Exhibit
10.6


 


ANNEX
I


 


Supplemental
Terms and Conditions


 


This Annex I forms a part
of the Master Repurchase Agreement dated as of June 26, 2003 (the “Repurchase
Agreement”) between BEAR, STEARNS & Co., Inc., as agent for BEAR,
STEARNS INTERNATIONAL LIMITED (“Buyer”), CRIIMI MAE Asset Acquisition
Corp. (the “Seller” or “Hedging Party”) and CRIIMI MAE INC. (the
“Guarantor”).  This Annex I shall
apply to Transactions in which Bear, Stearns International Limited will be the
Buyer of certain subordinated commercial mortgage-backed securities (“CMBS”)
issued with respect to pools of commercial mortgage loans or other securities,
in each case, approved by Buyer in its sole discretion (each, an “Other Bear
Approved Asset”) from Seller in accordance with the terms described below
(each, a “CMBS Transaction”). 
All CMBS Transactions between Seller and Buyer will be subject to the
Repurchase Agreement, this Annex I, each Confirmation under the Repurchase
Agreement (the Repurchase Agreement, this Annex I and each Confirmation,
collectively, the “Agreement”), any Institutional Account Agreement,
between Buyer and Seller, if and when entered into (any such agreement, the “Institutional
Account Agreement”) and any Netting Agreement between Buyer and Seller, if
and when entered into (any such agreement, the “Netting Agreement”).  If there is any inconsistency between the
Institutional Account Agreement, the Repurchase Agreement, a Confirmation under
the Repurchase Agreement, the Guaranty and this Annex I, this Annex I
shall control.  Each CMBS Transaction
shall constitute a sale by Seller to Buyer of the related Purchased CMBS or
Other Bear Approved Asset and, subject to the terms of this Agreement, Buyer
shall have all of the rights of a holder of the Purchased CMBS.  All other capitalized terms not herein
defined shall have the meanings set forth in the Repurchase Agreement.


 


1.             Definitions.


 


(i)            The definition of “Market Value” in
Paragraph 2(j) of the Repurchase Agreement shall be replaced with the
following:


 


“Market Value”
shall mean (i) with respect to each Purchased CMBS, the market value determined
by Buyer daily in its sole discretion acting in good faith and (ii) with
respect to each Related Hedge Position, the market value determined daily by
the Bear Stearns entity acting as principal with respect to such Related Hedge
Position, in its sole discretion acting in good faith.


 

















 


(ii)           Each Purchased CMBS or Other Bear
Approved Asset shall constitute a “Purchased Security” under the
Agreement.  All references to “Security”
or “CMBS” shall be deemed to include Other Bear Approved Assets.


 


(iii)          The term “Transaction” or “CMBS
Transaction” includes any repurchase or reverse repurchase transaction effected
pursuant to this Agreement and outstanding . 
All references to “Transaction” shall be deemed to include all CMBS
Transactions.


 


(iv)          The following definitions are hereby
added to Section 2 of the Repurchase Agreement:


 


“Affiliate” shall
mean with respect to any Person, any “affiliate” of such Person, as such term
is defined in the United States Bankruptcy Code of 1978, as amended from time
to time.


 


“Affirmative Control”
shall mean, with respect to any Purchased CMBS, the ability to exercise the
rights of the Controlling Class (by whatever name denominated in the documents
governing the applicable Trust ) with respect to such Trust or otherwise to
direct, approve or consent to or vote on specified actions to be taken with
respect to the underlying commercial mortgage loans or the applicable Trusts,
or, if such Trust does not provide for a Controlling Class, to appoint, retain
or remove the Trust’s special servicer and to unilaterally direct foreclosure
upon all underlying commercial mortgage loans.


 


“Amount of
Transactions” shall mean the aggregate amount of all Purchase Prices paid
by Buyer for all outstanding CMBS Transactions hereunder, and not repaid to
Buyer.


 


“Applicable Table”
shall mean (a) “Table X” during any time period in which the Purchased CMBS
have been issued by one to four Trusts, (b) “Table Y” during any time period in
which the Purchased CMBS have been issued by five to eight Trusts and (c)
“Table Z” during any time period in which the Purchased CMBS have been issued
by more than eight Trusts; provided, however, that if, during any
time period, the Diversity Percentage of the Purchased CMBS issued by any
single Trust exceeds the Maximum Diversity Percentage for Table Z, then the
Applicable Table shall be “Table Y”, or, if the Maximum Diversity Percentage
for Table Y is exceeded, then the Applicable Table shall be “Table X”, all as
annexed hereto.


 


“Bank”
shall mean Sun Trust Bank, Inc., in its capacity as bank with respect to the
Control Agreement.


 


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“Bear Stearns entity”  shall
have the meaning ascribed to it in the Institutional Account Agreement.


 


“Business Day”
shall mean each day on which  commercial
banks in New York City and the New York Stock Exchange are open for business
or, solely for purposes of the determination of LIBOR, any day on which dealings
in deposits in U.S. dollars are transacted in the London interbank market.


 


“Buyer’s Margin Ratio”
shall mean, with respect to each Purchased CMBS, the Buyer’s Margin Ratio as
set forth on the Applicable Table corresponding to the applicable Ratings of CMBS
for such Purchased CMBS (i) as of the Purchase Date, (ii) on each date on which
the Applicable Table changes and (iii) on the first Business Day after Seller
gives Buyer notice or Buyer becomes aware of a change in rating that causes
such Purchased CMBS to be in a different CMBS Ratings Category.


 


“CDO”
shall mean a collateralized debt obligation to be issued by CRIIMI Newco LLC or
CBO REIT II, Inc. (or an Affiliate) and structured and sold by the Buyer (or an
Affiliate), collateralized with the Transaction Assets or Subject Securities
(as such terms are defined under that certain Repurchase Agreement dated as of
January 14, 2003 among the Buyer, CRIIMI Newco LLC and CBO REIT II, Inc., as
amended) and generally without recourse to CRIIMI Newco LLC or CBO REIT II,
Inc. or any Affiliate thereof.


 


“CMBS Ratings Category”
shall mean the following groupings of ratings, each of which shall be a
separate CMBS Ratings Category:


 


(i)            BBB
+ /Baal, BBB/Baa2, BBB/Baa3 (the “BBB Category”);


 


(ii)           BB + /Bal, BB/Ba2 and BB-/Ba3 (the
“BB Category”);


 


(iii)          B + /B1, B/B2 and B-/B3 (the “B
Category”);


 


(iv)          CCC/Caa and not rated (the
“CCC/Unrated Category”); and


 


(v)           with respect to Purchased CMBS with a
rating above the BBB Category (the “A Category”), the Pricing Rate, Purchase
Percentage and Buyer’s Margin Ratio will be as agreed to by the Seller and
Buyer.


 


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


 


“Collection
Account” shall mean an account established by the Bank subject to a
Control Agreement, into which, collectively, all Proceeds shall be deposited.


 


“Concentration Limit”
shall mean the percentage set forth on Table X, Table Y or Table Z, as
applicable under such column heading.


 


“Contiguous
Affirmative Control” shall mean, with respect to each Purchased CMBS
purchased under the Agreement, the ability of the holder of Related CMBS to
exercise


 


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Affirmative Control,
without interruption, regardless of any change in the Controlling Class or
future reductions in the principal balance of the Related CMBS.


 


“Control
Agreement” shall mean a letter agreement among the Seller,
the Buyer, and the Bank substantially in the form of Exhibit A
attached hereto, as the same may be further amended, supplemented or otherwise
modified in accordance with the terms thereof.


 


“Controlling Class”
shall mean, with respect to each Trust, the class of CMBS certificates that
vests the holders in the aggregate of such CMBS certificates with the right to
appoint, retain or remove the transaction’s special servicer (and to otherwise
exercise the rights of the controlling class, however denominated in the
issuing Trust’s governing documentation).


 


“Diversity Percentage”
shall mean (a) the Repurchase Price of all Purchased CMBS issued by the single
Trust whose Purchased CMBS have the highest aggregate Repurchase Price divided
by (b) the Repurchase Price of all Purchased CMBS.


 


“Default” shall
mean an event that with notice or lapse of time or both would become an Event
of Default under the Agreement or the Institutional Account Agreement, in each
case after the expiration of any applicable cure period.


 


“EST” shall mean
Eastern Standard Time or Eastern Daylight Time, as in effect.


 


“Existing CMBS”
shall mean Purchased CMBS that Buyer purchased prior to a CMBS Transaction that
causes a change in the Applicable Table.


 


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


 


“Governmental
Authority” shall mean the government of the United States of America or of
any state, county, municipality or other political subdivision thereof or any
governmental body, agency, authority, department or commission (including,
without limitation, any taxing authority) or any instrumentality or officer of
any of the foregoing (including, without limitation, any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned by or controlled by the foregoing.


 


“Guaranty” shall
mean that certain Affiliate Guaranty by the Guarantor, in favor of the Buyer.


 


“Guarantor” shall
mean CRIIMI MAE Inc., a Maryland corporation.


