Exhibit 10.18


 


Execution
Version


 


 


SECOND AMENDED AND RESTATED MASTER
REPURCHASE AGREEMENT


 


 


by and among


 


 


GRAMERCY
WAREHOUSE FUNDING I LLC


 


and


 


the Additional Sellers from time to
time parties hereto,

as the Sellers


 


and


 


the Buyers from time to time parties
hereto


 


and


 


WACHOVIA BANK, NATIONAL ASSOCIATION,

as the Agent


 


with


 


WACHOVIA CAPITAL MARKETS, LLC,

as Sole Lead Arranger


 


 


Dated as of April 21, 2005


 





















 


TABLE OF CONTENTS


 


	
   

  	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  APPLICABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Amendment
  and Restatement

  	
   

  
	
  Section 1.02

  	
  Purchase
  and Sale

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEFINITIONAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Definitions

  	
   

  
	
  Section 2.02

  	
  Other
  Definitional Provisions; Determinations by the Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INITIATION; TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Conditions
  Precedent to Initial Transaction

  	
   

  
	
  Section 3.02

  	
  Conditions
  Precedent to all Transactions

  	
   

  
	
  Section 3.03

  	
  Transaction
  Mechanics; Related Matters

  	
   

  
	
  Section 3.04

  	
  Repurchases

  	
   

  
	
  Section 3.05

  	
  Termination
  Dates; Maximum Amount

  	
   

  
	
  Section 3.06

  	
  Payment
  of Price Differential

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MARGIN MAINTENANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Margin
  Adjustments

  	
   

  
	
  Section 4.02

  	
  Margin
  Correction Deadline

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INCOME PAYMENTS;
  REQUIREMENTS OF LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Income
  Payments

  	
   

  
	
  Section 5.02

  	
  Requirements
  of Law

  	
   

  



 


i





















 


	
   

  	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECURITY INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Security
  Interest

  	
   

  
	
  Section 6.02

  	
  Release
  of Security Interest

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PAYMENT, TRANSFER AND
  CUSTODY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Payment,
  Transfer and Custody

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Seller
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Seller
  Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
  Events
  of Default

  	
   

  
	
  Section 10.02

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XI

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SERVICING

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  Seller
  Covenants

  	
   

  
	
  Section 11.02

  	
  Seller
  as Servicer

  	
   

  
	
  Section 11.03

  	
  Third
  Party Servicer

  	
   

  
	
  Section 11.04

  	
  Event
  of Default

  	
   

  
	
  Section 11.05

  	
  Modification

  	
   

  
	
  Section 11.06

  	
  Inspection

  	
   

  



 


ii





















 


	
   

  	
  ARTICLE XII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.01

  	
  Appointment

  	
   

  
	
  Section 12.02

  	
  Duties

  	
   

  
	
  Section 12.03

  	
  Exculpatory
  Provisions

  	
   

  
	
  Section 12.04

  	
  Reliance
  by Agent

  	
   

  
	
  Section 12.05

  	
  Notice
  of Default

  	
   

  
	
  Section 12.06

  	
  Non-Reliance
  on Agent and the Buyers

  	
   

  
	
  Section 12.07

  	
  Reimbursement
  and Indemnification

  	
   

  
	
  Section 12.08

  	
  Agent
  in Its Individual Capacity

  	
   

  
	
  Section 12.09

  	
  Successor
  Agent

  	
   

  
	
  Section 12.10

  	
  Duties
  in the Case of Enforcement

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XIII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.01

  	
  Indemnification
  and Expenses

  	
   

  
	
  Section 13.02

  	
  Single
  Agreement

  	
   

  
	
  Section 13.03

  	
  Notices
  and Other Communications

  	
   

  
	
  Section 13.04

  	
  Entire
  Agreement; Severability

  	
   

  
	
  Section 13.05

  	
  Assignments
  and Participations; Hypothecation of Purchased Assets

  	
   

  
	
  Section 13.06

  	
  Governing
  Law

  	
   

  
	
  Section 13.07

  	
  Submission
  to Jurisdiction; Venue; Waiver of Jury Trial

  	
   

  
	
  Section 13.08

  	
  Amendments;
  Waivers; Remedies Cumulative

  	
   

  
	
  Section 13.09

  	
  Intent

  	
   

  
	
  Section 13.10

  	
  Joint
  and Several Liability

  	
   

  
	
  Section 13.11

  	
  Periodic
  Due Diligence Review

  	
   

  
	
  Section 13.12

  	
  Buyer’s
  Appointment as Attorney-in-Fact

  	
   

  
	
  Section 13.13

  	
  Legal
  Matters

  	
   

  
	
  Section 13.14

  	
  Confidentiality

  	
   

  
	
  Section 13.15

  	
  Conflicts

  	
   

  
	
  Section 13.16

  	
  Right
  of Set-off

  	
   

  
	
  Section 13.17

  	
  Treatment
  of Certain Information

  	
   

  
	
  Section 13.18

  	
  Increased
  Costs, Illegality, Etc

  	
   

  
	
  Section 13.19

  	
  Intended
  Third Party Beneficiaries

  	
   

  



 


iii





















 


	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1(a)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Whole Loans (including Transitional Assets)

  	
   

  
	
  Schedule 1(b)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Junior Interests

  	
   

  
	
  Schedule 1(c)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Mezzanine Loans

  	
   

  
	
  Schedule 1(d)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Preferred Equity

  	
   

  
	
  Schedule 1(e)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of CMBS

  	
   

  
	
  Schedule 1(f)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of RMBS

  	
   

  
	
  Schedule 1(g)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Non-Controlling Interests

  	
   

  
	
  Schedule 1(h)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Pass-Through Interests

  	
   

  
	
  Schedule 1(i)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Distressed Debt

  	
   

  
	
  Schedule 1(j)

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of REO Property Loans

  	
   

  
	
  Schedule 2

  	
  Wiring Instructions

  	
   

  
	
  Schedule 3

  	
  Controlled Accounts

  	
   

  
	
  Schedule 4

  	
  Insurance

  	
   

  
	
  Schedule 5

  	
  Subsidiaries

  	
   

  
	
  Schedule 6

  	
  MBS File Delivery Instructions

  	
   

  
	
  Schedule 7

  	
  Buyer Purchase Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Transaction Request

  	
   

  
	
  Exhibit B

  	
  Form of Confirmation

  	
   

  
	
  Exhibit C

  	
  UCC Filing Jurisdictions

  	
   

  
	
  Exhibit D

  	
  Form of Margin Deficit Notice

  	
   

  
	
  Exhibit E

  	
  Form of Servicer Notice

  	
   

  
	
  Exhibit F

  	
  Form of Custodial Agreement

  	
   

  
	
  Exhibit G

  	
  Form of Account Control Agreement

  	
   

  
	
  Exhibit H

  	
  Form of Release Letter(s)

  	
   

  
	
  Exhibit I

  	
  Form of Libor Period Election Notice

  	
   

  
	
  Exhibit J

  	
  Form of Compliance Certificate

  	
   

  
	
  Exhibit K

  	
  Form of Purchased Asset Data Summary

  	
   

  
	
  Exhibit L

  	
  Form of Guarantee Agreement

  	
   

  
	
  Exhibit M

  	
  Form of Pledge and Security Agreement

  	
   

  
	
  Exhibit N

  	
  Form of Additional Seller Joinder Agreement

  	
   

  
	
  Exhibit O

  	
  Form of Escrow Agreement

  	
   

  



 


iv





















 


	
  Exhibit P

  	
  Form of Assignment and Acceptance

  	
   

  
	
  Exhibit Q

  	
  Form of Closing Certification

  	
   

  
	
  Exhibit R

  	
  Organizational Chart

  	
   

  



 


v





















 


SECOND AMENDED AND RESTATED MASTER
REPURCHASE AGREEMENT


 


SECOND AMENDED AND RESTATED MASTER REPURCHASE
AGREEMENT, dated as of April 21, 2005 (as amended, restated, supplemented
or otherwise modified and in effect from time to time, this “Agreement”),
by and among GRAMERCY
WAREHOUSE FUNDING I LLC, a Delaware limited liability company (“GWF-I”)
and the additional sellers from time to time parties hereto (the “Additional
Sellers”, together with GWF-I, collectively, the “Sellers”, each, a “Seller”),
the buyers from time to time parties hereto (collectively, the “Buyers”,
each, a “Buyer”) and WACHOVIA
BANK, NATIONAL ASSOCIATION (“WBNA”), as agent for the Buyers (in
such capacity, the “Agent”), with Wachovia Capital Markets, LLC (“WCM”),
as the Sole Lead Arranger.


 


RECITALS


 


GWF-I, as seller, and WBNA, as buyer, are parties to that
certain Amended and Restated Master Repurchase Agreement, dated as of December 17,
2004 (the “Existing Agreement”).


 


The Sellers, the Agent and the Buyers have agreed that
the Existing Agreement shall be amended, restated and superceded in its
entirety by this Agreement.


 


Accordingly, the Sellers, the Agent and the Buyers
hereby agree, in consideration of the mutual premises and mutual obligations
set forth herein, that the Existing Agreement is hereby amended, restated and
superceded in its entirety as follows:


 


ARTICLE I



APPLICABILITY


 


Section 1.01                                Amendment and
Restatement.  This Agreement amends,
restates and supercedes the Existing Agreement in its entirety.  All Transactions (as defined in the Existing
Repurchase Agreement) outstanding under the Existing Agreement as of the
Effective Date hereof shall be deemed to be Transactions (as defined in this
Agreement) outstanding under this Agreement (and, accordingly, subject to the
terms and conditions hereof) and all references in any Repurchase Document to
the Agreement (however denominated) shall be deemed to be references to this
Agreement.


 


Section 1.02                                Purchase and Sale.  Subject to the terms and conditions hereof,
from time to time during the Purchase Period (as defined below) the Agent may,
upon request of a Seller, enter into transactions (or a series of transactions)
on behalf of the Buyers with the Seller in which the Seller transfers certain
Mortgage Assets (as defined below) to Agent, on behalf of the Buyers in a sales
transaction against the transfer of funds by Buyers representing the purchase
price for such Mortgage Assets, with a simultaneous agreement by the Buyers to
transfer to the Seller such Mortgage Assets in a repurchase transaction to
occur on a date certain, which shall not be later than the Final Termination
Date (as defined below), against the transfer of funds by the Seller
representing the repurchase price for such Mortgage Assets.  Each such


 





















 


transaction shall be referred
to herein as a “Transaction” and shall be governed by this Agreement,
unless otherwise agreed in writing.


 


ARTICLE II



DEFINITIONAL PROVISIONS


 


Section 2.01                                Definitions.  As used herein, the following terms shall
have the following meanings (all terms defined in this Section 2.01 or in
other provisions of this Agreement in the singular shall have the same meanings
when used in the plural and vice versa). 
Terms otherwise not defined herein shall have the meanings assigned
thereto in the Custodial Agreement.


 


“Accepted Servicing
Practices”: With respect to any Mortgage Asset, those mortgage servicing
practices of prudent lending institutions which service Mortgage Assets of the
same type as such Mortgage Asset in the jurisdiction where the related
Mortgaged Property is located.


 


“Account Control
Agreement”: An Account Control Agreement, substantially in the form
attached as Exhibit G hereto, among the Sellers, the Agent, for the
benefit of the Buyers, and the Bank.


 


“Act of Insolvency”:
With respect to any Person, (i) the filing of a petition, commencing, or
authorizing the commencement of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law relating to
the protection of creditors, or suffering any such petition or proceeding to be
commenced by another which is consented to, not timely contested or results in
entry of an order for relief; (ii) the seeking or consenting to the
appointment of a receiver, trustee, custodian or similar official for such
Person or any substantial part of the property of such Person; (iii) the
appointment of a receiver, conservator, or manager for such Person by any
governmental agency or authority having the jurisdiction to do so; (iv) the
making of a general assignment for the benefit of creditors; (v) the
admission by such Person of its inability to pay its debts or discharge its
obligations as they become due or mature; or (vi) that any governmental
authority or agency or any person, agency or entity acting or purporting to act
under governmental authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of
the property of such Person, or shall have taken any action to displace the
management of such Person or to curtail its authority in the conduct of the
business of such Person.


 


“Additional Purchased
Assets”: The meaning specified in Section 4.01 of this Agreement.


 


“Additional Seller
Joinder Agreement”: An Additional Seller Joinder Agreement, substantially
in the form of Exhibit N hereto, duly executed and delivered by
each of the parties thereto.


 


2





















 


“Additional Sellers”:
The meaning specified in the introductory paragraph hereof.


 


“Affiliate”: Any (A) entity
that directly or indirectly owns, controls, or holds with power to vote, 20
percent or more of the outstanding voting securities of the debtor, other than
an entity that holds such securities (i) in a fiduciary or agency capacity
without sole discretionary power to vote such securities; or (ii) solely
to secure a debt, if such entity has not in fact exercised such power to vote; (B) corporation
20 percent or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by the debtor, or by
an entity that directly or indirectly owns, controls, or holds with power to
vote, 20 percent or more of the outstanding voting securities of the debtor,
other than an entity that holds such securities (i) in a fiduciary or
agency capacity without sole discretionary power to vote such securities; or (ii) solely
to secure a debt, if such entity has not in fact exercised such power to vote; (C) person
whose business is operated under a lease or operating agreement by a debtor, or
person substantially all of whose property is operated under an operating
agreement with the debtor; or (D) entity that operates the business or
substantially all of the property of the debtor under a lease or operating
agreement.


 


“Affiliated Hedge
Counterparty”: The Agent, or any Affiliate of the Agent, in its capacity as
a party to any Interest Rate Protection Agreement with any Seller, or any
Affiliate of any Seller.


 


“Agent”: The
meaning specified in the introductory paragraph hereof.


 


“Agreement”: The
meaning assigned thereto in the introductory paragraph hereof.


 


“ALTA”: The
American Land Title Association.


 


“Allocated Underlying
Debt”: With respect to an Underlying Mortgaged Property, any senior or pari passu Indebtedness secured directly or indirectly by
such Underlying Mortgaged Property, including, without limitation, any
preferred equity interest or mezzanine debt that is senior to, or pari passu with, the related Mortgage Asset in right of
payment or priority.


 


“Approved Bank”: Any bank, savings and loan
association, savings institution, trust company or national banking association
subject to state and/or federal supervision.


 


“Asset Schedule and
Exception Report”: The meaning assigned thereto in the Custodial Agreement.


 


“Asset Value”: As
of any date of determination for each Eligible Asset, with respect to a
Mortgage Asset of a certain Class and the applicable Type of Underlying
Mortgaged Property, the least of (x) the product of the Book Value of such
Mortgage Asset times the Purchase Rate
applicable thereto, (y) the product of the Market Value of such Mortgage Asset times the Purchase Rate applicable thereto and (z) if the
LTV for an Underlying Mortgaged Property (including the principal amount of a
Mortgage Asset) is greater than the Maximum LTV for such Underlying Mortgaged
Property, the product of (i) that portion of the principal amount of such
Mortgage Asset, which when added to the Allocated Underlying Debt for such
Underlying Mortgaged Property, would result in an LTV for such Underlying
Mortgaged


 


3





















 


Property that would equal the Maximum LTV for such
Mortgaged Property times (ii) the
Purchase Rate applicable to such Mortgage Asset.  As of each date of determination, the
Purchase Rate shall take into account all adjustments applicable thereto
pursuant to the proviso set forth at the end of the definition thereof and the
following additional limitations on Asset Value shall apply:


 


(a)                                  the
aggregate Asset Value of the Mortgage Assets shall be reduced to the extent
that application of the Sub-Limit to the Underlying Properties securing
Mortgage Assets at any time results in breach of the Sub-Limit (such reduction
to be determined by the Agent by reference to the Mortgage Assets secured by
the Underlying Properties that give rise to breach of the Sub-Limit), unless
waived in writing by the Agent in its sole and absolute discretion; and


 


(b)                                 unless
otherwise specifically agreed by the Agent in the related Confirmation, the
Asset Value shall be deemed to be zero with respect to each Mortgage Asset (i) in
respect of which there is a material breach of a representation and warranty
set forth in Schedule 1(a) – 1(j) (as applicable) which has
not been cured by the Seller in accordance with the terms of this Agreement
(and any applicable cure period set forth in this Agreement has expired) or
waived in writing by the Agent (assuming each representation and warranty is
made as of the date the Asset Value is determined), (ii) with respect to which
any Wet Mortgage Asset in respect of which the Mortgage Asset File (subject to
the requirements of the Custodial Agreement) has not been delivered to the
Custodian within five (5) Business Days following the Purchase Date, (iii) which
has been released from the possession of the Custodian under the Custodial
Agreement to the Seller for a period in excess of twenty (20) calendar
days, (iv) upon the occurrence of any Act of Insolvency with respect to
any co-participant or any other Person having an interest in such Mortgage
Asset or any related Underlying Mortgaged Property which is pari passu with, in
right of payment or priority, the rights of the Buyers in such Mortgage
Asset, and (v) which is determined by the Agent not to be an Eligible
Asset.


 


Notwithstanding any other provision herein, each
Seller agrees that to the extent any Seller fails to deliver any reports
required hereunder with respect to the Mortgage Asset and/or Underlying
Mortgaged Property, such failure will adversely affect the Asset Value of such
Mortgage Asset, and, to the extent that such failure to deliver reports causes the
Agent to determine in its good faith that it is unable to accurately determine
the Asset Value of such Mortgage Asset, the Asset Value shall be deemed to be
zero.


 


“Assignment of Leases”:
With respect to any Mortgage, an assignment of leases thereunder, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the Underlying Mortgaged Property is located to
reflect the assignment of leases.


 


“Assignment of
Mortgage”: With respect to any Mortgage, an assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient
under the laws of the jurisdiction wherein the related Underlying Mortgaged
Property is located to reflect the assignment of the Mortgage to the Agent for
the benefit of the Buyers.


 


4





















 


“Bank”: The
meaning assigned thereto in the Account Control Agreement.


 


“Book Value”: With
respect to any Mortgage Asset at any time, an amount, as certified by the
Seller, equal to the lesser of (x) the face or par amount of such Mortgage
Asset and (y) the price which the Seller paid for such Mortgage Asset plus any
additional capital advanced by the Seller in respect of such Mortgage Asset, less,
in either case, an amount equal to the sum of all principal paydowns paid in
respect of such Mortgage Asset and realized losses or other write downs
recognized relating to such Mortgage Asset.


 


“Breakage Costs”: The
meaning assigned thereto in Section 3.06(b).


 


“Business Day”: (i) For
all purposes other than as covered by clause (ii) below, any day on which
commercial banks are open for business in New York and Minnesota, solely with
respect to the Custodial Agreement (or such other state where a successor
custodian has its principal place of business), and (ii) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, any Transaction, the Pricing Rate applicable to which is based
upon the Eurodollar Rate, any day on which commercial banks are open in each of
New York and London.


 


“Buyer” and “Buyers”:
The respective meanings assigned thereto in the introductory paragraph hereof.


 


“Buyer Percentage”:
As to any Buyer at any time, the percentage which such Buyer’s Purchase Amount
then constitutes of the aggregate Purchase Amount of all Buyers.


 


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


 


“Capital Stock”: Any
and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent equity
ownership interests in a Person which is not a corporation, including, without
limitation, any and all member or other equivalent interests in any limited
liability company, and any and all warrants or options to purchase any of the
foregoing.


 


“Cash and Cash Equivalents”: (i) cash, (ii) direct
obligations of the United States Government, including, without limitation,
treasury bills, notes and bonds, (iii) interest bearing or discounted
obligations of Federal agencies and Government sponsored entities or pools of
such instruments offered by Approved Banks and dealers, including without
limitation, Federal Home Loan Mortgage Corporation participation sale
certificates, Government National Mortgage Association modified pass-through
certificates, Federal National Mortgage Association bonds and notes, and
Federal Farm Credit System securities, (iv) time deposits, Domestic and
Eurodollar certificates of deposit, bankers’ acceptances, commercial paper
rated at least A-1 by S&P and P-1 by Moody’s and/or guaranteed by a Person
with an Aa1 rating by Moody’s, an AA- rating by S&P or better rated credit,
floating rate notes, other money market instruments and letters of credit each
issued by Approved Banks (provided that the same shall


 


5





















 


cease to be a “Cash or Cash Equivalent” if at any time
any such bank shall cease to be an Approved Bank), (v) obligations of
domestic corporations, including, without limitation, commercial paper, bonds,
debentures and loan participations, each of which is rated at least AA- by
S&P and/or Aa1 by Moody’s and/or guaranteed by a Person with an Aa1 rating
by Moody’s and/or an AA- rating by S&P or better rated credit, (vi) obligations
issued by states and local governments or their agencies, rated at least MIG-1
by Moody’s and/or SP-l by S&P and/or guaranteed by an irrevocable letter of
credit of an Approved Bank (provided that the same shall cease to be a “Cash
or Cash Equivalent” if at any time any such bank shall cease to be an Approved
Bank), (vii) repurchase agreements with major banks and primary government
security dealers fully secured by the U.S. Government or agency collateral
equal to or exceeding the principal amount on a daily basis and held in
safekeeping, and (viii) real estate loan pool participations, guaranteed
by a Person with an AA- rating given by S&P or Aa1 rating given by Moody’s
or better rated credit.


 


“CDO Closing Date”:
The date on which Seller (or a special purpose entity created by Seller) shall
have issued collateralized debt obligations with respect to all, or
substantially all, of the Purchased Assets subject to this Agreement as of the
date hereof.


 


“Change of Control”:
The occurrence of any of the following events: (a) prior to an
internalization of management by Parent, if GKK Manager LLC is no longer the
manager of Parent, (b) after such time as Parent is internally managed,
any “person” or “group” (within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
shall become, or obtain rights (whether by means of warrants, options or
otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of
the total voting power of all classes of Capital Stock of the Parent entitled
to vote generally in the election of directors of 20% or more; or (c) the
Parent shall cease to own and control, of record and beneficially, directly
100% of each class of outstanding Capital Stock of each Seller.  Notwithstanding the foregoing, none of the
Agent, any Buyer nor any other Person shall be deemed to approve or to have
approved any internalization of management as a result of this definition or
any other provision herein.


 


“Class”: With
respect to a Mortgage Asset, such Mortgage Asset’s classification as one of the
following: Whole Loan, Junior Interest, Mezzanine Loan, Preferred Equity, CMBS,
RMBS, Non-Controlling Interest, Pass-Through Interest, Distressed Debt, REO
Property Loan or Transitional Asset.


 


“Closing Certification”
A Closing Certification, in the form attached hereto as Exhibit Q,
executed on behalf of a Seller by a duly authorized officer of the Seller.


 


“CMBS”: Pass-through
certificates representing beneficial ownership interests in one or more first
lien mortgage loans secured by commercial and/or multifamily properties.


 


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


 


6





















 


“Collection Account”:
The account set forth on Schedule 3 established by the Sellers on
behalf of the Buyers and subject to an Account Control Agreement, into which
all Income shall be deposited.


 


“Confirmation”: The
meaning specified in Section 3.03(f).


 


“Consolidated Adjusted
EBITDA”: For any period, determined with respect to any Person(s) on a
consolidated basis, an amount equal to the sum of (a) net income (or loss)
of such Person(s) for such period determined on a consolidated basis (prior to
any impact from minority interests and before deduction of Preferred Dividends
on preferred stock, if any, of such Person(s)), in accordance with GAAP, plus
the following (but only to the extent actually included in determination of
such net income (or loss)): (i) depreciation and amortization expense, (ii) interest
expense, (iii) income tax expense and (iv) extraordinary or
non-recurring gains and losses; plus (b) each such Person’s pro
rata share of Consolidated Adjusted EBITDA of its Unconsolidated
Affiliates.  Consolidated Adjusted EBITDA
will be adjusted to remove all impact of FIN 46 and FAS 140 to the extent of
related transfers to special purpose entities in connection with bona fide
securitizations of Mortgage Assets and related extensions of credit in
connection with bona fide lendings made by such Person as lender.


 


“Consolidated Interest
Expense”: For any period, determined without duplication with respect to
any Person(s) on a consolidated basis, the amount of total interest expense
incurred (in accordance with GAAP), including capitalized or accruing interest
(but excluding interest funded under a construction loan), plus each such
Person’s pro rata share of Interest Expense from Joint Venture investments and
Unconsolidated Affiliates.


 


“Consolidated Total
Assets”: At any time, an amount equal to the aggregate book value of (a) all
assets owned by any Person(s) (on a consolidated basis) and (b) the
proportionate share of assets owned by non-consolidated subsidiaries of such
Person(s), less (i) amounts owing to such Person(s) from any
Affiliates thereof (other than “arm’s length” loans to SLG), or from officers,
employees, partners, members, directors, shareholders or other Persons
similarly affiliated with such Person(s) or their respective Affiliates, (ii) intangible
assets (other than Interest Rate Protection Agreements specifically related to
the Purchased Assets) and (iii) prepaid taxes and/or expenses.


 


“Consolidated Total
Indebtedness”: At any time, without duplication, all amounts of
Indebtedness and Contingent Liabilities of any Person(s) and all Subsidiaries
thereof determined on a consolidated basis, plus the pro rata share of
Indebtedness and Contingent Liabilities of Unconsolidated Affiliates of such
Person(s).


 


“Contingent
Liabilities”: Means with respect to any Person(s) and all Subsidiaries
thereof (without duplication): (i) liabilities and obligations (including
any Guarantee Obligations) of such Persons in respect of “off-balance sheet
arrangements” (as defined in the SEC Off-Balance Sheet Rules) which would be
required to be, or customarily would be, disclosed in the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” section of
a Form 10-Q or Form 10-K (or their equivalents) which any such Person
(or any Affiliate thereof) is required to file with the Securities and Exchange
Commission (or any Governmental Authority substituted therefore) other than
extensions of credit in connection


 


7





















 


with bona fide lendings made by such Person as lender
and bona fide securitization transactions which fall into this category solely
as a result of the application of FAS 140 or FIN 46, (ii) any obligation
(including, without limitation, any Guarantee Obligation) whether or not
required to be disclosed in the footnotes to any such Person’s financial
statements, guaranteeing partially or in whole any Non-Recourse Indebtedness,
lease, dividend or other obligation, exclusive of contractual indemnities
(including, without limitation, any indemnity or price-adjustment provision
relating to the purchase or sale of securities or other assets) and guarantees
of non-monetary obligations (other than guarantees of completion, environmental
indemnities and guarantees of customary carve-out matters made in connection
with Non-Recourse Indebtedness, such as fraud, misappropriation, bankruptcy and
misapplication) which have not yet been called on or quantified, of such Person
or of any other Person, and (iii) any forward commitment or obligation to
fund or provide proceeds with respect to any loan or other financing which is
obligatory and non-discretionary on the part of the lender.  The amount of any Contingent Liabilities
described in clause (ii) shall be deemed to be (a) with respect to a
guarantee of interest or interest and principal, or operating income guarantee,
the sum of all payments required to be made thereunder (which in the case of an
operating income guarantee shall be deemed to be equal to the debt service for
the note secured thereby, through (x) in the case of an interest or interest
and principal guarantee, the stated date of maturity of the obligation (and
commencing on the date interest could first be payable thereunder), or (y) in
the case of an operating income guarantee, the date through which such
guarantee will remain in effect, and (b) with respect to all guarantees
not covered by the preceding clause (a), an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to
the most recent financial statements of such Person.  As used in this definition, the term “SEC
Off-Balance Sheet Rules” means the Disclosure in Management’s Discussion and
Analysis About Off Balance Sheet Arrangements, Securities Act Release No. 33-8182,
68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and
249).


 


“Contractual
Obligation”: As to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is bound.


 


“Controlled Accounts”:
A collective reference to the Collection Account and the Operating Account.


 


“Custodial Agreement”:
A custodial agreement, substantially in the form attached as Exhibit F
hereto, by and among the Sellers, the Agent, the Buyers and the Custodian, as
the same may be amended, restated, supplemented or otherwise modified and in
effect from time to time.


 


“Custodian”: Wells
Fargo Bank, N.A. and its successors in interest, as custodian under the
Custodial Agreement, and any successor Custodian under the Custodial Agreement.


 


“Debt Service Coverage
Ratio” or “DSCR”: With respect to any Mortgage Asset, as of any date
of determination, each of (a) the In Place DSCR and (b) the
Stabilized DSCR of such Mortgage Asset at such time.


 


8





















 


“Default”: Any of
the events specified in Section 10.01, whether or not any requirement for
the giving of notice, the lapse of time, or both, or any other condition, has
been satisfied.


 


“Defaulted Mortgage
Asset”: Any Mortgage Asset (a) which is sixty (60) days or more
delinquent in the payment of principal, interest, fees or other amounts payable
under the terms of the related Mortgage Asset documents (including, without
limitation, any Preferred Equity which has not been current pay during such
period), (b) for which there is a material breach of the representations
and warranties set forth on Schedules 1(a) – 1(j), as applicable,
hereto having a Material Adverse Effect on such Mortgage Asset, or (c) for
which there is a material non-monetary default under the related Mortgage Asset
documents.


 


“Delinquent Mortgage Asset”:
A Mortgage Asset which is thirty (30) or more days, but less than sixty (60)
days, delinquent in the payment of principal, interest, fees or other amounts
payable under the terms of the related Mortgage Asset documents (including,
without limitation, any Preferred Equity which has not been current pay during
such period).


 


“Derivatives Contract”:
Any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement. 
Not in limitation of the foregoing, the term “Derivatives Contract”
includes any and all transactions of any kind, and the related confirmations,
which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or
any other master agreement, including any such obligations or liabilities under
any such master agreement.


 


“Derivatives
Termination Value”: With respect to any Derivatives Contract, after taking
into account the effect of any legally enforceable netting agreement relating
to such Derivatives Contract, (a) for any date on or after the date such
Derivatives Contract has been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date
prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Derivatives Contract, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Derivatives Contract (which may include the Agent or
any Buyer).


 


“Distressed Debt”:
A non-performing first priority commercial real estate whole loan, or a
performing first priority commercial real estate whole loan with an LTV greater
than 100%, which will mature within 12 months (including any extension options)
of the Purchase Date.  The LTV must take
into account any senior or pari passu Indebtedness secured directly or
indirectly by the applicable Underlying Mortgaged Property, including, without
limitation, any


 


9





















 


preferred equity interest or mezzanine debt that is
senior or pari passu with the related Mortgage Asset in right of payment or
priority.


 


“Dollars” and “$”:
Freely transferable lawful money of the United States of America.


