Exhibit 10.1


 


[EXECUTION
VERSION]


 


MASTER REPURCHASE AGREEMENT


 


between


 


GOLDMAN SACHS MORTGAGE COMPANY,


 


as Buyer


 


and


 


STARWOOD PROPERTY MORTGAGE SUB-3, L.L.C.


 


as Seller


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  APPLICABILITY;
  OTHER APPLICABLE ANNEXES

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  ADDITIONAL
  AND SUBSTITUTE DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  INITIATION;
  CONFIRMATION; TERMINATION; FEES

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.

  	
  MANDATORY
  PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

  	
  26

  
	
   

  	
   

  	
   

  
	
  5.

  	
  INCOME
  PAYMENTS AND PRINCIPAL PAYMENTS

  	
  26

  
	
   

  	
   

  	
   

  
	
  6.

  	
  CAUTIONARY
  SECURITY INTEREST

  	
  28

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PAYMENT,
  TRANSFER AND CUSTODY

  	
  29

  
	
   

  	
   

  	
   

  
	
  8.

  	
  CERTAIN
  RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS

  	
  33

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RESERVED

  	
  34

  
	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS

  	
  34

  
	
   

  	
   

  	
   

  
	
  11.

  	
  NEGATIVE
  COVENANTS OF SELLER

  	
  38

  
	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATIVE
  COVENANTS OF SELLER

  	
  39

  
	
   

  	
   

  	
   

  
	
  13.

  	
  RESERVED

  	
  42

  
	
   

  	
   

  	
   

  
	
  14.

  	
  EVENTS
  OF DEFAULT; REMEDIES

  	
  44

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SINGLE
  AGREEMENT

  	
  49

  
	
   

  	
   

  	
   

  
	
  16.

  	
  NOTICES
  AND OTHER COMMUNICATIONS

  	
  49

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NON-ASSIGNABILITY

  	
  49

  
	
   

  	
   

  	
   

  
	
  18.

  	
  GOVERNING
  LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

  	
  50

  
	
   

  	
   

  	
   

  
	
  19.

  	
  NO
  RELIANCE; DISCLAIMERS

  	
  51

  
	
   

  	
   

  	
   

  
	
  20.

  	
  INDEMNITY
  AND EXPENSES

  	
  52

  
	
   

  	
   

  	
   

  
	
  21.

  	
  DUE
  DILIGENCE

  	
  53

  
	
   

  	
   

  	
   

  
	
  22.

  	
  SERVICING

  	
  53

  
	
   

  	
   

  	
   

  
	
  23.

  	
  TREATMENT
  FOR TAX PURPOSES

  	
  55

  
	
   

  	
   

  	
   

  
	
  24.

  	
  INTENT

  	
  55

  
	
   

  	
   

  	
   

  
	
  25.

  	
  MISCELLANEOUS

  	
  55

  



 


i

















 


	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  Purchase Percentages and Margin Maintenance Percentages

  	
  1-1

  
	
  SCHEDULE 2

  	
  Purchased Loan Information

  	
  2-1

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
  Form of
  Confirmation

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT II

  	
  Authorized
  Representatives of Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT III

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IV-1

  	
  Form of
  Power of Attorney to Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IV-2

  	
  Form of
  Power of Attorney to Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT V

  	
  Representations
  and Warranties Regarding the Purchased Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VI

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VII

  	
  Form of
  Bailee Agreement

  	
   

  



 


ii

















 


MASTER REPURCHASE AGREEMENT


 


This
Master Repurchase Agreement (this “Agreement”) is dated as of December 2,
2010 and is made by and between Goldman Sachs Mortgage Company, as buyer (“Buyer”)
and Starwood Property Mortgage Sub-3, L.L.C., as seller (“Seller”).


 


1.                                      APPLICABILITY


 


From
time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer one or more Eligible Loans, on a servicing-released
basis, against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller such Eligible Loans at a date certain (or such
earlier date, in accordance with the terms hereof), against the transfer of
funds by Seller.  Each such transaction
involving the transfer of an Eligible Loan from Seller to Buyer shall be
referred to herein as a “Transaction” and, unless otherwise agreed in
writing, shall be governed by this Agreement.


 


2.                                      DEFINITIONS


 


The following capitalized terms shall have the
respective meanings set forth below:


 


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


 


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


 


“Act
of Insolvency” shall mean, with respect to any Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
with respect to such Person or any substantial part of its assets or property
in an involuntary case under any applicable Insolvency Law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its assets or property, or ordering the winding—up or liquidation of such Person’s
affairs, and such decree or order shall remain unstayed and in effect for a
period of thirty (30) days, (b) the commencement by such Person of a
voluntary case under any applicable Insolvency Law now or hereafter in effect, (c) the
consent by such Person to the entry of an order for relief in an involuntary
case under any Insolvency Law, (d) the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its assets or property, (e) the making by such Person
of any general assignment for the benefit of creditors, (f) the admission
in a legal proceeding or otherwise in writing of the inability of such Person
to pay its debts generally as they become due, or (g) the taking of action
by such Person in furtherance of any of the foregoing.


 


“Affiliate”
shall mean, when used with respect to any specified Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control
with, such Person.


 


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


 


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


 

















 


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


 


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


 


“Applicable
Spread” has the meaning specified in the Fee Letter.


 


“Appraisal”
shall mean an appraisal of any Eligible
Property prepared by a licensed appraiser approved by Buyer in its reasonable
discretion, in accordance with the Uniform Standards of Professional Appraisal
Practice of the Appraisal Foundation, in compliance with the requirements of
Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and utilizing customary valuation methods, such as the income,
sales/market or cost approaches, as any of the same may be updated by
recertification from time to time by the appraiser performing such Appraisal.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Bailee”
shall mean such third party as Buyer and Seller shall mutually approve in their
sole discretion.  Buyer and Seller each
agree that Sidley Austin LLP is an approved Bailee hereunder.


 


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


 


“Bailee
Delivery Failure” shall have the meaning specified in the Bailee Agreement.


 


“Bankruptcy
Code” shall mean Title 11 of the United State Code, as amended from time to
time.


 


“Blocked Account”
shall have the meaning specified in Section 5(a) of this Agreement.


 


2

















 


“Blocked
Account
Agreement” shall mean the Blocked Account Agreement executed by Buyer,
Seller, Servicer and the Depository Bank (and any successor thereto or
replacement thereof executed by Buyer, Seller, Servicer and the Depository
Bank).


 


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


 


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


 


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


 


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


 


“Cash
Equivalents” shall mean, as of any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to
interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States and (ii) time deposits, certificates
of deposit, money market accounts or banker’s acceptances of any investment
grade rated commercial bank, in each case maturing within ninety (90) days
after such date.


 


“Cash
Liquidity” shall mean, with respect to Guarantor on any date, the amount of
cash and Cash Equivalents held by Guarantor and its Subsidiaries on a
consolidated basis.


 


“Cause”
means, with respect to an Independent Director, (i) acts or omissions by
such Independent Director that constitute willful disregard of such Independent
Director’s duties, (ii) such Independent Director has been indicted or convicted
for any crime or crimes of moral turpitude or dishonesty or for any violation
of any Requirement of Law, (iii) such Independent Director no longer
satisfies the requirements set forth in the definition of “Independent Director”,
(iv) the fees charged for the services of such Independent Director are
materially in excess of the fees charged by the other providers of Independent
Directors listed in the definition of “Independent Director “ or (v) any
other reason for which the prior written consent of Buyer shall have been
obtained.


 


“Change
of Control” shall mean the occurrence of any of the following:


 


(a) prior
to an internalization of management by Guarantor, if Manager is no longer the
manager of Guarantor;


 


(b) after
such time as Guarantor 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, 


 


3

















 


of
a percentage of the total voting power of all classes of Capital Stock of
Guarantor entitled to vote generally in the election of directors, of 20% or
more;


 


(c) change
in Control of Manager and/or Starwood Capital Group Global, L.P. from the
Person or Persons who are directly or indirectly Controlling such entities on
the date hereof;


 


(d) each
of either Guarantor or the Intermediate Starwood Entities shall cease to own
and control, of record and beneficially, directly or indirectly 100% of the
outstanding Capital Stock of Seller; or


 


(e) a
Transfer of all or substantially all of Guarantor’s assets (excluding any
Transfer on arms-length terms to Affiliates of Guarantor or any Transfer of
Repurchased Loans or other assets of Guarantor in connection with any
securitization transaction or any repurchase or other similar transactions in
the ordinary course of or Guarantor’s business).


 


“CMBS”
shall mean mortgage pass-through certificates or other securities issued
pursuant to a securitization of commercial real estate loans.


 


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


 


“Collection
Period” shall mean, with respect to the Remittance Date in any month, the
period beginning on the Remittance Date in the preceding month to and including
the calendar day immediately preceding such Remittance Date.


 


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


 


“Control” shall mean, with respect to any
Person, the direct or indirect possession of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling,” “Controlled” and “under common
Control” have correlative meanings.


 


“Costs”  shall
mean, with respect to any Purchased Loan, all out-of-pocket costs, fees and
expenses in respect of such Purchased Loan actually incurred by Buyer,
including, without limitation, reasonable legal and custodial fees and expenses
associated with the establishment and maintenance of the facility under this
Agreement and the reasonable legal fees and expenses associated with asset
reviews by Buyer’s outside counsel.


 


“Cross-Termination
Event” shall mean a default by Guarantor, beyond any applicable notice and
grace period, in paying any recourse Indebtedness with an outstanding principal
amount of $25,000,000 or more, which default permits the acceleration of such
Indebtedness.


 


“Custodial
Agreement” shall mean the Custodial Agreement, dated as of December 2,
2010, entered into by and among Custodian, Seller and Buyer.


 


“Custodial
Delivery Certificate” shall mean the custodial delivery certificate, a form
of which is attached to the Custodial Agreement.


 


“Custodian”
shall mean U.S. Bank National Association or any successor Custodian appointed
by Buyer and reasonably acceptable to Seller.


 


“DBRS”
shall mean DBRS, Inc.


 


4

















 


“Debt
Yield Ratio” shall mean, with respect to any Eligible Property
or Properties directly or indirectly securing a New Loan, the quotient
(expressed as a percentage) of (i) net operating income for the trailing
twelve-month period for the most recently ended fiscal quarter, divided  by
(ii) the total amount of indebtedness secured directly or indirectly by
such Eligible Property or Properties that are senior to or pari passu with such
New Loan.


 


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


 


“Defaulted
Loan” shall mean any Purchased Loan as to which (i) there is a
material breach beyond any applicable notice and cure period of a
representation or warranty by Seller under Exhibit V attached
hereto (without regard to any Knowledge qualifier therein), (ii) a default
has occurred and is continuing beyond any applicable notice and cure period
under the related Purchased Loan Documents in the payment when due of interest,
principal or any other amounts due under the Purchased Loan Documents, (iii) the
occurrence and continuance of any other “Event of Default” as defined under the
related Purchased Loan Documents or (iv) the related Purchased
Loan File or any material portion thereof is subject to a continuing Bailee
Delivery Failure or has been released from the possession of the Custodian
under the Custodial Agreement to anyone other than Buyer or any Affiliate of
Buyer except in accordance with the terms of the Custodial Agreement; provided
that upon cure of a Bailee Delivery Failure satisfactory to Buyer or written
confirmation by Custodian of the return of such Purchased Loan File or portion
thereof, such Purchased Loan shall cease to be a Defaulted Loan under this
clause (iv).


 


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


 


“Depository
Bank” shall mean Goldman Sachs Bank USA.


 


“Diligence
Fee” shall mean fees, costs and expenses (so long as no Event of Default is
continuing, not to exceed $30,000 annually or such prorated amount as shall be
applicable for the 2010 calendar year) payable by Seller to Buyer in respect of
Buyer’s out-of-pocket fees, costs and expenses (other than legal expenses and
desk reviews) incurred in connection with its review of the Diligence Materials
hereunder and Buyer’s continuing due diligence reviews of Purchased Loans pursuant
to Section 21 or otherwise hereunder. 
Buyer’s current fee for a desk review of a third party report is $500.


 


“Diligence
Materials” shall mean, with respect to any New Loan, the related
Preliminary Due Diligence Package together with the related Supplemental Due
Diligence Package.


 


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


 


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


 


“EBITDA”
shall mean, for each fiscal quarter, with respect to a Person and its
consolidated Subsidiaries, an amount equal to the sum of:


 


(a) Net
Income (or loss) of such Person (prior to any impact from minority interests or
joint venture net income and before deduction of any dividends on preferred
stock of such Person), 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


 


5

















 


(b) such
Person’s proportionate share of Net Income of the joint venture investments and
unconsolidated Affiliates of such Person, all with respect to such fiscal
quarter, plus


 


(c) amounts
deducted in accordance with GAAP in respect of non-cash expenses in determining
Net Income of such Person.


 


“Eligible
Loans” shall mean performing Mortgage Loans (A) acceptable to Buyer in
the exercise of its sole good faith discretion (including, without limitation,
with respect to the suitability of such Mortgage Loan for a CMBS securitization
or similar transaction), (B) secured directly by an Eligible Property, (C) which
have a loan term equal to or less than ten (10) years (assuming exercise
of all extension options), (D) as to which the applicable representations
and warranties set forth in Exhibit V are true and correct in all material
respects as of the applicable Purchase Date, unless otherwise disclosed in
writing to Buyer on or prior to such Purchase Date, and (E) that have a
maximum LTV not in excess of 80%; provided, however, that a
Mortgage Loan with an LTV in excess of 80% shall, if all other terms and
conditions set forth in this Agreement governing the qualification of such
Mortgage Loan as an Eligible Loan are satisfied, be deemed an Eligible Loan
except that the Purchase Price Percentage and Margin Maintenance Percentage for
such loan shall be zero (0) percent for that portion of such loan that is in
excess of 80% LTV.


 


“Eligible
Property” shall mean a property that is a multifamily, retail, office,
industrial, warehouse, self-storage or hospitality property or such other
property type acceptable to Buyer in the exercise of its sole good faith
discretion.