 


“LIBOR” shall mean
the London interbank offered rate for one-month US Dollar deposits as quoted on
Telerate Page 3750 at 8:30 a.m. EST. 
LIBOR will be reset on a monthly basis on the Reset Date based on the
rate in effect two Business Days prior to


 


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such Reset Date.  If LIBOR is unavailable on Telerate Page
3750 (or such other page as may replace Page 3750) on such Business Day, the
Buyer shall determine the arithmetic mean of the offered quotations of four
major banks in the London interbank market selected by Buyer and approved by
Seller (the “Reference Banks”) to leading banks in the London interbank
market for one-month U.S. dollar deposits in an amount determined by Buyer by
reference to requests for quotations as of approximately 8:30 a.m. EST on the determination
date made by the Buyer to the Reference Banks. 
If on such date at least two of the Reference Banks provide such
quotations, LIBOR shall equal such arithmetic mean of such quotations.  If on such date only one or none of the
Reference Banks provide such quotations, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that leading banks in The City of New
York selected by Buyer and approved by Seller are quoting on such date for
one-month U.S. dollar deposits in an amount reasonably determined by Buyer to
be representative of a single transaction in such market at such time by
reference to the principal London offices of leading banks in the London
interbank market;  provided that if LIBOR
cannot be determined in accordance with one of the foregoing procedures, LIBOR
shall be LIBOR as determined on the previous determination date.


 


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


 


“Margin Deficit Amount”
shall mean, when referring to CMBS Transactions under the Agreement, the
amount, if any, by which the aggregate of the Repurchase Prices for all
Purchased CMBS within a CMBS Ratings Category exceeds the product of (a) the
Buyer’s Margin Ratio with respect to such CMBS Ratings Category and (b) the
Market Value of all Purchased CMBS within such CMBS Ratings Category.


 


“Margin Excess Amount”
shall mean, when referring to CMBS Transactions under the Agreement, the
amount, if any, by which the aggregate of the Repurchase Prices for all
Purchased CMBS within a CMBS Ratings Category is less than the product of (a)
the Buyer’s Margin Ratio with respect to such CMBS Ratings Category and (b) the
Market Value of all Purchased CMBS within such CMBS Ratings Category.


 


“Material Adverse
Effect” shall mean a material adverse effect on (a) the property, business,
operations or financial condition of Guarantor or Seller, (b) the ability of
Seller or Guarantor to perform their respective obligations under the Agreement,
the Guaranty, any Related Hedge Agreement or the Netting Agreement, as
applicable, or (c) the validity or enforceability of the Agreement, the
Guaranty, any Related Hedge Agreement or the Netting Agreement or the rights
and remedies of Buyer or any Bear Stearns entity hereunder or thereunder.


 


“Maximum Aggregate
Purchase Price” shall equal $200,000,000.


 


“Maximum Diversity
Percentage” shall mean, as applicable, a Diversity Percentage of  25% for Table Y and 15% for Table Z.


 


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“Maximum Purchase
Price” shall equal, with respect to each Purchased CMBS (i) on the Purchase
Date, the Purchase Percentage applicable to such Purchased CMBS in the
Applicable Table on such date multiplied by the Market Value of the Purchased
CMBS on such date and (ii) on each date on which there is a change in the
Applicable Table, (a) with respect to new CMBS, the Purchase Percentage in the
newly Applicable Table multiplied by the Market Value of the new CMBS as of the
Purchase Date and (b) with respect to Existing CMBS, except to the extent
provided otherwise with respect to Existing CMBS in Paragraph 6(b) of this
Annex I, the Purchase Percentage in the newly-Applicable Table multiplied by
the Market Value of the Existing CMBS as of the date of such change.


 


“Other Bear Approved
Asset” shall mean any Security approved for purchase hereunder by the Buyer
in its sole discretion.


 


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


 


“Pricing Rate”
shall mean, with respect to each Purchased CMBS, the Pricing Rate set forth on
the Applicable Table corresponding to the CMBS Ratings Category for such
Purchased CMBS as of the Purchase Date and on each subsequent Reset Date.


 


“Purchased CMBS”
shall mean all CMBS transferred by Seller to Buyer in a Transaction under the
Agreement that have not been repurchased or liquidated pursuant to the
Agreement and have not been replaced with Substituted CMBS as permitted in
Paragraph 9(e) of the Agreement.  The
term “Purchased CMBS” with respect to any Transaction also shall include CMBS
delivered pursuant to Paragraph 4(a) of the Repurchase Agreement that have not
been repurchased or liquidated pursuant to the Agreement and have not been
replaced with Substituted CMBS as permitted in Paragraph 9(e) of the Agreement.


 


“Purchase Percentage”
shall mean, with respect to each Purchased CMBS, the Purchase Percentage set
forth on the Applicable Table corresponding to the Ratings of CMBS for such
Purchased CMBS (i) as of the Purchase Date and (ii) on each date on which there
is a change in the Applicable Table (except to the extent provided otherwise
with respect to Existing CMBS in Paragraph 6(b) of this Annex I).


 


“Related CMBS”
shall mean with respect to any Purchased CMBS, all CMBS issued by the Trust
that issued the Purchased CMBS.


 


“Related Hedge
Position” shall mean any Activity (as defined in the Institutional Account
Agreement) with Seller in which a Bear Stearns entity acts as a principal and
which (i) prior to the time such Activity is entered into, Seller
designates as a position that hedges a position in a specifically-identified
CMBS Ratings Category and (ii) Buyer and such other Bear Stearns entity
agree to accept in their respective sole discretion as being such a hedge.


 


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“Related Hedge
Agreement” shall mean any agreement with a Bear Stearns entity pursuant to
which a Related Hedge Position is created.


 


“Reset Date” shall
mean the date on which LIBOR is reset with respect to a CMBS Transaction, which
date shall be the fifth calendar day of each month, or if such date is not a
Business Day, the next succeeding Business Day.


 


“Responsible Officer”
shall mean an officer of each of Seller and Buyer listed on Schedule 1
of this Annex I, as such Schedule 1 may be amended from time to
time.


 


“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.


 


“Substituted CMBS”
shall mean CMBS that are substituted for Purchased CMBS pursuant to the terms
and conditions of Paragraph 9(e) of the Agreement.


 


“Termination Date”
shall mean August 14, 2005.


 


“Transaction Assets”
shall have the meaning set forth in Paragraph 13 of this Annex I.


 


“Trust” shall mean
the trust or other special purpose entity that issued any Purchased CMBS.


 


2.             (a)  Buyer
and Seller may enter into certain CMBS Transactions, subject to the terms of
the Agreement and the Institutional Account Agreement.  Each CMBS Transaction shall be subject to
the approval of Buyer in its sole discretion. 
Each CMBS Transaction shall constitute a Transaction under the
Agreement.  The transfer of each
Purchased CMBS to Buyer under the Agreement shall constitute a separate
Transaction and be subject to the terms and conditions set forth in the
Agreement.  Upon notice by Seller to
Buyer that Seller offers to sell such CMBS to Buyer at the Maximum Purchase
Price of such CMBS on the Purchase Date or such lesser price as Seller in its
sole discretion elects to request pursuant to the terms and conditions of the
Agreement, Buyer shall respond to such offer within five (5) Business Days of
the date notice is received by Buyer. 
If Buyer fails to respond within such 5 Business Days, such offer shall
be deemed to have been rejected. 
Notices received after 3:00 p.m. (New York time) shall be deemed to be
received on the following Business Day. 
All sales of CMBS must be completed within 30 days of Buyer’s acceptance
or Buyer shall be under no obligation to purchase such CMBS.  The Purchase Price shall be determined  by the Buyer in its sole discretion as of
the Purchase Date and shall equal the Maximum Purchase Price on the Purchase
Date or such lesser amount as Seller in its sole discretion elects to request
on the Purchase Date.


 


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(b)  Each offer
to sell CMBS pursuant to Subparagraph 2(a) of this Annex I (i) shall disclose
any confidentiality agreement or other agreement that might prevent Seller from
disclosing or limit Seller’s ability to disclose information to Buyer and (ii)
shall include a copy of any and all such agreements.  Seller shall use commercially reasonable efforts to add as
permitted recipients of such information Buyer, any other Bear Stearns entity
designated by Buyer and any transferee of an interest in such CMBS from any of
the foregoing, subject to such recipients agreeing to maintain confidentiality
of such information.  Prior to the
Purchase Date, Seller shall provide Buyer with the form of confidentiality
agreement that it proposes to use for such purposes.


 


(c)  Seller acknowledges that Buyer will not
enter into or reprice a Transaction with respect to a Purchased CMBS whose
rating is lower than BB-/Ba3 unless the holder of such Purchased CMBS would
have Affirmative Control or Contiguous Affirmative Control or unless Buyer, in
its sole discretion, accepts a written assignment of other control rights; all
such control rights to be exercised by Seller in accordance with Paragraph
25(a) of this Annex I.


 


3.             All accrued Price
Differentials incurred in connection with all CMBS Transactions in each
calendar month shall be due and payable to the Buyer on the next Reset
Date.  If the rating on a particular Purchased
CMBS is upgraded or downgraded and such upgrade or downgrade results in a
change in the CMBS Ratings Category of such Purchased CMBS, then the resulting
change in the Pricing Rate of such Purchased CMBS shall be effected
automatically on the first Reset Date subsequent to the date of such upgrade or
downgrade.


 


4.             All Purchased CMBS
shall be repurchased by Seller on the Repurchase Date set forth in the related
Confirmation, which shall be any date selected by Seller and approved by Buyer
in its sole discretion on or prior to the Termination Date.


 


5.             On the applicable
Repurchase Date, all Repurchase Prices and other amounts owed by Seller on such
Repurchase Date will be due and payable and Seller shall pay all such amounts
to Buyer.


 


6.             (a) Upon the request
of the Seller, Buyer may pay any Margin Excess Amount to Seller, subject to any
restrictions in the Netting Agreement. 
Paragraph 4(b) of the Repurchase Agreement shall not apply to CMBS
Transactions.