 


“Dry Funding”: A
Transaction for which a complete Mortgage Asset File, in accordance with the
terms of this Agreement and the Custodial Agreement, has been delivered for
each related Mortgage Asset to the Custodian prior to the related Purchase
Date.


 


“Dry Mortgage Asset”:
A Mortgage Asset for which a complete Mortgage Asset File, in accordance with
the terms of this Agreement and the Custodial Agreement, has been delivered to
the Custodian prior to related Purchase Date.


 


“Due Diligence Review”:
The performance by the Agent of any or all of the reviews permitted under Section 13.11
with respect to any or all of the Mortgage Assets, as reasonably desired by the
Agent from time to time.


 


“Effective Date”: The
first date upon which all of the conditions precedent set forth in Section 3.01
shall have been satisfied or waived by the Agent.


 


“Election Notice”:
An irrevocable notice substantially in the form of Exhibit I hereto
specifying the Eurodollar Period which the Seller has selected in respect of
any Transaction.


 


“Electronic
Transmission”: The delivery of information in an electronic format
acceptable to the applicable recipient thereof.


 


“Eligible Asset”: A
Mortgage Asset which as of any date of determination:


 


(a)                                  except
with respect to non-performing Distressed Debt, is not a Defaulted Mortgage
Asset or Delinquent Mortgage Asset;


 


(b)                                 is
not a construction loan or a construction note of any sort (which shall not, in
and of itself, preclude Mortgage Assets that include renovation, rehabilitation
or expansion components which will be completed within twelve (12) months of
the related Purchase Date);


 


(c)                                  has
been approved by the Agent in its sole discretion;


 


(d)                                 in
the case of a Whole Loan (including any Transitional Asset), is evidenced by an
original Mortgage Note; and


 


(e)                                  is
not a Wet Mortgage Asset for which the related Mortgage Asset File has not been
delivered in accordance with the terms of this Agreement and the Custodial
Agreement within five (5) Business Days after the Purchase Date or is not
a Dry Mortgage Asset for which the related Mortgage Asset File has not been
delivered in accordance with this Agreement and the Custodial Agreement;


 


10





















 


provided, that (i) ”Eligible
Asset” shall not include any Mortgage Asset consisting of Preferred Equity or a
first loss debt instrument (other than CMBS) which represents less than 5.0% of
the total debt capitalization of the related Underlying Mortgaged Property, (ii) notwithstanding
the foregoing and any Mortgage Asset’s failure to conform to any of the
criteria set forth above, the Agent may, in its sole discretion, designate in
writing any such non-compliant Mortgage Asset an Eligible Asset, (iii) in
the case of Mortgage Assets consisting of Preferred Equity, REO Property Loans
and Distressed Debt, the Agent reserves the right to require that such Mortgage
Assets be held in separate special purpose entities with respect to each such
Mortgage Asset of a particular Class in order to be included as Eligible
Assets and (iv) Eligible Assets (other than CMBS or RMBS) that are pari
passu investments with third parties must provide that (a) the Seller or
the Parent retains the majority ownership or joint control with respect to
customary major decisions for the particular type of Eligible Asset and retains
notice and cure rights with respect to all material issues related thereto, (b) the
Buyers meet any applicable financial and other criteria required by the
applicable documentation for a holder of such Eligible Asset and (c) any
other participant or co-investor must meet customary “qualified institutional
lender” criteria on the related transfer date.


 


“Eligible Transferee”: Any Person selected by a
Buyer and consented to by the Sellers, such consent not to be unreasonably withheld,
delayed or conditioned; provided, that consent of the Sellers shall not
be required (i) upon the occurrence and during the continuation of any
Event of Default and (ii) at any time with respect to any Person which is
a Buyer, or an Affiliate of any Buyer, or a bank, financial institution,
pension fund, insurance company or other similar Person or a special purpose
vehicle.


 


“Environmental Law”:
Any federal, state, foreign or local statute, law, rule, regulation, ordinance,
code, guideline, written policy and rule of common law now or hereafter in
effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et  seq.; the
Toxic Substances Control Act, 15 U.S.C. § 2601 et  seq.; the
Clean Air Act, 42 U.S.C. § 7401 et  seq.; the Safe Drinking
Water Act, 42 U.S.C. § 3803 et  seq.; the Oil Pollution Act
of 1990, 33 U.S.C. § 2701 et  seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et  seq.;
the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et  seq.
and the Occupational Safety and Health Act, 29 U.S.C. § 651 et  seq.;
and any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.


 


“Equity Interest”:
With respect to any Person, any share of Capital Stock of (or other ownership
or profit interests in) such Person, any warrant, option or other right for the
purchase or other acquisition from such Person of any share of Capital Stock of
(or other ownership or profit interests in) such Person, any security
convertible into or exchangeable for any share of Capital Stock of (or other
ownership or profit interests in) such Person or warrant, right or option for
the purchase or other acquisition from such Person of such shares (or such
other interests), and any other ownership or profit interest in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such share, warrant,
option, right or other interest is authorized or otherwise existing on any date
of determination.


 


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


 


“ERISA Affiliate”:
Any person (as defined in Section 3(g) of ERISA which, together with
the Sellers would be deemed to be a “single employer” within the meaning of Section 414(b),
(c), (m) or (o) of the Code.


 


“Escrow Agreement”:
An agreement in the form attached hereto as Exhibit O, delivered by
the Settlement Agent with respect to any Wet Mortgage Assets to the Agent and
Custodian in accordance with the terms hereof in the form attached hereto as Exhibit O.


 


“Eurodollar Period”:
With respect to any Transaction, (i) initially, the period commencing on
the Purchase Date with respect to such Transaction and ending on the earlier of
the related Repurchase Date and the first Payment Date after such Purchase
Date, and (ii) thereafter, each period commencing on the last day of the
preceding Eurodollar Period applicable to such Transaction and ending on the
earliest of (x) the related Repurchase Date, (y) the Payment Date that is
one-month, two-months, three-months or six-months thereafter, in each case as
specified by Seller in an Election Notice delivered to Buyer not less than
three (3) Business Days prior to the last day of then-current Eurodollar
Period with respect thereto; provided, that Seller may not select a
Eurodollar Period longer than one-month if the last day of such Eurodollar
Period occurs after the Final Termination Date and, in the event that the Buyer
has not received an Election Notice by the date which is three (3) Business
days prior to the last day of then-current Eurodollar Period with respect
thereto, the Seller shall be deemed to have selected a one-month Eurodollar
Period, or (z) the Final Termination Date.


 


“Eurodollar
Rate”: With respect to any outstanding Transaction, the rate per annum
equal to LIBOR for deposits in Dollars for a period equal to the applicable
Eurodollar Period which appears on page 3750 of the Telerate Screen at or
about 9:00 a.m., New York City time, three (3) Business Days prior to
the beginning of such Eurodollar Period (and if such date is not a Business
Day, the Eurodollar Rate in effect on the Business Day immediately preceding
such date), and if such rate shall not be so quoted, the average rate per annum
at which three (3) mutually acceptable banks are offered Dollar deposits
at or about 8:00 a.m., New York City time, on such date by prime banks in
the interbank eurodollar market where the eurodollar and foreign currency
exchange operations in respect of its Transactions are then being conducted for
delivery on such day for a period of thirty (30) days and in an amount
comparable to the amount of the Transactions to be outstanding on such
day.  The Eurodollar Rate shall be reset
by the Agent as described above and the Agent’s determination of Eurodollar
Rate shall be conclusive upon the parties absent manifest error on the part of the
Agent.


 


“Event
of Default”: The meaning specified in Section 10.01.


 


“Federal Funds Rate”:
Shall mean for any day, the rate per annum (rounded upwards, if necessary, to
the nearest 1/1000 of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by


 


12





















 


Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such Business Day, the Federal Funds Rate for such day shall be the average
of the quotations for such day for such transactions received by Wachovia Bank,
National Association from three Federal funds brokers of recognized standing
and reputation reasonably selected by Wachovia Bank, National Association.


 


“Fee Letter”: That
certain Second Amended and Restated Fee Letter, dated as of even date herewith,
among the Sellers and the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.


 


“FHLMC”: Federal
Home Loan Mortgage Corporation, or any successor thereto.


 


“Final Purchase Date”:
The earlier of March 15, 2006 and the Final Termination Date.


 


“Final Termination
Date”: (i) June 16, 2008 or (ii) such later date as may be
in effect pursuant to Section 3.05(a) hereof or (iii) such
earlier date on which this Agreement shall terminate in accordance with the
provisions hereof (including, without limitation, Section 3.05(c)) or by
operation of law.


 


“FIRREA”: The
Federal Institutions Reform, Recovery and Enforcement Act of 1989, as amended.


 


“First Dollar LTV”:
With respect to any Mortgage Asset which is a Whole Loan (including any
Transitional Asset), 0%; with respect to any other Class of Mortgage Asset
at any time of determination, the LTV with respect to any debt which is senior
to such Mortgage Asset (as determined by Buyer in its sole and absolute
discretion) and which is secured by the same Underlying Mortgaged Property.


 


“First Termination
Date”: August 19, 2007, or such later date as may be in effect
pursuant to Section 3.05(a) hereof.


 


“FNMA”: Federal
National Mortgage Association, or any successor thereto.


 


“Foreclosed Loan”:
A Mortgage Asset with respect to which the Underlying Mortgaged Property has
been foreclosed upon by the Seller.


 


“Funds From Operation”
or “FFO”: For a given period, (a) Net Income of the Parent and its
Subsidiaries for such period (before extraordinary and non-recurring items),
minus (or plus) (b) gains (or losses) from debt restructuring and sales of
property during such period, plus (c) depreciation and amortization of
real and personal property assets for such period, plus (d) without
duplication, income from unconsolidated partnerships and joint ventures,
determined in each case in accordance with GAAP.


 


13





















 


“GAAP”: Generally
accepted accounting principles as in effect from time to time in the United
States.


 


“GNMA”: Government
National Mortgage Association, or any successor thereto.


 


“Governing Documents”:
As to any Person, its articles or certificate of incorporation and by-laws, its
partnership agreement, its certificate of formation and operating agreement,
and/or the other organizational or governing documents of such Person.


 


“Governmental
Authority”: Any government (or any political subdivision or jurisdiction
thereof), court, bureau, agency or other governmental authority having
jurisdiction over any Seller or Buyer, as applicable, or any of their
respective businesses, operations or properties.


 


“Ground Lease”: A
ground lease containing the following terms and conditions: (a) a
remaining term (exclusive of any unexercised extension options) of thirty (30)
years or more from the Purchase Date of the Mortgage Asset; (b) the right
of the lessee to mortgage and encumber its interest in the leased property
without the consent of the lessor or with such consent given; (c) the
obligation of the lessor to give the holder of any mortgage lien on such leased
property written notice of any defaults on the part of the lessee and agreement
of such lessor that such lease will not be terminated until such holder has had
a reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) reasonable
transferability of the lessee’s interest under such lease, including ability to
sublease; and (e) such other rights customarily required by mortgagees
making a loan secured by the interest of the holder of the leasehold estate
demised pursuant to a ground lease.


 


“Ground Lease Asset”:
A Mortgage Asset the Underlying Mortgaged Property for which is secured or
supported in whole or in part by a Ground Lease.


 


“Guarantee”: As to
any Person, any obligation of such Person directly or indirectly guaranteeing
any Indebtedness of any other Person or in any manner providing for the payment
of any Indebtedness of any other Person or otherwise protecting the holder of
such Indebtedness against loss (whether by virtue of partnership arrangements,
by agreement to keep-well another Person, to purchase assets, goods, securities
or services, or to agree to take-or-pay arrangement or otherwise).  The amount of any Guarantee of a Person shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not stated
or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.  The terms “Guarantee” and “Guaranteed” used
as verbs shall have correlative meanings.


 


“Guarantee Agreement”:
A Guarantee Agreement, substantially in the form attached as Exhibit L
hereto, made in favor of the Buyers by the Parent and its operating
partnership, as the same may be amended, restated, supplemented or otherwise
modified and in effect from time to time. 
Recourse under the Guarantee Agreement shall be limited to 10% of the
greater of the outstanding aggregate Purchase Price and the total
capitalization of the Sellers and shall include a joint and several recourse
carve out in favor of the Buyers and the same financial covenants as are
applicable to Parent under the Liquidity Facility.


 


14





















 


“Guarantee Default”:
The meaning specified
in Section 9.01(ff).


 


“Guarantee Obligation”:
As to any Person (the “guaranteeing person”), without duplication, any
obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of an obligation for which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof; provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The terms “Guarantee” and “Guaranteed” used
as a verb shall have a correlative meaning.


 


“Guarantors”: The
meaning assigned thereto in the Guarantee Agreement.


 


“In Place DSCR”: With
respect to any Mortgage Asset, as of any date of determination, the ratio of
(x) (i) Net Cash Flow plus (ii) debt service reserves actually held
back or funded into Seller controlled accounts subject to the Seller’s
exclusive dominion and control, plus (iii) at Buyer’s sole discretion,
third party credit enhancements, to (y) the debt service on the Mortgage Asset
calculated using (i) the greater of (A) the required amortization for
the first 12 months of the remaining term of the Mortgage Asset or (B) hypothetical
30-year amortization schedule for the first 12 months of the remaining
term of the Mortgage Asset, and (ii) an interest rate equal to the actual
interest rate (in the case of a fixed interest rate Eligible Asset) or the
lesser of (i) the highest applicable strike price of any LIBOR cap
contract for such 12-month period (plus the spread) or (ii) the average
interest rate for such 12 month period using the applicable “forward LIBOR
curve”, plus 50 basis points over the spread.


 


“Income”: With
respect to any Mortgage Asset at any time, all collections and proceeds on or
in respect of the Mortgage Assets, including, without limitation, any principal
thereof then payable and all interest or other distributions payable thereon
less any related servicing fee(s) charged by Servicer.


 


“Indebtedness”: For
any Person, at the time of computation thereof, all of the following (without
duplication): (a) all obligations of such Person in respect of money
borrowed (including without limitation principal, interest, assumption fees,
prepayment fees, contingent interest, and other monetary obligations whether
choate or inchoate); (b) all obligations of such Person, whether or not
for money borrowed (i) represented by notes payable, letters of credit, or
drafts accepted, in each case representing extensions of credit, (ii) evidenced
by bonds, debentures, notes or similar instruments, or (iii) constituting
purchase money indebtedness,


 


15





















 


conditional sales contracts, title retention debt
instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for
property or services rendered; (c) Capitalized Lease Obligations of such
Person; (d) all reimbursement obligations of such Person under any letters
of credit or acceptances (whether or not the same have been presented for
payment); (e) all “off-balance sheet arrangements” of such Person other
than bona fide securitization transactions; (f) all obligations of such
Person to purchase, redeem, retire, defease or otherwise make any payment in
respect of any Mandatory Redeemable Stock issued by such Person or any other
Person (inclusive of forward equity contracts), valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; (g) all obligations of such Person in respect of any keep well
arrangements, credit enhancements, contingent or future funding obligations
under any Purchased Asset or any obligation senior to the Purchased Asset,
unfunded interest reserve amount under any Purchased Asset or any obligation
that is senior to the Purchased Asset, purchase obligation, repurchase
obligation, takeout commitment or forward equity commitment, in each case
evidenced by a binding agreement (excluding any such obligation to the extent
the obligation can be satisfied by the issuance of Equity Interests (other than
Mandatory Redeemable Stock)); (h) net obligations under any Derivative
Contract not entered into as a hedge against existing Indebtedness, in an
amount equal to the Derivatives Termination Value thereof; (i) all
Indebtedness of other Persons which such Person has Guaranteed or is otherwise
recourse to such Person (except for guaranties of customary exceptions for
fraud, misapplication of funds, environmental indemnities and other similar
exceptions to recourse liability (but not exceptions relating to bankruptcy,
insolvency, receivership or other similar events)); (j) all Indebtedness of
another Person secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
or assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness or other payment obligation;
and (k) such Person’s pro rata share of the Indebtedness of any Unconsolidated
Affiliate of such Person.


 


“Initial Maximum
Amount”: An amount equal to $500,000,000, or such other amount as the
Sellers, the Agent and the Buyers may from time to time agree in writing.


 


“Interest Rate
Protection Agreement”: With respect to any or all of the Purchased Assets,
any futures contract, options related contract, short sale of US Treasury
securities or any interest rate swap, cap, floor or collar agreement, total
return swap or any other similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies and acceptable to the Agent.


 


“Investment”: With
respect to any Person, any acquisition or investment (whether or not of a
controlling interest) by such Person, whether by means of (a) the purchase
or other acquisition of any Equity Interest in another Person, (b) a loan,
advance or extension of credit to, capital contribution to, guaranty or credit
enhancement of Indebtedness of, or purchase or other acquisition of any
Indebtedness of, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute the business or a division or operating unit of another
Person.  Any binding commitment or option
to make an Investment in any other Person shall constitute an Investment.  Except as expressly provided otherwise, for


 


16





















 


purposes of determining compliance with any covenant
contained in any Wachovia Facility document, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.


 


“Joint Venture”: The
meaning specified in the Liquidity Facility.


 


“Junior Interest”:
(a) A junior participation interest in a performing commercial real estate
loan or (b) a “B-note” in an “A/B structure” in a performing commercial
real estate loan, for which the combined DSCR is not less than that set forth
in the related Confirmation, taking into account, in the calculation of the LTV
and the DSCR of such Junior Interest, any senior or pari passu Indebtedness secured directly or indirectly by
the applicable Underlying Mortgaged Property (including, if applicable, any
Preferred Equity).


 


“Junior Interest Note”:
The original executed promissory note, certificate (whether participation or
otherwise) or other tangible evidence of a Junior Interest.


 


“Late Payment Fee”:
The meaning specified in Section 3.06(a).


 


“LIBOR”: London Interbank Offered Rate.


 


“Lien”: Any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing or similar statement or
notice filed under the UCC or any other similar recording or notice statute,
and any lease having substantially the same effect as any of the foregoing).


 


“Liquidity”: At
any time, an amount equal to the sum of (x) the Cash and Cash Equivalents of the
Guarantors (on a consolidated basis) at such time and (y) so long as no Default
or Event of Default shall have occurred and then be continuing, the Wachovia
Facility Availability; provided, that the Wachovia Facility Availability shall
be included when calculating Liquidity only to the extent that all financial
covenants under this Agreement and the Liquidity Facility are satisfied
immediately before and, on a pro forma basis, after giving full effect to all
of the transactions taken into account with respect to any Wachovia Facility
pursuant to the definition of Wachovia Facility Availability.


 


“Liquidity Facility”:
That certain Credit Agreement, dated as of August 20, 2004, among Gramercy
Capital Corp. and GKK Capital LP, individually and collectively as borrower,
the financial institutions from time to time parties thereto, Wachovia Capital
Investments, Inc., as administrative agent, and WCM, as sole lead arranger
and sole book manager, as the same may be amended, restated, supplemented or
otherwise modified and in effect from time to time.


 


“Loan-to-Value Ratio”
or “LTV”: With respect to any Mortgage Asset, at the time of determination,
the ratio of (a) the outstanding principal amount of such Mortgage Asset
at such time plus the amount of any Allocated Underlying Debt for such Mortgage
Asset at such time to (b) the lesser of (i) the appraised value of
the related Underlying
Mortgaged Property, as determined
by reference to the third-party appraisal, meeting the standards required by
FIRREA, of such Underlying Mortgaged Property, with such appraised value
being subject to adjustment


 


17





















 


by the Agent in its sole discretion, and (ii) the
purchase price of such Underlying
Mortgaged Property.


 


“Management Contract”:
That certain Management Contract, dated as of August 20, 2004, between
Parent and GKK Manager LLC, as the same may be amended, restated, supplemented
or otherwise modified and in effect from time to time.


 


“Manager”: The
meaning assigned thereto in the Management Contract.


 


“Mandatory Redeemable
Stock”: With respect to any Seller or any Subsidiary thereof, any Equity
Interest of such Person which by the terms of such Equity Interest (or by the
terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise (a) matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise (other than an Equity Interest to the extent redeemable in exchange
for common stock or other equivalent common Equity Interests), (b) is
convertible into or exchangeable or exercisable for Indebtedness or Mandatory
Redeemable Stock, or (c) is redeemable at the option of the holder
thereof, in whole or in part (other than an Equity Interest which is redeemable
solely in exchange for common stock or other equivalent common Equity
Interests); in each case, on or prior to the Final Termination Date or the
maturity date of the Liquidity Facility.


 


“Margin Correction
Deadline”: The time, determined in accordance with Section 4.02 of
this Agreement, as the time by which all transfers, repurchases and payments
elected to be made by the Sellers pursuant to a Margin Deficit Notice shall be
completed.


 


“Margin Deficit”: At
any time and with respect to any Mortgage Asset subject to a Transaction then
outstanding, the amount, if any, by which (a) the Repurchase Price for
such Mortgage Asset exceeds the Asset Value of such Mortgage Asset (the value
of any applicable Interest Rate Protection Agreements shall be taken into
account when making any such calculations) or (b) the aggregate Repurchase
Price of all Mortgage Assets subject to Transactions then outstanding exceeds
the Maximum Amount.


 


“Margin Deficit Notice”:
A written notice, substantially in the form attached as Exhibit D
hereto, which requires the Sellers to correct a Margin Deficit in accordance
with Article IV of this Agreement.


 


“Margin Stock”: The
meaning provided in Regulations U and X of the Board of Governors of the
Federal Reserve System.


 


“Market Disruption
Event”: Any event or events which, in the good faith determination of the
Agent, shall have resulted in (i) the effective absence of a “repo market”
or related “lending market” for purchasing (subject to repurchase) or financing
debt obligations secured by commercial mortgage loans or securities, (ii) the
Agent or any Buyer not being able to finance Mortgage Assets through the “repo
market” or “lending market” with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such event or events, (iii) the
effective absence of a “securities market” for securities backed by Mortgage
Assets or (iv) the Agent or any Buyer not being able to sell securities
backed by Mortgage Assets at prices which would have been reasonable prior to the
occurrence of such event or events.


 


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“Market
Value”: As of any date in respect of any Mortgage Asset, the price at which
such Mortgage Asset could readily be sold (which price shall in no event be
greater than the outstanding principal amount (or equivalent term for “par” for
Mortgage Assets with no principal amount) of such Mortgage Asset, unless the
Seller, or any Affiliate of the Seller, shall have entered into an Interest
Rate Protection Agreement with an Affiliated Hedge Counterparty in respect of
such Mortgage Asset ), as determined by the Agent in its sole discretion
exercised in good faith by (i) reference to the market value of the
Underlying Mortgaged Property, which shall be determined by a third-party
appraisal of the Underlying Mortgaged Property (which appraisal may, at the
election of the Agent, be the appraisal in place at the time such Mortgage
Asset is sold to the Buyers hereunder), as such determination of the market
value of the Underlying Mortgaged Property may be adjusted by the Agent in its
sole discretion exercised in good faith, and (ii) taking into account such
other criteria as the Agent deems appropriate in its good faith, including,
without limitation, current market conditions (including, without limitation,
current interest rates and spreads), credit quality, liquidity of position,
eligibility for CDO execution, subordination, delinquency status and aging and
any amounts owing to or by an Affiliated Hedge Counterparty under any related
Interest Rate Protection Agreement, which price, in each case, may be
determined to be zero.


 


“Material Adverse
Effect”: A material adverse effect on (a) the Property, business,
operations, financial condition or prospects of Seller, (b) the ability of
Seller to perform its obligations under any of the Repurchase Documents to
which it is a party, (c) the validity or enforceability of any of the
Repurchase Documents, (d) the rights and remedies of the Agent or any Buyer
under any of the Repurchase Documents, (e) the timely payment of any
amounts payable under the Repurchase Documents, or (f) the Asset Value,
rating (if applicable) or liquidity of any or all of the Purchased Assets.


 


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


 


“Maximum Amount”: (i) For
the period from and including the Effective Date until the First Termination
Date, an amount equal to the Initial Maximum Amount; (ii) for the period
from and including the First Termination Date until the Second Termination Date,
an amount equal to 50% of the Initial Maximum Amount; and (iii) for the
period from and including the Second Termination Date until the Final
Termination Date, an amount equal to 20% of the Initial Maximum Amount.


 


“Maximum LTV”: With
respect to any Purchased Asset at any time, the Loan-to-Value ratio for the
related Underlying Mortgaged Property set forth in the related Confirmation
under the heading “Maximum LTV” and for the Class and Type of such
Mortgage Asset.


 


“MBS File”: The
documents required to be delivered to the Agent with respect to Mortgage Assets
which consist of CMBS or RMBS, which are set forth in the MBS File Delivery
Instructions attached as Schedule 6 hereto.


 


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“MBS File Delivery Instructions”: The
instructions on Schedule 6 hereto with respect to the delivery by a Seller
to the Agent of MBS Files.


 


“Mezzanine Loan”: A performing mezzanine loan
secured by pledges of all the Capital Stock of a Mortgagor or that portion of
the Capital Stock that includes the general partnership, managing member or
other controlling interest (including, without limitation, the right to take
title to and sell the related Underlying Mortgaged Property) that owns income
producing commercial real estate which is a Type of Mortgaged Property and for
which the combined DSCR is not less than that set forth in the related
Confirmation, taking into account, in the calculation of the LTV and the DSCR
of such Mezzanine Loan, any senior or pari passu
Indebtedness secured directly or indirectly by the applicable Underlying
Mortgaged Property, including, without limitation, any preferred equity
interest or mezzanine debt that is senior to, or pari passu
with, the related Mortgage Asset in right of payment or priority.


 


“Mezzanine Note”: The original executed
promissory note, certificate or other tangible evidence of Mezzanine Loan
indebtedness.


 


“Moody’s”:
Moody’s Investors Service, Inc. or, if Moody’s Investors
Service, Inc. is no longer issuing ratings, another nationally recognized
rating agency reasonably acceptable to the Agent.


 


“Mortgage”: Each mortgage, assignment of rents,
security agreement and fixture filing, or deed of trust, assignment of rents,
security agreement and fixture filing, or similar instrument creating and
evidencing a lien on real property and other property and rights incidental
thereto.


 


“Mortgage Asset”: Any Whole Loan, Junior
Interest, Mezzanine Loan, Preferred Equity, CMBS, RMBS, Non-Controlling
Interest, Pass-Through Interest, Distressed Debt, REO Property Loan or
Transitional Asset (i) the Underlying Mortgaged Property for which is
included in the categories for Types of Mortgaged Property, and (ii) which
the Seller has delivered to the Agent, on behalf of the Buyers, or its designee
(including the Custodian) in connection with any Transaction hereunder.  In no event shall “Mortgage Asset” include
any equity class issued by a CDO or CLO vehicle.


 


“Mortgage Asset File”: The meaning assigned
thereto in the Custodial Agreement.


 


“Mortgage Note”: The original executed
promissory note or other evidence of the indebtedness of a Mortgagor with
respect to a commercial mortgage loan.


 


“Mortgaged Property”: The real property
(including all improvements, buildings, fixtures, building equipment and
personal property thereon and all additions, alterations and replacements made
at any time with respect to the foregoing) and all other collateral securing
repayment of the debt evidenced by a Mezzanine Note, a Junior Interest Note or
a Mortgage Note or, in the case of Preferred Equity, all such real property
owned, and all other collateral pledged in favor of the holder of such
Preferred Equity, by the issuer of such Preferred Equity.


 


“Mortgagee”: The record holder of a Mortgage
Note secured by a Mortgage.


 


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“Mortgagor”: The obligor or obligors on a
Mortgage Note, including any person who has assumed or guaranteed the
obligations of the obligor thereunder.


 


“Multiemployer Plan”: A multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions have been
or are required to be made by Seller or any ERISA Affiliate and that is covered
by Title IV of ERISA.


 


“Net Cash Flow”: With respect to any Underlying
Mortgaged Property, for any period, the underwritten net cash flow calculated
in accordance with the Agent’s customary criteria for commercial mortgage
properties.


 


“Net Income”: With respect to any Person for
any period, the net income of such Person for such period as determined in
accordance with GAAP.


 


“Non-Consolidation Opinion”: A
“non-consolidation” opinion of outside counsel to the Seller in form and
substance satisfactory to the Agent.


 


“Non-Controlling Interest”: An interest in any
Whole Loan, Junior Interest or Mezzanine Loan which represents less than a
majority of the interests, and which does not represent a controlling position
as reasonably determined by the Agent, in such Mortgage Asset, and which is pari passu in right of payment and priority to any other interests
in such Mortgage Asset; provided, that such interest vests the holders
thereof with approval or veto rights over customary major decisions concerning
the Mortgage Asset and the related Underlying Mortgaged Property.


 


“Nonrecourse Indebtedness”: With respect to any
Person, Indebtedness for borrowed money in respect of which recourse for
payment (except for customary exceptions for fraud, misapplication of funds,
environmental indemnities, and other similar exceptions to recourse liability
(but not exceptions relating to bankruptcy, insolvency, receivership or other
similar events)) is contractually limited to specific assets of such Person
encumbered by a Lien securing such Indebtedness.


 


“Operating Account”: The account of a Seller
described on Schedule 3 hereto.


 


“Parent”: Gramercy Capital Corp., a Maryland
corporation.


 


“Pass-Through Interest”: A certificate or
certificates representing entire beneficial interests in a grantor trust or
similar pass-through special purpose entity exclusively holding any of the
following: Whole Loans, Junior Interests, Mezzanine Loans, Preferred Equity,
Distressed Debt, REO Property Loan, CMBS or RMBS; provided that such
certificate is and will be treated as debt by the United States Internal
Revenue Service for tax purposes.


 


“Payment Calculation Date”: The tenth (10th)
day of each month.


 


“Payment Date”: The last Business Day of each
calendar month.


 


“PBGC”: The Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA, or any
successor thereto.


 


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“Performance Guarantor”: The meaning specified in
Section 9.01(ff).


 


“Periodic Advance Repurchase Payment”: The
meaning specified in Section 3.06(a).


 


“Person”: Any individual, limited liability company,
partnership, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.


 


“Plan”: Any pension plan as defined in
Section 3(2) of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) any Seller or a Subsidiary of
the Seller or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the the Seller, or a Subsidiary
of the Seller or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.


 


“Pledge and Security Agreement”: A Pledge and
Security Agreement, substantially in the form attached as Exhibit M
hereto.