 


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


 


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


 


“Event
of Default” shall have the meaning given such term in Section 14(a).


 


“Exception
Report” shall have the meaning given such term in Section 3(c)(viii).


 


“Facility
Amount” shall mean $150,000,000.


 


“Facility
Termination Date” shall mean the earlier to occur of (a) December 3,
2012 and (b) the one-year anniversary of a Cross-Termination Event.


 


“FAS
140” shall mean Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 140, as amended, modified or supplemented from
time to time.


 


“FAS
166” shall mean Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 166, as amended, modified or supplemented from
time to time.


 


“Federal
Funds Rate” shall mean, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, 


 


6

















 


the
average of the quotations at approximately 10:00 a.m. (New York time) on
such day or such transactions received by Buyer from three Federal funds
brokers of recognized standing selected by Buyer in its sole discretion.


 


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


 


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


 


“FIN
46” shall mean Financial Accounting Standards Board Interpretation No. 46
(revised December 2003), as amended, modified or supplemented from time to
time.


 


“Final
Approval” shall have the meaning specified in Section 3(c) of this
Agreement.


 


“Financial
Covenant Compliance Certificate” shall mean an Officer’s Certificate to be
delivered, subject to Section 3(e)(2) of this Agreement, by Guarantor
within forty-five (45) days after the end of each fiscal quarter confirming
that as of the fiscal quarter most recently ended, Guarantor satisfies the
following financial covenants (each tested on a consolidated basis): (A) ratio
of EBITDA to Interest Expense for such calendar quarter is not less than 2.0 to
1.0 (adjusted to remove the impact of the application of FAS 140, FAS 166 and
FIN 46 and transfers to special purpose entities that are wholly owned by
Guarantor in connection with bona fide securitization transactions); (B) ratio
of Total Indebtedness to Total Assets is not greater than 0.75 to 1.0 (adjusted
to remove the impact of the application of FAS 140, FAS 166 and FIN 46 and
transfers to special purpose entities that are wholly owned by Guarantor in
connection with bona fide securitization transactions); (C) Cash Liquidity
is not less than $10,000,000; (D) Near Cash Liquidity is not less than
$20,000,000; (E) Tangible Net Worth is not less than $750,000,000; and (F) ratio
of EBITDA to Fixed Charges for such calendar quarter is not less than 1.5 to
1.0.


 


“Fitch”
shall mean Fitch Inc.


 


“Fixed
Charges” shall mean, with respect to any Person and for the applicable
measurement period, the sum of (a) debt service, (b) all preferred
dividends, (c) Capital Lease Obligations paid or accrued during such
period, (d) capital expenditures (if any), and (e) any amounts
payable under any ground lease.


 


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


 


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


 


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


 


7
















 


“Guarantor”
shall mean Starwood Property Trust, Inc., a Maryland corporation, together
with its permitted successors and assigns.


 


“Guaranty”
shall mean that certain Guaranty , dated as of December 2, 2010, made by
Guarantor in favor of Buyer, as the same may be amended, supplemented or
otherwise modified from time to time.


 


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


 


“Income”
shall mean, with respect to any Purchased Loan at any time, any payment or
other cash distribution thereon of principal, interest, dividends, fees,
reimbursements or proceeds thereof (including sales proceeds) or other cash
distributions thereon (including casualty or condemnation proceeds); provided
that, for avoidance of doubt, in no event shall Income include any escrow or
reserve payment made by the related Mortgagor.


 


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


 


“Indemnified
Amounts” and “Indemnified Parties” shall have the respective
meanings specified in Section 20(a) of this Agreement.


 


“Independent
Director” of any corporation or limited liability company means an
individual who is provided by CT Corporation, Corporation Service Company,
National Registered Agents, Inc., Wilmington Trust Company, Stewart
Management Company, Lord Securities Corporation or, if none of those companies
is then providing professional independent directors, another
nationally-recognized company reasonably approved by Buyer, in each case that
is not an Affiliate of Seller and that provides professional independent
directors and other corporate services in the ordinary course of its business,
and which individual is duly appointed as a member of the board of directors of
such corporation or as an 


 


8

















 


independent
manager, member of the board of managers, or special member of such limited
liability company and is not, and has never been, and will not while serving as
Independent Director be, any of the following:


 


(i)                                     a member (other
than an independent, non-economic “springing” member), partner, equityholder,
manager, director, officer or employee of such corporation or limited liability
company or any of its equityholders or affiliates (other than as an independent
director or manager of an affiliate of such corporation or limited liability
company that is required by a creditor to be a single purpose bankruptcy remote
entity, provided that such independent director or manager is employed by a
company that routinely provides professional independent directors or
managers);


 


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


 


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


 


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


 


A
natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the Independent Director of a
Special-Purpose Entity affiliated with the corporation or limited liability
company in question shall not be disqualified from serving as an Independent
Director of such corporation or limited liability company, provided that the
fees that such natural person earns from serving as Independent Director of
affiliates of such the corporation or limited liability company in any given
year constitute in the aggregate less than five percent of such natural person’s
annual income for that year.  The same
natural persons may not serve as Independent Directors of a corporation or
limited liability company and, at the same time, serve as Independent Directors
of an equityholder or member of such corporation or limited liability company.


 


“Insolvency
Laws” shall mean the Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments and similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.


 


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


 


“Interest
Expense” shall mean, with respect to any Person and any period, the amount
of total interest expense incurred by such Person, including capitalized or
accruing interest (but excluding interest funded under a construction loan),
all with respect to such period.


 


“Intermediate
Starwood Entities” shall mean, individually or collectively, Starwood
Property Mortgage BC, L.L.C., Starwood Property Mortgage, L.L.C. and SPT Real
Estate Sub I, LLC, a Delaware limited liability company.


 


9

















 


“Interim Servicing Period”
with respect to each Purchased Loan, the period of time from the Purchase Date
to but not including the earlier of (i) the Servicing Transfer Date and
(ii) the Facility Termination Date.


 


“Kick-Out Loan” shall have
the meaning specified in Section 3(j) of this Agreement.


 


“Knowledge” whenever in this
Agreement or any of the Transaction Documents, or in any document or
certificate executed on behalf of Seller, Guarantor or any of their Affiliates
pursuant to this Agreement or any of the Transaction Documents, reference is
made to the knowledge of Seller or any such Person (whether by use of the words
“Knowledge” or “Known”), same shall mean the actual knowledge of the
individuals who have significant responsibility for any policy making, major
decisions, legal or financial affairs of the applicable entity, or with respect
to any representations, warranties, certifications or statements with respect
to any Purchased Loan, individuals who have significant responsibility for the
origination or acquisition, as applicable, underwriting or servicing of such
Purchased Loan, without further inquiry or investigation, and shall not be
construed, by imputation or otherwise, to refer to the knowledge of Seller or
Guarantor, any Affiliate of Seller or Guarantor, or to any other officer,
agent, manager, representative or employee of Seller, Guarantor or any
Affiliate thereof or to impose upon any such individuals any duty to
investigate the matter to which such actual knowledge, or the absence thereof,
pertains.


 


“LIBOR” shall mean, with
respect to each day on which any Transaction is outstanding (or if such day is
not a Business Day, the next succeeding Business Day) and determined daily by
Buyer, the offered rate for thirty (30) day U.S. dollar deposits, as the
applicable rate appears on Reuters Screen LIBOR01 Page as of 11:00 a.m.
(London time) on such date (rounded up to the nearest whole multiple of
1/100%); provided that if the applicable rate does not appear on Reuters Screen
LIBOR01 Page, the rate for such date will be based upon the offered rates of
the Reference Banks for U.S. dollar deposits as of 11:00 a.m. (London
time) on such date.  In such event, Buyer
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If on such date, two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean of all such
offered quotations (rounded to the nearest whole multiple of 1/100%). If on
such date, fewer than two Reference Banks provide such offered quotations,
LIBOR shall be the higher of (i) LIBOR as determined on the immediately
preceding day that LIBOR is available and (ii) the Reserve Interest
Rate.  With respect to each Transaction,
on the related Purchase Date and for each day that such Transaction is
outstanding, LIBOR shall be calculated as specified in the related
Confirmation.


 


“LIBOR
Rate” shall mean, as of any date of determination, a rate per annum determined
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):


 


 


	
   

  	
  LIBOR

  	
   

  
	
   

  	
  1
  - Reserve Requirement

  	
   

  



 


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


 


“Loan
Type” shall mean, with respect to any Purchased Loan, the applicable loan
type listed in Schedule 1 to this Agreement.


 


“LTV”
shall mean, with respect to any Eligible Loan or Loans, the ratio of the
aggregate outstanding debt (which shall include such Eligible Loan and all debt
senior to or pari passu with such Eligible Loan) secured, directly or
indirectly, by the related Eligible Property or Properties, to the 


 


10

















 


aggregate
value of such Eligible Property or Properties as determined by Buyer in its
sole good faith discretion.  For purposes
of Buyer’s determination, (i) the value may be determined by reference to
an Appraisal, discounted cash flow analysis or other commercially reasonable
method and (ii) for the avoidance of doubt, Buyer may reduce value for any
actual or potential risks (including risk of delay) posed by any liens on the
related Eligible Property or Properties.


 


“Manager”
shall mean SPT Management, LLC, a Delaware limited liability company.


 


“Mandatory
Repurchase” shall have the meaning given such term in Section 3(j).


 


“Mandatory
Repurchase Date” shall have the meaning given such term in Section 3(j).


 


“Margin
Deficit” shall have the meaning specified in Section 4 of this Agreement.


 


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


 


“Market
Value” shall mean, with respect to any Purchased Loan as of any relevant
date, the market value of such Purchased Loan on such date, as determined by
Buyer in its sole good faith discretion.


 


For
purposes of Buyer’s determination, (i) the Market Value may be determined
by reference to an Appraisal, discounted cash flow analysis or any other method
selected by Buyer in its sole good faith discretion, (ii) any amounts or
claims secured by the related Eligible Property or Properties ranking senior to
or pari passu with the lien of the Purchased Loan may be deducted from the
Market Value of the Purchased Loan, (iii) the Market Value of any
Defaulted Loan shall be zero (unless Buyer otherwise specifies), (iv) Buyer
may consider the representations and warranties set forth in Exhibit V (including
a breach thereof), and exceptions thereto in its determination of the Market
Value of the Purchased Loans (provided, however, that to the extent Seller
notified Buyer in writing of any exceptions to the representations and
warranties set forth on Exhibit V attached hereto prior to the Purchase
Date with respect to a Purchased Loan, Buyer shall not base any subsequent
reduction in the Market Value of such Purchased Loan, in whole or in part, on
such exceptions) and (v) for the avoidance of doubt, Buyer may reduce
Market Value for any actual or potential risks (including risk of delay) posed
by any liens or claims on the related Eligible Property or Properties, other
than Permitted Encumbrances.  Seller
shall reasonably cooperate with Buyer in its determination of the Market Value
of each Purchased Loan (including, without limitation, providing all
information and documentation in the possession of Seller regarding such item
of underlying collateral or otherwise required by Buyer).


 


“Material
Adverse Effect” shall mean a material adverse effect on (i) the
property, business, operations, financial condition, credit quality or
prospects of Guarantor, Seller or any Intermediate Starwood Entity, (ii) the
ability of the Guarantor or Seller to perform its obligations under any of the
Transaction Documents to which it is party, (iii) the validity or
enforceability of any the Transaction Documents, (iv) the rights and
remedies of Buyer under any of the Transaction Documents, or (v) the
aggregate value of the Purchased Loans.


 


“Monthly
Statement” shall mean, for each calendar month during which this Agreement
shall be in effect, Seller’s or Servicer’s, as applicable, reconciliation in
arrears of beginning balances, interest and principal paid to date and ending balances
for each Purchased Loan, together with a certified written report describing
(i) any developments or events with respect to such Purchased Loan that
have occurred since the last Monthly Statement that are reasonably likely to
have a Material Adverse Effect, (ii) any and 


 


11

















 


all
written modifications to any Purchased Loan Documents that have occurred since
the last Monthly Statement, (iii) loan status, collection performance and
any delinquency and loss experience with respect to any Purchased Loan,
(iv) an update as to the expected disposition or sale of such Purchased
Loans and (v) such other information as mutually agreed by Seller and
Buyer, which report shall be delivered to Buyer for each calendar month during
the term of this Agreement within ten (10) Business Days following the end
of each such calendar month.


 


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


 


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


 


“Mortgage
Loan” shall mean a whole commercial mortgage loan secured by a Mortgage and
evidenced and secured by the Mortgage Note and all other Mortgage Loan
documents (including all related Servicing Rights).


 


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


 


“Mortgaged
Property” shall mean the real property or properties securing repayment of
the debt evidenced by a Mortgage Note.


 


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


 


“Near
Cash Liquidity” shall mean, with respect to Guarantor on any date, the
market value of Near Cash Securities held by Guarantor and its direct or
indirect subsidiaries, on a consolidated basis, as of such date.  Market value of Near Cash Securities shall be
determined on a monthly basis by at least one independent third party financial
institution reasonably acceptable to Buyer.


 


“Near
Cash Securities” shall mean (i) CMBS having, at all times, a maturity
or weighted average life of twelve (12) months or less, as determined by the
applicable servicer, (ii) RMBS having a duration of twelve (12) months or
less as determined by Tilden Park Capital Management (and, at Buyer’s request,
the assumptions used in such determination shall be provided to Buyer for Buyer’s
review), in each case, having a rating of Baa3 or BBB (or the equivalent) or
higher by at least one Rating Agency (it being acknowledged that such
securities may also have a lower rating from one or more Rating Agencies) or (iii) other
public or privately placed securities approved by Buyer.


 


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


 


“New
Loan” shall mean an Eligible Loan that Seller proposes to sell to Buyer pursuant to a Transaction.


 


“OFAC”
shall mean the Office of Foreign Assets Control of the United States Department
of the Treasury.