 


(b) Notwithstanding and
in addition to the provisions of Paragraph 4 of the Repurchase Agreement, (i)
if the rating on a particular Existing CMBS is upgraded or downgraded, and such
upgrade or downgrade results in a change in the CMBS Ratings Category of such
Existing CMBS, or (ii) upon the change in the number of Trusts related to
Transactions hereunder which results in a change in the Applicable Table or
(iii) upon a change in the Diversity Percentage which results in a change in
the Applicable Table, then (x) effective as of the date of such event the
Maximum Purchase Price of all affected Purchased CMBS shall equal the product
of the newly-applicable Purchase Percentage and the then-current Market Value
of such Purchased CMBS and (y) at the election of the Seller made within ten
Business Days or such longer period as may be agreed by Buyer if


 


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the change in the
Applicable Table results in an increase in the Purchase Percentage and on the
first Business Day following such notice, if the change in the Applicable Table
results in a decrease in the Purchase Percentage, all Purchased CMBS within the
applicable CMBS Ratings Category shall be repriced as provided below;


 


(c) Seller shall give
Buyer prompt notice of any change in the rating of a Purchased CMBS, but in any
event, within two (2) Business Days after Seller becomes aware of such
change.  Any resulting increase or
decrease in the Purchase Percentage resulting from a change in a CMBS Ratings
Category for such Purchased CMBS shall be applied on the first Business Day
following such notice;


 


(d) Notwithstanding and
in addition to the provisions of Paragraph 4 of the Repurchase Agreement, with
respect to CMBS that are repriced in accordance with Subparagraph (b) above,
effective with respect to an increase in the Purchase Percentage as of the
first Business Day after Seller gives notice of its election to reprice, and
effective as of the first Business Day following an event that causes a
decrease in the Purchase Percentage (each, a “Repricing Date”), if the
Purchase Price is less than the then outstanding Purchase Price, then the
Seller shall repay to Buyer the difference between the recalculated Purchase
Price and the then outstanding Purchase Price on such Repricing Date.  Notwithstanding the occurrence of a
Repricing Date hereunder, the Repurchase Date for each Transaction will be as
set forth in the initial Confirmation. 
The resulting change in the Pricing Rate of such Purchased CMBS shall be
effected automatically on the first Reset Date subsequent to such Repricing
Date.


 


7.             The Amount of
Transactions shall not exceed, in the aggregate, the Maximum Aggregate Purchase
Price at any time.  If the Amount of
Transactions exceeds the Maximum Aggregate Purchase Price, Seller shall
repurchase sufficient Purchased CMBS to reduce the Amount of Transactions to
not greater than the Maximum Aggregate Purchase Price not later than the one
Business Day after notice from Buyer (which date shall constitute a Repurchase
Date with respect to the Purchased CMBS to be repurchased hereunder and for the
purpose of Section 11(ii) of the Repurchase Agreement) provided that any such
notice given after 10 A.M. New York City time shall be deemed to have been
given on the next succeeding Business Day. 
Seller may select the Purchased CMBS to be repurchased pursuant to this
Paragraph 7; provided, however, that after such repurchase, the repurchased
CMBS shall not be Purchased CMBS for the purpose of determining the Applicable
Table or for any other purpose.


 


8.             [RESERVED]


 


9.             Seller shall deliver
to Buyer all of the CMBS proposed to be purchased hereunder together with a
complete set of all transfer documents to be completed by Buyer and executed
copies of any transfer documents to be completed by Seller, in either case in
form sufficient to allow transfer and registration of such Purchased CMBS to
Buyer no later than the proposed Purchase Date for the relevant CMBS.  Seller shall deliver to Buyer the related
Prospectus or Private Placement Memorandum at least two Business Days prior to
Buyer’s purchase and shall deliver the related Pooling and Servicing Agreement
no more than two Business Days after Seller’s receipt of same.  Seller shall


 


9

















 


deliver to Buyer no later
than the proposed Purchase Date for the relevant CMBS such documentation as
Buyer may reasonably request to effect or confirm Buyer’s right to exercise
Affirmative Control with respect to such CMBS after an Event of Default by
Seller in accordance with Paragraph 25(a) of this Annex I.  Buyer shall have the right to cancel any
CMBS Transaction and Seller agrees to pay to Buyer any Purchase Price  paid
by Buyer plus any accrued Price Differential  within fifteen Business Days
after written notice is received by Seller from Buyer (which date shall
constitute a Repurchase Date for the purpose of Section 11(ii) of the
Repurchase Agreement) if a Trustee (in the case of physical Purchased CMBS)
and/or Depository Trust Company (in the case of book entry Purchased CMBS)
fails or refuses to transfer or register the Purchased CMBS into the name of
Buyer.


 


10.           Seller shall provide to
Buyer monthly, or with such greater frequency as requested by the Buyer,
Purchased CMBS performance data, including, without limitation, (i) trustee
reports for the Purchased CMBS, (ii) CMSLP-prepared reports: (a) CMBS monthly
performance reports, (b) assets under review (AUR) reports, (c) monetary
defaults added to special servicing, (d) schedule of realized losses and
appraisal reduction events, and (e) corrected loan report; and (iii) such other
reports as may be reasonably requested by the Buyer from time to time,
including, without limitation, the notices and other information provided for
in Paragraph 16(c) of this Annex I. 
Monthly, the Seller will furnish to the Buyer information describing any
other event, circumstance or condition that has resulted, or has a possibility
of resulting, in the Seller’s good faith discretion, in a Material Adverse
Effect.  To the extent the disclosure of
any of the foregoing information is subject to any confidentiality agreement or
other agreement limiting disclosure of such information (other than a
confidentiality agreement or such other agreement entered into on or before the
Purchase Date), Seller shall so notify Buyer and, if permitted under the terms
of such agreement, shall disclose such information to Buyer conditioned upon
the execution by Buyer of a confidentiality agreement in a form which would
permit Seller to disclose such information. 
Seller shall use commercially reasonable efforts to add as permitted
recipients of such information Buyer and any of Buyer’s Affiliates specifically
designated by Buyer (and solely for use by Buyer and such Affiliates in
connection with the transactions contemplated hereby or in any Related Hedge
Agreement and for no other purpose) and any transferee of an interest in such
CMBS from Buyer.  All such recipients
and transferees shall execute confidentiality agreements.  In addition, to the extent it is legally
permitted to do so, and subject to the execution by Buyer of a confidentiality
agreement in a form which would permit Seller to do so, Seller will make
available to Buyer any password in Seller’s possession permitting access to
electronic services upon which information relating to the Related CMBS is
maintained as may be reasonably required by Buyer to facilitate Buyer’s
determination of the Market Value of any Purchased CMBS (including the cash
flows due thereon).


 


11.           (a) The first sentence
of Paragraph 3(c) is hereby replaced with the following:


 


“In the case of
Transaction terminable upon demand, such demand shall be made by Buyer or
Seller, by telephone or otherwise on a Business Day of the recipient of the
demand.  If such demand is made prior to
10:00 A.M. New York time, termination shall be effective on the same Business
Day such demand is made; if such demand is made


 


10

















 


after 10:00 A.M. New York
time, termination shall be effective at 10:00 A.M. New York time on the Business
Day following such demand.  After such
demand, another later time may be agreed to by Buyer and Seller if confirmed in
writing by both.


 


(b)  The second sentence of Paragraph 3(c) is
hereby amended by replacing the words “On the date specified in such demand”
with the words “At the time specified in such demand (or such later time as
agreed to in writing)”.


 


12.           Paragraph 4(d) of the
Repurchase Agreement is deleted and “(d) [OMITTED]” substituted therefor and
Paragraph 4(a) of the Repurchase Agreement is deleted and the following
substituted therefor:


 


“(a)         Notwithstanding anything in the
Agreement to the contrary, if on any day there is a Margin Deficit Amount with
respect to any CMBS Ratings Category, then Buyer may by notice to Seller
require Seller to, and Seller shall (i) transfer to Buyer sufficient cash
or additional securities acceptable to Buyer in its sole discretion, which cash
or additional securities shall constitute Additional Purchased CMBS within the
meaning of Paragraph 2(b) of the Repurchase Agreement, and/or (at Seller’s
election) or (ii) pay such amount of the Purchase Price so that, after
such transfer(s) and/or payment of Purchase Price, there is no Margin Deficit
Amount with respect to such CMBS Ratings Category.”


 


Solely for the purpose of
determining the Margin Deficit Amount and the Margin Excess Amount, Additional
Purchased CMBS shall be treated as Purchased CMBS.


 


Seller shall satisfy any
demand to cure a Margin Deficit Amount in accordance with this Paragraph 4(a)
as follows.  If such demand is made
prior to 5:00 P.M. New York time, such demand shall be satisfied not later than
the close of the Federal Reserve wire for money transactions on the Business
Day following such demand.


 


Demand by Buyer for the
delivery of cash or Additional Purchased CMBS pursuant to Paragraph 4(a) may be
made orally, if promptly confirmed in writing.


 


Any cash transferred to
Buyer by Seller to pay a Margin Deficit Amount shall be credited to the
Purchase Price on the date of payment.