 


“Post-Default Rate”: In respect of any day a
Transaction is outstanding or any other amount under this Agreement or any
other Repurchase Document that is not paid when due, whether on the stated
Repurchase Date or otherwise (a “Post-Default Day”), a rate per annum on
a 360 day per year basis during the period from and including the due date to
but excluding the date on which such amount is paid in full equal to the
Pricing Rate on such Post-Default Day plus
500 basis points.


 


“Preferred Dividends”: For any period and
without duplication, all Restricted Payments paid or accrued during such period
on Preferred Securities issued by any Seller or any Subsidiary thereof.  Preferred Dividends shall not include
dividends or distributions paid or payable (a) solely in Equity Interests
(other than Mandatory Redeemable Stock) payable to holders of such class of
Equity Interests; (b) to any Seller or any Subsidiary thereof; or
(c) constituting or resulting in the redemption of Preferred Securities,
other than scheduled redemptions not constituting balloon, bullet or similar
redemptions in full.


 


“Preferred Equity”: A performing current pay
preferred equity position (with a put or synthetic maturity date structure
replicating a debt instrument) evidenced by a stock share certificate or other
similar ownership certificate representing the entire equity ownership interest
in entities that own income producing commercial real estate for which the
underwritten DSCR is not less than that set forth in the related Confirmation,
taking into account, in the calculation of the LTV and the DSCR of such
Preferred Equity, any senior or pari passu
Indebtedness secured directly or indirectly by the applicable Underlying
Mortgaged Property, including, without limitation, any preferred equity
interest or mezzanine debt that is senior to, or pari passu
with, the related Mortgage Asset in right of payment or priority.


 


“Preferred Securities”: With respect to any
Person, Equity Interests in such Person that are entitled to preference or
priority over any other Equity Interest in such Person in respect of the
payment (or accrual) of dividends or distribution of assets upon liquidation,
or both.


 


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“Price Differential”: With respect to any
Transaction hereunder as of any date, the aggregate amount obtained by daily
application of the applicable Pricing Rate in effect from time to time for such
Transaction to the Purchase Price (decreased by any amounts previously paid by
the Seller to the Agent hereunder in respect of the Purchase Price component of
the Repurchase Price of such Mortgage Asset) for such Transaction on each day
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date (reduced by any
amount of such Price Differential previously paid by the Seller to the Agent
with respect to such Transaction).


 


“Pricing Rate”: With respect to a Mortgage
Asset of a certain Class and the applicable Type of Underlying Mortgaged
Property, at any date of determination a rate per annum equal to the sum of
(a) the Eurodollar Rate applicable on such date plus (b) the
Pricing Spread for such Mortgage Asset applicable on such date as set forth in
the related Confirmation.


 


“Pricing Spread”: The point spreads set forth
in the related Confirmation corresponding to both the Classes of Mortgage
Assets and the Types of Underlying Mortgaged Property set forth therein; provided,
that, (i) with respect to each Transaction comprised of more than
one (1) Type of Mortgage Asset, the Pricing Spread shall be
determined on a weighted average basis based upon the value allocated to each
Type of Underlying Mortgaged Property as of any date of determination,
(ii) in the event that such Transaction is comprised of Mortgage Assets
each with a corresponding Book Value, the Pricing Spread shall be based upon
the Type of Underlying Mortgaged Property as of any date of determination and
(iii) the Pricing Spread will vary in accordance with the Purchase Rate selected
by Seller in the related Confirmation. 
All such reductions and any other adjustments to the Pricing Spread
shall be determined by the Agent in its sole discretion and shall be conclusive
and binding absent manifest error.


 


“Prime Rate”: The prime rate announced to be in
effect from time to time by the Agent as its prime rate.  The prime rate is not intended to be the
lowest general rate of interest charged by the Agent to its customers.


 


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


 


“Properties”: The meaning in
Section 8.01(x).


 


“Purchase Agreement”: Any purchase agreement by
and between any Seller and any third party, including without limitation, any Affiliate
of any Seller, pursuant to which the Seller has purchased assets subsequently
sold to the Buyers hereunder.


 


“Purchase Amount”: As to any Buyer, the
obligation of such Buyer to participate in Transactions entered into by the
Agent on behalf of the Buyers in accordance with the terms hereof, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Buyer’s name on Schedule 7 under the caption
“Purchase Amount” or, as the case may be, in the Assignment and Acceptance
pursuant to which such Buyer became a party hereto, as such amount may be
changed from time to time in accordance with the provisions of this Agreement.


 


23





















 


“Purchase Date”: With respect to each
Transaction, the date on which the related Mortgage Assets are transferred by
the Seller to the Agent, on behalf of the Buyers, or its designee (including
the Custodian), which date shall in no event be after the Final Purchase Date.


 


“Purchase Period”: The period from and
including the Effective Date to and including the Final Purchase Date.


 


“Purchase Price”: On each Purchase Date, the
price at which the respective Mortgage Assets are transferred by the Seller to
the Agent, on behalf of the Buyers, or its designee (including the Custodian),
which amount shall not exceed the Asset Value for such Mortgage Assets on the
Purchase Date.


 


“Purchase Rate”: With respect to a Mortgage
Asset of a certain Class and the applicable Type of Underlying Mortgaged Property,
the “Purchase Rate” set forth in the applicable column in the related
Confirmation; provided, however, that (i) in the event any DSCR
criteria applicable to a Mortgage Asset is not satisfied and Buyer nevertheless
elects to enter into, or continue, a Transaction in respect of such Mortgage
Asset, the applicable Purchase Rate shall be reduced to the level at which all
applicable DSCR criteria are satisfied, (ii) if, on any date after the
one-year anniversary of the Effective Date, the total number of Mortgage Assets
is fewer than five (5), then on such date (and again on each one-year
anniversary of such date) the Purchase Rate applicable to each Mortgage Asset
shall be reduced by 5.0% (e.g., from 65% to 60%) and (iii) notwithstanding
anything herein to the contrary, if a Purchased Asset consisting of Preferred
Equity or an interest in Preferred Equity has not been repurchased within 360
days of the related Purchase Date then on such date the Purchase Rate
applicable to each Mortgage Asset shall be reduced by 5.0% (e.g., from 65% to
60%).


 


“Purchased Assets”: The Mortgage Assets sold by
the Seller to the Buyers in a Transaction hereunder.  The term “Purchased Assets” shall include
Additional Purchased Assets delivered pursuant to Article IV hereof.


 


“Purchased Items”: The meaning specified in
Section 6.01.


 


“Qualified Servicer”:
Any nationally recognized commercial mortgage loan servicer (other than ORIX
Capital Markets LLC or any of its Affiliates) rated at least “Css2” (or
equivalent successor rating) by Fitch, Inc., or any successor to
Fitch, Inc. and on the approved master servicer list or special servicer
list of Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.


 


“Ratings Agencies”: Each of Fitch
Ratings, Inc., Moody’s Investors Services, Inc. or Standard and
Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., or
their successors in interest, and such nationally recognized statistical rating
agencies as may be designated by the Seller to the Agent, on behalf of the
Buyers, from time to time.


 


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


 


24





















 


“REIT”: A Person satisfying the conditions and
limitations set forth in Section 856(b) and 856(c) of the Code
which are necessary to qualify such Person as a “real estate investment trust”,
as defined in Section 856(a) of the Code.


 


“Release Letter”: A letter substantially in the
form of Exhibit H hereto (or such other form acceptable to the
Agent).


 


“REMIC”: A real estate mortgage investment
conduit, within the meaning of Section 860D(a) of the Code.


 


“REO Property”: Any real property acquired by a
Seller, including a Mortgaged Property acquired through foreclosure of a
Mortgage Asset or by deed in lieu of such foreclosure.


 


“REO Property Loan”: A non-performing mortgage
loan secured by a perfected first priority security interest in a commercial
real property and any personal property related thereto which is owned by the
Seller as the result of foreclosure of another mortgage loan, with such
documentation as was included in such foreclosed mortgage loan with respect to
such Underlying Mortgaged Property in an amount equal to the Book Value; provided,
however that with respect to any management agreement or any agreement or other
arrangement with any party affiliated with Seller, Manager or SLG, Seller shall
provide such other documentation as is reasonably requested by the Agent, and
any such agreement with an affiliated party shall be terminable at will.


 


“Reportable Event”: Any of the events set forth
in Section 4043(c) of ERISA, other than those events as to which the
thirty day notice period is waived under Sections .21, .22, .23, .26, .27 or
..28 of PBGC Reg. § 4043.


 


“Repurchase Date”: The date on which the Seller
is to repurchase the Purchased Assets from the Buyers, which date shall not be
later than the Final Termination Date and, unless otherwise specified in the
related Confirmation (but subject to the repurchase obligations associated with
the periodic reductions contemplated in respect of the Maximum Amount) shall be
the Final Termination Date; provided, that the Repurchase Date for
Purchased Assets consisting of Preferred Equity shall not be later than the
date that is 360 days after the Purchase Date therefore.


 


“Repurchase Documents”: This Agreement, the
Custodial Agreement, the Account Control Agreement, all Pledge and Security
Agreements (if any), all Servicing Agreements (if any), all Interest Rate
Protection Agreements (if any), all Additional Seller Joinder Agreements (if
any), the Guarantee Agreement and the Fee Letter.


 


“Repurchase Obligations”: The meaning specified
in Section 6.01(b).


 


“Repurchase Price”: The price at which
Purchased Assets are to be transferred from the Buyers or their designee
(including the Custodian) to the Seller upon termination of a Transaction,
which will be determined in each case (including Transactions terminable upon
demand) as the sum of (i) the Purchase Price, (ii) the Price
Differential and (iii) any
amounts which would be payable to (a positive amount) or by (a negative amount)
an Affiliated Hedge


 


25





















 


Counterparty under any
related Interest Rate Protection Agreement if such Interest Rate
Protection Agreement were terminated on the date of determination, in each case
as of the date of such determination, decreased by all cash, Income and
Periodic Advance Repurchase Payments (including Late Payment Fees, if any)
actually received by the Agent for the account of the Buyers, and increased by
all other costs, fees or other amounts payable to the Buyers by the Seller under
any Repurchase Document; provided, that with respect to any
determination of Repurchase Price that is made in connection with the actual
repurchase by the Seller of any Purchased Asset which is subject to a
Transaction outstanding hereunder (and not in connection with any calculation
of Margin Deficit or other determination that is made during the course of a
Transaction which is not related to such a repurchase), the Repurchase Price
for such Purchased Asset shall take into account amounts payable by (a negative
amount) an Affiliated Hedge Counterparty under any related Interest Rate
Protection Agreement only (i) to the extent such amounts are actually then
due and payable under the related Interest Rate Protection Agreement and
(ii) to the extent that the Seller shall have provided the applicable
Affiliated Hedge Counterparty with written instructions (with a copy to the
Agent) that such amounts are anticipated by the Seller to be paid by the Agent
directly to the Affiliated Hedge Counterparty or by such Affiliated Hedge
Counterparty directly to the Agent, as applicable.


 


“Required Buyers”: At any time, an aggregate
amount of Buyers for which the Buyer Percentages aggregate more than 50%.


 


“Requirement of Law”: As to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority
(including, without limitation, those relating to environmental standards and
controls), in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.


 


“Responsible Officer”: As to any Person, the
chief executive officer, the chief financial officer, the chief accounting
officer, the treasurer or the chief operating officer of such Person.


 


“Restricted Payment”: (a) Any dividend or
other distribution, direct or indirect, on account of any Equity Interest of
any Seller or any Subsidiary thereof now or hereafter outstanding, except a
dividend payable solely in Equity Interests of identical class to the holders
of that class; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any Equity Interest of any Seller or any Subsidiary
thereof now or hereafter outstanding; and (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire any Equity Interests of any Seller or any Subsidiary thereof
now or hereafter outstanding.


 


“RMBS”: Publicly offered, SEC registered
pass-through certificates representing beneficial ownership interests in one or
more first lien mortgage loans secured by residential properties which are
rated “AAA” (or equivalent) by any two Rating Agencies.


 


26





















 


“S&P”:
Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or, if Standard & Poor’s Ratings Services is no
longer issuing ratings, another nationally recognized rating agency reasonably
acceptable to the Agent.


 


“SEC”: The Securities and Exchange Commission,
or any successor thereto.


 


“Second Termination Date”: December 16,
2007, or such later date as may be in effect pursuant to
Section 3.05(a) hereof.


 


“Security Agreement”: With respect to any
Mortgage Asset, any contract, instrument or other document related to security
for repayment or payment thereof (other than the related Mortgage and Mezzanine
Note), executed by the Mortgagor or other applicable party (in the case of a
Mezzanine Loan or Preferred Equity) and/or others in connection with such
Mortgage Asset, including without limitation, any security agreement, guaranty,
title insurance policy, hazard insurance policy, chattel mortgage, letter of
credit or certificate of deposit or other pledged accounts, and any other
documents and records relating to any of the foregoing.


 


“Seller” and “Sellers”: The meanings
assigned thereto in the introductory paragraph hereof.


 


“Seller-Related Obligations”: With respect to
any Seller, any obligations of the Seller hereunder and under any other
arrangement between the Seller or an Affiliate of the Seller on the one hand
and the Agent or any Affiliate of the Agent on the other hand (including,
without limitation, the Liquidity Facility, any Interest Rate Protection
Agreement entered into with any Affiliated Hedge Counterparty and all amounts,
if any, anticipated to be paid to the Agent by an Affiliated Hedge
Counterparty, as provided for in the definition of Repurchase Price).


 


“Servicer”: The meaning specified in
Section 11.03.


 


“Servicer Account”: Any account established by
Servicer in connection with the servicing of the Mortgage Assets.


 


“Servicer Notice”: A notice from the Sellers,
as applicable, to the Servicer, substantially in the form attached as Exhibit E
hereto.


 


“Servicing Agreement”: The meaning specified in
Section 11.03.


 


“Servicing File”: With respect to each Mortgage
Asset, the file retained by Seller consisting of originals of all documents in
the Mortgage Asset File which are not delivered to the Custodian and copies of
all documents in the Mortgage Asset File set forth in Section 2.01 of the
Custodial Agreement.


 


“Servicing Records”: The meaning specified in
Section 11.02.


 


“Settlement Agent”: With respect to any
Transaction involving a Wet Mortgage Asset, the entity approved by the Agent,
in its sole discretion, which may be a title company, escrow company or
attorney in accordance with local law and practice in the appropriate


 


27





















 


jurisdiction of the related Wet Mortgage Asset, to
which the proceeds of such Transaction are to be wired pursuant to
Section 3.03(l).


 


“SLG”: SL Green Realty Corp., a Maryland
corporation.


 


“Special Purpose Transaction”: (i) A Wet
Funding or (ii) an additional Transaction requested with respect to any
Purchased Asset (other than a Transitional Asset) to provide for the funding of
future funding obligations which were expressly identified to and approved by
the Agent in connection with the initial Transaction entered into in respect of
such Purchased Asset.


 


“Stabilized DSCR”: With respect to any Mortgage
Asset, as of any date of determination, the ratio of (x) Net Cash Flow
(calculated using the projected Net Cash Flow at the maturity of the Mortgage
Asset, annualized) to (y) debt service due using the applicable refinance
constant for the related Underlying Mortgaged Property then being used by the
Buyers and their Affiliates and the projected outstanding balance of such
Mortgage Asset.


 


“Sub-Limit”: The composition of Mortgage Assets
transferred to Buyer shall at all times meet the following sublimit caps, and
no Asset Value shall be ascribed to any Mortgage Assets:


 


(a)           to
the extent that the Asset Value ascribed to Mortgage Assets, the Classes of
which consist of Mezzanine Loans, Junior Interests and Preferred Equity,
collectively, would exceed 75% of the Maximum Amount;


 


(b)           to
the extent that the Asset Value ascribed to Mortgage Assets, the Class of
which consists of Preferred Equity, would exceed 15% of the Maximum Amount;


 


(c)           to
the extent that the Asset Value ascribed to Mortgage Assets, the Class of
which consists of Transitional Assets, would exceed 40% of the Maximum Amount;


 


(d)           to
the extent that the Asset Value ascribed to Mortgage Assets, the Classes of
which consist of Non-Controlling Interests and Pass-Through Interests,
collectively, would exceed 15% of the Maximum Amount;


 


(e)           to
the extent that the Asset Value ascribed to Mortgage Assets, the Type of which
consists of hotels, nursing homes or other non-traditional property types (as
determined by the Agent), would exceed 20% of the a Maximum Amount;


 


(f)            to the extent that the Asset Value ascribed to Mortgage
Assets which are Ground Lease Assets, would exceed 50% of the Maximum Amount; provided, that with respect to any
Ground Lease Asset which is secured or supported in part, but not in whole, by
a Ground Lease, the Agent shall determine, in its sole and absolute discretion,
the amount of the total Asset Value which shall be deemed to be a Ground Lease
Asset for purposes of this calculation;


 


(g)           to
the extent that the weighted average Purchase Rate of all Mortgage Assets would
exceed 85.0%; and


 


28





















 


(h)           to
the extent that the Weighted Average LTV of all Mortgage Assets would exceed
80.0%.


 


“Subsidiary”: With respect to any Person, any
corporation, partnership, limited liability company or other entity (heretofore,
now or hereafter established) of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership, limited liability company or other
entity (without regard to the occurrence of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person, and shall include all Persons the accounts of which are
consolidated with those of such Person pursuant to GAAP.


 


“Tax Based Accounting Principles”: With respect
to any Person, those generally accepted tax accounting principles and practices
which are recognized as such in the United States for the purposes of complying
with filing and reporting obligations under the Code, and which are
consistently applied for all periods, after the date hereof, so as to properly
and fairly reflect the financial position of such Person.


 


“Termination Date”: Any or all of the First
Termination Date, the Second Termination Date or the Final Termination Date, as
required by the context.


 


“Test Period”: Any fiscal quarter, commencing
with the fiscal quarter ending on September 30, 2004.


 


“Total Assets”:
At any time, an amount equal to the aggregate book value of (a) all assets
owned by any Person(s) (on a consolidated basis) and (b) the proportionate
share of assets owned by non-consolidated subsidiaries of such Person(s), less
(i) amounts owing to such Person(s) from any Affiliates thereof (other
than arm’s length loans to SLG), or from officers, employees, partners,
members, directors, shareholders or other Persons similarly affiliated with
such Person(s) or their respective Affiliates, (ii) intangible assets
(other than Interest Rate Protection Agreements specifically related to the
Purchased Assets), and (iii) prepaid taxes and/or expenses.


 


“Total Indebtedness”:
At any time, without duplication, all Indebtedness and Contingent Liabilities
of any Person and all Subsidiaries thereof determined on a consolidated basis,
plus the pro  rata share of Indebtedness and Contingent
Liabilities of Unconsolidated Affiliates of such Person.


 


“Total Liabilities Ratio”:
As to any Person, the ratio of (a) the Total Indebtedness of such Person
to (b) the Total Assets of such Person.


 


“Transaction”: The meaning specified in
Section 1.02.


 


“Transaction Request”: The meaning specified in
Section 3.03(a).


 


29





















 


“Transaction Request Package”:  The documents required to be delivered to the
Agent at the time a Transaction Request is delivered to the Agent, which shall
include the following:


 


(a)           an
appraisal meeting the standards of FIRREA and stating the loan-to-value ratio
of the outstanding Purchase Price to the value (based on the lesser of
(i) the appraised value of the related Underlying Mortgaged Property, as
determined by reference to the third-party appraisal, meeting the standards
required by FIRREA, of such Underlying Mortgaged Property, and (ii) the
purchase price of such Underlying Mortgaged Property);


 


(b)           an
environmental report indicating no material environmental condition for which
recommended reserves have not been established;


 


(c)           written
certification that such Mortgage Asset meets the requisite DSCR required for
such asset type and that all covenants, representations and warranties
contained herein have been complied with (together with such additional
materials as Buyer may request);


 


(d)           an
internal document or credit committee memorandum (redacted to protect
confidential information) setting forth all material information actually known
to Seller relating to the Mortgage Assets;


 


(e)           with
respect to a Mortgage Asset consisting of a Whole Loan, Junior Interest, REO
Property Loan or Distressed Debt, a copy of the related note, Mortgage,
Assignment of Mortgage (if any), title policy (or binding commitment to issue a
title policy if no title policy has been issued) for such Mortgage Asset;


 


(f)            with
respect to a Mortgage Asset consisting of CMBS or RMBS, a copy of the related
bond or a copy of the related bond power, endorsed in blank, or, with respect
to any bonds registered with DTC, evidence of re-registration to the securities
intermediary in the Agent’s name on behalf of the Buyers;


 


(g)           with
respect to a Mortgage Asset consisting of a Mezzanine Loan, a copy of the
related Mezzanine Note, a copy of the related pledge agreement and copies of
any assignments;


 


(h)           with
respect to a Mortgage Asset consisting of Preferred Equity, a copy of the
related stock share certificate, a copy of the related partnership agreement or
equivalent document and copies of any assignments; and


 


(i)            with
respect to a Mortgage Asset consisting of a Pass-Through Interest, a copy of
the related promissory note, certificate or equivalent document evidencing
ownership of such Pass-Through Interest, and copies of any assignments.


 


“Transitional Asset”: Any Whole Loan with
respect to which the Underlying Mortgaged Property does not meet the applicable
In Place DSCR criteria but which has nevertheless been deemed acceptable by the
Agent in its sole discretion; provided, that


 


30





















 


“Transitional Asset” shall not include (a) land
loans, (b) construction loans, (c) loans with respect to which the
Underlying Mortgaged Property will take more than thirty (30) months to achieve
a stabilized cash flow sufficient to characterize such loans as stabilized or
non-transitional or (d) operating companies (other than hotel properties).


 


“True Sale Opinion”: A “true sale” opinion of
outside counsel to Seller in form and substance satisfactory to the Agent.


 


“Trust Receipt”: A trust receipt issued by the
Custodian to the Agent confirming the Custodian’s possession of certain
Mortgage Asset Files which are held by the Custodian for the benefit of the
Agent or the registered holder of such trust receipt.


 


“Type”: With respect to a Mortgaged Property,
such Mortgaged Property’s classification as one of the following:
(a) multifamily, (b) retail, (c) office, (d) industrial,
(e) hotel, (f) student housing, (g) medical office product,
(h) self-storage or (i) nursing home.


 


“UCC Financing Statement”: A financing
statement on Form UCC-1 or the proper national UCC form, naming the Agent,
as agent for the Buyers, as “Secured Party” and Seller as “Debtor” and
describing the Purchased Items.


 


“Unconsolidated Affiliates”: With respect to
any Person, any other Person in whom such Person holds an Investment, which
Investment is accounted for in the financial statements of such Person on an
equity basis of accounting and whose financial results would not be
consolidated under GAAP with the financial results of such Person on the
consolidated financial statements of such Person.


 


“Underlying Mortgage Loan”: With respect to any
Junior Interest, Mezzanine Loan, Preferred Equity, CMBS, RMBS, Non-Controlling
Interest or Pass-Through Interest, a mortgage loan made in respect of the
related Underlying Mortgaged Property.


 


“Underlying Mortgaged Property”: In the case of
any:


 


(a)           Whole
Loan (including any Transitional Asset), the Mortgaged Property securing such
Whole Loan;


 


(b)           Junior
Interest, the Mortgaged Property securing such Junior Interest (if the Junior
Interest is of the type described in clause (a) of the definition
thereof), or the Mortgaged Property securing the Mortgage Loan in which such
Junior Interest represents a junior participation (if the Junior Interest is of
the type described in clause (b) of the definition thereof);


 


(c)           Mezzanine
Loan, the Mortgaged Property that is owned by the Person the Capital Stock of
which is pledged as collateral security for such Mezzanine Loan;


 


(d)           Preferred
Equity, the income producing commercial real estate owned by the entity whose
equity ownership interest is represented by such Preferred Equity;


 


31





















 


(e)           CMBS,
the Mortgaged Property securing the mortgage loans related to such security;


 


(f)            RMBS,
the Mortgaged Property securing the mortgage loans related to such security;


 


(g)           Non-Controlling
Interest, the Mortgaged Property related to the applicable mortgage asset which
the Non-Controlling Interest represents an interest in;


 


(h)           Pass-Through
Interest, the Mortgaged Property related to the applicable mortgage asset held
by the grantor trust or similar pass-through special purpose entity which
issued such Pass-Through Interest;


 


(i)            Distressed
Debt, the Mortgaged Property securing such Distressed Debt; and


 


(j)            REO
Property Loan, the Mortgaged Property securing such REO Property Loan.


 


“Underlying Obligor”: Individually and
collectively, as the context may require, the obligor or obligors under a
Mortgage Asset, including any Person that has not signed the related Mortgage
Note but owns an interest in the related Underlying Mortgaged Property, which
interest has been encumbered to secure such Mortgage Asset.


 


“Underwriting Package”: An internal document or credit committee memorandum (redacted to protect
confidential information) setting forth all material information relating to a
Mortgage Asset which is known by a Seller, prepared by a Seller for its
evaluation of such Mortgage Asset, to include at a minimum the data required in
the relevant Confirmation.  In addition,
(a)  with respect to each Mortgage Asset which does not consist of RMBS
and CMBS, the Underwriting Package shall include, to the extent applicable,
(i) a copy of the appraisal, (ii) the current occupancy report
(including tenant stack and rent roll), (iii) a minimum of two
(2) years of property level financial statements to the extent available,
(iv) current financial statement of the obligor, if any, on the commercial
mortgage loan, if available, (vi) the Mortgage Asset File, (vii) all
third party reports and agreed upon procedures, any letters and reports
(whether drafts or final forms), site inspection reports, market studies and
any other diligence conducted by Seller relating to such Mortgage Asset, (viii) aging
of all accounts receivable and accounts payable, (ix) copies of all
transaction documentation and (x) such further documents or information as the
Agent may request;


 


(b)           with respect to each Mortgage Asset which
consists of RMBS, the Underwriting Package shall include, to the extent
applicable, (i) the related prospectus, (ii) all distribution date
statements issued in respect thereof during the immediately preceding 12 months
(or, if less, since the date such RMBS was issued) and (iii) any other information
delivered to certificate holders in respect of such RMBS during the immediately
preceding 6 months;


 


(c)           with respect to any Mortgage Asset which consists
of CMBS, the Underwriting Package shall include, to the extent applicable,
(i) the related prospectus or


 


32





















 


offering circular, (ii) all
structural and collateral term sheets and all other computational or other
similar materials provided to a Seller in connection with its acquisition of
such CMBS, (iii) all distribution date statements issued in respect
thereof during the immediately preceding 12 months (or, if less, since the date
such CMBS was issued), (iv) all monthly CSMA reporting packages issued in
respect of such CMBS during the immediately preceding 12 months (or, if less,
since the date such CMBS was issued), (v) all Rating Agency pre-sale
reports and (vi) all asset summaries and any other due diligence
materials, including, without limitation, reports prepared by third parties,
provided to Seller in connection with its acquisition of such CMBS;


 


(d)           with respect to each Special Purpose Transaction
requested to be entered into to provide for the funding of future funding
obligations, unless the Agent shall otherwise agree, the Underwriting Package
for such Special Purpose Transaction shall include all such additional
information as was contemplated to be provided in connection with such funding
when the initial Transaction was entered into in respect of the related
Purchased Asset.


 


“Uniform Commercial Code” or “UCC”: The Uniform
Commercial Code as in effect on the date hereof in the State of New York;
provided that if by reason of mandatory provisions of law, the perfection, the
effect of perfection or nonperfection, or the priority of the security interest
in any Purchased Items is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection, effect of perfection or
nonperfection, or priority.


 


“Wachovia Facility”: This Agreement and/or the
Liquidity Facility.


 


“Wachovia Facility Availability”: At any time,
an amount equal to the sum of (i)   the
excess, if any, of the aggregate Asset Value of all Purchased Assets subject to
Transactions then outstanding under this Agreement over the aggregate
outstanding Repurchase Price of all such Purchased Assets plus
(ii) the amount available to be borrowed at such time under the Liquidity
Facility, determined pursuant to Section 2.03 of the Liquidity Facility as
the lesser of (x) the Associated Value of the related Pledged Asset (as such
terms are defined in the Liquidity Facility), (y) to the extent no Eligible
Asset is required to be pledged pursuant to Section 6.11 of the Liquidity
Facility, the amount then available to be borrowed such that after giving
effect to such Borrowing the Total Liabilities Ratio of the Parent is less than
seventy five percent (75%) and the Fixed Charge Coverage Ratio of the Borrower
is equal to or greater than 1.75x (as such terms are defined in the Liquidity
Facility), and (z) the Available Commitment at such time (as defined in the
Liquidity Facility).


 


“Weighted Average LTV”: With respect to all
Mortgage Assets at any time, the sum of the products of the outstanding
principal balances of such Mortgage Assets and (1) for any Mortgage Asset
which is a Whole Loan (including any Transitional Asset), or a pari passu interest in a Whole Loan (including any
Transitional Asset), the product of the Purchase Rate for such Mortgage Asset
and the LTV of such Mortgage Asset and (2) for any Mortgage Asset which is
not a Whole Loan, or a pari passu
interest in a Whole Loan, the sum of the LTV of any debt senior to such
Mortgage Asset and the product of (x) the Purchase Rate for such Mortgage


 


33





















 


Asset and (y) the LTV of such Mortgage Asset minus the
First Dollar LTV for such Mortgage Asset, divided by the total outstanding
principal balances of all Mortgage Assets.


 


“Wet Funding”: 
A Transaction for which the Seller has delivered to the Agent a
Transaction Request pursuant to Section 3.03(d).


 


“Wet Mortgage Asset”:  An Eligible Asset for which the Seller has
delivered a Transaction Request and Transaction Request Package pursuant to
Section 3.02(e) hereof, and for which a complete Mortgage Asset File
has not been delivered to Custodian prior to the related Purchase Date.


 


“Whole Loan”: A performing first priority
commercial real estate whole loan for which the underwritten DSCR is not less
than that set forth in the related Confirmation as determined by the Agent
after taking into account any reserves and any other adjustments which Whole
Loan includes, without limitation, (i) a Mortgage Note and related
Mortgage, and (ii) all right, title and interest of the Seller in and to
the Mortgaged Property covered by such Mortgage.  The Whole Loan LTV and DSCR must take into
account any senior or pari passu
Indebtedness secured directly or indirectly by the applicable Underlying
Mortgaged Property, including, without limitation, any preferred equity
interest or mezzanine debt that is senior to, or pari passu
with, the related Mortgage Asset in right of payment or priority.


 


Section 2.02           Other Definitional Provisions; Determinations by the
Agent.