 


“Officer’s
Certificate” shall mean, as to any
Person, a certificate of the chief
executive officer, the chief financial officer, the president, any vice
president or the secretary of such Person.


 


12

















 


“Originated
Loan” shall mean any loan that is an Eligible Loan originated by Seller or
an Affiliate of Seller.


 


“Permitted
Encumbrances” shall mean, with respect to any Purchased Loans,
collectively: (a) liens for real property taxes, ground rents, water
charges, sewer rates and assessments not yet due and payable, (b) liens
arising by operation of law such as materialmen, mechanics, carriers, workmen,
repairmen and similar liens, arising in the ordinary course of business which
are discharged by payment, bonding or otherwise or which are being contested in
good faith by the Mortgagor in accordance with the related Purchased Loan
Documents, (c) covenants, conditions and restrictions, rights of way,
easements and other matters of public record, none of which, individually or in
the aggregate, in the reasonable judgment of Seller, materially interferes with
the current use of the related Mortgaged Property or the security intended to
be provided by such Mortgage or with the underlying obligor’s ability to pay
its obligations when they become due or the value of the related Mortgaged
Property, (d) liens and encumbrances set forth in the Title Policy with
respect to such Purchased Loan, (e) rights of existing or future tenants
as tenants only, pursuant to leases, and (f) liens granted pursuant to or
by the Transaction Documents.


 


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


 


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


 


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


 


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


 


“Preliminary
Approval” shall have the meaning specified in Section 3(b) of
this Agreement.


 


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


 


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


 


(ii)                                  current rent
roll, if applicable;


 


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


 


(iv)                              interest
coverage ratios and Debt Yield Ratio;


 


13

















 


(v)                                 loan-to-value
ratio;


 


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


 


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


 


(a)                                  engineering and structural
reports, each in form and prepared by consultants reasonably acceptable to
Buyer;


 


(b)                                 current Appraisal;


 


(c)                                  Phase I environmental report
(including asbestos and lead paint report) and, if applicable, Phase II or
other follow-up environmental report if recommended in Phase I, each in form
and prepared by consultants reasonably acceptable to Buyer;


 


(d)                                 seismic reports, each in
form and prepared by consultants reasonably acceptable to Buyer; and


 


(e)                                  operations and maintenance
plan with respect to asbestos containing materials, each in form and prepared
by consultants reasonably acceptable to Buyer;


 


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


 


(xi)                                insurance
certificates or other evidence of insurance coverage evidencing the insurance
required to be maintained with respect to any Eligible Property or Properties
pursuant to Section 3(c)(iv) hereof (including evidence of terrorism
insurance coverage and such other customary insurance coverage reasonably
satisfactory to Buyer); and


 


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


 


“Price
Differential” shall mean, with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Repurchase Price thereof (excluding any amount attributable
to Price Differential in the definition thereof), calculated on the basis of a
360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending
on (but excluding) the date of determination (such aggregate amount to be
reduced by any amount of such Price Differential paid by Seller to Buyer, prior
to such date, with respect to such Transaction).


 


“Pricing
Rate” shall mean with respect to any Transaction and any date of determination, an annual
rate equal to the LIBOR Rate on such date plus the Applicable Spread for the
related Purchased Loan (subject to adjustment and/or conversion as provided in
Sections 3(k), 3(l), 3(n) and 3(o) of this Agreement).


 


“Principal
Payment” shall mean, with respect to any Purchased Loan, any payment or
prepayment of principal received in respect thereof (including casualty or
condemnation proceeds to the extent that such proceeds are not required under
the underlying loan documents to be reserved, escrowed, readvanced 


 


14

















 


or
applied for the benefit of the Mortgagor or the related Mortgaged
Property).  For purposes of
clarification, prepayment premiums, fees or penalties shall not be deemed to be
principal.


 


“Prohibited Person” shall
mean any Person:


 


(i)                                     listed in the Annex to (the “Annex”), or otherwise
subject to the provisions of, the Executive Order 13224 (the “Executive
Order”) ;


 


(ii)                                  that is owned or controlled by, or acting for or on behalf
of, any person or entity that is listed to the Annex to, or is otherwise
subject to the provisions of, the Executive Order;


 


(iii)                               with whom the Buyer is prohibited from dealing or otherwise
engaging in any transaction by any terrorism or money laundering law, including
the Executive Order;


 


(iv)                              who commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order;


 


(v)                                 that is named as a “specially designated national and
blocked person” on the most current list published by the OFAC at its official
website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or
other replacement official publication of such list; or


 


(vi)                              who is an Affiliate of a Person listed above.


 


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


 


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


 


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


 


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


 


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


 


“Purchased
Loan Information” shall mean, with respect to each Purchased Loan, the
information set forth in Schedule 2 attached hereto.


 


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


 


15

















 


“Purchased
Loans” shall mean (i) with respect to any Transaction, the Eligible
Loans sold by Seller to Buyer in such Transaction and (ii) with respect to
the Transactions in general, all Eligible Loans sold by Seller to Buyer.


 


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


 


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


 


“Reference
Banks” shall mean any leading banks selected by Buyer which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
with an established place of business in London.


 


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


 


“REIT”
shall mean a Person satisfying the conditions and limitations set forth in Section 756(b) and
856(c) of the Code which are necessary to qualify such Person as a “real
estate investment trust,” as defined in Section 756(a) of the Code.


 


“Remittance
Date” shall mean the tenth (10th) calendar day of each month, or the next succeeding
Business Day, if such calendar day shall not be a Business Day.


 


“Repurchase
Assets” shall have the meaning specified in Section 6(a).


 


“Repurchase
Date” shall mean, with respect to any Purchased Loan, the date that is the
earliest to occur of the following: (a) the Facility Termination Date, (b) 364
days following the Purchase Date of such Purchased Loan, (c) the date
specified in the related Confirmation, or (d) if applicable, the related
Mandatory Repurchase Date, Early Repurchase Date or Accelerated Repurchase
Date.


 


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


 


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


 


16
















 


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


 


“Reserve
Interest Rate” shall mean with respect to any LIBOR determination date, the
rate per annum that Buyer determines to be either (i) the arithmetic mean
(rounded to the nearest whole multiple of 1/100%) of the one-month or overnight
U.S. dollar lending rates (as applicable) which New York City banks selected by
Buyer are quoting on the relevant LIBOR determination date to the principal
London offices of leading banks in the London interbank market or (ii) in
the event that Buyer can determine no such arithmetic mean, the lowest
one-month or overnight U.S. dollar lending rate (as applicable) which New York
City banks selected by Buyer are quoting on such LIBOR determination date to
leading European banks.


 


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


 


“RMBS”
shall mean mortgage pass-through certificates or other securities issued
pursuant to a securitization of residential mortgage loans.


 


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


 


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


 


“Servicer”
shall mean Manager, or an Affiliate thereof, as sub-servicer of the Purchased
Loans, or such other servicer or sub-servicer as Buyer may appoint in its sole
discretion in accordance with Section 22.


 


“Servicing
Records” shall have the meaning specified in Section 22(b) of
this Agreement.


 


“Servicing Rights” means
contractual, possessory or other rights of Seller and/or Servicer to administer
or service any Purchased Loans (or to possess any Servicing Records relating
thereto), including: (i) the rights to service the Purchased Loans; (ii) the
right to receive compensation (whether direct or indirect) for such servicing,
including the right to receive and retain the related servicing fee and all
other fees with respect to such Purchased Loans; and (iii) all rights,
powers and privileges incidental to the foregoing, together with all Servicing
Records relating thereto.


 


“Servicing Transfer Date”
shall mean, with respect to the Servicer, the date that is forty-five (45) days
after the earlier of (i) the termination of Servicer as servicer of the
Purchased Loans pursuant to Section 22 hereof, and (ii) the Purchase
Date or any subsequent Remittance Date on which the Interim Servicing Period is
extended as provided in Section 22.


 


“Significant Modification” shall mean (i) any
material extension, amendment, waiver, termination, rescission, cancellation,
release, subordination or other material modification to the terms of, or any
collateral, guaranty or indemnity for, any Purchased Loan or Purchased Loan
Document, or (ii) the foreclosure or exercise of any material remedies by
the holder of any Purchased Loan or Purchased Loan 


 


17

















 


Document after the occurrence and during the continuance
of an “Event of Default” as defined in the related Purchased Loan Documents.


 


“Special Purpose Entity” shall mean any
corporation, limited partnership or limited liability company that, since the
date of its formation and at all times on and after the date hereof, has
complied with and shall at all times comply with the provisions of Section 13.


 


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


 


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


 


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


 


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


 


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


 


“Tangible
Net Worth” shall mean, with respect to any Person, as of any date of
determination, (a) all amounts that would be included under capital or
shareholders’ equity (or like caption) on the balance sheet of such Person at
such date, determined in accordance with GAAP as of such date, less (b)(i) amounts
owing to such Person from Affiliates or from officers, employees, partners,
members, directors, shareholders or other Persons similarly affiliated with
such Person or any Affiliate thereof, (ii) intangible assets of such
Person (other than Hedging Transactions specifically related to the Purchased
Loans) and (iii) prepaid taxes and/or expenses, all on or as of such date.


 


“Title
Policy” shall have the meaning specified in paragraph 4 of Exhibit V.


 


“Total
Assets” shall mean, with respect to any Person and any date of
determination, an amount equal to the aggregate book value of all assets owned
by such Person on a consolidated basis and the proportionate share of assets
owned by non-consolidated Subsidiaries of such Person, less (a) amounts
owing to such Person from any Affiliate thereof, or from officers, employees,
partners, members, 


 


18

















 


directors,
shareholders or other Persons similarly affiliated with such Person or any
Affiliate thereof, (b) intangible assets (other than Hedging Transactions
specifically related to the Purchased Loans), and (c) prepaid taxes and
expenses, all on or as of such date.


 


“Total
Indebtedness” shall mean, with respect to any Person, as of any date of
determination, the aggregate Indebtedness of such Person plus the proportionate
share of all Indebtedness of all non-consolidated Subsidiaries of such Person
as of such date.


 


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


 


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


 


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


 


“Transaction
Documents” shall mean, collectively, this Agreement, the Blocked Account Agreement,
the Custodial Agreement, the Fee Letter, the Guaranty, all Transfer Documents,
all Confirmations executed pursuant to this Agreement in connection with
specific Transactions and all other documents executed in connection herewith
and therewith.


 


“Transfer”
shall mean, with respect to any Person, any sale or other whole or partial
conveyance of all or any portion of such Person’s assets, or any direct or
indirect interest therein to a third party (other than in connection with the
transfer of a Purchased Loan to Buyer in accordance herewith).


 


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


 


“Transfer
Event” shall have the meaning given such term in Section 17(b).


 


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


 


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


 


“Underwriting
Issues” shall mean, with respect to any New Loan, all material information
of which Seller has knowledge that, based on the making of reasonable inquiries
and the exercise of reasonable care and diligence by a reasonable institutional
mortgage loan buyer in determining whether to 


 


19

















 


originate
or acquire such New Loan under the circumstances, would, in the context of the
totality of the Transaction in question, be considered a materially “negative”
factor (either separately or in the aggregate with other information relating
to such New Loan), including, but not limited to, whether, to Seller’s
Knowledge, such New Loan was repurchased from any warehouse loan facility or a
repurchase transaction due to the breach of a representation and warranty or a
material defect in loan documentation or closing deliveries (such as any
absence of any material Purchased Loan Document(s)).


 


3.                                      INITIATION;
CONFIRMATION; TERMINATION; FEES


 


(a)                                  Seller may,
from time to time, prior to the Facility Termination Date, request that Buyer
enter into a Transaction with respect to one or more New Loans.  Seller shall initiate each request by
submitting a Preliminary Due Diligence Package for Buyer’s review and approval
in Buyer’s sole discretion. 
Notwithstanding anything to the contrary herein, Buyer shall have no
obligation to consider for purchase any New Loan if, immediately after the
purchase of such New Loan, the Aggregate Repurchase Price (including the
proposed Purchase Price of such New Loan) would exceed the Facility
Amount.  Buyer and its representatives
shall have the right to review all New Loans proposed to be sold to Buyer in
any Transaction and to conduct its own due diligence investigation of such New
Loans as Buyer determines is reasonably necessary in Buyer’s sole
discretion.  Seller agrees to reimburse
Buyer promptly for its Diligence Fees upon request for payment or reimbursement
thereof.  Notwithstanding any provision
to the contrary herein or any other Transaction Document, Buyer shall be
entitled to make a determination, in its sole discretion, whether a New Loan
qualifies as an Eligible Loan or whether to reject any New Loan proposed to be
sold to Buyer by Seller.


 


(b)                                 Upon Buyer’s receipt
of a Preliminary Due Diligence Package with respect to a New Loan, Buyer shall
have the right to request a Supplemental Due Diligence Package to evaluate such
New Loan.  Upon Buyer’s receipt of such
Supplemental Due Diligence Package or Buyer’s waiver thereof, Buyer shall,
within three (3) Business Days, either (i) notify Seller of Buyer’s
intent to proceed with the Transaction and of its determination with respect to
the Purchase Price and the Market Value for the related New Loan (such notice,
a “Preliminary Approval”) or (ii) deny, in Buyer’s sole discretion,
Seller’s request for the applicable Transaction.  Buyer’s failure to respond to Seller within
three (3) Business Days, as applicable, shall be deemed to be a denial of
Seller’s request to enter into the proposed Transaction, unless Buyer and
Seller have agreed otherwise in writing.


 


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


 


(i)                                     Delivery of
Purchased Loan Documents. 
Seller shall deliver to Buyer:  (A) with
respect to any New Loan that is a Pre-Existing Loan, copies of the Purchased
Loan Documents, except for such Purchased Loan Documents that were not in
Seller’s possession; and (B) with respect to any New Loan that is an
Originated Loan, drafts of the Purchased Loan Documents.


 


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


 


20

















 


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


 


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


 


(v)                                 Opinions of
Counsel.  Buyer shall have received
copies of all legal opinions with respect to the New Loan (which shall include
a non-consolidation opinion, if applicable) that shall be in form and substance
reasonably satisfactory to Buyer; provided that Seller may deliver drafts of
such opinions if such New Loan is being originated concurrently with the
transfer to Buyer and shall deliver final, executed copies of such legal opinions
on the Purchase Date of such New Loan.


 


(vi)                              Title Policy.  Seller shall have delivered to Buyer (1) an
unconditional commitment from the title company to issue a Title Policy or
Policies in favor of Seller and Seller’s successors and/or assigns with respect
to each Mortgage securing such New Loan with an amount of insurance that shall
be not less than the principal balance of such New Loan or (2) an
endorsement or confirmatory letter from the existing title company to an
existing Title Policy (in an amount not less than the principal balance of such
New Loan) in favor of Seller and Seller’s successors and/or assigns that adds
such parties as an additional insured.


 


(vii)                           Additional Real
Estate Matters.  To the
extent obtained by Seller, Seller shall have delivered to Buyer such other real
estate related certificates and documentation as may have been reasonably
requested by Buyer, such as:  (a) certificates
of occupancy issued by the appropriate Governmental Authority and either
letters certifying that the related Eligible Property or Properties are in
material compliance (or in legal non-compliance) with all applicable zoning
laws issued by the appropriate Governmental Authority, a zoning report in form
prepared by a consultant reasonably acceptable to Buyer evidencing such
material compliance (or legal non-compliance), or evidence that the related
Title Policy includes a zoning endorsement; and (b) abstracts of all
material leases in effect at the Mortgaged Property delivered in connection
with the New Loan.


 


(viii)                        Exception
Report.  Seller shall have delivered to
Buyer a report of any exceptions to the representations and warranties in Exhibit V
attached hereto (an “Exception Report”).


 


(ix)                                Other Documents.  Buyer shall have received such other documents
as Buyer shall reasonably deem to be necessary.


 


Within
three (3) Business Days of Seller’s delivery of the documents and
materials contemplated in clauses (i) through (viii) above, Buyer
shall in its sole discretion either (A) notify Seller that Buyer has not
approved the New Loan or (B) notify Seller that Buyer agrees to purchase
the New Loan, subject to 


 


21

















 


satisfaction
(or waiver by Buyer) of the Transaction Conditions Precedent upon the terms set
forth in the Preliminary Approval (or, if Buyer intends to enter into the
Transaction on terms different than those set forth in the Preliminary
Approval, Buyer shall set forth such new terms in Buyer’s notice to Seller
pursuant to this clause (B)) (a “Final Approval”) set forth in Section 3(e) below.  Buyer’s failure to respond to Seller within
three (3) Business Days shall be deemed to be a denial of Seller’s request
that Buyer purchase the New Loan, unless Buyer and Seller have agreed otherwise
in writing.


 


(d)                                 Within two (2) Business
Days after Seller’s request therefor, delivered after Seller has received a
Final Approval from Buyer pursuant to Section 3(c) above with respect
to a proposed Transaction and setting forth the proposed Purchase Date for such
proposed Transaction, Buyer shall deliver to Seller a written confirmation of
such Final Approval of such proposed Transaction including such proposed
Purchase Date in the form of Exhibit I attached hereto (a “Confirmation”);
provided that, unless otherwise agreed by Seller, Buyer shall deliver a
separate Confirmation with respect to each New Loan that will be the subject of
a Transaction.  Each Confirmation shall
be deemed to be incorporated herein by reference with the same effect as if set
forth herein at length.


 


(e)                                  Provided that
each of the Transaction Conditions Precedent set forth in this Section 3(e) have
been satisfied (or waived by Buyer in its sole discretion), and subject to
Seller’s rights under Section 3(f), Buyer shall transfer the Purchase Price
to Seller with respect to each New Loan for which it has issued a Confirmation
on the Purchase Date specified in such Confirmation, and the related New Loan
shall be concurrently transferred by Seller to Buyer or its nominee.  For purposes of this Section 3(e), the “Transaction
Conditions Precedent” shall be satisfied with respect to any proposed
Transaction if:


 


(1)                                  no Default,
Event of Default or Margin Deficit shall have occurred and be continuing as of
the Purchase Date for such proposed Transaction;


 


(2)                                  Guarantor shall
have delivered to Buyer a true and accurate Financial Covenant Compliance
Certificate with respect to Guarantor’s most recently ended fiscal quarter;


 


(3)                                  Seller shall
have delivered to Buyer an Officer’s Certificate of Seller certifying that the
representations and warranties made by Seller in this Agreement are true and
correct in all material respects as of the Purchase Date for such Transaction
(except such representations which by their terms speak as of a specified date
and subject to any exceptions disclosed to Buyer in an Exception Report prior
to issuance of the Confirmation by Buyer). 
If requested by Buyer, Seller shall also deliver an Officer’s
Certificate of Seller covering such matters as Buyer may reasonably request with
respect to matters relating to this Agreement or the other Transaction
Documents;


 


(4)                                  Buyer shall
have (A) determined, in accordance with the applicable provisions of Section 3(a) of
this Agreement that the New Loan proposed to be sold to Buyer by Seller in such
Transaction is an Eligible Loan and (B) obtained internal credit approval
for the inclusion of such New Loan as a Purchased Loan in a Transaction, each
of which shall be deemed satisfied upon Buyer’s delivery to Seller of a Final
Approval with respect to such Transaction pursuant to Section 3(c) above;


 


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


 


(6)                                  Seller shall
have delivered to each Mortgagor or obligor or related servicer or lead lender
under any Purchased Loan a direction letter in accordance with Section 5(a) of
this 


 


22

















 


Agreement unless such
Mortgagor or obligor or related servicer or lead lender is already remitting
payments to the Servicer whereupon Seller shall direct the Servicer to remit
all such amounts into the Blocked Account in accordance with Section 5(a) of this
Agreement and to service such payments in accordance with the provisions of
this Agreement;


 


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


 


(8)                                  such Purchased
Loan shall not be a Delinquent Loan or a Defaulted Loan;


 


(9)                                  Buyer shall
have received true and complete copies of fully executed originals of all
Transfer Documents;


 


(10)                            in Buyer’s good
faith judgment, no event shall have occurred or circumstance shall exist that
has a Material Adverse Effect;


 


(11)                            in Buyer’s good
faith judgment, there shall not have occurred


 


(i) (a) a material change in financial
markets, an outbreak or escalation of hostilities or a material change in
national or international political, financial or economic conditions, or (b) a
general suspension of trading on major stock exchanges, or (c) a
disruption in or moratorium on commercial banking activities or securities
settlement services; or


 


(ii) (a) an event or events in the good
faith determination of Buyer resulting in the effective absence of a “repo
market” or comparable “lending market” for financing debt obligations secured
by commercial mortgage loans, or (b) an event or events shall have
occurred resulting in the Buyer not being able to finance Eligible Loans
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.


 


(12)                            no
Cross-Termination Event shall have occurred and be continuing.


 


(f)                                    Each
Confirmation, together with this Agreement, shall be conclusive evidence
(absent manifest error) of the terms of the Transaction covered thereby unless
objected to in writing by Seller no more than three (3) Business Days
after the date such Confirmation is received by Seller.  An objection sent by Seller with respect to
any Confirmation must state specifically that the writing is an objection, must
specify the provision(s) of such Confirmation being objected to by Seller,
must set forth such provision(s) in the manner that Seller believes such
provisions should be stated, and must be received by Buyer no more than three (3) Business
Days after such Confirmation is received by Seller.  Buyer, in its good faith discretion, may
issue another Confirmation addressing Seller’s objections or may elect not to
proceed with the proposed Transaction.


 


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


 


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


 


23
















 


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


 


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


 


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


 


(i)                                     So long as
Event of Default has occurred and is then continuing, the Repurchase Price with
respect to one or more Purchased Loans may be paid in part at any time upon two
(2) Business Days prior written notice from Seller to Buyer; provided,
however, that any such payment shall be accompanied by an amount
representing accrued Price Differential with respect to such Purchased Loan(s) on
the amount of such payment and all other amounts then due under the Transaction
Documents.  Each partial payment of the
Repurchase Price that is voluntary (as opposed to mandatory under the terms of
this Agreement) shall be in an amount of not less than One Hundred Thousand
Dollars ($100,000).


 


(j)                                     Not later than
thirty (30) days after receipt of written notice from Buyer (a “Mandatory
Repurchase Date”) that any Purchased Loan is not eligible for inclusion in
a CMBS securitization, which notice shall describe in reasonable detail the
reason for such ineligibility, whether by reason of failure to satisfy legal or
REMIC requirements or a Rating Agency or “B-piece” buyer determination (a “Kick-Out
Loan”), Seller shall repurchase the applicable Purchased Loan at the
Repurchase Price therefor (a “Mandatory Repurchase”).  The Purchase Percentage of a Kick Out Loan
shall be subject to reduction as set forth in Schedule I.


 


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


 


(l)                                     Notwithstanding
any other provision herein, if, after the date of this Agreement, the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for Buyer to effect LIBOR
Transactions as contemplated by the Transaction Documents, (i) the
commitment of Buyer hereunder to enter into new LIBOR Transactions and to
continue LIBOR Transactions as such shall forthwith be canceled, and (ii) the
LIBOR Transactions then outstanding shall be converted automatically to
Alternative Rate Transactions.


 


(m)                               Upon demand by
Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any net
actual, out-of-pocket loss or expense (not to include any indirect or
consequential damages including, 


 


24

















 


without limitation, lost profit or opportunity)
(including, without limitation, reasonable attorneys’ fees and disbursements)
that Buyer actually sustains or incurs as a consequence of (i) a default
by Seller in terminating any Transaction after Seller has given a notice in
accordance with Section 3(g) of a termination of a Transaction, (ii) any
payment of all or any portion of the Repurchase Price, as the case may be, on
any day other than a Remittance Date (including, without limitation, any such
loss or expense arising from the reemployment of funds obtained by Buyer to
maintain Transactions hereunder or from fees payable to terminate the deposits
from which such funds were obtained, provided that Seller shall not be
obligated to reimburse Buyer for the incremental cost of reemploying funds or
terminating deposits that arise solely as a result of Buyer’s depositing funds
or employing funds at a rate calculated other than by reference to LIBOR) or (iii) Seller’s
failure to sell Eligible Loans to Buyer after Seller has notified Buyer of a
proposed Transaction and Buyer has issued a Confirmation to purchase such
Eligible Loans in accordance with the provisions of this Agreement.  Buyer shall promptly deliver a certificate to
Seller certifying such actual, out-of-pocket losses or expenses and setting
forth the calculations therefor, which certificate shall be prima facie
evidence of the information set forth therein.


 


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


 


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


 


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


 


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


 


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


 


(o)                                 If Buyer shall
have reasonably determined that the adoption of or any change in any
Requirement of Law regarding reserve, special deposit or similar requirements
relating to extensions of credit or other assets of Buyer or in the
interpretation or application thereof or compliance by Buyer or 


 


25

















 


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


 


(p)                                 If any of the
events described in Section 3(k), Section 3(l), Section 3(n) or
Section 3(o) result in Buyer’s election to use the Alternative Rate
or Buyer’s request for additional amounts, then Seller shall have the option to
notify Buyer in writing of its intent to terminate all of the Transactions and
repurchase all of the Purchased Loans no later than five (5) Business Day
after such notice is given to Buyer, and such repurchase by Seller shall be
conducted pursuant to and in accordance with Section 3(g).  The election by Seller to terminate the
Transactions in accordance with this Section 3(p) shall not relieve
Seller for liability with respect to any additional amounts or increased costs
actually incurred by Buyer prior to the actual repurchase of the Purchased Loans.


 


(q)                                 From and after
the Facility Termination Date, Buyer shall have no further obligation to
purchase any New Loans.  On the Facility
Termination Date, Seller shall be obligated to repurchase all of the Purchased
Loans and transfer payment of the Repurchase Price for each such Purchased
Loan, together with the accrued and unpaid Price Differential and all Costs and
other amounts due and payable to Buyer hereunder.  Following the Facility Termination Date,
Buyer shall not be obligated to transfer any Purchased Loans to Seller until
payment in full to Buyer of all amounts due hereunder.


 


4.                                      MANDATORY
PAYMENT OR DELIVERY OF ADDITIONAL ASSETS


 


Buyer
may determine and re-determine the Asset Base and/or Asset Margin on any
Business Day and on as many Business Days as it may elect.  If at any such time the Aggregate Repurchase
Price of the Purchased Loans is greater than the Asset Margin as determined by
Buyer in its sole good faith discretion and notified to Seller on any Business
Day (a “Margin Deficit”), then Seller shall, no later than the second (2nd) Business Day after receipt
of such notice, either deliver to Buyer (i) cash or (ii) additional
collateral acceptable to Buyer in its sole and absolute discretion (including,
without limitation, Eligible Loans pursuant to the terms of this Agreement), in
each case in an amount sufficient to reduce the Aggregate Repurchase Price to
an amount equal to the Asset Base as re-determined by Buyer after giving effect
to the delivery of cash or additional collateral by Seller to Buyer pursuant to
this Section 4.  Any cash delivered
to Buyer pursuant to this Section 4 shall be applied by Buyer to reduce
the Repurchase Price of each Purchased Loan on a pro rata basis.


 


5.                                      INCOME
PAYMENTS AND PRINCIPAL PAYMENTS


 


(a)                                  On or before
the date hereof, Seller, Servicer and Buyer shall establish and maintain with
the Depository Bank a deposit account in the name of Seller and under the sole
control of Buyer with respect to which the Blocked Account Agreement shall have been
executed (such account, together with any replacement or successor thereof, the
“Blocked
Account”).  Seller shall cause
all Income with respect to the Purchased Loans or cash delivered under Section 4
to be deposited in the Blocked Account.  In
furtherance of the foregoing, Servicer agrees to remit to the Blocked Account
all Income received in 


 


26

















 


respect of the Purchased Loans within one (1) Business
Day of receipt.  All Income in respect of
the Purchased Loans, which may include payments in respect of associated
Hedging Transactions, shall be deposited directly into, or, if applicable,
remitted directly from the applicable underlying collection account to, the Blocked Account.