 


13.           Paragraph 6 of the
Repurchase Agreement is deleted and replaced with the following:


 


“Although the parties
intend that all Transactions hereunder be sales and purchases and not loans, in
the event that any such Transactions are deemed to be loans, Seller shall be
deemed to have pledged to Buyer as security for the performance by Seller of
its obligations under each such Transaction and shall be deemed to have granted
to Buyer a security interest in, all of the Purchased CMBS with respect to all
Transactions hereunder, all Income thereon, and all other proceeds with respect
thereto, all books, records and files relating to any Purchased CMBS, any other
accounts, payments, rights to payment and general intangibles relating to any
Purchased CMBS, all “securities accounts” (as defined in Section 8-501(a) of
the Uniform Commercial Code) to which any or all of the Purchased CMBS are or
may be credited, in all instances, whether now owned or


 


11

















 


hereafter acquired, now
existing or hereafter created (collectively, the “Transaction Assets”).”


 


14.           Paragraph 9 of the Repurchase
Agreement is amended to insert the following three paragraphs at the end
thereof:


 


(c)  In the case of any Transaction for which the
Repurchase Date is other than the business day immediately following the
Purchase Date and with respect to which Seller does not have any existing right
to substitute substantially the same Securities for the Purchased Securities,
Seller shall have the right, subject to the proviso to this sentence, upon
notice to Buyer, which notice shall be given at or prior to 10 a.m. (New York
time) on such business day, to substitute substantially the same Securities for
any Purchased Securities; provided, however, that Buyer may elect, by the close
of business on the business day notice is received, or by the close of the next
business day if notice is given after 10 a.m. (New York time) on such day, not
to accept such substitution.  In the
event such substitution is accepted by Buyer (the “Substitution Date”),
such substitution shall be made by Seller’s transfer to Buyer of such other
Securities and Buyer’s transfer to Seller of such Purchased Securities, and
after such substitution, the substituted Securities (the “Substituted CMBS”)
shall be deemed to be Purchased Securities. 
If Buyer elects not to accept such substitution, Buyer shall offer
Seller the right to terminate the Transaction.


 


(d)  If Seller exercises its right to substitute
or terminate under sub-paragraph (c), Seller shall be obligated to pay to
Buyer, by the close of the business day of such substitution or termination, as
the case may be, an amount equal to (A) Buyer’s actual cost (including all
fees, expenses and commissions) of (i) terminating such Transaction and/or entering
into a replacement transaction or transactions; (ii) entering into or
terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like transactions with third parties in connection
with or as a result of such substitution or termination, and (B) to the extent
Buyer determines not to enter into replacement transactions, the loss incurred
by Buyer directly arising or resulting from such substitution or
termination.  The foregoing amounts
shall be solely determined and calculated by Buyer in good faith, and provided
promptly to Seller.


 


(e)
Notwithstanding anything in the Agreement to the contrary and for so long as no
Seller Default or Seller Event of Default under the Agreement has occurred and
is continuing, Seller may substitute for Purchased CMBS on a one-to-one basis
other CMBS that are acceptable to Buyer in its sole discretion provided that
the Substituted CMBS is of the same or higher rating and equal or higher Market
Value on the date of such substitution (the “Substitution Date”).  In the event such substitution is accepted
by Buyer, (i) for the purpose of determining the Purchase Percentage, the
Buyer’s Margin Ratio and the Pricing Rate, the Substituted CMBS shall be deemed
to have a Ratings of CMBS equal to the Ratings of CMBS for the Substituted CMBS
on the Substitution Date, and (ii) the


 


12

















 


Substituted
CMBS shall be counted both for the purpose of determining the number of Trusts
and for the purpose of determining the Diversity Percentage.


 


15.           Paragraph 10 of the Repurchase
Agreement is amended to insert prior to the final sentence thereof the
following:


 


“In addition, Seller represents to Buyer that


 


(a)  Organization,
Etc.  Seller is duly formed, validly
existing and in good standing under the laws and regulations of the state of
Seller’s formation and is duly licensed, qualified, and in good standing in all
other jurisdictions in which the nature of the business conducted by it makes
such qualification necessary. Seller has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets, 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, the Netting Agreement
and the Related Hedge Agreements.  The
Seller has no Subsidiaries.


 


(b)  Financial
Information.  All financial data
(other than projections and pro forma financial information) concerning the
Purchased CMBS that has been delivered by or on behalf of Seller to Buyer in
connection with the Transaction was, at the time so delivered, correct in all
material respects, and all projections and pro forma financial information so
delivered were based on good faith estimates and assumptions believed by Seller
to be reasonable at the time when made. 
All balance sheets and statements of cash flows of the Guarantor and its
consolidated Subsidiaries constituting part of the consolidated financial
statements contained in (a) Guarantor’s annual report on Form 10-K for the year
ended December 31, 2002 and (b) Guarantor’s quarterly report on Form 10-Q for
the first quarter of the year ended December 31, 2003, in each case as filed
with the SEC and the Guarantor’s quarterly report on Form 10-Q for the second
quarter for the year ended December 31, 2003, (collectively, the “Recent
Financial Statements”), were prepared in conformity with GAAP except as set
forth therein. Since June 30, 2003, there has been no material adverse change
in the consolidated business, operations or financial condition of the
Guarantor and its consolidated Subsidiaries taken as a whole from that set
forth in the Recent Financial Statements nor is Seller aware of any state of
facts which (without notice or the lapse of time) would or could result in any
such material adverse change or could have a Material Adverse Effect.  Neither the Guarantor or Seller has, on the
date of this Agreement, any liabilities, direct or indirect, fixed or
contingent, matured or unmatured, known or unknown, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, said Recent Financial Statements (except (a) liabilities
that have arisen since the date of such Recent Financial Statements in the
ordinary course of business and that are similar in nature and amount to the
liabilities that arose during the comparable period of time in the immediately
preceding fiscal period, (b) liabilities incurred in the ordinary course of
business that are not required by GAAP to be reflected on such Recent Financial
Statements and that are not, in the aggregate, material, and (c) liabilities
assumed pursuant to the Agreement, the Netting Agreement and the Related Hedge
Agreements, and at the present time there are no material unrealized or


 


13

















 


anticipated losses
from any loans, advances or other commitments of Seller except as heretofore
disclosed to the Buyer in writing or in the Recent Financial Statements.


 


(c)  Litigation.  There is no action, suit, proceeding,
investigation, or arbitration pending or, to the best knowledge of Seller,
threatened against Seller or Guarantor, or other legal or arbitrable  proceedings affecting Seller or any of the
Transaction Assets or any other properties of the Seller before any
Governmental Authority which (i) questions or challenges the validity or enforceability
of the Agreement, the Netting Agreement or any Related Hedge Agreement 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 $1,000,000,
(iii) individually or in the aggregate, if adversely determined, would have a
Material Adverse Effect, or (iv) requires filing with the SEC in accordance
with its regulations.


 


(d)  No
Broker.  Seller has not dealt with
any broker, investment banker, agent, or other person (other than Buyer or an
Affiliate of Buyer) who may be entitled to any commission or compensation in
connection with the sale of Purchased CMBS hereunder.


 


(e)  No
Default.  No Default or Event of
Default has occurred or is continuing under or with respect to the Agreement,
the Guaranty, the Netting Agreement or any Related Hedge Agreement.


 


(f)  Taxes.  Seller has filed or caused to be filed all
tax returns which to the knowledge of Seller would be delinquent if they had
not been filed on or before the date hereof and has paid all taxes shown to be
due and payable on or before the date hereof on such returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it and any of its assets by any governmental
authority; 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.


 


(g)  ERISA
Matters.  Seller is not, and it is
not using the assets of, an employee benefit plan subject to Section 406 of
ERISA, a plan subject to Section 4975 of the Code, a plan subject to another
law, regulation or restriction materially similar to Section 406 of ERISA or
Section 4975 of the Code, or an entity the assets of which constitute assets of
any such plans by reason of investment by such plans in the entity (including
for this purpose, the general account of a life insurance company), because no
class of equity interest in Seller is held to the extent of 25 % or more (as
measured by value) by one or more so-called “benefit plan investors”, after
disregarding the interests in Seller held by certain controlling persons, or
because of another exception set forth in U. S. Department of Labor Regulation
Section 2510.3-101 (the “Plan Assets Regulation”). The parties hereto
agree that the foregoing representation and covenant and the terms used therein
shall be interpreted in a manner consistent with the Plan Assets Regulation.


 


(h)  Authorization,
Compliance.  The execution and
delivery of, and the performance by Seller of its obligations under this
Agreement, the Netting Agreement or any Related Hedge Agreement to which it is
a party (a) are within Seller’s powers, (b) have


 


14

















 


been duly
authorized by all requisite action, (c) do not violate any provision of
applicable law, rule or regulation, or any order, writ, injunction or decree of
any court or other Governmental Authority, or its organizational documents, (d)
do not violate any indenture, agreement, document or instrument to which Seller
is a party, or by which it or any of its properties, any of the Transaction
Assets is bound or to which it is subject and (e) are not in conflict with, do
not result in a breach of, or constitute (with due notice or lapse of time or
both) a default under, or except as may be provided by this Agreement, the
Netting Agreement or any Related Hedge Agreement, result in the creation or
imposition of any Lien upon any of the property or assets of Seller pursuant
to, any such indenture, agreement, document or instrument.  Seller is not required to obtain any
consent, approval or authorization from, or to file any declaration or
statement with, any Governmental Authority in connection with or as a condition
to the consummation of the Transaction contemplated herein and the execution,
delivery or performance of this Agreement, the Netting Agreement or any Related
Hedge Agreement to which it is a party.


 


(i)  Purchased
CMBS.


 


(i)       Immediately
prior to the purchase of any Purchased CMBS by Buyer from Seller, such
Purchased CMBS is free and clear of any lien, claim, encumbrance or impediment
to transfer, and Seller is the record and beneficial owner of and has good and
marketable title or right to sell and transfer such Purchased CMBS to Buyer
and, upon transfer of such Purchased CMBS to Buyer, Buyer shall be the owner of
such Purchased CMBS free of any adverse claim, lien or other encumbrance
created or suffered by Seller.


 


(ii)      As of
the applicable Purchase Date, all consents to the entry into and performance of
the Transactions provided for in the Agreement have been obtained and are in
full force and effect.


 


(iii)     The
provisions of this Agreement are effective to either constitute, as of the
Purchase Date, a sale of Purchased CMBS to the Buyer or, if the Transactions
are deemed not to be sales, to create in favor of the Buyer a valid security
interest in all right, title and interest of Seller in, to and under the
Transaction Assets.


 


(j)  Chief
Executive Office.  On the date of execution
of this Agreement, Seller’s chief executive office is, and has been, located at
11200 Rockville Pike, Rockville, MD 20852. 
Seller’s sole jurisdiction of organization is, and at all times has
been, the State of Maryland.  Seller has
no trade name.  During the preceding
five years, Seller has not been known by or done business under any other name,
corporate or fictitious.


 


(k)  Books
and Records.  The location where
Seller keeps its current books and records, including all records related to
the Purchased CMBS, is its chief executive office.


 


(l)  Enforceability.  This Agreement, the Netting Agreement and
any Related Hedge Agreements executed and delivered by Seller in connection
herewith are legal, valid


 


15

















 


and binding
obligations of Seller and are enforceable against Seller in accordance with
their terms except as such enforceability may be limited by (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors rights generally and (ii) general principles of
equity.


 


(m)  Ability
to Perform.  Seller does not
believe, nor has any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement, the Netting Agreement or any
Related Hedge Agreement to which it is a party on its part to be performed.


 


(n)  Indebtedness.  Seller has no Indebtedness for borrowed
money.


 


(o)  Accurate
Disclosure.  The information,
reports, financial statements, exhibits and schedules furnished in writing by
or on behalf of Seller and the Guarantor to the Buyer in connection with the
Transactions, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading.


 


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


 


(q)   Investment Company.  Seller is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.


 


(r)  Solvency.  As of the related Purchase Date and
immediately after giving effect to the Transaction, the fair value of the
assets of Seller is greater than the fair value of the liabilities (including,
without limitation, contingent liabilities if and to the extent required to be
recorded as a liability on the financial statements of Seller in accordance
with GAAP) of Seller and Seller is solvent and, after giving effect to the
transactions contemplated by the Agreement, the Netting Agreement and the
Related Hedge Agreement, will not be rendered insolvent or left with an
unreasonably small amount of capital with which to conduct its business and
perform its obligations.  Seller does
not intend to incur, nor believes that it has incurred, debts beyond its
ability to pay such debts as they mature. 
Seller is not contemplating the commencement of an insolvency,
bankruptcy, liquidation, or consolidation proceeding or the appointment of a
receiver, liquidator, conservator, trustee, or similar official in respect of
itself or any of its property.


 


(s)  RESERVED.


 


(t)  No
Reliance.  Seller has made its own
independent decision to enter into the Agreement, the Netting Agreement and any
Related Hedge Agreement and the Transactions and as to whether such
Transactions are appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. 
Seller is not relying upon any


 


16

















 


advice from Buyer as to
any aspect of the Transactions, including without limitation, the legal,
accounting or tax treatment of such Transactions.


 


16.           On and as of the date
of the Agreement and until the Agreement is no longer in force with respect to
the Transaction, Seller covenants as follows:


 


(a)  Preservation of Existence; Compliance
with Law.  Seller shall:


 


(i)           Preserve
and maintain its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business;


 


(ii)          Comply
with the requirements of all applicable laws, rules, regulations and orders,
whether now in effect or hereafter enacted or promulgated by any applicable
Governmental Authority (including, without limitation, all environmental laws)
in all material respects;


 


(iii)         Maintain
all licenses, permits or other approvals necessary for Seller to conduct its
business and to perform its obligations under the Agreement, the Netting
Agreement or any Related Hedge Agreement, and shall conduct its business
strictly in accordance with applicable law; and


 


(iv)        Permit
representatives of the Buyer, upon reasonable notice (unless an Event of Default
shall have occurred and is continuing, in which case, no prior notice shall be
required), during normal business hours, to examine, copy and make extracts
from its books and records and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Buyer.


 


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


 


(c)  Notice
of Proceedings or Adverse Change. 
Seller shall give notice to the Buyer immediately after a Responsible
Officer of Seller has any knowledge of:


 


(i)           the
occurrence of any Default or Event of Default;


 


(ii)          any
litigation or proceeding that is pending or threatened against (a) Seller in
which the amount involved exceeds $100,000 and is not covered by insurance, in
which injunctive or similar relief is sought, or which, would reasonably be
expected to have a Material Adverse Effect and (b) any litigation or
proceeding that is pending or threatened in connection with any of the
Transaction Assets, which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;


 


(iii)         with
thirty days advance notice of any change in Seller’s name, principal office or
place of business or jurisdiction;


 


17

















 


(iv)        and,
as soon as reasonably possible, notice of any of the following events:


 


(A) any material change in accounting policies or
financial reporting practices of Seller; and


 


(B) promptly upon receipt of notice or knowledge of
any Lien or security interest (other than security interests created by the
Agreement, the Netting Agreement or any Related Hedge Agreement) on, or claim
asserted against, any of the Transaction Assets; and


 


(v)         Promptly,
but no later than five (5) Business Days after Seller receives any of the same,
deliver to the Buyer a true, complete, and correct copy of any material
schedule, report, notice, or any other material document delivered to the
Seller by any Person pursuant to, or in connection with, any of the Transaction
Assets.


 


(d)  Further
Assurances.  Seller shall execute
and deliver to the Buyer all further documents, financing statements,
agreements and instruments, and take all further action that may be required
under applicable law, or that the Buyer may reasonably request, in order to
effectuate the transactions contemplated by the Agreement, the Netting
Agreement or any Related Hedge Agreement, without limiting any of the foregoing,
to grant, preserve, protect and perfect the validity of the Buyer’s ownership
of the Purchased CMBS pursuant to this Agreement, and if the Transactions are
characterized by a court as a loan, the validity and first-priority of the
security interests created hereby.  From
and after the initial Purchase Date, Seller shall do all things necessary to
preserve Buyer’s ownership of the Purchased CMBS.  Without limiting the foregoing, Seller will comply in all
material respects, with all rules, regulations, and other laws of any
Governmental Authority and cause the Purchased CMBS held under the Agreement to
comply in all material respects, with all applicable rules, regulations and
other laws.  Seller will not allow any
default for which Seller is responsible to occur under any of the Purchased
CMBS, or the Agreement, the Netting Agreement or any Related Hedge Agreement
and Seller shall fully perform or cause to be performed when due all of its
obligations under any Purchased CMBS or the Agreement, the Netting Agreement or
any Related Hedge Agreement.


 


(e)  True
and Correct Information.  All
written information, reports, exhibits, schedules, financial statements or
certificates of Seller or any of its Affiliates or any of their officers
furnished to Buyer hereunder and furnished to Buyer during Buyer’s diligence of
Seller will be true and complete and will not omit to disclose any material
facts necessary to make the statements therein or herein, in light of the
circumstances in which they are made, not misleading.  All required financial statements, information and reports to be
delivered by Seller to the SEC shall be prepared in accordance with GAAP, or if
applicable, the appropriate SEC accounting requirements.


 


(f)  Books
and Records.  Seller shall, to the extent
practicable, maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Transaction Assets in the event of the destruction of the


 


18

















 


originals thereof), and
keep and maintain or obtain, as and when required, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Transaction Assets.


 


(g)  Illegal
Activities.  Seller shall not engage
in any conduct or activity that could subject its assets to forfeiture or
seizure.


 


(h)  Material
Change in Business.  Seller shall
not make any material change in the nature of its business as carried on at the
date hereof except as contemplated by this Repurchase Agreement or Seller’s
organizational documents.


 


(i)  Disposition
of Assets; Liens.  From and after
the applicable Purchase Date, Seller shall not create, incur or assume any
mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on
any of the Transaction Assets, whether real, personal or mixed, now or
hereafter owned, other than the Liens created in connection with the
transactions contemplated by the Agreement or in the Netting Agreement; nor
shall Seller (i) cause or allow any of the Purchased CMBS to be sold, pledged,
assigned or transferred or (ii) prior to the repurchase hereunder engage in any
repurchase transactions or similar transactions with respect to the Purchased
CMBS (or any of them) with any Person other than the Buyer.


 


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


 


(k)  ERISA
Matters.  Seller represents and
covenants that as of the date hereof and for so long as it is a party to the
Agreement or any Transaction hereunder, it is not, and it is not using the
assets of, an employee benefit plan subject to Section 406 of ERISA, a plan
subject to Section 4975 of the Code, a plan subject to another law, regulation
or restriction materially similar to Section 406 of ERISA or Section 4975 of
the Code, or an entity the assets of which constitute assets of any such plans
by reason of investment by such plans in the entity (including for this
purpose, the general account of a life insurance company),  because no class of equity interest in Seller
is held to the extent of 25 % or more (as measured by value) by one or more
so-called “benefit plan investors”, after disregarding the interests in Seller
held by certain controlling persons, or because of another exception set forth
in U. S. Department of Labor Regulation Section 2510.3-101 (the “Plan Assets
Regulation”). The parties hereto agree that the foregoing representation
and covenant and the terms used therein shall be interpreted in a manner
consistent with the Plan Assets Regulation.


 


(l)  Investment
Company.  Seller shall not take any
action to be or become, and shall use its best efforts to avoid being or
becoming, at any time prior to the payment in full of the Repurchase Price and
any other amount payable under the Agreement, an open-end investment company,
unit investment trust, closed-end investment company or face-


 


19

















 


amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended.


 


(m)  Subsidiaries.  The Seller shall not form any Subsidiaries.


 


(n)  Separateness.  Seller shall (i) comply with the provisions
of its organizational documents (including articles of incorporation and
by-laws); (ii) do all things necessary to observe organizational formalities
and to preserve its existence, and shall not amend, modify or otherwise change
its organizational documents (including articles of incorporation and by-laws),
or suffer same to be amended, modified or otherwise changed, without the prior
written consent of Buyer; (iii) maintain all of its books, records and bank
accounts separate from those of its Affiliates; (iv) 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), correct any known misunderstanding
regarding its status as a separate entity, conduct business in its own name,
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;
and (v) 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.


 


(o)  Liquidity.  The Guarantor and its consolidated
subsidiaries (including Seller) (the “Seller Group”), as  a whole, shall, commencing with the Purchase
Date of the first CMBS Transaction entered into hereunder, maintain at least
$10,000,000 in cash and market value unencumbered investment grade rated
securities acceptable to the Buyer in its reasonable discretion (such
maintenance, the “Liquidity Requirement”); provided, that any failure to
comply with the Liquidity Requirement shall not be an Event of Default
hereunder so long as the Seller does not acquire any CMBS under this Agreement
at any time when the Seller Group is not in compliance with the Liquidity
Requirement.  The Seller Group shall
provide to the Buyer quarterly cash flow projections based on the Seller
Group’s fiscal quarters, evidencing projected maintenance of the Liquidity
Requirement.  In the event that the
Seller Group is not in compliance with the Liquidity Requirement and a
Transaction is outstanding, the Seller and the Buyer will mutually agree on a
mechanism to trap cash until the Seller Group is in compliance with the
Liquidity Requirement that was in effect on the Purchase Date for the related
transaction.  In the event that a CDO is
not closed (regardless of reason) by the date (such date, the “Liquidity
Trigger Date”) that is the earlier of (a) nine months from January 14, 2003
or (b) the date that is ten (10) Business Days after the date that all of the
investment grade ratings contemplated by the Letter of Intent, dated as of
November 27, 2002, between the Buyer and CRIIMI MAE Inc. (with its affiliates)
have been obtained, then the Liquidity Requirement shall increase by $2,500,000
per calendar quarter following the Liquidity Trigger Date.  The Liquidity Requirement shall terminate
upon the closing of the CDO or repayment in full of the outstanding Repurchase
Price under that certain Repurchase Agreement, dated as of January 14, 2003,
among the Buyer, CRIIMI NEWCO LLC and CBO REIT II, Inc., as amended from time
to time.


 


17.           If, as of the date CMBS
are offered for sale to Buyer pursuant to the Agreement, the pool of mortgage
loans underlying such CMBS is not qualified under sections 860A through 860G of
the Code as a real estate mortgage investment conduit (“REMIC”), then
Seller shall so notify Buyer as part of the offer to sell such CMBS to Buyer pursuant
to


 


20

















 


Paragraph 2 of this Annex
I. 
If at any time after the Purchase Date with respect to a
Purchased CMBS the pool of mortgage loans relating to such Purchased CMBS which
was a REMIC when purchased ceases to be qualified as a REMIC, then Seller shall
give Buyer notice of such change in qualification within five (5) Business Days
after Seller becomes aware of such change.


 


18.           The parties acknowledge
and agree that any sale pursuant to Paragraph 11 of the Repurchase Agreement,
may be a private sale, which shall be deemed commercially reasonable and Bear
Stearns shall have the right to purchase the Securities, acting in good faith.


 


19.           The words “obtained
from a generally recognized source or the most recent closing bid quotation
from such a source” in Paragraph 11(d)(i)(B) of the Repurchase Agreement, shall
be replaced with the words “determined by Bear Stearns, in its sole discretion,
exercised in good faith”.


 


20.           Paragraph 11 of the
Repurchase Agreement is amended to delete the word “or” before (vii) and to add
the following after “obligations hereunder” and prior to “(each an “Event of
Default”)”:


 


(viii) Seller fails to
make any payment of Price Differential or Margin Deficit after such payment becomes
due; (ix) Seller fails to comply with any material obligation or covenant to
Buyer set forth in Paragraph 16(a)(i), (ii) and (iii), (g), (i), (k), (l) or
(n); (x) any default in the performance or breach by Seller of any other
covenant or other agreement of the Seller in the Agreement (and not contained
in the foregoing clause (ix)) and if such default shall be capable of being
remedied, such failure to observe or perform shall continue unremedied for a
period of 10 Business Days after (a) the Seller has actual knowledge of such
default or (b) Buyer notifies Seller of such default; (xi) the Guarantor shall
be in default of its payment obligations or covenants under the Guaranty; (xii)
Seller shall be in default under any other agreement for borrowed money
(including for this purpose any repurchase or reverse repurchase agreement) to
which it is a party which default entitles the holder to accelerate the
indebtedness thereunder; (xiii) an Event of Default shall occur and be
continuing under any “Repurchase Document” as defined in that certain
Repurchase Agreement, dated as of January 14, 2003, between Buyer and CRIIMI
NEWCO LLC and CBO REIT II, Inc., as the same may be further amended or
supplemented from time to time; (xiv) a judgment or judgment for the payment of
money in excess of $100,000 shall be rendered against Seller by one or more
courts, administrative tribunals or other bodies having jurisdiction and the
same shall not be satisfied, discharged (or provision shall not be made for
such discharge) or bonded, or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof, and Seller shall not,
within said period of thirty (30) days, or such longer period during which
execution of the same shall have been stayed or bonded, appeal therefrom and
cause the execution thereof to be stayed during such appeal; (xv) a judgment or
judgment for the payment of money in excess of $1,000,000 shall be rendered
against Guarantor by one or more courts, administrative tribunals or


 


21

















 


other bodies having
jurisdiction and the same shall not be satisfied, discharged (or provision
shall not be made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within 30 days from the date of entry thereof, and the
Guarantor shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed or bonded,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or (xvi) a Purchased CMBS with a rating of lower than BB-/Ba3 is
subject to a Transaction hereunder and the holder of such Purchased CMBS does
not have Affirmative Control or Contiguous Affirmative Control, unless Buyer,
at its sole discretion, accepts a written assignment of other control rights.


 


21.           Seller may elect to
terminate any Transaction prior to the applicable Repurchase Date.  Subject to the last sentence of the
succeeding paragraph, if the Seller repurchases any Purchased CMBS prior to the
Repurchase Date applicable to such Purchased CMBS, Seller shall give five (5)
Business Days’ notice and shall pay a termination fee (the “Exit Fee”),
which shall be calculated as the sum of (a) the product of (i) the Repurchase Price
of the related Purchased CMBS multiplied by (ii) 0.06% times the number of
whole and partial months remaining until the Repurchase Date applicable to such
Purchased CMBS, plus (b) any costs, losses, damages or fees incurred in
connection with any hedge related to such Purchased CMBS entered into or
unwound by Buyer in contemplation of such termination.


 


In connection with its
election, the Seller shall pay the Exit Fee with respect to all Purchased CMBS
transferred to Seller on any such Repurchase Date that precedes the original
Repurchase Date applicable to such Purchased CMBS.  No Exit Fee shall be payable by Seller if Seller elects to
accelerate a Repurchase Date in connection with (i) an Event of Default where
the Buyer is the defaulting party, (ii) the sale of such Purchased CMBS to
Buyer or an Affiliate of Buyer, (iii) the transfer of such Purchased CMBS into
a securitization for which the Buyer or an Affiliate of the Buyer is acting as
a “lead manager”, (iv) a repricing pursuant to Paragraph 6 of Annex I, (v) a
substitution pursuant to Paragraph 9 of the Repurchase Agreement, or (vi) a
repurchase pursuant to Paragraph 7 of Annex I. 
In addition, no Exit Fee shall be payable by the Seller (i) for any
Transaction with a Repurchase Date of six (6) months or less from the Purchase
Date of such Transaction or (ii) if the Buyer and the Seller agree, as of the
Purchase Date for any Transaction, that no Exit Fee shall be payable with
respect to such Transaction, as noted in the related Confirmation.


 


22.           The obligations of the
Seller from time to time to pay the Repurchase Price and all other amounts due
under the Agreement shall be full recourse obligations of the Seller.


 


23.           Seller’s obligations
under the Agreement, the Institutional Account Agreement and the Related Hedge
Agreements consist of a single obligation. 
If an Event of Default shall occur and be continuing, all Purchased
CMBS, each Related Hedge Position, all cash and other property held pursuant to
the Agreement, the Institutional Account Agreement, the Netting Agreement and
the Related Hedge Agreements (including but not limited to all principal and
interest payments received by Buyer as the owner of the Purchased CMBS), and
all payments and performance due under the Agreement, the Institutional Account


 


22

















 


Agreement, the Netting
Agreement and the Related Hedge Agreements may be utilized by Buyer to satisfy
Seller’s obligations under the Agreement, the Institutional Account Agreement,
the Netting Agreement and the Related Hedge Agreements.


 


24.           Notwithstanding
anything to the contrary in the Agreement, Buyer shall not be deemed to have
waived any right which it may have or be deemed to have under
Section 506(a), 506(b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount due and owing under the
provisions of the Agreement.  No
reference in this Agreement to a security interest, lien or the like shall be
construed to negate the parties’ intent that all Transactions shall constitute
a sale by Seller and a purchase by Buyer of the related Purchased CMBS, and any
such references are contained herein solely to protect Buyer’s interests should
a court determine that any Transaction should be treated as a loan.


 


25.           (a) Notwithstanding any
provision in the Agreement or the Institutional Account Agreement to the
contrary, for so long as no Event of Default has occurred (or if occurred, has
not been waived) with respect to Seller under the Agreement, Buyer grants Seller
a license to exercise Affirmative Control or Contiguous Affirmative Control, as
applicable, and any and all other voting or other control rights held by Buyer,
with respect to the Purchased CMBS rated “BB” or lower or unrated, and pursuant
to such license Seller shall have the sole and exclusive right to exercise
Affirmative Control or Contiguous Affirmative Control, as applicable, and any
and all other voting or other control rights held by Buyer with respect to the
Purchased CMBS rated “BB” or lower or unrated. 
Upon the occurrence and continuance of an Event of Default with respect
to Seller, the foregoing license shall terminate automatically, and all rights
of Affirmative Control shall automatically re-vest in Buyer until such time, if
any, as such Event of Default is waived by Buyer in its sole discretion by
written notice to Seller.  Buyer and
Seller shall enter into such agreements, give such notices and obtain such
acknowledgements as may be necessary or desirable for Seller to have the right
to exercise Affirmative Control prior to the occurrence of any Event of Default
and for Buyer to have the right to exercise Affirmative Control upon the
occurrence of such Event of Default on a Trust by Trust basis.  This Paragraph 25(a) shall survive any transfer
(including by way of pledge, sale, hypothecation, repurchase agreement or other
means) by Buyer of the Purchased CMBS or any interest in the Purchased CMBS and
shall be binding on any transferee of the Purchased CMBS and Buyer shall notify
any purchaser of the Purchased CMBS of this provision to the extent such
transferee would otherwise have such rights.


 


(b) Seller shall
indemnify and hold Buyer harmless from and against any and all losses, damages,
liabilities, obligations, penalties, judgments and awards arising from or
related to claims and to pay on demand all direct and indirect costs,
liabilities and damages incurred by Buyer (including, without limitation,
reasonable costs of collection, reasonable third-party attorneys’ fees, court
costs and other reasonable expenses arising from or related to the foregoing)
in connection with any action or failure to take action by Seller with respect
to the foregoing license of Affirmative Control (“Control Costs”).  In each case, whether or not demand has been
made therefor, Buyer may in its sole


 


23

















 


discretion treat the
Control Costs as Margin Deficit.  This
indemnity shall survive termination of the Agreement.


 


(c)  Seller agrees to hold the Buyer, and its
Affiliates and their officers, directors, employees, agents and advisors and
controlling persons (within the meaning of federal securities laws) (each an “Indemnified
Party”) harmless from and indemnify any Indemnified Party on an after-tax
basis against losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements (and any and all
actions, suits, proceedings and investigations in respect thereof and any and
all legal and other costs, expenses or disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise), including,
without limitation, the costs, expenses, and disbursements, as and when
incurred, of investigating, preparing or defending any such action, suit, proceeding
or investigation (whether or not in connection with litigation in which the
Buyer is a party) of any kind which may be imposed on, incurred by or asserted
against such Indemnified Party (collectively, “Costs”), (a) relating to
or arising out of the Agreement or any transaction contemplated hereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, the Agreement or any transaction contemplated hereby, that, in each
case, results from anything other than the Indemnified Party’s gross negligence
or willful misconduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction, (b) directly or indirectly caused
by, relating to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in, or
omissions or alleged omissions from, any statements or omission in or from any
other information furnished by the Seller to the Buyer; provided, however, such
indemnity penalty shall not apply to any portion of any such loss, claim,
damage, obligation, penalty, judgment, award, liability, cost, expense or
disbursement to the extent it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of
Buyer.


 


(d)  Without limiting the generality of the
foregoing, Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all
Purchased CMBS relating to or arising out of any taxes incurred or assessed in
connection with the ownership of the Purchased CMBS, including, without
limitation, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Purchased CMBS,
that, in each case, results from anything other than the Indemnified Party’s
gross negligence or willful misconduct as determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction.  In any suit, proceeding or action brought by
an Indemnified Party in connection with any of the Purchased CMBS for any sum
owing thereunder, or to enforce any provisions of any Purchased CMBS, Seller
will save, indemnify and hold such Indemnified Party harmless from and against
all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by Seller 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


 


24

















 


successors from
Seller.  Seller also agrees to reimburse
an Indemnified Party as and when billed by such Indemnified Party for all the
Indemnified Party’s reasonable costs and expenses incurred in connection with
the enforcement or the preservation of the Buyer’s rights under the Agreement
or any transaction contemplated hereby, including without limitation the
reasonable fees and disbursements of its counsel.


 


(e)  If any action, suit, proceeding or
investigation is commenced, as to which the Buyer proposes to demand
indemnification, it shall notify the Seller with reasonable promptness;
provided, however, that any failure by the Buyer to notify the Seller shall not
relieve the Seller from its obligations hereunder.  The Buyer shall have the right to retain counsel of its own
choice to represent it, and the Seller shall pay the reasonable fees, expenses
and disbursements of such counsel; and such counsel shall, to the extent
consistent with its professional responsibilities, cooperate with the Seller
and any counsel designated by the Seller. 
The Seller shall be liable for any settlement of any claim against the
Indemnified Parties with the Seller’s written consent, which consent shall not
be unreasonably withheld.  The Seller
shall not, without the prior written consent of Buyer, settle or compromise any
claim, or permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement, compromise or consent includes, as an
unconditional term thereof, the giving by the claimant to Buyer of an
unconditional and irrevocable release from all liability in respect of such
claim.


 


In order to provide for
just and equitable contribution, if a claim for indemnification pursuant to
these indemnification provisions is made but it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) that such
indemnification may not be enforced in such case, even though the express provisions
hereof provide for indemnification in such case, then the Seller, on the one
hand, and Buyer, on the other hand, shall contribute to the losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements to which the indemnified persons may be subject in
accordance with the relative benefits received by the Seller, on the one hand,
and Buyer, on the other hand, and also the relative fault of the Seller, on the
one hand, and Buyer, on the other hand, in connection with the statements, acts
or omissions which resulted in such losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements
and the relevant equitable considerations shall also be considered.  No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation.  Notwithstanding the foregoing, the Buyer
shall not be obligated to contribute any amount hereunder that exceeds the
amount of fees received by Buyer pursuant to the Agreement.


 


26.           Notwithstanding
anything in the Agreement to the contrary, Buyer shall have the right to assign
its rights and obligations under the Agreement and all other documents executed
in connection herewith and any or all of the Transactions to any of its
Affiliates provided (i) that Buyer remains responsible for the performance by
such Affiliate of its obligations or (ii) such assignment is approved by Seller,
such approval not to be unreasonably withheld. 
Notwithstanding anything in the Agreement to the contrary, Buyer may
assign its rights and obligations under the Agreement and all other documents
executed herewith and all of the Transactions to an entity which is not
consolidated with Bear Stearns for


 


25

















 


financial reporting
purposes (i) in an assignment that qualifies as a disposition of assets under
GAAP or (ii) to an entity that is controlled or managed by a Bear Stearns
entity.  Any such assignment shall be
subject to the approval of Seller, which approval shall not be unreasonably
withheld.


 


27.           The Buyer and the
Seller shall deposit any Income received with respect to any of the Purchased
CMBS into the Collection Account.


 


(a)  All such amounts shall be withdrawn from the
Collection Account on each Reset Date and remitted by the Seller as follows:


 


(i)            First, to the Buyer in payment of
any accrued and unpaid Price Differential;


 


(ii)           Second, without limiting the rights
of Buyer under Section 4 of this Repurchase Agreement, in the amount of any
unpaid Margin Deficit Amount;


 


(iii)          Third, to the Sellers.


 


(b) 
Notwithstanding the preceding provisions, if an Event of Default has
occurred, all funds in the Collection Account shall be withdrawn and applied as
determined by the Buyer in its sole discretion.


 


26

















 


28.           The Agreement, the
Netting Agreement, any Related Hedge Agreements and the Institutional Account
Agreementconstitute the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions between the parties hereto,
whether verbal or written, with respect to such subject matter.


 


29.           Seller agrees to pay as
and when billed by the Buyer all of the reasonable out-of-pocket outside legal
costs and expenses incurred by the Buyer in connection with the preparation and
execution of the Agreement and the Transactions contemplated hereby and thereby
and any other documents prepared in connection herewith.


 


30.           Buyer’s obligation to
enter into the Transactions is subject to receipt of an opinion or opinions of
outside counsel to the Seller relating to corporate matters and enforceability
of the Seller acceptable to the Buyer in its sole discretion.


 


 


	
  BEAR, STEARNS & Co., Inc.,

  as agent for

  BEAR, STEARNS INTERNATIONAL LIMITED

  	
  CRIIMI MAE ASSET ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
   /s/ Timothy
  Greene

  	
   

  	
  By:

  	
   /s/ Barry
  Blattman

  	
   

  
	
   

  	
  Name:

  	
  Timothy Green

  	
   

  	
   

  	
   Name:   Barry Blattman

  
	
   

  	
  TITLE:

  	
  Senior Managing Director

  	
   

  	
   

  	
   Title:   Chairman, President
  and CEO

  
									



 


27

















 


Table
X

(One to Four Trusts)


 


	
  CMBS

  Ratings

  Category*

  	
   

  	
  Pricing Rate

  	
   

  	
  Purchase

  Percentage

  	
   

  	
  Buyer’s

  Margin

  Ratio

  	
   

  	
  Concentration

  Limit

  	
   

  
	
  A Category

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB Category

  	
   

  	
  LIBOR + 80 bps

  	
   

  	
  70

  	
  %

  	
  80

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB Category

  	
   

  	
  LIBOR + 125 bps

  	
   

  	
  55

  	
  %

  	
  65

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B Category

  	
   

  	
  LIBOR + 150 bps

  	
   

  	
  35

  	
  %

  	
  45

  	
  %

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CCC/Unrated Category

  	
   

  	
  LIBOR + 200 bps

  	
   

  	
  15

  	
  %

  	
  25

  	
  %

  	
  20

  	
  %

  



 












* Ratings as published by
at least one of Moody’s Investors Service, Standard & Poor’s Ratings
Services or Fitch Ratings, Inc. on Purchased CMBS.  If more than one rating agency rates the Purchased CMBS, the
lowest of the ratings shall be the rating for the purposes of this Annex
I.  If either (i) no rating agency rates
the Purchased CMBS or (ii) any rating agency withdraws its rating of a
Purchased CMBS for reasons specified by such rating agency that relate to the
credit or structure of such Purchased CMBS, the terms listed for “CCC/Unrated”
shall apply unless Buyer, in its sole discretion acting in good faith, agrees
to attribute such Purchased CMBS to a higher CMBS Ratings Category.


 

















 


Table
Y

(Five to Eight Trusts)

Maximum Diversity Percentage 25%


 


	
  CMBS

  Ratings

  Category*

  	
   

  	
  Pricing Rate

  	
   

  	
  Purchase

  Percentage

  	
   

  	
  Buyer’s

  Margin

  Ratio

  	
   

  	
  Concentration

  Limit

  	
   

  
	
  A Category

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB Category

  	
   

  	
  LIBOR + 80 bps

  	
   

  	
  75

  	
  %

  	
  80

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB Category

  	
   

  	
  LIBOR + 125 bps

  	
   

  	
  65

  	
  %

  	
  70

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B Category

  	
   

  	
  LIBOR + 150 bps

  	
   

  	
  45

  	
  %

  	
  50

  	
  %

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CCC/Unrated Category

  	
   

  	
  LIBOR + 200 bps

  	
   

  	
  25

  	
  %

  	
  30

  	
  %

  	
  20

  	
  %

  



 












* Ratings as published by
at least one of Moody’s Investors Service, Standard & Poor’s Ratings
Services or Fitch Ratings, Inc. on Purchased CMBS.  If more than one rating agency rates the Purchased CMBS, the
lowest of the ratings shall be the rating for the purposes of this Annex
I.  If either (i) no rating agency rates
the Purchased CMBS or (ii) any rating agency withdraws its rating of a
Purchased CMBS for reasons specified by such rating agency that relate to the
credit or structure of such Purchased CMBS, the terms listed for “CCC/Unrated”
shall apply unless Buyer, in its sole discretion acting in good faith, agrees
to attribute such Purchased CMBS to a higher CMBS Ratings Category.


 


2

















 


Table
Z

(More than Eight Trusts)

Maximum Diversity Percentage 15%


 


	
  CMBS

  Ratings

  Category*

  	
   

  	
  Pricing Rate

  	
   

  	
  Purchase

  Percentage

  	
   

  	
  Buyer’s

  Margin

  Ratio

  	
   

  	
  Concentration

  Limit

  	
   

  
	
  A Category

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB Category

  	
   

  	
  LIBOR + 80 bps

  	
   

  	
  80

  	
  %

  	
  85

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB Category

  	
   

  	
  LIBOR + 125 bps

  	
   

  	
  70

  	
  %

  	
  75

  	
  %

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B Category

  	
   

  	
  LIBOR + 150 bps

  	
   

  	
  50

  	
  %

  	
  55

  	
  %

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CCC/Unrated Category

  	
   

  	
  LIBOR + 200 bps

  	
   

  	
  30

  	
  %

  	
  35

  	
  %

  	
  20

  	
  %

  



 












* Ratings as published by
at least one of Moody’s Investors Service, Standard & Poor’s Ratings
Services or Fitch Ratings, Inc. on Purchased CMBS.  If more than one rating agency rates the Purchased CMBS, the
lowest of the ratings shall be the rating for the purposes of this Annex
I.  If either (i) no rating agency rates
the Purchased CMBS or (ii) any rating agency withdraws its rating of a
Purchased CMBS for reasons specified by such rating agency that relate to the
credit or structure of such Purchased CMBS, the terms listed for “CCC/Unrated”
shall apply unless Buyer, in its sole discretion acting in good faith, agrees
to attribute such Purchased CMBS to a higher CMBS Ratings Category.


 


3

















 


EXHIBIT A


 


[FORM OF CONTROL AGREEMENT]


 


	
   

  	
  [                  ],
  200   

  



 


	
  CRIIMI MAE Asset
  Acquisition Corp.

  
	
  11200 Rockville Pike

  
	
  Rockville, Maryland
  20852

  
	
  Attn: Cynthia O. Azzara

  
	
   

  
	
  Sun Trust Bank, as Bank

  
	
  14401 Sweitzer Lane

  
	
  Laurel, MD 20707-2921

  
	
  Attn: Raymond Lyon

  



 


Re:          Collection Account
Established by CRIIMI MAE Asset Acquisition Corp. (the “Seller”) at Sun
Trust Bank (the “Bank”) pursuant to that certain Master Repurchase
Agreement and Annex I (as amended, supplemented or otherwise modified from time
to time, the “Repurchase Agreement”), dated June 26, 2003, between Bear,
Stearns International Limited(the “Buyer”), and the Seller.


 


Ladies and Gentlemen:


 


The Seller has entered
into the Repurchase Agreement pursuant to which the Buyer may enter into
Transactions (as defined therein) secured by, among other things, the payments
made on account of Purchased CMBS sold to the Buyer under the Repurchase
Agreement.  As a requirement of each
Transaction, all such payments are required to be deposited into the Collection
Account identified below within two (2) Business Days of receipt.


 


The Seller has
established a collection account, Account No. [     ],
for the account of Bear, Stearns International Limited, with the Bank,
ABA# [          ] (the “Collection
Account”) which the Bank maintains in the name of Seller.  The Seller has granted to the Buyer a
security interest in all payments deposited in the Collection Account with
respect to the Purchased Assets sold to the Buyer under the Repurchase
Agreement.


 

















 


The Bank acknowledges
that (a) the Seller has granted a security interest in all of the Seller’s
right, title and interest in and to any funds from time to time on deposit in
the Collection Account with respect to the Purchased Assets sold to the Buyer
under the Repurchase Agreement, (b) that such funds are received by the
Bank and, except as provided below, are for application as instructed by the
Seller, and (c) that the Bank shall transfer funds from the Collection
Account in accordance with such instructions until the Bank receives notice
from the Buyer that an event of default has occurred and is continuing under
the Repurchase Agreement (a “Notice of Event of Default”).  Upon Bank’s receipt of a Notice of Event of
Default, the Bank shall (i) in no event (a) transfer funds from the
Collection Account to the Seller, (b) act on the instruction of the Seller
or (c) cause or permit withdrawals from the Collection Account in any
manner not approved by the Buyer in writing and (ii) comply with instructions
originated by the Buyer concerning the disposition of funds in the Collection
Account, without further consent from the Seller.


 


In the event that the
Bank has or subsequently obtains by agreement, operation of law or otherwise a
security interest in the Collection Account or funds held therein, the Bank
hereby agrees that such security interest shall be subordinate to the security
interest of the Buyer.  The funds or
other items deposited to the Collection Account will not be subject to
deduction, set-off, banker’s lien or any other right in favor of any person
other than the Buyer (except that the Bank may set off (i) all amounts due to
the Bank in respect of customary fees and expenses for the routine maintenance
and operation of the Collection Account and (ii) the face amount of any checks
which have been credited to the Collection Account but are subsequently
returned unpaid because of uncollected or insufficient funds).


 


2

















 


All bank statements in
respect to the Collection Account shall be sent to the Seller at:


 


	
  CRIIMI MAE Asset
  Acquisition Corp.

  
	
  11200 Rockville Pike

  
	
  Rockville, Maryland 20852

  
	
  Attn: Cynthia O. Azzara

  



 


with copies to Buyer at:


 


	
  BEAR, STEARNS
  INTERNATIONAL LIMITED

  
	
  383 Madison Avenue

  
	
  New York, New York
  10179

  
	
  Attention: James J.
  Higgins

  



 


All notices in respect to
the Collection Account shall be sent to the Bank at:


 


	
  SUNTRUST BANK

  
	
  [Address]

  
	
  Attention: 

  



 


3

















 


Kindly acknowledge your
agreement with the terms of this agreement by signing the enclosed copy of this
letter and returning it to the undersigned.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRIIMI MAE Asset
  Acquisition Corp., as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
					



 


 


Agreed and acknowledged:


 


 


	
  BEAR, STEARNS
  INTERNATIONAL LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


 


Agreed and Acknowledged:


 


 


	
  SUN TRUST BANK, as Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


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