 


(a)           All
references to, and calculations required to be made in respect of, any
principal and/or interest associated with any Mortgage Asset, shall, with
respect to Mortgage Assets consisting of Preferred Equity, be deemed to refer,
respectively, to the face amount of such Preferred Equity and the preferred
return or yield (however such terms are denominated, as set forth in the
related Mortgage Asset documents), whether payable or accrued.


 


(b)           As
used herein, and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to a Seller not defined in Section 2.01,
and accounting terms partly defined in Section 2.01, to the extent not defined,
shall have the respective meanings given to them under GAAP.


 


(c)           The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, schedule and exhibit
references are to this Agreement unless otherwise specified.


 


(d)           The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.


 


(e)           All
matters to be determined by the Agent in its sole discretion hereunder shall be
determined by the Agent in its sole discretion exercised in good faith.


 


(f)            All
references herein, or in any other Repurchase Document, to “the Seller” shall
refer to the applicable Seller of a Purchased Asset in connection with a
Transaction hereunder.


 


34





















 


ARTICLE III



INITIATION; TERMINATION


 


Section 3.01           Conditions Precedent to Initial Transaction.  The Agent and each Buyer’s agreement
to enter into the initial Transaction hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Transaction, of
the condition precedent that the Agent shall have received from the Sellers
payment of an amount equal to all fees and expenses payable hereunder and
pursuant to the Fee Letter, and all of the following documents, each of which
shall be satisfactory in form and substance to the Agent and its counsel:


 


(a)           The
following Repurchase Documents, as well as certain other documents, delivered
to the Agent:


 


(i)            Second
Amended and Restated Master Repurchase Agreement.  This Second Amended and Restated Master
Repurchase Agreement duly completed and executed by each of the parties hereto;


 


(ii)           Custodial
Agreement.  The Custodial Agreement,
duly executed and delivered by each of the parties thereto;


 


(iii)          Account
Control Agreement.  The Account
Control Agreement, duly executed and delivered by each of the parties thereto;


 


(iv)          Interest
Rate Protection Agreements.  All
Interest Rate Protection Agreements required pursuant to Section 9.01(v),
duly executed and delivered by each of the parties thereto;


 


(v)           Guarantee
Agreement.  The Guarantee Agreement,
duly executed and delivered by the Guarantors;


 


(vi)          Pledge
Agreement.  A Pledge and Security
Agreement, or such other pledge agreement as shall be acceptable to the Agent
in its sole discretion, pursuant to which all of the Capital Stock of the
Subsidiaries of the Parent and GKK Capital LP shall be pledged in favor of the
Agent for the benefit of the Buyers hereunder, executed and delivered by a duly
authorized officer of each of the parties thereto;


 


(vii)         Amendment
to Liquidity Facility.  An amendment
to the Liquidity Facility, executed and delivered by a duly authorized officer
of each of the parties thereto;


 


(viii)        Consents
and Waivers.  Any and all consents
and waivers applicable to any Seller or to the Mortgage Assets;


 


(ix)           UCC
Financing Statements.  UCC Financing
Statements naming each Seller as “Debtor” and the Agent, as agent for the
Buyers, as “Secured Party” and describing as “Collateral” the Purchased Items
and any other documents necessary or


 


35





















 


requested by the
Agent to perfect the security interests granted by the Sellers in favor of the
Agent, for the benefit of the Buyers, under this Agreement or any other
Repurchase Document;


 


(b)           Opinions
of Counsel.  An opinion or opinions
of outside counsel to the Sellers, which opinion or opinions shall be satisfactory
in form and substance to the Agent and shall include general issues of
formation and enforceability with respect to each Seller, first priority
perfected security interest with respect to the Purchased Assets, a
Non-Consolidation Opinion and such other issues as requested by the Agent;


 


(c)           Organizational
Documents.  A good standing
certificate and certified copies of the charter and by-laws (or equivalent
documents) of each Seller and of all corporate or other authority for each
Seller with respect to the execution, delivery and performance of the
Repurchase Documents and each other document to be delivered by the Seller from
time to time in connection herewith (and the Agent may conclusively rely on
such certificate until it receives notice in writing from the Seller to the
contrary);


 


(d)           Servicing
Agreement.  With respect to any
Eligible Asset to be purchased hereunder on the related Purchase Date which is
not serviced by Seller, Seller shall have provided to the Agent a copy of the
related Servicing Agreement, certified as a true, correct and complete copy of
the original, together with a Servicer Notice, fully executed by Seller and
Servicer;


 


(e)           Closing
Certification.  A Closing
Certification of each Seller.


 


(f)            Fees
and Expenses.  The Agent shall have
received payment from the Sellers of an amount equal to the amount of actual
costs and expenses, including, without limitation, the fees and expenses of
counsel to the Agent and/or the Buyers, incurred by the Agent and/or the Buyers
in connection with the development, preparation and execution of this
Agreement, the other Repurchase Documents, the Wachovia Facilities and any
other documents prepared in connection herewith or therewith; and


 


(g)           Other
Documents.  The Agent shall have
received all such other and further documents, documentation and legal opinions
as the Agent in its sole discretion shall reasonably require.


 


Section 3.02           Conditions Precedent to all Transactions.  The Agent’s and each Buyer’s agreement to
enter into each Transaction (including the initial
Transaction) is subject to the satisfaction of the following further conditions
precedent, both immediately prior to entering into such Transaction and also
after giving effect to the consummation thereof and the intended use of the proceeds
of the sale:


 


(a)           the
Seller shall have delivered a Confirmation via Electronic Transmission in
accordance with the procedures set forth in Section 3.03, and the Agent
shall have determined that the Mortgage Asset described in such Confirmation is
an Eligible Asset, shall have approved the purchase of the Mortgage Asset to be
included in such Transaction in its sole and absolute discretion and shall have
obtained all necessary internal credit approvals for such Transaction;


 


36





















 


(b)           no
Default or Event of Default shall have occurred and be continuing under this
Agreement, the Guarantee Agreement or any other Repurchase Document and no
event shall have occurred which has, or would reasonably be expected to have, a
Material Adverse Effect;


 


(c)           the
Agent shall have received a certificate of a Responsible Officer of the Seller,
substantially in the form of Exhibit J hereto, (i) showing in
detail the calculations demonstrating that, after giving effect to the
requested Transaction, no Margin Deficit shall then exist, (ii) stating
that, to the best of such Responsible Officer’s knowledge, since the date of
the certificate most recently delivered pursuant to Section 9.01(b)(ii),
the Seller has observed or performed all of its covenants and other agreements
in all material respects, and satisfied in all material respects, every
condition, contained in this Agreement and the related documents to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate, (iii) describing all interests of the Seller’s
Affiliates in any Underlying Mortgaged Property related to any proposed
Mortgage Asset (including without limitation, any lien, encumbrance or other
debt or equity position or other interest in the Underlying Mortgaged Property
that is senior or junior to, or pari passu
with, the proposed Mortgage Asset in right of payment or priority), (iv) showing in detail
the calculations supporting such Responsible Officer’s certification of the
Seller’s compliance with the requirements of Section 9.01(f) and
Sections 9.01(l)-(o) and (v) confirming that all equity of each of the
Seller’s Subsidiaries has been pledged to the Agent for the benefit of the
Buyers;


 


(d)           both
immediately prior to the requested Transaction and also after giving effect
thereto and to the intended use thereof, the representations and warranties
made by the Seller in Section 8.01 and in Schedules 1(a)-1(j), as
applicable, shall be true, correct and complete on and as of such Purchase Date
in all material respects with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date);


 


(e)           subject
to the Agent’s right to perform one or more Due Diligence Reviews pursuant to
Section 13.11, (i) in the case of a Dry Mortgage Asset, Seller shall
have delivered a Transaction Request, a Transaction Request Package and all
Mortgage Asset Documents to the Custodian as required by this Agreement and the
Custodial Agreement and Buyer has consented in writing to the related Mortgage
Asset becoming a Purchased Asset, and (ii) in the case of a Wet Mortgage
Asset, Seller has delivered a Transaction Request, Transaction Request Package
and pledge to deliver a complete Mortgage Asset File with respect to any Wet
Mortgage Assets identified on such Transaction Request within five (5) Business
Days of the related Purchase Date; provided, that if the Agent’s
diligence review of the Mortgage Asset File requires the delivery of a mortgage
file or the equivalent, Seller shall have the benefit of delayed delivery under
circumstances and pursuant to the terms and conditions set forth in
Section 2.01(g)(ii) of the Custodial Agreement;


 


(f)            with
respect to any Dry Mortgage Asset to be purchased hereunder on the related
Purchase Date which is not serviced by the Seller or an Affiliate thereof, the Seller shall have provided to the
Agent a copy of the related Servicing Agreement, certified as a true, correct


 


37





















 


and complete copy
of the original, together with a Servicer Notice, fully executed by the Seller
and the Servicer;


 


(g)           the
Agent shall have received all fees and expenses of counsel to the Agent as
required hereunder and/or by the Fee Letter and Section 13.01 and, to the
extent Seller is required hereunder to reimburse the Agent for such amounts,
the Agent shall have received the costs and expenses incurred by it in
connection with the entering into of any Transaction hereunder, including,
without limitation, costs associated with due diligence, recording or other
administrative expenses necessary or incidental to the execution of any
Transaction hereunder, which amounts, at the Agent’s option, may be withheld
from the sale proceeds of any Transaction hereunder;


 


(h)           no
Margin Deficit shall exist, either immediately prior to or after giving effect
to the requested Transaction, and no Market Disruption Event shall have
occurred and be continuing.


 


(i)            with
respect to Dry Fundings, the Agent shall have received from the Custodian on
each Purchase Date an Asset Schedule and Exception Report with respect to
each Purchased Asset, dated the Purchase Date, duly completed and with
exceptions acceptable to the Agent in its sole discretion in respect of
Eligible Assets to be purchased hereunder on such Business Day;


 


(j)            the
Agent shall have received from the Seller a Release Letter covering each
Eligible Asset to be sold to the Buyers;


 


(k)           prior
to the purchase of any Mortgage Asset acquired (by purchase or otherwise) by
the Seller from any Affiliate of the Seller, the Agent shall have received a
Non-Consolidation Opinion and a True Sale Opinion;


 


(l)            the
Agent shall not have reasonably determined that the introduction of, or a
change in, any Requirement of Law or in the interpretation or administration of
any Requirement of Law applicable to any Buyer has made it unlawful, and no
Governmental Authority shall have asserted that it is unlawful, for any Buyer
to enter into Transactions;


 


(m)          the
initial Purchase Price specified in a Confirmation for a Mortgage Asset shall
not be less than $3,000,000 and increments of $100,000 thereafter; provided,
that two (2) Confirmations per calendar month may specify an initial
Purchase Price in an amount greater than $1,000,000 and less than $3,000,000.


 


(n)           the
Repurchase Date for such Transaction is not later than the Final Termination
Date;


 


(o)           the
Seller shall have taken such other action as the Agent shall have reasonably
requested in order to transfer the Purchased Assets pursuant to this Agreement
and to perfect all security interests granted under this Agreement or any other
Repurchase Document in favor of the Agent for the benefit of the Buyers with
respect to the Purchased Assets;


 


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(p)           the
weighted average Purchase Rate of all Mortgage Assets shall not exceed 85.0%;


 


(q)           the
Weighted Average LTV of all Mortgage Assets shall not exceed 80.0%;


 


(r)            with
respect to each Seller that is a Subsidary of GWF-I, the Agent shall have
received a Pledge and Security Agreement, substantially in the form attached
hereto as Exhibit M, duly executed and delivered by GWF-I, as owner
of 100% of the Equity Interest of the Seller;


 


(s)           with
respect to any Wet Mortgage Assets, the Agent shall have received a complete
Transaction Request Package and an Escrow Agreement in the form attached hereto
as Exhibit O;


 


(t)            the
Seller shall have assigned to the Agent, for the benefit of the Buyers, all of
the Seller’s rights under each Interest Rate Protection Agreement entered into
with an Affiliated Hedge Counterparty in respect of a Purchased Asset and no
“termination event”, “event of default” or “potential event of default”
(however denominated) shall have occurred and be continuing under any such
Interest Rate Protection Agreement; and


 


(u)           the
Agent shall have received all such other and further documents, documentation
and legal opinions (including, without limitation, opinions regarding the
perfection of the Agent’s security interests) as the Agent in its reasonable
discretion shall reasonably require.


 


Each Confirmation delivered by any Seller hereunder
shall constitute a certification by the Seller that all the conditions set
forth in this Section 3.02 with respect to the Seller have been satisfied,
waived or is not applicable (both as of the date of such notice or request and
as of the date of such purchase).


 


Section 3.03           Transaction Mechanics; Related Matters.  (a)  During the Purchase Period, in the
sole discretion of the Agent, the Agent may from time
to time purchase from a Seller certain Eligible Assets.  (For the avoidance of doubt, the parties
hereby acknowledge and agree that any decision by WBNA, or any Affiliate
thereof, to enter into any rate lock agreement, interest rate protection
agreement, total return swap or any other agreement with respect to any
Mortgage Asset, other than a Confirmation hereunder, shall not reflect, and
shall not be deemed to reflect, the Agent’s approval of any Mortgage Asset or
its determination to enter into any Transaction hereunder.)  A Seller shall request a Transaction,
including a Special Purpose Transaction requested to effect a Wet Funding or to
provide for the funding of certain obligations associated with a Purchased
Asset, by delivering to the Agent (with a copy to the Custodian) via Electronic
Transmission a request in the form of Exhibit A attached hereto (a
“Transaction Request”) within one (1) Business Day after the Agent
approves such Transaction and delivers the related Confirmation.


 


(b)           With
respect to Dry Mortgage Assets, the Seller shall request a Transaction by
delivering to the Agent a Transaction Request (with a copy to the Custodian)
via Electronic Transmission.  Each such
Transaction Request shall describe the Mortgage Assets


 


39





















 


proposed to be
purchased (including the applicable Class and Type), and set forth
(i) the proposed Purchase Date (which date, notwithstanding any extension
of Termination Date, shall not be later than the Final Purchase Date),
(ii) the proposed Purchase Price, (iii) the Proposed Repurchase Date,
(iv) the Pricing Rate applicable to such Transaction, (v) the
applicable Class and Type for each Mortgage Asset for which the Seller is
requesting the Transaction, (vi) whether such Transaction Request pertains
to a Special Purpose Transaction (and, if so, a description of such Special
Purpose Transaction) and (vii) any additional terms or conditions not
inconsistent with this Agreement and shall be accompanied by the Underwriting
Package with respect to such Dry Mortgage Assets.


 


(c)           Upon
receipt of the complete Underwriting Package for any Dry Mortgage Asset, the
Agent shall notify the Seller of its approval or disapproval of each such
proposed Mortgage Asset within ten (10) Business Days after such receipt; provided,
that with respect to any Transaction Request pertaining to a pool consisting of
more than three (3) proposed Mortgage Assets, the Agent may notify the
Seller of its approval or disapproval of such proposed Mortgage Assets after
such ten (10) Business Day period, provided such notice is given as soon as
practicable after the expiration of such period.  If the Agent shall have approved a proposed
Dry Mortgage Asset in accordance with the preceding sentence and the related
Mortgage Asset File and, if applicable, the related MBS File, shall have been
delivered in accordance with Section 3.03(h) below, upon receipt by
the Agent of a Trust Receipt and Exception Report from Custodian and subject to
the other terms and conditions of this Agreement, the Agent, on behalf of the
Buyers, shall purchase such Dry Mortgage Assets on the Purchase Date.


 


(d)           With
respect to any Wet Mortgage Asset, the Seller shall request a Transaction by
delivering to the Agent a Transaction Request (with a copy to the Custodian)
via Electronic Transmission.  Such
Transaction Request shall be delivered no later than 12:00 noon (eastern time)
two (2) Business Days prior to the requested Purchase Date and it shall be
accompanied by all of the items specified in clauses (a) through
(d) of the definition of “Transaction Request Package”; provided,
that if such delivery is made after 12:00 noon (eastern time) it shall be
deemed to have been delivered on the next succeeding Business Day and the
requested Purchase Date shall be deemed to be the date that is two
(2) Business Days thereafter.  Each
such Transaction Request shall describe the Mortgage Assets proposed to be
purchased, and set forth (i) the proposed Purchase Date (which date,
notwithstanding any extension of Termination Date, shall not be later than the
Final Purchase Date), (ii) the proposed Purchase Price, (iii) the
Proposed Repurchase Date, (iv) the Pricing Rate applicable to such
Transaction, (v) the applicable Class and Type for each Mortgage
Asset for which the Seller is requesting the Transaction and (vi) any additional
terms or conditions not inconsistent with this Agreement.  All other items necessary to effect delivery
of a complete Transaction Request Package shall be delivered no later than
12:00 noon (eastern time) on the requested Purchase Date (or such later date as
may be deemed to be the Purchase Date pursuant to the immediately preceding
sentence); provided, that if such items are delivered after 12:00 noon
(eastern time) on such requested Purchase Date, the Agent may, in its sole
discretion, decline to enter into the requested Transaction or may deem the
Purchase Date to be the Business Day immediately following the date on which
the Agent received the complete Transaction Request Package.


 


(e)           Notwithstanding
any other provision hereunder, the fact that the Agent has conducted or has
failed to conduct any partial or complete examination or any other due


 


40





















 


diligence review
of any Purchased Asset shall in no way affect any rights the Agent or any Buyer
(or any of their successors) may have hereunder or otherwise with respect to
any representations or warranties or other rights hereunder, including without
limitation, the right to determine at any time that such Purchased Asset is not
an Eligible Asset.


 


(f)            On
the Purchase Date for each Mortgage Asset, the Seller shall forward to the
Agent via Electronic Transmission, a confirmation of each Transaction,
substantially in the form of Exhibit B attached hereto (a “Confirmation”).  The Confirmation shall specify any additional
terms or conditions of the Transaction not inconsistent with this Agreement or
as otherwise agreed to by the Agent.  In
the event that the terms of the related Confirmation are inconsistent with the
terms of this Agreement, this Agreement shall supersede the Confirmation with
respect to the inconsistent terms only; provided, however, that the
Confirmation and this Agreement shall be construed to be cumulative to the
extent possible.  Upon receipt of the
Confirmation, the Agent shall evidence its agreement to enter into the
requested Transaction by its signature thereon and return such Confirmation to
the Seller.  Any Confirmation executed by
the Agent shall be deemed to have been received by the Seller on the date such
executed Confirmation is actually received by the Seller.


 


(g)           With
respect to Wet Mortgage Assets, following the receipt of a Confirmation from
the Agent, the related Escrow Agreement shall be delivered to Custodian with a
copy to the Agent not later than 12:00 noon (eastern time) on the day prior to
the requested Purchase Date, as provided in the Custodial Agreement.  Following the Agent’s receipt of the faxed
Escrow Agreement and Buyer’s determination that each of the Wet Mortgage Assets
is an Eligible Asset, the Agent shall wire funds pursuant to wiring
instructions set forth in the Escrow Agreement. 
On the Business Day that Custodian receives the complete Mortgage Asset
Files, the Custodian will notify the Agent of its receipt of such Mortgage
Asset Files and deliver to the Agent a Trust Receipt.  The Seller shall cause the Settlement Agent
to deliver the Mortgage Asset File with respect to each Mortgage Asset within
one (1) Business Day following the Purchase Date. Within five
(5) Business Days of receipt of such Mortgage Asset Files, Custodian shall
deliver to the Agent an Asset Schedule and Exception Report.


 


(h)           With
respect to Dry Mortgage Assets, at least seven (7) Business Days prior to
the requested Purchase Date, Seller shall cause (i) the related Mortgage
Asset File pertaining to each Dry Mortgage Asset to be purchased by the Agent
to be delivered to the Custodian in accordance with the Custodial Agreement and
(ii) with respect to any Mortgage Assets consisting of CMBS or RMBS, the
related MBS File to be delivered to the Agent, for the benefit of the
Buyers.  With respect to each Wet
Mortgage Asset, no later than 12:00 noon (eastern time) on the Business Day
prior to the Purchase Date, the Seller shall deliver to the Agent a completed
Transaction Request and Transaction Request Package, along with any other
documents or certifications required to be delivered in connection with such
Transaction Request pursuant to the Custodial Agreement.  Subject to the proviso in
Section 3.02(e)(ii), within five (5) Business Days of the related
Purchase Date, the Mortgage Asset Documents pertaining to each Wet Mortgage
Asset purchased by the Agent on behalf of the Buyers shall be delivered to the
Custodian in accordance with the Custodial Agreement.  Within five (5) Business Days of the
related Purchase Date, the Seller shall deliver to the Agent a complete
Underwriting Package with respect to any Wet Mortgage Assets purchased by the
Agent on behalf of the Buyers.


 


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(i)            Each
Confirmation, together with this Agreement, shall constitute conclusive
evidence of the terms agreed between the Agent and the Seller with respect to
the Transaction to which the Confirmation relates, and the Seller’s acceptance
of the related proceeds shall constitute the Seller’s agreement to the terms of
such Confirmation.  It is the intention
of the parties that each Confirmation shall not be separate from this Agreement
but shall be made a part of this Agreement. 
In the event that any terms or conditions of any Confirmation are
inconsistent, or in direct conflict, with this Agreement, the terms of such
Confirmation shall prevail; provided, that such Confirmation and this
Agreement shall be construed to be cumulative to the extent possible.


 


(j)            On
the Repurchase Date, termination of a Transaction will be effected by transfer
to the Seller or its designee of the Purchased Assets and receipt of the
Repurchase Price by the Agent.  To the
extent a net amount is owed to one party, the other party shall pay such amount
to such party.  The Agent shall direct
Custodian to deliver the related Mortgage Files to the Seller or its designee
at the Seller’s expense on the Repurchase Date.


 


(k)           In
no event shall a Transaction be entered into when any Margin Deficit exists or
when any Default or Event of Default has occurred and is continuing, when the
Repurchase Date for such Transaction would be later than the Facility
Termination Date or to the extent that after giving effect to such Transaction
the aggregate Repurchase Price of all Mortgage Assets subject to Transactions
then outstanding would exceed the Maximum Amount.


 


(l)            Pursuant
to Section 3.01(b) of the Custodial Agreement, the Custodian shall
deliver to the Seller and the Agent an Asset Schedule and Exception Report
with respect to the Dry Mortgage Assets which the Seller has requested the
Agent purchase, on behalf of the Buyers, on such Purchase Date, and no later
than 12:00 p.m., New York City time, on each Purchase Date, the Custodian
shall deliver to the Agent a Dry Trust Receipt in respect of all such Dry
Mortgage Assets purchased by the Agent, on behalf of the Buyers, on such
Purchase Date.  Subject to the provisions
of this Article III, the Purchase Price for each Eligible Asset will be
made available to the Seller by the Agent transferring the aggregate amount of
such Purchase Price in accordance with the wiring instructions set forth in
respect of the Seller on Schedule 2.


 


Section 3.04           Repurchases.


 


(a)           Optional
Repurchases.  Subject to the payment
of any LIBOR breakage costs and any other fee or payment then due in accordance
with terms hereof, the Seller may repurchase Purchased Assets, without penalty
or premium (other than any fees payable), in whole on any date and in part on
any date so long as no Margin Deficit, Default or Event of Default shall have
occurred and then be continuing.  If the
Seller intends to make any such repurchase, the Seller shall give
one (1) Business Day’s prior written notice thereof to the Agent,
which notice shall specifically identify any Purchased Assets to be repurchased
in whole.  The Repurchase Price specified
in any such notice shall be due and payable on the date specified therein, and,
upon payment thereof, such amount shall be applied (i) with respect to
Purchased Assets being repurchased in whole, subject to Section 3.04(c),
to the Repurchase Price of the Purchased Assets identified by the Seller and
(ii) with respect to repurchases made in part, pro rata to the Repurchase
Price of all Purchased Assets.


 


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(b)           Mandatory
Repurchases.


 


(i)            In
the event that the Final Termination Date (as specified in clause (i) of
the definition thereof, the “Original Final Termination Date”) is
extended in accordance with Section 3.05(a), in addition to any other
amounts due and payable at any time pursuant to this Agreement or any other
Repurchase Document, the Sellers shall make equal quarterly payments, beginning
on the date occurring three (3) calendar months after the Original Final
Termination Date (or if such date is not a Business Day, on the immediately
preceding Business Day), in a total amount equal to the aggregate Repurchase
Price outstanding as of the Original Final Termination Date, unless the
aggregate Repurchase Price is paid in full prior to such quarterly payments
being due.


 


(ii)           In
the event that the weighted average Purchase Rate of all Mortgage Assets
exceeds 85.0%, the Sellers shall repurchase such Mortgage Assets as the Agent
shall have determined are necessary so that the weighted average Purchase Rate
of all Mortgage Assets does not exceed 85.0%; provided, however,
that, so long as no Default or Event of Default has occurred, if the Seller
specifically notifies the Agent in writing prior to the Agent purchasing a
particular Mortgage Asset that purchasing such Mortgage Asset will cause the
weighted average Purchase Rate to exceed 85.0% and the Agent approves and
purchases such Mortgage Asset, Sellers shall not be required to repurchase any
Mortgage Assets based solely on the increased weighted average Purchase Rate
caused by the purchase of such Mortgage Asset. 
Notwithstanding the foregoing, nothing in this subsection shall in
any way impair the Agent’s ability to issue a Margin Deficit Notice and require
satisfaction of any Margin Deficit in the manner and within the time frames as
provided in this Agreement.


 


(iii)          In
the event that the Weighted Average LTV of all Mortgage Assets exceeds 80.0%,
the Sellers shall pay a portion of the Repurchase Price of Purchased Assets
selected by the Sellers until the Weighted Average LTV of all Mortgage Assets
does not exceed 80.0%.


 


Section 3.05           Termination Dates; Maximum Amount.


 


(a)           Extension
of Termination Dates.  Upon written
request of all of the Sellers delivered to the Agent at least ninety (90) days,
but in no event earlier than 120 days, prior to any Termination Date, and so
long as no event which has a Material Adverse Effect and no Margin Deficit,
Default or Event of Default, or any default under any other Repurchase
Document, shall have occurred and be continuing on such Termination Date, and
so long as all representations and warranties are true, correct, complete and
accurate in all material respects on such Termination Date, the Agent may in
its sole discretion agree to extend such Termination Date by giving written
notice to the Sellers of such extension and of the new Termination Date
determined by the Agent; provided, that (i) any failure by the
Agent to deliver any such notice of extension to the Sellers shall be deemed to
be the Agent’s determination not to extend such Termination Date, (ii) in
no event shall the Second Termination Date or the Final Termination Date be
extended unless the Parent shall be listed on a national securities exchange
and (iii) no Termination Date shall be extended unless the Agent shall
have received payment of an amount equal to the Extension Fee (as defined in
the Fee Letter).


 


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(b)           [Reserved.]


 


(c)           Reduction
of Maximum Amount; Acceleration of Facility Termination Date.  The Maximum Amount may be reduced from time
to time at the election of all of the Sellers upon thirty (30) days advance
written notice to the Agent; provided, that (i) any such reduction
shall be in a minimum amount of $10,000,000 and a whole multiple of $1,000,000
in excess thereof, (ii) no Default of Event of Default shall exist
immediately after giving effect to any such reduction, and (iii) no Margin
Deficit shall exist immediately after giving effect to any such reduction (and
to any payments made contemporaneously therewith).  In the event that the Maximum Amount is, or
is at any time requested by the Sellers to be, less than $100,000,000, the
Maximum Amount may be reduced to $0 at the election of the Agent upon five
(5) days advance written notice to the Sellers, whereupon the Facility
Termination Date shall be deemed to have occurred and all amounts outstanding
under the this Agreement and the other Repurchase Documents shall be then due
and payable.


 


(d)           No
Obligation to Extend Facility Termination Date.  Notwithstanding any other provision of this
Section 3.05 or otherwise herein, neither the Agent nor any Buyer (or any
of their respective Affiliates) shall be under any obligation to extend the
Facility Termination Date.


 


Section 3.06           Payment of Price Differential.


 


(a)           Notwithstanding
that the Sellers, the Agent and the Buyers intend that the Transactions
hereunder be sales to the Buyers of the Purchased Assets, the Sellers shall pay
to the Agent, for the account of the Buyers, an amount equal to the accrued
Price Differential of each Transaction through but not including the Payment
Calculation Date (each such payment, a “Periodic Advance Repurchase Payment”)
on each Payment Date less any portion thereof previously paid, if any.  The Agent shall deliver to the Sellers, via
Electronic Transmission, notice of the required Periodic Advance Repurchase
Payment, and a detailed calculation thereof, on or prior to the fifth (5th)
Business Day preceding each Payment Date. 
If the Sellers fail to make all or part of the Periodic Advance
Repurchase Payment by 5:00 p.m., New York City time, on the Payment Date,
the Sellers shall be obligated to pay to the Agent for the account of the
Buyers (in addition to, and together with, the Periodic Advance Repurchase
Payment) interest on the unpaid amount of the Periodic Advance Repurchase
Payment at a rate per annum equal to the Post-Default Rate (the “Late
Payment Fee”) until the overdue Periodic Advance Repurchase Payment is
received in full by the Agent for the account of the Buyers.


 


(b)           If
any Seller repurchases Purchased
Assets on a day other than the last day of the Eurodollar Period applicable to
the related Transaction, all of the Sellers
shall jointly and severally indemnify the Agent and each Buyer and hold the Agent and each Buyer harmless from any actual liabilities, losses,
costs and/or expenses which the Agent or
any Buyer sustains or incurs arising from the reemployment of funds
obtained by Buyer hereunder or from fees payable to terminate the deposits from
which such funds were obtained (“Breakage Costs”), in each case for the
remainder of the applicable Eurodollar Period. 
The Agent shall deliver to the Sellers
a statement setting forth the amount and basis of determination of any Breakage
Costs in reasonable detail, it being agreed that such statement and the method
of its calculation shall be conclusive and binding upon the Sellers absent manifest error.  This Section 3.06(b) shall survive


 


44





















 


termination of
this Agreement and repurchase of all Purchased Assets subject to Transactions
hereunder.


 


ARTICLE IV



MARGIN MAINTENANCE


 


Section 4.01           Margin Adjustments. 
(a)  If at any time the aggregate Repurchase Price for all
Purchased Assets exceeds the aggregate Asset Value of
the Purchased Assets, then the Agent may, by delivery to the Sellers of a
Margin Deficit Notice, require the Sellers to, at the Sellers’ option, no later
than the Margin Correction Deadline, (i) sell to the Buyers for no
additional consideration (by transfer to the Agent or its designee, including
the Custodian) additional Eligible Assets (“Additional Purchased Assets”),
(ii) repurchase Purchased Assets at the Repurchase Price, (iii) make
a payment in reduction of the aggregate Repurchase Price (to be allocated to
the Repurchase Price of one or more Purchased Assets, as the Sellers shall
direct to the Agent in writing) or (iv) choose any combination of the
foregoing, so that, after giving effect to such transfers, repurchases and
payments, the aggregate Repurchase Price for all Purchased Assets does not
exceed the aggregate Asset Value thereof.


 


(b)           If
at any time the aggregate Repurchase Price of all Mortgage Assets subject to
Transactions then outstanding exceeds the Maximum Amount then in effect
(including, without limitation, after giving effect to the decreases in the
Maximum Amount which shall occur on the First Termination Date and the Second Termination
Date), or the aggregate Repurchase Price of all Mortgage Assets subject to
Special Purpose Transactions then outstanding exceeds an amount equal to 15% of
the Maximum Amount, then the Agent may, by delivery to the Sellers of a Margin
Deficit Notice, require the Sellers to, no later than the Margin Correction
Deadline, (i) repurchase Purchased Assets at the Repurchase Price,
(ii) make a payment in reduction of the Repurchase Price or
(iii) choose any combination of the foregoing, so that, after giving
effect to such repurchases and payments, the aggregate Repurchase Price of all
Mortgage Assets subject to Transactions then outstanding does not exceed the
Maximum Amount then in effect, or the aggregate Repurchase Price of all
Mortgage Assets subject to Special Purpose Transactions then outstanding does
not exceed an amount equal to 15% of the Maximum Amount as applicable.


 


(c)           Except
as contemplated by Section 4.02(a) or (b) as a repurchase
payment or as otherwise agreed in writing by the Agent, all cash transferred to
the Agent pursuant to this Section 4.01 shall be deposited in the account
set forth in Section 7.01 hereof and shall be deemed to reduce the
aggregate Repurchase Price with respect to all outstanding Transactions.


 


(d)           The
Agent’s election, in its sole and absolute discretion, not to deliver a Margin
Deficit Notice at any time a such a notice is permitted to be delivered by
Section 4.01(a) or 4.01(b) shall not in any way limit or impair
the Agent’s right to deliver a Margin Deficit Notice at any other time such a
notice is permitted to be delivered by Section 4.01(a) or 4.01(b).


 


Section 4.02           Margin Correction Deadline.  (a)  Subject to Section 4.02(b),
all transfers, repurchases and payments to be made by
the Sellers in satisfaction of any Margin Deficit Notice delivered pursuant to
Section 4.01(a) or 4.01(b) shall be completed no later than


 


45





















 


the time that is twenty-four (24) hours after
such notice is first received by any Seller (or if such time is not during a
Business Day, then no later than the same time on the next Business Day).


 


(b)           Notwithstanding
the foregoing, the deadline for completion of any repurchases or payments to be
made in satisfaction of any Margin Deficit Notice delivered pursuant to
Section 4.01(a) in respect of any Mortgage Asset (other than RMBS)
shall be extended to 12:00 p.m., New York City time, on the fifteenth (15th)
Business Day following the date on which the applicable Margin Deficit Notice
was first received by any Seller; provided, that no later than the time
that is twenty-four (24) hours after such notice is first received by any
Seller (or if such time is not during a Business Day, then no later than the
same time on the next Business Day), the Agent shall have received payment of
an amount equal to the Margin Deficit, which amount shall be held by the Agent
as cash collateral and not applied to the reduction of the aggregate Repurchase
Price so long as all of the following conditions are satisfied: (i) no
Default of Event of Default has occurred and is continuing, (ii) no
Eligible Asset in respect of which such repurchase or payment is to be made is
in any monetary or non-monetary default or is otherwise a Delinquent Mortgage
Asset, (iii) the Sellers are making diligent and good faith efforts to
effect the necessary repurchase or payment, (iv) no cash flow shall be
distributed in any manner by any Seller except to the Agent or into the
Collection Account (and the Parent, including its Affiliates, shall not be
entitled to, and shall not receive, from any Seller any fees, compensation or
other payments of any kind until all repurchases and payments necessary to be
made in satisfaction of the Margin Deficit Notice shall have been completed),
and (v) the Sellers provide to the Agent, on a periodic basis, a summary
of all efforts to be made by the Sellers to effect the necessary repurchase or
payment.  Notwithstanding anything herein
to the contrary, in the event any Seller fails to correct a Margin Deficit within
twenty-four (24) hours following receipt by a Seller of a Margin Deficit
Notice, the provisions of this Section 4.02(b) shall not prohibit,
prevent or restrict, in any manner, the Agent from selling the Purchased Asset
which is subject to the Margin Deficit and retaining the proceeds of such sale,
to the extent the related sale price is at least equal to the Repurchase Price
of such Purchased Asset; provided, however, that in the event any
Guarantor, in its capacity as borrower, has duly requested that a borrowing be
made under the Liquidity Facility for the purpose of funding any Margin Deficit
hereunder, Seller shall have not less than forty-eight (48) hours to correct
such Margin Deficit.  If the Agent sells
such Purchased Asset for an amount at least equal to the Repurchase Price
pursuant to the immediately preceding sentence, the Margin Deficit with respect
to such Purchased Asset will not, in and of itself, be deemed to be an Event of
Default.  The Agent shall report the
status of the sale of any Purchased Assets which are subject to a Margin
Deficit to Sellers every other Business Day during the fifteen-day period
following the delivery of a Margin Deficit Notice by the Agent to Sellers with
respect to such Purchased Assets.


 


ARTICLE V



INCOME PAYMENTS; REQUIREMENTS
OF LAW


 


Section 5.01           Income Payments. 
Subject to the conditions set forth below, the Sellers shall be entitled
to receive an amount equal to all Income paid or
distributed on or in respect of the Purchased Assets that is not otherwise received
by any Seller, to the full extent it
would be so entitled if the Mortgage Assets had not been sold to the Buyers. 
Notwithstanding 


 


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the foregoing, each Seller hereby agrees
(i) to instruct each applicable trustee, Servicer or other party acting as
paying agent with respect to the related Eligible Asset, to transfer all Income
with respect thereto directly to the Agent for
deposit into the Collection Account within two (2) Business Days after
receipt thereof and (ii) to itself make, and to instruct each counterparty
to any Interest Rate Protection Agreement to deliver, any payments from time to
time due and payable under such Interest Rate Protection Agreement directly to
the Agent for deposit into the Collection Account.  On each Payment Date, any amounts on deposit
in the Collection Account in respect of a Purchased Asset shall be applied as
follows:


 


 first,
to the payment of all fees, expenses, and other obligations then due to the
Agent and/or the Buyers (or their
Affiliates) pursuant to this Agreement, other than the Pricing
Differential and Repurchase Price on the Purchased Assets;


 


second, pro rata, to the payment of
accrued and unpaid Pricing Differential on such Purchased Asset and any amounts
(other than breakage costs) then due and payable to an Affiliated Hedge
Counterparty under any Interest Rate Protection Agreement related to such
Purchased Asset;


 


third, pro rata, to the payment of the
Repurchase Price for such Purchased Asset then subject to a request to
repurchase in accordance with the terms of Section 3.04 and, solely with
respect to any Interest Rate Protection Agreement with an Affiliated Hedge
Counterparty related to such Purchased Asset, to any accrued and unpaid
breakage costs under such Interest Rate Protection Agreement related to such
Purchased Asset; and


 


fourth, to the Operating Account, for such
purposes as the Seller shall determine in its sole discretion; provided,
that (i) if any Market Disruption Event shall have occurred and be
continuing at any time during the period from the date hereof to the earlier of
August 31, 2005 and the CDO Closing Date, amounts on deposit in the
Collection Account shall be transferred to the Operating Account solely to the
extent necessary to preserve the status of the Parent as a REIT (such amounts
to be supported by documentation delivered to the Agent prior to any such
transfer, which documentation shall be reasonably satisfactory to the Agent in
form and substance) and any additional amounts shall remain in the Collection
Account and (ii) if any Margin Deficit, Default or Event of Default shall
have occurred and be continuing, or if any Market Disruption Event shall have
occurred and/or be continuing after the period described in clause (i) of
this proviso, no amounts on deposit in the Collection Account shall be
transferred to the Operating Account, all such amounts shall remain in the
Collection Account.


 


All investment income
received with respect to the amount in the Collection Account shall be held by
the Agent for the account of Sellers, subject to the Agent’s and each Buyer’s
liens on such amounts created under the Repurchase Documents, and shall be paid
to the Operating Account in the priority stated above, provided all amounts due
and payable to the Agent and each Buyer (or their Affiliates) under the terms
of the Repurchase Documents have been timely paid.


 


Section 5.02           Requirements of Law.  (a)  In the event that any Buyer shall
at any time have determined (which determination
shall, absent manifest error, be final and conclusive


 


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and binding upon all parties hereto) that any
Requirement of Law (other than with respect to any amendment made to such
Buyer’s certificate of incorporation and by-laws or other organizational or
governing documents) or any change in the interpretation or application thereof
or compliance by such Buyer with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority
made subsequent to the date hereof:


 


(i)            shall
subject such Buyer to any tax of any kind whatsoever with respect to this
Agreement or any Transaction (excluding net income taxes) or change the basis
of taxation of payments to such Buyer in respect thereof;


 


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


 


(iii)          shall
impose on such Buyer any other condition;


 


and the result of any of the foregoing is to increase
the cost to such Buyer, by an amount which such Buyer deems in good faith to be
material, of entering, continuing or maintaining any Transaction or to reduce
any amount due or owing hereunder in respect thereof by an amount which such
Buyer determines in good faith to be material, then, in any such case, the
Sellers shall promptly pay such Buyer such additional amount or amounts as
calculated by such Buyer in good faith as will compensate such Buyer for such
increased cost or reduced amount receivable.


 


(b)           In
the event that any Buyer shall at any time have determined (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that the adoption of or any change in any Requirement of Law
(other than with respect to any amendment made to such Buyer’s certificate of
incorporation and by-laws or other organizational or governing documents)
regarding capital adequacy or in the interpretation or application thereof or
compliance by such Buyer or any corporation controlling such Buyer with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Buyer’s or
such corporation’s capital as a consequence of its obligations hereunder to a
level below that which such Buyer or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Buyer’s
or such corporation’s policies with respect to capital adequacy) by an amount
deemed by such Buyer in good faith to be material, then from time to time, the
Sellers shall promptly pay to such Buyer such additional amount or amounts as
will compensate such Buyer for such reduction.


 


(c)           All
payments made by any Seller to any Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however,
that if any Seller shall be required by law to deduct or withhold any taxes
from any sums payable to such Buyer, then the Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant authority in
accordance with applicable law, (B) pay to such Buyer the sum that would
have been payable had such deduction or withholding not been made, and
(C) at the time the Price


 


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Differential is
paid, pay to such Buyer all additional amounts as specified by such Buyer to
preserve the after-tax yield such Buyer would have been received had such tax
not been imposed; provided, however, that the Seller shall not be
required to pay any additional amounts solely as a result of the syndication of
this Agreement to an entity that would be treated as being engaged in a trade
or business in the United States for federal income tax purposes, or is
otherwise exempt from any such withholding taxes.


 


(d)           If
any Buyer becomes entitled to claim any additional amounts pursuant to this
Section 5.02, it shall promptly notify each affected Seller of the event
by reason of which it has become so entitled. 
A certificate as to any additional amounts payable pursuant to this
Section 5.02 submitted by such Buyer to an affected Seller shall be
conclusive in the absence of manifest error.


 


ARTICLE VI



SECURITY INTEREST


 


Section 6.01           Security Interest. 
(a)  Each of the following items or types of property, whether now
owned or hereafter acquired, now existing or hereafter
created and wherever located, is hereinafter referred to as (the “Purchased
Items”): all Mortgage Assets, all rights under each Purchase Agreement (but
not the obligations thereunder), all Mortgage Asset Files, including without
limitation all promissory notes included therein, all Servicing Records
relating to the Mortgage Assets, all Servicing Agreements relating to the
Mortgage Assets and any other collateral pledged or otherwise relating to such
Mortgage Assets, together with all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating thereto, all
mortgage guaranties and insurance (issued by governmental agencies or
otherwise) and any mortgage insurance certificate or other document evidencing
such mortgage guaranties or insurance relating to any Mortgage Asset, all
servicing fees to which the Seller is entitled and servicing and other rights
relating to the Mortgage Assets, all Servicer Accounts established pursuant to
any Servicing Agreement and all amounts on deposit therein, from time to time,
all Purchase Agreements or other agreements or contracts relating to,
constituting, or otherwise governing, any or all of the foregoing to the extent
they relate to the Purchased Assets including the right to receive principal and
interest payments with respect to the Purchased Assets and the right to enforce
such payments, the Controlled Accounts and all monies and investment property
from time to time on deposit in, or credited to, the Controlled Accounts, all
securities accounts to which any Purchased Assets consisting of “securities” or
“security entitlements” (as defined in the UCC) have been credited, all
Interest Rate Protection Agreements, if any, all “general intangibles”,
“accounts”, “chattel paper”, “deposit accounts”, “instruments” and “investment
property” as defined in the UCC relating to or constituting any and all of the
foregoing, and any and all replacements, substitutions, distributions on or
proceeds of any and all of the foregoing.


 


(b)           The
Sellers and Buyers intend that the Transactions hereunder be sales to the
Buyers of the Purchased Assets and not loans from the Buyers to the Seller
secured by the Purchased Assets. 
However, in order to preserve the Agent’s and each Buyer’s rights under
this Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as loans and as security for the performance by each
Seller of all of the Seller’s obligations to the


 


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Agent and each
Buyer hereunder and the Transactions entered into hereunder (“Repurchase
Obligations”) and Seller-Related Obligations, each Seller hereby assigns,
pledges and grants a security interest in all of its right, title and interest
in, to and under the Purchased Items and the Purchased Assets to the Agent, for
the ratable benefit of the Buyers and the Affiliated Hedge Counterparties, to
secure the Repurchase Obligations and Seller-Related Obligations, including
without limitation the repayment of all amounts owing to the Agent and each
Buyer hereunder and, as security for the performance by each Seller of all of
the Seller’s obligations to the Affiliated Hedge Counterparties under the
Interest Rate Protection Agreements and this Agreement, each Seller hereby
assigns, pledges and grants to the Agent, as agent for and on behalf of the
Affiliated Hedge Counterparties, a pari passu security interest, subject to the
payment priorities set forth in this Agreement, in all of the Seller’s right,
title and interest in, to and under the Purchased Items and the Purchased
Assets.  Each Seller agrees to mark its
computer records and files to the extent practicable to evidence the interests
granted to the Agent and the Buyers hereunder. 
All Purchased Items shall secure the payment of all obligations of each
Seller now or hereafter existing under this Agreement and each Interest Rate
Protection Agreement that is with an Affiliated Hedge Counterparty, including,
without limitation, each Seller’s obligation to repurchase Purchased Assets, or
if such obligation is so recharacterized as a loan, to repay such loan, for the
Repurchase Price and to pay any and all other amounts owing to the Agent and
each Buyer hereunder.  The Agent agrees
to act as agent for and on behalf of the Affiliated Hedge Counterparties with
respect to the security interest granted hereby to secure the Sellers’
obligations to the Affiliated Hedge Counterparties, including, without
limitation, with respect to the Purchased Assets and the Mortgage Asset Files
held by the Custodian pursuant to the Custodial Agreement.


 


(c)           Pursuant
to the Custodial Agreement, the Custodian shall hold the Mortgage Asset Files
as exclusive bailee and agent for the Agent pursuant to the terms of the
Custodial Agreement and shall deliver to the Agent Trust Receipts each to the
effect that the Custodian has reviewed such Mortgage Asset Files in the manner
and to the extent required by the Custodial Agreement and identifying any
deficiencies in such Mortgage Asset Files as so reviewed.


 


(d)           With
respect to any portion of the Purchased Items which consist of “securities” or
“security entitlements” (as defined in the UCC), (x) in the case of any
security represented by a “security certificate” (within the meaning of the
UCC), the Custodian shall hold such security certificate, registered in the
name of the Custodian or indorsed to the Custodian in blank (in the case of a
security in “registered form” (within the meaning of the UCC)) and (y) in the
case of a security entitlement, cause the relevant “securities intermediary”
(as defined in the UCC) to indicate by book-entry the credit thereof to a
“securities account” (as defined in the UCC), as to which the Custodian is the
“entitlement holder” (as defined in the UCC).


 


(e)           In
addition to and without limiting the generality of the foregoing, each Seller
hereby grants to the Agent for the benefit of the Buyers hereunder a security
interest in each Interest Rate Protection Agreement, if any, relating to the
Purchased Assets to secure the Repurchase Obligations and the Seller-Related
Obligations.


 


(f)            The
Agent agrees to act as agent for and on behalf of the Affiliated Hedge
Counterparties with respect to the security interest granted hereby to secure
the obligations


 


50





















 


owing to the
Affiliated Hedge Counterparties under any Interest Rate Protection Agreements,
including, without limitation, with respect to the Purchased Assets and the
Mortgage Asset Files held by the Custodian pursuant to the Custodial Agreement.


 


Section 6.02           Release of Security Interest.  Upon satisfaction of the Repurchase
Obligations and the Seller-Related Obligations, the
Agent shall reconvey the Purchased Assets to the Seller and release its
security interest therein.


 


ARTICLE VII



PAYMENT, TRANSFER AND CUSTODY


 


Section 7.01           Payment, Transfer and Custody.  (a)  Unless otherwise mutually agreed in
writing, all transfers of funds to be made by each
Seller hereunder shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Agent, in accordance with
the wiring instructions set forth on Schedule 2 hereto, not later
than 3:00 p.m., New York City time, on the date on which such payment
shall become due (and each such payment made after such time shall be deemed to
have been made on the next succeeding Business Day).  Each Seller acknowledges that it has no
rights of withdrawal from the foregoing account.


 


(b)           On
the Purchase Date for each Transaction, ownership of the Purchased Assets shall
be transferred to the Buyers or their designee (including the Custodian)
against the simultaneous transfer of the Purchase Price by the Agent on behalf
of the Buyers to the Seller, in accordance with the wiring instructions set
forth on Schedule 2 hereto, not later than 6:00 p.m., New York
City time, simultaneously with the delivery by the Custodian to the Agent of
the Trust Receipts with respect to the Purchased Assets relating to each
Transaction.  The Seller hereby sells,
transfers, conveys and assigns to the Buyers or their designee (including the
Custodian), subject to the terms of this Agreement, all the right, title and
interest of the Seller in and to the Purchased Assets together with all right,
title and interest in and to the proceeds of any related Purchased Items.


 


(c)           In
connection with such sale, transfer, conveyance and assignment, on or prior to
each Purchase Date, the Sellers shall deliver or cause to be delivered and
released to the Agent or its designee (including the Custodian) the documents
identified in the Custodial Agreement.


 


(d)           Any
Mortgage Asset Files not delivered to the Agent or its designee (including the
Custodian) are and shall be held in trust by the Seller or its designee for the
benefit of the Buyers as the owner thereof. 
The Seller or its designee shall maintain a copy of the Mortgage Asset
File and the originals of the Mortgage Asset File not delivered to the Agent or
its designee (including the Custodian). 
The possession of the Mortgage Asset File by the Seller or its designee
is at the will of the Agent for the sole purpose of servicing the related
Purchased Asset, and such retention and possession by the Seller or its
designee is in a custodial capacity only. 
Each Mortgage Asset File retained or held by the Seller or its designee
shall be segregated on the Seller’s books and records, to the extent possible,
from the other assets of the Seller or its designee and the books and records
of the Seller or its designee shall be marked appropriately to


 


51





















 


reflect clearly
the sale of the related Purchased Asset to the Buyers.  The Seller or its designee shall release its
custody of the Mortgage Asset File only in accordance with written instructions
from the Agent, unless such release is required as incidental to the servicing
of the Purchased Assets or is in connection with a repurchase of any Purchased
Asset by the Seller.


 


ARTICLE VIII



SELLER REPRESENTATIONS AND
WARRANTIES


 


Section 8.01           Seller Representations and Warranties.  Each Seller represents and warrants to the
Agent and each Buyer that as of the Purchase Date for
the purchase of any Purchased Assets by the Buyers from the Seller and as of
the date of this Agreement and any Transaction hereunder and, except where any
such representation or warranty is expressly stated to have been made as of a
specific date, at all times while the Repurchase Documents and any Transaction
hereunder is in full force and effect:


 


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


 


(b)           Solvency.  Neither the Repurchase Documents nor any
Transaction thereunder are entered into in contemplation of insolvency or with
intent to hinder, delay or defraud any of Seller’s creditors.  The transfer of the Mortgage Assets subject
hereto and the obligation to repurchase such Mortgage Assets is not undertaken
with the intent to hinder, delay or defraud any of Seller’s creditors.  As of the Repurchase Date, Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor
provision thereof and the transfer and sale of the Mortgage Assets pursuant
hereto and the obligation to repurchase such Mortgage Asset (i) will not
cause the liabilities of Seller to exceed the assets of Seller, (ii) will
not result in Seller having unreasonably small capital, and (iii) will not
result in debts that would be beyond Seller’s ability to pay as the same
mature.  Seller received reasonably
equivalent value in exchange for the transfer and sale of the Purchased Assets
and Purchased Items subject hereto.  No
petition in bankruptcy has been filed against Seller in the last ten (10) years,
and Seller has not in the last ten (10) years made an assignment for the
benefit of creditors or taken advantage of any Debtors Relief Laws.


 


(c)           No
Broker.  (i) Seller has not
engaged the services of, or otherwise dealt with, any broker, investment
banker, agent, or other person, except for the Agent (or an Affiliate of the
Agent) in connection with this Agreement or any other Repurchase Document or
any Transaction or other matter related thereto and (ii)  no brokerage
commission or other similar compensation is payable in connection with this
Agreement or any other Repurchase Document or any Transaction or other matter
related thereto.


 


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


 


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(e)           No Margin Deficit; No Defaults. 
No Margin Deficit exists and no Default or Event of Default has
occurred and is continuing hereunder.


 


(f)            Legal
Name, Good Standing; Organizational Identification Number; Authority,
Qualification to do Business; Compliance with Law.


 


(i)            GWF-I’s
exact legal name is Gramercy Warehouse Funding I LLC.  GWF-I is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Delaware.


 


(ii)           GWF-I’s
organizational identification number is 81-0653125.  Seller will promptly notify the Agent of any
change in its organizational number.


 


(iii)          Seller
has the requisite corporate, partnership or limited liability company power and
authority, as the case may be, to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage.  Seller is qualified to do business and is in
good standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify could not be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect.


 


(iv)          Seller
is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.


 


(g)           Organizational
Structure; Financial Condition; No Material Adverse Change.  A copy of Seller’s current organizational
chart (depicting and delineating all of such Guarantor’s consolidated and
non-consolidated Subsidiaries) is attached as Exhibit R
hereto.  Seller has heretofore furnished
to the Agent a copy of its most recent quarterly balance sheet and the related
statement of income and cash flows, certified by a Responsible Officer of the
Parent to be true and correct; such financial statements are true and correct,
fairly present the consolidated financial condition of Seller and its
Subsidiaries as of such date and have been prepared in accordance with Tax
Based Accounting Principles.  Since the
date of the most recent financial statements delivered to the Agent, no change
having a Material Adverse Effect has occurred.


 


(h)           No
Litigation.  As of the date of this
Agreement and as of the Purchase Date for the purchase of any Purchased Assets
hereunder, there are no actions, suits, investigations or legal, equitable,
arbitration or administrative proceedings pending, or to the knowledge of
Seller threatened, against Seller as to which there is a reasonable possibility
of an adverse determination that would have a Material Adverse Effect.  To the extent the representations and warranties
in this Section 8.01 shall be remade as of any date subsequent to the date
hereof, Seller shall be deemed to represent that as of such subsequent date,
there are no actions, suits, investigations or legal, equitable, arbitration or
administrative proceedings pending, or to the knowledge of Seller, threatened,
against Seller which have not been disclosed to Buyer in writing and as to
which there is a reasonable possibility of an adverse determination that would
have a Material Adverse Effect.


 


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(i)            No
Conflicts or Consents.  Neither the
execution and delivery of this Agreement and the other Repurchase Documents by
Seller, nor the consummation of any of the transactions by it herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, will contravene or conflict with any provision of
law, statute, or regulation to which Seller is subject or any material
judgment, license, order, or permit applicable to Seller or contravene or
conflict with or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of Seller
pursuant to the terms of any indenture, mortgage, deed of trust, or other
agreement or instrument to which Seller is a party or by which Seller may be
bound, or to which Seller may be subject, other than Liens created pursuant to
the Repurchase Documents.  No consent,
approval, authorization, or order of any court or Governmental Authority or
third party is required in connection with the execution and delivery by Seller
of the Repurchase Documents to which it is a party or to consummate the
transactions contemplated hereby or thereby which has not already been
obtained.


 


(j)            Authorization,
Power and Enforceability.  Seller has
all necessary corporate or other power, authority and legal right to execute,
deliver, and perform under this Agreement and each of the other Repurchase
Documents executed by it; Seller is duly authorized to execute, deliver, and
perform under this Agreement and the other Repurchase Documents to which it is
a party and is and will continue to be duly authorized to perform under this
Agreement and such other Repurchase Documents; and each Repurchase Document has
been duly executed and delivered by Seller, as applicable, and constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.


 


(k)           Governmental
Approvals.  No order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any Governmental Authority is required to
authorize, or is required in connection with, (i) the execution, delivery
and performance of any Repurchase Document to which Seller is or will be a
party, (ii) the legality, validity, binding effect or enforceability of
any such Repurchase Document against Seller or (iii) the consummation of
the transactions contemplated by this Agreement (other than the filing of
certain financing statements in respect of certain security interests).


 


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


 


(m)          Taxes.  Seller and each Subsidiary thereof has filed
all required federal income tax returns and all other material tax returns,
domestic and foreign, required to be filed by it and has paid all material
taxes (including mortgage recording taxes), assessments, fees, and other
governmental charges payable by it, or with respect to any of their properties,
which have become due, and income or franchises have been paid prior to the
time that such taxes could give rise to a lien thereon or are being contested
in good faith by appropriate proceedings and


 


54





















 


appropriate
reserves therefor have been established in accordance with GAAP.  Seller and each Subsidiary thereof has paid,
or has provided adequate reserves (in the good faith judgment of the management
of Seller) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to
date.  There is no material action, suit,
proceeding, investigation, audit or claim now pending or, to the knowledge of
Seller, threatened by any authority regarding any taxes relating to Seller or
any Subsidiary thereof which is material or not being contested in good
faith.  Neither Seller nor any Subsidiary
thereof has entered into any agreement or waiver or been requested to enter
into any agreement or waiver extending any statute of limitations relating to
the payment or collection of taxes, or is aware of any circumstances that would
cause the taxable years or other taxable periods of Seller or any Subsidiary
thereof not to be subject to the normally applicable statute of limitations.


 


(n)           Government
Regulation.  Neither Seller nor any
Subsidiary thereof is (i) an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended; (ii) a “holding company” or a “subsidiary
company” of a “holding company” or an “affiliate” of either a “holding company”
or a “subsidiary company” within the meaning of the Public Utility Holding
Company Act of 1935, as amended; or (iii) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.


 


(o)           Purchased
Assets.


 


(i)            As
of the date hereof, Seller has not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Asset (or any interest therein) to any other Person,
and immediately prior to the sale of such Mortgage Asset to the Buyers, Seller
was the sole owner of such Mortgage Asset and had good and marketable title
thereto, free and clear of all Liens, in each case except for Liens to be
released simultaneously with the sale to the Buyers hereunder.


 


(ii)           The
provisions of this Agreement and the related Confirmation are effective to
either constitute a sale of Purchased Items to the Buyers or to create in favor
of the Agent for the ratable benefit of the Buyers a legal, valid and
enforceable security interest in all right, title and interest of Seller in, to
and under the Purchased Items.


 


(iii)          Upon
receipt by the Custodian of each Mezzanine Note or Junior Interest Note,
endorsed in blank by a duly authorized officer of Seller, either a purchase
shall have been completed by the Buyers of such Mezzanine Note or Junior
Interest Note, as applicable, or the Agent shall have for the ratable benefit
of the Buyers a valid and fully perfected first priority security interest in
all right, title and interest of Seller in the Purchased Items described
therein.


 


(iv)          Each
of the representations and warranties made in respect of the Purchased Assets
pursuant to Schedule 1(a) – 1(j), as applicable, are true,
complete and correct.


 


(v)           Upon
the filing of financing statements on Form UCC-1 naming the Agent, as
agent for the Buyers, as “Secured Party”, Seller as “Debtor” and
describing the


 


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Purchased Items,
in the jurisdictions and recording offices listed on Exhibit C
attached hereto, the security interests granted hereunder in that portion of
the Purchased Items which can be perfected by filing under the Uniform
Commercial Code will constitute fully perfected security interests under the
Uniform Commercial Code in all right, title and interest of Seller in, to and
under such Purchased Items.


 


(vi)          Upon
execution and delivery of the Account Control Agreement, the Agent shall have,
for the ratable benefit of the Buyers, a valid and fully perfected first
priority security interest in, the “investment property” and all “deposit
accounts” (each as defined in the Uniform Commercial Code) comprising Purchased
Items.


 


(p)           Principal
Place of Business; Location of Records; Federal Tax ID.  GWF-I’s principal place of business is 420
Lexington Avenue, New York, New York 10170. 
All of the books and records of GWF-I are and will be kept at 420
Lexington Avenue, New York, New York 10170 and will continue to be at such
location (unless GWF-I notifies the Agent in writing at least thirty (30) days
prior to the date of any change). 
GWF-I’s federal taxpayer’s identification number is 81-0653125.


 


(q)           Interest
Rate Protection Agreements.  Seller
has entered into all Interest Rate Protection Agreements required pursuant to
Section 9.01(v) and to the actual knowledge of Seller, as of the date
of this Agreement and as of the Purchase Date for the purchase of any Purchased
Assets subject to an Interest Rate Protection Agreement, each such Interest
Rate Protection Agreement is in full force and effect in accordance with its
terms and no default, event of default or termination event (however
denominated) exists thereunder.


 


(r)            Servicing
Agreements.  Seller has delivered to
the Agent all Servicing Agreements pertaining to the Mortgage Assets and to the
actual knowledge of Seller, as of the date of this Agreement and as of the
Purchase Date for the purchase of any Purchased Assets subject to a Servicing
Agreement, each such Servicing Agreement is in full force and effect in
accordance with its terms and no default or event of default exists thereunder.


 


(s)           True
and Complete Disclosure.  The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of Seller to the Agent in connection with the
negotiation, preparation or delivery of this Agreement and the other Repurchase
Documents or included herein or therein or delivered pursuant hereto or thereto
(other than with respect to the Mortgage Assets), 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.  All written information furnished after the
date hereof by or on behalf of Seller to the Agent in connection with this
Agreement and the other Repurchase Documents and the transactions contemplated
hereby (other than with respect to the Mortgage Assets) and thereby will be true,
complete and accurate in all material respects, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified.  There is no fact
known to a Responsible Officer of Seller, after due inquiry, that would
reasonably be expected to have a Material Adverse Effect that has not been
disclosed herein, in the other Repurchase Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or


 


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other writing
furnished to the Agent for use in connection with the transactions contemplated
hereby or thereby.


 


(t)            No
Plan Assets.  Seller is not an
“employee benefit plan,” as defined in Section 3(3) of ERISA, subject
to Title I of ERISA, and none of the assets of Seller constitutes or will
constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101.  In
addition, (a) Seller is not a “governmental plan” within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Seller are not
subject to state statutes regulating investment of, and fiduciary obligations
with respect to, governmental plans similar to the provisions of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code currently
in effect, which prohibit or otherwise restrict the transactions contemplated
by this Agreement.


 


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


 


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


 


(w)          Insurance.  As of the date of this Agreement and as of
the Purchase Date for the purchase of any Purchased Assets hereunder, Seller
has, with respect to its properties and business, insurance covering the risks,
in the amounts, with the deductible or other retention amounts, and with the
carriers, listed on Schedule 4, which insurance meets the
requirements of Section 9.01(x).


 


(x)            Environmental
Matters.  As of the date of this
Agreement and as of the Purchase Date for the purchase of any Purchased Assets
hereunder:


 


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


 


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


 


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


 


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


 


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


 


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


 


(vii)         to
the best knowledge of Seller, each of the representations and warranties set
forth in the preceding clauses (i) through (vi) is true and correct
with respect to each parcel of real property owned or operated by Seller.


 


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


 


(z)            Office
of Foreign Assets Control.  Seller is
not a person (i) whose property or interest in property is blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (ii) who engages in any dealings or transactions prohibited
by Section 2 of such executive order, or to the best of Seller’s
knowledge,  is otherwise associated with
any such person in any manner violative of Section 2 of such executive
order, or (iii) on the current list of Specially Designated Nationals


 


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and Blocked
Persons or subject to the limitations or prohibitions under any other U.S.
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order.


 


(aa)         Certain
Tax Matters.  Seller represents and
warrants, and acknowledges and agrees, that it does not intend to treat any
Transaction or any related transactions hereunder as being a “reportable
transaction” (within the meaning of United States Treasury Department
Regulation Section 1.6011-4).  In
the event that Seller determines to take any action inconsistent with such
intention, it will promptly notify the Agent. 
If Seller so notifies Buyer, Seller acknowledges and agrees that the
Agent and each Buyer may treat each Transaction as part of a transaction that
is subject to United States Treasury Department Regulation
Section 301.6112-1, and the Agent will maintain the lists and other
records required by such Treasury Regulation.


 


(bb)         Fiscal
Year.  The fiscal year of Seller is
the calendar year.


 


(cc)         Agreements.  Seller is not a party to any agreement or
instrument or subject to any restriction which could reasonably be expected to
have any Material Adverse Effect.  Seller
is not in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Seller is
bound.  Seller does not have any material
financial obligation under any agreement or instrument to which Seller is a
party or by which such party is otherwise bound, other than (a) obligations
incurred in the ordinary course of Seller’s business and (b) obligations
under the Repurchase Documents.


 


(dd)         Amendment
and Restatement.  The Existing
Agreement is amended, restated and superceded in its entirety by this
Agreement.  Seller has no, and Seller
hereby waives all, defenses, rights of setoff, claims, counterclaims or causes
of action of any kind or description against the Agent and any applicable Buyer
arising under or in respect of the Existing Agreement or any related document
and, as of the Effective Date, the Agent and each applicable Buyer is in full
compliance with its undertakings and obligations under this Agreement
(including the Existing Agreement) and all related documents.


 


ARTICLE IX



COVENANTS


 


Section 9.01           Seller Covenants. 
On and as of the date of this Agreement and each Purchase Date and until
this Agreement is no longer in force with respect to
any Transaction, each Seller covenants that:


 


(a)           Financial
Statements.  Seller shall deliver or
cause to be delivered to the Agent:


 


(i)            as
soon as available and in any event within thirty (30) days after the end of
each fiscal quarter of the Parent,
the unaudited consolidated balance sheets of the Parent and its consolidated
Subsidiaries (and, to the extent available, for each Seller) as at the end of
such period and the related unaudited consolidated statements of income and
retained earnings and of cash flows for the Parent and its consolidated
Subsidiaries (and,


 


59





















 


to the extent
available, for each Seller) for such period and the portion of the fiscal year
through the end of such period, accompanied by a schedule of all
contingent funding obligations and hedging positions of the Parent and its
consolidated Subsidiaries (and, to the extent available, for each Seller) and a
certificate of a Responsible Officer, which certificate shall state that said
consolidated financial statements fairly present in all material respects the
consolidated financial condition and results of operations of the Parent and
its consolidated Subsidiaries (and, to the extent applicable, for each Seller)
in accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end adjustments);


 


(ii)           as
soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Parent,
the audited consolidated balance sheets of the Parent and its consolidated
Subsidiaries (and, to the extent available, for each Seller) as at the end of
such fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for the Parent and its consolidated Subsidiaries
(and, to the extent available, for each Seller) for such year, setting forth in
each case in comparative form the figures for the previous year, accompanied by
an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations
of the Parent and its consolidated Subsidiaries (and, to the extent applicable,
for each Seller) as at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default or Event of Default;


 


(iii)          (A) with
respect to each Mortgage Asset (not including RMBS) originated or master serviced
by an Affiliate of Seller, the Agent or any Buyer, as soon as available, but in
any event not later than sixty (60) days after the end of each fiscal quarter
of Seller, the rent roll, operating statement and aging of accounts receivable
and accounts payable for each Underlying Mortgaged Property and (B) with
respect to each Mortgage Asset not originated or master serviced by an
Affiliate of Seller, the Agent or any Buyer, Seller shall use its good faith
efforts to deliver as soon as practicable, the rent roll, operating statement
and aging of accounts receivable and accounts payable for each Underlying
Mortgaged Property;


 


(iv)          with
respect to each Mortgage Asset (not including RMBS), as soon as available, but
in any event not later than sixty (60) days after the end of each fiscal
quarter of Seller, a report
detailing projections of Seller with
respect to such Mortgage Asset for the following six (6) month period,
which shall include, in any event, a description of Seller’s internal risk
rating, tenant ratings, tenant KMV ratings (if applicable) and/or surveillance
of such Mortgage Asset;


 


(v)           with
respect to each Mortgage Asset to the extent received by any Seller from the
obligor under any Mortgage Asset, as soon as available, but in any event not
later than thirty (30) days after receipt thereof, the annual balance sheet
with respect to such obligor;


 


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(vi)          with
respect to each Mortgage Asset that is CMBS, RMBS or a Junior Interest or which
is a Non-Controlling Interest or Pass-Through Interest in any of the foregoing,
as soon as available but in any event not later than thirty (30) days after
receipt thereof, (i) the related monthly securitization report, if any,
and (ii) within thirty (30) days after the end of each month, a copy of
the standard monthly exception report, prepared by Seller in the ordinary course of its business in respect of the
related Mortgage Asset or Underlying Mortgaged Property;


 


(vii)         from
time to time such other information regarding the financial condition,
operations, or business of Seller as the Agent may reasonably request; and


 


(viii)        as
soon as reasonably possible, and in any event within thirty (30) days after a
Responsible Officer of Seller knows, or with respect to any Plan to which
Seller or any Subsidiary thereof makes direct contributions, has reason to
believe, that any of the events or conditions specified below with respect to
any Plan has occurred or exists, a statement signed by a senior financial
officer of Seller setting forth details respecting such event or condition and
the action, if any, that Seller or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with
or given to PBGC by Seller or an ERISA Affiliate with respect to such event or
condition):


 


(A)          any
Reportable Event, or and any request for a waiver under
Section 412(d) of the Code or any successor provision thereof for any
Plan;


 


(B)           the
distribution under Section 4041(c) of ERISA or any successor
provision thereof of a notice of intent to terminate any Plan or any action
taken by Seller or an ERISA Affiliate to terminate any Plan;


 


(C)           the
institution by PBGC of proceedings under Section 4042 of ERISA or any
successor provision thereof for the termination of, or the appointment of a
trustee to administer, any Plan; and


 


(D)          the
adoption of an amendment to any Plan that would result in the loss of tax
exempt status of the trust of which such Plan is a part if Seller or an ERISA
Affiliate fails to provide timely security to such Plan in accordance with the
provisions of Section 401(a)(29) of the Code or Section 307 of ERISA
or any successor provision thereof.


 


(b)           Certificates;
Other Information.  Seller shall
furnish to the Agent:


 


(i)            concurrently
with the delivery of the financial statements referred to in
Section 9.01(a)(ii) above, a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefore no knowledge was obtained of any
Default or Event of Default caused by a failure to comply with the requirements
of Section 9.01(l)-(o), except as specified in such certificate;


 


(ii)           concurrently
with the delivery of the financial statements referred to in
Section 9.01(a) above and with the delivery of each Confirmation, a
certificate of a


 


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Responsible
Officer substantially in the form of Exhibit J hereto
(A) stating that, to the best of such Responsible Officer’s knowledge,
Seller during such period has observed or performed all of its covenants and
other agreements in all material respects, and satisfied every material
condition, contained in this Agreement and the related documents to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate, (B) showing in detail the calculations supporting such
Responsible Officer’s certification of Seller’s compliance with the
requirements of Sections 9.01(l)-(o), (C) showing in detail the
calculations projected with respect to the requirements of
Sections 9.01(l)-(o) for the upcoming period of four (4) fiscal
quarters, (D) attaching a current copy of Seller’s organizational chart
(depicting and delineating all of such Guarantor’s consolidated and
non-consolidated Subsidiaries), (E) confirming that all of the Capital
Stock and other equity and ownership interests of Seller’s Subsidiaries has been
pledged to the Agent for the ratable benefit of the Buyers and Seller has taken
all such further actions as the Agent has requested in order to effect and
perfect such pledge and (F) showing the calculations which demonstrate
compliance with the Sub-Limits;


 


(iii)          as
soon as available, but in any event not later than ninety (90) days after
the end of each fiscal year of Seller, a copy of the projections of the Sellers
and the Parent of the operating budget and cash flow budget of the Sellers and
the Parent for the succeeding fiscal year, such projections to be accompanied
by a certificate of a Responsible Officer certifying that such projections have
been prepared in good faith based upon reasonable assumptions;


 


(iv)          promptly
upon receipt thereof, copies of all reports submitted to Seller by independent
certified public accountants in connection with each annual, interim or special
audit of the books and records of Seller made by such accountants, including,
without limitation, any management letter commenting on Seller’s internal
controls submitted by such accountants to management in connection with their
annual audit;


 


(v)           within
thirty (30) days of the end of each calendar quarter, a quarterly report, which
report shall include, among other items, (1) a summary of Seller’s
delinquency and loss experience with respect to Mortgage Assets serviced by
Seller, any Servicer or any designee of either, and (2) operating
statements and the occupancy status of such Mortgaged Property and other
property level information, plus any such additional reports as the Agent may
reasonably request with respect to Seller or any Servicer’s servicing portfolio
or pending originations of Mortgage Assets;


 


(vi)          within
fifteen (15) days after the same are sent, copies of all financial statements
and reports which Seller sends to its stockholders, and within fifteen (15)
days after the same are filed, copies of all financial statements and reports
which Seller may make to, or file with, the Securities and Exchange Commission
or any successor or analogous Governmental Authority;


 


(vii)         no
later than the 15th day of each month, with respect to each
Purchased Asset, a Purchased Asset Data Summary, substantially in the form of Exhibit K,
properly completed; and


 


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(viii)        promptly,
any report or material notice received by Seller with respect to any Purchased
Asset and such additional financial and other information as the Agent may from time to time reasonably
request.


 


(c)           Litigation.  Seller will promptly, and in any event within
ten (10) Business Days after service of process on any of the following,
give to the Agent notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened in writing) or other legal or arbitrable proceedings
affecting Seller or any Subsidiary thereof or affecting any of the Property of
any of them before any Governmental Authority that (i) questions or
challenges the validity or enforceability of any of the Repurchase Documents or
any action to be taken in connection with the transactions contemplated hereby,
(ii) makes a claim or claims in an aggregate amount greater than
$1,000,000 (not covered by insurance), or (iii) which, individually or in
the aggregate, if adversely determined, could be reasonably likely to have a
Material Adverse Effect.


 


(d)           Existence,
etc.  Seller shall:


 


(i)            continue
to engage in business of the same general type as now conducted by it or
otherwise as approved by the Agent prior to the date hereof and maintain and
preserve its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business (including,
without limitation, preservation of all lending licenses held by Seller and of
Seller’s status as a “qualified transferee” (however denominated) under all
documents which govern the Purchased Assets); provided, that nothing in
this Section 9.01(d)(i) shall prohibit any transaction expressly
permitted under Section 9.01(e);


 


(ii)           comply
with all Contractual Obligations and with the requirements of all applicable
laws, rules, regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply with such
requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect;


 


(iii)          keep
adequate records and books of account, in which complete entries will be made
in accordance with GAAP consistently applied;


 


(iv)          not
(i) cause or permit any change to be made in its name, organizational
identification number, identity or corporate structure, each as described in
Section 8.01(f) or (ii) change its jurisdiction of organization,
unless it shall have provided the Agent thirty (30) days’ prior written
notice of such change and shall have first taken all action required by the
Agent for the purpose of perfecting or protecting the lien and security
interest of the Agent established hereunder;


 


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


 


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(vi)          permit
representatives of the Agent, upon reasonable notice (unless a Default shall
have occurred and is continuing, in which case, no prior notice shall be
required), during normal business hours, to examine, copy (at the Agent’s
expense) and make extracts from its books and records, to inspect any of its
Properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by the Agent.


 


(e)           Prohibition
of Fundamental Changes; Fiscal Year and Accounting Method.  Seller shall not enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation, winding up or dissolution), sell all or
substantially all of its assets or acquire or form any Subsidiaries (other than
the Subsidiaries set forth on Schedule 5 hereto and such additional
Subsidiaries which may from time to time become Sellers under this Agreement in
accordance with Section 9.01(hh)); provided, that Seller may merge
or consolidate with (A) any wholly owned subsidiary of the Seller or
(B) any other Person if Seller is the surviving corporation, in either
case, as long as, after giving effect thereto, no Default or Event of Default
would exist hereunder.  Seller shall not
change its respective fiscal year or method of accounting without the consent
of the Agent and Seller shall give the Agent at least fifteen (15) days prior
written notice of any such requested change, which notice shall include a
detailed explanation of the changes intended to be made and pro forma financial
statements demonstrating the impact thereof.


 


(f)            Margin
Deficit.  If at any time there exists
a Margin Deficit, the Sellers shall cure same in accordance with
Section 4.01.


 


(g)           Notices.  Seller shall give notice to the Agent:


 


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


 


(ii)           with
respect to any Purchased Asset, promptly upon receipt by Seller of any
principal prepayment (in full or partial) of such Purchased Asset;


 


(iii)          with
respect to any Purchased Asset hereunder, promptly upon receipt of notice or
knowledge by or of Seller that the Underlying Mortgaged Property has been
materially damaged by waste, fire, earthquake or earth movement, flood, tornado
or other casualty, or otherwise damaged so as to materially and adversely
affect the Asset Value of such Purchased Asset; and


 


(iv)          promptly
upon receipt of notice or knowledge by or of Seller of (i) any material
default related to any Purchased Item, (ii) any Lien or security interest
on, or claim asserted against, any Purchased Item or (iii) any event or
change in circumstances which would reasonably be expected to have a Material
Adverse Effect.


 


Each notice pursuant to this Section shall be
accompanied by a statement of a Responsible Officer of Seller setting forth
details of the occurrence referred to therein and stating what action Seller
has taken or proposes to take with respect thereto.


 


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(h)           Transactions
with Affiliates.  Seller may enter
into any transaction with an Affiliate; provided that such transaction
is disclosed in writing in advance to Buyer and such transaction is 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; provided,
further, that in no event shall Seller transfer to the Agent hereunder
any Mortgage Asset acquired by Seller from an Affiliate of Seller unless a
Non-Consolidation Opinion and a True Sale Opinion have been delivered to the
Agent prior to such sale.


 


(i)            Limitation
on Liens.  Immediately upon notice to
Seller of a Lien or any circumstance which if adversely determined would be
reasonably likely to give rise to a Lien (other than in favor of the Agent for
the benefit of the Buyers) on the Purchased Items, Seller will defend the
Purchased Items against, and will take such other action as is necessary to
remove, any Lien, security interest or claim on or to the Purchased Items
(other than any security interest created under this Agreement), and Seller
will defend the right, title and interest of the Buyers and the Agent in and to
any of the Purchased Items against the claims and demands of all persons
whomsoever.


 


(j)            Limitations
on Indebtedness, Guarantees and Contingent Liabilities.  Seller shall not create, incur, assume or
suffer to exist any Indebtedness, Guarantees or Contingent Liabilities, except
Indebtedness of the Seller to the Agent or any Buyer (or an Affiliate of the
Agent or any Buyer).


 


(k)           Limitation
on Distributions.  Seller shall not
declare or make any payment on account of, or set apart assets for, a sinking
or other analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of any equity or partnership interest of Seller, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
Seller, except, so long as no Default, Event of Default or Margin
Deficit shall have occurred and be continuing, Seller may (i) make such
payments solely to the extent necessary to preserve the status of the Parent as
a REIT and (ii) make additional payments subject to the following
restrictions: (1) during the first year following the Effective Date of
this Agreement, Seller may make payments in an amount equal to (a) 103% of
FFO only if a dividend payment is made to reimburse certain original
shareholders for expenses associated with the capitalization of Parent, or
(b) 100% of FFO if no such dividend payment is made, and (2) after
the first year following the Effective Date, Seller may make payments in an
amount equal to 100% of FFO.


 


(l)            Weighted
Average of Purchase Rate and LTV.  No
Seller shall permit (i) the weighted average Purchase Rate of all Mortgage
Assets to exceed 85.0% or (ii) the Weighted Average LTV of all Mortgage
Assets to exceed 80.0%.


 


(m)          Interest
Coverage.  Seller shall not permit,
during any Test Period, the ratio of (i) the sum of Consolidated Adjusted
EBITDA of all Sellers at any time such Test Period to (ii) Consolidated
Interest Expense of all Sellers at any time such Test Period to be less than
1.50 to 1.00.


 


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(n)           Maintenance
of Ratio of Consolidated Total Indebtedness to Consolidated Total Assets.  Seller shall not permit the ratio of
Consolidated Total Indebtedness of all Sellers to Consolidated Total Assets of
all Sellers at any time to be greater than 0.85 to 1.00.


 


(o)           Positive
Net Income.  Seller’s Net Income
shall be positive at all times following the first anniversary of the Effective
Date of this Agreement.


 


(p)           Servicer;
Servicing Tape.  Seller shall cause
each Servicer to provide to the Agent and to the Custodian via Electronic
Transmission, a remittance report on a monthly basis by no later than the 15th
day of each month (the “Reporting Date”) containing servicing
information, including without limitation those fields reasonably requested by
the Agent from time to time, on a loan-by-loan basis and in the aggregate, with
respect to the Purchased Assets serviced hereunder by Seller or any Servicer
for the month (or any portion thereof) prior to the Reporting Date (such
remittance report, an “Asset Tape”). 
To the extent it has control, Seller shall not cause or permit any Mortgage
Assets to be serviced by any servicer other than a Qualified Servicer.


 


(q)           Required
Filings.  Seller shall promptly
provide the Agent with copies of all material documents which Seller or any
Subsidiary of Seller is required to file with any regulatory body in accordance
with its regulations.


 


(r)            Remittance
of Prepayments.  Seller shall remit
or cause to be remitted to the Agent for the ratable benefit of the Buyers,
with sufficient detail via Electronic Transmission to enable the Agent to
appropriately identify the Mortgage Asset to which any amount remitted applies,
all full or partial principal prepayments on any Purchased Asset that Seller or
Servicer has received no later than five (5) Business Days following the
date such prepayment was received.


 


(s)           Custodial
Agreement and Account Control Agreement. 
Seller shall maintain each of the Custodial Agreement and Account
Control Agreement in full force and effect and shall not amend or modify either
of the Custodial Agreement or the Account Control Agreement or waive compliance
with any provisions thereunder without the prior written consent of the Agent.


 


(t)            Inconsistent
Agreements.  Seller shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any material agreement containing any material provision which would be
violated or breached by any Transaction hereunder or by the performance by
Seller of its obligations under any Repurchase Document.


 


(u)           Escrow
Imbalance.  Seller shall, no later
than five (5) Business Days after learning (from any source) of any
material imbalance in any escrow account, fully and completely correct and
eliminate such imbalance including, without limitation, depositing its own
funds into such account to eliminate any overdrawal or deficit.


 


(v)           Hedging.  Seller shall enter into Interest Rate
Protection Agreement(s) selected by Seller and acceptable to the Agent with
respect to all Purchased Assets which have a fixed rate of interest or yield
and are intended for securitization and Seller shall enter into such other
Interest Rate Protection Agreement(s) with respect to any or all of the
Purchased Assets as


 


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the Agent may from
time to time request.  Seller shall take
all such steps as the Agent deems necessary to perfect the security interest
granted in each Interest Rate Protection Agreement pursuant to
Section 6.01(e) of this Agreement.


 


(w)          Separateness.  Seller shall (a) own no assets, and will
not engage in any business, other than the assets and transactions specifically
contemplated by this Agreement, which
assets and transactions specifically contemplated by this Agreement shall include, without limitation, the origination, acquisition, ownership,
management, servicing, administration, operation, collection, enforcement,
development, improvement, leasing, exchange, participation, securitization,
sale, transfer and other disposition of all of any portion of the Purchased
Assets (including the Underlying Mortgaged Property and any business interests
related thereto), personal property necessary for and used or to be used in
connection with its ownership or operation of the Purchased Assets (including
the Underlying Mortgaged Property and any business interests related thereto)
or any portion thereof, cash, its interest under any associated Interest Rate
Protection Agreement, this Agreement, and any and all agreements, documents,
insurance policies, reports and other instruments in any way relating to the
Purchased Assets (including the Underlying Mortgaged Property and any business
interests related thereto) or any portion thereof; (b) not incur
any indebtedness or obligation, secured or unsecured, direct or indirect,
absolute or contingent (including guaranteeing any obligation), other than
(i) pursuant to this Agreement, and under the agreements, documents, insurance policies, reports and other
instruments evidencing, securing or in any other way related to the
Purchased Assets (including the
Underlying Mortgaged Property and any business interests related thereto),
(ii) in connection with customary
representations, warranties, indemnities and agreements in connection with the
origination, acquisition, ownership,
management, servicing, administration,
operation, collection, enforcement, financing, development, improvement, leasing, exchange, participation,
securitization, sale, transfer
or other disposition of the Purchased Assets
(including the Underlying Mortgaged Property and any business interests related
thereto), and (iii) under zoning and other governmental
regulations, rules, prohibitions and ordinances and existing and proposed covenants, easements and other matters of
public record governing, burdening,
benefiting or otherwise affecting
any real property constituting
or underlying any of the Purchased Assets (including the Underlying Mortgaged
Property and any business interests related thereto); (c) not make
any loans or advances to any third party, and shall not acquire obligations or
securities of its affiliates; (d) pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) only from
its own assets; (e) comply with the provisions of its organizational
documents; (f) do all things necessary to observe organizational
formalities and to preserve its existence, and will not amend, modify or
otherwise change its organizational documents, or suffer same to be amended,
modified or otherwise changed, without the prior written consent of the Agent, not to unreasonably withheld;
(g) maintain all of its books, records, financial statements and bank
accounts separate from those of its Affiliates (except that such financial
statements may be consolidated to the extent consolidation is required under
GAAP consistently applied as in effect from time to time or as a matter of law)
and file its own tax returns (except to the extent that either consolidation is
required or permitted under applicable law or it is a tax disregarded entity
not required to file tax returns under applicable law); (h) be, and at all
times will hold itself out to the public as, a legal entity separate and
distinct from any other entity (including any Affiliate), shall correct any
known misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other and shall


 


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maintain and
utilize separate invoices and checks; (i) maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations; (j) not engage
in or suffer any change of ownership, dissolution, winding up, liquidation,
consolidation or merger in whole or in part, except as otherwise permitted in
accordance herewith; (k) not commingle its funds or other assets with those of
any Affiliate or any other Person; (l) maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or any other Person; (m) not and
will not hold itself out to be responsible for the debts or obligations of any
other Person; and (n) shall not, without the vote of 100% of the Board of
Directors or Board of Managers of Seller,
(i) file or consent to the filing of any bankruptcy, insolvency or
reorganization case or proceeding with respect to Seller; institute any proceedings under any applicable insolvency
law or otherwise seek any relief under any laws relating to the relief from
debts or the protection of debtors generally with respect to Seller; (ii) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for Seller
or a substantial portion of its properties; or (iii) make any assignment
for the benefit of Seller’s
creditors.


 


(x)            Maintenance
of Property; Insurance.  Seller shall
keep all property useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business, and furnish to the Agent, upon written request, full
information as to the insurance carried.


 


(y)           Compliance
with Laws.  Seller shall comply in
all material respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without limitation,
Environmental Laws, and all federal securities laws) except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings.


 


(z)            ERISA.  Seller shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all requirements of ERISA
applicable with respect to each Plan.


 


(aa)         Investments.  Neither Seller nor any Affiliate thereof
shall acquire or maintain any right or interest in any Purchased Asset or Underlying
Mortgaged Property that is senior to or pari passu with
the rights and interests of the Agent or the Buyers therein under this
Agreement and the other Repurchase Documents.


 


(bb)         Payment
of Obligations.  Seller shall pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature
(including, without limitation, all amounts necessary to preserve the value of,
and Seller’s, the Agent’s and the Buyers’ rights in, the Purchased Assets),
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of Seller, or its Subsidiaries,
as the case may be.


 


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(cc)         Margin
Regulations.  No part of the proceeds
of any Transaction hereunder shall be used for any purpose which violates, or
would be inconsistent with, the provisions of Regulation T, U or X.


 


(dd)         Limitation
on Lines of Business.  Seller shall
not enter into any business, either directly or through any Subsidiary, except
for those businesses in which Seller and its Subsidiaries are engaged on the
date of this Agreement.


 


(ee)         Payment
of Breakage Costs.  Seller shall pay
the Agent, within one (1) Business Day after any request therefor from the
Agent or any Buyer, for all Breakage Costs at any time sustained or incurred by
the Agent or any Buyer.


 


(ff)           Guarantee
Agreement.  If at any time
(i) the obligations of any Guarantor under the Guarantee Agreement shall
cease to be in effect, (ii) any Act of Insolvency shall have occurred with
respect to any Guarantor or (iii) there shall occur any violation of any
provision set forth in Sections 9(b) through 9(o) of the Guarantee
Agreement (any of the foregoing events, a “Guarantee Default”), then,
within sixty (60) days after the occurrence of any such Guarantee Default,
Seller shall have a replacement performance guarantor acceptable to Buyer (a “Performance
Guarantor”) assume in writing such obligations under the Guarantee as the
Agent deems necessary to correct such Guarantee Default.


 


(gg)         Internalization
of Management.  Seller shall not
internalize the management of Parent without the prior written consent of the
Agent; provided, however, that such consent shall be granted by the
Agent so long as (1) no Margin Deficit, Default or Event of Default
exists, (2) Seller shall, at the time of such internalization, and will
continue after such internalization to meet all covenants, conditions,
representations and warranties, whether financial or otherwise, as set forth in
any of the Repurchase Documents, and (3) Seller delivers to the Agent a
fairness opinion, in form and substance acceptable to the Agent, provided by a
nationally recognized expert in the related field acceptable to the Agent.


 


(hh)         Additional
Sellers.  Subject to the terms and
conditions of this Agreement and the other Repurchase Documents, including
without limitation the separateness provisions set forth in
Section 9.01(w) of this Agreement, any Seller may from time to time form
or acquire additional Subsidiaries.  In
the event that any Seller at any time forms or acquires any such Subsidiary,
such Seller shall, within ten (10) days after such formation or
acquisition, (i) notify the Agent in writing of such formation or
acquisition, (ii) pledge in favor of the Agent for the ratable benefit of
the Buyers of all of the Capital Stock and other equity and ownership interests
held by the Seller in each such Subsidiary and shall take all such further
action as the Agent shall deem reasonably necessary or advisable (including,
without limitation, the execution of financing statements on form UCC-1 and any
additional security agreements or amendments thereto) in order to effect and
perfect such pledge, (iii) in the event that such Subsidiary was formed or
acquired for the purpose of acquiring or holding assets in contemplation of the
entering into of Transactions hereunder, such Subsidiary shall deliver to the
Agent a properly completed and duly executed Additional Seller Joinder
Agreement substantially in the form of Exhibit N hereto, pursuant
to which such additional Subsidiary shall become a Seller under this Agreement
and (iv) the addition of such Subsidiary shall be indicated on the first
organizational chart delivered to the Agent pursuant to
Section 9.01(b)(ii) after such formation or acquisition.


 


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(ii)                                  Independence
of Covenants.  All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of,
another covenant shall not avoid the occurrence of an Event of Default or
Default if such action is taken or condition exists.


 


ARTICLE X



EVENTS OF DEFAULT; REMEDIES


 


Section 10.01                          Events
of Default.  If any of the following
events (each, an “Event of Default”) occur, each Seller and the
Agent shall have the rights set forth in Section 10.02, as applicable:


 


(a)                                  any
Seller shall default in the payment of any Repurchase Price due or any amount
under Section 5.01 when due (whether at stated maturity, upon acceleration
or at mandatory or optional prepayment); or


 


(b)                                 the
Sellers shall fail to cure any Margin Deficit in accordance with Section 4.01;
or


 


(c)                                  any
Seller shall default in the payment of any other amount payable by it hereunder
or under any other Repurchase Document after written notification by Buyer of
such default, and such default shall have continued unremedied for five (5) Business
Days; or


 


(d)                                 any
representation, warranty or certification made or deemed made herein or in any
other Repurchase Document by any Seller or any certificate furnished to the
Agent pursuant to the provisions hereof or thereof or any material information
with respect to the Mortgage Assets furnished in writing by on behalf of any
Seller shall prove to have been false or misleading in any material respect as
of the time made or furnished (other than the representations and warranties
set forth in Schedule 1, which shall be considered solely for the
purpose of determining the Asset Value of the Purchased Assets, unless (i) the
Seller shall have made any such representations and warranties with actual
knowledge that they were materially false or misleading at the time made; or (ii) any
such representations and warranties have been determined in good faith by the
Agent in its sole discretion to be materially false or misleading on a regular
basis); or


 


(e)                                  any
Seller shall fail to comply with the requirements of Sections 9.01(c) -
(ii), or (except as otherwise set forth in Sections 10.01(a), 10.01(b),
10.01(c), or 10.01(d)) any Seller shall fail to observe or perform any other
covenant or agreement contained in this Agreement or any other Repurchase
Document and such failure to observe or perform shall continue unremedied for a
period of ten (10) Business Days after actual knowledge by the Seller
or receipt of written notice from the Agent; provided, however
that to the extent such failure to observe or perform relates to the Seller’s
failure to deliver reports required under Section 9.01(a)(iii) or Section 9.01(b)(v)(2) and
neither the Seller nor its Affiliates have received such reports, and the
Seller has used commercially reasonable best efforts to obtain such reports as
and when required hereunder, such failure shall not be deemed to be an Event of
Default unless


 


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such failure shall have been on a consistent or frequent basis (which
determination shall be made in the Agent’s reasonable discretion); or


 


(f)                                    a
final judgment or judgments for the payment of money in excess of $1,000,000 in
the aggregate shall be rendered against any 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 thirty (30) days from the date of entry thereof; or


 


(g)                                 an
Act of Insolvency shall have occurred with respect to any Seller or any of
Affiliate thereof; or


 


(h)                                 the
Custodial Agreement, the Account Control Agreement or any Repurchase Document
or a replacement therefor acceptable to the Agent shall for whatever reason be
terminated by Seller or cease to be in full force and effect (other than due to
causes solely within the control of the Agent or Custodian), or the
enforceability thereof shall be contested by any Seller; or


 


(i)                                     any
Seller shall grant, or suffer to exist, any Lien on any Purchased Item (except
any Lien in favor of the Agent for the benefit of the Buyers); or the Purchased
Items shall not have been sold to the Buyers, or the Liens contemplated hereby
shall cease or fail to be first priority perfected Liens on any Purchased Items
in favor of the Agent for the benefit of the Buyers (other than by result of any
action or inaction by the Agent) or shall be Liens in favor of any Person other
than the Agent for the benefit of the Buyers; or


 


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


 


(k)                                  (i) any
Seller or an ERISA Affiliate shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any material “accumulated funding deficiency” (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect
to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the
assets of any Seller or any ERISA Affiliate, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of Buyer, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan
shall terminate for purposes of Title IV of ERISA, (v) any Seller or any
ERISA Affiliate shall, or in the reasonable opinion of Buyer is likely to,
incur any liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i)


 


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through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or


 


(l)                                     any
Pledge and Security Agreement shall cease to create a valid and perfected
security interest in favor of the Agent for the benefit of the Buyers in the
Capital Stock of the respective Seller, or any Seller shall so assert; or


 


(m)                               any
Change of Control shall occur; or


 


(n)                                 the
Management Contract shall be amended to increase the amount of compensation
required to be paid to the Manager thereunder, or the Management Contract shall
be otherwise materially amended to the detriment of Parent, or the Manager
shall be terminated, in any case without the prior written consent of the
Agent; or


 


(o)                                 any
event of default or termination event (however denominated) shall have occurred
with respect to Seller (or its Affiliate, as applicable) under any Interest
Rate Protection Agreement with an Affiliated Hedge Counterparty.


 


Section 10.02                          Remedies.  (a) If an Event of Default shall have
occurred and be continuing, the following rights and remedies are
available to the Agent.


 


(i)                                     At
the option of the Agent, exercised by written notice to the Sellers (which
option shall be deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of an Act of Insolvency of any Seller), the
Repurchase Date for each Transaction hereunder, if it has not already occurred,
shall be deemed immediately to occur. 
The Agent shall (except upon the occurrence of an Act of Insolvency of
any Seller) give notice to the Sellers of the exercise of such option as
promptly as practicable.


 


(ii)                                  If
the Agent exercises or is deemed to have exercised the option referred to in Section 10.02(a)(i),


 


(A)                              (i) all
of the Sellers’ obligations in respect of such Transactions to repurchase all
Purchased Assets at the Repurchase Price therefor on the Repurchase Date, and
to pay all other amounts owed by the Sellers hereunder, shall thereupon become
immediately due and payable, (ii) all Income paid after such exercise or
deemed exercise shall be retained by the Agent, for the account of the Buyers,
and applied to the aggregate unpaid Repurchase Prices and any other amounts
owed by the Sellers hereunder or under any other Repurchase Document, and (iii) each
Seller shall immediately deliver to the Agent any Purchased Assets subject to
such Transactions then in the Seller’s possession or control;


 


(B)                                from
and after the exercise or deemed exercise of such option, to the extent
permitted by applicable law, the Repurchase Price with respect to each such
Transaction shall be determined by daily application of, on a 360 day per year
basis for the actual number of days during the period from and including the
date of the exercise or deemed exercise of such option to but excluding the
date of


 


72





















 


payment of the Repurchase Price, (x) the Post-Default Rate to
(y) the Repurchase Price for such Transaction as of the Repurchase Date
(decreased as of any day by (i) any amounts actually in the possession of
the Agent pursuant to clause (C) of this subsection, (ii) any
proceeds from the sale of Purchased Assets applied to the Repurchase Price
pursuant to Section 10.02(a)(iv), and (iii) any amounts applied to
the Repurchase Price pursuant to Section 10.02(a); and


 


(C)                                all
Income actually received by the Agent for the account of the Buyers pursuant to
Section 5.01 (excluding any Late Payment Fees paid pursuant to Section 3.06(a))
shall be applied to the aggregate unpaid Repurchase Price owed by the Seller.


 


(iii)                               Upon the occurrence and
during the continuance of one or more Events of Default, the Agent shall have
the right to obtain physical possession of the Servicing Records (subject to
the provisions of the Custodial Agreement) and all other files of the Seller
relating to the Purchased Assets and all documents relating to the Purchased
Assets which are then or may thereafter come into the possession of the Seller
or any third party acting for the Seller and the Seller shall deliver to the
Agent such assignments as the Agent shall request and the Agent shall have the
right to appoint any Person to act as Servicer for the Purchased Assets.  The Agent shall be entitled to specific
performance of all agreements of the Sellers contained in the Repurchase
Documents.


 


(iv)                              At
any time on the Business Day following written notice to the Sellers (which
notice may be the written notice given under Section 10.02(a)(i)), in the
event the Sellers have not repurchased all Purchased Assets, the Agent may (A) immediately
sell, without demand or further notice of any kind, at a public or private sale
and at such price or prices as the Agent may deem satisfactory any or all
Purchased Assets subject to such Transactions hereunder and apply the proceeds
thereof to the aggregate unpaid Repurchase Price and any other amounts owing by
the Sellers hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Assets, to give the Sellers credit
for such Purchased Assets in an amount equal to the Market Value of the
Purchased Assets against the aggregate unpaid Repurchase Price and any other amounts
owing by the Sellers hereunder.  The
proceeds of any disposition of Purchased Assets shall be applied first to the costs and expenses incurred by the Agent or any
Buyer in connection with any Seller’s default; second
to costs of related covering and/or related hedging transactions; third to the aggregate Repurchase Price; and fourth to any other outstanding obligation of any Seller to
the Agent or any Buyer or any of their respective Affiliates under this
Agreement.


 


(v)                                 Each
Seller agrees that the Agent may seek to obtain an injunction or an order of
specific performance to compel the Seller to fulfill any of its obligations as
set forth in Article XI, if the Seller fails or refuses to perform its
obligations as set forth therein.


 


(vi)                              Each
Seller shall be liable to the Agent, payable as and when incurred by the Agent,
for (A) the amount of all actual out-of-pocket expenses, including legal
or other expenses incurred by the Agent in connection with or as a consequence
of any


 


73





















 


Event of Default, and (B) all costs incurred in connection with
hedging or covering transactions.


 


(vii)                           The Agent shall have, in
addition to its rights hereunder, any rights otherwise available to it under
any other agreement or applicable law.


 


(b)                                 The
Agent may exercise one or more of the remedies available to the Agent
immediately upon and during the continuance of an Event of Default and, except
to the extent provided in Sections 10.02(a)(i) and 10.02(a)(iv), at
any time thereafter without notice to any Seller.  All rights and remedies arising under this
Agreement as amended from time to time hereunder are cumulative and not
exclusive of any other rights or remedies which the Agent may have.


 


(c)                                  The
Agent may enforce its rights and remedies hereunder without prior judicial
process or hearing, and each Seller hereby expressly waives any defenses the
Seller might otherwise have to require the Agent to enforce its rights by
judicial process.  Each Seller also
waives any defense (other than a defense of payment or performance) the Seller
might otherwise have arising from the use of nonjudicial process, enforcement
and sale of all or any portion of the Purchased Items, or from any other
election of remedies.  Each Seller
recognizes that nonjudicial remedies are consistent with the usages of the
trade, are responsive to commercial necessity and are the result of a bargain
at arm’s-length.


 


(d)                                 To
the extent permitted by applicable law each Seller shall be liable to the Agent
for interest on any amounts owing by the Seller hereunder, from the date the
Seller becomes liable for such amounts hereunder until such amounts are (i) paid
in full or (ii) satisfied in full by the exercise of the Agent’s rights
hereunder.  Interest on any sum payable
by any Seller to the Agent under this Section 10.02(d) shall be at a
rate equal to the Post-Default Rate.


 


ARTICLE XI



SERVICING


 


Section 11.01                          Seller
Covenants.  Each Seller covenants to
cause the servicing of the Mortgage Assets (other than Junior Interests,
CMBS, RMBS and Pass-Through Interests) to be maintained in conformity with
Accepted Servicing Practices and in a manner at least equal in quality to the
servicing the Seller would provide for Mortgage Assets which it owns.  In the event that the preceding language is
interpreted as constituting one or more servicing contracts, each such
servicing contract shall terminate automatically upon the earliest of (i) an
Event of Default, (ii) the date on which this Agreement terminates or (iii) the
transfer of servicing approved by the Agent in accordance with the terms of
this Agreement.


 


Section 11.02                          Seller
as Servicer.  With respect to
Mortgage Assets other than Junior Interests, CMBS, RMBS and Pass-Through
Interests, if the Mortgage Assets are serviced an Affiliate of any Seller, each
Seller agrees that, until the repurchase of a Mortgage Asset on a Repurchase
Date for a Mortgage Asset, the Buyers are the owners of all servicing records,
including but not limited to any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies,


 


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appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of such Mortgage Asset (the “Servicing Records”).  Each Seller covenants to safeguard such
Servicing Records and to deliver them promptly to the Agent or its designee
(including the Custodian) at the Agent’s request.


 


Section 11.03                          Third
Party Servicer.  With respect to
Mortgage Assets other than Junior Interests, CMBS, RMBS and Pass-Through
Interests, if any Mortgage Assets are serviced by a person other than an
Affiliate of the Sellers (such third party, the “Servicer”), (i) the
Sellers shall, in accordance with Section 3.02(g), provide to the Agent a
copy of the servicing agreement, which shall be in form and substance
reasonably acceptable to the Agent (the “Servicing Agreement”) and
Sellers shall require each Servicing Agreement to contain provisions relating
to the delivery of information and reports as will enable each Seller to comply
with its obligations under this Agreement as and when required hereunder, and (ii) each
Seller hereby irrevocably assigns to the Agent, and the Agent’s successors and
assigns, for the benefit of the Buyers, all of the Seller’s right, title and
interest in, to and under, and the benefits of, each Servicing Agreement
pertaining to any Mortgage Assets.  Each
Seller agrees that no Person shall assume the servicing obligations with
respect to any Mortgage Assets as successor to the Servicer unless such
successor is a Qualified Servicer.  The
Agent hereby agrees that upon the repurchase of any Mortgage Asset, the Agent
shall assign back to the Seller all of its right, title and interest in, to and
under, and the benefits of, any Servicing Agreement pertaining to such Mortgage
Asset.


 


Section 11.04                          Event
of Default.  With respect to Mortgage
Assets other than Junior Interests, CMBS, RMBS and Pass-Through
Interests, if the servicer of the Mortgage Assets is a Seller or an Affiliate
of a Seller, upon the occurrence and during the continuance of an Event of
Default, the Agent shall have the right to terminate the Seller or Affiliate as
servicer of the Mortgage Assets and transfer servicing to its designee, at no
cost or expense to the Agent, at any time thereafter.  If the servicer of the Mortgage Assets is not
a Seller, the Agent shall have the right, as contemplated in the applicable
Servicer Notice, upon the occurrence of an Event of Default, to terminate any
applicable Servicing Agreement and transfer servicing to its designee, at no
cost or expense to the Agent, it being agreed that the Sellers will pay any and
all fees required to terminate such Servicing Agreement and to effectuate the
transfer of servicing to the designee of the Agent.


 


Section 11.05                          Modification.  After the Purchase Date, until the repurchase
of any Mortgage Asset, no Seller will have any right to modify or alter
the terms of such Mortgage Asset and no Seller will have any obligation or
right to repossess such Mortgage Asset or substitute another Mortgage Asset, in
each case except as provided in the Custodial Agreement.


 


Section 11.06                          Inspection.  In the event that any Seller or any Affiliate
thereof is servicing the Mortgage Assets, the Seller or Affiliate shall
permit the Agent to inspect the Seller’s or Affiliate’s servicing facilities,
as the case may be, for the purpose of satisfying the Agent that the Seller or
Affiliate, as the case may be, has the ability to service the Mortgage Assets
as provided in this Agreement.


 


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ARTICLE XII



THE AGENT


 


Section 12.01                          Appointment.  Each Buyer hereby irrevocably designates and
appoints the Agent as its agent under this Agreement and the other
Repurchase Documents, and each Buyer hereby irrevocably authorizes the Agent,
in such capacity, to take such action on its behalf under the provisions of
this Agreement and the other Repurchase Documents and to exercise such powers
and perform such duties as are expressly delegated to or conferred upon the
Agent by the terms of this Agreement, the other Repurchase Documents and any
other instruments and agreements referred to herein or therein, together with
such other powers as are reasonably incidental thereto.  The Agent agrees to act as such upon the
express conditions contained in this Article XII.  Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Buyer, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement
or any other Repurchase Document or otherwise exist against the Agent.  The provisions of this Article XII are
solely for the benefit of the Agent and the Buyers, and neither the Manager nor
any Seller shall have any rights as a third party beneficiary of any of the
provisions hereof.


 


Section 12.02                          Duties.


 


(a)                                  The
Agent shall be responsible for administering the Transactions on a day-to-day
basis.  In the exercise of such
administrative duties, the Agent shall use the same diligence and standard of care
that is customarily used by the Agent with respect to similar transactions
entered into by the Agent solely for its own account.


 


Each Buyer delegates to
the Agent the full right and authority on its behalf to take the following
specific actions in connection with its administration of the Transactions:


 


(i)                                     to
enter into and fund Transactions on behalf of the Buyers in accordance with the
provisions of the Repurchase Documents;


 


(ii)                                  to
receive all amounts paid by, or on behalf of, the Sellers and, except for fees
to which the Agent is entitled pursuant to the Repurchase Documents or
otherwise, to distribute all such funds to the respective Buyers as provided
for hereunder;


 


(iii)                               to keep and maintain
complete and accurate files and records of all material matters pertaining to
the Transactions, and make such files and records available for inspection and
copying by each Buyer and its respective employees and agents during normal
business hours upon reasonable prior notice to the Agent; and


 


(iv)                              to
do or omit doing all such other actions as may be reasonably necessary or
incident to the implementation and administration of the Transactions and the
rights and duties delegated hereinabove.


 


Notwithstanding the
foregoing, written consent of each of the Buyers and the Agent shall be
required to:


 


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(1)                                  modify
the Purchase Rate of any Purchased Asset;


 


(2)                                  reduce
the Pricing Rate or extend the time of payment of any Price Differential;


 


(3)                                  reduce
or waive the Repurchase Price of any Purchased Asset;


 


(4)                                  increase
the Purchase Amount of any Buyer over the amount thereof in effect (it being
understood and agreed that (A) a Buyer’s Purchase Amount will change pro
rata in accordance with any change in the Maximum Amount and (B) a waiver
of any Default or Event of Default or mandatory reduction in the aggregate
Purchase Amount of all Buyers shall not constitute a change in the terms of the
Purchase Amount of any Buyer);


 


(5)                                  release
any Seller or Guarantor from any of its obligations under the Repurchase
Documents;


 


(6)                                  release
all or any material part of the Purchased Items (other than as specifically
provided in the Repurchase Documents);


 


(7)                                  amend,
modify or waive any provision of this Section 12.02 or Section 13.01;
or


 


(8)                                  reduce
any percentage specified in, or otherwise modify, the definition of Required
Buyers.


 


(b)                                 The
Agent may execute any of its duties under this Agreement and the other
Repurchase Documents by or through its agents or attorneys-in-fact and shall be
entitled to the advice of counsel concerning all matters pertaining to its
rights and duties hereunder and under the other Repurchase Documents.  The Agent shall not be responsible for the
negligence or willful misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.


 


Section 12.03                          Exculpatory
Provisions.  Neither the Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement or any
other Repurchase Document (except for its or such Person’s own gross negligence
or willful misconduct) or (ii) responsible in any manner to any Buyer for
any recitals, statements, representations or warranties made by any Seller or
any officer thereof contained in this Agreement or any other Repurchase
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or any other Repurchase Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Repurchase Document or for any failure of any Seller to perform its
obligations hereunder or thereunder.  The
Agent shall not be under any obligation to any Buyer to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Repurchase Document, or to inspect
the properties, books or records of any Seller.


 


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Section 12.04                          Reliance
by Agent.  The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon the advice and statements of legal counsel (including, without
limitation, counsel to the Manager or any Seller), independent accountants and
other experts selected by the Agent.  The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Repurchase Document unless it shall first receive
such advice or concurrence of the Required Buyers as the Agent deems
appropriate or it shall first be indemnified to its satisfaction by the Buyers
against any and all liability and expense which may be incurred by it by reason
of taking, continuing or failing to take any such action.  The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Repurchase Documents in accordance with a request of the Required Buyers,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon each Buyer.


 


Section 12.05                          Notice
of Default.  The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice from a Buyer or
a Seller referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”.  In the event that the Agent receives any such
notice from a Seller, the Agent shall give notice thereof to each Buyer.  The Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Buyers; provided that unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or Event
of Default as it shall deem advisable in the best interests of the Buyers; and
the Agent shall not incur liability to any Person by reason of so acting or
refraining from acting.  Without limiting
the foregoing, no Buyer shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder or
under any other Repurchase Document in accordance with the instructions of the
Required Buyers.


 


Section 12.06                          Non-Reliance
on Agent and the Buyers.  Each Buyer
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of any Seller, shall be deemed to
constitute any representation or warranty by the Agent to any Buyer.  Each Buyer represents to the Agent that it
has, independently and without reliance upon the Agent, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of each Seller and made its own decision
to enter into this Agreement and each Transaction hereunder.  Each Buyer also represents that it will,
independently and without reliance upon the Agent, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Repurchase Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
each Seller.  Except for notices, reports
and other documents expressly required to be furnished by a Seller to the Agent


 


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hereunder or under the other
Repurchase Documents, which the Agent must distribute promptly to each Buyer,
the Agent shall not have any duty or responsibility to provide any Buyer with
any credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the Seller
which may come into the possession of the Agent or any of its officers,
directors, employees, attorneys-in-fact or Affiliates.


 


Section 12.07                          Reimbursement
and Indemnification.  To the extent
that the Agent is not fully reimbursed and indemnified by the Sellers,
and without limiting the obligation of the Sellers to do so as otherwise
provided in the Repurchase Documents, within five (5) Business Days after
the delivery of a written request by the Agent to the Sellers for such
reimbursement or indemnification or, if earlier, upon receipt by the Agent of a
refusal from the Sellers to comply with any such request, each Buyer agrees to
reimburse and indemnify the Agent in its capacity as such from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following payment
of all Repurchase Prices) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, any of the other
Repurchase Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing; provided
that no Buyer shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Agent’s gross
negligence or willful misconduct.  The
agreements in this Section shall survive the payment of all Repurchase
Prices and all other amounts payable hereunder.


 


Section 12.08                          Agent
in Its Individual Capacity.  The
Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with any Seller as though the Agent
were not the Agent hereunder and under the other Repurchase Documents.


 


Section 12.09                          Successor
Agent.  The Agent may resign as Agent
upon thirty (30) days’ notice to the Buyers and the Sellers.  If the Agent shall resign as Agent under this
Agreement and the other Repurchase Documents, then the Buyers shall appoint a
successor Agent, which successor Agent shall be subject to approval by the
Sellers (unless an Event of Default has occurred and is continuing), such
approval not to be unreasonably withheld, conditioned or delayed, and any such
successor Agent shall succeed to the rights, powers and duties of the Agent,
and the term “Agent” shall mean such successor
Agent effective upon such appointment and approval, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement or any Transaction.  If no
successor Agent has been appointed and shall have accepted such appointment
within thirty (30) days after the retiring Agent’s giving notice of its
resignation, then the retiring Agent’s resignation shall nevertheless thereupon
become effective and the Buyers shall perform all of the duties of the Agent
hereunder until such time, if any, as the Buyers appoint and the Sellers
approve a successor Agent as provided for above.  After any retiring Agent’s resignation as
Agent, the provisions of this Section shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Repurchase Documents.


 


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Section 12.10                          Duties
in the Case of Enforcement.  In case
one or more Events of Default have occurred and shall be continuing, and
whether or not acceleration of Sellers’ obligations under the Repurchase
Documents shall have occurred, the Agent shall, at the request, or may, upon
the consent, of the Required Buyers, and provided that the Buyers have given to
the Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of this Agreement and the other Repurchase Documents respecting the
sale or other disposition of all or any of the Purchased Items and the exercise
of any other legal or equitable rights or remedies as it may have hereunder or
under any other Repurchase Document or otherwise by virtue of applicable law,
or to refrain from so acting if similarly requested by the Required
Buyers.  The Agent shall be fully
protected in so acting or refraining from acting upon the instruction of the
Required Buyers, and such instruction shall be binding upon all the
Buyers.  The Required Buyers may direct
the Agent in writing as to the method and the extent of any such foreclosure,
sale or other disposition or the exercise of any other right or remedy, the
Buyers hereby agreeing to indemnify and hold the Agent harmless from all costs
and liabilities incurred in respect of all actions taken or omitted in
accordance with such direction, provided that the Agent need not comply with
any such direction to the extent that the Agent reasonably believes the Agent’s
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.  The Agent
may, in its discretion but without obligation, in the absence of direction from
the Required Buyers, take such interim actions as it believes necessary to
preserve the rights of the Buyers hereunder and in and to any Purchased Item,
including but not limited to petitioning a court for injunctive relief,
appointment of a receiver or preservation of the proceeds of any Purchased
Item.  Each of the Buyers acknowledges
and agrees that no individual Buyer may separately enforce or exercise any of
the provisions of any of the Repurchase Documents, other than through the
Agent.


 


ARTICLE XIII



MISCELLANEOUS


 


Section 13.01                          Indemnification
and Expenses.  (a)  Each Seller
jointly and severally, agrees to indemnify and hold harmless each of the
Buyers, the Agent, the Sole Lead Arranger and their respective Affiliates and
Subsidiaries and their present and former respective officers, directors,
employees, agents, advisors and other representatives (each, an “Indemnified
Party”) from and against any and all claims, damages, losses, liabilities,
costs, and expenses (including, without limitation, attorneys’ fees and
disbursements) (“Costs”) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case relating to or arising out of this
Agreement, any other Repurchase Document or any transaction contemplated hereby
or thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, any other Repurchase Document
or any transaction contemplated hereby or thereby, except to the extent such
claim, damage, loss, liability, cost, or expense is found in a final, non
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party’s gross negligence or willful misconduct.  Costs subject to this Section 13.01
shall include but not be limited to Costs incurred in connection with the
violation of any Environmental Law, the correction of any environmental
condition or the removal of any Materials of Environmental Concern, in each
case in any way affecting any Seller’s or any of its Affiliates’ properties or
any of the Mortgage Assets.  Without
limiting the generality of the


 


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foregoing, each Seller agrees
to hold any Indemnified Party harmless from and indemnify such Indemnified
Party against all Costs with respect to all Mortgage Assets relating to or
arising out of any violation or alleged violation of any law, rule or
regulation, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct.  In the case of an
investigation, litigation or other proceeding to which the indemnity in this Section 13.01
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Seller, its directors, shareholders
or creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not any transaction
contemplated hereby is consummated.  Each
Seller agrees not to assert any claim against any Indemnified Party, or any of
their respective directors, officers, employees, attorneys, agents, and advisers,
on any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Repurchase Documents, any
of the transactions contemplated herein or the actual or proposed use of the
proceeds of any Transaction.  In any
suit, proceeding or action brought by an Indemnified Party in connection with
any Mortgage Asset for any sum owing thereunder, or to enforce any provisions
of any Mortgage Asset, each 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 any Seller of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from any Seller.  Each Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all the
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of the Agent’s and each Buyer’s rights under
this Agreement, any other Repurchase Document or any transaction contemplated
hereby or thereby, including without limitation the fees and disbursements of
its counsel.


 


(b)                                 Each
Seller shall, whether or not any transaction contemplated hereby is
consummated: (i) pay as when billed by the Agent, and in any event within
three (3) days after demand from the Agent, all reasonable out-of-pocket
costs and expenses (including, without limitation, all actual and reasonable
fees and disbursements of outside legal counsel, accounting, consulting,
brokerage or other similar professional fees or expenses, and any reasonable
fees and expenses associated with travel or other costs relating to any
appraisals or examinations conducted in connection with any Transactions or any
proposed Purchased Assets, and the amount of such costs and expenses shall,
until paid, bear interest at the greater of (x) 5.25% per  annum
in excess of the Prime Rate in effect from time to time or (y) 0.50% per
annum in excess of the Federal Funds Rate in effect from time to time
(or at such greater rate plus 6.00%, at any time the Post-Default Rate is
applicable to any Transaction)) (A) of the Agent in connection with the
development, preparation, execution and delivery of, and any amendment,
supplement or modification to, this Agreement, any other Repurchase Document or
any other documents prepared in connection herewith or therewith and the
documents and instruments referred to herein and therein (including, without
limitation, all reasonable fees, disbursements and expenses of Cadwalader,
Wickersham & Taft LLP and/or other counsel incurred as of the date of
this Agreement, which amount shall be deducted from the Purchase Price paid for
the first Transaction hereunder) and (B) of the Agent in connection with
the enforcement of this Agreement and the other Repurchase Documents and any
amendment, waiver or consent relating


 


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hereto or thereto and the documents and instruments referred to herein
and therein; (ii) pay and hold each Indemnified Party harmless from and
against any and all present and future stamp, documentary, issue, sales and
use, value added, property and other similar taxes (other than taxes imposed on
net income) with respect to the matters described in foregoing clause (i) and
hold each Indemnified Party harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such taxes; and (iii) indemnify
each Indemnified Party from and hold each of them harmless against any and all
Costs incurred by any of them as a result of, or arising out of, or in any way
related to, or by reason of, the entering into and/or performance of this
Agreement or any other Repurchase Document or the use of the proceeds of any
Transaction hereunder or the consummation of any transactions contemplated
herein or in any other Repurchase Document, including, without limitation, (A) the
reasonable out of pocket due diligence, inspection, appraisals, testing and
review costs and expenses incurred by the Agent with respect to Mortgage Assets
submitted by any Seller for purchase under this Agreement, including, but not
limited to, those actual out of pocket costs and expenses incurred by the Agent
pursuant to Sections 11.01 through 11.06 and Section 13.11, (B) the
reasonable fees and disbursements of counsel incurred in connection therewith
and (C) any environmental liabilities with respect to any real estate or
other assets held by any Seller or any of its Affiliates (but excluding any
such Costs to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).


 


(c)                                  Without
prejudice to the survival of any other agreement of any Seller hereunder, the
agreements and obligations of each Seller contained in this Section 13.01
shall survive the repayment of all amounts owing to the Agent and the Buyers by
each Seller under the Repurchase Documents and the termination of the
commitment of the Buyers hereunder.


 


Section 13.02                          Single
Agreement.  Each Seller, the Agent
and each Buyer acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and that each has been entered into in consideration
of the other Transactions.  Accordingly,
each of the Sellers, the Agent and the Buyers agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to
set off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transaction
hereunder, (iii) that payments, deliveries, and other transfers made by
either of them in respect of any Transaction shall be deemed to have been made
in consideration of payments, deliveries, and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted
and (iv) to promptly provide notice to the other after any such set off or
application.


 


Section 13.03                          Notices
and Other Communications.  Except as
otherwise expressly permitted by this Agreement, all notices, requests
and other communications provided for herein and under the Custodial Agreement
(including without limitation any modifications of, or waivers, requests or
consents under, this Agreement) shall be given or made in writing (including
without limitation by email, telex or telecopy) delivered to the intended
recipient at the “Address for Notices” specified below its name on the
signature pages hereof or thereof); or, as to any party, at such other address
as shall be designated by such party in a written notice to 


 


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each other party.  Except as otherwise provided in this
Agreement and except for notices given under Article III (which shall be
effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by Electronic Transmission or telecopy (upon
receipt of confirmation) or personally delivered or, in the case of a mailed
notice, upon receipt.


 


Section 13.04                          Entire
Agreement; Severability.  This
Agreement together with the other Repurchase Documents and the Account
Control Agreement constitute the entire understanding among the Sellers, the
Agent and the Buyers with respect to the subject matter it covers and shall
supersede any existing agreements between the parties containing general terms
and conditions for repurchase transactions involving Purchased Assets.  By acceptance of this Agreement, the Sellers,
the Agent and the Buyers acknowledge that they have not made, and are not
relying upon, any statements, representations, promises or undertakings not
contained in this Agreement.  Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.


 


Section 13.05                          Assignments
and Participations; Hypothecation of Purchased Assets.


 


(a)                                  No Seller may assign any of its rights or
obligations under this Agreement without the prior written consent of the
Agent, such consent not to be unreasonably withheld or delayed, and any attempt
by any Seller to assign any of its rights or obligations under this Agreement
without the prior written consent of the Agent shall be null and void.


 


(b)                                 Title to all Purchased Assets and Purchased
Items shall pass to the Buyers and, subject to the terms of the Repurchase
Documents, the Buyers or their designee shall have free and unrestricted use of
all Purchased Assets and Purchased Items. 
Nothing in this Agreement shall preclude the Buyers or their designee
from engaging in repurchase transactions with the Purchased Assets and
Purchased Items or otherwise selling, pledging, repledging, transferring,
hypothecating, or rehypothecating the Purchased Assets and Purchased Items, all
on terms that the Buyers may determine in their sole discretion; provided,
that any such pledge or transfer shall be made expressly subject to the terms
of the Repurchase Documents and the Buyers shall transfer the Purchased Assets
to the Seller on the applicable Repurchase Date free and clear of any pledge,
Lien, security interest, encumbrance, charge or other adverse claim on any of
the Purchased Assets.  Nothing contained
in this Agreement shall obligate the Buyers or the Agent to segregate any Purchased Assets or
Purchased Items transferred by any Seller to the Buyers.


 


(c)                                  Any Buyer may at any time, upon notice to the
Sellers, sell to any Person which is an Eligible Transferee (each such Person,
a “Participant”), participating interests in all or any part of such
Buyer’s interest in the Purchased Assets, or in any other interest of such
Buyer under this Agreement.  In the event
of any such sale of a participating interest, the obligations of the Buyer
which sold the participating interest under this Agreement to the other parties
to this Agreement shall remain unchanged, such Buyer shall remain solely
responsible for the performance thereof, and the other parties to this
Agreement shall continue to deal solely and directly with such Buyer in
connection with such Buyer’s rights and obligations under this Agreement and
the other Repurchase Documents.  In no
event shall any Participant have any


 


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right to approve any amendment to or waiver
of any provision of any Repurchase Document, or any consent to any departure by
Seller therefrom, except to the extent that such amendment, waiver or consent
would reduce the Repurchase Price or Price Differential owing in respect of any
Transaction, or postpone the Repurchase Date of any Transaction for more than
one (1) year, in each case to the extent subject to such
participation.  Each Seller agrees that
if any amounts outstanding under this Agreement are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Buyer under this Agreement.  Each Seller
also agrees that each Participant shall be entitled to the benefits of, and
bound by the obligations imposed on each Buyer in, Sections 5.02 and 13.01 with
respect to its participation in the Transactions outstanding from time to time
as if it were a Buyer; provided, that no Participant shall be entitled
to receive any greater amount pursuant to any such Section than a Buyer
would have been entitled to receive in respect of the amount of the
participation transferred by such Buyer to such Participant had no such
transfer occurred.


 


(d)                                 Any Buyer may at any time, upon notice to the
Sellers, sell to any Person which is an Eligible Transferee (each such Person,
an “Assignee” and together with any Participants, collectively, the “Transferees”,
each a “Transferee”), all or a portion of all of such Buyer’s rights and
obligations under this Agreement and the other Repurchase Documents.  Each assignment by a Buyer shall be made
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit P,
with appropriate completions (an “Assignment and Acceptance”); provided,
that such Assignee shall be (i) organized under the laws of the United
States or a State thereof or the District of Columbia or (ii) a branch or
agency of a bank or financial institution which is not organized under the laws
of the United States or a State thereof or the District of Columbia which (A) provides
to the Agent a duly executed IRS
Form W-8ECI and (B) represents that income with respect to the
assignment will be “effectively connected” with a U.S. trade or business at all
times it holds a beneficial interest in the assignment.  Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Buyer hereunder with the Purchase Amount as set forth
therein, and (y) the assigning Buyer thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Buyer’s rights and obligations under this
Agreement, such assigning Buyer shall cease to be a party hereto), the obligations
of such assigning Buyer shall be deemed to be so reduced, and the Agent will
give prompt written notice thereof (including identification of the assigning
Buyer, the Assignee and the amount of the assignment) to each of the parties to
this Agreement (but the assigning Buyer shall not have any liability for any
failure to timely provide such notice). 
Any assignment or transfer by a Buyer of rights or obligations under
this Agreement that does not comply with this Section 13.05 shall be
treated for purposes of this Agreement as a sale by such Buyer of a
participation in such rights and obligations in accordance with clause (c) of
this Section 13.05.


 


(e)                                  Each Seller authorizes each Buyer to disclose
to any Transferee (including any prospective Transferee) any and all of the
information in the possession of such Buyer


 


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relating to the Seller and its Affiliates or
to any aspect of the Transactions that has been delivered to such Buyer by or
on behalf of the Seller or any of its Affiliates pursuant to this Agreement or
in connection with the credit evaluation of the Buyers and their Affiliates
prior to becoming a party to this Agreement; provided, that such
Transferee shall have agreed to be bound by the provisions of Section 13.14
hereof.  Each Seller agrees to cooperate
with the applicable Buyer in connection with any such sale of participating
interests or assignments and to enter into such restatements of, and
amendments, supplements and other modifications to, this Agreement to give
effect to any such sale or transfer; provided, that the Seller’s further
consent shall be required with respect to any such restatement, amendment,
supplement or other modification which adversely changes any economic or other
material term of this Agreement.


 


(f)                                    For avoidance of doubt, the parties to this
Agreement acknowledge that nothing in this Agreement shall limit or otherwise
restrict the right of any Buyer to grant security interests in its rights
hereunder, including, without limitation, (i) any security interest in all
or any portion of any Buyer’s rights under this Agreement to any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank, and (ii) any pledge or assignment for the benefit of the
assignor’s trustee and/or its investors or financing parties to secure its
obligations under any indenture, credit facility or Governing Documents to
which it is a party; provided, that no such pledge or assignment of a
security interest shall release such Buyer from any of its obligations
hereunder or substitute any such pledgee or assignee for such Buyer as a party
hereto.


 


SECTION 13.06                                    GOVERNING
LAW.  THIS AGREEMENT AND THE OTHER
REPURCHASE DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.


 


SECTION 13.07                                    SUBMISSION
TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.


 


(A)                               ANY LEGAL ACTION OR PROCEEDING
AGAINST ANY SELLER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER REPURCHASE
DOCUMENT TO WHICH SUCH SELLER IS A PARTY MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE SELLER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH SELLER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE SELLER AT ITS ADDRESS AS DESIGNATED IN ACCORDANCE WITH SECTION 13.03
OF THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER
SUCH MAILING.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF BUYER TO SERVE PROCESS


 


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IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SELLER IN
ANY OTHER JURISDICTION.


 


(B)                               EACH SELLER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER REPURCHASE DOCUMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.


 


(C)                               EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER
REPURCHASE DOCUMENTS OR ANY DEALINGS, COURSE OF DEALINGS, COURSE OF CONDUCT
BETWEEN THEM, OR ANY STATEMENTS (WHETHER ORAL OR WRITTEN) OR OTHER ACTIONS OF
ANY PARTY, RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED HEREBY, INCLUDING, WITHOUT LIMITATION, ANY ACTION OF
THE AGENT OR ANY BUYER RELATING TO THE ADMINISTRATION OF THE TRANSACTIONS OR
THE ENFORCEMENT OF THE REPURCHASE DOCUMENTS, AND NONE OF THE PARTIES HERETO
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.


 


(D)                               EXCEPT AS PROHIBITED BY LAW, EACH
SELLER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH SELLER CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE AGENT OR ANY BUYER HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE AGENT OR ANY BUYER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER.  THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.


 


(E)                                 EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO


 


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RELY ON THIS WAIVER IN THEIR
RELATED FUTURE DEALINGS.  EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL AND THAT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.


 


(F)                                 THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER REPURCHASE DOCUMENTS OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO ANY TRANSACTION ENTERED INTO
HEREUNDER.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


Section 13.08                          Amendments;
Waivers; Remedies Cumulative.  Except
as otherwise expressly provided in this Agreement, any provision of this
Agreement may be modified or supplemented only by an instrument in writing
signed by each of the Sellers, the Agent and the Buyers.  Any provision of this Agreement may be waived
by the Agent; provided, that no failure or delay on the part of the
Agent in exercising any right, power or privilege hereunder or under any other
Repurchase Document and no course of dealing with respect to any right, power
or privilege hereunder or under any other Repurchase Document shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Repurchase Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder.  The
rights, powers and remedies herein or in any other Repurchase Document
expressly provided are cumulative and not exclusive of any rights, powers or
remedies which the Agent or any Buyer would otherwise have.  No notice to or demand on any Seller in any
case shall entitle any Seller to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agent or any Buyer to any other or further action in any circumstances without
notice or demand.  An Event of Default
shall be deemed to be continuing unless expressly waived by the Agent in
writing.


 


Section 13.09                          Intent.  (a)  The parties recognize that each
Transaction is not a “Repurchase Agreement” as that term is
defined in Section 101 of Title 11 of the United States Code, as amended
(except insofar as the sub-limit of Purchased Assets subject to such
Transaction or the term of such Transaction would render such definition
applicable), or a “Securities Contract” as that term is defined in Section 741
of Title 11 of the United States Code, as amended (except insofar as the type
of Purchased Assets subject to such Transaction would render such definition
applicable).


 


(b)                                 It
is understood that any party’s right to liquidate Purchased Assets delivered to
it in connection with Transactions hereunder or to exercise any other remedies
pursuant to Section 10.02 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.


 


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(c)                                  The
parties agree and acknowledge that if a party hereto is an “Insured
Depository Institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“Qualified Financial Contract,” as that term is defined in FDIA and any
rules, orders or policy statements thereunder (except insofar as the type of
Purchased Assets subject to such Transaction would render such definition
inapplicable).


 


(d)                                 It
is understood that this Agreement constitutes a “Netting Contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a “Covered
Contractual Payment Entitlement” or “Covered Contractual Payment
Obligation”, respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a “Financial Institution”
as that term is defined in FDICIA or regulations promulgated thereunder).


 


Section 13.10                          Joint
and Several Liability.


 


(a)                                  Each
Seller hereby acknowledges and agrees that the Seller shall be jointly and
severally liable to the Agent and each Buyer to the maximum extent permitted by
applicable law for all representations, warranties, covenants, obligations and
indemnities of all of the Sellers hereunder.


 


(b)                                 Each
Seller hereby agrees that, to the extent another Seller shall have paid more
than its proportionate share of any payment made hereunder, the Seller shall be
entitled to seek and receive contribution from and against any other Seller
which has not paid its proportionate share of such payment; provided  however,
that the provisions of this clause shall in no respect limit the obligations
and liabilities of any Seller to the Agent or any Buyer, and, notwithstanding
any payment or payments made by any Seller (the “paying Seller”) hereunder or
any set-off or application of funds of the paying Seller by the Agent or any
Buyer, the paying Seller shall not be entitled to be subrogated to any of the
rights of the Agent or any Buyer against any other Seller or any collateral
security or guarantee or right of offset held by the Agent or any Buyer, nor
shall the paying Seller seek or be entitled to seek any contribution or
reimbursement from the other Seller in respect of payments made by the paying
Seller hereunder, until all amounts owing to the Agent or any Buyer by the
Sellers under the Repurchase Documents are paid in full.  If any amount shall be paid to the paying
Seller on account of such subrogation rights at any time when all such amounts
shall not have been paid in full, such amount shall be held by the paying
Seller in trust for the Agent and any applicable Buyer, segregated from other
funds of the paying Seller, and shall, forthwith upon receipt by the paying
Seller, be turned over to the Agent and any applicable Buyer in the exact form
received by the paying Seller (duly indorsed by the paying Seller to the Agent
or any applicable Buyer, if required), to be applied against amounts owing to
the Agent and any Buyer by the Sellers under the Repurchase Documents, whether
matured or unmatured, in such order as the Agent may determine.


 


(c)                                  Each
Seller shall remain obligated under this Section 13.10 notwithstanding
that, without any reservation of rights against the Seller and without notice
to or further assent by the Seller, any demand by the Agent for payment of any
amounts owing to the Agent or any Buyer by any other Seller under the
Repurchase Documents may be rescinded by


 


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the Agent and any the payment of any such amounts may be continued, and
the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Agent, and this Agreement and the other Repurchase Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent may
deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Agent for the payment of amounts owing
to the Agent or any Buyer by the Sellers under the Repurchase Documents may be
sold, exchanged, waived, surrendered or released.  The Agent shall not have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for amounts owing to the Agent or any Buyer by the Sellers under the Repurchase
Documents, or any property subject thereto. 
When making any demand hereunder against any Seller, the Agent may, but shall
be under no obligation to, make a similar demand on any other Seller, and any
failure by the Agent to make any such demand or to collect any payments from
any other Seller, or any release of such other Seller shall not relieve any
Seller in respect of which a demand or collection is not made or the Sellers
not so released of their obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of the Agent or the Buyer against the Sellers.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.


 


(d)                                 Each
Seller waives any and all notice of the creation, renewal, extension or accrual
of any amounts at any time owing to the Agent or any Buyer by any other Seller
under the Repurchase Documents and notice of or proof of reliance by the Agent
or the Buyers upon the Seller or acceptance of the obligations of the Seller
under this Section 13.10, and all such amounts, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the obligations of the
Sellers under this Section 13.10; and all dealings between the Sellers, on
the one hand, and the Agent and the Buyers, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
obligations of the Sellers under this Section 13.10.  Each Seller waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Seller with respect to any amounts at any time owing to the Agent or the Buyers
by the Seller under the Repurchase Documents, other than such notices as are
expressly required to be given under this Agreement or any of the other
Repurchase Documents.  Each Seller
understands and agrees that it shall continue to be liable under this Section 13.10
without regard to (a) the validity, regularity or enforceability of any
other provision of this Agreement or any other Repurchase Document, any amounts
at any time owing to the Agent or the Buyers by the Sellers under the
Repurchase Documents, or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Buyer, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by any Seller against the Agent or any Buyer, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Sellers) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Sellers for any amounts owing to the Agent or the
Buyers by the Sellers under the Repurchase Documents, or of the Sellers under
this Agreement, in bankruptcy or in any other instance.  When pursuing its rights and remedies
hereunder against any Seller, the Agent and any Buyer may, but shall be under
no obligation to, pursue such rights


 


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and remedies as it may have against the Seller or any other Person or
against any collateral security or guarantee related thereto or any right of
offset with respect thereto, and any failure by the Agent or any Buyer to pursue
such other rights or remedies or to collect any payments from the Seller or any
such other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Seller or any
such other Person or any such collateral security, guarantee or right of
offset, shall not relieve Seller of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Agent or any Buyer against Seller.


 


(e)                                  Anything
herein or in any other Repurchase Document to the contrary notwithstanding, the
maximum liability of any Seller hereunder in respect of the liabilities of the
other Sellers under this Agreement and the other Repurchase Documents shall in
no event exceed the amount which can be guaranteed by the Seller under
applicable federal and state laws relating to the insolvency of debtors.


 


Section 13.11                          Periodic
Due Diligence Review.  Each Seller
acknowledges that the Agent has the right to perform continuing due
diligence reviews with respect to the Purchased Assets, for purposes of
verifying compliance with the representations, warranties and specifications
made hereunder, or otherwise, and the Seller agrees that upon reasonable (but
no less than three (3) Business Day’s) prior notice unless an Event of
Default shall have occurred and be continuing, in which case no notice is
required, to any Seller, the Agent or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
extracts of, the Mortgage Asset Files and any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession or under the control of any Seller and/or the Custodian.  Each Seller also shall make available to the
Agent a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Asset Files and the Purchased
Assets.  Without limiting the generality
of the foregoing, each Seller acknowledges that the Buyers may purchase
Mortgage Assets from the Seller based solely upon the information provided by
Seller to the Agent in the Underwriting Package and, with respect to Wet
Mortgage Assets, the Transaction Request Package and the representations,
warranties and covenants contained herein, and that the Agent, at its option,
has the right at any time to conduct a partial or complete due diligence review
on some or all of the Purchased Assets purchased in a Transaction, including
without limitation ordering new credit reports and new appraisals on the
related Mortgaged Properties and otherwise re-generating the information used
to originate such Purchased Asset.  The
Agent may underwrite such Purchased Assets itself or engage a mutually agreed
upon third party underwriter to perform such underwriting.  Each Seller agrees to cooperate with the
Agent and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Agent and any third party
underwriter with reasonable access to any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession, or under the control, of the Seller.  The Sellers shall pay all out-of-pocket costs
and expenses (including fees and expenses of counsel, if any) incurred by the
Agent in connection with the Agent’s activities pursuant to this Section 13.11
(“Due Diligence Costs”); provided that, in the event that a
Default or an Event of Default shall have occurred, the Sellers shall reimburse
the Agent for all Due Diligence Costs for any and all reasonable out-of-pocket
costs and expenses incurred by the Agent in connection with any due diligence
review conducted by the the Agent pursuant to this


 


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Section 13.11 following
the occurrence and during the continuation of such Default or Event of Default.


 


Section 13.12                          Buyer’s
Appointment as Attorney-in-Fact.  (a) 
Following the occurrence and during the continuance of an Event of
Default, each Seller hereby irrevocably constitutes and appoints the Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact (coupled with an interest) with full irrevocable power
and authority in the place and stead of the Seller and in the name of the
Seller or in its own name, from time to time in the Agent’s discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be reasonably necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Seller
hereby gives the Agent the power and right, on behalf of the Seller, without
assent by, but with written notice to, the Seller, to do the following:


 


(i)                                     in
the name of the Seller, or in its own name, or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any mortgage insurance or with
respect to any other Purchased Items and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and all such moneys
due under any such mortgage insurance or with respect to any other Purchased
Items whenever payable;


 


(ii)                                  to
pay or discharge taxes and Liens levied or placed on or threatened against the
Purchased Items;


 


(iii)                               (A) to direct any
party liable for any payment under any Purchased Items to make payment of any
and all moneys due or to become due thereunder directly to the Agent or as the
Agent shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Purchased Items; (C) to
sign and endorse any invoices, assignments, verifications, notices and other
documents in connection with any Purchased Items; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Purchased Items or any proceeds thereof
and to enforce any other right in respect of any Purchased Items; (E) to
defend any suit, action or proceeding brought against the Seller with respect
to any Purchased Items; (F) to settle, compromise or adjust without the
Seller’s consent any suit, action or proceeding described in clause (E) above
and, in connection therewith, to give such discharges or releases as the Agent
may deem appropriate; and (G) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any Purchased Items
as fully and completely as though the Agent were the absolute owner thereof for
all purposes, and to do, at the Agent’s option and the Seller’s expense, at any
time, and from time to time, all acts and things which the Agent deems
necessary to protect, preserve or realize upon the Purchased Items and the
Agent’s Liens thereon and to effect the intent of this Agreement, all as fully
and effectively as the Seller might do;


 


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(iv)                              to
direct the actions of the Custodian with respect to the Purchased Items under
the Custodial Agreement; and


 


(v)                                 to
execute, from time to time, in connection with any sale provided for in Section 10.02,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Purchased Items.


 


Each
Seller hereby ratifies all that said attorneys shall lawfully do or cause to be
done by the express terms hereof.  This
power of attorney is a power coupled with an interest and shall be irrevocable.


 


(b)                                 The
powers conferred on the Agent hereunder are solely to protect the interests of
the Agent and the Buyers in the Purchased Items and Purchase Assets and shall
not impose any duty upon it to exercise any such powers.  The Agent shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to any Seller for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.


 


Section 13.13                          Legal
Matters.  (a)  If there is any
conflict between the terms of this Agreement or any Transaction entered
into hereunder and the Custodial Agreement, this Agreement shall prevail.


 


(b)                                 This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.


 


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


 


(d)                                 Each
Seller hereby acknowledges that:


 


(i)                                     it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Repurchase Documents;


 


(ii)                                  neither
the Agent nor any Buyer has any fiduciary relationship to any Seller; and


 


(iii)                               no joint venture exists
between any Seller and the Agent or any Buyer.


 


Section 13.14                          Confidentiality.  Each Seller, the Agent and each Buyer hereby
acknowledge and agree that all information regarding the terms set forth
in any of the Repurchase Documents or the Transactions contemplated thereby
(the “Confidential Terms”) shall be kept confidential and shall not be
divulged to any party without the prior written consent of such other party
except to the extent that (i) it is necessary to do so in working with
legal counsel, auditors, taxing authorities or other governmental agencies or
regulatory bodies or in order to comply with any applicable federal or state
laws including, without limitation, federal securities laws applicable to any
Seller or any Affiliate thereof, (ii) any of the Confidential


 


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Terms are in the public domain
other than due to a breach of this covenant, or (iii) in the event of a
Default or an Event of Default, the Agent or any Buyer determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Assets or otherwise to enforce or exercise
the Agent’s or any Buyer’s rights hereunder; provided, that nothing
herein shall prevent any party from disclosing any such information (i) to
any other party to this Agreement, (ii) to any Transferee or potential Transferee
which agrees to comply with the provisions of this Section, or (iii) to
its Affiliates, employees, directors, agents, attorneys, accountants and other
professional advisors or other Persons deemed necessary or appropriate in the
reasonable judgment of the disclosing party, in each case who are made aware of
and instructed to comply with the provisions of this Section 13.14; and, provided,
further, that no disclosure made with respect to any Repurchase Document
shall include a copy of such Repurchase Document to the extent that a summary
would suffice in lieu thereof and in the event that it is necessary for a copy
of any Repurchase Document to be disclosed, any specific terms set forth in
such Repurchase Document with respect to fees, pricing, advance rates and the
like shall be redacted therefrom prior to disclosure of such Repurchase
Document.  The provisions set forth in
this section shall survive the termination of this Agreement for a period
of one year following such termination.


 


Section 13.15                          Conflicts.  In the event of any conflict between the
terms of this Agreement, any other Repurchase Document and any
Confirmation, the documents shall control in the following order of priority: first,
the terms of the Confirmation shall prevail, then the terms of this Agreement
shall prevail, and then the terms of the other Repurchase Documents shall
prevail.


 


Section 13.16                          Right
of Set-off.  In addition to any
rights now or hereafter granted under applicable law or otherwise, and
not by way of limitation of such rights, each Seller hereby grants to the Agent
and each Buyer a right of offset, to secure repayment of all amounts owing to
the Agent or any Buyer by the Sellers under the Repurchase Documents, upon any
and all monies, securities, collateral or other property of the Seller and the
proceeds therefrom, now or hereafter held or received by the Agent or any Buyer
or any entity under the control of the Agent or any Buyer and their respective
successors and assigns (including, without limitation, branches and agencies of
the Agent, wherever located), for the account of the Seller, whether for
safekeeping, custody, pledge, transmission, collection, or otherwise, and also
upon any and all deposits (general or specified) and credits of the Seller at
any time existing.  Each of the Agent and
the Buyers is hereby authorized at any time and from time to time upon the
occurrence and during the continuance of an Event of Default, without notice to
any Seller, to offset, appropriate, apply and enforce such right of offset
against any and all items hereinabove referred to against any amounts owing to
any of the Buyers or the Agent by the Sellers under the Repurchase Documents,
irrespective of whether any of the Buyers or the Agent shall have made any
demand hereunder and although such amounts, or any of them, shall be contingent
or unmatured and regardless of any other collateral securing such amounts.  Each Seller shall be deemed directly indebted
to the Agent and the Buyers in the full amount of all amounts owing to the
Buyers and the Agent by the Sellers under the Repurchase Documents, and Buyer
shall be entitled to exercise the rights of offset provided for above.  ANY AND ALL RIGHTS TO REQUIRE ANY OF THE
BUYERS OR THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING TO ANY OF THE BUYERS OR THE
AGENT BY THE SELLERS


 


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UNDER THE REPURCHASE DOCUMENTS,
PRIOR TO EXERCISING ITS RIGHT OF OFFSET WITH RESPECT TO SUCH MONIES,
SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY SELLER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY EACH SELLER.


 


Section 13.17                          Treatment
of Certain Information. 
Notwithstanding anything to the contrary contained herein or in
any related document, all Persons may disclose to any and all Persons, without
limitation of any kind, the federal income tax treatment of any of the
transactions contemplated by this Agreement or any other related document, any
fact relevant to understanding the federal tax treatment of such transactions
and all materials of any kind (including opinions or other tax analyses)
relating to such federal income tax treatment.


 


Section 13.18                          Increased
Costs, Illegality, Etc.  (a)  In
the event that the Agent shall have determined (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto):


 


(i)                                     on
any date that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair means do
not exist for ascertaining the applicable Pricing Rate on the basis provided
for in the definition of Eurodollar Rate; or


 


(ii)                                  at
any time, that the Agent or the Buyers shall incur increased costs or reductions
in the amounts received or receivable hereunder with respect to any Transaction
because of (x) any change since the date of this Agreement in any applicable
law or governmental rule, regulation, order or request (whether or not having
the force of law) (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
order or request), such as, for example, but not limited to, (A) a change
in the basis of taxation of payments to the Agent or the applicable Buyer in
respect of any amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of the Agent or
the applicable Buyer imposed by the jurisdiction in which its principal office
is located) or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
covered by Section 13.18(c) and/or (y) other circumstances arising
after the date hereof, affecting the Agent or any Buyer or the interbank
Eurodollar market or the position of the Agent or any Buyer in such market; or


 


(iii)                               at any time that the
entering into or continuance of any Transaction, the Pricing Rate applicable to
which is based upon the Eurodollar Rate, has been made (x) unlawful by any law
or governmental rule, regulation or order, (y) impossible by compliance by
Buyer with any governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;


 


then, and in any such event, the Agent shall promptly
give notice thereof (by telephone confirmed in writing) to the Sellers.  Thereafter (x) in the case of clause (i) above,
Transactions, the Pricing Rate applicable to which is based upon the Eurodollar
Rate, shall no longer be available until such time as the Agent notifies the
Sellers that the circumstances giving rise to


 


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such notice by the Agent no longer exist, and any
Transaction Request or Election Notice that is pending shall be deemed
rescinded by the Seller, and (y) in the case of clause (ii) above, the
Sellers shall pay to the Agent for the ratable benefit of the Buyers, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as the
Agent in its sole discretion shall determine) as shall be required to
compensate the Agent and the Buyers for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to the Agent and the Buyers, showing the basis for the calculation
thereof, submitted to the Sellers by the Agent shall, absent manifest error, be
final and conclusive and binding on all the parties hereto).


 


(b)                                 If
the Agent determines at any time that any applicable law or governmental rule,
regulation, order or request (whether or not having the force of law) adopted
after the date hereof concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by the Buyers based on the
existence of the Buyers’ obligations hereunder, then the Sellers shall pay to
the Agent, for the ratable benefit of the Buyers, upon its written demand
therefor, such additional amounts as shall be required to compensate the Buyers
for the increased cost to the Buyers as a result of such increase of
capital.  In determining such additional
amounts, the Agent will act reasonably and in good faith and will use averaging
and attribution methods which are reasonable and consistent with its policies
and the policies of its holding company with respect to capital adequacy, provided
that the Agent’s determination of compensation owing under this Section 13.18(b) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto.  The Agent, upon determining that
any additional amounts will be payable pursuant to this Section 13.18(b),
will give prompt written notice thereof to the Sellers, which notice shall show
the basis for calculation of such additional amounts, although the failure to
give any such notice shall not, subject to Section 13.18(d), release or
diminish any of the Seller’s obligations to pay or cause the payment of
additional amounts pursuant to this Section 13.18(b).


 


(c)                                  In
the event that the Agent shall determine (which determination shall, absent
manifest error, be final and conclusive and binding on all the parties hereto)
at any time that by reason of Regulation D the Buyers are required to maintain
reserves in respect of any liabilities during any period that it has a
Transaction, the Pricing Rate applicable to which is based upon the Eurodollar
Rate, outstanding (each such period, a “Eurocurrency Reserve Period”),
then the Agent shall promptly give notice (by telephone confirmed in writing)
to the Sellers of such determination specifying the additional amounts required
to indemnify the Buyers against the cost of maintaining such reserves (such
written notice to provide a computation of such additional amounts), and the
Sellers shall directly pay to the Agent, for the benefit of the Buyers, such
specified amounts as additional interest at the time that it is otherwise
required to pay interest in respect of such Transaction or, if later demanded
by the Agent, promptly on demand.  The
Agent agrees that if it gives notice to the Sellers of the existence of a
Eurocurrency Reserve Period, it shall promptly notify the Sellers of any
termination thereof, at which time the Sellers shall cease to be obligated to
pay additional Price Differential to the Agent pursuant to the first sentence
of this Section 13.18(c) until such time, if any, as a subsequent
Eurocurrency Reserve Period shall occur.


 


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Section 13.19                          Intended
Third Party Beneficiaries.  Each
Affiliated Hedge Counterparty is an intended third party beneficiary of
Sections 5.01 and 6.01 of this Agreement and no provision set forth in any such
Section (including in any related definition) shall be amended or
otherwise modified without the written consent of each Affiliated Hedge
Counterparty.


 


[SIGNATURES FOLLOW]


 


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


 


	
   

  	
  GRAMERCY
  WAREHOUSE FUNDING I

  LLC, a Delaware limited liability company,

  as a Seller

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  GKK CAPITAL LP, a
  Delaware limited

  partnership, its sole member and manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Gramercy Capital Corp.,
  a Maryland

  corporation, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Hugh Hall

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York
  10170

  
	
   

  	
   

  	
  Attention: Bob Foley

  
	
   

  	
   

  	
  Telecopier No: (212)
  297-1090

  
	
   

  	
   

  	
  Telephone No:

  



 





















 


	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as the
  Agent and as a Buyer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  301 South College
  Street

  
	
   

  	
   

  	
  Charlotte, North
  Carolina 28288

  
	
   

  	
   

  	
  Attn:

  
	
   

  	
   

  	
  Telecopier No.:

  
						



 





















 


	
   

  	
  [BUYER], as a Buyer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  [                       ]

  
	
   

  	
   

  	
  Attn:

  
	
   

  	
   

  	
  Telecopier No.: