next Pricing Rate Period
will be the rate for deposits in United States dollars for a one-month
period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date; or


 


(ii)                                  On
any Pricing Rate Determination Date on which no such rate appears on Telerate
Page 3750 as described above, LIBOR for the next Pricing Rate Period will be
determined on the basis of the arithmetic mean of the rates at which deposits
in United States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such date to prime banks in the London interbank
market for a one-month period.


 


All
percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards, if necessary, to the nearest multiple
of 1/100th of 1% and all U.S. dollar amounts used in or resulting from such
calculations will be rounded to the nearest cent (with one-half cent or more
being rounded upwards).


 


10





















 


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


 


“Loan Type” shall mean, with respect to any
Purchased Loan, each of the loan types listed in Schedule 1 attached hereto.


 


“LTV” shall mean, with respect to any Eligible
Property or Properties, the ratio of the aggregate outstanding debt (which
shall include the related Eligible Loan and all debt senior to or pari passu
with such Eligible Loan) secured, directly or indirectly, by such Eligible
Property or Properties, taking into consideration, in Buyer’s sole discretion,
reserves, letters of credit, and recourse to third parties acceptable to Buyer,
to the aggregate value of such Eligible Property or Properties as determined by
Buyer in its sole and absolute discretion. 
For purposes of Buyer’s determination, (i) the value may be
determined by reference to an Appraisal, discounted cash flow analysis or other
commercially reasonable method and (ii) for the avoidance of doubt, Buyer may
reduce value for any actual or potential risks (including risk of delay) posed
by any liens on the related Eligible Property or Properties.


 


“Material Adverse Effect” shall mean a material
adverse effect on (a) the property, business, operations, financial condition
or prospects of Seller or Guarantor, (b) the ability of Seller or
Guarantor to perform its obligations under any of the Transaction Documents to
which it is a party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights and remedies of Buyer under any of the Transaction
Documents, (e) the timely payment of
the Repurchase Price of or accrued Price Differential in respect of the
Purchased Loans or other amounts payable in connection therewith, or (f) the
aggregate Market Value of the Purchased Loans.


 


“Mezzanine Loan” shall mean any loan (including
any participation interest therein) secured by a pledge of the direct or
indirect equity ownership interests in a Person that owns a Mortgaged Property
that also secures a Mortgage Note.


 


“Mezzanine Note” shall mean a note or other
evidence of indebtedness of the owner or owners of direct or indirect equity
ownership interests in an underlying real property owner secured by a pledge of
such ownership interests.


 


“Minimum Liquidity” shall mean, for any Person
and any date of determination, the sum of such Person’s Cash, Cash Equivalents
and actual borrowing availability under any credit facilities, as of such date
of determination.


 


“Monthly Statement” shall mean, for each
calendar month during which the Agreement shall be in effect, Seller’s or
Servicer’s, as applicable, reconciliation in arrears of beginning balances,
interest and principal paid to date and ending balances for each Purchased
Loan, together with a certified written report describing (a) any developments
or events that are reasonably likely to have a Material Adverse Effect, (b) any
and all written modifications to any Purchased Loan Documents not previously
described in a written report, (c) loan status, collection performance and any
delinquency and loss experience with respect to any Purchased Loan, (d) an
update as to the expected repurchase for all Purchased Loans in the facility
and (e) such other information as mutually agreed by Seller and Buyer which
report shall be delivered to Buyer for each calendar month during the term of
the Agreement within ten (10) days following the end of each such calendar
month.


 


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


 


11





















 


“Mortgage” shall mean the mortgage, deed of
trust, deed to secure debt or other instruments, creating a valid and
enforceable first or second lien, as applicable, on or a first or second
priority ownership interest in a Mortgaged Property.


 


“Mortgage Loan” shall mean a commercial
mortgage loan secured by a lien on real property, and includes any First
Mortgage Loan, Senior First Mortgage B Note and Junior First Mortgage B Note.


 


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


 


“Mortgaged Property” shall mean the real
property or properties securing repayment of the debt evidenced by a Mortgage
Note, or, in the case of any Mezzanine Loan, owned indirectly by the related
obligor.


 


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


 


“Net Income” shall mean, with respect to any
Person, for any period, the consolidated net income for such period of such
Person as reported in such Person’s financial statements prepared in accordance
with GAAP.


 


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


 


“Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, any vice chairman
and the chief financial officer of such Person or, for the purpose of executing
certificates, the president, the vice president and counsel responsible
therefor.


 


“Originated Loan” shall mean any loan that is
an Eligible Loan and whose related loan documents were prepared by Seller or an
Affiliate controlled by Seller.


 


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


 


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


 


“Plan Assets” shall mean assets of any (i)
employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I
of ERISA, (ii) plan (as defined in Section 4975(e)(l) of the Code) subject to
Section 4975 of the Code, or (iii) governmental plan (as defined in Section
3(32) of ERISA) subject to any other federal, state or local laws, rules or
regulations substantially similar to Title I of ERISA or Section 4975 of the
Code.


 


“Portfolio Loans” shall mean all of the
Purchased Loans.  As of the date of the
Agreement, the Eligible Loans identified on Schedule 2 hereto have been
approved by Buyer as suitable for inclusion as Portfolio Loans, subject to
satisfaction of the conditions in this Annex I.


 


12





















 


“Portfolio Securities” has the meaning
specified in the Securities Repurchase Agreement.


 


“Pre-Existing Loans” shall mean any loan that
is an Eligible Loan and is not an Originated Loan.


 


“Preliminary Due Diligence Package” shall mean
with respect to any New Loan, the following due diligence information relating
to such New Loan to be provided by Seller to Buyer pursuant to this Annex I:


 


(i)                                     Seller’s
internal investment committee memorandum, among other things, outlining the
proposed transaction, including potential transaction benefits and all material
underwriting risks, and Underwriting Issues, anticipated exit strategies and
all other characteristics of the proposed transaction that a prudent buyer
would consider material;


 


(ii)                                  current
rent roll, if applicable;


 


(iii)                               cash
flow pro-forma, plus historical information, if available;


 


(iv)                              indicative
interest coverage ratios;


 


(v)                                 indicative
loan-to-value ratio;


 


(vi)                              Seller’s
or any Affiliate’s relationship with its potential underlying borrower or any
affiliate;


 


(vii)                           third
party reports, to the extent available and applicable, including:


 


(a)                                  engineering
and structural reports;


 


(b)                                 current
Appraisal;


 


(c)                                  Phase
I environmental report (including asbestos and lead paint report) and, if
applicable, Phase II or other follow-up environmental report if recommended in
Phase I;


 


(d)                                 seismic
reports; and


 


(e)                                  operations
and maintenance plan with respect to asbestos containing materials;


 


(viii)                        documents
evidencing such New Loan, or current drafts thereof, including, without
limitation, underlying debt and security documents, guaranties, underlying
borrower’s organizational documents, warrant agreements, loan and collateral
pledge agreements, and intercreditor agreements, as applicable;


 


(ix)                                a
list that specifically identifies any Purchased Loan Documents that relate to
such Purchased Loan but are not in Seller’s possession;


 


(x)                                   in
the case of a participation interest, all information described in this definition
which would otherwise be provided for the underlying Mortgage Loan if it
constituted an Eligible Loan except that, as to items set forth in
subparagraphs (vii) and (xii), to the extent Seller possesses such information
or has access to such information because it was provided to the


 


13





















 


related lead lender and made available to Seller, and
in addition, all documentation evidencing the participation interest;


 


(xi)                                insurance
documentation as shall be reasonably satisfactory to Buyer; and


 


(xii)                             analyses
and reports with respect to such other matters concerning the New Loan as Buyer
may in its reasonable discretion require.


 


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


 


“Pricing Rate Period” shall mean (a) in the
case of the first Pricing Rate Period with respect to any Transaction, the
period commencing on and including the Purchase Date for such Transaction and
ending on and including the last day of the calendar month in which the
Purchase Date occurs, (b) in the case of any subsequent Pricing Rate Period,
the period commencing on and including the first day of a calendar month and ending
on and including the last day of such calendar month, and (c) in the case where
the Remittance Date is not the first day of a calendar month, the period
commending on and including the Remittance Date and ending on (but excluding)
the subsequent Remittance Date; provided, however, that in no
event shall any Pricing Rate Period end subsequent to the Repurchase Date.


 


“Principal Payment” shall mean, with respect to
any Purchased Loans, any payment or prepayment of principal received in respect
thereof (including casualty or condemnation proceeds to the extent such
proceeds are required under the applicable Purchase Loan Documents to be
applied toward the balance of the underlying loan, or are not otherwise
required under the underlying loan documents to be reserved, escrowed,
readvanced or applied for the benefit of the obligor or the underlying real
property).  For purposes of
clarification, prepayment premiums, fees or penalties shall not be deemed
principal.


 


“Purchase Percentage” shall mean, with respect
to any Purchased Loan, the “Purchase Percentage” specified in Schedule 1 for
the related Loan Type (or as otherwise specified in the applicable
Confirmation).


 


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


 


“Purchased Loan File” shall mean the documents
specified as the “Purchased Loan File” in Section 7(b) of this Annex I,
together with any additional documents and information required to be delivered
to Buyer or its designee (including the Custodian) pursuant to this Annex I.


 


“Purchased Loan Information” shall mean, with
respect to each Purchased Loan, the information set forth in Schedule 3
attached hereto.


 


“Purchased Loan Schedule” shall mean a schedule
of Purchased Loans, together with the Purchased Loan Information for each such
loan attached to each Trust Receipt and Custodial Delivery Certificate.


 


“Purchased Loans” shall mean (i) with respect
to any Transaction, the Eligible Loans sold by Seller to Buyer in such
Transaction and (ii) with respect to the Transactions in general, all Eligible
Loans sold by Seller to Buyer and any additional cash and/or other assets
delivered by Seller to Buyer pursuant to Section 4 of this Annex I.


 


14





















 


“Quarterly Report” shall mean, for each fiscal quarter during which the Agreement shall be
in effect, Seller’s or Servicer’s, as applicable, certified written report
summarizing, with respect to the Mortgaged Properties securing each Purchased
Loan (or, in the case of a Purchased Loan secured (directly or indirectly) by a
portfolio of Mortgaged Properties, such information on a consolidated basis),
the net operating income, debt service coverage, occupancy, the revenues per
room (for hospitality properties) and sales per square footage (for retail
properties) and such other information as mutually agreed by Seller and Buyer
which report shall be delivered to Buyer for each fiscal quarter during the
term of the Agreement within 60 days following the end of each such fiscal
quarter.


 


“Rating Agency” shall mean any of Fitch, Moody’s
and Standard & Poor’s.


 


“Reference Banks” shall mean banks each of
which shall (i) be a leading bank engaged in transactions in Eurodollar deposits
in the international Eurocurrency market and (ii) have an established place of
business in London.  Initially, the
Reference Bank shall be JPMorgan Chase Bank. 
If any such Reference Bank should be unwilling or unable to act as such
or if Buyer shall terminate the appointment of any such Reference Bank or if
any of the Reference Banks should be removed from the Reuters Monitor Money
Rates Service or in any other way fail to meet the qualifications of a
Reference Bank, Buyer in the exercise of its good faith business judgment may
designate alternative banks meeting the criteria specified in clauses (i)
and (ii) above.


 


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


 


“Remittance Date” shall mean the first (1st)
calendar day of each month, or the next succeeding Business Day, if such
calendar day shall not be a Business Day.


 


“Repurchased Loan” shall mean any Purchased
Loan which has been repurchased by Seller pursuant to the terms hereof.


 


“Repurchased Security” shall have the meaning
set forth in the Securities Repurchase Agreement.


 


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


 


“Reserve Requirement” shall mean, with respect
to any Pricing Rate Period, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect during such
Pricing Rate Period (including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto) dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as “Eurocurrency Liabilities”
in Regulation D of such Board of Governors) maintained by Buyer.


 


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


 


“Scheduled Purchase Date” shall mean the date
agreed between the parties or specified in the applicable Confirmation as the “Purchase
Date” or the “Scheduled Purchase Date”.


 


15





















 


“Securities Aggregate Repurchase Price” shall
mean, as of any date of determination, the “Aggregate Repurchase Price” (as
defined in the Securities Repurchase Agreement) as of such date.


 


“Securities
Repurchase Agreement” shall mean
the Master Repurchase Agreement dated as of the date hereof between Seller and
Goldman, Sachs & Co., as amended supplemented or otherwise modified from
time to time.


 


“Seller” shall mean Gramercy Warehouse Funding
II LLC, a Delaware limited liability company and its permitted successors and
assigns.


 


“Servicer” shall mean GKK Manager LLC or an
affiliate thereof, or such other servicer mutually acceptable to Buyer and
Seller.


 


“Servicing Agreement” shall mean that certain
servicing agreement entered into by Seller and Servicer or such other servicing
agreement in each case approved by Buyer in its reasonable discretion.


 


“Servicing Records” has the meaning specified
in Section 22(b) of this Annex I.


 


“Significant Modification”
shall mean (a) any modification or amendment of a Purchased Loan which:


 


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


 


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


 


(iii)                               modifies
the payments of principal and interest when due of the Purchased Loan in
question;


 


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


 


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


 


(vi)                              releases
(1) any collateral for the Purchased Loan other than releases required under
the then existing Purchased Loan Documents or releases in connection with
eminent domain or under threat of eminent domain or (2) any underlying obligor
with respect to a Purchased Loan;


 


16





















 


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


 


(viii)                        waives
any due-on-sale or due-on-encumbrance provisions of the Purchased Loan other
than waivers required to be given under the then existing Purchased Loan
Documents; and


 


(b)                                 any
modification, amendment or other material action with respect to a Purchased
Loan (or the related mortgage loan, if such Purchased Loan is a Mezzanine Loan)
which under the terms of the related intercreditor agreement or participation
agreement, as the case may be, requires the consent of Seller or its “operating
advisor” or the agent (as distinct from consultation rights).


 


“Single-Purpose Entity”
shall mean a Person, other than an individual, which is formed or organized solely
for the purpose of holding, directly or indirectly and subject to this
Agreement and the Securities Repurchase Agreement, the Purchased Loans and the
Portfolio Securities, does not engage in any business unrelated to the
Purchased Loans and the Portfolio Securities, does not have any assets other
than the Purchased Loans and the Portfolio Securities or any indebtedness other
than as permitted by the Agreement and the Securities Repurchase Agreement, has
its own separate books and records and its own accounts, in each case which are
separate and apart from the books and records and accounts of any other Person,
holds itself out as being a Person, separate and apart from any other Person
and provides in its partnership agreement or limited liability company
agreement (as applicable) for the inclusion of at least one Independent
Director.  If  the foregoing entity is a limited partnership
or limited liability company, its partnership agreement or limited liability
company agreement (as applicable) shall provide that that the dissolution and
winding up or bankruptcy or insolvency filing of such partnership or limited
liability company shall require the unanimous consent of all partners or
members (including the affirmative vote of the independent directors) and if
the foregoing entity is a single-member limited liability company whose single
member is not itself a Single-Purpose Entity, its limited liability company
agreement shall provide that upon the occurrence of any event that
causes its sole member to cease to be a member during the term of this
Agreement, at least one of its independent directors shall automatically be
admitted as the sole member and shall preserve and continue the existence of
the entity without dissolution.


 


“Standard & Poor’s” shall mean Standard
& Poor’s Ratings Services, Inc., a division of the McGraw Hill Companies
Inc.


 


“Subsidiary” shall mean,
with respect to any Person, any corporation, partnership or other entity of
which at least a majority of the securities or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.


 


“Supplemental Due Diligence List” shall mean,
with respect to any New Loan, information or deliveries concerning such New
Loan that Buyer shall request in addition to the Preliminary Due Diligence
Package, including, without limitation, a
credit approval memorandum representing the final terms of the underlying
transaction, a loan-to-value ratio computation and a final debt service
coverage ratio computation for such proposed New Loan.


 


17





















 


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


 


“Table Funded Purchased Loan” shall mean a
Purchased Loan which is sold to Buyer simultaneously with the origination or
acquisition thereof, which origination or acquisition is financed with the
Purchase Price, pursuant to Seller’s request, paid directly to a title company
or other settlement agent, in each case, approved by Buyer, for disbursement in
connection with such origination or acquisition.  A Purchased Loan shall cease to be a Table
Funded Purchased Loan after the Custodian has delivered a Trust Receipt to
Buyer certifying its receipt of the Purchased Loan File therefor.


 


“Tangible Net Worth” shall mean, with respect
to any Person, as of any date of determination, (a) all amounts which
would be included under capital on the balance sheet of such Person at such
date, determined in accordance with GAAP as of such date, less (b)(i)
amounts owing to such Person from Affiliates and (ii) intangible assets of such
Person as of such date.


 


“Telerate Page 3750” shall mean the display
page currently so designated on the Dow Jones Telerate Service (or such other
page as may replace that page on that service for the purpose of displaying
comparable rates or prices).


 


“Title Policy” shall have the meaning specified
in paragraph 2(d) of Exhibit V.


 


“Total Indebtedness” shall mean, with respect
to any Person, as of any date of determination, the aggregate Indebtedness of
such Person as of such date less the amount of any nonspecific balance sheet
reserves maintained in accordance with GAAP as of such date.


 


“Transaction” shall have the meaning specified
in Section 1(a) of this Annex I.


 


“Transaction Conditions Precedent” shall have
the meaning specified in Section 3(e) of this Annex I.


 


“Transaction Costs” shall
mean, with respect to any Purchased Loan, all actual out-of-pocket reasonable
costs and expenses paid or incurred by Buyer and payable by Seller relating to
the purchase of such Purchased Loan (including legal fees and other fees
described in Section 20(b) of this Annex I). 
Transaction Costs shall not include costs incurred by Buyer for overhead
and general administrative expenses.


 


“Transaction Documents” shall mean,
collectively, the Agreement (including this Annex I and any other annexes and
schedules attached to the Agreement), the Blocked Account Agreement, the
Custodial Agreement, the Fee Letter, the Servicing Agreement, all Transfer
Documents, all Confirmations executed pursuant to this Annex I in connection
with specific Transactions and all other documents executed in connection
herewith and therewith.


 


“Transfer” shall mean, with respect to any
Person, any sale or other whole or partial conveyance of all or any portion of
such Person’s assets, or any direct or indirect interest therein to a third
party (other than in connection with the transfer of a Purchased Loan to Buyer
in accordance herewith), including granting of any purchase options, rights of
first refusal, rights of first offer or similar rights in respect of any
portion of such assets or the subjecting of any portion of such assets to
restrictions on transfer.


 


18





















 


“Transfer Documents” shall mean, with respect
to any Purchased Loan, all applicable documents described in Section 7(b) of
this Annex I necessary to transfer all of Seller’s right, title and interest in
such Purchased Loan to Buyer in accordance with the terms of this Annex I.


 


“Trust Receipt” shall mean a trust receipt
issued by the Custodian, or the Bailee, as applicable, to Buyer confirming the
Bailee’s or the Custodian’s, as applicable, possession of certain Purchased
Loan Files which are the property of and held by the Bailee or the Custodian,
as applicable, on behalf of Buyer (or any other holder of such trust receipt)
in the form required under the Custodial Agreement or the Bailee Agreement.


 


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


 


“Underwriting Issues” shall mean, with respect
to any Eligible Loan as to which Seller intends to request a Transaction, all
material information that has come to Seller’s attention that, based on the
making of commercially reasonable inquiries and the exercise of reasonable care
and diligence by a reasonable institutional mortgage or mezzanine loan buyer in
determining whether to originate or acquire the Eligible Loan in question under
the circumstances, would, in the context of the totality of the Transaction in
question, be considered a materially “negative” factor (either separately or in
the aggregate with other information), (including, but not limited to, whether
any of the Eligible Loans were repurchased from any warehouse loan facility or
a repurchase transaction due to the breach of a representation and warranty or
a material defect in loan documentation or closing deliveries (such as any
absence of any material Purchased Loan Document(s)).


 


3.                                      INITIATION;
CONFIRMATION; TERMINATION; FEES


 


The provisions of Paragraph 3 of the Agreement (“Initiation;
Confirmation; Termination”) are hereby deleted and replaced in their respective
entireties by the following provisions of this Section 3:


 


(a)                                  Seller
may, from time to time, prior to the Facility Termination Date, request that
Buyer enter into a Transaction with respect to one or more New Loans.  Seller shall initiate each request by
submitting a Preliminary Due Diligence Package for Buyer’s review and
approval.  Notwithstanding anything to
the contrary herein, Buyer shall have no obligation to consider for purchase
any proposed Transaction that has an aggregate Repurchase Price (excluding the
Price Differential with respect to the Purchased Loans as of the date of
determination) that when combined with all Purchased Loans which have not been
repurchased by Seller hereunder exceeds the Facility Amount.  Buyer shall have the right to review all New
Loans proposed to be sold to Buyer in any Transaction and to conduct its own
due diligence investigation of such New Loans as Buyer determines is reasonably
necessary.  Seller agrees to promptly
reimburse Buyer for its Diligence Fees upon request for payment or
reimbursement thereof.  Notwithstanding
any provision to the contrary herein or any other Transaction Document, Buyer
shall be entitled to make a determination, in its sole and absolute discretion,
whether a New Loan qualifies as an Eligible Loan and whether to reject any or
all of the New Loans proposed to be sold to Buyer by Seller.  Buyer shall have no obligation to consider
for purchase any New Loans proposed by Seller after the original Facility
Termination Date or during the Facility Extension Period (if applicable).


 


(b)                                 Upon
Buyer’s receipt of a complete Preliminary Due Diligence Package with respect to
a proposed Transaction, Buyer shall have the right within two (2) Business
Days, to request in a


 


19





















 


Supplemental Due
Diligence List such additional Diligence Materials and deliveries that Buyer
deems necessary to properly evaluate the New Loans.  Upon Buyer’s receipt of such additional
Diligence Materials or Buyer’s waiver thereof, Buyer shall within five (5)
Business Days either (i) notify Seller of Buyer’s intent to proceed with the
Transaction and of its determination with respect to the Purchase Price and the
Market Value for the related New Loans (such notice, a “Preliminary Approval”)
or (ii) deny, in Buyer’s sole and absolute discretion, Seller’s request for the
applicable Transaction.  Buyer’s failure
to respond to Seller within five (5) Business Days, as applicable, shall be
deemed to be a denial of Seller’s request to enter into the proposed
Transaction, unless Buyer and Seller have agreed otherwise in writing.


 


(c)                                  Upon
Seller’s receipt of Buyer’s Preliminary Approval with respect to a Transaction,
Seller shall, if Seller desires to enter into such Transaction with respect to
the related New Loans upon the terms set forth by Buyer in its Preliminary
Approval, deliver the documents set forth below in this Section 3(c) with
respect to each New Loan and related Eligible Property or Properties (to the
extent not already delivered in the Preliminary Due Diligence Package or
pursuant to a Supplemental Due Diligence List) as a condition precedent to
Buyer’s Final Approval and issuance of a Confirmation (as defined below), all
in a manner reasonably satisfactory to Buyer and pursuant to documentation
reasonably satisfactory to Buyer:


 


(i)                                     Delivery
of Purchased Loan Documents.  Seller
shall deliver to Buyer: (x) with respect to any New Loan that is a Pre-Existing
Loan, copies of the Purchased Loan Documents, except for such Purchased Loan
Documents that Seller expressly and specifically disclosed in Seller’s
Preliminary Due Diligence Package were not in Seller’s possession; and (y) with
respect to any New Loan that is an Originated Loan, drafts of the Purchased
Loan Documents.


 


(ii)                                  Environmental
and Engineering.  Buyer shall have
received a “Phase 1” (and, if necessary, “Phase 2”) environmental report, an
asbestos survey, if applicable, and an engineering report, each in form
reasonably satisfactory to Buyer, by an engineer and an environmental
consultant, approved by Buyer in its reasonable discretion.


 


(iii)                               Appraisal.  If obtained by Seller, Buyer shall have
received either an Appraisal (from the closing of the financing of the related
Eligible Property or Properties) or a Draft Appraisal of the related Eligible
Property or Properties.  If Buyer
receives only a Draft Appraisal prior to entering into a Transaction, Seller shall
use its best efforts to deliver an Appraisal on or before thirty (30) days
after the Purchase Date.


 


(iv)                              Insurance.  Buyer shall have received certificates or
other evidence of insurance detailing insurance coverage in respect of the
related Eligible Property or Properties of types (including but not limited to
casualty, general liability and terrorism insurance coverage (consistent with
market standard requirements)), in amounts, with insurers and otherwise in
compliance with the terms, provisions and conditions set forth in the Purchased
Loan Documents and otherwise reasonably satisfactory to Buyer.  Such certificates or other evidence shall
indicate that Seller (or as to a New Loan that is a participation interest, the
lead lender on the related whole loan in which Seller is a participant) will be
named as an additional insured as its interest may appear and shall contain a
loss payee endorsement in favor of such additional insured with respect to the
policies required to be maintained under the Purchased Loan Documents.


 


(v)                                 Survey.  Buyer shall have received all surveys of the
related Eligible Property or Properties that are in Seller’s possession.


 


(vi)                              Lien
Search Reports.  Buyer or Buyer’s
counsel shall have received, as reasonably requested by Buyer, satisfactory
reports of UCC, tax lien, judgment and litigation


 


20





















 


searches and any existing Title Policies relating to
the New Loan, Eligible Property or Properties, Seller and related underlying
obligor, such searches to be conducted in each location Buyer shall reasonably
designate; provided that such materials were a part of the closing file for the
financing of such Eligible Property or Properties.


 


(vii)                           Opinions
of Counsel.  Buyer shall have received
copies of all legal opinions with respect to the New Loan which shall be in
form and substance reasonably satisfactory to Buyer.


 


(viii)                        Title
Policy.


 


(a)                                  With
respect to any New Loan that is a Mortgage Loan, Seller shall have delivered to
Buyer (1) an unconditional commitment to issue a Title Policy or Policies in
favor of Seller and Seller’s successors and/or assigns with respect to Seller’s
interest in the related real property with an amount of insurance that shall be
not less than the related Repurchase Price or such other amount as Buyer shall
require in its reasonable discretion or (2) an endorsement or confirmatory
letter from the existing title company to an existing Title Policy (in an
amount not less than the related Repurchase Price or such other amount as Buyer
shall require in its reasonable discretion) in favor of Seller and Seller’s
successors and/or assigns that adds such parties as an additional insured.


 


(b)                                 With
respect to any New Loan that is a First Mortgage B-Note, Seller shall have
delivered to Buyer a copy of an unconditional commitment to issue a Title
Policy or endorse an existing Title Policy in favor of the lead lender to whom
the related obligor issued the related Mortgage Note, in an amount not less
than the amount of such Mortgage Note and, if the First Mortgage B-Note is
evidenced by a separate promissory note rather than a participation
certificate, in an amount not less than the amount of all Mortgage Notes
secured by the Mortgage that secures the related promissory notes.


 


(c)                                  With
respect to a Mezzanine Loan, (i) Seller shall have delivered to Buyer such
evidence as Buyer on a case-by-case basis, in its sole discretion, shall
require of the ownership of the real property underlying the New Loan
including, without limitation, a copy of a Title Policy, issued by a title
insurer and with such endorsements (including, without limitation, a “Mezzanine
Lender’s Endorsement”, if obtained by Seller), in each case acceptable to Buyer
in its sole discretion, showing that title is vested in the related obligor or
in an entity in whom such obligor holds an equity interest and (ii) if obtained
by Seller, Seller shall have delivered to Buyer an Eagle 9 UCC Title Policy
which policy shall (x) provide an amount of insurance that shall be not less
than the related Repurchase Price or such other amount as Buyer shall require
in its sole discretion, (y) shall insure Seller’s security interest in the
equity interests pledged and (z) be assignable by its terms with a transfer of
the Mezzanine Loan, as applicable.


 


(ix)                                Additional
Real Estate Matters.  To the extent
obtained by Seller, Seller shall have delivered to Buyer such other real estate
related certificates and documentation as may have been requested by Buyer,
such as: (y) certificates of occupancy issued by the appropriate Governmental
Authority and either letters certifying that the related Eligible Property or
Properties is in compliance with all applicable zoning laws issued by the
appropriate Governmental Authority or evidence that the related Title Policy
includes a zoning endorsement and (z) abstracts of all leases in effect at the
Mortgaged Property delivered in connection with the New Loan.


 


21





















 


(x)            First Mortgage B
Notes.  In the case of a First
Mortgage B Note, in addition to the delivery of the items in clauses (vi),
(vii) and (viii), Buyer shall have received all documentation specified in
clauses (i) through (v) and (ix) as if the underlying Mortgage Loan were the
direct collateral to the extent Seller possesses such documentation or has
access to such documentation because it was provided to the related lead lender
and made available to Seller and, to the extent applicable, all documents
evidencing a participation interest, including, but not limited to, an original
participation certificate, if applicable, and the related participation
agreement and/or the related intercreditor agreement.


 


(xi)           Other Documents.  Buyer shall have received such other
documents as Buyer or its counsel shall reasonably deem necessary.


 


Within five (5)
Business Days of Seller’s delivery of the documents and materials contemplated
in clauses (i) through (xi) above, Buyer shall either (A) if the Purchased Loan
Documents with respect to the New Loan are not reasonably satisfactory in form
and substance to Buyer, notify Seller that Buyer has not approved the New Loan
or (B) notify Seller that Buyer agrees to purchase the New Loan, subject to
satisfaction (or waiver by Buyer) of the Transaction Conditions Precedent (a “Final
Approval”) set forth in Section 3(e), below.  Buyer’s failure to respond to Seller within
five (5) Business Days shall be deemed to be a denial of Seller’s request that
Buyer purchase the New Loan, unless Buyer and Seller have agreed otherwise in
writing.


 


(d)           Buyer shall promptly deliver to
Seller a written confirmation of any Final Approval in the form of Exhibit I
attached hereto of each proposed Transaction (a “Confirmation”); provided,
that unless otherwise agreed by Seller, Buyer shall deliver a separate
Confirmation with respect to each New Loan which will be the subject of a
Transaction.  Each Confirmation shall be
deemed incorporated herein by reference with the same effect as if set forth herein
at length.  With respect to any Transaction,
the Pricing Rate shall be determined initially on the Pricing Rate
Determination Date applicable to the first Pricing Rate Period for such
Transaction, and shall be reset on each Reset Date for the next succeeding
Pricing Rate Period for such Transaction. 
Buyer or its agent shall determine in accordance with the terms of the
Agreement the Pricing Rate on each Pricing Rate Determination Date for the
related Pricing Rate Period and notify Seller of such rate for such period on
the Reset Date.


 


(e)           Provided each of the Transaction
Conditions Precedent set forth in this Section 3(e) shall have been satisfied
(or waived by Buyer), and subject to Seller’s rights under Section 3(f), Buyer
shall transfer the Purchase Price to Seller with respect to each New Loan for
which it has issued a Confirmation on the Purchase Date specified in such
Confirmation (provided Seller has not objected to such Confirmation within the
time frame permitted under Section 3(f)), and the related Purchased Loan shall
be concurrently transferred by Seller to Buyer or its nominee.  For purposes of this Section 3(e), the “Transaction
Conditions Precedent” shall be satisfied with respect to any proposed
Transaction if:


 


(1)           No (A) monetary or
material non-monetary Default or (B) Event of Default under the Agreement shall
have occurred and be continuing as of the Purchase Date for such proposed
Transaction;


 


(2)           Guarantor shall have
delivered a true and accurate Financial Covenant Compliance Certificate in a
timely manner with respect to the most recently ended fiscal quarter;


 


(3)           Seller shall have
delivered to the Buyer an Officer’s Certificate of the Seller certifying that
(A) the representations and warranties made by Seller in any of the Transaction
Documents are true and correct in all material respects as of the Purchase Date
for such Transaction and unless waived by Buyer (except such representations
which by their terms speak


 


22





















 


as of a specified date).  If requested by Buyer, Seller shall also
deliver an Officer’s Certificate covering such matters as Buyer may request
with respect to matters relating to the Agreement or the other Transaction
Documents;


 


(4)           Buyer
shall have (A) determined, in accordance with the applicable provisions of Section 3(a)
of this Annex I that the New Loan proposed to be sold to Buyer by Seller in
such Transaction is an Eligible Loan and (B) obtained internal credit approval
for the inclusion of such New Loan as a Purchased Loan in a Transaction;


 


(5)           The
applicable Purchased Loan File described in Section 7(b) shall have been
delivered to Custodian or Bailee and Buyer shall have received a Trust Receipt
from Custodian or Bailee with respect to such Purchased Loan File;


 


(6)           Seller
shall have delivered to each Mortgagor or obligor or related servicer or lead
lender under any Purchased Loan a direction letter in accordance with Section 5(a)
of this Annex I unless such Mortgagor or obligor or related servicer or lead
lender is already remitting payments to the Servicer whereupon Seller shall
direct the Servicer to remit all such amounts into the Blocked Account in
accordance with Section 5(a) of this Annex I and to service such payments
in accordance with the Servicing Agreement and the provisions of this Annex I;


 


(7)           Seller
shall have paid to Buyer (i) any fees then due and payable under the Fee Letter
and (ii) any unpaid Diligence Fees and Transaction Costs in respect of such
Purchased Loan (which amounts, at Seller’s option, may be held back from funds
remitted to Seller by Buyer on the Purchase Date);


 


(8)           No
Purchased Loan shall be a Delinquent Loan or a Defaulted Loan;


 


(9)           Buyer
shall have received fully executed originals of all Transfer Documents and an
opinion of counsel of Seller, in form and substance reasonably satisfactory to
Buyer, covering the enforceability, authority, execution, delivery and
perfection of the assignment of the Purchased Loan and all Transfer Documents,
and such other matters as Buyer may reasonably require;


 


(10)         Buyer
shall have determined that after giving effect to the proposed Transaction, (i)
the Repurchase Price (exclusive of accrued and unpaid Price Differential) of no
single Purchased Loan exceeds 25% of the Aggregate Repurchase Price and (ii)
the aggregate Repurchase Price (exclusive of accrued and unpaid Pricing
Differential) of Purchased Loans secured directly or indirectly by Eligible
Properties which are hotels, lodging or hospitality properties does not exceed
35% of the Aggregate Repurchase Price;


 


(11)         No
event shall have occurred or circumstance shall exist which has a Material
Adverse Effect;


 


(12)         There
shall not have occurred (i) a material adverse change in the financial
condition of the Buyer which affects (or can reasonably be expected to affect)
materially and adversely the ability of the Buyer to fund its obligations under
this Agreement; (ii) a material change in financial markets, an outbreak or
escalation of hostilities or a material change in national or international
political, financial or economic conditions; (iii) a general suspension of
trading on major stock exchanges or suspension of trading in Guarantor’s stock;
or (iv) a disruption in or moratorium on commercial banking activities or
securities settlement services.


 


23





















 


(f)            Each
Confirmation, together with the Agreement, shall be conclusive evidence of the
terms of the Transaction covered thereby unless objected to in writing by
Seller no more than two (2) Business Days after the date such Confirmation is
received by Seller.  An objection sent by
Seller with respect to any Confirmation must state specifically that the
writing is an objection, must specify the provision(s) of such Confirmation being
objected to by Seller, must set forth such provision(s) in the manner that
Seller believes such provisions should be stated, and must be received by Buyer
no more than two (2) Business Days after such Confirmation is received by
Seller.  Buyer, in its sole discretion,
may issue another Confirmation addressing Seller’s objections or may elect not
to proceed with the proposed Transaction.


 


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


 


(i)            No
Event of Default shall be continuing or would occur or result from such early
repurchase,


 


(ii)           Seller
notifies Buyer in writing of its intent to terminate such Transaction and
repurchase the related Purchased Loan no later than five (5) Business Days
prior to the Early Repurchase Date, and


 


(iii)          Seller
shall pay to Buyer on the Early Repurchase Date, an amount equal to the sum of
the Repurchase Price for such Transaction, all Costs and any other amounts
payable by Seller and outstanding under the Agreement (including, without
limitation, Section 3(m) of this Annex I) with respect to such Transaction
against transfer to Seller or its agent of the related Purchased Loan.


 


(h)           On
the Repurchase Date (or the Early Repurchase Date, as applicable), termination
of the applicable Transactions will be effected by transfer to Seller or, if
requested by Seller, its designee of the related Purchased Loans, and any Income
in respect thereof received by Buyer (and not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to Section 4
or Section 5) against the simultaneous transfer of the Repurchase Price,
all Costs and any other amounts payable and outstanding under the Agreement
(including without limitation, Sections 3(m), 3(n) and 3(o) of this Annex I, if
any) to an account of Buyer.


 


(i)            So
long as no Default or Event of Default has occurred and is then continuing, the
Repurchase Price with respect to one or more Purchased Loans may be paid in
part at any time upon two (2) Business Days prior written notice; provided,
however, that any such payment shall be accompanied by an amount representing
accrued Price Differential with respect to such Purchased Loan(s) on the amount
of such payment and all other amounts then due under the Transaction
Documents.  Each partial payment of the
Repurchase Price that is voluntary (as opposed to mandatory under the terms of
the Agreement) shall be in an amount of not less than One Hundred Thousand
Dollars ($100,000).


 


(j)            In
lieu of repaying the Repurchase Price, in whole or in part, with respect to the
Transactions when and as otherwise required or permitted by the Agreement,
Seller may elect to deposit any such amount (the “Early Repurchase Deposit”)
with Buyer (the date of such deposit, the “Early Repurchase Deposit Funding
Date”) until such date as the application of the Early Repurchase Deposit
towards the Repurchase Price would not cause Buyer to incur the costs described
in Section 3(m) hereof (the “Early Repurchase Deposit Application Date”).  The Early Repurchase Deposit shall be held in
an interest-bearing account controlled by Buyer and, at Buyer’s option, shall
be accompanied by a payment


 


24





















 


(as estimated by
Buyer) equal to the difference between the interest earned on the Early
Repurchase Deposit and the Price Differential that will accrue on a portion of
the relevant Transaction equal to the Early Repurchase Deposit during the
period from the Early Repurchase Deposit Funding Date to the Early Repurchase
Deposit Application Date.


 


(k)           If
prior to the first day of any Pricing Rate Period with respect to any
Transaction, Buyer shall have reasonably determined (which determination shall
be conclusive and binding upon Seller absent manifest error) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate for such Pricing Rate Period.  If such notice is given, the Pricing Rate
with respect to such Transaction for such Pricing Rate Period, and for any
subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer,
shall be a per annum rate equal to the sum of (i) the Federal Funds Rate, (ii)
0.25% and (iii) the Applicable Spread (the “Alternative Rate”).


 


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


 


(m)          Upon
demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any
net loss or expense (not to include any lost profit or opportunity) (including,
without limitation, reasonable attorneys’ fees and disbursements) which Buyer actually
sustains or incurs as a consequence of (i) default by Seller in
terminating any Transaction after Seller has given a notice in accordance with Section 3(g)
of a termination of a Transaction, (ii) any payment of all or any portion of
the Repurchase Price, as the case may be, on any day other than a Remittance
Date (including, without limitation, any such loss or expense arising from the
reemployment of funds obtained by Buyer to maintain Transactions hereunder or
from fees payable to terminate the deposits from which such funds were
obtained, provided Seller shall not be obligated to reimburse Buyer for the
incremental cost of reemploying funds or terminating deposits which arise
solely as a result of Buyer depositing funds or employing funds at a rate
calculated other than by reference to LIBOR (as defined herein)) or (iii)
default by Seller in selling Eligible Loans after Seller has notified Buyer of
a proposed Transaction and Buyer has agreed to purchase such Eligible Loans in
accordance with the provisions of the Agreement.  A certificate as to such costs, losses,
damages and expenses, setting forth the calculations therefor shall be
submitted promptly by Buyer to Seller and shall be conclusive and binding on Seller
in the absence of manifest error.


 


(n)           If
(A) the Transactions are characterized by a U.S. Federal, state or local
taxing authority in a manner other than as described in Section 23 of this
Annex I, or (B) after the date of the Agreement, the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof by any Governmental Authority or compliance by Buyer with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority having jurisdiction over Buyer made subsequent to
the date hereof:


 


(i)            shall
subject Buyer to any tax of any kind whatsoever with respect to the Transaction
Documents, any Purchased Loan or any Transaction, or change the basis of
taxation


 


25





















 


of payments to Buyer in respect thereof (except for
changes in the rate of tax on Buyer’s overall net income);


 


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


 


(iii)          shall
impose on Buyer any other condition due to the Agreement or the Transactions;


 


and the result of any of the foregoing is to increase
the cost to Buyer of entering into, continuing or maintaining Transactions or
to reduce any amount receivable under the Transaction Documents in respect
thereof; then, in any such case, Seller shall pay Buyer, within ten (10)
Business Days after written demand therefor is received by Seller, any
additional amounts necessary to compensate Buyer for such increased cost
payable or reduced amount receivable.  If
Buyer becomes aware that it is entitled to claim any additional amounts
pursuant to this Section 3(o), it shall notify Seller in writing of the
event by reason of which it has become so entitled within a reasonable period
after Buyer becomes aware thereof.  A
certificate as to the calculation of any additional amounts payable pursuant to
this subsection shall be submitted by Buyer to Seller and shall be
conclusive and binding upon Seller in the absence of manifest error.  This covenant shall survive the termination
of the Agreement and the repurchase by Seller of any or all of the Purchased
Loans.


 


(o)           If
Buyer shall have reasonably determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does have the effect of reducing the rate of return on Buyer’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which Buyer or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration Buyer’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
Buyer to be material, then from time to time, within five (5) Business Days
after submission by Buyer to Seller of a written request therefor, Seller shall
pay to Buyer such additional amount or amounts as will compensate Buyer for
such reduction.  A certificate as to the
calculation of any additional amounts payable pursuant to this subsection shall
be submitted by Buyer to Seller and shall be conclusive and binding upon Seller
in the absence of manifest error.  This
covenant shall survive the termination of the Agreement and the repurchase by
Seller of any or all of the Purchased Loans.


 


(p)           If
any of the events described in Section 3(k), Section 3(l), Section 3(n)
or Section 3(o) result in Buyer’s election to use the Alternative Rate or
Buyer’s request for additional amounts, then Seller shall have the option to
notify Buyer in writing of its intent to terminate the Transactions and
repurchase the Purchased Loans no later than one (1) Business Day after notice
is given to Buyer in accordance with Section 3(g).  The election by Seller to terminate the
Transactions in accordance with this Section 3(p) shall not relieve Seller
for liability with respect to any additional amounts or increased costs
actually incurred by Buyer prior to the actual repurchase of the Purchased
Loans.


 


(q)           The
facility under the Agreement shall terminate on January 3, 2008, unless
extended as provided herein. Provided that (i) no Event of Default has occurred
and is continuing, (ii) Seller shall have paid to Buyer the applicable fees in
accordance with the Fee Letter and (iii) Seller shall have exercised its
extension option under the Securities Repurchase Agreement, Seller may elect by
written


 


26





















 


notice not later
than 45 days prior to such Facility Termination Date to extend the Facility
Termination Date for a period ending on the Remittance Date that is six months
after the initial Facility Termination Date (such period, the “Facility
Extension Period”).  During the
Facility Extension Period, the Applicable Spread with respect to each
Transaction shall be increased as set forth in Schedule 1.  On each Remittance Date during the Facility
Extension Period, Seller shall be obligated to pay the Extended Repurchase
Monthly Amount, in addition to payments in respect of the accrued Price
Differential and any other amounts due and payable under this Agreement, which
shall be applied to reduce the Repurchase Price of each Purchased Loan pro
rata.


 


(r)            From
and after the Facility Termination Date (including during the Facility
Extension Period, if applicable), Buyer shall have no further obligation to
purchase any New Loans.  On the Facility
Termination Date, Seller shall be obligated to repurchase all of the Purchased
Loans and transfer payment of the aggregate Repurchase Price for each such
Purchased Loan, together with the accrued and unpaid Price Differential and all
Costs and other amounts due and payable to Buyer hereunder.  Following the Facility Termination Date,
Buyer shall not be obligated to transfer any Purchased Loans to Seller until
payment in full to Buyer of all amounts due hereunder; provided, however, upon
Seller’s request, Buyer shall transfer to Seller the Purchased Loans with
respect to which Buyer shall have received the full Repurchase Price and such
other amounts payable to Buyer in respect of such Purchased Loans in accordance
with the requirements of this Annex I, provided an Event of Default is not then
continuing and the transfer of such Purchased Loans would not result in a
Margin Deficit.


 


4.             MANDATORY PAYMENT OR DELIVERY
OF ADDITIONAL ASSETS


 


Paragraphs 4 (a) through (f) of the Agreement (“Margin
Maintenance”) shall be deleted in their entirety and replaced with the
following provisions of this Section 4:


 


(a)           Buyer
may determine and re-determine the Asset Base on any Business Day and on as
many Business Days as it may elect.  If
at any such time the aggregate Repurchase Price of the Portfolio Loans is
greater than the aggregate Asset Base as determined by Buyer in its sole
discretion and notified to Seller on any Business Day (a “Margin Deficit”),
then Seller shall, no later than one (1) Business Day after receipt of such
notice, either deliver to Buyer (A) cash (which shall be applied to reduce the
Repurchase Price of each Purchased Loan to be determined by Seller) or (B)
additional assets acceptable to Buyer in its sole and absolute discretion in
such amounts that after giving effect to such delivery of cash or other assets,
the aggregate Repurchase Price of the Portfolio Loans does not exceed the Asset
Base as re-determined by Buyer after giving effect to the delivery of cash (or
other assets) by Seller to Buyer pursuant to this Section 4.


 


(b)           If
at any time the aggregate Repurchase Price of the Portfolio Loans is less than
the aggregate Asset Base as determined by Buyer in its sole discretion and
notified to Seller on any Business Day Seller requests such notification (a “Margin Excess”), then Seller may,
upon providing written notice to Buyer by 3 p.m. on the Business Day prior to
the date funds are requested, request that Buyer advance additional funds (not
to exceed such Margin Excess) (a “Margin Excess Advance”) to Seller in
respect of the Purchased Loans.  On the
date set forth in such request, Buyer shall transfer cash to Seller in the
amount of such Margin Excess Advance. 
Each Margin Excess Advance by Buyer to Seller shall increase the
Repurchase Price of one or more Purchased Loans (such aggregate increase not to
exceed such Margin Excess Advance) as Buyer shall determine in its sole
discretion.


 


5.             INCOME PAYMENTS AND PRINCIPAL
PAYMENTS


 


Paragraph 5 of the Agreement (“Income Payments”) is
hereby deleted and replaced in its entirety by the following provisions of this
Section 5:


 


27





















 


(a)           On
or before the date hereof, Seller and Buyer shall establish and maintain with
the Depository Bank a deposit account owned by, in the name of and under the
sole control of Buyer with respect to which the Blocked Account Agreement shall
have been executed (such account, together with any replacement or successor
thereof, the “Blocked Account”). 
Seller shall cause all Income with respect to the Purchased Loans or
other assets (if cash) delivered under Section 4 to be deposited in the
Blocked Account no later than the next Business Day following its collection
and receipt thereof.  Simultaneously with
the transfer of any Purchased Loan under Section 3, Seller shall deliver
to each Mortgagor or obligor (or the related collection account bank, as
applicable), or the related lead lender or servicer under a Purchased Loan an
irrevocable direction letter in form and substance satisfactory to Buyer
instructing such Person to remit to the Blocked Account all amounts payable to
Seller under the related Purchased Loan (unless such Mortgagor or obligor or
related servicer or lender is already remitting payments to the Servicer,
whereupon Seller shall direct Servicer to remit all such amounts into the
Blocked Account and service such payments in accordance with the Servicing
Agreement and the provisions hereof) and shall provide to Buyer written proof
of such delivery.  If a Mortgagor or
obligor (or the related collection account bank) or the related lead lender or
servicer under a Purchased Loan forwards any Income with respect to such
Purchased Loan to Seller rather than directly to the Blocked Account, Seller
shall (i) deliver an additional irrevocable direction letter to the applicable
Person and cause such Person to forward such amounts directly to the Blocked
Account and (ii) hold such amounts in trust for Buyer and immediately deposit
in the Blocked Account any such amounts. 
All Income in respect of the Portfolio Loans, which may include payments
in respect of associated Hedging Transactions, shall be deposited directly
into, or, if applicable, remitted directly from the applicable underlying
collection account to, the Blocked Account.


 


(b)           So
long as no Event of Default shall have occurred and be continuing, all Income
on deposit in the Blocked Account in respect of the Portfolio Loans and the
associated Hedging Transactions during each Collection Period shall be applied
by the Buyer on the related Remittance Date as follows:


 


(i)            first, to Buyer an amount equal to the
Price Differential which has accrued and is outstanding in respect of the
Transactions as of such Business Day;


 


(ii)           second, to Buyer an amount equal to all
Costs and other amounts payable by Seller and outstanding hereunder and under
the other Transaction Documents (other than the Repurchase Price);


 


(iii)          third, if a Principal Payment in respect
of any Purchased Loan has been made during such Collection Period, to Buyer in
respect of the Repurchase Price an amount equal to the greater of (i) the
product of the amount of such Principal Payment multiplied by the Purchase
Percentage and (ii) such greater amount, such that after giving effect to
such payment of the applicable Repurchase Price, the aggregate Repurchase Price
of the Portfolio Loans is less than or equal to the Asset Base, as determined
by Buyer after giving effect to such payment;


 


(iv)          fourth, during the Facility Extension
Period, to Buyer the Extended Repurchase Monthly Amount;


 


(v)           fifth, during the Facility Extension
Period, to Buyer in respect of the Aggregate Repurchase Price until the
Aggregate Repurchase Price for all of the Purchased Loans has been reduced to
zero; and


 


(vi)          sixth, to remit to Seller the remainder,
if any.


 


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If on
any Remittance Date, the amounts deposited in the Blocked Account shall be
insufficient to make the payments required under clauses (i) through (iv) of
this Section 5(b), the same shall constitute an Event of Default
hereunder.


 


(c)           If
an Event of Default shall have occurred and be continuing, all Income on
deposit in the Blocked Account in respect of the Purchased Loans and the associated
Hedging Transactions shall be applied on the Business Day next following the
Business Day on which such funds are deposited in the Blocked Account as
follows:


 


(i)            first, to Buyer, an amount equal to the
Price Differential which has accrued and is outstanding in respect of the
Transactions as of such Business Day;


 


(ii)           second, to Buyer, all Costs and all other
amounts payable by Seller and outstanding hereunder and under the other
Transaction Documents (other than the Repurchase Price);


 


(iii)          third, to Buyer, an amount equal to the
aggregate Repurchase Price of the Purchased Loans, until the Aggregate
Repurchase Price for all of the Purchased Loans has been reduced to zero; and


 


(iv)          fourth, to Seller, the remainder.


 


(d)           If at any time during the term of any
Transaction any Income is distributed to Seller or Seller has otherwise
received such Income and has made a payment in respect of such Income to Buyer
pursuant to this Section 5, and for any reason such amount is
required to be returned by Buyer to an obligor under such Purchased Loan
(either before or after the Repurchase Date), Buyer may provide Seller with
notice of such required return, and Seller shall pay the amount of such
required return to Buyer by 11:00 a.m., New York time, on the Business Day
following Seller’s receipt of such notice.


 


(e)           Subject
to the other provisions hereof, Seller shall be responsible for all Costs in
respect of any Purchased Loans to the extent it would be so obligated if the
Purchased Loans had not been sold to Buyer. 
Buyer shall provide Seller with notice of any Costs promptly upon
receiving such notice, and Seller shall pay the amount of any Costs to Buyer by
11:00 a.m., New York time, on the later of (i) five (5) Business Days after
Buyer has informed Seller that such amount is due under the Purchased Loan
Documents and (ii) three (3) Business Days following Seller’s receipt of such
notice.


 


6.             CAUTIONARY SECURITY INTEREST


 


Paragraph 6 of the Agreement (“Security Interest”) is
hereby deleted and replaced in its entirety by the following provisions of this
Section 6:


 


(a)           Buyer
and Seller intend that all Transactions hereunder be sales to Buyer of the
Purchased Loans for all purposes (other than for U.S. Federal, state and local
income or franchise tax purposes) and not loans from Buyer to Seller secured by
the Purchased Loans.  However, in the
event any Transaction is deemed to
be a loan, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under such Transaction and shall be
deemed to have granted to Buyer a security interest in (i) the Blocked Account,
(ii) all of the Purchased Loans, (iii) all “general intangibles,” “accounts”
and “chattel paper” as defined in the UCC relating to or constituting any and
all of the foregoing, (iv) all Income from the Purchased Loans and (v) all
replacements, substitutions or distributions on or proceeds, payments and
profits of, and records and files relating to, any and all of the foregoing
(excluding any Margin Excess Advances).


 


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(b)           To
the extent Buyer is deemed to have a security interest with respect to the
Purchased Loans as provided in Section 6(a) hereof, and with respect to
the security interests granted in subsection (c) of this Section 6,
Buyer shall have all of the rights and may exercise all of the remedies of a
secured creditor under the UCC and any other applicable law.  In furtherance of the foregoing, (i) Seller,
at its sole cost and expense, shall cause to be filed as a protective filing
with respect to the Purchased Loans and as a UCC filing with respect to the
security interests granted in subsection (c)) of this Section 6 one
or more UCC financing statements in form satisfactory to Buyer (to be filed in
the filing office indicated therein), in such locations as may be necessary to
perfect and maintain perfection and priority of the outright transfer and the
security interest granted hereby (including under Section 22 of this Annex
I) and, in each case, continuation statements and any amendments thereto
(collectively, the “Filings”), and shall forward copies of such Filings
to Buyer upon completion thereof, and (ii) Seller shall from time to time, at
its own expense, deliver and cause to be duly filed all such further filings,
instruments and documents and take all such further actions as may be necessary
or desirable or as may be requested by Buyer with respect to the perfection and
priority of the outright transfer of the Purchased Loans and the security interest
deemed granted hereunder and in the Purchased Loans and the rights and remedies
of the Buyer with respect to the Purchased Loans (including under Section 22
of this Annex I) (including the payments of any fees and taxes required in
connection with the execution and delivery of the Agreement).


 


(c)           Seller
hereby pledges to Buyer, as security for the performance by Seller of its
obligations under all Transactions, all Hedging Transactions relating to
Purchased Loans entered into by Seller and all proceeds thereof.  Seller shall take all action as is necessary
or desirable to obtain consent to assignment of any such Hedging Transaction to
Buyer and shall cause the counterparty under each such Hedging Transaction to enter
into such document or instrument satisfactory to Buyer, Seller and such
counterparty, pursuant to which such counterparty will covenant and agree to
accept notice from Buyer to redirect payments under such Hedging Transaction as
Buyer may direct.  So long as no Event of
Default shall be continuing, Buyer agrees that it will not redirect payments
under any Hedging Transaction pledged to Buyer pursuant to the terms of this Section 6(c).


 


(d)           In
connection with the repurchase by Seller of any Purchased Loan in accordance
herewith, upon receipt of the Repurchase Price by Buyer, Buyer will deliver to
Seller, at Seller’s expense, such documents and instruments as may be
reasonably necessary to reconvey such Purchased Loan and any income related
thereto to Seller.


 


7.             PAYMENT, TRANSFER AND CUSTODY


 


Paragraph 7 of the Agreement (“Payment and Transfer”)
is hereby deleted and replaced in its entirety by the following provisions of
this Section 7:


 


(a)           Subject
to the terms and conditions of the Agreement, on the Purchase Date for each
Transaction, ownership of the Purchased Loans and all rights thereunder shall
be transferred to Buyer or its designee (including the Custodian) against the
simultaneous transfer of the Purchase Price to an account of Seller specified
in the Confirmation relating to such Transaction.  On the Purchase Date for the first
Transaction, Buyer will provide Seller with a power of attorney, substantially
in the form attached as Exhibit IV-2 hereto, in recordable form, allowing
Seller to administer, operate and service such Purchased Loans.  Provided no Event of Default beyond any
applicable cure period shall have occurred and be continuing, the power of
attorney shall be binding upon Buyer and Buyer’s successors and assigns.


 


(b)           With
respect to each Table Funded Purchased Loan, Seller shall cause the Bailee to
deliver to the Custodian (with a copy to Buyer) by no later than 1:00 p.m. (New
York time), on the Purchase Date, by facsimile the related promissory note (or
the participation certificate, as applicable), the Insured Closing Letter and
Escrow Instructions, if any, the Bailee Agreement and a Trust Receipt issued


 


30





















 


by the Bailee
thereunder on or before the related Purchase Date.  In connection with the sale of each Purchased
Loan, not later than 1:00 p.m., two (2) Business Days prior to the related
Purchase Date (or on the related Purchase Date, as may be agreed by Buyer and
Seller on a case by case basis) (or with respect to a Table Funded Purchased
Loan not later than 1:00 p.m. (New York time) on the third Business Day
following the applicable Purchase Date), Seller shall deliver or cause Bailee
to deliver (with a copy to Buyer) and release to the Custodian (together with
the Custodial Delivery Certificate in the form attached hereto as Exhibit III),
and shall cause the Custodian to deliver a Trust Receipt on the Purchase Date
(or in the case of a Table Funded Purchased Loan, not later than two (2)
Business Days following the receipt by the Custodian) confirming the receipt of
the following original documents (collectively, the “Purchased Loan File”),
pertaining to each of the Purchased Loans identified in the Custodial Delivery
Certificate delivered therewith:


 


(i)            With
respect to each Purchased Loan that is a Mortgage Loan (including a First
Mortgage B Note), the following documents, as applicable:


 


(A)          The
original Mortgage Note bearing all intervening endorsements, endorsed “Pay to
the order of              
without recourse” and signed in the name of the last endorsee (the “Last
Endorsee”) by an authorized Person (in the event that the Purchased Loan
was acquired by the Last Endorsee in a merger, the signature must be in the
following form:  “[Last Endorsee],
successor by merger to [name of predecessor]”; in the event that the Purchased
Loan was acquired or originated by the Last Endorsee while doing business under
another name, the signature must be in the following form:  “[Last Endorsee], formerly known as [previous
name]”) or a lost note affidavit in a form reasonably approved by Buyer, with a
copy of the applicable Mortgage Note attached thereto.


 


(B)           The
original or a copy of the loan agreement and the guarantee, if any, executed in
connection with the Purchased Loan.


 


(C)           The
original Mortgage with evidence of recording thereon, or a copy thereof
together with an officer’s certificate of Seller certifying that such
represents a true and correct copy of the original and that such original has
been submitted for recordation in the appropriate governmental recording office
of the jurisdiction where the Mortgaged Property is located.


 


(D)          The
originals of all assumption, modification, consolidation or extension
agreements with evidence of recording thereon, or copies thereof together with
an officer’s certificate of Seller certifying that such represent true and
correct copies of the originals and that such originals have each been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.


 


(E)           The
original Assignment of Mortgage to Buyer for each Purchased Loan, in form and
substance acceptable for recording and signed in the name of the Last Endorsee
(in the event that the Purchased Loan was acquired by the Last Endorsee in a
merger, the signature must be in the following form:  “[Last Endorsee], successor by merger to
[name of predecessor]”; in the event that the Purchased Loan was acquired or
originated while doing business under another name, the signature must be in
the following form: “[Last Endorsee], formerly known as [previous name]”).


 


31





















 


(F)           The
originals of all intervening assignments of mortgage with evidence of recording
thereon, or copies thereof together with an officer’s certificate of Seller certifying
that such represent true and correct copies of the originals and that such
originals have each been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.


 


(G)           The
original Title Policy, or if the original Title Policy has not been issued, the
original irrevocable marked commitment to issue the same.


 


(H)          The
original of any security agreement, chattel mortgage or equivalent document
executed in connection with the Purchased Loan.


 


(I)            The
original Assignment of Leases, if any, with evidence of recording thereon, or a
copy thereof together with an officer’s certificate of Seller, certifying that
such copy represents a true and correct copy of the original that has been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.


 


(J)            The
originals of all intervening assignments of assignment of leases and rents, if
any, or copies thereof, with evidence of recording thereon, or copies thereof
together with an officer’s certificate of Seller certifying that such represent
true and correct copies of the originals and that such originals have each been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.


 


(K)          A
copy of the UCC financing statements, certified as true and correct by Seller,
and all necessary UCC continuation statements with evidence of filing thereon
or copies thereof certified by Seller to have been sent for filing, and UCC
assignments to Buyer, which UCC assignments shall be in form and substance
acceptable for filing in the applicable jurisdictions.


 


(L)           The
original environmental indemnity agreement or similar guaranty or indemnity,
whether stand-alone or incorporated into the applicable loan documents (if
any).


 


(M)         The
original omnibus assignment to Buyer or such other documents necessary and
sufficient to transfer to Buyer all of Seller’s right, title and interest in
and to the Purchased Loan (if any).


 


(N)          A
disbursement letter from the Mortgagor to the original mortgagee or other
evidence that the Purchased Loan has been fully disbursed (if applicable).


 


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


 


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


 


(Q)          The
original of any participation agreement, intercreditor agreement and/or
servicing agreement executed in connection with such Purchased Loan.


 


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(R)           A
copy of all servicing agreements and Servicing Records related to such
Purchased Loan, which Seller shall deliver to Servicer (with a copy to Buyer).


 


(S)           A
copy of the Mortgagor’s opinions of counsel.


 


(T)           An
assignment of any management agreements, permits, contracts and other material
agreements (if any).


 


(U)          Reports
of UCC, tax lien, judgment and litigation searches as requested by Buyer,
conducted by search firms reasonably acceptable to Buyer with respect to the
Purchased Loan, Seller and the related underlying obligor, such searches to be
conducted in each location Buyer shall reasonably designate and such reports
reasonably satisfactory to Buyer.


 


(V)           The
original or a copy of the intercreditor or loan coordination agreement (if any)
executed in connection with the Purchased Loan to the extent the subject
borrower, or an affiliate thereof, has encumbered its assets with senior,
junior or similar financing, whether mortgage financing or mezzanine loan
financing.


 


(W)         Copies
of all documents relating to the formation and organization of the related
obligor under such Purchased Loan, together with all consents and resolutions
delivered in connection with such obligor’s obtaining such Purchased Loan.


 


(X)          All
other material documents and instruments evidencing, guaranteeing, insuring or
otherwise constituting or modifying or otherwise affecting such Purchased Loan,
or otherwise executed or delivered in connection with, or otherwise relating
to, such Purchased Loan, including all documents establishing or implementing
any lockbox pursuant to which Seller is entitled to receive any payments from
cash flow of the underlying real property.


 


(Y)           Evidence
that the Purchased Loan has been fully disbursed (if applicable).


 


If
Seller cannot deliver, or cause to be delivered, any of the documents and/or
instruments required above to be delivered as originals, Seller shall deliver a
photocopy thereof and, unless waived by Buyer, an Officer’s Certificate of
Seller certifying that such copy represents a true and correct copy of the
original.  Seller shall then, in the
event that Seller has a legitimate and reasonable opportunity to obtain the
original documents in question if the document in question exists in original
form (1) use reasonable efforts to obtain and deliver the original document
within 180 days after the related Purchase Date (or such longer period after
the related Purchase Date as Buyer may consent to, which consent shall not be
unreasonably withheld so long as Seller is, as certified in writing to Buyer no
less often than monthly, in good faith attempting to obtain the original) and
(2) after the expiration of such reasonable efforts period, deliver to
Buyer a certification that states, despite Seller’s reasonable efforts, Seller
was unable to obtain such original document.


 


(ii)           With
respect to each Purchased Loan which is a Mezzanine Loan secured by a pledge of
the equity ownership interests in an entity that owns Eligible Property, the
following, as applicable:


 


33





















 


(A)          The
original Mezzanine Note signed in connection with the Purchased Loan bearing
all intervening endorsements, endorsed “Pay to the order of                    
without recourse” and signed in the name of the Last Endorsee by an authorized
Person (in the event that the Mezzanine Note was acquired by the Last Endorsee
in a merger, the signature must be in the following form:  “[Last Endorsee], successor by merger to
[name of predecessor]”; in the event that the Purchased Loan was acquired or
originated by the Last Endorsee while doing business under another name, the
signature must be in the following form: 
“[Last Endorsee], formerly known as [previous name]”) or a lost note
affidavit in a form reasonably approved by Buyer with a copy of the applicable
Mezzanine Note attached thereto.


 


(B)           The
original or a copy of the loan agreement and the guarantee, if any, executed in
connection with the Purchased Loan.


 


(C)           The
original or a copy of the intercreditor or loan coordination agreement executed
in connection with the Purchased Loan to the extent the subject borrower, or an
affiliate thereof, has encumbered its assets with senior, junior or similar
financing, whether mortgage financing or mezzanine loan financing.


 


(D)          The
original security agreement executed in connection with the Purchased Loan.


 


(E)           Copies
of all documents relating to the formation and organization of the borrower
under such Purchased Loan, together with all consents and resolutions delivered
in connection with such borrower’s obtaining the Purchased Loan.


 


(F)           All
other material documents and instruments evidencing, guaranteeing, insuring or
otherwise constituting or modifying or otherwise affecting such Purchased Loan,
or otherwise executed or delivered in connection with, or otherwise relating
to, such Purchased Loan, including all documents establishing or implementing
any lockbox pursuant to which Seller is entitled to receive any payments from cash
flow of the underlying real property.


 


(G)           An
omnibus assignment to Buyer or other documents necessary and sufficient to
transfer to Buyer all of Seller’s right, title and interest in and to the
Purchased Loan.


 


(H)          The
original of any participation agreement executed in connection with such
Purchased Loan.


 


(I)            A
copy of all servicing agreements and Servicing Records related to such
Purchased Loan, which Seller shall deliver to Servicer (with a copy to Buyer).


 


(J)            A
copy of the borrower’s opinions of counsel.


 


(K)          A
copy of the UCC financing statements, certified as true and correct by Seller,
and all necessary UCC continuation statements with evidence of filing thereon
or copies thereof certified by Seller to have been sent for filing, and UCC
assignments to Buyer, which UCC assignments shall be in form and substance
acceptable for filing in the applicable jurisdictions.


 


34





















 


(L)           The
original certificates representing the pledged equity interests to the extent
such interests are in certificated form.


 


(M)         Stock
or similar powers relating to each pledged equity interest, executed in blank,
if such equity interests are in certificated form.


 


(N)          Assignment
of any management agreements, agreements among equity interest holders or other
material contracts.


 


(O)          If
the pledged equity interests are not certificated, evidence (which may be an
Officer’s Certificate confirming such circumstances or in the form of an
executed instruction to register such pledge by the mezzanine borrower and
acknowledgment by the entity in which such pledged equity interests are held)
that the pledged equity interests have been transferred to, or otherwise made
subject to a first priority security interest in favor of, Seller.


 


(P)           Copies
of all material documents evidencing or securing the related mortgage loan and
any other documents affecting the related mortgaged property to the extent in
possession of Seller.


 


(Q)          If
the mezzanine borrower is an Affiliate of Seller, a pledge agreement and any
UCC financing statements, executed by the owner(s) of all the equity interests
of the mezzanine borrower as debtor in favor of Seller as secured party (which
pledge agreement and UCC financing statements shall be transferred by Seller to
Buyer), covering all equity interests in the mezzanine borrower, if not
previously delivered to Buyer, together with any related original certificates
of equity ownership and blank assignments thereof, all to give Buyer a security
interest in such equity as additional collateral for Seller’s obligations.


 


(R)           Evidence
that the Purchased Loan has been fully disbursed (if applicable).


 


In
connection with the transfer of any Purchased Loan, if Seller cannot deliver,
or cause to be delivered, any of the documents and/or instruments referred to
above, required to be delivered as originals, Seller shall deliver a photocopy
thereof and, unless waived by Buyer, an Officer’s Certificate of Seller
certifying that such copy represents a true and correct copy of the original.  Seller shall then, in the event that Seller
has a legitimate and reasonable opportunity to obtain the original documents in
question if the document in question exists in original form (1) use reasonable
efforts to obtain and deliver the original document within 180 days after the
related Purchase Date (or such longer period after the related Purchase Date as
Buyer may consent to, which consent shall not be unreasonably withheld so long
as Seller is, as certified in writing to Buyer no less often than monthly, in
good faith attempting to obtain the original) and (2) after the expiration
of such reasonable efforts period, deliver to Buyer a certification that
states, despite Seller’s reasonable efforts, Seller was unable to obtain such
original document.


 


(c)           From
time to time, Seller shall forward to the Custodian additional original
documents or additional documents evidencing any assumption, modification,
consolidation or extension of a Purchased Loan approved in accordance with the
terms of the Agreement, and upon receipt of any such other documents, the
Custodian shall hold such other documents on behalf of Buyer and as Buyer shall
request from time to time.  With respect
to any documents which have been delivered or are being delivered to recording
offices for recording and have not been returned to Seller in time to permit
their delivery


 


35





















 


hereunder at the
time required, in lieu of delivering such original documents, Seller shall
deliver to Buyer a true copy thereof with an officer’s certificate certifying
that such copy is a true, correct and complete copy of the original, which has
been transmitted for recordation.  Seller
shall deliver such original documents to the Custodian promptly when they are
received.  With respect to all of the
Purchased Loans delivered by Seller to Buyer or its designee (including the
Custodian), Seller shall execute an omnibus power of attorney substantially in
the form of Exhibit IV-1 attached hereto irrevocably appointing Buyer its
attorney-in-fact with full power to (i) complete and record any Assignment of
Mortgage, (ii) complete the endorsement of any Mortgage Note or Mezzanine Note
and (iii) take such other steps as may be necessary or desirable to enforce
Buyer’s rights against any Purchased Loans and the related Purchased Loan Files
and the Servicing Records.  Buyer shall
deposit the Purchased Loan Files representing the Purchased Loans, or cause the
Purchased Loan Files to be deposited directly, with the Custodian to be held by
the Custodian on behalf of Buyer.  The
Purchased Loan Files shall be maintained in accordance with the Custodial
Agreement.  Any Purchased Loan Files not
delivered to Buyer or its designee (including the Custodian) are and shall be
held in trust by Seller or its designee for the benefit of Buyer as the owner
thereof.  Seller or its designee shall
maintain a copy of the Purchased Loan File and the originals of the Purchased
Loan File not delivered to Buyer or its designee.  The possession of the Purchased Loan File by
Seller or its designee is at the will of Buyer for the sole purpose of
servicing the related Purchased Loan, and such retention and possession by
Seller or its designee is in a custodial capacity only.  The books and records (including, without
limitation, any computer records or tapes) of Seller or its designee shall be
marked appropriately to reflect clearly the transfer, subject to the terms and
conditions of the Agreement, of the related Purchased Loan to Buyer.  Seller or its designee (including the
Custodian) shall release its custody of the Purchased Loan File only in
accordance with written instructions from Buyer, unless such release is
required as incidental to the servicing of the Purchased Loans or is in
connection with a repurchase of any Purchased Loan by Seller or is pursuant to
the order of a court of competent jurisdiction.


 


(d)           In
addition to any documents or instruments that are required to be delivered by
Seller to Buyer hereunder in connection with the transfer of Purchased Loans by
Seller to Buyer, on the date of the Agreement, Buyer shall have received all of the following items and documents, each
of which shall be satisfactory to Buyer in form and substance:


 


(i)            Transaction
Documents.


 


(A)          The
Agreement (including this Annex I), duly executed and delivered by Seller and
Buyer;


 


(B)           The
Guaranty, duly executed and delivered by the Guarantor;


 


(C)           The
Custodial Agreement, duly executed and delivered by Seller, Buyer and
Custodian;


 


(D)          The
Blocked Account Agreement, duly executed and delivered by Seller, Buyer and
Depository Bank;


 


(E)           The
Servicing Agreement, duly executed and delivered by Seller, Buyer and Servicer;
and


 


(F)           The
Fee Letter, duly executed and delivered by Seller, Buyer and Goldman, Sachs
& Co.


 


36





















 


(ii)           Organizational
Documents. Certified copies of the Seller’s and Guarantor’s organizational
documents and resolutions or other documents evidencing the authority of Seller
and Guarantor with respect to the execution, delivery and performance of the
Transaction Documents to which it is a party and each other document to be
delivered by Seller and Guarantor from time to time in connection with the
Transaction Documents (and Buyer may conclusively rely on such certifications
until it receives notice in writing from Seller to the contrary);


 


(iii)          Legal
Opinion.  Opinions of counsel to the
Seller and Guarantor in form and substance satisfactory to Buyer as to (i)
authority, enforceability of the Transaction Documents to which it is a party
and such other matters as may be requested by Buyer and (ii) nonconsolidation;
and


 


(iv)          Other
Documents.  Such other documents as
Buyer may reasonably request.


 


8.             CERTAIN RIGHTS OF BUYER WITH
RESPECT TO THE PURCHASED LOANS


 


Paragraph 8 of the Agreement (“Segregation of
Purchased Securities”) is hereby deleted and replaced in its entirety by the
following provisions of this Section 8:


 


(a)           Subject
to the terms and conditions of the Agreement, title to all Purchased Loans
shall pass to Buyer on the applicable Purchase Date, and Buyer shall have free
and unrestricted use of its interest in the Purchased Loans in accordance with
the terms and conditions of the Purchased Loans.  Nothing in the Agreement or any other
Transaction Document shall preclude Buyer from engaging in repurchase
transactions with the Purchased Loans with Persons in conformity with the terms
and conditions of the Purchased Loans or otherwise selling, transferring,
pledging, repledging, hypothecating, or rehypothecating all or a portion of its
interest in the Purchased Loans to Persons in conformity with the terms and
conditions to the Purchased Loans, but no such transaction shall relieve Buyer
of its obligations to transfer the Purchased Loans to Seller pursuant to Section 3
of this Annex I or of Buyer’s obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Section 5 of this Annex I
or otherwise affect the rights, obligations and remedies of any party to the
Agreement.


 


(b)           Subject
to the terms and conditions of the Agreement, any documents delivered to the
Custodian pursuant to Section 7(b) and 7(c) of this Annex I shall only be
released in accordance with the terms and conditions of the Custodial
Agreement.


 


9.             RESERVED.


 


10.          REPRESENTATIONS


 


Paragraph 10 of the Agreement (“Representations”) is
hereby supplemented by the following:


 


(a)           Seller
represents and warrants to Buyer that as of the Purchase Date for the purchase
of any Purchased Loan by Buyer from Seller and any Transaction thereunder and
as of the date of the Agreement and at all times while the Agreement and any
Transaction thereunder is in full force and effect:


 


(i)            Organization.  Seller is duly organized, validly existing
and in good standing under the laws and regulations of the state of Seller’s
organization and is duly licensed, qualified, and in good standing in every
state where such licensing or qualification is necessary for the transaction of
Seller’s business, except where lack of such licenses or qualifications would
not be


 


37





















 


reasonably likely to result in a Material Adverse
Effect.  Seller has the power to own and
hold the assets it purports to own and hold, and to carry on its business as
now being conducted and proposed to be conducted, and has the power to execute,
deliver, and perform its obligations under the Agreement and the other
Transaction Documents.


 


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


 


(iii)          Non-Contravention;
Consents.  Neither the execution and
delivery of the Transaction Documents, nor consummation by Seller of the
transactions contemplated by the Transaction Documents (or any of them), nor
compliance by Seller with the terms, conditions and provisions of the
Transaction Documents (or any of them) will (x) conflict with or result in a
breach or violation of any of the terms, conditions or provisions of any judgment
or order, writ, injunction, decree or demand of any court applicable to Seller,
or (y) result in the creation or imposition of any lien or any other
encumbrance upon any of the assets of Seller, other than pursuant to the
Transaction Documents.  Seller has all
necessary licenses, permits and other consents from Governmental Authorities
necessary to acquire, own and sell the Portfolio Loans and for the performance
of its obligations under the Transaction Documents except where the failure to
have any such license, permit or consent would not be reasonably likely to
result in a Material Adverse Effect.


 


(iv)          Litigation;
Requirements of Law.  There is no
action, suit, proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against Seller, or any of its assets which may
result in any Material Adverse Effect, or which may have an adverse effect on
the validity of the Transaction Documents or any action taken or to be taken in
connection with the obligations of Seller under any of the Transaction
Documents.  Seller is in compliance in
all material respects with all Requirements of Law.  Seller is not in default in any material
respect with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any arbitrator or Governmental Authority.


 


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


 


(vi)          Good
Title to Purchased Loans. 
Immediately prior to the purchase of any Purchased Loans by Buyer from
Seller, such Purchased Loans are free and clear of any lien, security interest,
claim, option, charge, encumbrance or impediment to transfer (including any “adverse
claim” as defined in Section 8-102(a)(1) of the UCC but excluding any
liens or encumbrances to be released simultaneously with the sale to Buyer
hereunder), and are not subject to any rights of setoff, any prior sale,
transfer, assignment, or participation by Seller or any agreement by Seller to
assign, convey, transfer or participate, in whole or in part, and Seller is the
sole legal record and beneficial owner of and owns and has the right to sell
and transfer such Purchased Loans to Buyer and, upon transfer of such Purchased
Loans to Buyer, Buyer shall be the owner of such Purchased Loans (other than
for U.S. Federal, state and local income and franchise tax purposes) free of
any adverse claim, subject to Seller’s rights pursuant to the Agreement.  In the event the related Transaction is
recharacterized as a secured financing of the Purchased Loans and with respect
to the security interests granted in Sections 6(a) and 6(c), the 


 


38





















 


provisions of the Agreement are effective to create in
favor of Buyer a valid security interest in all rights, title and interest of
Seller in, to and under the Purchased Loans and the collateral specified in
Sections 6(a) and 6(c), Buyer shall have a valid, perfected and enforceable
first priority security interest in the Purchased Loans and such other
collateral, subject to no lien or rights of others other than as granted
herein.


 


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


 


(viii)        Representations
and Warranties Regarding Purchased Loans; Delivery of Purchased Loan File.  Seller represents and warrants to Buyer that
each Purchased Loan sold hereunder, as of the applicable Purchase Date for the
Transaction in question conforms to the applicable representations and
warranties set forth in Exhibit V attached hereto, except as have been
disclosed to Buyer in writing prior to Buyer’s issuance of a Confirmation with
respect to the related Purchased Loan. 
It is understood and agreed that the representations and warranties set
forth in Exhibit V hereto, if any, shall survive delivery of the respective
Purchased Loan File to Buyer or its designee (including the Custodian).  With respect to each Purchased Loan, the
Mortgage Note or Mezzanine Note, the Mortgage (if any), the Assignment of
Mortgage (if any) and any other documents required to be delivered under the
Agreement and the Custodial Agreement for such Purchased Loan have been
delivered (or with respect to Table Funded Loans shall be delivered in
accordance with Section 7(b)) to Buyer or the Custodian on its behalf or
such requirement will have been expressly waived in writing by Buyer.  Seller or its designee is in possession of a
complete, true and accurate Purchased Loan File with respect to each Purchased
Loan, except for such documents the originals of which have been delivered to
the Custodian.


 


(ix)           Adequate
Capitalization; No Fraudulent Transfer. 
Seller has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.  Seller is generally able to pay, and as of
the date hereof is paying, its debts as they come due.  Seller has not become, or is presently,
financially insolvent nor will Seller be made insolvent by virtue of Seller’s
execution of or performance under any of the Transaction Documents within the
meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.  Seller has not entered into any Transaction
Document or any Transaction pursuant thereto in contemplation of insolvency or
with intent to hinder, delay or defraud any creditor.  Seller has not received any written notice
that any payment or other transfer made to or on account of Seller from or on
account of any Mortgagor or any other person obligated under any Purchased Loan
Documents is or may be void or voidable as an actual or constructive fraudulent
transfer or as a preferential transfer.


 


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


 


(xi)           No
Encumbrances.  There are (i) no
outstanding rights, options, warrants or agreements on the part of Seller for a
purchase, sale or issuance, in connection with the Purchased Loans and (ii) no
agreements on the part of Seller to issue, sell or distribute the Purchased
Loan.


 


(xii)          Federal
Regulations.  Seller is not (A) an “investment
company,” or a company “controlled by an investment company,” within the
meaning of the Investment Company Act of 1940, as amended, or (B) a “holding
company,” or a “subsidiary company of a holding company,” or an “affiliate” of
either a “holding company” or a “subsidiary company of a holding


 


39





















 


company,” as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.


 


(xiii)         Taxes.
 Seller has filed or caused to be filed
all tax returns which would be delinquent if they had not been filed on or
before the date hereof and has paid all taxes due and payable on or before the
date hereof and all other taxes, fees or other charges imposed on it and any of
its assets by any Governmental Authority; no tax liens have been filed against
any of Seller’s assets and, to Seller’s knowledge, no claims are being asserted
with respect to any such taxes, fees or other charges.


 


(xiv)        ERISA.  Neither Seller nor any ERISA Affiliate
(a) sponsors or maintains any Plans or (b) makes any contributions to
or has any liabilities or obligations (direct or contingent) with respect to
any Plans. Seller does not, and would not be deemed to, hold Plan Assets and the
consummation of the transactions contemplated by the Agreement will not
constitute or result in any non-exempt prohibited transaction under Section 406
of ERISA, Section 4975 of the Code or substantially similar provisions
under any other federal, state or local laws, rules or regulations.


 


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


 


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


 


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


 


(xviii)      Jurisdiction
of Organization.  The Seller’s
jurisdiction of organization is the State of Delaware.


 


(xix)         Location
of Books and Records.  The location
where Seller keeps its books and records, including all computer tapes and
records relating to the Purchased Securities is its chief executive office at
420 Lexington Avenue, New York, New York 10170.


 


(xx)          Regulation
T, U and X.  Neither the entering
into nor consummation of any Transaction hereunder, nor the use of the proceeds
thereof, will violate any provisions of Regulation T, U or X. If requested by
Buyer, Seller, any applicable Affiliate of Seller and the recipient of any
portion of the proceeds of, or any portion of, any Transaction shall furnish to
Buyer a statement on Federal Reserve Form G-3 referred to in Regulation U.


 


40





















 


(b)           On
the Purchase Date for any Transaction, Seller shall be deemed to have made all
of the representations set forth in Paragraph 10 of the Agreement and Section 10(a)
of this Annex I as of such Purchase Date.


 


11.          NEGATIVE
COVENANTS OF SELLER


 


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


 


(a)           subject
to Seller’s right to repurchase, take any action which would directly or
indirectly impair or adversely affect Buyer’s title to the Purchased Loans;


 


(b)           transfer,
assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose
of, or pledge or hypothecate, directly or indirectly, any interest in the
Purchased Loans (or any of them) to any Person other than Buyer, or engage in
repurchase transactions or similar transactions with respect to the Purchased
Loans (or any of them) with any Person other than Buyer, except where the
Purchased Loans in question are simultaneously repurchased from Buyer;


 


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


 


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


 


(e)           create,
incur or permit any lien, security interest, charges, or encumbrances with
respect to any Hedging Transaction for the benefit of any Person other than
Buyer;


 


(f)            materially
modify or terminate any of the organizational documents of Seller or take any
action which would cause it to cease to be a Single-Purpose Entity;


 


(g)           consent
or assent to a Significant Modification or any extension or termination of any
note, loan agreement, mortgage, pledge agreement or guaranty relating to the
Purchased Loans or other material agreement or instrument relating to the
Purchased Loans without the prior written consent of Buyer;


 


(h)           take
any action or permit such action to be taken which would result in a Change in
Control;


 


(i)            after
the occurrence and during the continuation of any Event of Default or monetary
Default, make any distribution, payment on account of, or set apart assets for,
a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any equity or ownership interest of Seller,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Seller; or


 


(j)            sponsor
or maintain any Plans or make any contributions to, or have any liability or
obligation (direct or contingent) with respect to any Plan and shall not permit
any ERISA Affiliate to sponsor or maintain any Plans or make any contributions
to, or have any liability or obligation (direct or contingent) with respect to
any Plan;


 


41





















 


(k)           engage
in any transaction that would cause any obligation or action taken or to be
taken hereunder (or the exercise by Buyer of any of its rights under the
Agreement, the Purchased Loans or any Transaction Document) to be a non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of
the Code or substantially similar provisions under any other federal, state or
local laws, rules or regulations; or


 


(l)            make
any future advances under any Purchased Loan to any underlying obligor which
are not permitted by the related Purchased Loan Documents.


 


12.          AFFIRMATIVE
COVENANTS OF SELLER


 


(a)           Seller
shall promptly notify Buyer of any event and/or condition which is likely to
have a Material Adverse Effect.


 


(b)           Seller
shall give notice to Buyer of the following (accompanied by an Officer’s
Certificate setting forth details of the occurrence referred to therein and
stating what actions Seller has taken or proposes to take with respect
thereto):


 


(i)            promptly
upon receipt of notice or knowledge of the occurrence of any Default or Event
of Default;


 


(ii)           with
respect to any Purchased Loan sold to Buyer hereunder, immediately upon receipt
of any Principal Payment (in full or in part);


 


(iii)          with
respect to any Purchased Loan sold to Buyer hereunder, immediately upon receipt
of notice or knowledge that the related Mortgaged Property has been damaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty, or otherwise damaged so as to affect adversely the value of such
Mortgaged Property;


 


(iv)          promptly
upon receipt of notice or knowledge of (i) any Purchased Loan which becomes a
Defaulted Loan, (ii) any lien or security interest (other than security
interests created hereby) on, or claim asserted against, any Purchased Loan or,
to Seller’s knowledge, the underlying collateral therefor or (iii) any event or
change in circumstances that has or could reasonably be expected to have an
adverse affect on the Market Value of a Purchased Loan; and


 


(v)           promptly,
and in any event within 10 days after service of process on any of the
following, give to Buyer notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or arbitrable
proceedings affecting Seller or affecting any of the assets of Seller before
any Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Transaction Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $5,000,000, or (iii) which,
individually or in the aggregate, if adversely determined could reasonably be
likely to have a Material Adverse Effect.


 


(c)           Seller
shall provide Buyer with copies of such documents as Buyer may reasonably
request evidencing the truthfulness of the representations set forth in Section 10.


 


(d)           Seller
shall defend the right, title and interest of Buyer in and to the Purchased
Loans against, and take such other action as is necessary to remove, the liens,
security interests, claims,


 


42





















 


encumbrances,
charges and demands of all Persons (other than security interests granted to
Buyer hereunder).


 


(e)           Seller
will permit Buyer or its designated representative to inspect any of Seller’s
records with respect to all or any portion of the Purchased Loans and the
conduct and operation of its business related thereto, at such reasonable times
and with reasonable frequency requested by Buyer or its designated
representative, and to make copies of extracts of any and all thereof.


 


(f)            If
any amount payable under or in connection with any of the Purchased Loans shall
be or become evidenced by any promissory note, other instrument or chattel
paper (as each of the foregoing is defined under the UCC), such note,
instrument or chattel paper shall be immediately delivered to Buyer or its
designee, duly endorsed in a manner satisfactory to Buyer or if any collateral
or other security shall subsequently be delivered to Seller in connection with
any Purchased Loan, Seller shall immediately deliver or forward such item of
collateral or other security to Buyer or its designee, together with such
instruments of assignment as Buyer may request.


 


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


 


(i)            the
Monthly Statement;


 


(ii)           within
10 days of Seller’s receipt, all operating statements and occupancy information
that Seller or Servicer has received relating to the Portfolio Loans;


 


(iii)          the
Quarterly Report;


 


(iv)          the
Financial Covenant Compliance Certificate;


 


(v)           as
soon as available and in any event within fifty-five (55) days after the end of
each of the first three quarterly fiscal periods of each fiscal year of Seller,
the unaudited, consolidated balance sheets of Seller, which shall incorporate
its consolidated subsidiaries, as at the end of such period and the related
unaudited, consolidated statements of income and retained earnings and of cash
flows for Seller, which shall incorporate its consolidated Subsidiaries, for
such period and the portion of the fiscal year through the end of such period,
accompanied by an Officer’s Certificate of Seller, which certificate shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations Seller and its
consolidated Subsidiaries in accordance with GAAP, consistently applied, as at
the end of, and for, such period (subject to normal year-end audit
adjustments);


 


(vi)          within
sixty (60) days following the end of each quarter, or within one hundred twenty
(120) days following the end of each fiscal year, as the case may be, an
Officer’s Certificate of Seller in form and substance reasonably satisfactory
to Buyer that Seller during such fiscal period or year has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in the Agreement and the other Transaction Documents to be
observed, performed or satisfied by it, and that there has been no Event of
Default and no event or circumstance has occurred that is reasonably likely to
result in a Material Adverse Effect;


 


(vii)         as
soon as available and in any event within one hundred (100) days after the end
of each fiscal year of Seller, the consolidated balance sheets of Seller, which
shall incorporate its consolidated Subsidiaries, if any, as at the end of such
fiscal year and the related consolidated


 


43





















 


statements of income and retained earnings and of cash
flows for Seller, which shall incorporate its consolidated Subsidiaries, if
any, for such year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of Seller and its consolidated Subsidiaries
as at the end of, and for, such fiscal year in accordance with GAAP;


 


(viii)        within
ten (10) Business Days after Buyer’s reasonable request, such further
information with respect to the operation of any Mortgaged Property, Purchased Loan,
the financial affairs of the Seller and any Plan and Multiemployer Plan as may
be requested by Buyer, including all business plans prepared by or for Seller;
provided, however, that with respect to information not previously known to, or
in the possession of, Seller relating to any Multiemployer Plan, Seller shall
only be required to provide such information as may be obtained through good
faith efforts;


 


(ix)           within
sixty (60) Business Days after the end of each calendar year, such information
as may be reasonably requested by Buyer, its successors and assigns, and
transferees, in connection with the Portfolio Loans, and that are necessary for
the party requesting such information in preparing its tax return and paying
taxes in any country or jurisdiction where such tax return or taxes are due;
and


 


(x)            such
other reports as Buyer shall reasonably require.


 


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


 


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


 


(j)            Seller
shall advise Buyer in writing of the opening of any new chief executive office
or the closing of any such office and of any change in Seller’s name or the
places where the books and records pertaining to the Purchased Securities are
held not less than the later of fifteen (15) Business Days prior to taking any
such action or 90 days before any financial statement filing will lapse, lose
perfection or become materially misleading.


 


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


 


(l)            Seller
shall maintain its existence as a limited liability company, organized solely
and in good standing under the law of the State of Delaware and shall not
dissolve, liquidate, merge with or into any other Person or otherwise change
its organizational structure or identity or incorporate in any other
jurisdiction.


 


44





















 


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


 


(n)           Seller
shall provide Buyer with notice of each modification of any Purchased Loan
Documents consented to by Seller (including such modifications which do not
constitute a Significant Modification).


 


(o)           Seller
shall provide Buyer with notice of the occurrence of any “appraisal reduction
event”, “control appraisal period” or similar event under any participation
agreement related to any Purchased Loan.


 


(p)           Seller
shall provide Buyer with reasonable access to operating statements, the
occupancy status and other property level information, with respect to the Mortgaged
Properties, plus any such additional reports as Buyer may reasonably request.


 


(q)           Seller may propose, and Buyer will consider but
shall be under no obligation to approve, strategies for the foreclosure or
other realization upon the security for any Purchased Loan that has become a
Defaulted Loan.


 


(r)            Seller shall not cause any Purchased Loan to be
serviced by any servicer other than a servicer expressly approved in writing by
Buyer.


 


13.          SINGLE-PURPOSE ENTITY


 


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


 


(a)           It is and intends to
remain solvent and it has paid and will pay its debts and liabilities
(including employment and overhead expenses) from its own assets as the same
shall become due.


 


(b)           It has complied and will
comply with the provisions of its certificate of formation and its limited
liability company agreement.


 


(c)           It has done or caused to
be done and will do all things necessary to observe limited liability company
formalities and to preserve its existence.


 


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


 


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


 


45





















 


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


 


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


 


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


 


(i)            It has not incurred and
will not incur any indebtedness or obligation, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than (A) obligations under the Transaction Documents and the Securities
Repurchase Agreement, (B) obligations under the documents evidencing the
Purchased Loans and Portfolio Securities and (C) unsecured trade payables,
in an aggregate amount not to exceed $100,000 at any one time outstanding,
incurred in the ordinary course of acquiring, owning, financing and disposing
of the the Purchased Loans and Portfolio Securities; provided, however,
that any such trade payables incurred by Seller shall be paid within 30 days of
the date incurred.


 


(j)            It has not made and will
not make any loans or advances to any other Person, and shall not acquire
obligations or securities of any member or affiliate of any member or any other
Person (other than in connection with the origination or acquisition of
Purchased Loans and Portfolio Securities).


 


(k)           It will maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations.


 


(l)            Neither it nor Guarantor
will seek its dissolution, liquidation or winding up, in whole or in part, or
suffer any Change of Control, consolidation or merger.


 


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


 


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


 


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


 


(p)           It has no liabilities,
contingent or otherwise, other than those normal and incidental to the
acquisition, origination, ownership, servicing, administration, enforcement,
financing and disposition of the Purchased Loans and Portfolio Securities.


 


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


 


(r)            It shall not maintain any employees.


 


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14.          EVENTS
OF DEFAULT; REMEDIES


 


Paragraph 11 (“Events of Default”) of the Agreement is
hereby amended by the deletion in their entirety of the first paragraph thereof
(other than the clauses referenced in Section 14(a) below) and Paragraphs
11(a) through (i) thereof and by the addition of the provisions (a) through (c)
of Section 14 of this Annex I:


 


(a)           Together
with clauses (iii) through (v) and (vii) of the first paragraph of Paragraph 11
of the Agreement, the following shall constitute an event of default hereunder
(each an “Event of Default”):


 


(i)            failure
of Seller to repurchase or the failure of Buyer to transfer the Purchased Loan
on the applicable Repurchase Date (except when such failure to transfer is a
result of Buyer’s inability to obtain necessary consents to, or fulfill
restrictions on, such transfer);


 


(ii)           failure
of Seller to apply any Income received by Seller in accordance with the
provisions hereof;


 


(iii)          (A)
the Transaction Documents shall for any reason not cause, or shall cease to
cause, Buyer to be the owner or, if recharacterized as a secured financing, a
secured party with respect to any of the Purchased Loans or the collateral
specified in Section 6(a) and 6(c) free of any adverse claim, liens and
other rights of others (other than as granted herein) or (B) if a Transaction
is recharacterized as a secured financing, the Transaction Documents with
respect to any Transaction shall for any reason cease to create a valid first
priority security interest in favor of Buyer in any of the Purchased Loans or
the collateral specified in Sections 6(a) and 6(c) or (C) if the
Transaction Documents shall cease to be in full force and effect or if their
enforceability is challenged by Seller;


 


(iv)          failure
of Seller to make the payments required under Section 4 or Section 5(b)
on any Remittance Date which failure is not remedied within one (1) Business
Day;


 


(v)           failure
of Seller to make any other payment owing to Buyer which has become due,
whether by acceleration or otherwise, under the terms of the Agreement which
failure is not remedied within the applicable period (in the case of a failure
pursuant to Section 4) or, if no period is specified, five (5) Business
Days after notice thereof to Seller; provided, however, that
Buyer shall not be required to provide notice in the event of a failure by
Seller to repurchase on the Repurchase Date;


 


(vi)          breach
by Seller in the due performance or observance of any term, covenant or
agreement contained in Section 11(k) of this Annex I;


 


(vii)         Change
of Control shall have occurred with respect to the Seller or Guarantor;


 


(viii)        any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated; provided  that the representations and warranties set
forth in Section 10(a) (vi) or (viii) (in the case of (vi), with respect
to the affected or Purchased Loans only) made by Seller shall not be considered
an Event of Default if incorrect or untrue in any material respect, if Buyer
terminates the related Transaction and Seller repurchases the related Purchased
Loans on an Early Repurchase Date no later than ten (10) Business Days after
receiving written notice of such incorrect or untrue representation;  provided, however, that if
Seller shall have made any such representation with


 


47










 













 


knowledge that it was materially incorrect or untrue
at the time made, such misrepresentation shall constitute an Event of Default;


 


(ix)                                a
final judgment by any competent court in the United States of America for the
payment of money (in the case of Seller) or for the payment of money in an
amount greater than $5,000,000 (in the case of Guarantor) shall have been
rendered against Seller or Guarantor, as the case may be, and remained
undischarged or unpaid for a period of forty-five (45) days, during which
period execution of such judgment is not effectively stayed;


 


(x)                                   Guarantor
shall have defaulted or failed to perform under any note, indenture, loan
agreement, guaranty, swap agreement or any other contract, agreement or
transaction to which it is a party, and which default (A) involves the failure
to pay a matured obligation in excess of $10,000,000, or (B) involving an
obligation of at least $10,000,000 is a monetary default or a material
non-monetary default and results in acceleration or permits the acceleration of
the obligation by any other party to or beneficiary of such note, indenture,
loan agreement, guaranty, swap agreement or other contract agreement or
transaction; provided, however, that any such default, failure to
perform or breach shall not constitute an Event of Default if Guarantor cures
such default, failure to perform or breach, as the case may be, within the
grace period, if any, provided under the applicable agreement;


 


(xi)                                As
of the end of any fiscal quarter (A) Guarantor’s (1) Debt to Equity Ratio is
greater than 5:1, (2) Tangible Net Worth is less than the sum of (x)
$129,750,000 and (y) 75% of the proceeds of any equity issuances occurring
after Guarantor’s initial public offering, (3) Fixed Charge Coverage Ratio is
less than 1.50:1, or (4) Minimum Liquidity is less than $10,000,000, for the
first two years after the date of this Agreement, and less than $15,000,000
thereafter; or (B) Guarantor fails to maintain cumulative positive EBITDA for
the three fiscal quarters most recently ended.


 


(xii)                             if
Seller or Buyer shall breach or fail to perform any of the terms, covenants,
obligations or conditions of the Agreement, other than as specifically
otherwise referred to in this definition of “Event of Default”, and such breach
or failure to perform is not remedied within ten (10) Business Days, or if such
breach is not curable by the payment of a sum of money, thirty (30) days after
notice thereof to Seller or Buyer from the applicable party or its successors
or assigns;


 


(xiii)                          an Act
of Insolvency shall have occurred with respect to the Seller or Guarantor;


 


(xiv)                         an “event
of default” beyond any applicable notice and cure period shall have occurred
under (A) the Securities Repurchase Agreement, (B) any repurchase facility or
loan facility entered into by Seller and Buyer or any affiliate thereof or (C)
any facility with Buyer or any affiliate thereof in which Seller is a
guarantor; or


 


(xv)                            (A) any of the representations, warranties and
covenants of Guarantor in the Guaranty or any Financial Covenant Compliance
Certificate shall have been incorrect or untrue in any material respect when
made or repeated or deemed to have been made or repeated and such
misrepresentation or breach of warranty or covenant has not been cured within
ten (10) Business Days of after receiving written notice of such incorrect or
untrue representation or such breach of covenant or (B) Guarantor shall
have defaulted or failed to perform under the Guaranty.


 


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


 


48





















 


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


 


(ii)                                  If
Buyer exercises or is deemed to have exercised the option referred to in Section 14(b)(i):


 


(A)                              Seller’s
obligations hereunder to repurchase all Purchased Loans shall become
immediately due and payable on and as of the Accelerated Repurchase Date and
all Income deposited in the Blocked Account shall be retained by Buyer and
applied to the aggregate unpaid Repurchase Price and any other amounts owing by
Seller hereunder; and


 


(B)                                to
the extent permitted by applicable law, the Repurchase Price with respect to
each Transaction (determined as of the Accelerated Repurchase Date) shall be
increased by the aggregate amount obtained by daily application of, on a 360
day per year basis for the actual number of days during the period from and
including the Accelerated Repurchase Date to but excluding the date of payment
of the Repurchase Price (as so increased), (x) the Pricing Rate applicable upon
an Event of Default for such Transaction multiplied by (y) the Repurchase Price
for such Transaction (decreased by (I) any amounts actually remitted to Buyer
by Seller from time to time pursuant to Section 5 and applied to such
Repurchase Price to the extent such amounts are not already included in the
computation of the Repurchase Price and (II) any amounts applied to the
Repurchase Price pursuant Section 14(b)(iii) of this Annex I); and


 


(C)                                the
Custodian shall, upon the request of Buyer (with simultaneous copy of such
request to Seller), deliver to Buyer all instruments, certificates and other
documents then held by the Custodian relating to the Purchased Loans.


 


(iii)                               Buyer
may, after ten (10) days notice to Seller of Buyer’s intent to take such action
(provided that no such notice shall be required in the circumstances set forth
in Section 9-611(d) of the UCC), (A) immediately sell, at a public or
private sale in a commercially reasonable manner and at such price or prices as
Buyer may reasonably deem satisfactory any or all of the Purchased Loans or (B)
in its sole discretion elect, in lieu of selling all or a portion of such
Purchased Loans, to give Seller credit for such Purchased Loans in an amount
equal to the Market Value of such Purchased Loans against the aggregate unpaid
Repurchase Price for such Purchased Loans and any other amounts owing by Seller
under the Transaction Documents.  The
proceeds of any disposition of Purchased Loans effected pursuant to this Section 14(b)(iii)
shall be applied, (v) first, to the costs and expenses incurred by Buyer in
connection with Seller’s default; (w) second, to costs of cover and/or Hedging
Transactions, if any; (x) third, to the Repurchase Price; (y) fourth, to any
other outstanding obligation of Seller to Buyer or its Affiliates pursuant to
the Transaction Documents, and (z) the balance, if any, to Seller.


 


(iv)                              The
parties recognize that it may not be possible to purchase or sell all of the
Purchased Loans on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Loans
may not be liquid.  In view of the nature
of the Purchased Loans, the parties agree that, to the extent permitted by
applicable law,


 


49





















 


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


 


(v)                                 Seller
shall be liable to Buyer for the amount of all reasonable expenses, including
reasonable legal fees and expenses, actually incurred by Buyer in connection
with or as a consequence of an Event of Default with respect to Seller, (B) all
costs incurred in connection with covering transactions or Hedging Transactions
(including short sales) or entering into replacement transactions (C) all
damages, losses, judgment costs and expenses of any kind which may be imposed
on, incurred by or asserted against Buyer relating to or arising out of such
Hedging Transactions or covering transactions and (D) any other loss, damage,
cost or expense directly arising or resulting from the occurrence of an Event
of Default with respect to Seller.


 


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


 


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


 


(viii)                        Without
limiting any other rights or remedies of Buyer, Buyer shall have the right to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by or for account of Buyer or Buyer’s
Affiliates on behalf of Seller to any obligations of Seller hereunder to Buyer,
irrespective of whether Buyer shall have made any demand under the Agreement or
the other Transaction Documents.


 


(ix)                                Buyer shall have, in addition to its rights and
remedies under the Transaction Documents, all of the rights and remedies
provided by applicable federal, state, foreign, and local laws (including,
without limitation, if the Transactions are recharacterized as secured
financings, the rights and remedies of a secured party under the UCC of the
State of New York, to the extent that the UCC is applicable, and the right to
offset any mutual debt and claim), in equity, and under any other agreement
between Buyer and Seller, exercisable upon ten (10) days notice from Buyer to
Seller.  Without limiting the generality
of the foregoing, Buyer shall be entitled to set off the proceeds of the
liquidation of the Purchased Loans against all of Seller’s obligations to
Buyer, whether or not such obligations are then due, without prejudice to Buyer’s
right to recover any deficiency.


 


(c)                                  If
an Event of Default occurs and is continuing with respect to Buyer, the
following rights and remedies shall be available to Seller:


 


50





















 


(i)                                     Upon
tender by Seller of payment of the aggregate Repurchase Price for all Purchased
Loans, together with all other amounts due hereunder to Buyer, Buyer’s right,
title and interest in such Purchased Loans shall be deemed transferred to
Seller, and Buyer shall simultaneously deliver such Purchased Loans to Seller.


 


(ii)                                  Seller
shall have all the rights and remedies provided herein or provided by
applicable federal, state, foreign, local and any other applicable laws, in
equity, and under any other agreement between Buyer and Seller (including the
right to offset any debt or claim).


 


(iii)                               If
Seller exercises the option referred to in Section 14(c)(i) hereof and
Buyer fails to deliver any Purchased Loans to Seller, after three (3) Business
Days’ notice to Buyer, Seller may purchase loans that are in as similar an
amount and interest rate as is reasonably practicable and in the same Loan Type
as such Purchased Loans.


 


15.                               SINGLE AGREEMENT


 


Clause (ii) of Paragraph 12 of the Agreement (“Single
Agreement”) is hereby deleted.


 


16.                               NOTICES AND OTHER
COMMUNICATIONS


 


Paragraph 13 of the Agreement (“Notices and Other
Communications”) is hereby deleted and replaced in its entirety by the
following provisions of this Section 16:


 


All notices, consents, approvals and requests required
or permitted hereunder shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) hand delivery, with proof of
attempted delivery, (b) certified or registered United States mail, postage
prepaid, (c) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (d) by telecopier
(with answerback acknowledged); provided that such telecopied notice
must also be delivered by one of the means set forth in (a), (b) or (c) above,
to the addresses specified in Annex II hereto or at such other address and
person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section 16.  A
notice shall be deemed to have been given: 
(a) in the case of hand delivery, at the time of delivery, (b) in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day, (c) in the case of expedited prepaid delivery
upon the first attempted delivery on a Business Day; or (d) in the case telecopier,
upon receipt of answerback confirmation, provided that such telecopied
notice was also delivered as required in this Section.  A party receiving a notice which does not
comply with the technical requirements for notice under this Section may
elect to waive any deficiencies and treat the notice as having been properly
given.


 


17.                               NON-ASSIGNABILITY


 


The provisions of Paragraph 15 of the Agreement (“Nonassignability;
Termination”) are hereby deleted and replaced in their respective entireties by
the following provisions of this Section 17:


 


(a)                                  The
rights and obligations of Seller under the Transaction Documents, the Hedging
Transactions and under any Transaction shall not be assigned by Seller without
the prior written consent of Buyer. 
Buyer may assign or participate its rights and obligations under the
Transaction Documents and under any Transaction and its rights and interests in
any Hedging Transaction, in each case, without the prior written consent of
Seller.  Seller agrees to use its good
faith efforts to include in the participation agreement or intercreditor
agreement, as applicable, relating to each Purchased Loan a provision


 


51





















 


expressly
recognizing Goldman Sachs Mortgage Company, together with its successors and
assigns, as a permitted transferee of each such Purchased Loan.


 


Notwithstanding anything to the contrary contained
herein, with respect to Seller, (A) Buyer shall remain responsible for
reviewing and determining the eligibility of any New Loan for purposes of any
Transaction and (B) Seller shall continue to deal solely and directly with
Buyer in connection with any Transaction. 
As long as an Event of Default on the part of Seller shall have occurred
and be continuing, Buyer may assign or participate its rights and obligations
under the Transaction Documents and/or any Transaction to any Person.


 


(b)                                 The
Buyer shall maintain a record of ownership identifying all assignees.  If any assignee is a non-U.S. Person, such
assignee shall timely provide Seller with such forms as may be required to
establish the assignee’s status for U.S. withholding tax purposes.


 


(c)                                  With
respect to any issuance by Buyer of a participation in any Transaction,
(i) Buyer shall act as agent for all participants in any dealings with
Seller in connection with such Transactions and will maintain, on behalf of
Seller, a record of ownership that identifies all participants, and (ii) Seller
shall not be obligated to deal directly with any party other than Buyer in
connection with such Transactions, or to pay or reimburse Buyer for any costs
that would not have been incurred by Buyer had no participation interests in
such Transactions been issued.


 


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


 


18.                               GOVERNING LAW; CONSENT
TO JURISDICTION; WAIVER OF JURY TRIAL


 


The language in Paragraph 16 of the Agreement (“Governing
Law”) which reads “without giving effect to the conflict of law principals
thereof” is hereby deleted. Paragraph 18 of the Agreement (“Use of Employee
Plan Assets”) is hereby deleted in its entirety.  Paragraph 17 (“No Waivers, Etc.”) is hereby
deleted and replaced in its entirety by the following provisions of this Section 18:


 


(a)                                  Each
party irrevocably and unconditionally submits to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in Manhattan, and
any appellate court from any such court, solely for the purpose of any suit,
action or proceeding brought to enforce its obligations under the Agreement or
relating in any way to the Agreement or any Transaction under the Agreement.


 


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


 


(c)                                  Each
party hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile and irrevocably consents to the service of any
summons and complaint and any other process by the mailing of copies of such
process to


 


52





















 


them at their
respective address specified herein. 
Each party hereby agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this Section 18 shall affect
the right of Buyer to serve legal process in any other manner permitted by law
or affect the right of Buyer to bring any action or proceeding against Seller
or its property in the courts of other jurisdictions.


 


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


 


19.                               NO RELIANCE; DISCLAIMERS


 


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


 


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


 


(ii)                                  It
has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and it has made its own investment, hedging and trading decisions (including
decisions regarding the suitability of any Transaction) based upon its own
judgment and upon any advice from such advisors as it has deemed necessary and
not upon any view expressed by the other party;


 


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


 


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


 


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


 


(b)                                 Each
determination by Buyer of the Market Value with respect to each New Loan or
Purchased Loan or the communication to Seller of any information pertaining to
Market Value under the Agreement shall be subject to the following disclaimers:


 


(i)                                     Buyer
has assumed and relied upon, with Seller’s consent and without independent
verification, the accuracy and completeness of the information provided by
Seller and reviewed by Buyer.  Buyer has
not made any independent inquiry of any aspect of the New Loans or Purchased
Loans or the underlying collateral. 
Buyer’s view is based on economic,


 


53





















 


market and other conditions as in effect on, and the
information made available to Buyer as of, the date of any such determination
or communication of information, and such view may change at any time without
prior notice to Seller.


 


(ii)                                  Market
Value determinations and other information provided to Seller constitute a
statement of Buyer’s view of the value of one or more loans or other assets at
a particular point in time and neither (x) constitute a bid for a particular
trade, (y) indicate a willingness on the part of Buyer or any Affiliate thereof
to make such a bid, nor (z) reflect a valuation for substantially similar
assets at the same or another point in time, or for the same assets at another
point in time.


 


(iii)                               Market
Value determinations and other information provided to Seller may vary
significantly from valuation determinations and other information which may be
obtained from other sources.


 


(iv)                              Market
Value determinations and other information provided to Seller are communicated
to Seller solely for its use and may not be relied upon by any other person and
may not be disclosed or referred to publicly or to any third party without the
prior written consent of Buyer, which consent Buyer may withhold or delay in
its sole and absolute discretion.


 


(v)                                 Buyer
makes no representations or warranties with respect to any Market Value
determinations or other information provided to Seller. Buyer shall not be
liable for any incidental or consequential damages arising out of any
inaccuracy in such valuation determinations and other information provided to
Seller, including as a result of any act of gross negligence or breach of any
warranty.


 


(vi)                              Market
Value indications and other information provided to Seller in connection with Section 3(b)
are only indicative of the initial Market Value of the New Loan submitted to
Buyer for consideration thereunder, and may change without notice to Seller
prior to, or subsequent to, the transfer by Seller of the New Loan pursuant to Section 3(e).  No indication is provided as to Buyer’s
expectation of the future value of such Purchased Loan or the underlying
collateral.


 


(vii)                           Initial
Market Value indications and other information provided to Seller in connection
with Section 3(b) are to be used by Seller for the sole purpose of
determining whether to proceed in accordance with Section 3 and for no
other purpose.


 


20.                               INDEMNITY AND EXPENSES


 


(a)                                  Seller
hereby agrees to hold Buyer and its Affiliates and each of their respective
officers, directors, employees and agents (“Indemnified Parties”)
harmless from and indemnify the Indemnified Parties against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, taxes (including stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Purchased Loans
or in connection with any of the transactions contemplated by the Agreement (or
the recharacterization of any Transaction) and the documents delivered in
connection herewith and therewith, other than net income taxes of Buyer), fees,
costs, expenses (including reasonable attorneys fees and disbursements and any
and all servicing and enforcement costs with respect to the Purchased Loans) or
disbursements (all of the foregoing, collectively “Indemnified Amounts”)
which may at any time (including, without limitation, such time as the
Agreement shall no longer be in effect and the Transactions shall have been
repaid in full) be imposed on or asserted against any Indemnified Party in any
way whatsoever arising out of or in connection with, or relating to, the
Agreement or any Transactions thereunder or any action taken or omitted to be
taken by any Indemnified Party under or in


 


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connection with
any of the foregoing; provided, that Seller shall not be liable for
Indemnified Amounts resulting from the gross negligence or willful misconduct
of any Indemnified Party.  Without
limiting the generality of the foregoing, Seller agrees to hold Buyer harmless
from and indemnify Buyer against all Indemnified Amounts with respect to all
Purchased Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation ERISA, that, in each case, results from
anything other than Buyer’s gross negligence or willful misconduct.  In any suit, proceeding or action brought by
Buyer in connection with any Purchased Loan for any sum owing thereunder, or to
enforce any provisions of any Purchased Loan Documents, Seller will save,
indemnify and hold Buyer harmless from and against all expense, loss or damage
suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Seller of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from Seller.  Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party’s rights under the
Agreement and any other Transaction Document or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel.  Seller hereby
acknowledges its obligations hereunder are recourse obligations of Seller.


 


(b)                                 Seller
agrees to pay as and when billed by Buyer all of the out-of-pocket costs and
expenses incurred by Buyer in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, the Agreement,
this Annex I and the other Transaction Documents or any other documents
prepared in connection herewith or therewith. 
Seller agrees to pay as and when billed by Buyer all of the out-of-pocket
costs and expenses incurred in connection with the consummation and
administration of the transactions contemplated hereby and thereby including
without limitation (i) all the reasonable fees, disbursements and expenses
of counsel to Buyer, not to exceed $15,000 for each Transaction and
(ii) all the Due Diligence Fees, testing and review costs and expenses
incurred by Buyer in connection with the evaluation of any New Loan and with
respect to any Transaction.


 


21.                               DUE
DILIGENCE


 


Seller acknowledges that Buyer has the right to
perform continuing due diligence reviews with respect to the Purchased Loans,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or determining or re-determining the Asset Base
for purposes of Section 4 of this Annex I, or otherwise, and Seller agrees
that Buyer, at its option, has the right at
any time to conduct a partial or complete due diligence review on any or all of
the Purchased Loans, including, without limitation, ordering new credit reports
and Appraisals on the applicable collateral and otherwise regenerating the
information used to originate such Purchased Loans.  Upon reasonable (but no less than one (1)
Business Day) prior notice to Seller, Buyer or its authorized representatives
will be permitted during normal business hours to examine, inspect, and make
copies and extracts of, the Purchased Loan Files and any and all documents,
records, agreements, instruments or information relating to any Purchased Loan
in the possession or under the control of Seller, any servicer or sub-servicer
and/or Custodian.  Seller also shall make
available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Purchased Loan Files and the
Purchased Loans. Seller agrees to cooperate with Buyer and any third party
underwriter designated by Buyer in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Purchased Loans in the possession, or under the
control, of such Seller.


 


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22.                               SERVICING


 


(a)                                  Notwithstanding
the purchase and sale of the Purchased Loans by Seller to Buyer hereunder, GKK
Manager LLC or such other Servicer shall continue to service the Purchased
Loans at Seller’s sole cost and for the benefit of Buyer and, if Buyer shall
exercise its rights to pledge or hypothecate the Purchased Loans prior to the
Repurchase Date pursuant to Section 8 or 17 of this Annex I, Buyer’s
assigns; provided, however, that the obligations of Seller to
service any of the Purchased Loans shall cease automatically upon the earliest
of (i) an Event of Default, (ii) the date on which the aggregate Repurchase
Price for the Portfolio Loans together with all accrued and unpaid Price
Differential, unpaid Costs and other amounts payable by Seller to Buyer
hereunder have been paid in full or (iii) the transfer of servicing approved by
Seller and Buyer, which Buyer’s consent shall not be unreasonably
withheld.  Seller shall service and shall
cause the Servicer to service the Purchased Loans in accordance with Accepted
Servicing Practices.


 


(b)                                 Seller
agrees that Buyer is the owner of all servicing records, including but not
limited to any and all servicing agreements (the “Servicing Agreements”),
files, documents, records, data bases, computer tapes, copies of computer
tapes, proof of insurance coverage, insurance policies, appraisals, other
closing documentation, payment history records, and any other records relating
to or evidencing the servicing of Purchased Loans (the “Servicing Records”)
so long as the Purchased Loans are subject to the Agreement.  Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer’s request.


 


(c)                                  Upon
the occurrence and continuance of an Event of Default, Buyer may, in its sole
discretion, (i) sell its right to the Purchased Loans on a servicing released
basis or (ii) terminate Servicer or any sub-servicer of the Purchased Loans
with or without cause, in each case without payment of any termination fee or
such other costs or expenses to Buyer, it being agreed that Seller will pay any
and all fees, costs and expenses required to terminate the Servicing Agreement
and to effectuate a transfer of servicing to a designee of the Buyer; provided,
however, that Buyer shall cause any successor servicer to deliver to
Seller reports generated for Buyer relating to the Purchased Loans.


 


(d)                                 Seller
shall not, and shall not permit Servicer to, employ sub-servicers to service
the Purchased Loans without the prior written approval of Buyer which shall not
be unreasonably withheld.  If the
Purchased Loans are serviced by a sub-servicer, Seller shall irrevocably assign
all rights, title and interest in the Servicing Agreements with such
sub-servicer to Buyer.


 


(e)                                  Seller
shall cause Servicer and any sub-servicers engaged by Seller to execute a
letter agreement with Buyer acknowledging Buyer’s security interest in the
Purchased Loans and the Servicing Agreements and agreeing that each such
sub-servicer shall deposit all Income with respect to the Purchased Loans in
the Blocked Account, all in such manner as shall be reasonably acceptable to
Buyer.


 


(f)                                    In
the event Seller or its Affiliate is servicing any Purchased Loan, Seller shall
permit Buyer to inspect Seller’s or its Affiliate’s servicing facilities, as the
case may be, for the purpose of satisfying Buyer that Seller or its Affiliate,
as the case may be, has the ability to service such Purchased Loans as provided
in the Agreement.


 


(g)                                 Seller
shall cause the Servicer to provide a copy of each report and notice sent to
Seller to be sent to Buyer concurrently therewith.


 


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23.                               TREATMENT FOR TAX
PURPOSES


 


It is the intention of the parties that, for U.S.
Federal, state and local income and franchise tax purposes, the Transactions
constitute a financing, and that the Seller is, and, so long as no Event of
Default shall have occurred and be continuing, will continue to be, treated as
the owner of the Purchased Loans for such purposes.  Unless prohibited by applicable law, Seller
and Buyer agree to treat the Transactions as described in the preceding
sentence on any and all filings with any U.S. Federal, state or local taxing
authority.


 


24.                               INTENT


 


The provisions of Paragraph 19 of the Agreement (“Intent”)
are hereby deleted and replaced in their respective entireties by the following
provisions of this Section 24:


 


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


 


25.                               MISCELLANEOUS


 


The provisions of Paragraph 20 of the Agreement (“Disclosure
Relating to Certain Federal Protections”) are hereby deleted in their entirety
and replaced by the following provisions of this Section 26:


 


(a)                                  Time
is of the essence under the Transaction Documents and all Transactions
thereunder and all references to a time shall mean New York time in effect on
the date of the action unless otherwise expressly stated in the Transaction
Documents.


 


(b)                                 All
rights, remedies and powers of Buyer hereunder and in connection herewith are
irrevocable and cumulative, and not alternative or exclusive, and shall be in
addition to all other rights, remedies and powers of Buyer whether under law, equity
or agreement.  In addition to the rights
and remedies granted to it in the Agreement to the extent applicable, Buyer
shall have all rights and remedies of a secured party under the UCC and any
other applicable law.


 


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


 


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


 


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


 


(f)                                    This
Annex I, together with the Agreement contain a final and complete integration
of all prior expressions by the parties with respect to the subject matter
hereof and thereof and shall constitute


 


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the entire
agreement among the parties with respect to such subject matter, superseding
all prior oral or written understandings.


 


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


 


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


 


(i)                                     Buyer
agrees not to seek before any court or governmental agency to have any director
or officer of the Seller held personally liable for any action or inactions of
the Seller or any obligations of the Seller under the Agreement or the related
Transaction Documents, except if such actions or inactions are the result of the
gross negligence, fraud or willful misconduct of such director or officer.


 


[SIGNATURES COMMENCE ON NEXT PAGE]


 


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IN WITNESS WHEREOF, the parties have executed this
Annex I as of the        day of December 2004.


 


 


	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  GOLDMAN
  SACHS MORTGAGE COMPANY, 

  a New York limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Goldman
  Sachs Real Estate Funding Corp., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  GRAMERCY
  WAREHOUSE FUNDING II LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GKK CAPITAL LP,

  
	
   

  	
   

  	
  a Delaware
  limited partnership,

  
	
   

  	
   

  	
  its sole member
  and manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GRAMERCY CAPITAL
  CORP.,

  
	
   

  	
   

  	
  a Maryland
  corporation, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   Name: Hugh Hall

  
	
   

  	
   

  	
   

  	
   Its: Chief Operating Officer

  
								



 


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