 


(b)                                 Unless an Event
of Default shall have occurred and be continuing, on each Remittance Date, all
Income on deposit in the Blocked Account in respect of the Purchased Loans and the
associated Hedging Transactions shall be applied as follows:


 


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


 


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


 


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


 


(iv)                              fourth, to Seller the
remainder, if any.


 


If,
on any Remittance Date, the amounts deposited in the Blocked Account shall be
insufficient to make the payments required under clauses (i) through (iii) of
this Section 5(b), and Seller does not otherwise make such payments on
such Remittance Date, the same shall constitute an Event of Default hereunder.


 


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


 


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


 


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


 


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


 


(iv)                              fourth, to Seller the
remainder, if any.


 


(d)                                 If at any time
during the term of any Transaction any Income is distributed to Seller with
respect to the related Purchased Loan or Seller has otherwise received such
Income and has made a payment in respect of such Income to Buyer pursuant to
this Section 5, and for any reason such amount is 


 


27

















 


required to be returned by Buyer to an obligor under
such Purchased Loan (either before or after the Repurchase Date), Buyer may
provide Seller with notice of such required return, and Seller shall pay the
amount of such required return to Buyer by 11:00 a.m., New York time, on
the Business Day following Seller’s receipt of such notice.


 


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


 


6.                                      CAUTIONARY
SECURITY INTEREST


 


(a)                                  Buyer and
Seller intend that all Transactions hereunder be sales to Buyer of the
Purchased Loans for all purposes (other than for U.S. Federal, state and local
income or franchise tax purposes) and not loans from Buyer to Seller secured by
the Purchased Loans.  However, in the
event that any Transaction is deemed to be a loan,  subject to the terms and conditions of this
Agreement, Seller hereby pledges to Buyer as security for the performance by
Seller of its obligations under the Transactions and the Transaction Documents
and hereby grants to Buyer a first priority security interest in all of Seller’s
right, title and interest in and to (i) all of the Purchased Loans
(including, for the avoidance of doubt, all security interests, mortgages and
liens on personal or real property securing the Purchased Loans) and related
Servicing Rights, (ii) the Blocked Account and all amounts and property from
time to time on deposit therein, (iii) all Income from the
Purchased Loans, (iv) all insurance policies and insurance proceeds
relating to any Purchased Loan or the related Eligible Property, (v) all “general
intangibles”, “accounts” and “chattel paper” as defined in the UCC relating to
or constituting any and all of the foregoing, (vi) all replacements,
substitutions or distributions on or proceeds, payments and profits of, and
records and files relating to, any and all of the foregoing, and (viii) any
other property, rights, title or interests as are specified in the Confirmation
and/or the Trust Receipt, the Purchased Loan Schedule or exception report with
respect to the foregoing in all instances, whether now owned or hereafter
acquired, now existing or hereafter created (collectively, the “Repurchase
Assets”).


 


(b)                                 With respect to
the security interest in the Repurchase Assets granted in Section 6(a) hereof,
and with respect to the security interests granted in Section 6(c), Buyer
shall have all of the rights and, upon the occurrence and during the
continuance of an Event of Default, may exercise all of the remedies of a
secured creditor under the UCC and any other applicable law and shall have the
right to apply the Repurchase Assets or proceeds therefrom to the obligations
of Seller under the Transaction Documents. 
In furtherance of the foregoing, (i) Buyer, at Seller’s sole cost
and expense, shall cause to be filed as a protective filing with respect to the
Repurchase Assets and as a UCC filing with respect to the security interests granted
in Section 6(c) one or more UCC financing statements in form
satisfactory to Buyer (to be filed in the filing office indicated therein), in
such locations as may be necessary to perfect and maintain perfection and
priority of the outright transfer (including under Section 22 of this
Agreement) and the security interest granted hereby and, in each case,
continuation statements and any amendments thereto (including, without
limitation, by causing to be filed any amendments necessary to add or delete
Repurchase Assets covered by the financing statement to reflect the purchase
and repurchase of Purchased Loans) (collectively, the “Filings”), and
shall forward copies of such Filings to Seller upon completion thereof, and (ii) Seller
shall, from time to time, at its own expense, deliver and cause to be duly
filed all such further filings, instruments and documents and take all such
further actions as may be reasonably necessary or as may be reasonably
requested by Buyer with respect to the perfection and priority of the outright
transfer of the Purchased Loans and the security interest granted hereunder in
the Repurchase Assets and the rights and remedies of Buyer with respect to the
Repurchase 


 


28

















 


Assets (including under Section 22 of this
Agreement) (including the payments of any fees and taxes required in connection
with the execution and delivery of this Agreement).


 


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


 


(d)                                 Notwithstanding
that Servicer has no rights to the Servicing Rights relating to any Purchased
Loans or any appurtenant rights, to the extent that a court determines that
Servicer has rights with respect to any such Servicing Rights and appurtenant
rights, and as security for the performance by Servicer of its obligations
under the Transaction Documents, Servicer hereby grants and pledges to Buyer a
first priority security interest in all of its rights, title and interest in
and to the following property: (i) the Servicing Rights related to the
Purchased Loans; (ii) all rights of Servicer to receive from any third
party or to take delivery of any servicing of the Purchased Loans; (iii) all
rights of Servicer to receive from any third party or to take delivery of all
related Servicing Records and all other documents which constitute a part of
the related Purchased Loan Files; (iv) all rights of Servicer to recover
from any third party or to take delivery of any of the foregoing, in all
instances, whether now owned or hereafter acquired, now existing or hereafter
created; and (v) all replacements, substitutions or distributions on or
proceeds, payments or profits of any and all of the foregoing.


 


(e)                                  In connection
with the repurchase by Seller of any Purchased Loan in accordance herewith,
upon receipt of the Repurchase Price by Buyer, Buyer will deliver to Seller, at
Seller’s expense, such documents and instruments as may be reasonably necessary
and requested by Seller to reconvey such Purchased Loan and any Income related
thereto to Seller and to evidence the termination of Buyer’s security interest
therein including, without limitation, UCC termination statements.


 


7.                                      PAYMENT,
TRANSFER AND CUSTODY


 


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


 


(b)                                 With respect to
each Table Funded Purchased Loan, Seller shall cause the Bailee to deliver to
the Buyer by no later than 1:00 p.m. (New York time), on the Purchase
Date, by facsimile a true and complete copy of the related promissory note, the
Insured Closing Letter and Escrow Instructions, if any, and the executed Bailee
Agreement.  In connection with the sale
of each Purchased Loan, not later than 1:00 p.m. (New York time), two (2) Business
Days prior to the related Purchase Date (or with respect to a Table Funded
Purchased Loan not later than 1:00 p.m. (New York time) on the third (3rd) Business Day following the
applicable Purchase Date), Seller shall deliver or cause Bailee to deliver
(with 


 


29

















 


a copy to Buyer) and release to the Custodian
(together with the Custodial Delivery Certificate ), and shall cause the
Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a
Table Funded Purchased Loan, not later than two (2) Business Days
following the receipt by the Custodian) confirming the receipt of the following
original (or where indicated, copied) documents, to the extent applicable
(collectively, the “Purchased Loan File”), pertaining to each of the
Purchased Loans identified in the Custodial Delivery Certificate delivered
therewith:


 


(i)                                     With respect to
each Purchased Loan that is a Mortgage Loan, the following documents, as
applicable and subject to clause (ii) below:


 


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


 


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


 


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


 


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


 


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


 


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


 


30

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


31
















 


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


 


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


 


(ii)                                 If Seller
cannot deliver, or cause to be delivered, any of the original documents and/or
instruments required to be delivered as originals under the provisions above,
Seller shall deliver a photocopy thereof and, unless waived by Buyer, an
Officer’s Certificate of Seller certifying that such copy represents a true and
correct copy of the original.  Seller
shall then, (1) use its best efforts to obtain and deliver the original
document within 180 days after the related Purchase Date (or such longer period
after the related Purchase Date to which Buyer may consent in its sole good
faith discretion, so long as Seller is, as certified in writing to Buyer not
less frequently than monthly, using its best efforts to obtain the original),
(2) after the expiration of such best efforts period, deliver to Buyer a
certification that states, despite Seller’s best efforts, Seller was unable to
obtain such original document and (3) thereafter have no further obligation to
deliver the related original document.


 


(c)                                  From time to
time, Seller shall forward to the Custodian additional original documents or
additional documents evidencing any assumption, modification, consolidation or
extension of a Purchased Loan approved in accordance with the terms of this
Agreement, and upon receipt of any such other documents, the Custodian shall
hold such other documents on behalf of Buyer and as Buyer shall request from time
to time.  With respect to any documents
which have been delivered or are being delivered to recording offices for
recording and have not been returned to Seller in time to permit their delivery
hereunder at the time required, in lieu of delivering such original documents,
Seller shall deliver to Buyer a true copy thereof with an Officer’s Certificate
certifying that such copy is a true, correct and complete copy of the original,
which has been transmitted for recordation. 
Seller shall deliver such original documents to the Custodian promptly
when they are received.  With respect to
all of the Purchased Loans delivered by Seller to Buyer or its designee
(including the Custodian), Seller shall execute an omnibus power of attorney
substantially in the form of Exhibit IV-1 attached hereto irrevocably
appointing Buyer its attorney-in-fact with full power to, during the
continuance of an Event of Default, (i) complete and record any Assignment of
Mortgage, (ii) complete the endorsement of any Mortgage Note and (iii) take
such other steps as may be necessary or desirable to enforce Buyer’s rights
against any Purchased Loans and the related Purchased Loan Files and the
Servicing Records.  Buyer shall deposit
the Purchased Loan Files representing the Purchased Loans, or cause the
Purchased Loan Files to be deposited directly, with the Custodian to be held by
the Custodian on behalf of Buyer.  The
Purchased Loan Files shall be maintained in accordance with the Custodial
Agreement.  Any Purchased Loan Files not
delivered to Buyer or its designee (including the Custodian) are and shall be
held in trust by Seller or its designee for the benefit of Buyer as the owner
thereof.  Seller or its designee shall
maintain a copy of the Purchased Loan File and any originals of the Purchased
Loan File not delivered to Buyer or its designee.  The possession of the Purchased Loan File by
Seller or its designee is at the will of Buyer for the sole purpose of
servicing the related Purchased Loan, and such retention and possession by Seller
or its designee is in a custodial capacity only.  The books and records (including, without
limitation, any computer records or tapes) of Seller or its designee shall be
marked appropriately to reflect clearly the transfer, subject to the terms and
conditions of this Agreement, of the related Purchased Loan to Buyer.  Seller or its designee (including the
Custodian) shall release its custody of the Purchased Loan File only in
accordance with written instructions from Buyer, unless such release is required
as incidental to the servicing of the 


 


32

















 


Purchased Loans or is in connection with a
repurchase of any Purchased Loan by Seller or is pursuant to the order of a
court of competent jurisdiction.


 


(d)                                 Unless an Event
of Default shall have occurred and be continuing, Seller shall exercise all
voting, consent, corporate and decision-making rights with respect to the
Purchased Loans, provided that Seller shall not effectuate any Significant
Modification of any Purchased Loan without Buyer’s prior written consent
thereto, which consent shall not be unreasonably withheld, conditioned or
delayed.  Buyer agrees to use
commercially reasonable efforts to respond to any requests for consent by
Seller pursuant to this Section 7(d) in an expeditious manner.  Upon the occurrence and during the
continuation of an Event of Default, Buyer shall be entitled to exercise all
voting, consent, corporate, and decision-making rights with respect to the
Purchased Loans without regard to Seller’s instructions.


 


(e)                                  On the date of
this Agreement, Buyer shall have received
all of the following items and documents, each of which shall be satisfactory
to Buyer in form and substance:


 


(i)                                     Transaction
Documents.


 


(A)  this Agreement, duly executed and delivered
by Seller, Buyer and Servicer;


 


(B)  the Custodial Agreement, duly executed and
delivered by Seller, Buyer and Custodian;


 


(C)  the Blocked Account Agreement, duly executed and
delivered by Seller, Buyer, Servicer and Depository Bank;


 


(D)  the Fee Letter, duly executed and delivered
by Seller and Buyer; and


 


(E)  the Guaranty, duly executed and delivered by
Guarantor.


 


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


 


(iii)                               Legal Opinion.  Opinions of counsel to Seller, the Guarantor
and the Servicer in form and substance satisfactory to Buyer as to authority,
enforceability of the Transaction Documents to which it is a party,
perfection, bankruptcy safe harbors, the Investment Company Act and such other
matters as may be requested by Buyer; and


 


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


 


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


 


(a)                                  Subject to the
terms and conditions of this Agreement, title to all Purchased Loans shall pass
to Buyer on the applicable Purchase Date, and, subject to the terms and
conditions of this Agreement, Buyer shall have free and unrestricted use of its
interest in the Purchased Loans in accordance with the terms and conditions of
the Purchased Loan Documents.  Nothing in
this Agreement or any other Transaction Document shall preclude Buyer from
engaging, at Buyer’s expense, in repurchase 


 


33

















 


transactions with the Purchased Loans with Persons
in conformity with the terms and conditions of the Purchased Loan Documents or
otherwise selling, transferring, pledging, repledging, hypothecating, or
rehypothecating all or a portion of its interest in the Purchased Loans to
Persons in conformity with the terms and conditions of the Purchased Loan
Documents, but no such transaction shall relieve Buyer of its obligations to
transfer the Purchased Loans to Seller pursuant to Section 3 of this Agreement
or of Buyer’s obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Section 5 of this Agreement or otherwise
affect the rights, obligations and remedies of any party to this Agreement.


 


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


 


9.                                      RESERVED


 


10.                               REPRESENTATIONS


 


(a)                                  Seller
represents and warrants to Buyer that as of the Purchase Date and as of the
date of this Agreement and at all times while this Agreement and any
Transaction thereunder is in effect:


 


(i)                                     Organization.  Seller is duly organized, validly existing
and in good standing under the laws and regulations of the state of Seller’s
organization and is duly licensed, qualified, and in good standing in every
state where such licensing or qualification is necessary for the transaction of
Seller’s business.  Seller has the power
to own and hold the assets it purports to own and hold, and to carry on its
business as now being conducted and proposed to be conducted, and has the power
to execute, deliver, and perform its obligations under this Agreement and the
other Transaction Documents.


 


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


 


(iii)                               Non-Contravention;
Consents.  Neither the
execution and delivery of the Transaction Documents, nor consummation by Seller
of the transactions contemplated by the Transaction Documents (or any of them),
nor compliance by Seller with the terms, conditions and provisions of the
Transaction Documents (or any of them) will (x) conflict with or result in a
breach or violation of any of the terms, conditions or provisions of any
judgment or order, writ, injunction, decree or demand of any court applicable
to Seller, (y) result in the creation or imposition of any lien or any other
encumbrance upon any of the assets of Seller, other than pursuant to the
Transaction Documents or (z) violate or conflict with contractual provisions
of, or cause an event of default under, any indenture, loan agreement,
mortgage, material contract or other material agreement to which Seller is a
party or by which Seller may be bound. 
Seller has all necessary licenses, permits and other consents from
Governmental Authorities necessary to acquire, own and sell the Purchased Loans
and for the performance of its obligations under the Transaction Documents.


 


(iv)                              Litigation;
Requirements of Law.  There is no
action, suit, proceeding, investigation, or arbitration pending or, to the best
Knowledge of Seller, threatened against Seller or any of its assets which may
result in any Material Adverse Effect, or which may have an 


 


34

















 


adverse effect on the
validity of the Transaction Documents or any action taken or to be taken in
connection with the obligations of Seller under any of the Transaction Documents.  Seller is in compliance in all material
respects with all Requirements of Law. 
Seller is not in default in any material respect with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any arbitrator
or Governmental Authority.


 


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


 


(vi)                              Good Title to
Purchased Loans.  Immediately
prior to the purchase of any Purchased Loans by Buyer from Seller, such
Purchased Loans are free and clear of any lien, security interest, claim,
option, charge, encumbrance or impediment to transfer to Buyer (including any “adverse
claim” as defined in Section 8-102(a)(1) of the UCC), and are not subject to
any rights of set-off, any prior sale, transfer, assignment, or participation
by Seller or any agreement by Seller to assign, convey, transfer or participate
in such Purchased Loans, in whole or in part, and Seller is the sole legal
record and beneficial owner of, and owns and has the right to sell and
transfer, such Purchased Loans to Buyer, and, upon transfer of such Purchased
Loans to Buyer, Buyer shall be the owner of such Purchased Loans (other than
for U.S. Federal, state and local income and franchise tax purposes) free of
any adverse claim, subject to Seller’s rights pursuant to this Agreement.  In the event that the related Transaction is
recharacterized as a secured financing of the Purchased Loans and with respect
to the security interests granted in Sections 6(a) and 6(c), the provisions of
this Agreement are effective to create in favor of Buyer a valid security
interest in all right, title and interest of Seller in, to and under the
Repurchase Assets specified in Sections 6(a) and the other collateral specified
in Section 6(c), and Buyer shall have a valid, perfected and enforceable first
priority security interest in the Repurchase Assets and such other collateral
to the extent that a security interest in the Repurchase Assets and such
collateral can be perfected under the UCC by the filing of UCC financing
statements in accordance with Section 6(b) hereof or by delivery of the
Purchased Loan File to the Custodian in accordance with Section 7(b) hereof,
subject to no lien or rights of others other than as granted herein (other than
Permitted Encumbrances).


 


(vii)                           No Default.  No Event of Default and, to Seller’s
Knowledge, no Default exists under or with respect to the Transaction
Documents.


 


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


 


35

















 


respect to each Purchased
Loan, except for such documents the originals of which have been delivered to
the Custodian and except as disclosed to Buyer in an Exception Report prior to
Buyer’s issuance of a Confirmation with respect to the related Purchased Loan.


 


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


 


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


 


(xi)                                [Intentionally
Omitted]


 


(xii)                             No Investment
Company.  Neither Seller nor any
Intermediate Starwood Entity is an “investment company”, or a company “controlled
by an investment company”, within the meaning of the Investment Company Act of
1940, as amended.


 


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


 


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


 


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


 


(xvi)                         Full and
Accurate Disclosure.  No
information provided pursuant to the Transaction Documents, or any written statement
furnished by or on behalf of Seller pursuant to the terms of the Transaction
Documents (including any certification of Bailee), contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the 


 


36

















 


statements contained herein
or therein not misleading in light of the circumstances under which they were
made when such statements and omissions are considered in the totality of the
circumstances in question.


 


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


 


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


 


(xix)                           Location of
Books and Records.  The
location where Seller keeps its books and records at its chief executive office
at 591 West Putnam Avenue, Greenwich, Connecticut 06830.


 


(xx)                              Regulation T, U
and X.  Neither the entering into nor
consummation of any Transaction hereunder, nor the use of the proceeds thereof,
will violate any provisions of Regulation T, U or X.


 


(xxi)                           If requested by
Buyer, Seller, any applicable Affiliate of Seller and the recipient of any
portion of the proceeds of, or any portion of, any Transaction shall furnish to
Buyer a statement on Federal Reserve Form G-3 referred to in Regulation U.


 


(xxii)                        USA Patriot
Act; OFAC.  Neither
Seller, Guarantor, Servicer nor any of their respective Affiliates is a
Prohibited Person and each of Seller, Guarantor and Servicer is in full
compliance with all applicable orders, rules, regulations and recommendations
of OFAC.  None of Seller, Guarantor or
Servicer any of their respective members, directors, executive officers,
parents or Subsidiaries: (1) are subject to U.S. or multilateral economic or
trade sanctions currently in force; (2) are owned or controlled by, or act on
behalf of, any governments, corporations, entities or individuals that are
subject to U.S. or multilateral economic or trade sanctions currently in force;
(3) is a Prohibited Person or is otherwise named, identified or described on
any blocked persons list, designated nationals list, denied persons list,
entity list, debarred party list, unverified list, sanctions list or other list
of individuals or entities with whom U.S. persons may not conduct business,
including but not limited to lists published or maintained by OFAC, lists
published or maintained by the U.S. Department of Commerce, and lists published
or maintained by the U.S. Department of State. 
Each of Seller, Guarantor and Servicer has established an anti-money
laundering compliance program as required by all applicable anti-money
laundering laws and regulations, including without limitation the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56) (the “USA PATRIOT ACT”)
(collectively, the “Anti-Money Laundering Laws”).


 


(xxiii)                     REIT Status.  Guarantor has not engaged in any material “prohibited
transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code.  Guarantor for its current “tax year” (as
defined in the Code) is entitled to a dividends paid deduction under the
requirements of Section 857 of the Code with respect to any dividends paid by
it with respect to each such year for which it claims a deduction in its Form
1120-REIT filed with the United States Internal Revenue Service for such year.


 


37

















 


11.                               NEGATIVE
COVENANTS OF SELLER


 


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


 


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


 


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


 


(c)                                  create, incur
or permit to exist any lien, encumbrance or security interest in or on any of
the Repurchase Assets or other collateral subject to the security interests
granted by Seller pursuant to Section 6 of this Agreement;


 


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


 


(e)                                  permit Guarantor
to internalize its management without Buyer’s prior written approval, which
shall not be unreasonably withheld;


 


(f)                                    consent or
assent to a Significant Modification of any Purchased Loan without the prior
written consent of Buyer, which consent shall not be unreasonably withheld;


 


(g)                                 take any action
or permit such action to be taken which would result in a Change of Control
without the prior written consent of Buyer;


 


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


 


(i)                                     sponsor or
maintain any Plans or make any contributions to, or have any liability or
obligation (direct or contingent) with respect to, any Plan or permit any ERISA
Affiliate to sponsor or maintain any Plans or make any contributions to, or
have any liability or obligation (direct or contingent) with respect to, any
Plan;


 


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


 


(k)                                  make any future
advances under any Purchased Loan to any underlying obligor that are not
permitted by the related Purchased Loan Documents;


 


38

















 


(l)                                     seek its
dissolution, liquidation or winding up, in whole or in part;  or


 


(m)                               incur any
Indebtedness except as provided in Section 13(i) or otherwise cease to be a Single-Purpose
Entity.


 


12.                               AFFIRMATIVE
COVENANTS OF SELLER


 


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


 


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


 


(i)                                     promptly upon
receipt of notice or Knowledge of the occurrence of any Default, Event of
Default or Cross-Termination Event;


 


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


 


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


 


(iv)                              promptly
following receipt of notice by Seller or Knowledge of (1) any Purchased Loan
that becomes a Defaulted Loan, (2) any lien or security interest (other than
security interests created hereby) on, or claim asserted against, any Purchased
Loan or, to Seller’s Knowledge, the underlying collateral therefor or (3) any
event or change in circumstances that has or could reasonably be expected to
have an adverse affect on the Market Value of a Purchased Loan;


 


(v)                                 promptly, and
in any event within ten (10) Business Days after service of process on any of
the following, give to Buyer notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or arbitrable
proceedings affecting Seller or affecting any of the assets of Seller before
any Governmental Authority that (1) questions or challenges the validity or
enforceability of any of the Transaction Documents or any action to be taken in
connection with the transactions contemplated hereby, (2) makes a claim or
claims in an aggregate amount greater than $1,000,000, or (3) which,
individually or in the aggregate, if adversely determined could reasonably be
likely to have a Material Adverse Effect;


 


(vi)                              promptly upon
Seller obtaining Knowledge of any change in Guarantor’s status as a REIT; and


 


(vii)                           promptly upon
any transfer of any underlying Mortgaged Property or any direct or indirect equity
interest in any Mortgagor of which the Seller has Knowledge, whether or not
consent to such transfer is required under the applicable Purchased Loan
Documents.


 


39

















 


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


 


(d)                                 Seller shall
defend the right, title and interest of Buyer in and to the Purchased Loans
against, and take such other action as is necessary to remove, the liens,
security interests, claims, encumbrances, charges and demands of all Persons
against the Purchased Loans (other than security interests granted to Buyer hereunder
and other than Permitted Encumbrances).


 


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


 


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


 


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


 


(i)                                     the Monthly
Statement;


 


(ii)                                  the Quarterly
Report, together with all operating statements and occupancy information that
Seller or Servicer has received relating to the Purchased Loans for the related
fiscal quarter;


 


(iii)                               the Financial
Covenant Compliance Certificate;


 


(iv)                              as soon as
available and in any event within forty-five (45) days after the end of each of
the first three quarterly fiscal periods of each fiscal year of Guarantor, the
unaudited, consolidated balance sheets of Guarantor, as at the end of such
period and the related unaudited, consolidated statements of income and
retained earnings and of cash flows for Guarantor for such period and the
portion of the fiscal year through the end of such period (and in each case
with comparisons to applicable information in the financials statements from
the previous year), accompanied by an Officer’s Certificate of Guarantor, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of
Guarantor in accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end audit adjustments);


 


(v)                                 within
forty-five (45) days following the end of each fiscal quarter, or within ninety
(90) days following the end of each fiscal year, as the case may be, an Officer’s
Certificate of Seller in form and substance reasonably satisfactory to Buyer
certifying that during such fiscal quarter or year there has occurred no Event
of Default which remains uncured and, to Seller’s Knowledge, no event or circumstance
has occurred that is reasonably likely to result in a Material Adverse Effect
under this Agreement;


 


40

















 


(vi)                              as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of Guarantor, the consolidated balance sheets of Guarantor as at the end
of such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor for such year, accompanied by
an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations
of Guarantor as at the end of, and for, such fiscal year in accordance with
GAAP;


 


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


 


(viii)                        within ten (10)
Business Days after Buyer’s request, such further information in Guarantor’s
possession as may be reasonably requested by Buyer.


 


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


 


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


 


(j)                                     Seller shall
advise Buyer in writing of the opening of any new chief executive office of
Seller or the closing of any such office and of any change in Seller’s name or
the places where the books and records pertaining to the Purchased Loans are
held not less than the later of fifteen (15) Business Days prior to taking any
such action or thirty (30) days before any financing statement filing will
lapse, lose perfection or become materially misleading of which Seller has
Knowledge.


 


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


 


(l)                                     Seller shall
maintain its existence as a limited partnership or a limited liability company,
as applicable, organized solely and in good standing under the law of the State
of Delaware (unless Seller shall have given Buyer at least fifteen (15)
Business Days’ prior written notice that Seller intends to change the
jurisdiction of its organization) and shall not dissolve, liquidate, merge with
or into any other Person or otherwise change its organizational structure or
documents in any material respect or incorporate or organize in any other
jurisdiction, without the prior written approval of Buyer, which approval shall
not be unreasonably withheld, conditioned or delayed.


 


41
















 


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


 


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


 


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


 


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


 


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


 


(r)                                    If Seller has
entered into or shall enter into or amend a repurchase agreement, warehouse
facility, credit facility or other similar arrangement with any Person which by
its terms provides more favorable terms with respect to any financial
covenants, including without limitation covenants covering the same or similar
subject matter set forth in the Financial Covenant Compliance Certificates
required to be delivered hereunder, then Seller shall deliver written notice to
Buyer of such more favorable terms and, upon Buyer’s request, Buyer and Seller
shall enter into an amendment to this Agreement in form and substance
reasonably acceptable to each of the parties, which amendment shall incorporate
such more favorable terms.


 


13.                               SINGLE-PURPOSE
ENTITY


 


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


 


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


 


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


 


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


 


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


 


(e)                                  It has been, is
and will be, and at all times will hold itself out to the public as, a legal
entity separate and distinct from any other entity (including any Affiliate),
shall correct any known 


 


42

















 


misunderstanding regarding its status as a separate
entity, shall conduct business in its own name, shall not identify itself or
any of its Affiliates as a division or part of the other and shall maintain and
utilize separate stationery, invoices and checks.


 


(f)                                    It has not
owned and will not own any property or any other assets other than the Purchased
Loans, cash and its interest under any associated Hedging Transactions and
other assets incidental to the origination, acquisition, ownership, financing
and disposition of the Purchased Loans and the associated Hedging Transactions.


 


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


 


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


 


(i)                                     It has not
incurred and will not incur any indebtedness or obligation, secured or
unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than (A) obligations under the Transaction Documents,
(B) obligations under the documents evidencing the Purchased Loans, and
(C) unsecured trade payables, in an aggregate amount not to exceed
$300,000 at any one time outstanding, incurred in the ordinary course of acquiring,
owning, financing and disposing of the Purchased Loans; provided, however,
that any such trade payables incurred by Seller shall be paid within ninety
(90) days of the date incurred.


 


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


 


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


 


(l)                                     Neither it nor
Guarantor, any Intermediate Starwood Entity or Manager will seek the
dissolution, liquidation or winding up, in whole or in part of Seller.


 


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


 


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


 


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


 


(p)                                 (i) It will
have at all times at least one Independent Director and (ii) provide Buyer with
up-to-date contact information for all Independent Director(s) and a copy of
the agreement pursuant to which each Independent Director consents to and
serves as an “Independent Director” for Seller


 


(q)                                 Its
organizational documents shall provide that (i) no Independent Director of
Seller may be removed or replaced without Cause, (ii) Buyer be given at least
two (2) Business Days prior notice of 


 


43

















 


the removal and/or replacement of the Independent
Director, together with the name and contact information of the replacement
Independent Director and evidence of the replacement’s satisfaction of the
definition of Independent Director and (iii) any Independent Director of Seller
shall not have any fiduciary duty to anyone including the holders of the equity
interests in Seller and any Affiliates of Seller except Seller and the
creditors of Seller with respect to taking of, or otherwise voting on, any
Insolvency Action; provided, that the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing.


 


(r)                                    It shall not,
without the consent of its Independent Director, institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or answer
or consent seeking reorganization or relief under the Bankruptcy Code or
consent to the filing of any such petition or to the appointment of a receiver,
rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or
other similar official) of it or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, or make an assignment
for the benefit of creditors, or admit in writing its inability to pay its
debts generally as they become due, or take any action in furtherance of any of
the foregoing.


 


(s)                                  It shall not
have any employees.


 


14.                               EVENTS
OF DEFAULT; REMEDIES


 


(a)                                  The following
shall constitute an event of default by Seller hereunder (each a “Event of
Default”):


 


(i)                                     failure of
Seller to repurchase one or more Purchased Loans on the applicable Repurchase
Date;


 


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


 


(iii)                               (A) the
Transaction Documents shall for any reason not cause, or shall cease to cause,
Buyer to be the owner of, or, if recharacterized as a secured financing, a
secured party with respect to, the Repurchase Assets specified in Sections 6(a)
and the other collateral specified in Section 6(c) free of any adverse claim,
liens and other rights of others (other than Permitted Encumbrances and other
than as granted herein), and Seller shall fail to cure such default within
three (3) Business Days after its receipt of Buyer’s notice thereof; (B) if a
Transaction is recharacterized as a secured financing, the Transaction
Documents with respect to any Transaction shall for any reason cease to create
a valid first priority security interest in favor of Buyer in the Repurchase
Assets specified in Section 6(a) and the other collateral specified in Section
6(c), and Seller shall fail to cure such default within three (3) Business Days
after its receipt of Buyer’s notice thereof; or (C) if the Transaction
Documents shall cease to be in full force and effect or if the enforceability
of any of them is challenged or repudiated by Seller, Guarantor or Servicer or
any Affiliate of any of them;


 


(iv)                              failure of
Seller to make the payments required under Section 4 or Section 5(b) when due;


 


(v)                                 failure of
Seller to make any other payment owing to Buyer which has become due, whether
by acceleration or otherwise, under the terms of this Agreement which failure
is not remedied within the period specified herein or, if no period is
specified, five (5) Business Days after notice thereof to Seller from Buyer; provided,
however, that Buyer shall not be required to 


 


44

















 


provide notice in the event
of a failure by Seller to repurchase any Purchased Loan on the required
Repurchase Date therefor;


 


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


 


(vii)                           a Change of
Control shall have occurred that has not been consented to by Buyer in writing;


 


(viii)                        any
representation made by Seller herein or in any Transaction Document shall have
been incorrect or untrue in any material respect when made or repeated or deemed
to have been made or repeated; provided  that the representations
and warranties made by Seller in Section 10(a) (vi) or (viii) (in the case of
(vi), with respect to the affected or Purchased Loans only) shall not be
considered an Event of Default if incorrect or untrue in any material respect
(which determination shall be made with respect to the representations and
warranties in Exhibit V without regard to any Knowledge qualifier therein), if
Buyer terminates the related Transaction and Seller repurchases the related
Purchased Loan(s) on an Early Repurchase Date no later than ten (10) Business
Days after receiving written notice of such incorrect or untrue representation;
provided, however, that if Seller shall have made any such
representation with Knowledge that it was materially incorrect or untrue at the
time made, such misrepresentation shall constitute an Event of Default;


 


(ix)                                (A) a final
judgment by any competent court in the United States of America for the payment
of money in an amount greater than $100,000 shall have been rendered against
Seller and remains undischarged or unpaid for a period of forty-five (45) days,
during which period execution of such judgment is not effectively stayed or (B)
a final judgment by any competent court in the United States of America for the
payment of money in an amount greater than $25,000,000 shall have been rendered
against Guarantor and remains undischarged or unpaid for a period of thirty
(30) days, during which period execution of such judgment is not effectively
stayed;


 


(x)                                   (A) Seller
shall have defaulted or failed to perform under any note, indenture, loan
agreement, guaranty, swap agreement or any other contract, agreement or
transaction to which it is a party, and which default (1) involves the failure to
pay a matured obligation in excess of $100,000, or (2) involves an obligation
of at least $100,000 and is a monetary default or a material non-monetary
default beyond any applicable notice and grace periods and results in
acceleration of the obligation by any other party to or beneficiary of such
note, indenture, loan agreement, guaranty, swap agreement or other contract
agreement or transaction or (B) Guarantor shall have defaulted or failed to
perform under any note, indenture, loan agreement, guaranty, swap agreement or
any other contract, agreement or transaction to which it is a party, and which
default (1) involves the failure to pay a matured obligation in excess of
$25,000,000, or (2) involves an obligation of at least $25,000,000 and is a
monetary default or a material non-monetary default beyond any applicable
notice and grace periods and results in acceleration of the obligation by any
other party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction ; provided,
however, that any such default, failure to perform or breach shall not
constitute an Event of Default if Seller or Guarantor, as the case may be,
cures such default, failure to perform or breach, as the case may be, within
the grace period, if any, provided under the applicable agreement;


 


(xi)                                as of the end
of any fiscal quarter, Guarantor’s (A) ratio of EBITDA to Interest Expense for
such calendar quarter is less than 2.0 to 1.0 (adjusted to remove the impact of
the 


 


45

















 


application of FAS 140, FAS
166 and FIN 46 and transfers to special purpose entities that are wholly owned
by Guarantor in connection with bona fide securitization transactions); (B)
ratio of Total Indebtedness to Total Assets is greater than 0.75 to 1.0
(adjusted to remove the impact of the application of FAS 140, FAS 166 and FIN
46 and transfers to special purpose entities that are wholly owned by Guarantor
in connection with bona fide securitization transactions); (C) Cash Liquidity
is less than $10,000,000; (D) Near Cash Liquidity is less than $20,000,000; (E)
Tangible Net Worth is less than $750,000,000; or (F) ratio of EBITDA to Fixed
Charges for such fiscal quarter is less than 1.5 to 1.0.


 


(xii)                             if Seller shall
breach or fail to perform any of the terms, covenants, obligations or
conditions of this Agreement or any other Transaction Document, other than as
specifically otherwise referred to in this definition of “Event of Default”,
and such breach or failure to perform is not remedied within ten (10) Business
Days after notice thereof to Seller by Buyer, or its successors or assigns;
provided, however, that if such default is susceptible of cure but cannot
reasonably be cured within such ten (10) Business Day period and provided
further that Seller shall have commenced to cure such default within such ten
(10) Business Day period and thereafter diligently and expeditiously proceeds
to cure the same, such ten (10) Business Day period shall be extended for such
time as is reasonably necessary for Seller, in the exercise of due diligence,
to cure such default, and in no event shall such cure period exceed thirty (30)
days from Seller’s receipt of Buyer’s notice of such default;


 


(xiii)                          an Act of
Insolvency shall have occurred with respect to Seller, Guarantor or any
Intermediate Starwood Entity;


 


(xiv)                         an “event of
default” or “termination event” (as defined in the agreements relating to a
facility described in clause (A) or (B) of this clause (xiv)), resulting from a
payment default or failure by Seller or Guarantor to pay cash or deliver other
required collateral in satisfaction of any margin call or other collateral
delivery obligation when required by Seller or Guarantor, beyond any applicable
notice and cure period, shall have occurred under (A) any repurchase facility,
loan facility or hedging transaction entered into by Seller or Guarantor and
Buyer or any Affiliate of Buyer or (B) any repurchase facility, loan facility
or hedging transaction with Buyer or any Affiliate of Buyer in which Seller or
Guarantor is a guarantor;


 


(xv)                            (A) any of the representations and warranties of Guarantor in the Guaranty
or any Financial Covenant Compliance Certificate shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been
made or repeated or (B) Guarantor shall breach any covenant of Guarantor in the
Guaranty and such breach has not been cured within three (3) Business Days
after receipt of notice thereof from Buyer; or


 


(xvi)                         Guarantor fails (i) to qualify as a REIT (without giving any effect to any
cure or corrective periods or allowances), or (ii) to continue to be entitled
to a dividend paid deduction under Section 857 of the Code with respect to
dividends paid by it with respect to each taxable year for which it claims a
deduction on its Form 1120- REIT filed with the United States Internal Revenue
Service for such year, or the entering into by Guarantor of “prohibited
transactions” as defined in Sections 857(b)(6)(B)(iii) of the Code (taking into
account Sections 857(b)(6)(C), 857(b)(6)(D) and 857(b)(6) (E) of the Code) or
(iii) to satisfy any of the income or asset tests required to be satisfied by a
REIT.


 


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


 


46

















 


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


 


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


 


(A)  Seller’s obligations hereunder to repurchase
all Purchased Loans shall become immediately due and payable on and as of the
Accelerated Repurchase Date, and except as otherwise provided in Section 5(c),
all Income deposited in the Blocked Account shall be retained by Buyer and applied to the
aggregate unpaid Repurchase Price and any other amounts owing by Seller
hereunder; and


 


(B)  the Repurchase Price with respect to each
Transaction (determined as of the Accelerated Repurchase Date) shall include
the accrued and unpaid Price Differential with respect to each Purchased Loan
accrued at the Pricing Rate applicable upon an Event of Default for such
Transaction; and


 


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


 


(iii)                               Buyer may,
after ten (10) days notice to Seller of Buyer’s intent to take such action
(provided that no such notice shall be required in the circumstances set forth
in Section 9-611(d) of the UCC), (A) immediately sell, at a public or private
sale in a commercially reasonable manner and at such price or prices as Buyer may
reasonably deem to be satisfactory any or all of the Purchased Loans on a
servicing released basis or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Loans, to give Seller credit for
such Purchased Loans in an amount equal to the Market Value (without regard to
the provisions of clause (iii) of the definition thereof) of such Purchased
Loans against the aggregate unpaid Repurchase Price for such Purchased Loans
and any other amounts owing by Seller under the Transaction Documents.  The proceeds of any disposition of Purchased
Loans effected pursuant to this Section 14(b)(iii) shall be applied (v) first,
to the costs and expenses incurred by Buyer in connection with Seller’s
default, (w) second, to the costs of cover and/or Hedging Transactions, if any,
(x) third, to the Repurchase Price, (y) fourth, to any other outstanding
obligation owed by Seller to Buyer or its Affiliates pursuant to the
Transaction Documents (including interest which would be payable as post-petition
interest in connection with any bankruptcy or similar proceeding) irrespective
of whether such obligations are direct or indirect, absolute or contingent,
matured or unmatured, and (z) the balance, if any, to Seller.  In the event that Buyer shall not have
received repayment in full of the aggregate Repurchase Price and the other
obligations of the Seller under the Transaction Documents following its
liquidation of the Purchased Loans, Buyer may, in its sole discretion, pursue
the Seller and Guarantor (to the extent provided in the Guaranty) for all or
any part of any deficiency.


 


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


 


47

















 


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


 


(v)                                 Seller shall be
liable to Buyer for (A) the amount of all expenses, including reasonable legal
fees and expenses of counsel, incurred by Buyer in connection with or as a
consequence of an Event of Default, (B) all actual damages, losses, judgments,
out-of-pocket costs and other expenses incurred by Buyer under any Hedging
Transactions as a result of an Event of Default by Seller hereunder, and (C)
any other actual loss, damage, out-of-pocket cost or expense directly arising
or resulting from the occurrence of an Event of Default.


 


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


 


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


 


(viii)                        Without
limiting any other rights or remedies of Buyer, Buyer shall have the right,
without prior notice to Seller, and any such notice being expressly waived by
Seller to the extent permitted by applicable law, to set off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final) in any currency, and any other obligation (including to return excess
margin), credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by or due from Buyer or any Affiliate thereof to or for the
credit of the account of Seller, Guarantor or any Subsidiary of either of them
to any obligations of Seller hereunder to Buyer.


 


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


 


48

















 


(x)                                   Buyer shall at
any time have the right, in each case until such time as Buyer determines otherwise,
to retain, to suspend payment of, or to decline to remit, any amount or
property that Buyer would otherwise be obligated to pay, remit or deliver to
Seller hereunder if a Default or an Event of Default has occurred and is
continuing.


 


15.                               SINGLE AGREEMENT


 


Buyer
and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees 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.


 


16.                               NOTICES
AND OTHER COMMUNICATIONS


 


All
notices, consents, approvals and requests required or permitted hereunder shall
be given in writing and shall be effective for all purposes if hand delivered
or sent by (a) hand delivery, with proof of attempted delivery, (b) certified
or registered United States mail, postage prepaid, (c) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or (d) by telecopier (with answerback acknowledged); provided
that such telecopied notice must also be delivered by one of the means set
forth in (a), (b) or (c) above, to the addresses specified in Annex I
hereto or at such other address and person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section 16.  A notice shall be deemed to have been given:  (w) in the case of hand delivery, at the
time of delivery; (x) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (y) in the
case of expedited prepaid delivery upon the first attempted delivery on a
Business Day; or (z) in the case telecopier, upon receipt of answerback
confirmation, provided that such telecopied notice is also delivered as
required in this Section 16.  A
party receiving a notice that does not comply with the technical requirements
for notice under this Section 16 may elect to waive any deficiencies and
treat such notice as having been properly given.  Notwithstanding the foregoing, notices
pursuant to Section 4 may be sent by electronic mail to the e-mail addresses
set forth on Annex I.


 


17.                               NON-ASSIGNABILITY


 


(a)                                  The rights and
obligations of Seller under the Transaction Documents, the Hedging Transactions
and under any Transaction shall not be assigned by Seller without the prior
written consent of Buyer.


 


(b)                                 Buyer may
assign, participate or sell all or a portion of its rights and obligations
under the Transaction Documents and under any Transaction and all or a portion
of its rights and interests in any Hedging Transaction, in each case, without
the prior written consent of Seller but, prior to the occurrence and continuance
of an Event of Default, upon thirty (30) days prior written notice to
Seller.  Any such assignment,
participation or sale of more than 50% of Buyer’s interest in the Transactions
and the Transaction Documents prior to an Event of Default, other than to an
Affiliate of Buyer, shall be referred to herein as a “Transfer Event.”  Buyer agrees that prior to the occurrence and
continuance of an Event of Default, (i) Buyer shall remain responsible for
reviewing and determining the eligibility of any New Loan for purposes of any
Transaction and (ii) Seller shall continue to deal solely and directly with
Buyer in connection with any Transaction. 
As long as an Event of Default shall have occurred and be continuing,
Buyer may assign, participate or sell its rights and obligations under the
Transaction Documents and/or 


 


49

















 


any Transaction to any Person without prior notice
to Seller and without regard to the limitations in the prior sentence.


 


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


 


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


 


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


 


(a)                                  This Agreement
shall be governed by the laws of the State of New York without giving effect to
the conflict of law principles thereof, except for Section 5-1401 of the
General Obligations Law of the State of New York..


 


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


 


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


 


(d)                                 Each party
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile and irrevocably consents to the service of any
summons and complaint and any other process by the mailing of copies of such
process to them at their respective address specified herein.  Each party hereby agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Section 18 shall
affect the right of Buyer to serve legal process in any other manner permitted
by law or affect the right of Buyer to bring any action or proceeding against
Seller or its property in the courts of other jurisdictions.


 


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


 


50

















 


19.                               NO
RELIANCE; DISCLAIMERS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(i)                                     Buyer has
assumed and relied upon, with Seller’s consent and without independent
verification, the accuracy and completeness of the information provided by
Seller and reviewed by Buyer.  Buyer has
not made any independent inquiry of any aspect of the New Loans or Purchased
Loans or the underlying collateral. 
Buyer’s view is based on economic, market and other conditions as in
effect on, and the information made available to Buyer as of, the date of any
such determination or communication of information, and such view may change at
any time without prior notice to Seller.


 


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


 


51
















 


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


 


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


 


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


 


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


 


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


 


20.                               INDEMNITY
AND EXPENSES


 


(a)                                  Seller hereby
agrees to hold Buyer and its Affiliates and each of their respective officers,
directors and employees (“Indemnified Parties”) harmless from and
indemnify the Indemnified Parties against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, taxes (including stamp,
excise, sales or other taxes that may be payable or determined to be payable
with respect to any of the Purchased Loans or in connection with any of the
transactions contemplated by this Agreement (or the recharacterization of any
Transaction) and the documents delivered in connection herewith and therewith,
other than income or franchise taxes of Buyer), costs and expenses (including
reasonable attorneys’ fees and disbursements and any and all servicing and
enforcement costs with respect to the Purchased Loans) or disbursements (all of
the foregoing, collectively “Indemnified Amounts”) that may at any time
(including, without limitation, such time as this Agreement shall no longer be
in effect and the Transactions shall have been repaid in full) be imposed on or
asserted against any Indemnified Party in any way whatsoever arising out of or
in connection with, or relating to, this Agreement or any Transactions
thereunder or any action taken or omitted to be taken by any Indemnified Party
under or in connection with any of the foregoing; provided, that Seller
shall not be liable for Indemnified Amounts resulting from the bad faith, gross
negligence or willful misconduct of any Indemnified Party.  Without limiting the generality of the
foregoing, Seller agrees to hold each Indemnified Party harmless from and
indemnify each Indemnified Party against all Indemnified Amounts with respect
to all Purchased Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation ERISA, that, in each case, results from
anything other than the bad faith, gross negligence or willful misconduct of an
Indemnified Party.  In any suit,
proceeding or action brought by Buyer in connection with any Purchased Loan for
any sum owing thereunder, or to enforce any provisions of any Purchased Loan
Documents, Seller will save, indemnify and hold Buyer harmless from and against
all expense, loss or 


 


52

















 


damage suffered by Buyer by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by Seller of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Seller.  Seller also
agrees to reimburse an Indemnified Party as and when billed by such Indemnified
Party for all such Indemnified Party’s costs and expenses incurred in
connection with the enforcement or the preservation of such Indemnified Party’s
rights under this Agreement and any other Transaction Document or any
transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel.  Seller hereby acknowledges that its
obligations hereunder are recourse obligations of Seller.


 


(b)                                 Seller agrees
to pay as and when billed by Buyer all of the out-of-pocket costs and expenses
incurred by Buyer in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, this
Agreement and the other Transaction Documents or any other documents prepared
in connection herewith or therewith. 
Seller agrees to pay as and when billed by Buyer all of the
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including
without limitation (i) all the reasonable fees, disbursements and expenses
of counsel to Buyer and (ii) all the Due Diligence Fees, testing and
review costs and expenses incurred by Buyer in connection with the evaluation
of any New Loan and with respect to any Transaction.


 


21.                               DUE
DILIGENCE


 


Seller
acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or determining or re-determining the Asset Base for purposes of
Section 4 of this Agreement, or otherwise, and Seller agrees that Buyer, at its option, has the right at any time
to conduct a partial or complete due diligence review on any or all of the
Purchased Loans, including, without limitation, ordering new credit reports and
Appraisals on the applicable collateral and otherwise regenerating the
information used to originate such Purchased Loans; provided, however,
notwithstanding anything to the contrary contained herein, so long as no Event
of Default is continuing, in no event shall Seller be responsible for payment
of Diligence Fees of Buyer hereunder in excess of $30,000 per calendar
year.  Upon reasonable (but no less than
three (3) Business Days) prior notice to Seller, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Purchased Loan Files and any and
all documents, records, agreements, instruments or information relating to any
Purchased Loan in the possession or under the control of Seller, any servicer
or sub-servicer and/or Custodian.  Seller
also shall make available to Buyer a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Purchased Loan
Files and the Purchased Loans.  Seller
agrees to cooperate with Buyer and any third party underwriter designated by
Buyer in connection with such underwriting, including, but not limited to,
providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Purchased Loans in the possession, or under the control, of such Seller.


 


22.                               SERVICING


 


(a)                                  The parties
hereto agree and acknowledge that, the Purchased Loans will be sold by Seller
to Buyer on a servicing released basis. 
In furtherance of the foregoing, the Seller and the Servicer hereby
agree and confirm that from and after the date hereof that this Section 22
shall solely govern the servicing of the Purchased Loans and any prior
agreement between Seller and Servicer or otherwise with respect to such
servicing is hereby superseded in all respects. 
During the related Interim Servicing Period, Servicer shall sub-service
the Purchased Loans for the benefit of or on behalf of Buyer; provided, 


 


53

















 


however, that the obligation of
Servicer to sub-service any Purchased Loan for the benefit of or on behalf of
Buyer as aforesaid shall cease upon the repurchase of such Purchased Loan by
Seller in accordance with the provisions of this Agreement.  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 (a) the termination
thereof by Buyer pursuant to Section 22(c) below, (b) forty-five (45) days
after the Purchase Date of the applicable Purchased Loans or any subsequent
date on which the Interim Servicing Period is extended pursuant to Section
22(c), (c) the date of an Event of Default, or (d) the transfer of servicing to
any other entity approved by Buyer and the assumption thereof by such entity.


 


(b)                                 Seller and
Servicer agrees that, as between Seller and Servicer, on the one hand, and
Buyer, on the other, Buyer is the owner 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, appraisals, other closing documentation, payment
history records, and any other records relating to or evidencing the servicing
of Purchased Loans (the “Servicing Records”) so long as the Purchased
Loans are subject to this Agreement. 
Each of Seller and Servicer covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer’s request.


 


(c)                                  With respect to
the Servicing Records for each Purchased Loan and the physical and contractual
servicing of each Purchased Loan, Servicer shall deliver such Servicing Records
and, to the extent applicable, the servicing to such other successor as may be
designated by Buyer on the Servicing Transfer Date.  Notwithstanding the foregoing, the Interim
Servicing Period with respect to the Purchased Loans shall automatically
terminate on each Remittance Date unless reinstated for each such Purchased
Loan pursuant to written notice of Buyer of such reinstatement (and thereafter
the immediately preceding delivery requirement will be deemed to be rescinded),
and a new 45-day Interim Servicing Period will be deemed to commence for such
Purchased Loan as of such Remittance Date upon receipt of such written notice from
Buyer.  If the Interim Servicing Period
terminates with respect to the Purchased Loans, the Servicer shall be
terminated and shall transfer such servicing in accordance with
Section 22(g) below.  Sellers’ and
Servicer’s transfer and delivery of the Servicing Rights, Servicing Records and
the physical and contractual servicing under this Section, as applicable, shall
be in accordance with customary standards in the industry and such transfer
shall include the transfer of the gross amount of all escrows held for the
related mortgagors (without reduction for unreimbursed advances or “negative
escrows”).


 


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


 


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


 


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


 


(g)                                 Buyer may, in
its sole discretion if an Event of Default shall have occurred and be
continuing, sell the Purchased Loans on a servicing released basis without
payment of any termination fee or any other amount to Servicer.  Upon the occurrence of an Event of Default
hereunder, Buyer shall have 


 


54

















 


the right immediately to terminate Servicer’s right
to service the Purchased Loans without payment of any penalty or termination
fee.  If Servicer shall be terminated under
any of Section 22(c), this Section 22(g) or as otherwise provided
hereunder, Servicer shall transfer such servicing with respect to such
Purchased Loans to such successor designated by Buyer by the Servicing Transfer
Date, at no cost or expense to Buyer. 
The Seller and the Servicer each agree to cooperate with Buyer in
connection with the termination of Servicer under the terms of this
Section 22 and transfer of servicing.


 


23.                               TREATMENT
FOR TAX PURPOSES


 


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


 


24.                               INTENT


 


(a)                                  The parties
intend and acknowledge that each Transaction is a “repurchase agreement” as
that term is defined in Section 101(47A)(i) of Title 11 of the Bankruptcy
Code, a “master netting agreement” as that term is defined in
Section 101(38A)(A) of the Bankruptcy Code and a “securities contract” as
that term is defined in Section 741(7)(A)(i) of the Bankruptcy Code.


 


(b)                                 The parties
intend and acknowledge that the Guaranty is a “securities contract” as that
term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code.


 


(c)                                  It is
understood and agreed that any party’s right to cause the termination,
liquidation or acceleration of, or to offset net termination values, payment
amounts or other transfer obligations arising under or in connection with this
Agreement or any Transaction hereunder is in each case a contractual right to
cause the termination, liquidation, or acceleration of, or to offset net
termination values, payment amounts or other transfer obligations arising under
or in connection with this Agreement or any Transaction hereunder as described
in Sections 555, 559 and 561 of the Bankruptcy Code.


 


(d)                                 The parties
hereby agree that any provisions hereof or in any other document, agreement or
instrument that is related in any way to the servicing of the Purchased Loans
shall be deemed “related to” this Agreement within the meaning of Sections
101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and part of the “contract”
as such term is used in Section 741 of the Bankruptcy Code.


 


25.                               MISCELLANEOUS


 


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


 


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


 


55

















 


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


 


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


 


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


 


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


 


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


 


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


 


[SIGNATURES COMMENCE ON NEXT PAGE]


 


56

















 


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


 


 


	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  GOLDMAN
  SACHS MORTGAGE COMPANY, 

  
	
   

  	
  a
  New York limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Goldman
  Sachs Real Estate Funding Corp.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  STARWOOD
  PROPERTY MORTGAGE SUB-3,

  L.L.C., a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SERVICER (FOR PURPOSES OF SECTION 5,

  SECTION 6(d) AND SECTION 22 HEREOF):

  
	
   

  	
   

  	
   

  
	
   

  	
  SPT
  MANAGEMENT, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Starwood
  Capital Group Global, L.P., its Sole

  
	
   

  	
   

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SCGG
  GP, L.L.C., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title: