**Exhibit 10.18**

 

**ExecutionVersion**

 

 

**SECOND AMENDED AND RESTATED MASTERREPURCHASE AGREEMENT**

 

 

**by and among**

 

 

**GRAMERCYWAREHOUSE FUNDING I LLC**

 

**and**

 

**the Additional Sellers from time totime parties hereto,as the Sellers**

 

**and**

 

**the Buyers from time to time partieshereto**

 

**and**

 

**WACHOVIA BANK, NATIONAL ASSOCIATION,as the Agent**

 

**with**

 

**WACHOVIA CAPITAL MARKETS, LLC,as Sole Lead Arranger**

 

 

**Dated as of April 21, 2005**

 

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TABLE OF CONTENTS

 
|              | ARTICLE I                                              |   |
|-------------------|-------------------------------------------------------------|--------|
|              |                                                        |   |
|              | APPLICABILITY                                               |   |
|              |                                                        |   |
| Section 1.01 | Amendment  and Restatement                                  |   |
| Section 1.02 | Purchase  and Sale                                          |   |
|              |                                                        |   |
|              | ARTICLE II                                             |   |
|              |                                                        |   |
|              | DEFINITIONAL PROVISIONS                                     |   |
|              |                                                        |   |
| Section 2.01 | Definitions                                                 |   |
| Section 2.02 | Other  Definitional Provisions; Determinations by the Agent |   |
|              |                                                        |   |
|              | ARTICLE III                                            |   |
|              |                                                        |   |
|              | INITIATION; TERMINATION                                     |   |
|              |                                                        |   |
| Section 3.01 | Conditions  Precedent to Initial Transaction                |   |
| Section 3.02 | Conditions  Precedent to all Transactions                   |   |
| Section 3.03 | Transaction  Mechanics; Related Matters                     |   |
| Section 3.04 | Repurchases                                                 |   |
| Section 3.05 | Termination  Dates; Maximum Amount                          |   |
| Section 3.06 | Payment  of Price Differential                              |   |
|              |                                                        |   |
|              | ARTICLE IV                                             |   |
|              |                                                        |   |
|              | MARGIN MAINTENANCE                                          |   |
|              |                                                        |   |
| Section 4.01 | Margin  Adjustments                                         |   |
| Section 4.02 | Margin  Correction Deadline                                 |   |
|              |                                                        |   |
|              | ARTICLE V                                              |   |
|              |                                                        |   |
|              | INCOME PAYMENTS;  REQUIREMENTS OF LAW                       |   |
|              |                                                        |   |
| Section 5.01 | Income  Payments                                            |   |
| Section 5.02 | Requirements  of Law                                        |   |

 

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|               | ARTICLE VI                        |   |
|--------------------|----------------------------------------|--------|
|               |                                   |   |
|               | SECURITY INTEREST                      |   |
|               |                                   |   |
| Section 6.01  | Security  Interest                     |   |
| Section 6.02  | Release  of Security Interest          |   |
|               |                                   |   |
|               | ARTICLE VII                       |   |
|               |                                   |   |
|               | PAYMENT, TRANSFER AND  CUSTODY         |   |
|               |                                   |   |
| Section 7.01  | Payment,  Transfer and Custody         |   |
|               |                                   |   |
|               | ARTICLE VIII                      |   |
|               |                                   |   |
|               | SELLER  REPRESENTATIONS AND WARRANTIES |   |
|               |                                   |   |
| Section 8.01  | Seller  Representations and Warranties |   |
|               |                                   |   |
|               | ARTICLE IX                        |   |
|               |                                   |   |
|               | COVENANTS                              |   |
|               |                                   |   |
| Section 9.01  | Seller  Covenants                      |   |
|               |                                   |   |
|               | ARTICLE X                         |   |
|               |                                   |   |
|               | EVENTS OF DEFAULT; REMEDIES            |   |
|               |                                   |   |
| Section 10.01 | Events  of Default                     |   |
| Section 10.02 | Remedies                               |   |
|               |                                   |   |
|               | ARTICLE XI                        |   |
|               |                                   |   |
|               | SERVICING                              |   |
|               |                                   |   |
| Section 11.01 | Seller  Covenants                      |   |
| Section 11.02 | Seller  as Servicer                    |   |
| Section 11.03 | Third  Party Servicer                  |   |
| Section 11.04 | Event  of Default                      |   |
| Section 11.05 | Modification                           |   |
| Section 11.06 | Inspection                             |   |

 

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|               | ARTICLE XII                                                   |   |
|--------------------|--------------------------------------------------------------------|--------|
|               |                                                               |   |
|               | THE AGENT                                                          |   |
|               |                                                               |   |
| Section 12.01 | Appointment                                                        |   |
| Section 12.02 | Duties                                                             |   |
| Section 12.03 | Exculpatory  Provisions                                            |   |
| Section 12.04 | Reliance  by Agent                                                 |   |
| Section 12.05 | Notice  of Default                                                 |   |
| Section 12.06 | Non-Reliance  on Agent and the Buyers                              |   |
| Section 12.07 | Reimbursement  and Indemnification                                 |   |
| Section 12.08 | Agent  in Its Individual Capacity                                  |   |
| Section 12.09 | Successor  Agent                                                   |   |
| Section 12.10 | Duties  in the Case of Enforcement                                 |   |
|               |                                                               |   |
|               | ARTICLE XIII                                                  |   |
|               |                                                               |   |
|               | MISCELLANEOUS                                                      |   |
|               |                                                               |   |
| Section 13.01 | Indemnification  and Expenses                                      |   |
| Section 13.02 | Single  Agreement                                                  |   |
| Section 13.03 | Notices  and Other Communications                                  |   |
| Section 13.04 | Entire  Agreement; Severability                                    |   |
| Section 13.05 | Assignments  and Participations; Hypothecation of Purchased Assets |   |
| Section 13.06 | Governing  Law                                                     |   |
| Section 13.07 | Submission  to Jurisdiction; Venue; Waiver of Jury Trial           |   |
| Section 13.08 | Amendments;  Waivers; Remedies Cumulative                          |   |
| Section 13.09 | Intent                                                             |   |
| Section 13.10 | Joint  and Several Liability                                       |   |
| Section 13.11 | Periodic  Due Diligence Review                                     |   |
| Section 13.12 | Buyer’s  Appointment as Attorney-in-Fact                      |   |
| Section 13.13 | Legal  Matters                                                     |   |
| Section 13.14 | Confidentiality                                                    |   |
| Section 13.15 | Conflicts                                                          |   |
| Section 13.16 | Right  of Set-off                                                  |   |
| Section 13.17 | Treatment  of Certain Information                                  |   |
| Section 13.18 | Increased  Costs, Illegality, Etc                                  |   |
| Section 13.19 | Intended  Third Party Beneficiaries                                |   |

 

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| SCHEDULES          |                                                                                                                |   |
|--------------------|---------------------------------------------------------------------------------------------------------------------|--------|
|               |                                                                                                                |   |
| Schedule 1(a) | Representations and Warranties Re: Purchased Assets  Consisting of Whole Loans (including Transitional Assets) |   |
| Schedule 1(b) | Representations and Warranties Re: Purchased Assets  Consisting of Junior Interests                                 |   |
| Schedule 1(c) | Representations and Warranties Re: Purchased Assets  Consisting of Mezzanine Loans                                  |   |
| Schedule 1(d) | Representations and Warranties Re: Purchased Assets  Consisting of Preferred Equity                                 |   |
| Schedule 1(e) | Representations and Warranties Re: Purchased Assets  Consisting of CMBS                                             |   |
| Schedule 1(f) | Representations and Warranties Re: Purchased Assets  Consisting of RMBS                                             |   |
| Schedule 1(g) | Representations and Warranties Re: Purchased Assets  Consisting of Non-Controlling Interests                        |   |
| Schedule 1(h) | Representations and Warranties Re: Purchased Assets  Consisting of Pass-Through Interests                           |   |
| Schedule 1(i) | Representations and Warranties Re: Purchased Assets  Consisting of Distressed Debt                                  |   |
| Schedule 1(j) | Representations and Warranties Re: Purchased Assets  Consisting of REO Property Loans                               |   |
| Schedule 2    | Wiring Instructions                                                                                                 |   |
| Schedule 3    | Controlled Accounts                                                                                                 |   |
| Schedule 4    | Insurance                                                                                                           |   |
| Schedule 5    | Subsidiaries                                                                                                        |   |
| Schedule 6    | MBS File Delivery Instructions                                                                                      |   |
| Schedule 7    | Buyer Purchase Amounts                                                                                              |   |
|               |                                                                                                                |   |
| EXHIBITS           |                                                                                                                |   |
|               |                                                                                                                |   |
| Exhibit A     | Form of Transaction Request                                                                                    |   |
| Exhibit B     | Form of Confirmation                                                                                           |   |
| Exhibit C     | UCC Filing Jurisdictions                                                                                            |   |
| Exhibit D     | Form of Margin Deficit Notice                                                                                  |   |
| Exhibit E     | Form of Servicer Notice                                                                                        |   |
| Exhibit F     | Form of Custodial Agreement                                                                                    |   |
| Exhibit G     | Form of Account Control Agreement                                                                              |   |
| Exhibit H     | Form of Release Letter(s)                                                                                      |   |
| Exhibit I     | Form of Libor Period Election Notice                                                                           |   |
| Exhibit J     | Form of Compliance Certificate                                                                                 |   |
| Exhibit K     | Form of Purchased Asset Data Summary                                                                           |   |
| Exhibit L     | Form of Guarantee Agreement                                                                                    |   |
| Exhibit M     | Form of Pledge and Security Agreement                                                                          |   |
| Exhibit N     | Form of Additional Seller Joinder Agreement                                                                    |   |
| Exhibit O     | Form of Escrow Agreement                                                                                       |   |

 

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| Exhibit P | Form of Assignment and Acceptance |   |
|----------------|----------------------------------------|--------|
| Exhibit Q | Form of Closing Certification     |   |
| Exhibit R | Organizational Chart                   |   |

 

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**SECOND AMENDED AND RESTATED MASTERREPURCHASE AGREEMENT**

 

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

 

**RECITALS**

 

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

 

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

 

Accordingly, the Sellers, the Agent and the Buyershereby agree, in consideration of the mutual premises and mutual obligationsset forth herein, that the Existing Agreement is hereby amended, restated andsuperceded in its entirety as follows:

 

# **ARTICLE I**APPLICABILITY

# ** **

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

 

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

 

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

 

# **ARTICLE II**DEFINITIONAL PROVISIONS

# ** **

## Section 2.01                                Definitions.  As used herein, the following terms shallhave the following meanings (all terms defined in this Section 2.01 or inother provisions of this Agreement in the singular shall have the same meaningswhen used in the plural and vice versa). Terms otherwise not defined herein shall have the meanings assignedthereto in the Custodial Agreement.

 

“Accepted ServicingPractices”: With respect to any Mortgage Asset, those mortgage servicingpractices of prudent lending institutions which service Mortgage Assets of thesame type as such Mortgage Asset in the jurisdiction where the relatedMortgaged Property is located.

 

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

 

“Act of Insolvency”:With respect to any Person, (i) the filing of a petition, commencing, orauthorizing the commencement of any case or proceeding under any bankruptcy,insolvency, reorganization, liquidation, dissolution or similar law relating tothe protection of creditors, or suffering any such petition or proceeding to becommenced by another which is consented to, not timely contested or results inentry of an order for relief; (ii) the seeking or consenting to theappointment of a receiver, trustee, custodian or similar official for suchPerson or any substantial part of the property of such Person; (iii) theappointment of a receiver, conservator, or manager for such Person by anygovernmental agency or authority having the jurisdiction to do so; (iv) themaking of a general assignment for the benefit of creditors; (v) theadmission by such Person of its inability to pay its debts or discharge itsobligations as they become due or mature; or (vi) that any governmentalauthority or agency or any person, agency or entity acting or purporting to actunder governmental authority shall have taken any action to condemn, seize orappropriate, or to assume custody or control of, all or any substantial part ofthe property of such Person, or shall have taken any action to displace themanagement of such Person or to curtail its authority in the conduct of thebusiness of such Person.

 

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

 

“Additional SellerJoinder Agreement”: An Additional Seller Joinder Agreement, substantiallyin the form of Exhibit N hereto, duly executed and delivered byeach of the parties thereto.

 

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

 

“Affiliate”: Any (A) entitythat directly or indirectly owns, controls, or holds with power to vote, 20percent or more of the outstanding voting securities of the debtor, other thanan entity that holds such securities (i) in a fiduciary or agency capacitywithout sole discretionary power to vote such securities; or (ii) solelyto secure a debt, if such entity has not in fact exercised such power to vote; (B) corporation20 percent or more of whose outstanding voting securities are directly orindirectly owned, controlled, or held with power to vote, by the debtor, or byan entity that directly or indirectly owns, controls, or holds with power tovote, 20 percent or more of the outstanding voting securities of the debtor,other than an entity that holds such securities (i) in a fiduciary oragency capacity without sole discretionary power to vote such securities; or (ii) solelyto secure a debt, if such entity has not in fact exercised such power to vote; (C) personwhose business is operated under a lease or operating agreement by a debtor, orperson substantially all of whose property is operated under an operatingagreement with the debtor; or (D) entity that operates the business orsubstantially all of the property of the debtor under a lease or operatingagreement.

 

“Affiliated HedgeCounterparty”: The Agent, or any Affiliate of the Agent, in its capacity asa party to any Interest Rate Protection Agreement with any Seller, or anyAffiliate of any Seller.

 

“Agent”: Themeaning specified in the introductory paragraph hereof.

 

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

 

“ALTA”: TheAmerican Land Title Association.

 

“Allocated UnderlyingDebt”: With respect to an Underlying Mortgaged Property, any senior or *pari passu* Indebtedness secured directly or indirectly bysuch Underlying Mortgaged Property, including, without limitation, anypreferred equity interest or mezzanine debt that is senior to, or *pari passu* with, the related Mortgage Asset in right ofpayment or priority.

 

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

 

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

 

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

 

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

 

(a)                                  theaggregate Asset Value of the Mortgage Assets shall be reduced to the extentthat application of the Sub-Limit to the Underlying Properties securingMortgage Assets at any time results in breach of the Sub-Limit (such reductionto be determined by the Agent by reference to the Mortgage Assets secured bythe Underlying Properties that give rise to breach of the Sub-Limit), unlesswaived in writing by the Agent in its sole and absolute discretion; and

 

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

 

Notwithstanding any other provision herein, eachSeller agrees that to the extent any Seller fails to deliver any reportsrequired hereunder with respect to the Mortgage Asset and/or UnderlyingMortgaged Property, such failure will adversely affect the Asset Value of suchMortgage Asset, and, to the extent that such failure to deliver reports causes theAgent to determine in its good faith that it is unable to accurately determinethe Asset Value of such Mortgage Asset, the Asset Value shall be deemed to bezero.

 

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

 

“Assignment ofMortgage”: With respect to any Mortgage, an assignment of the Mortgage,notice of transfer or equivalent instrument in recordable form, sufficientunder the laws of the jurisdiction wherein the related Underlying MortgagedProperty is located to reflect the assignment of the Mortgage to the Agent forthe benefit of the Buyers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Capital Stock”: Anyand all shares, interests, participations or other equivalents (howeverdesignated) of capital stock of a corporation, any and all equivalent equityownership interests in a Person which is not a corporation, including, withoutlimitation, any and all member or other equivalent interests in any limitedliability company, and any and all warrants or options to purchase any of theforegoing.

 

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

 

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

 

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

 

“Change of Control”:The occurrence of any of the following events: (a) prior to aninternalization of management by Parent, if GKK Manager LLC is no longer themanager of Parent, (b) after such time as Parent is internally managed,any “person” or “group” (within the meaning of Section 13(d) or 14(d) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”))shall become, or obtain rights (whether by means of warrants, options orotherwise) to become, the “beneficial owner” (as defined in Rules 13d-3and 13d-5 under the Exchange Act), directly or indirectly, of a percentage ofthe total voting power of all classes of Capital Stock of the Parent entitledto vote generally in the election of directors of 20% or more; or (c) theParent shall cease to own and control, of record and beneficially, directly100% of each class of outstanding Capital Stock of each Seller.  Notwithstanding the foregoing, none of theAgent, any Buyer nor any other Person shall be deemed to approve or to haveapproved any internalization of management as a result of this definition orany other provision herein.

 

“Class”: Withrespect to a Mortgage Asset, such Mortgage Asset’s classification as one of thefollowing: Whole Loan, Junior Interest, Mezzanine Loan, Preferred Equity, CMBS,RMBS, Non-Controlling Interest, Pass-Through Interest, Distressed Debt, REOProperty Loan or Transitional Asset.

 

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

 

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

 

“Code”: TheInternal Revenue Code of 1986, as amended from time to time, and theregulations promulgated and rulings issued thereunder.

 

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

 

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

 

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

 

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

 

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

 

“Consolidated TotalIndebtedness”: At any time, without duplication, all amounts ofIndebtedness and Contingent Liabilities of any Person(s) and all Subsidiariesthereof determined on a consolidated basis, plus the pro rata share ofIndebtedness and Contingent Liabilities of Unconsolidated Affiliates of suchPerson(s).

 

“ContingentLiabilities”: Means with respect to any Person(s) and all Subsidiariesthereof (without duplication): (i) liabilities and obligations (includingany Guarantee Obligations) of such Persons in respect of “off-balance sheetarrangements” (as defined in the SEC Off-Balance Sheet Rules) which would berequired to be, or customarily would be, disclosed in the “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” section ofa Form 10-Q or Form 10-K (or their equivalents) which any such Person(or any Affiliate thereof) is required to file with the Securities and ExchangeCommission (or any Governmental Authority substituted therefore) other thanextensions of credit in connection

 

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with bona fide lendings made by such Person as lenderand bona fide securitization transactions which fall into this category solelyas a result of the application of FAS 140 or FIN 46, (ii) any obligation(including, without limitation, any Guarantee Obligation) whether or notrequired to be disclosed in the footnotes to any such Person’s financialstatements, guaranteeing partially or in whole any Non-Recourse Indebtedness,lease, dividend or other obligation, exclusive of contractual indemnities(including, without limitation, any indemnity or price-adjustment provisionrelating to the purchase or sale of securities or other assets) and guaranteesof non-monetary obligations (other than guarantees of completion, environmentalindemnities and guarantees of customary carve-out matters made in connectionwith Non-Recourse Indebtedness, such as fraud, misappropriation, bankruptcy andmisapplication) which have not yet been called on or quantified, of such Personor of any other Person, and (iii) any forward commitment or obligation tofund or provide proceeds with respect to any loan or other financing which isobligatory and non-discretionary on the part of the lender.  The amount of any Contingent Liabilitiesdescribed in clause (ii) shall be deemed to be (a) with respect to aguarantee of interest or interest and principal, or operating income guarantee,the sum of all payments required to be made thereunder (which in the case of anoperating income guarantee shall be deemed to be equal to the debt service forthe note secured thereby, through (x) in the case of an interest or interestand principal guarantee, the stated date of maturity of the obligation (andcommencing on the date interest could first be payable thereunder), or (y) inthe case of an operating income guarantee, the date through which suchguarantee will remain in effect, and (b) with respect to all guaranteesnot covered by the preceding clause (a), an amount equal to the stated ordeterminable amount of the primary obligation in respect of which suchguarantee is made or, if not stated or determinable, the maximum reasonablyanticipated liability in respect thereof (assuming such Person is required toperform thereunder) as recorded on the balance sheet and on the footnotes tothe most recent financial statements of such Person.  As used in this definition, the term “SECOff-Balance Sheet Rules” means the Disclosure in Management’s Discussion andAnalysis About Off Balance Sheet Arrangements, Securities Act Release No. 33-8182,68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and249).

 

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

 

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

 

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

 

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

 

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

 

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

 

“Defaulted MortgageAsset”: Any Mortgage Asset (a) which is sixty (60) days or moredelinquent in the payment of principal, interest, fees or other amounts payableunder the terms of the related Mortgage Asset documents (including, withoutlimitation, any Preferred Equity which has not been current pay during suchperiod), (b) for which there is a material breach of the representationsand warranties set forth on Schedules 1(a) – 1(j), as applicable,hereto having a Material Adverse Effect on such Mortgage Asset, or (c) forwhich there is a material non-monetary default under the related Mortgage Assetdocuments.

 

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

 

“Derivatives Contract”:Any and all rate swap transactions, basis swaps, credit derivativetransactions, forward rate transactions, commodity swaps, commodity options,forward commodity contracts, equity or equity index swaps or options, bond orbond price or bond index swaps or options or forward bond or forward bond priceor forward bond index transactions, interest rate options, forward foreignexchange transactions, cap transactions, floor transactions, collartransactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), whether or not any such transaction isgoverned by or subject to any master agreement. Not in limitation of the foregoing, the term “Derivatives Contract”includes any and all transactions of any kind, and the related confirmations,which are subject to the terms and conditions of, or governed by, any form ofmaster agreement published by the International Swaps and DerivativesAssociation, Inc., any International Foreign Exchange Master Agreement, orany other master agreement, including any such obligations or liabilities underany such master agreement.

 

“DerivativesTermination Value”: With respect to any Derivatives Contract, after takinginto account the effect of any legally enforceable netting agreement relatingto such Derivatives Contract, (a) for any date on or after the date suchDerivatives Contract has been closed out and termination value(s) determined inaccordance therewith, such termination value(s), and (b) for any dateprior to the date referenced in clause (a) the amount(s) determined as themark-to-market value(s) for such Derivatives Contract, as determined based uponone or more mid-market or other readily available quotations provided by anyrecognized dealer in such Derivatives Contract (which may include the Agent orany Buyer).

 

“Distressed Debt”:A non-performing first priority commercial real estate whole loan, or aperforming first priority commercial real estate whole loan with an LTV greaterthan 100%, which will mature within 12 months (including any extension options)of the Purchase Date.  The LTV must takeinto account any senior or pari passu Indebtedness secured directly orindirectly by the applicable Underlying Mortgaged Property, including, withoutlimitation, any

 

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preferred equity interest or mezzanine debt that issenior or pari passu with the related Mortgage Asset in right of payment orpriority.

 

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

 

“Dry Funding”: ATransaction for which a complete Mortgage Asset File, in accordance with theterms of this Agreement and the Custodial Agreement, has been delivered foreach related Mortgage Asset to the Custodian prior to the related PurchaseDate.

 

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

 

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

 

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

 

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

 

“ElectronicTransmission”: The delivery of information in an electronic formatacceptable to the applicable recipient thereof.

 

“Eligible Asset”: AMortgage Asset which as of any date of determination:

 

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

 

(b)                                 isnot a construction loan or a construction note of any sort (which shall not, inand of itself, preclude Mortgage Assets that include renovation, rehabilitationor expansion components which will be completed within twelve (12) months ofthe related Purchase Date);

 

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

 

(d)                                 inthe case of a Whole Loan (including any Transitional Asset), is evidenced by anoriginal Mortgage Note; and

 

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

 

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

 

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

 

“Environmental Law”:Any federal, state, foreign or local statute, law, rule, regulation, ordinance,code, guideline, written policy and rule of common law now or hereafter ineffect and in each case as amended, and any judicial or administrativeinterpretation thereof, including any judicial or administrative order, consentdecree or judgment, relating to the environment, employee health and safety orHazardous Materials, including, without limitation, CERCLA; RCRA; the FederalWater Pollution Control Act, 33 U.S.C. § 1251 etseq.; theToxic Substances Control Act, 15 U.S.C. § 2601 etseq.; theClean Air Act, 42 U.S.C. § 7401 etseq.; the Safe DrinkingWater Act, 42 U.S.C. § 3803 etseq.; the Oil Pollution Actof 1990, 33 U.S.C. § 2701 etseq.; the Emergency Planningand the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 etseq.;the Hazardous Material Transportation Act, 49 U.S.C. § 1801 etseq.and the Occupational Safety and Health Act, 29 U.S.C. § 651 etseq.;and any state and local or foreign counterparts or equivalents, in each case asamended from time to time.

 

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

 

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“ERISA”: TheEmployee Retirement Income Security Act of 1974, as amended from time to time,and the regulations promulgated and rulings issued thereunder.  Section references to ERISA are toERISA, as in effect at the date of this Agreement, and to any subsequentprovisions of ERISA, amendatory thereof, supplemental thereto or substitutedtherefor.

 

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

 

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

 

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

 

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

 

“Eventof Default”: The meaning specified in Section 10.01.

 

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

 

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

 

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

 

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

 

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

 

“Final TerminationDate”: (i) June 16, 2008 or (ii) such later date as may bein effect pursuant to Section 3.05(a) hereof or (iii) suchearlier date on which this Agreement shall terminate in accordance with theprovisions hereof (including, without limitation, Section 3.05(c)) or byoperation of law.

 

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

 

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

 

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

 

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

 

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

 

“Funds From Operation”or “FFO”: For a given period, (a) Net Income of the Parent and itsSubsidiaries for such period (before extraordinary and non-recurring items),minus (or plus) (b) gains (or losses) from debt restructuring and sales ofproperty during such period, plus (c) depreciation and amortization ofreal and personal property assets for such period, plus (d) withoutduplication, income from unconsolidated partnerships and joint ventures,determined in each case in accordance with GAAP.

 

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“GAAP”: Generallyaccepted accounting principles as in effect from time to time in the UnitedStates.

 

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

 

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

 

“GovernmentalAuthority”: Any government (or any political subdivision or jurisdictionthereof), court, bureau, agency or other governmental authority havingjurisdiction over any Seller or Buyer, as applicable, or any of theirrespective businesses, operations or properties.

 

“Ground Lease”: Aground lease containing the following terms and conditions: (a) aremaining term (exclusive of any unexercised extension options) of thirty (30)years or more from the Purchase Date of the Mortgage Asset; (b) the rightof the lessee to mortgage and encumber its interest in the leased propertywithout the consent of the lessor or with such consent given; (c) theobligation of the lessor to give the holder of any mortgage lien on such leasedproperty written notice of any defaults on the part of the lessee and agreementof such lessor that such lease will not be terminated until such holder has hada reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) reasonabletransferability of the lessee’s interest under such lease, including ability tosublease; and (e) such other rights customarily required by mortgageesmaking a loan secured by the interest of the holder of the leasehold estatedemised pursuant to a ground lease.

 

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

 

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

 

“Guarantee Agreement”:A Guarantee Agreement, substantially in the form attached as Exhibit Lhereto, made in favor of the Buyers by the Parent and its operatingpartnership, as the same may be amended, restated, supplemented or otherwisemodified and in effect from time to time. Recourse under the Guarantee Agreement shall be limited to 10% of thegreater of the outstanding aggregate Purchase Price and the totalcapitalization of the Sellers and shall include a joint and several recoursecarve out in favor of the Buyers and the same financial covenants as areapplicable to Parent under the Liquidity Facility.

 

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

 

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

 

“Guarantors”: Themeaning assigned thereto in the Guarantee Agreement.

 

“In Place DSCR”: Withrespect to any Mortgage Asset, as of any date of determination, the ratio of(x) (i) Net Cash Flow plus (ii) debt service reserves actually heldback or funded into Seller controlled accounts subject to the Seller’sexclusive dominion and control, plus (iii) at Buyer’s sole discretion,third party credit enhancements, to (y) the debt service on the Mortgage Assetcalculated using (i) the greater of (A) the required amortization forthe first 12 months of the remaining term of the Mortgage Asset or (B) hypothetical30-year amortization schedule for the first 12 months of the remainingterm of the Mortgage Asset, and (ii) an interest rate equal to the actualinterest rate (in the case of a fixed interest rate Eligible Asset) or thelesser of (i) the highest applicable strike price of any LIBOR capcontract for such 12-month period (plus the spread) or (ii) the averageinterest rate for such 12 month period using the applicable “forward LIBORcurve”, plus 50 basis points over the spread.

 

“Income”: Withrespect to any Mortgage Asset at any time, all collections and proceeds on orin respect of the Mortgage Assets, including, without limitation, any principalthereof then payable and all interest or other distributions payable thereonless any related servicing fee(s) charged by Servicer.

 

“Indebtedness”: Forany Person, at the time of computation thereof, all of the following (withoutduplication): (a) all obligations of such Person in respect of moneyborrowed (including without limitation principal, interest, assumption fees,prepayment fees, contingent interest, and other monetary obligations whetherchoate or inchoate); (b) all obligations of such Person, whether or notfor money borrowed (i) represented by notes payable, letters of credit, ordrafts accepted, in each case representing extensions of credit, (ii) evidencedby bonds, debentures, notes or similar instruments, or (iii) constitutingpurchase money indebtedness,

 

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conditional sales contracts, title retention debtinstruments or other similar instruments, upon which interest charges arecustomarily paid or that are issued or assumed as full or partial payment forproperty or services rendered; (c) Capitalized Lease Obligations of suchPerson; (d) all reimbursement obligations of such Person under any lettersof credit or acceptances (whether or not the same have been presented forpayment); (e) all “off-balance sheet arrangements” of such Person otherthan bona fide securitization transactions; (f) all obligations of suchPerson to purchase, redeem, retire, defease or otherwise make any payment inrespect of any Mandatory Redeemable Stock issued by such Person or any otherPerson (inclusive of forward equity contracts), valued at the greater of itsvoluntary or involuntary liquidation preference plus accrued and unpaiddividends; (g) all obligations of such Person in respect of any keep wellarrangements, credit enhancements, contingent or future funding obligationsunder any Purchased Asset or any obligation senior to the Purchased Asset,unfunded interest reserve amount under any Purchased Asset or any obligationthat is senior to the Purchased Asset, purchase obligation, repurchaseobligation, takeout commitment or forward equity commitment, in each caseevidenced by a binding agreement (excluding any such obligation to the extentthe obligation can be satisfied by the issuance of Equity Interests (other thanMandatory Redeemable Stock)); (h) net obligations under any DerivativeContract not entered into as a hedge against existing Indebtedness, in anamount equal to the Derivatives Termination Value thereof; (i) allIndebtedness of other Persons which such Person has Guaranteed or is otherwiserecourse to such Person (except for guaranties of customary exceptions forfraud, misapplication of funds, environmental indemnities and other similarexceptions to recourse liability (but not exceptions relating to bankruptcy,insolvency, receivership or other similar events)); (j) all Indebtedness ofanother Person secured by (or for which the holder of such Indebtedness has anexisting right, contingent or otherwise, to be secured by) any Lien on propertyor assets owned by such Person, even though such Person has not assumed orbecome liable for the payment of such Indebtedness or other payment obligation;and (k) such Person’s pro rata share of the Indebtedness of any UnconsolidatedAffiliate of such Person.

 

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

 

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

 

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

 

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purposes of determining compliance with any covenantcontained in any Wachovia Facility document, the amount of any Investment shallbe the amount actually invested, without adjustment for subsequent increases ordecreases in the value of such Investment.

 

“Joint Venture”: Themeaning specified in the Liquidity Facility.

 

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

 

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

 

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

 

“LIBOR”: London Interbank Offered Rate.

 

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

 

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

 

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

 

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

 

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by the Agent in its sole discretion, and (ii) thepurchase price of such UnderlyingMortgaged Property.

 

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

 

“Manager”: Themeaning assigned thereto in the Management Contract.

 

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

 

“Margin CorrectionDeadline”: The time, determined in accordance with Section 4.02 ofthis Agreement, as the time by which all transfers, repurchases and paymentselected to be made by the Sellers pursuant to a Margin Deficit Notice shall becompleted.

 

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

 

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

 

“Margin Stock”: Themeaning provided in Regulations U and X of the Board of Governors of theFederal Reserve System.

 

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

 

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

 

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

 

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

 

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

 

“Maximum LTV”: Withrespect to any Purchased Asset at any time, the Loan-to-Value ratio for therelated Underlying Mortgaged Property set forth in the related Confirmationunder the heading “Maximum LTV” and for the Class and Type of suchMortgage Asset.

 

“MBS File”: Thedocuments required to be delivered to the Agent with respect to Mortgage Assetswhich consist of CMBS or RMBS, which are set forth in the MBS File DeliveryInstructions attached as Schedule 6 hereto.

 

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

 

“Mezzanine Loan”: A performing mezzanine loansecured by pledges of all the Capital Stock of a Mortgagor or that portion ofthe Capital Stock that includes the general partnership, managing member orother controlling interest (including, without limitation, the right to taketitle to and sell the related Underlying Mortgaged Property) that owns incomeproducing commercial real estate which is a Type of Mortgaged Property and forwhich the combined DSCR is not less than that set forth in the relatedConfirmation, taking into account, in the calculation of the LTV and the DSCRof such Mezzanine Loan, any senior or *pari passu*Indebtedness secured directly or indirectly by the applicable UnderlyingMortgaged Property, including, without limitation, any preferred equityinterest or mezzanine debt that is senior to, or *pari passu*with, the related Mortgage Asset in right of payment or priority.

 

“Mezzanine Note”: The original executedpromissory note, certificate or other tangible evidence of Mezzanine Loanindebtedness.

 

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

 

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

 

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

 

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

 

“Mortgage Note”: The original executedpromissory note or other evidence of the indebtedness of a Mortgagor withrespect to a commercial mortgage loan.

 

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

 

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

 

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

 

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

 

“Net Cash Flow”: With respect to any UnderlyingMortgaged Property, for any period, the underwritten net cash flow calculatedin accordance with the Agent’s customary criteria for commercial mortgageproperties.

 

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

 

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

 

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

 

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

 

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

 

“Parent”: Gramercy Capital Corp., a Marylandcorporation.

 

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

 

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

 

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

 

“PBGC”: The Pension Benefit GuarantyCorporation established pursuant to Section 4002 of ERISA, or anysuccessor thereto.

 

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

 

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

 

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

 

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

 

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

 

“Post-Default Rate”: In respect of any day aTransaction is outstanding or any other amount under this Agreement or anyother Repurchase Document that is not paid when due, whether on the statedRepurchase Date or otherwise (a “Post-Default Day”), a rate per annum ona 360 day per year basis during the period from and including the due date tobut excluding the date on which such amount is paid in full equal to thePricing Rate on such Post-Default Day plus500 basis points.

 

“Preferred Dividends”: For any period andwithout duplication, all Restricted Payments paid or accrued during such periodon Preferred Securities issued by any Seller or any Subsidiary thereof.  Preferred Dividends shall not includedividends or distributions paid or payable (a) solely in Equity Interests(other than Mandatory Redeemable Stock) payable to holders of such class ofEquity Interests; (b) to any Seller or any Subsidiary thereof; or(c) constituting or resulting in the redemption of Preferred Securities,other than scheduled redemptions not constituting balloon, bullet or similarredemptions in full.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Properties”: The meaning inSection 8.01(x).

 

“Purchase Agreement”: Any purchase agreement byand between any Seller and any third party, including without limitation, any Affiliateof any Seller, pursuant to which the Seller has purchased assets subsequentlysold to the Buyers hereunder.

 

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

 

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

 

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

 

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

 

“Purchase Rate”: With respect to a MortgageAsset of a certain Class and the applicable Type of Underlying Mortgaged Property,the “Purchase Rate” set forth in the applicable column in the relatedConfirmation; provided, however, that (i) in the event any DSCRcriteria applicable to a Mortgage Asset is not satisfied and Buyer neverthelesselects to enter into, or continue, a Transaction in respect of such MortgageAsset, the applicable Purchase Rate shall be reduced to the level at which allapplicable DSCR criteria are satisfied, (ii) if, on any date after theone-year anniversary of the Effective Date, the total number of Mortgage Assetsis fewer than five (5), then on such date (and again on each one-yearanniversary of such date) the Purchase Rate applicable to each Mortgage Assetshall be reduced by 5.0% (e.g., from 65% to 60%) and (iii) notwithstandinganything herein to the contrary, if a Purchased Asset consisting of PreferredEquity or an interest in Preferred Equity has not been repurchased within 360days of the related Purchase Date then on such date the Purchase Rateapplicable to each Mortgage Asset shall be reduced by 5.0% (e.g., from 65% to60%).

 

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

 

“Purchased Items”: The meaning specified inSection 6.01.

 

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

 

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

 

“Regulations T, U and X”: Regulations T, U andX 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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Repurchase Documents”: This Agreement, theCustodial Agreement, the Account Control Agreement, all Pledge and SecurityAgreements (if any), all Servicing Agreements (if any), all Interest RateProtection Agreements (if any), all Additional Seller Joinder Agreements (ifany), the Guarantee Agreement and the Fee Letter.

 

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

 

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

 

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Counterparty under anyrelated Interest Rate Protection Agreement if such Interest RateProtection Agreement were terminated on the date of determination, in each caseas of the date of such determination, decreased by all cash, Income andPeriodic Advance Repurchase Payments (including Late Payment Fees, if any)actually received by the Agent for the account of the Buyers, and increased byall other costs, fees or other amounts payable to the Buyers by the Seller underany Repurchase Document; provided, that with respect to anydetermination of Repurchase Price that is made in connection with the actualrepurchase by the Seller of any Purchased Asset which is subject to aTransaction outstanding hereunder (and not in connection with any calculationof Margin Deficit or other determination that is made during the course of aTransaction which is not related to such a repurchase), the Repurchase Pricefor such Purchased Asset shall take into account amounts payable by (a negativeamount) an Affiliated Hedge Counterparty under any related Interest RateProtection Agreement only (i) to the extent such amounts are actually thendue and payable under the related Interest Rate Protection Agreement and(ii) to the extent that the Seller shall have provided the applicableAffiliated Hedge Counterparty with written instructions (with a copy to theAgent) that such amounts are anticipated by the Seller to be paid by the Agentdirectly to the Affiliated Hedge Counterparty or by such Affiliated HedgeCounterparty directly to the Agent, as applicable.

 

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

 

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

 

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

 

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

 

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

 

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“S&P”:Standard and Poor’s Ratings Services, a division of The McGraw-HillCompanies, Inc. or, if Standard & Poor’s Ratings Services is nolonger issuing ratings, another nationally recognized rating agency reasonablyacceptable to the Agent.

 

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

 

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

 

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

 

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

 

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

 

“Servicer”: The meaning specified inSection 11.03.

 

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

 

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

 

“Servicing Agreement”: The meaning specified inSection 11.03.

 

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

 

“Servicing Records”: The meaning specified inSection 11.02.

 

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

 

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

 

“SLG”: SL Green Realty Corp., a Marylandcorporation.

 

“Special Purpose Transaction”: (i) A WetFunding or (ii) an additional Transaction requested with respect to anyPurchased Asset (other than a Transitional Asset) to provide for the funding offuture funding obligations which were expressly identified to and approved bythe Agent in connection with the initial Transaction entered into in respect ofsuch Purchased Asset.

 

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

 

“Sub-Limit”: The composition of Mortgage Assetstransferred to Buyer shall at all times meet the following sublimit caps, andno Asset Value shall be ascribed to any Mortgage Assets:

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           tothe extent that the weighted average Purchase Rate of all Mortgage Assets wouldexceed 85.0%; and

 

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(h)           tothe extent that the Weighted Average LTV of all Mortgage Assets would exceed80.0%.

 

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

 

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

 

“Termination Date”: Any or all of the FirstTermination Date, the Second Termination Date or the Final Termination Date, asrequired by the context.

 

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

 

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

 

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

 

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

 

“Transaction”: The meaning specified inSection 1.02.

 

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

 

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

 

(a)           anappraisal meeting the standards of FIRREA and stating the loan-to-value ratioof the outstanding Purchase Price to the value (based on the lesser of(i) the appraised value of the related Underlying Mortgaged Property, asdetermined by reference to the third-party appraisal, meeting the standardsrequired by FIRREA, of such Underlying Mortgaged Property, and (ii) thepurchase price of such Underlying Mortgaged Property);

 

(b)           anenvironmental report indicating no material environmental condition for whichrecommended reserves have not been established;

 

(c)           writtencertification that such Mortgage Asset meets the requisite DSCR required forsuch asset type and that all covenants, representations and warrantiescontained herein have been complied with (together with such additionalmaterials as Buyer may request);

 

(d)           aninternal document or credit committee memorandum (redacted to protectconfidential information) setting forth all material information actually knownto Seller relating to the Mortgage Assets;

 

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

 

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

 

(g)           withrespect to a Mortgage Asset consisting of a Mezzanine Loan, a copy of therelated Mezzanine Note, a copy of the related pledge agreement and copies ofany assignments;

 

(h)           withrespect to a Mortgage Asset consisting of Preferred Equity, a copy of therelated stock share certificate, a copy of the related partnership agreement orequivalent document and copies of any assignments; and

 

(i)            withrespect to a Mortgage Asset consisting of a Pass-Through Interest, a copy ofthe related promissory note, certificate or equivalent document evidencingownership of such Pass-Through Interest, and copies of any assignments.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Unconsolidated Affiliates”: With respect toany Person, any other Person in whom such Person holds an Investment, whichInvestment is accounted for in the financial statements of such Person on anequity basis of accounting and whose financial results would not beconsolidated under GAAP with the financial results of such Person on theconsolidated financial statements of such Person.

 

“Underlying Mortgage Loan”: With respect to anyJunior Interest, Mezzanine Loan, Preferred Equity, CMBS, RMBS, Non-ControllingInterest or Pass-Through Interest, a mortgage loan made in respect of therelated Underlying Mortgaged Property.

 

“Underlying Mortgaged Property”: In the case ofany:

 

(a)           WholeLoan (including any Transitional Asset), the Mortgaged Property securing suchWhole Loan;

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           Pass-ThroughInterest, the Mortgaged Property related to the applicable mortgage asset heldby the grantor trust or similar pass-through special purpose entity whichissued such Pass-Through Interest;

 

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

 

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

 

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

 

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

 

(b)           with respect to each Mortgage Asset whichconsists of RMBS, the Underwriting Package shall include, to the extentapplicable, (i) the related prospectus, (ii) all distribution datestatements issued in respect thereof during the immediately preceding 12 months(or, if less, since the date such RMBS was issued) and (iii) any other informationdelivered to certificate holders in respect of such RMBS during the immediatelypreceding 6 months;

 

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

 

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

 

(d)           with respect to each Special Purpose Transactionrequested to be entered into to provide for the funding of future fundingobligations, unless the Agent shall otherwise agree, the Underwriting Packagefor such Special Purpose Transaction shall include all such additionalinformation as was contemplated to be provided in connection with such fundingwhen the initial Transaction was entered into in respect of the relatedPurchased Asset.

 

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

 

“Wachovia Facility”: This Agreement and/or theLiquidity Facility.

 

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

 

“Weighted Average LTV”: With respect to allMortgage Assets at any time, the sum of the products of the outstandingprincipal balances of such Mortgage Assets and (1) for any Mortgage Assetwhich is a Whole Loan (including any Transitional Asset), or a *pari passu* interest in a Whole Loan (including anyTransitional Asset), the product of the Purchase Rate for such Mortgage Assetand the LTV of such Mortgage Asset and (2) for any Mortgage Asset which isnot a Whole Loan, or a *pari passu*interest in a Whole Loan, the sum of the LTV of any debt senior to suchMortgage Asset and the product of (x) the Purchase Rate for such Mortgage

 

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

 

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

 

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

 

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

 

## Section 2.02           Other Definitional Provisions; Determinations by theAgent.

##  

### (a)           Allreferences to, and calculations required to be made in respect of, anyprincipal and/or interest associated with any Mortgage Asset, shall, withrespect to Mortgage Assets consisting of Preferred Equity, be deemed to refer,respectively, to the face amount of such Preferred Equity and the preferredreturn or yield (however such terms are denominated, as set forth in therelated Mortgage Asset documents), whether payable or accrued.

###  

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

###  

### (c)           Thewords “hereof,” “herein” and “hereunder” and words of similar import when usedin this Agreement shall refer to this Agreement as a whole and not to anyparticular provision of this Agreement, and section, schedule and exhibitreferences are to this Agreement unless otherwise specified.

###  

### (d)           Themeanings given to terms defined herein shall be equally applicable to both thesingular and plural forms of such terms.

###  

### (e)           Allmatters to be determined by the Agent in its sole discretion hereunder shall bedetermined by the Agent in its sole discretion exercised in good faith.

###  

### (f)            Allreferences herein, or in any other Repurchase Document, to “the Seller” shallrefer to the applicable Seller of a Purchased Asset in connection with aTransaction hereunder.

 

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# **ARTICLE III**INITIATION; TERMINATION

# ** **

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

 

### (a)           Thefollowing Repurchase Documents, as well as certain other documents, deliveredto the Agent:

###  

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

####  

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

####  

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

####  

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

####  

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

####  

#### (vi)          PledgeAgreement.  A Pledge and SecurityAgreement, or such other pledge agreement as shall be acceptable to the Agentin its sole discretion, pursuant to which all of the Capital Stock of theSubsidiaries of the Parent and GKK Capital LP shall be pledged in favor of theAgent for the benefit of the Buyers hereunder, executed and delivered by a dulyauthorized officer of each of the parties thereto;

####  

#### (vii)         Amendmentto Liquidity Facility.  An amendmentto the Liquidity Facility, executed and delivered by a duly authorized officerof each of the parties thereto;

####  

#### (viii)        Consentsand Waivers.  Any and all consentsand waivers applicable to any Seller or to the Mortgage Assets;

####  

#### (ix)           UCCFinancing Statements.  UCC FinancingStatements naming each Seller as “Debtor” and the Agent, as agent for theBuyers, as “Secured Party” and describing as “Collateral” the Purchased Itemsand any other documents necessary or

 

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#### requested by theAgent to perfect the security interests granted by the Sellers in favor of theAgent, for the benefit of the Buyers, under this Agreement or any otherRepurchase Document;

####  

### (b)           Opinionsof Counsel.  An opinion or opinionsof outside counsel to the Sellers, which opinion or opinions shall be satisfactoryin form and substance to the Agent and shall include general issues offormation and enforceability with respect to each Seller, first priorityperfected security interest with respect to the Purchased Assets, aNon-Consolidation Opinion and such other issues as requested by the Agent;

###  

### (c)           OrganizationalDocuments.  A good standingcertificate and certified copies of the charter and by-laws (or equivalentdocuments) of each Seller and of all corporate or other authority for eachSeller with respect to the execution, delivery and performance of theRepurchase Documents and each other document to be delivered by the Seller fromtime to time in connection herewith (and the Agent may conclusively rely onsuch certificate until it receives notice in writing from the Seller to thecontrary);

###  

### (d)           ServicingAgreement.  With respect to anyEligible Asset to be purchased hereunder on the related Purchase Date which isnot serviced by Seller, Seller shall have provided to the Agent a copy of therelated Servicing Agreement, certified as a true, correct and complete copy ofthe original, together with a Servicer Notice, fully executed by Seller andServicer;

###  

### (e)           ClosingCertification.  A ClosingCertification of each Seller.

###  

### (f)            Feesand Expenses.  The Agent shall havereceived payment from the Sellers of an amount equal to the amount of actualcosts and expenses, including, without limitation, the fees and expenses ofcounsel to the Agent and/or the Buyers, incurred by the Agent and/or the Buyersin connection with the development, preparation and execution of thisAgreement, the other Repurchase Documents, the Wachovia Facilities and anyother documents prepared in connection herewith or therewith; and

###  

### (g)           OtherDocuments.  The Agent shall havereceived all such other and further documents, documentation and legal opinionsas the Agent in its sole discretion shall reasonably require.

###  

## Section 3.02           Conditions Precedent to all Transactions.  The Agent’s and each Buyer’s agreement toenter into each Transaction (including the initialTransaction) is subject to the satisfaction of the following further conditionsprecedent, both immediately prior to entering into such Transaction and alsoafter giving effect to the consummation thereof and the intended use of the proceedsof the sale:

 

### (a)           theSeller shall have delivered a Confirmation via Electronic Transmission inaccordance with the procedures set forth in Section 3.03, and the Agentshall have determined that the Mortgage Asset described in such Confirmation isan Eligible Asset, shall have approved the purchase of the Mortgage Asset to beincluded in such Transaction in its sole and absolute discretion and shall haveobtained all necessary internal credit approvals for such Transaction;

 

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### (b)           noDefault or Event of Default shall have occurred and be continuing under thisAgreement, the Guarantee Agreement or any other Repurchase Document and noevent shall have occurred which has, or would reasonably be expected to have, aMaterial Adverse Effect;

###  

### (c)           theAgent shall have received a certificate of a Responsible Officer of the Seller,substantially in the form of Exhibit J hereto, (i) showing indetail the calculations demonstrating that, after giving effect to therequested Transaction, no Margin Deficit shall then exist, (ii) statingthat, to the best of such Responsible Officer’s knowledge, since the date ofthe certificate most recently delivered pursuant to Section 9.01(b)(ii),the Seller has observed or performed all of its covenants and other agreementsin all material respects, and satisfied in all material respects, everycondition, contained in this Agreement and the related documents to beobserved, performed or satisfied by it, and that such Responsible Officer hasobtained no knowledge of any Default or Event of Default except as specified insuch certificate, (iii) describing all interests of the Seller’sAffiliates in any Underlying Mortgaged Property related to any proposedMortgage Asset (including without limitation, any lien, encumbrance or otherdebt or equity position or other interest in the Underlying Mortgaged Propertythat is senior or junior to, or *pari passu*with, the proposed Mortgage Asset in right of payment or priority), (iv) showing in detailthe calculations supporting such Responsible Officer’s certification of theSeller’s compliance with the requirements of Section 9.01(f) andSections 9.01(l)-(o) and (v) confirming that all equity of each of theSeller’s Subsidiaries has been pledged to the Agent for the benefit of theBuyers;

###  

### (d)           bothimmediately prior to the requested Transaction and also after giving effectthereto and to the intended use thereof, the representations and warrantiesmade by the Seller in Section 8.01 and in Schedules 1(a)-1(j), asapplicable, shall be true, correct and complete on and as of such Purchase Datein all material respects with the same force and effect as if made on and as ofsuch date (or, if any such representation or warranty is expressly stated to havebeen made as of a specific date, as of such specific date);

###  

### (e)           subjectto the Agent’s right to perform one or more Due Diligence Reviews pursuant toSection 13.11, (i) in the case of a Dry Mortgage Asset, Seller shallhave delivered a Transaction Request, a Transaction Request Package and allMortgage Asset Documents to the Custodian as required by this Agreement and theCustodial Agreement and Buyer has consented in writing to the related MortgageAsset becoming a Purchased Asset, and (ii) in the case of a Wet MortgageAsset, Seller has delivered a Transaction Request, Transaction Request Packageand pledge to deliver a complete Mortgage Asset File with respect to any WetMortgage Assets identified on such Transaction Request within five (5) BusinessDays of the related Purchase Date; provided, that if the Agent’sdiligence review of the Mortgage Asset File requires the delivery of a mortgagefile or the equivalent, Seller shall have the benefit of delayed delivery undercircumstances and pursuant to the terms and conditions set forth inSection 2.01(g)(ii) of the Custodial Agreement;

###  

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

 

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### and complete copyof the original, together with a Servicer Notice, fully executed by the Sellerand the Servicer;

 

### (g)           theAgent shall have received all fees and expenses of counsel to the Agent asrequired hereunder and/or by the Fee Letter and Section 13.01 and, to theextent Seller is required hereunder to reimburse the Agent for such amounts,the Agent shall have received the costs and expenses incurred by it inconnection with the entering into of any Transaction hereunder, including,without limitation, costs associated with due diligence, recording or otheradministrative expenses necessary or incidental to the execution of anyTransaction hereunder, which amounts, at the Agent’s option, may be withheldfrom the sale proceeds of any Transaction hereunder;

###  

### (h)           noMargin Deficit shall exist, either immediately prior to or after giving effectto the requested Transaction, and no Market Disruption Event shall haveoccurred and be continuing.

###  

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

###  

### (j)            theAgent shall have received from the Seller a Release Letter covering eachEligible Asset to be sold to the Buyers;

###  

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

###  

### (l)            theAgent shall not have reasonably determined that the introduction of, or achange in, any Requirement of Law or in the interpretation or administration ofany Requirement of Law applicable to any Buyer has made it unlawful, and noGovernmental Authority shall have asserted that it is unlawful, for any Buyerto enter into Transactions;

###  

### (m)          theinitial Purchase Price specified in a Confirmation for a Mortgage Asset shallnot be less than $3,000,000 and increments of $100,000 thereafter; provided,that two (2) Confirmations per calendar month may specify an initialPurchase Price in an amount greater than $1,000,000 and less than $3,000,000.

###  

### (n)           theRepurchase Date for such Transaction is not later than the Final TerminationDate;

###  

### (o)           theSeller shall have taken such other action as the Agent shall have reasonablyrequested in order to transfer the Purchased Assets pursuant to this Agreementand to perfect all security interests granted under this Agreement or any otherRepurchase Document in favor of the Agent for the benefit of the Buyers withrespect to the Purchased Assets;

 

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

###  

### (q)           theWeighted Average LTV of all Mortgage Assets shall not exceed 80.0%;

###  

### (r)            withrespect to each Seller that is a Subsidary of GWF-I, the Agent shall havereceived a Pledge and Security Agreement, substantially in the form attachedhereto as Exhibit M, duly executed and delivered by GWF-I, as ownerof 100% of the Equity Interest of the Seller;

###  

### (s)           withrespect to any Wet Mortgage Assets, the Agent shall have received a completeTransaction Request Package and an Escrow Agreement in the form attached heretoas Exhibit O;

###  

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

###  

### (u)           theAgent shall have received all such other and further documents, documentationand legal opinions (including, without limitation, opinions regarding theperfection of the Agent’s security interests) as the Agent in its reasonablediscretion shall reasonably require.

###  

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

 

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

 

### (b)           Withrespect to Dry Mortgage Assets, the Seller shall request a Transaction bydelivering to the Agent a Transaction Request (with a copy to the Custodian)via Electronic Transmission.  Each suchTransaction Request shall describe the Mortgage Assets

 

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### proposed to bepurchased (including the applicable Class and Type), and set forth(i) the proposed Purchase Date (which date, notwithstanding any extensionof Termination Date, shall not be later than the Final Purchase Date),(ii) the proposed Purchase Price, (iii) the Proposed Repurchase Date,(iv) the Pricing Rate applicable to such Transaction, (v) theapplicable Class and Type for each Mortgage Asset for which the Seller isrequesting the Transaction, (vi) whether such Transaction Request pertainsto a Special Purpose Transaction (and, if so, a description of such SpecialPurpose Transaction) and (vii) any additional terms or conditions notinconsistent with this Agreement and shall be accompanied by the UnderwritingPackage with respect to such Dry Mortgage Assets.

###  

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

###  

### (d)           Withrespect to any Wet Mortgage Asset, the Seller shall request a Transaction bydelivering to the Agent a Transaction Request (with a copy to the Custodian)via Electronic Transmission.  SuchTransaction Request shall be delivered no later than 12:00 noon (eastern time)two (2) Business Days prior to the requested Purchase Date and it shall beaccompanied by all of the items specified in clauses (a) through(d) of the definition of “Transaction Request Package”; provided,that if such delivery is made after 12:00 noon (eastern time) it shall bedeemed to have been delivered on the next succeeding Business Day and therequested Purchase Date shall be deemed to be the date that is two(2) Business Days thereafter.  Eachsuch Transaction Request shall describe the Mortgage Assets proposed to bepurchased, and set forth (i) the proposed Purchase Date (which date,notwithstanding any extension of Termination Date, shall not be later than theFinal Purchase Date), (ii) the proposed Purchase Price, (iii) theProposed Repurchase Date, (iv) the Pricing Rate applicable to suchTransaction, (v) the applicable Class and Type for each MortgageAsset for which the Seller is requesting the Transaction and (vi) any additionalterms or conditions not inconsistent with this Agreement.  All other items necessary to effect deliveryof a complete Transaction Request Package shall be delivered no later than12:00 noon (eastern time) on the requested Purchase Date (or such later date asmay be deemed to be the Purchase Date pursuant to the immediately precedingsentence); provided, that if such items are delivered after 12:00 noon(eastern time) on such requested Purchase Date, the Agent may, in its solediscretion, decline to enter into the requested Transaction or may deem thePurchase Date to be the Business Day immediately following the date on whichthe Agent received the complete Transaction Request Package.

###  

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

 

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### diligence reviewof any Purchased Asset shall in no way affect any rights the Agent or any Buyer(or any of their successors) may have hereunder or otherwise with respect toany representations or warranties or other rights hereunder, including withoutlimitation, the right to determine at any time that such Purchased Asset is notan Eligible Asset.

###  

### (f)            Onthe Purchase Date for each Mortgage Asset, the Seller shall forward to theAgent via Electronic Transmission, a confirmation of each Transaction,substantially in the form of Exhibit B attached hereto (a “Confirmation”).  The Confirmation shall specify any additionalterms or conditions of the Transaction not inconsistent with this Agreement oras otherwise agreed to by the Agent.  Inthe event that the terms of the related Confirmation are inconsistent with theterms of this Agreement, this Agreement shall supersede the Confirmation withrespect to the inconsistent terms only; provided, however, that theConfirmation and this Agreement shall be construed to be cumulative to theextent possible.  Upon receipt of theConfirmation, the Agent shall evidence its agreement to enter into therequested Transaction by its signature thereon and return such Confirmation tothe Seller.  Any Confirmation executed bythe Agent shall be deemed to have been received by the Seller on the date suchexecuted Confirmation is actually received by the Seller.

###  

### (g)           Withrespect to Wet Mortgage Assets, following the receipt of a Confirmation fromthe Agent, the related Escrow Agreement shall be delivered to Custodian with acopy to the Agent not later than 12:00 noon (eastern time) on the day prior tothe requested Purchase Date, as provided in the Custodial Agreement.  Following the Agent’s receipt of the faxedEscrow Agreement and Buyer’s determination that each of the Wet Mortgage Assetsis an Eligible Asset, the Agent shall wire funds pursuant to wiringinstructions set forth in the Escrow Agreement. On the Business Day that Custodian receives the complete Mortgage AssetFiles, the Custodian will notify the Agent of its receipt of such MortgageAsset Files and deliver to the Agent a Trust Receipt.  The Seller shall cause the Settlement Agentto deliver the Mortgage Asset File with respect to each Mortgage Asset withinone (1) Business Day following the Purchase Date. Within five(5) Business Days of receipt of such Mortgage Asset Files, Custodian shalldeliver to the Agent an Asset Schedule and Exception Report.

###  

### (h)           Withrespect to Dry Mortgage Assets, at least seven (7) Business Days prior tothe requested Purchase Date, Seller shall cause (i) the related MortgageAsset File pertaining to each Dry Mortgage Asset to be purchased by the Agentto be delivered to the Custodian in accordance with the Custodial Agreement and(ii) with respect to any Mortgage Assets consisting of CMBS or RMBS, therelated MBS File to be delivered to the Agent, for the benefit of theBuyers.  With respect to each WetMortgage Asset, no later than 12:00 noon (eastern time) on the Business Dayprior to the Purchase Date, the Seller shall deliver to the Agent a completedTransaction Request and Transaction Request Package, along with any otherdocuments or certifications required to be delivered in connection with suchTransaction Request pursuant to the Custodial Agreement.  Subject to the proviso inSection 3.02(e)(ii), within five (5) Business Days of the relatedPurchase Date, the Mortgage Asset Documents pertaining to each Wet MortgageAsset purchased by the Agent on behalf of the Buyers shall be delivered to theCustodian in accordance with the Custodial Agreement.  Within five (5) Business Days of therelated Purchase Date, the Seller shall deliver to the Agent a completeUnderwriting Package with respect to any Wet Mortgage Assets purchased by theAgent on behalf of the Buyers.

 

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### (i)            EachConfirmation, together with this Agreement, shall constitute conclusiveevidence of the terms agreed between the Agent and the Seller with respect tothe Transaction to which the Confirmation relates, and the Seller’s acceptanceof the related proceeds shall constitute the Seller’s agreement to the terms ofsuch Confirmation.  It is the intentionof the parties that each Confirmation shall not be separate from this Agreementbut shall be made a part of this Agreement. In the event that any terms or conditions of any Confirmation areinconsistent, or in direct conflict, with this Agreement, the terms of suchConfirmation shall prevail; provided, that such Confirmation and thisAgreement shall be construed to be cumulative to the extent possible.

###  

### (j)            Onthe Repurchase Date, termination of a Transaction will be effected by transferto the Seller or its designee of the Purchased Assets and receipt of theRepurchase Price by the Agent.  To theextent a net amount is owed to one party, the other party shall pay such amountto such party.  The Agent shall directCustodian to deliver the related Mortgage Files to the Seller or its designeeat the Seller’s expense on the Repurchase Date.

###  

### (k)           Inno event shall a Transaction be entered into when any Margin Deficit exists orwhen any Default or Event of Default has occurred and is continuing, when theRepurchase Date for such Transaction would be later than the FacilityTermination Date or to the extent that after giving effect to such Transactionthe aggregate Repurchase Price of all Mortgage Assets subject to Transactionsthen outstanding would exceed the Maximum Amount.

###  

### (l)            Pursuantto Section 3.01(b) of the Custodial Agreement, the Custodian shalldeliver to the Seller and the Agent an Asset Schedule and Exception Reportwith respect to the Dry Mortgage Assets which the Seller has requested theAgent purchase, on behalf of the Buyers, on such Purchase Date, and no laterthan 12:00 p.m., New York City time, on each Purchase Date, the Custodianshall deliver to the Agent a Dry Trust Receipt in respect of all such DryMortgage Assets purchased by the Agent, on behalf of the Buyers, on suchPurchase Date.  Subject to the provisionsof this Article III, the Purchase Price for each Eligible Asset will bemade available to the Seller by the Agent transferring the aggregate amount ofsuch Purchase Price in accordance with the wiring instructions set forth inrespect of the Seller on Schedule 2.

###  

## Section 3.04           Repurchases.

##  

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

 

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### (b)           MandatoryRepurchases.

###  

#### (i)            Inthe event that the Final Termination Date (as specified in clause (i) ofthe definition thereof, the “Original Final Termination Date”) isextended in accordance with Section 3.05(a), in addition to any otheramounts due and payable at any time pursuant to this Agreement or any otherRepurchase Document, the Sellers shall make equal quarterly payments, beginningon the date occurring three (3) calendar months after the Original FinalTermination Date (or if such date is not a Business Day, on the immediatelypreceding Business Day), in a total amount equal to the aggregate RepurchasePrice outstanding as of the Original Final Termination Date, unless theaggregate Repurchase Price is paid in full prior to such quarterly paymentsbeing due.

####  

#### (ii)           Inthe event that the weighted average Purchase Rate of all Mortgage Assetsexceeds 85.0%, the Sellers shall repurchase such Mortgage Assets as the Agentshall have determined are necessary so that the weighted average Purchase Rateof all Mortgage Assets does not exceed 85.0%; provided, however,that, so long as no Default or Event of Default has occurred, if the Sellerspecifically notifies the Agent in writing prior to the Agent purchasing aparticular Mortgage Asset that purchasing such Mortgage Asset will cause theweighted average Purchase Rate to exceed 85.0% and the Agent approves andpurchases such Mortgage Asset, Sellers shall not be required to repurchase anyMortgage Assets based solely on the increased weighted average Purchase Ratecaused by the purchase of such Mortgage Asset. Notwithstanding the foregoing, nothing in this subsection shall inany way impair the Agent’s ability to issue a Margin Deficit Notice and requiresatisfaction of any Margin Deficit in the manner and within the time frames asprovided in this Agreement.

####  

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

####  

## Section 3.05           Termination Dates; Maximum Amount.

##  

### (a)           Extensionof Termination Dates.  Upon writtenrequest of all of the Sellers delivered to the Agent at least ninety (90) days,but in no event earlier than 120 days, prior to any Termination Date, and solong as no event which has a Material Adverse Effect and no Margin Deficit,Default or Event of Default, or any default under any other RepurchaseDocument, shall have occurred and be continuing on such Termination Date, andso long as all representations and warranties are true, correct, complete andaccurate in all material respects on such Termination Date, the Agent may inits sole discretion agree to extend such Termination Date by giving writtennotice to the Sellers of such extension and of the new Termination Datedetermined by the Agent; provided, that (i) any failure by theAgent to deliver any such notice of extension to the Sellers shall be deemed tobe the Agent’s determination not to extend such Termination Date, (ii) inno event shall the Second Termination Date or the Final Termination Date beextended unless the Parent shall be listed on a national securities exchangeand (iii) no Termination Date shall be extended unless the Agent shallhave received payment of an amount equal to the Extension Fee (as defined inthe Fee Letter).

 

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### (b)           [Reserved.]

###  

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

###  

### (d)           NoObligation to Extend Facility Termination Date.  Notwithstanding any other provision of thisSection 3.05 or otherwise herein, neither the Agent nor any Buyer (or anyof their respective Affiliates) shall be under any obligation to extend theFacility Termination Date.

###  

## Section 3.06           Payment of Price Differential.

##  

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

###  

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

 

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### termination ofthis Agreement and repurchase of all Purchased Assets subject to Transactionshereunder.

###  

# **ARTICLE IV**MARGIN MAINTENANCE

# ** **

## Section 4.01           Margin Adjustments. (a)  If at any time the aggregate Repurchase Price for allPurchased Assets exceeds the aggregate Asset Value ofthe Purchased Assets, then the Agent may, by delivery to the Sellers of aMargin Deficit Notice, require the Sellers to, at the Sellers’ option, no laterthan the Margin Correction Deadline, (i) sell to the Buyers for noadditional consideration (by transfer to the Agent or its designee, includingthe Custodian) additional Eligible Assets (“Additional Purchased Assets”),(ii) repurchase Purchased Assets at the Repurchase Price, (iii) makea payment in reduction of the aggregate Repurchase Price (to be allocated tothe Repurchase Price of one or more Purchased Assets, as the Sellers shalldirect to the Agent in writing) or (iv) choose any combination of theforegoing, so that, after giving effect to such transfers, repurchases andpayments, the aggregate Repurchase Price for all Purchased Assets does notexceed the aggregate Asset Value thereof.

 

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

###  

### (c)           Exceptas contemplated by Section 4.02(a) or (b) as a repurchasepayment or as otherwise agreed in writing by the Agent, all cash transferred tothe Agent pursuant to this Section 4.01 shall be deposited in the accountset forth in Section 7.01 hereof and shall be deemed to reduce theaggregate Repurchase Price with respect to all outstanding Transactions.

###  

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

###  

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

 

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

 

### (b)           Notwithstandingthe foregoing, the deadline for completion of any repurchases or payments to bemade in satisfaction of any Margin Deficit Notice delivered pursuant toSection 4.01(a) in respect of any Mortgage Asset (other than RMBS)shall be extended to 12:00 p.m., New York City time, on the fifteenth (15th)Business Day following the date on which the applicable Margin Deficit Noticewas first received by any Seller; provided, that no later than the timethat is twenty-four (24) hours after such notice is first received by anySeller (or if such time is not during a Business Day, then no later than thesame time on the next Business Day), the Agent shall have received payment ofan amount equal to the Margin Deficit, which amount shall be held by the Agentas cash collateral and not applied to the reduction of the aggregate RepurchasePrice so long as all of the following conditions are satisfied: (i) noDefault of Event of Default has occurred and is continuing, (ii) noEligible Asset in respect of which such repurchase or payment is to be made isin any monetary or non-monetary default or is otherwise a Delinquent MortgageAsset, (iii) the Sellers are making diligent and good faith efforts toeffect the necessary repurchase or payment, (iv) no cash flow shall bedistributed in any manner by any Seller except to the Agent or into theCollection Account (and the Parent, including its Affiliates, shall not beentitled to, and shall not receive, from any Seller any fees, compensation orother payments of any kind until all repurchases and payments necessary to bemade in satisfaction of the Margin Deficit Notice shall have been completed),and (v) the Sellers provide to the Agent, on a periodic basis, a summaryof all efforts to be made by the Sellers to effect the necessary repurchase orpayment.  Notwithstanding anything hereinto the contrary, in the event any Seller fails to correct a Margin Deficit withintwenty-four (24) hours following receipt by a Seller of a Margin DeficitNotice, the provisions of this Section 4.02(b) shall not prohibit,prevent or restrict, in any manner, the Agent from selling the Purchased Assetwhich is subject to the Margin Deficit and retaining the proceeds of such sale,to the extent the related sale price is at least equal to the Repurchase Priceof such Purchased Asset; provided, however, that in the event anyGuarantor, in its capacity as borrower, has duly requested that a borrowing bemade under the Liquidity Facility for the purpose of funding any Margin Deficithereunder, Seller shall have not less than forty-eight (48) hours to correctsuch Margin Deficit.  If the Agent sellssuch Purchased Asset for an amount at least equal to the Repurchase Pricepursuant to the immediately preceding sentence, the Margin Deficit with respectto such Purchased Asset will not, in and of itself, be deemed to be an Event ofDefault.  The Agent shall report thestatus of the sale of any Purchased Assets which are subject to a MarginDeficit to Sellers every other Business Day during the fifteen-day periodfollowing the delivery of a Margin Deficit Notice by the Agent to Sellers withrespect to such Purchased Assets.

###  

# **ARTICLE V**INCOME PAYMENTS; REQUIREMENTSOF LAW

# ** **

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

 

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

 

 *first*,to the payment of all fees, expenses, and other obligations then due to theAgent and/or the Buyers (or theirAffiliates) pursuant to this Agreement, other than the PricingDifferential and Repurchase Price on the Purchased Assets;

 

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

 

*third*, pro rata, to the payment of theRepurchase Price for such Purchased Asset then subject to a request torepurchase in accordance with the terms of Section 3.04 and, solely withrespect to any Interest Rate Protection Agreement with an Affiliated HedgeCounterparty related to such Purchased Asset, to any accrued and unpaidbreakage costs under such Interest Rate Protection Agreement related to suchPurchased Asset; and

 

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

 

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

 

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

 

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## and binding upon all parties hereto) that anyRequirement of Law (other than with respect to any amendment made to suchBuyer’s certificate of incorporation and by-laws or other organizational orgoverning documents) or any change in the interpretation or application thereofor compliance by such Buyer with any request or directive (whether or nothaving the force of law) from any central bank or other Governmental Authoritymade subsequent to the date hereof:

 

#### (i)            shallsubject such Buyer to any tax of any kind whatsoever with respect to thisAgreement or any Transaction (excluding net income taxes) or change the basisof taxation of payments to such Buyer in respect thereof;

####  

#### (ii)           shallimpose, modify or hold applicable any reserve, special deposit, compulsory loanor similar requirement against assets held by, deposits or other liabilities inor for the account of, advances, or other extensions of credit by, or any otheracquisition of funds by, any office of such Buyer which is not otherwiseincluded in the determination of the Eurodollar Rate hereunder;

####  

#### (iii)          shallimpose on such Buyer any other condition;

####  

and the result of any of the foregoing is to increasethe cost to such Buyer, by an amount which such Buyer deems in good faith to bematerial, of entering, continuing or maintaining any Transaction or to reduceany amount due or owing hereunder in respect thereof by an amount which suchBuyer determines in good faith to be material, then, in any such case, theSellers shall promptly pay such Buyer such additional amount or amounts ascalculated by such Buyer in good faith as will compensate such Buyer for suchincreased cost or reduced amount receivable.

 

### (b)           Inthe event that any Buyer shall at any time have determined (which determinationshall, absent manifest error, be final and conclusive and binding upon allparties hereto) that the adoption of or any change in any Requirement of Law(other than with respect to any amendment made to such Buyer’s certificate ofincorporation and by-laws or other organizational or governing documents)regarding capital adequacy or in the interpretation or application thereof orcompliance by such Buyer or any corporation controlling such Buyer with anyrequest or directive regarding capital adequacy (whether or not having theforce of law) from any Governmental Authority made subsequent to the datehereof shall have the effect of reducing the rate of return on such Buyer’s orsuch corporation’s capital as a consequence of its obligations hereunder to alevel below that which such Buyer or such corporation could have achieved butfor such adoption, change or compliance (taking into consideration such Buyer’sor such corporation’s policies with respect to capital adequacy) by an amountdeemed by such Buyer in good faith to be material, then from time to time, theSellers shall promptly pay to such Buyer such additional amount or amounts aswill compensate such Buyer for such reduction.

###  

### (c)           Allpayments made by any Seller to any Buyer shall be free and clear of, andwithout deduction or withholding for, any taxes; provided, however,that if any Seller shall be required by law to deduct or withhold any taxesfrom any sums payable to such Buyer, then the Seller shall (A) make suchdeductions or withholdings and pay such amounts to the relevant authority inaccordance with applicable law, (B) pay to such Buyer the sum that wouldhave been payable had such deduction or withholding not been made, and(C) at the time the Price

 

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### Differential ispaid, pay to such Buyer all additional amounts as specified by such Buyer topreserve the after-tax yield such Buyer would have been received had such taxnot been imposed; provided, however, that the Seller shall not berequired to pay any additional amounts solely as a result of the syndication ofthis Agreement to an entity that would be treated as being engaged in a tradeor business in the United States for federal income tax purposes, or isotherwise exempt from any such withholding taxes.

###  

### (d)           Ifany Buyer becomes entitled to claim any additional amounts pursuant to thisSection 5.02, it shall promptly notify each affected Seller of the eventby reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to thisSection 5.02 submitted by such Buyer to an affected Seller shall beconclusive in the absence of manifest error.

###  

# **ARTICLE VI**SECURITY INTEREST

# ** **

## Section 6.01           Security Interest. (a)  Each of the following items or types of property, whether nowowned or hereafter acquired, now existing or hereaftercreated and wherever located, is hereinafter referred to as (the “PurchasedItems”): all Mortgage Assets, all rights under each Purchase Agreement (butnot the obligations thereunder), all Mortgage Asset Files, including withoutlimitation all promissory notes included therein, all Servicing Recordsrelating to the Mortgage Assets, all Servicing Agreements relating to theMortgage Assets and any other collateral pledged or otherwise relating to suchMortgage Assets, together with all files, documents, instruments, surveys,certificates, correspondence, appraisals, computer programs, computer storagemedia, accounting records and other books and records relating thereto, allmortgage guaranties and insurance (issued by governmental agencies orotherwise) and any mortgage insurance certificate or other document evidencingsuch mortgage guaranties or insurance relating to any Mortgage Asset, allservicing fees to which the Seller is entitled and servicing and other rightsrelating to the Mortgage Assets, all Servicer Accounts established pursuant toany Servicing Agreement and all amounts on deposit therein, from time to time,all Purchase Agreements or other agreements or contracts relating to,constituting, or otherwise governing, any or all of the foregoing to the extentthey relate to the Purchased Assets including the right to receive principal andinterest payments with respect to the Purchased Assets and the right to enforcesuch payments, the Controlled Accounts and all monies and investment propertyfrom time to time on deposit in, or credited to, the Controlled Accounts, allsecurities accounts to which any Purchased Assets consisting of “securities” or“security entitlements” (as defined in the UCC) have been credited, allInterest Rate Protection Agreements, if any, all “general intangibles”,“accounts”, “chattel paper”, “deposit accounts”, “instruments” and “investmentproperty” as defined in the UCC relating to or constituting any and all of theforegoing, and any and all replacements, substitutions, distributions on orproceeds of any and all of the foregoing.

 

### (b)           TheSellers and Buyers intend that the Transactions hereunder be sales to theBuyers of the Purchased Assets and not loans from the Buyers to the Sellersecured by the Purchased Assets. However, in order to preserve the Agent’s and each Buyer’s rights underthis Agreement in the event that a court or other forum recharacterizes theTransactions hereunder as loans and as security for the performance by eachSeller of all of the Seller’s obligations to the

 

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### Agent and eachBuyer hereunder and the Transactions entered into hereunder (“RepurchaseObligations”) and Seller-Related Obligations, each Seller hereby assigns,pledges and grants a security interest in all of its right, title and interestin, to and under the Purchased Items and the Purchased Assets to the Agent, forthe ratable benefit of the Buyers and the Affiliated Hedge Counterparties, tosecure the Repurchase Obligations and Seller-Related Obligations, includingwithout limitation the repayment of all amounts owing to the Agent and eachBuyer hereunder and, as security for the performance by each Seller of all ofthe Seller’s obligations to the Affiliated Hedge Counterparties under theInterest Rate Protection Agreements and this Agreement, each Seller herebyassigns, pledges and grants to the Agent, as agent for and on behalf of theAffiliated Hedge Counterparties, a pari passu security interest, subject to thepayment priorities set forth in this Agreement, in all of the Seller’s right,title and interest in, to and under the Purchased Items and the PurchasedAssets.  Each Seller agrees to mark itscomputer records and files to the extent practicable to evidence the interestsgranted to the Agent and the Buyers hereunder. All Purchased Items shall secure the payment of all obligations of eachSeller now or hereafter existing under this Agreement and each Interest RateProtection Agreement that is with an Affiliated Hedge Counterparty, including,without limitation, each Seller’s obligation to repurchase Purchased Assets, orif such obligation is so recharacterized as a loan, to repay such loan, for theRepurchase Price and to pay any and all other amounts owing to the Agent andeach Buyer hereunder.  The Agent agreesto act as agent for and on behalf of the Affiliated Hedge Counterparties withrespect to the security interest granted hereby to secure the Sellers’obligations to the Affiliated Hedge Counterparties, including, withoutlimitation, with respect to the Purchased Assets and the Mortgage Asset Filesheld by the Custodian pursuant to the Custodial Agreement.

###  

### (c)           Pursuantto the Custodial Agreement, the Custodian shall hold the Mortgage Asset Filesas exclusive bailee and agent for the Agent pursuant to the terms of theCustodial Agreement and shall deliver to the Agent Trust Receipts each to theeffect that the Custodian has reviewed such Mortgage Asset Files in the mannerand to the extent required by the Custodial Agreement and identifying anydeficiencies in such Mortgage Asset Files as so reviewed.

###  

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

###  

### (e)           Inaddition to and without limiting the generality of the foregoing, each Sellerhereby grants to the Agent for the benefit of the Buyers hereunder a securityinterest in each Interest Rate Protection Agreement, if any, relating to thePurchased Assets to secure the Repurchase Obligations and the Seller-RelatedObligations.

###  

### (f)            TheAgent agrees to act as agent for and on behalf of the Affiliated HedgeCounterparties with respect to the security interest granted hereby to securethe obligations

 

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

###  

## Section 6.02           Release of Security Interest.  Upon satisfaction of the RepurchaseObligations and the Seller-Related Obligations, theAgent shall reconvey the Purchased Assets to the Seller and release itssecurity interest therein.

 

# **ARTICLE VII**PAYMENT, TRANSFER AND CUSTODY

# ** **

## Section 7.01           Payment, Transfer and Custody.  (a)  Unless otherwise mutually agreed inwriting, all transfers of funds to be made by eachSeller hereunder shall be made in Dollars, in immediately available funds,without deduction, set-off or counterclaim, to the Agent, in accordance withthe wiring instructions set forth on Schedule 2 hereto, not laterthan 3:00 p.m., New York City time, on the date on which such paymentshall become due (and each such payment made after such time shall be deemed tohave been made on the next succeeding Business Day).  Each Seller acknowledges that it has norights of withdrawal from the foregoing account.

 

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

###  

### (c)           Inconnection with such sale, transfer, conveyance and assignment, on or prior toeach Purchase Date, the Sellers shall deliver or cause to be delivered andreleased to the Agent or its designee (including the Custodian) the documentsidentified in the Custodial Agreement.

###  

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

 

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### reflect clearlythe sale of the related Purchased Asset to the Buyers.  The Seller or its designee shall release itscustody of the Mortgage Asset File only in accordance with written instructionsfrom the Agent, unless such release is required as incidental to the servicingof the Purchased Assets or is in connection with a repurchase of any PurchasedAsset by the Seller.

###  

# **ARTICLE VIII**SELLER REPRESENTATIONS ANDWARRANTIES

# ** **

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

 

### (a)           Actingas Principal.  Seller will engage insuch Transactions as principal (or, if agreed in writing in advance of anyTransaction by the other party hereto, as agent for a disclosed principal).

###  

### (b)           Solvency.  Neither the Repurchase Documents nor anyTransaction thereunder are entered into in contemplation of insolvency or withintent to hinder, delay or defraud any of Seller’s creditors.  The transfer of the Mortgage Assets subjecthereto and the obligation to repurchase such Mortgage Assets is not undertakenwith the intent to hinder, delay or defraud any of Seller’s creditors.  As of the Repurchase Date, Seller is notinsolvent within the meaning of 11 U.S.C. Section 101(32) or any successorprovision thereof and the transfer and sale of the Mortgage Assets pursuanthereto and the obligation to repurchase such Mortgage Asset (i) will notcause the liabilities of Seller to exceed the assets of Seller, (ii) willnot result in Seller having unreasonably small capital, and (iii) will notresult in debts that would be beyond Seller’s ability to pay as the samemature.  Seller received reasonablyequivalent value in exchange for the transfer and sale of the Purchased Assetsand Purchased Items subject hereto.  Nopetition in bankruptcy has been filed against Seller in the last ten (10) years,and Seller has not in the last ten (10) years made an assignment for thebenefit of creditors or taken advantage of any Debtors Relief Laws.

###  

### (c)           NoBroker.  (i) Seller has notengaged the services of, or otherwise dealt with, any broker, investmentbanker, agent, or other person, except for the Agent (or an Affiliate of theAgent) in connection with this Agreement or any other Repurchase Document orany Transaction or other matter related thereto and (ii)  no brokeragecommission or other similar compensation is payable in connection with thisAgreement or any other Repurchase Document or any Transaction or other matterrelated thereto.

###  

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

 

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

###  

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

###  

#### (i)            GWF-I’sexact legal name is Gramercy Warehouse Funding I LLC.  GWF-I is a limited liability company, dulyorganized, validly existing and in good standing under the laws of the State ofDelaware.

####  

#### (ii)           GWF-I’sorganizational identification number is 81-0653125.  Seller will promptly notify the Agent of anychange in its organizational number.

####  

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

####  

#### (iv)          Selleris in compliance with all Requirements of Law except to the extent that thefailure to comply therewith could not, in the aggregate, reasonably be expectedto have a Material Adverse Effect.

####  

### (g)           OrganizationalStructure; Financial Condition; No Material Adverse Change.  A copy of Seller’s current organizationalchart (depicting and delineating all of such Guarantor’s consolidated andnon-consolidated Subsidiaries) is attached as Exhibit Rhereto.  Seller has heretofore furnishedto the Agent a copy of its most recent quarterly balance sheet and the relatedstatement of income and cash flows, certified by a Responsible Officer of theParent to be true and correct; such financial statements are true and correct,fairly present the consolidated financial condition of Seller and itsSubsidiaries as of such date and have been prepared in accordance with TaxBased Accounting Principles.  Since thedate of the most recent financial statements delivered to the Agent, no changehaving a Material Adverse Effect has occurred.

###  

### (h)           NoLitigation.  As of the date of thisAgreement and as of the Purchase Date for the purchase of any Purchased Assetshereunder, there are no actions, suits, investigations or legal, equitable,arbitration or administrative proceedings pending, or to the knowledge ofSeller threatened, against Seller as to which there is a reasonable possibilityof an adverse determination that would have a Material Adverse Effect.  To the extent the representations and warrantiesin this Section 8.01 shall be remade as of any date subsequent to the datehereof, Seller shall be deemed to represent that as of such subsequent date,there are no actions, suits, investigations or legal, equitable, arbitration oradministrative proceedings pending, or to the knowledge of Seller, threatened,against Seller which have not been disclosed to Buyer in writing and as towhich there is a reasonable possibility of an adverse determination that wouldhave a Material Adverse Effect.

 

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### (i)            NoConflicts or Consents.  Neither theexecution and delivery of this Agreement and the other Repurchase Documents bySeller, nor the consummation of any of the transactions by it herein or thereincontemplated, nor compliance with the terms and provisions hereof or with theterms and provisions thereof, will contravene or conflict with any provision oflaw, statute, or regulation to which Seller is subject or any materialjudgment, license, order, or permit applicable to Seller or contravene orconflict with or result in the creation or imposition of (or the obligation tocreate or impose) any Lien upon any of the property or assets of Sellerpursuant to the terms of any indenture, mortgage, deed of trust, or otheragreement or instrument to which Seller is a party or by which Seller may bebound, or to which Seller may be subject, other than Liens created pursuant tothe Repurchase Documents.  No consent,approval, authorization, or order of any court or Governmental Authority orthird party is required in connection with the execution and delivery by Sellerof the Repurchase Documents to which it is a party or to consummate thetransactions contemplated hereby or thereby which has not already beenobtained.

###  

### (j)            Authorization,Power and Enforceability.  Seller hasall necessary corporate or other power, authority and legal right to execute,deliver, and perform under this Agreement and each of the other RepurchaseDocuments executed by it; Seller is duly authorized to execute, deliver, andperform under this Agreement and the other Repurchase Documents to which it isa party and is and will continue to be duly authorized to perform under thisAgreement and such other Repurchase Documents; and each Repurchase Document hasbeen duly executed and delivered by Seller, as applicable, and constitutes alegal, valid and binding obligation of Seller enforceable against Seller inaccordance with its terms.

###  

### (k)           GovernmentalApprovals.  No order, consent,approval, license, authorization or validation of, or filing, recording orregistration with, or exemption by, any Governmental Authority is required toauthorize, or is required in connection with, (i) the execution, deliveryand performance of any Repurchase Document to which Seller is or will be aparty, (ii) the legality, validity, binding effect or enforceability ofany such Repurchase Document against Seller or (iii) the consummation ofthe transactions contemplated by this Agreement (other than the filing ofcertain financing statements in respect of certain security interests).

###  

### (l)            Useof Proceeds; Margin Regulations.  Allproceeds of each Transaction shall be used by Seller for purposes permittedunder Seller’s Governing Documents, provided that no part of the proceeds ofany Transaction will be used by Seller to purchase or carry any Margin Stock orto extend credit to others for the purpose of purchasing or carrying any MarginStock.  Neither the entering into of anyTransaction nor the use of any proceeds thereof will violate, or beinconsistent with, any provision of Regulation T, U or X of the Board ofGovernors of the Federal Reserve System.

###  

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

 

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

 

### (n)           GovernmentRegulation.  Neither Seller nor anySubsidiary thereof is (i) an “investment company” or a company“controlled” by an “investment company,” within the meaning of the InvestmentCompany Act of 1940, as amended; (ii) a “holding company” or a “subsidiarycompany” of a “holding company” or an “affiliate” of either a “holding company”or a “subsidiary company” within the meaning of the Public Utility HoldingCompany Act of 1935, as amended; or (iii) subject to any other federal or statelaw or regulation which purports to restrict or regulate its ability to borrowmoney.

###  

### (o)           PurchasedAssets.

###  

#### (i)            Asof the date hereof, Seller has not assigned, pledged, or otherwise conveyed orencumbered any Mortgage Asset (or any interest therein) to any other Person,and immediately prior to the sale of such Mortgage Asset to the Buyers, Sellerwas the sole owner of such Mortgage Asset and had good and marketable titlethereto, free and clear of all Liens, in each case except for Liens to bereleased simultaneously with the sale to the Buyers hereunder.

####  

#### (ii)           Theprovisions of this Agreement and the related Confirmation are effective toeither constitute a sale of Purchased Items to the Buyers or to create in favorof the Agent for the ratable benefit of the Buyers a legal, valid andenforceable security interest in all right, title and interest of Seller in, toand under the Purchased Items.

####  

#### (iii)          Uponreceipt by the Custodian of each Mezzanine Note or Junior Interest Note,endorsed in blank by a duly authorized officer of Seller, either a purchaseshall have been completed by the Buyers of such Mezzanine Note or JuniorInterest Note, as applicable, or the Agent shall have for the ratable benefitof the Buyers a valid and fully perfected first priority security interest inall right, title and interest of Seller in the Purchased Items describedtherein.

####  

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

####  

#### (v)           Uponthe filing of financing statements on Form UCC-1 naming the Agent, asagent for the Buyers, as “Secured Party”, Seller as “Debtor” anddescribing the

 

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

####  

#### (vi)          Uponexecution and delivery of the Account Control Agreement, the Agent shall have,for the ratable benefit of the Buyers, a valid and fully perfected firstpriority security interest in, the “investment property” and all “depositaccounts” (each as defined in the Uniform Commercial Code) comprising PurchasedItems.

####  

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

###  

### (q)           InterestRate Protection Agreements.  Sellerhas entered into all Interest Rate Protection Agreements required pursuant toSection 9.01(v) and to the actual knowledge of Seller, as of the dateof this Agreement and as of the Purchase Date for the purchase of any PurchasedAssets subject to an Interest Rate Protection Agreement, each such InterestRate Protection Agreement is in full force and effect in accordance with itsterms and no default, event of default or termination event (howeverdenominated) exists thereunder.

###  

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

###  

### (s)           Trueand Complete Disclosure.  Theinformation, reports, financial statements, exhibits and schedules furnished inwriting by or on behalf of Seller to the Agent in connection with thenegotiation, preparation or delivery of this Agreement and the other RepurchaseDocuments or included herein or therein or delivered pursuant hereto or thereto(other than with respect to the Mortgage Assets), when taken as a whole, do notcontain any untrue statement of material fact or omit to state any materialfact necessary to make the statements herein or therein, in light of thecircumstances under which they were made, not misleading.  All written information furnished after thedate hereof by or on behalf of Seller to the Agent in connection with thisAgreement and the other Repurchase Documents and the transactions contemplatedhereby (other than with respect to the Mortgage Assets) and thereby will be true,complete and accurate in all material respects, or (in the case of projections)based on reasonable estimates, on the date as of which such information isstated or certified.  There is no factknown to a Responsible Officer of Seller, after due inquiry, that wouldreasonably be expected to have a Material Adverse Effect that has not beendisclosed herein, in the other Repurchase Documents or in a report, financialstatement, exhibit, schedule, disclosure letter or

 

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### other writingfurnished to the Agent for use in connection with the transactions contemplatedhereby or thereby.

###  

### (t)            NoPlan Assets.  Seller is not an“employee benefit plan,” as defined in Section 3(3) of ERISA, subjectto Title I of ERISA, and none of the assets of Seller constitutes or willconstitute “plan assets” of one or more such plans within the meaning of 29C.F.R. Section 2510.3-101.  Inaddition, (a) Seller is not a “governmental plan” within the meaning ofSection 3(32) of ERISA and (b) transactions by or with Seller are notsubject to state statutes regulating investment of, and fiduciary obligationswith respect to, governmental plans similar to the provisions ofSection 406 of ERISA or Section 4975 of the Internal Revenue Code currentlyin effect, which prohibit or otherwise restrict the transactions contemplatedby this Agreement.

###  

### (u)           NoReliance.  Seller has made its ownindependent decisions to enter into each Transaction and as to whether suchTransaction is appropriate and proper for it based upon its own judgment andupon advice from such advisors (including without limitation, legal counsel andaccountants) as it has deemed necessary. Seller is not relying upon any advice from the Agent or any Buyer as toany aspect of the Repurchase Documents or any Transaction, including withoutlimitation, the legal, accounting or tax treatment of such Transactions.

###  

### (v)           PatriotAct.  Seller is in compliance, in allmaterial respects, with the (i) the Trading with the Enemy Act, as amended,and each of the foreign assets control regulations of the United StatesTreasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any otherapplicable enabling legislation or executive order relating thereto, and(ii) the Uniting and Strengthening America by Providing Appropriate ToolsRequired to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).  No part of the proceeds of any Transactionwill be used, directly or indirectly, for any payments to any governmentalofficial or employee, political party, official of a political party, candidatefor political office, or anyone else acting in an official capacity, in orderto obtain, retain or direct business or obtain any improper advantage, inviolation of the United States Foreign Corrupt Practices Act of 1977, asamended.

###  

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

###  

### (x)            EnvironmentalMatters.  As of the date of thisAgreement and as of the Purchase Date for the purchase of any Purchased Assetshereunder:

###  

#### (i)            Tothe best knowledge of Seller, no properties owned or leased by Seller and noproperties formerly owned or leased by Seller, its predecessors, or any formersubsidiaries or predecessors thereof (the “Properties”), contain, orhave previously contained, any Materials of Environmental Concern in amounts orconcentrations which constitute or constituted a violation of, or reasonablycould be expected to give rise to liability under, Environmental Laws;

 

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#### (ii)           Tothe best knowledge of Seller, Seller is in compliance with all applicableEnvironmental Laws, and there is no violation of any Environmental Laws whichreasonably would be expected to interfere with the continued operations ofSeller;

####  

#### (iii)          Sellerhas not received any notice of violation, alleged violation, non-compliance,liability or potential liability under any Environmental Law, nor does Sellerhave any actual knowledge that any such notice will be received or is beingthreatened;

####  

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

####  

#### (v)           Nojudicial proceedings or governmental or administrative action is pending, or,to the knowledge of Seller, threatened, under any Environmental Law whichSeller is or will be named as a party, nor are there any consent decrees orother decrees, consent orders, administrative orders or other orders, or otheradministrative or judicial requirements arising out of judicial proceedings orgovernmental or administrative actions, outstanding under any Environmental Lawto which Seller is a party;

####  

#### (vi)          Tothe best knowledge of Seller, there has been no release or threat of release ofMaterials of Environmental Concern in violation of or in amounts or in a mannerthat reasonably would be expected to give rise to liability under anyEnvironmental Law for which Seller may become liable; and

####  

#### (vii)         tothe best knowledge of Seller, each of the representations and warranties setforth in the preceding clauses (i) through (vi) is true and correctwith respect to each parcel of real property owned or operated by Seller.

####  

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

###  

### (z)            Officeof Foreign Assets Control.  Seller isnot a person (i) whose property or interest in property is blocked orsubject to blocking pursuant to Section 1 of Executive Order 13224 ofSeptember 23, 2001 Blocking Property and Prohibiting Transactions WithPersons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.49079 (2001)), (ii) who engages in any dealings or transactions prohibitedby Section 2 of such executive order, or to the best of Seller’sknowledge,  is otherwise associated withany such person in any manner violative of Section 2 of such executiveorder, or (iii) on the current list of Specially Designated Nationals

 

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

###  

### (aa)         CertainTax Matters.  Seller represents andwarrants, and acknowledges and agrees, that it does not intend to treat anyTransaction or any related transactions hereunder as being a “reportabletransaction” (within the meaning of United States Treasury DepartmentRegulation Section 1.6011-4).  Inthe event that Seller determines to take any action inconsistent with suchintention, it will promptly notify the Agent. If Seller so notifies Buyer, Seller acknowledges and agrees that theAgent and each Buyer may treat each Transaction as part of a transaction thatis subject to United States Treasury Department RegulationSection 301.6112-1, and the Agent will maintain the lists and otherrecords required by such Treasury Regulation.

###  

### (bb)         FiscalYear.  The fiscal year of Seller isthe calendar year.

###  

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

###  

### (dd)         Amendmentand Restatement.  The ExistingAgreement is amended, restated and superceded in its entirety by thisAgreement.  Seller has no, and Sellerhereby waives all, defenses, rights of setoff, claims, counterclaims or causesof action of any kind or description against the Agent and any applicable Buyerarising under or in respect of the Existing Agreement or any related documentand, as of the Effective Date, the Agent and each applicable Buyer is in fullcompliance with its undertakings and obligations under this Agreement(including the Existing Agreement) and all related documents.

###  

# **ARTICLE IX**COVENANTS

# ** **

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

 

### (a)           FinancialStatements.  Seller shall deliver orcause to be delivered to the Agent:

###  

#### (i)            assoon as available and in any event within thirty (30) days after the end ofeach fiscal quarter of the Parent,the unaudited consolidated balance sheets of the Parent and its consolidatedSubsidiaries (and, to the extent available, for each Seller) as at the end ofsuch period and the related unaudited consolidated statements of income andretained earnings and of cash flows for the Parent and its consolidatedSubsidiaries (and,

 

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

####  

#### (ii)           assoon as available and in any event within ninety (90) days after the endof each fiscal year of the Parent,the audited consolidated balance sheets of the Parent and its consolidatedSubsidiaries (and, to the extent available, for each Seller) as at the end ofsuch fiscal year and the related consolidated statements of income and retainedearnings and of cash flows for the Parent and its consolidated Subsidiaries(and, to the extent available, for each Seller) for such year, setting forth ineach case in comparative form the figures for the previous year, accompanied byan opinion thereon of independent certified public accountants of recognizednational standing, which opinion shall not be qualified as to scope of audit orgoing concern and shall state that said consolidated financial statementsfairly present the consolidated financial condition and results of operationsof the Parent and its consolidated Subsidiaries (and, to the extent applicable,for each Seller) as at the end of, and for, such fiscal year in accordance withGAAP, and a certificate of such accountants stating that, in making theexamination necessary for their opinion, they obtained no knowledge, except asspecifically stated, of any Default or Event of Default;

####  

#### (iii)          (A) withrespect to each Mortgage Asset (not including RMBS) originated or master servicedby an Affiliate of Seller, the Agent or any Buyer, as soon as available, but inany event not later than sixty (60) days after the end of each fiscal quarterof Seller, the rent roll, operating statement and aging of accounts receivableand accounts payable for each Underlying Mortgaged Property and (B) withrespect to each Mortgage Asset not originated or master serviced by anAffiliate of Seller, the Agent or any Buyer, Seller shall use its good faithefforts to deliver as soon as practicable, the rent roll, operating statementand aging of accounts receivable and accounts payable for each UnderlyingMortgaged Property;

####  

#### (iv)          withrespect to each Mortgage Asset (not including RMBS), as soon as available, butin any event not later than sixty (60) days after the end of each fiscalquarter of Seller, a reportdetailing projections of Seller withrespect to such Mortgage Asset for the following six (6) month period,which shall include, in any event, a description of Seller’s internal riskrating, tenant ratings, tenant KMV ratings (if applicable) and/or surveillanceof such Mortgage Asset;

####  

#### (v)           withrespect to each Mortgage Asset to the extent received by any Seller from theobligor under any Mortgage Asset, as soon as available, but in any event notlater than thirty (30) days after receipt thereof, the annual balance sheetwith respect to such obligor;

 

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

####  

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

####  

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

####  

##### (A)          anyReportable Event, or and any request for a waiver underSection 412(d) of the Code or any successor provision thereof for anyPlan;

#####  

##### (B)           thedistribution under Section 4041(c) of ERISA or any successorprovision thereof of a notice of intent to terminate any Plan or any actiontaken by Seller or an ERISA Affiliate to terminate any Plan;

#####  

##### (C)           theinstitution by PBGC of proceedings under Section 4042 of ERISA or anysuccessor provision thereof for the termination of, or the appointment of atrustee to administer, any Plan; and

#####  

##### (D)          theadoption of an amendment to any Plan that would result in the loss of taxexempt status of the trust of which such Plan is a part if Seller or an ERISAAffiliate fails to provide timely security to such Plan in accordance with theprovisions of Section 401(a)(29) of the Code or Section 307 of ERISAor any successor provision thereof.

#####  

### (b)           Certificates;Other Information.  Seller shallfurnish to the Agent:

###  

#### (i)            concurrentlywith the delivery of the financial statements referred to inSection 9.01(a)(ii) above, a certificate of the independent certifiedpublic accountants reporting on such financial statements stating that inmaking the examination necessary therefore no knowledge was obtained of anyDefault or Event of Default caused by a failure to comply with the requirementsof Section 9.01(l)-(o), except as specified in such certificate;

####  

#### (ii)           concurrentlywith the delivery of the financial statements referred to inSection 9.01(a) above and with the delivery of each Confirmation, acertificate of a

 

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#### ResponsibleOfficer substantially in the form of Exhibit J hereto(A) stating that, to the best of such Responsible Officer’s knowledge,Seller during such period has observed or performed all of its covenants andother agreements in all material respects, and satisfied every materialcondition, contained in this Agreement and the related documents to beobserved, performed or satisfied by it, and that such Responsible Officer hasobtained no knowledge of any Default or Event of Default except as specified insuch certificate, (B) showing in detail the calculations supporting suchResponsible Officer’s certification of Seller’s compliance with therequirements of Sections 9.01(l)-(o), (C) showing in detail thecalculations projected with respect to the requirements ofSections 9.01(l)-(o) for the upcoming period of four (4) fiscalquarters, (D) attaching a current copy of Seller’s organizational chart(depicting and delineating all of such Guarantor’s consolidated andnon-consolidated Subsidiaries), (E) confirming that all of the CapitalStock and other equity and ownership interests of Seller’s Subsidiaries has beenpledged to the Agent for the ratable benefit of the Buyers and Seller has takenall such further actions as the Agent has requested in order to effect andperfect such pledge and (F) showing the calculations which demonstratecompliance with the Sub-Limits;

####  

#### (iii)          assoon as available, but in any event not later than ninety (90) days afterthe end of each fiscal year of Seller, a copy of the projections of the Sellersand the Parent of the operating budget and cash flow budget of the Sellers andthe Parent for the succeeding fiscal year, such projections to be accompaniedby a certificate of a Responsible Officer certifying that such projections havebeen prepared in good faith based upon reasonable assumptions;

####  

#### (iv)          promptlyupon receipt thereof, copies of all reports submitted to Seller by independentcertified public accountants in connection with each annual, interim or specialaudit of the books and records of Seller made by such accountants, including,without limitation, any management letter commenting on Seller’s internalcontrols submitted by such accountants to management in connection with theirannual audit;

####  

#### (v)           withinthirty (30) days of the end of each calendar quarter, a quarterly report, whichreport shall include, among other items, (1) a summary of Seller’sdelinquency and loss experience with respect to Mortgage Assets serviced bySeller, any Servicer or any designee of either, and (2) operatingstatements and the occupancy status of such Mortgaged Property and otherproperty level information, plus any such additional reports as the Agent mayreasonably request with respect to Seller or any Servicer’s servicing portfolioor pending originations of Mortgage Assets;

####  

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

####  

#### (vii)         nolater than the 15th day of each month, with respect to eachPurchased Asset, a Purchased Asset Data Summary, substantially in the form of Exhibit K,properly completed; and

 

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

####  

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

###  

### (d)           Existence,etc.  Seller shall:

###  

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

####  

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

####  

#### (iii)          keepadequate records and books of account, in which complete entries will be madein accordance with GAAP consistently applied;

####  

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

####  

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

 

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#### (vi)          permitrepresentatives of the Agent, upon reasonable notice (unless a Default shallhave occurred and is continuing, in which case, no prior notice shall berequired), during normal business hours, to examine, copy (at the Agent’sexpense) and make extracts from its books and records, to inspect any of itsProperties, and to discuss its business and affairs with its officers, all tothe extent reasonably requested by the Agent.

####  

### (e)           Prohibitionof Fundamental Changes; Fiscal Year and Accounting Method.  Seller shall not enter into any transactionof merger or consolidation or amalgamation, or liquidate, wind up or dissolveitself (or suffer any liquidation, winding up or dissolution), sell all orsubstantially all of its assets or acquire or form any Subsidiaries (other thanthe Subsidiaries set forth on Schedule 5 hereto and such additionalSubsidiaries which may from time to time become Sellers under this Agreement inaccordance with Section 9.01(hh)); provided, that Seller may mergeor consolidate with (A) any wholly owned subsidiary of the Seller or(B) any other Person if Seller is the surviving corporation, in eithercase, as long as, after giving effect thereto, no Default or Event of Defaultwould exist hereunder.  Seller shall notchange its respective fiscal year or method of accounting without the consentof the Agent and Seller shall give the Agent at least fifteen (15) days priorwritten notice of any such requested change, which notice shall include adetailed explanation of the changes intended to be made and pro forma financialstatements demonstrating the impact thereof.

###  

### (f)            MarginDeficit.  If at any time there existsa Margin Deficit, the Sellers shall cure same in accordance withSection 4.01.

###  

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

###  

#### (i)            promptlyupon receipt by Seller of notice or knowledge of the occurrence of any Defaultor Event of Default;

####  

#### (ii)           withrespect to any Purchased Asset, promptly upon receipt by Seller of anyprincipal prepayment (in full or partial) of such Purchased Asset;

####  

#### (iii)          withrespect to any Purchased Asset hereunder, promptly upon receipt of notice orknowledge by or of Seller that the Underlying Mortgaged Property has beenmaterially damaged by waste, fire, earthquake or earth movement, flood, tornadoor other casualty, or otherwise damaged so as to materially and adverselyaffect the Asset Value of such Purchased Asset; and

####  

#### (iv)          promptlyupon receipt of notice or knowledge by or of Seller of (i) any materialdefault related to any Purchased Item, (ii) any Lien or security intereston, or claim asserted against, any Purchased Item or (iii) any event orchange in circumstances which would reasonably be expected to have a MaterialAdverse Effect.

####  

Each notice pursuant to this Section shall beaccompanied by a statement of a Responsible Officer of Seller setting forthdetails of the occurrence referred to therein and stating what action Sellerhas taken or proposes to take with respect thereto.

 

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### (h)           Transactionswith Affiliates.  Seller may enterinto any transaction with an Affiliate; provided that such transactionis disclosed in writing in advance to Buyer and such transaction is upon fairand reasonable terms no less favorable to Seller than it would obtain in acomparable arm’s length transaction with a Person which is not an Affiliate; provided,further, that in no event shall Seller transfer to the Agent hereunderany Mortgage Asset acquired by Seller from an Affiliate of Seller unless aNon-Consolidation Opinion and a True Sale Opinion have been delivered to theAgent prior to such sale.

###  

### (i)            Limitationon Liens.  Immediately upon notice toSeller of a Lien or any circumstance which if adversely determined would bereasonably likely to give rise to a Lien (other than in favor of the Agent forthe benefit of the Buyers) on the Purchased Items, Seller will defend thePurchased Items against, and will take such other action as is necessary toremove, any Lien, security interest or claim on or to the Purchased Items(other than any security interest created under this Agreement), and Sellerwill defend the right, title and interest of the Buyers and the Agent in and toany of the Purchased Items against the claims and demands of all personswhomsoever.

###  

### (j)            Limitationson Indebtedness, Guarantees and Contingent Liabilities.  Seller shall not create, incur, assume orsuffer to exist any Indebtedness, Guarantees or Contingent Liabilities, exceptIndebtedness of the Seller to the Agent or any Buyer (or an Affiliate of theAgent or any Buyer).

###  

### (k)           Limitationon Distributions.  Seller shall notdeclare or make any payment on account of, or set apart assets for, a sinkingor other analogous fund for the purchase, redemption, defeasance, retirement orother acquisition of any equity or partnership interest of Seller, whether nowor hereafter outstanding, or make any other distribution in respect thereof,either directly or indirectly, whether in cash or property or in obligations ofSeller, except, so long as no Default, Event of Default or MarginDeficit shall have occurred and be continuing, Seller may (i) make suchpayments solely to the extent necessary to preserve the status of the Parent asa REIT and (ii) make additional payments subject to the followingrestrictions: (1) during the first year following the Effective Date ofthis Agreement, Seller may make payments in an amount equal to (a) 103% ofFFO only if a dividend payment is made to reimburse certain originalshareholders for expenses associated with the capitalization of Parent, or(b) 100% of FFO if no such dividend payment is made, and (2) afterthe first year following the Effective Date, Seller may make payments in anamount equal to 100% of FFO.

###  

### (l)            WeightedAverage of Purchase Rate and LTV.  NoSeller shall permit (i) the weighted average Purchase Rate of all MortgageAssets to exceed 85.0% or (ii) the Weighted Average LTV of all MortgageAssets to exceed 80.0%.

###  

### (m)          InterestCoverage.  Seller shall not permit,during any Test Period, the ratio of (i) the sum of Consolidated AdjustedEBITDA of all Sellers at any time such Test Period to (ii) ConsolidatedInterest Expense of all Sellers at any time such Test Period to be less than1.50 to 1.00.

 

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

###  

### (o)           PositiveNet Income.  Seller’s Net Incomeshall be positive at all times following the first anniversary of the EffectiveDate of this Agreement.

###  

### (p)           Servicer;Servicing Tape.  Seller shall causeeach Servicer to provide to the Agent and to the Custodian via ElectronicTransmission, a remittance report on a monthly basis by no later than the 15thday of each month (the “Reporting Date”) containing servicinginformation, including without limitation those fields reasonably requested bythe Agent from time to time, on a loan-by-loan basis and in the aggregate, withrespect to the Purchased Assets serviced hereunder by Seller or any Servicerfor the month (or any portion thereof) prior to the Reporting Date (suchremittance report, an “Asset Tape”). To the extent it has control, Seller shall not cause or permit any MortgageAssets to be serviced by any servicer other than a Qualified Servicer.

###  

### (q)           RequiredFilings.  Seller shall promptlyprovide the Agent with copies of all material documents which Seller or anySubsidiary of Seller is required to file with any regulatory body in accordancewith its regulations.

###  

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

###  

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

###  

### (t)            InconsistentAgreements.  Seller shall not, andshall not permit any of its Subsidiaries to, directly or indirectly, enter intoany material agreement containing any material provision which would beviolated or breached by any Transaction hereunder or by the performance bySeller of its obligations under any Repurchase Document.

###  

### (u)           EscrowImbalance.  Seller shall, no laterthan five (5) Business Days after learning (from any source) of anymaterial imbalance in any escrow account, fully and completely correct andeliminate such imbalance including, without limitation, depositing its ownfunds into such account to eliminate any overdrawal or deficit.

###  

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

 

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### the Agent may fromtime to time request.  Seller shall takeall such steps as the Agent deems necessary to perfect the security interestgranted in each Interest Rate Protection Agreement pursuant toSection 6.01(e) of this Agreement.

###  

### (w)          Separateness.  Seller shall (a) own no assets, and willnot engage in any business, other than the assets and transactions specificallycontemplated by this Agreement, whichassets and transactions specifically contemplated by this Agreement shall include, without limitation, the origination, acquisition, ownership,management, servicing, administration, operation, collection, enforcement,development, improvement, leasing, exchange, participation, securitization,sale, transfer and other disposition of all of any portion of the PurchasedAssets (including the Underlying Mortgaged Property and any business interestsrelated thereto), personal property necessary for and used or to be used inconnection with its ownership or operation of the Purchased Assets (includingthe Underlying Mortgaged Property and any business interests related thereto)or any portion thereof, cash, its interest under any associated Interest RateProtection Agreement, this Agreement, and any and all agreements, documents,insurance policies, reports and other instruments in any way relating to thePurchased Assets (including the Underlying Mortgaged Property and any businessinterests related thereto) or any portion thereof; (b) not incurany indebtedness or obligation, secured or unsecured, direct or indirect,absolute or contingent (including guaranteeing any obligation), other than(i) pursuant to this Agreement, and under the agreements, documents, insurance policies, reports and otherinstruments evidencing, securing or in any other way related to thePurchased Assets (including theUnderlying Mortgaged Property and any business interests related thereto),(ii) in connection with customaryrepresentations, warranties, indemnities and agreements in connection with theorigination, acquisition, ownership,management, servicing, administration,operation, collection, enforcement, financing, development, improvement, leasing, exchange, participation,securitization, sale, transferor other disposition of the Purchased Assets(including the Underlying Mortgaged Property and any business interests relatedthereto), and (iii) under zoning and other governmentalregulations, rules, prohibitions and ordinances and existing and proposed covenants, easements and other matters ofpublic record governing, burdening,benefiting or otherwise affectingany real property constitutingor underlying any of the Purchased Assets (including the Underlying MortgagedProperty and any business interests related thereto); (c) not makeany loans or advances to any third party, and shall not acquire obligations orsecurities of its affiliates; (d) pay its debts and liabilities(including, as applicable, shared personnel and overhead expenses) only fromits own assets; (e) comply with the provisions of its organizationaldocuments; (f) do all things necessary to observe organizationalformalities and to preserve its existence, and will not amend, modify orotherwise change its organizational documents, or suffer same to be amended,modified or otherwise changed, without the prior written consent of the Agent, not to unreasonably withheld;(g) maintain all of its books, records, financial statements and bankaccounts separate from those of its Affiliates (except that such financialstatements may be consolidated to the extent consolidation is required underGAAP consistently applied as in effect from time to time or as a matter of law)and file its own tax returns (except to the extent that either consolidation isrequired or permitted under applicable law or it is a tax disregarded entitynot required to file tax returns under applicable law); (h) be, and at alltimes will hold itself out to the public as, a legal entity separate anddistinct from any other entity (including any Affiliate), shall correct anyknown misunderstanding regarding its status as a separate entity, shall conductbusiness in its own name, shall not identify itself or any of its Affiliates asa division or part of the other and shall

 

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### maintain andutilize separate invoices and checks; (i) maintain adequate capital forthe normal obligations reasonably foreseeable in a business of its size andcharacter and in light of its contemplated business operations; (j) not engagein or suffer any change of ownership, dissolution, winding up, liquidation,consolidation or merger in whole or in part, except as otherwise permitted inaccordance herewith; (k) not commingle its funds or other assets with those ofany Affiliate or any other Person; (l) maintain its assets in such a mannerthat it will not be costly or difficult to segregate, ascertain or identify itsindividual assets from those of any Affiliate or any other Person; (m) not andwill not hold itself out to be responsible for the debts or obligations of anyother Person; and (n) shall not, without the vote of 100% of the Board ofDirectors or Board of Managers of Seller,(i) file or consent to the filing of any bankruptcy, insolvency orreorganization case or proceeding with respect to Seller; institute any proceedings under any applicable insolvencylaw or otherwise seek any relief under any laws relating to the relief fromdebts or the protection of debtors generally with respect to Seller; (ii) seek or consent to theappointment of a receiver, liquidator, assignee, trustee, sequestrator,custodian or any similar official for Selleror a substantial portion of its properties; or (iii) make any assignmentfor the benefit of Seller’screditors.

###  

### (x)            Maintenanceof Property; Insurance.  Seller shallkeep all property useful and necessary in its business in good working orderand condition; maintain with financially sound and reputable insurancecompanies insurance on all its property in at least such amounts and against atleast such risks as are usually insured against in the same general area bycompanies engaged in the same or a similar business, and furnish to the Agent, upon written request, fullinformation as to the insurance carried.

###  

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

###  

### (z)            ERISA.  Seller shall, and shall cause each of itsSubsidiaries to, comply in all material respects with all requirements of ERISAapplicable with respect to each Plan.

###  

### (aa)         Investments.  Neither Seller nor any Affiliate thereofshall acquire or maintain any right or interest in any Purchased Asset or UnderlyingMortgaged Property that is senior to or *pari passu* withthe rights and interests of the Agent or the Buyers therein under thisAgreement and the other Repurchase Documents.

###  

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

 

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### (cc)         MarginRegulations.  No part of the proceedsof any Transaction hereunder shall be used for any purpose which violates, orwould be inconsistent with, the provisions of Regulation T, U or X.

###  

### (dd)         Limitationon Lines of Business.  Seller shallnot enter into any business, either directly or through any Subsidiary, exceptfor those businesses in which Seller and its Subsidiaries are engaged on thedate of this Agreement.

###  

### (ee)         Paymentof Breakage Costs.  Seller shall paythe Agent, within one (1) Business Day after any request therefor from theAgent or any Buyer, for all Breakage Costs at any time sustained or incurred bythe Agent or any Buyer.

###  

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

###  

### (gg)         Internalizationof Management.  Seller shall notinternalize the management of Parent without the prior written consent of theAgent; provided, however, that such consent shall be granted by theAgent so long as (1) no Margin Deficit, Default or Event of Defaultexists, (2) Seller shall, at the time of such internalization, and willcontinue after such internalization to meet all covenants, conditions,representations and warranties, whether financial or otherwise, as set forth inany of the Repurchase Documents, and (3) Seller delivers to the Agent afairness opinion, in form and substance acceptable to the Agent, provided by anationally recognized expert in the related field acceptable to the Agent.

###  

### (hh)         AdditionalSellers.  Subject to the terms andconditions of this Agreement and the other Repurchase Documents, includingwithout limitation the separateness provisions set forth inSection 9.01(w) of this Agreement, any Seller may from time to time formor acquire additional Subsidiaries.  Inthe event that any Seller at any time forms or acquires any such Subsidiary,such Seller shall, within ten (10) days after such formation oracquisition, (i) notify the Agent in writing of such formation oracquisition, (ii) pledge in favor of the Agent for the ratable benefit ofthe Buyers of all of the Capital Stock and other equity and ownership interestsheld by the Seller in each such Subsidiary and shall take all such furtheraction as the Agent shall deem reasonably necessary or advisable (including,without limitation, the execution of financing statements on form UCC-1 and anyadditional security agreements or amendments thereto) in order to effect andperfect such pledge, (iii) in the event that such Subsidiary was formed oracquired for the purpose of acquiring or holding assets in contemplation of theentering into of Transactions hereunder, such Subsidiary shall deliver to theAgent a properly completed and duly executed Additional Seller JoinderAgreement substantially in the form of Exhibit N hereto, pursuantto which such additional Subsidiary shall become a Seller under this Agreementand (iv) the addition of such Subsidiary shall be indicated on the firstorganizational chart delivered to the Agent pursuant toSection 9.01(b)(ii) after such formation or acquisition.

 

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

###  

# **ARTICLE X**EVENTS OF DEFAULT; REMEDIES

# ** **

## Section 10.01                          Eventsof Default.  If any of the followingevents (each, an “Event of Default”) occur, each Seller and theAgent shall have the rights set forth in Section 10.02, as applicable:

 

### (a)                                  anySeller shall default in the payment of any Repurchase Price due or any amountunder Section 5.01 when due (whether at stated maturity, upon accelerationor at mandatory or optional prepayment); or

###  

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

###  

### (c)                                  anySeller shall default in the payment of any other amount payable by it hereunderor under any other Repurchase Document after written notification by Buyer ofsuch default, and such default shall have continued unremedied for five (5) BusinessDays; or

###  

### (d)                                 anyrepresentation, warranty or certification made or deemed made herein or in anyother Repurchase Document by any Seller or any certificate furnished to theAgent pursuant to the provisions hereof or thereof or any material informationwith respect to the Mortgage Assets furnished in writing by on behalf of anySeller shall prove to have been false or misleading in any material respect asof the time made or furnished (other than the representations and warrantiesset forth in Schedule 1, which shall be considered solely for thepurpose of determining the Asset Value of the Purchased Assets, unless (i) theSeller shall have made any such representations and warranties with actualknowledge that they were materially false or misleading at the time made; or (ii) anysuch representations and warranties have been determined in good faith by theAgent in its sole discretion to be materially false or misleading on a regularbasis); or

###  

### (e)                                  anySeller shall fail to comply with the requirements of Sections 9.01(c) -(ii), or (except as otherwise set forth in Sections 10.01(a), 10.01(b),10.01(c), or 10.01(d)) any Seller shall fail to observe or perform any othercovenant or agreement contained in this Agreement or any other RepurchaseDocument and such failure to observe or perform shall continue unremedied for aperiod of ten (10) Business Days after actual knowledge by the Selleror receipt of written notice from the Agent; provided, howeverthat to the extent such failure to observe or perform relates to the Seller’sfailure to deliver reports required under Section 9.01(a)(iii) or Section 9.01(b)(v)(2) andneither the Seller nor its Affiliates have received such reports, and theSeller has used commercially reasonable best efforts to obtain such reports asand when required hereunder, such failure shall not be deemed to be an Event ofDefault unless

 

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

###  

### (f)                                    afinal judgment or judgments for the payment of money in excess of $1,000,000 inthe aggregate shall be rendered against any Seller by one or more courts,administrative tribunals or other bodies having jurisdiction and the same shallnot be satisfied, discharged (or provision shall not be made for suchdischarge) or bonded, or a stay of execution thereof shall not be procured,within thirty (30) days from the date of entry thereof; or

###  

### (g)                                 anAct of Insolvency shall have occurred with respect to any Seller or any ofAffiliate thereof; or

###  

### (h)                                 theCustodial Agreement, the Account Control Agreement or any Repurchase Documentor a replacement therefor acceptable to the Agent shall for whatever reason beterminated by Seller or cease to be in full force and effect (other than due tocauses solely within the control of the Agent or Custodian), or theenforceability thereof shall be contested by any Seller; or

###  

### (i)                                     anySeller shall grant, or suffer to exist, any Lien on any Purchased Item (exceptany Lien in favor of the Agent for the benefit of the Buyers); or the PurchasedItems shall not have been sold to the Buyers, or the Liens contemplated herebyshall cease or fail to be first priority perfected Liens on any Purchased Itemsin favor of the Agent for the benefit of the Buyers (other than by result of anyaction or inaction by the Agent) or shall be Liens in favor of any Person otherthan the Agent for the benefit of the Buyers; or

###  

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

###  

### (k)                                  (i) anySeller or an ERISA Affiliate shall engage in any “prohibited transaction” (asdefined in Section 406 of ERISA or Section 4975 of the Code) involvingany Plan, (ii) any material “accumulated funding deficiency” (as definedin Section 302 of ERISA), whether or not waived, shall exist with respectto any Plan or any Lien in favor of the PBGC or a Plan shall arise on theassets of any Seller or any ERISA Affiliate, (iii) a Reportable Eventshall occur with respect to, or proceedings shall commence to have a trusteeappointed, or a trustee shall be appointed, to administer or to terminate, anyPlan, which Reportable Event or commencement of proceedings or appointment of atrustee is, in the reasonable opinion of Buyer, likely to result in thetermination of such Plan for purposes of Title IV of ERISA, (iv) any Planshall terminate for purposes of Title IV of ERISA, (v) any Seller or anyERISA Affiliate shall, or in the reasonable opinion of Buyer is likely to,incur any liability in connection with a withdrawal from, or the insolvency orreorganization of, a Multiemployer Plan or (vi) any other event orcondition shall occur or exist with respect to a Plan; and in each case inclauses (i)

 

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### through (vi) above, such event or condition, together with allother such events or conditions, if any, could reasonably be expected to have aMaterial Adverse Effect; or

###  

### (l)                                     anyPledge and Security Agreement shall cease to create a valid and perfectedsecurity interest in favor of the Agent for the benefit of the Buyers in theCapital Stock of the respective Seller, or any Seller shall so assert; or

###  

### (m)                               anyChange of Control shall occur; or

###  

### (n)                                 theManagement Contract shall be amended to increase the amount of compensationrequired to be paid to the Manager thereunder, or the Management Contract shallbe otherwise materially amended to the detriment of Parent, or the Managershall be terminated, in any case without the prior written consent of theAgent; or

###  

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

###  

## Section 10.02                          Remedies.  (a) If an Event of Default shall haveoccurred and be continuing, the following rights and remedies areavailable to the Agent.

 

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

####  

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

####  

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

#####  

##### (B)                                fromand after the exercise or deemed exercise of such option, to the extentpermitted by applicable law, the Repurchase Price with respect to each suchTransaction shall be determined by daily application of, on a 360 day per yearbasis for the actual number of days during the period from and including thedate of the exercise or deemed exercise of such option to but excluding thedate of

 

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

#####  

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

#####  

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

####  

#### (iv)                              Atany time on the Business Day following written notice to the Sellers (whichnotice may be the written notice given under Section 10.02(a)(i)), in theevent the Sellers have not repurchased all Purchased Assets, the Agent may (A) immediatelysell, without demand or further notice of any kind, at a public or private saleand at such price or prices as the Agent may deem satisfactory any or allPurchased Assets subject to such Transactions hereunder and apply the proceedsthereof to the aggregate unpaid Repurchase Price and any other amounts owing bythe Sellers hereunder or (B) in its sole discretion elect, in lieu ofselling all or a portion of such Purchased Assets, to give the Sellers creditfor such Purchased Assets in an amount equal to the Market Value of thePurchased Assets against the aggregate unpaid Repurchase Price and any other amountsowing by the Sellers hereunder.  Theproceeds of any disposition of Purchased Assets shall be applied *first* to the costs and expenses incurred by the Agent or anyBuyer in connection with any Seller’s default; *second*to costs of related covering and/or related hedging transactions; *third* to the aggregate Repurchase Price; and *fourth* to any other outstanding obligation of any Seller tothe Agent or any Buyer or any of their respective Affiliates under thisAgreement.

####  

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

####  

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

 

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

####  

#### (vii)                           The Agent shall have, inaddition to its rights hereunder, any rights otherwise available to it underany other agreement or applicable law.

####  

### (b)                                 TheAgent may exercise one or more of the remedies available to the Agentimmediately upon and during the continuance of an Event of Default and, exceptto the extent provided in Sections 10.02(a)(i) and 10.02(a)(iv), atany time thereafter without notice to any Seller.  All rights and remedies arising under thisAgreement as amended from time to time hereunder are cumulative and notexclusive of any other rights or remedies which the Agent may have.

###  

### (c)                                  TheAgent may enforce its rights and remedies hereunder without prior judicialprocess or hearing, and each Seller hereby expressly waives any defenses theSeller might otherwise have to require the Agent to enforce its rights byjudicial process.  Each Seller alsowaives any defense (other than a defense of payment or performance) the Sellermight otherwise have arising from the use of nonjudicial process, enforcementand sale of all or any portion of the Purchased Items, or from any otherelection of remedies.  Each Sellerrecognizes that nonjudicial remedies are consistent with the usages of thetrade, are responsive to commercial necessity and are the result of a bargainat arm’s-length.

###  

### (d)                                 Tothe extent permitted by applicable law each Seller shall be liable to the Agentfor interest on any amounts owing by the Seller hereunder, from the date theSeller becomes liable for such amounts hereunder until such amounts are (i) paidin full or (ii) satisfied in full by the exercise of the Agent’s rightshereunder.  Interest on any sum payableby any Seller to the Agent under this Section 10.02(d) shall be at arate equal to the Post-Default Rate.

###  

# **ARTICLE XI**SERVICING

# ** **

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

 

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

 

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

 

## Section 11.03                          ThirdParty Servicer.  With respect toMortgage Assets other than Junior Interests, CMBS, RMBS and Pass-ThroughInterests, if any Mortgage Assets are serviced by a person other than anAffiliate of the Sellers (such third party, the “Servicer”), (i) theSellers shall, in accordance with Section 3.02(g), provide to the Agent acopy of the servicing agreement, which shall be in form and substancereasonably acceptable to the Agent (the “Servicing Agreement”) andSellers shall require each Servicing Agreement to contain provisions relatingto the delivery of information and reports as will enable each Seller to complywith its obligations under this Agreement as and when required hereunder, and (ii) eachSeller hereby irrevocably assigns to the Agent, and the Agent’s successors andassigns, for the benefit of the Buyers, all of the Seller’s right, title andinterest in, to and under, and the benefits of, each Servicing Agreementpertaining to any Mortgage Assets.  EachSeller agrees that no Person shall assume the servicing obligations withrespect to any Mortgage Assets as successor to the Servicer unless suchsuccessor is a Qualified Servicer.  TheAgent hereby agrees that upon the repurchase of any Mortgage Asset, the Agentshall assign back to the Seller all of its right, title and interest in, to andunder, and the benefits of, any Servicing Agreement pertaining to such MortgageAsset.

 

## Section 11.04                          Eventof Default.  With respect to MortgageAssets other than Junior Interests, CMBS, RMBS and Pass-ThroughInterests, if the servicer of the Mortgage Assets is a Seller or an Affiliateof a Seller, upon the occurrence and during the continuance of an Event ofDefault, the Agent shall have the right to terminate the Seller or Affiliate asservicer of the Mortgage Assets and transfer servicing to its designee, at nocost or expense to the Agent, at any time thereafter.  If the servicer of the Mortgage Assets is nota Seller, the Agent shall have the right, as contemplated in the applicableServicer Notice, upon the occurrence of an Event of Default, to terminate anyapplicable Servicing Agreement and transfer servicing to its designee, at nocost or expense to the Agent, it being agreed that the Sellers will pay any andall fees required to terminate such Servicing Agreement and to effectuate thetransfer of servicing to the designee of the Agent.

 

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

 

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

 

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# **ARTICLE XII**THE AGENT

# ** **

## Section 12.01                          Appointment.  Each Buyer hereby irrevocably designates andappoints the Agent as its agent under this Agreement and the otherRepurchase Documents, and each Buyer hereby irrevocably authorizes the Agent,in such capacity, to take such action on its behalf under the provisions ofthis Agreement and the other Repurchase Documents and to exercise such powersand perform such duties as are expressly delegated to or conferred upon theAgent by the terms of this Agreement, the other Repurchase Documents and anyother instruments and agreements referred to herein or therein, together withsuch other powers as are reasonably incidental thereto.  The Agent agrees to act as such upon theexpress conditions contained in this Article XII.  Notwithstanding any provision to the contraryelsewhere in this Agreement, the Agent shall not have any duties orresponsibilities, except those expressly set forth herein, or any fiduciaryrelationship with any Buyer, and no implied covenants, functions,responsibilities, duties, obligations or liabilities shall be read into this Agreementor any other Repurchase Document or otherwise exist against the Agent.  The provisions of this Article XII aresolely for the benefit of the Agent and the Buyers, and neither the Manager norany Seller shall have any rights as a third party beneficiary of any of theprovisions hereof.

 

## Section 12.02                          Duties.

##  

### (a)                                  TheAgent shall be responsible for administering the Transactions on a day-to-daybasis.  In the exercise of suchadministrative duties, the Agent shall use the same diligence and standard of carethat is customarily used by the Agent with respect to similar transactionsentered into by the Agent solely for its own account.

###  

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

 

#### (i)                                     toenter into and fund Transactions on behalf of the Buyers in accordance with theprovisions of the Repurchase Documents;

####  

#### (ii)                                  toreceive all amounts paid by, or on behalf of, the Sellers and, except for feesto which the Agent is entitled pursuant to the Repurchase Documents orotherwise, to distribute all such funds to the respective Buyers as providedfor hereunder;

####  

#### (iii)                               to keep and maintaincomplete and accurate files and records of all material matters pertaining tothe Transactions, and make such files and records available for inspection andcopying by each Buyer and its respective employees and agents during normalbusiness hours upon reasonable prior notice to the Agent; and

####  

#### (iv)                              todo or omit doing all such other actions as may be reasonably necessary orincident to the implementation and administration of the Transactions and therights and duties delegated hereinabove.

####  

Notwithstanding theforegoing, written consent of each of the Buyers and the Agent shall berequired to:

 

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(1)                                  modifythe Purchase Rate of any Purchased Asset;

 

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

 

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

 

(4)                                  increasethe Purchase Amount of any Buyer over the amount thereof in effect (it beingunderstood and agreed that (A) a Buyer’s Purchase Amount will change prorata in accordance with any change in the Maximum Amount and (B) a waiverof any Default or Event of Default or mandatory reduction in the aggregatePurchase Amount of all Buyers shall not constitute a change in the terms of thePurchase Amount of any Buyer);

 

(5)                                  releaseany Seller or Guarantor from any of its obligations under the RepurchaseDocuments;

 

(6)                                  releaseall or any material part of the Purchased Items (other than as specificallyprovided in the Repurchase Documents);

 

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

 

(8)                                  reduceany percentage specified in, or otherwise modify, the definition of RequiredBuyers.

 

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

###  

## Section 12.03                          ExculpatoryProvisions.  Neither the Agent norany of its officers, directors, employees, agents, attorneys-in-fact orAffiliates shall be (i) liable for any action lawfully taken or omitted tobe taken by it or such Person under or in connection with this Agreement or anyother Repurchase Document (except for its or such Person’s own gross negligenceor willful misconduct) or (ii) responsible in any manner to any Buyer forany recitals, statements, representations or warranties made by any Seller orany officer thereof contained in this Agreement or any other RepurchaseDocument or in any certificate, report, statement or other document referred toor provided for in, or received by the Agent under or in connection with, thisAgreement or any other Repurchase Document or for the value, validity,effectiveness, genuineness, enforceability or sufficiency of this Agreement orany other Repurchase Document or for any failure of any Seller to perform itsobligations hereunder or thereunder.  TheAgent shall not be under any obligation to any Buyer to ascertain or to inquireas to the observance or performance of any of the agreements contained in, orconditions of, this Agreement or any other Repurchase Document, or to inspectthe properties, books or records of any Seller.

 

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## Section 12.04                          Relianceby Agent.  The Agent shall beentitled to rely, and shall be fully protected in relying, upon anynote, writing, resolution, notice, statement, consent, certificate, affidavit,letter, cablegram, telegram, telecopy, telex or teletype message, statement,order or other document or conversation believed by it to be genuine andcorrect and to have been signed, sent or made by the proper Person or Personsand upon the advice and statements of legal counsel (including, withoutlimitation, counsel to the Manager or any Seller), independent accountants andother experts selected by the Agent.  TheAgent shall be fully justified in failing or refusing to take any action underthis Agreement or any other Repurchase Document unless it shall first receivesuch advice or concurrence of the Required Buyers as the Agent deemsappropriate or it shall first be indemnified to its satisfaction by the Buyersagainst any and all liability and expense which may be incurred by it by reasonof taking, continuing or failing to take any such action.  The Agent shall in all cases be fullyprotected in acting, or in refraining from acting, under this Agreement and theother Repurchase Documents in accordance with a request of the Required Buyers,and such request and any action taken or failure to act pursuant thereto shallbe binding upon each Buyer.

 

## Section 12.05                          Noticeof Default.  The Agent shall not bedeemed to have knowledge or notice of the occurrence of any Default orEvent of Default hereunder unless the Agent has received notice from a Buyer ora Seller referring to this Agreement, describing such Default or Event ofDefault and stating that such notice is a “notice of default”.  In the event that the Agent receives any suchnotice from a Seller, the Agent shall give notice thereof to each Buyer.  The Agent shall take such action with respectto such Default or Event of Default as shall be reasonably directed by theBuyers; provided that unless and until the Agent shall have receivedsuch directions, the Agent may (but shall not be obligated to) take suchaction, or refrain from taking such action, with respect to such Default or Eventof Default as it shall deem advisable in the best interests of the Buyers; andthe Agent shall not incur liability to any Person by reason of so acting orrefraining from acting.  Without limitingthe foregoing, no Buyer shall have any right of action whatsoever against theAgent as a result of the Agent acting or refraining from acting hereunder orunder any other Repurchase Document in accordance with the instructions of theRequired Buyers.

 

## Section 12.06                          Non-Relianceon Agent and the Buyers.  Each Buyerexpressly acknowledges that neither the Agent nor any of its officers,directors, employees, agents, attorneys-in-fact or Affiliates has made anyrepresentations or warranties to it and that no act by the Agent hereinaftertaken, including any review of the affairs of any Seller, shall be deemed toconstitute any representation or warranty by the Agent to any Buyer.  Each Buyer represents to the Agent that ithas, independently and without reliance upon the Agent, and based on suchdocuments and information as it has deemed appropriate, made its own appraisalof and investigation into the business, operations, property, financial andother condition and creditworthiness of each Seller and made its own decisionto enter into this Agreement and each Transaction hereunder.  Each Buyer also represents that it will,independently and without reliance upon the Agent, and based on such documentsand information as it shall deem appropriate at the time, continue to make itsown credit analysis, appraisals and decisions in taking or not taking actionunder this Agreement and the other Repurchase Documents, and to make suchinvestigation as it deems necessary to inform itself as to the business,operations, property, financial and other condition and creditworthiness ofeach Seller.  Except for notices, reportsand other documents expressly required to be furnished by a Seller to the Agent

 

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

 

## Section 12.07                          Reimbursementand Indemnification.  To the extentthat the Agent is not fully reimbursed and indemnified by the Sellers,and without limiting the obligation of the Sellers to do so as otherwiseprovided in the Repurchase Documents, within five (5) Business Days afterthe delivery of a written request by the Agent to the Sellers for suchreimbursement or indemnification or, if earlier, upon receipt by the Agent of arefusal from the Sellers to comply with any such request, each Buyer agrees toreimburse and indemnify the Agent in its capacity as such from and against anyand all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements of any kind whatsoever whichmay at any time (including, without limitation, at any time following paymentof all Repurchase Prices) be imposed on, incurred by or asserted against theAgent in any way relating to or arising out of this Agreement, any of the otherRepurchase Documents or any documents contemplated by or referred to herein ortherein or the transactions contemplated hereby or thereby or any action takenor omitted by the Agent under or in connection with any of the foregoing; providedthat no Buyer shall be liable for the payment of any portion of suchliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements resulting solely from the Agent’s grossnegligence or willful misconduct.  Theagreements in this Section shall survive the payment of all RepurchasePrices and all other amounts payable hereunder.

 

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

 

## Section 12.09                          SuccessorAgent.  The Agent may resign as Agentupon thirty (30) days’ notice to the Buyers and the Sellers.  If the Agent shall resign as Agent under thisAgreement and the other Repurchase Documents, then the Buyers shall appoint asuccessor Agent, which successor Agent shall be subject to approval by theSellers (unless an Event of Default has occurred and is continuing), suchapproval not to be unreasonably withheld, conditioned or delayed, and any suchsuccessor Agent shall succeed to the rights, powers and duties of the Agent,and the term “Agent” shall mean such successorAgent effective upon such appointment and approval, and the former Agent’srights, powers and duties as Agent shall be terminated, without any other orfurther act or deed on the part of such former Agent or any of the parties tothis Agreement or any Transaction.  If nosuccessor Agent has been appointed and shall have accepted such appointmentwithin thirty (30) days after the retiring Agent’s giving notice of itsresignation, then the retiring Agent’s resignation shall nevertheless thereuponbecome effective and the Buyers shall perform all of the duties of the Agenthereunder until such time, if any, as the Buyers appoint and the Sellersapprove a successor Agent as provided for above.  After any retiring Agent’s resignation asAgent, the provisions of this Section shall inure to its benefit as to anyactions taken or omitted to be taken by it while it was Agent under thisAgreement and the other Repurchase Documents.

 

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## Section 12.10                          Dutiesin the Case of Enforcement.  In caseone or more Events of Default have occurred and shall be continuing, andwhether or not acceleration of Sellers’ obligations under the RepurchaseDocuments shall have occurred, the Agent shall, at the request, or may, uponthe consent, of the Required Buyers, and provided that the Buyers have given tothe Agent such additional indemnities and assurances against expenses andliabilities as the Agent may reasonably request, proceed to enforce theprovisions of this Agreement and the other Repurchase Documents respecting thesale or other disposition of all or any of the Purchased Items and the exerciseof any other legal or equitable rights or remedies as it may have hereunder orunder any other Repurchase Document or otherwise by virtue of applicable law,or to refrain from so acting if similarly requested by the RequiredBuyers.  The Agent shall be fullyprotected in so acting or refraining from acting upon the instruction of theRequired Buyers, and such instruction shall be binding upon all theBuyers.  The Required Buyers may directthe Agent in writing as to the method and the extent of any such foreclosure,sale or other disposition or the exercise of any other right or remedy, theBuyers hereby agreeing to indemnify and hold the Agent harmless from all costsand liabilities incurred in respect of all actions taken or omitted inaccordance with such direction, provided that the Agent need not comply withany such direction to the extent that the Agent reasonably believes the Agent’scompliance with such direction to be unlawful or commercially unreasonable inany applicable jurisdiction.  The Agentmay, in its discretion but without obligation, in the absence of direction fromthe Required Buyers, take such interim actions as it believes necessary topreserve the rights of the Buyers hereunder and in and to any Purchased Item,including but not limited to petitioning a court for injunctive relief,appointment of a receiver or preservation of the proceeds of any PurchasedItem.  Each of the Buyers acknowledgesand agrees that no individual Buyer may separately enforce or exercise any ofthe provisions of any of the Repurchase Documents, other than through theAgent.

 

# **ARTICLE XIII**MISCELLANEOUS

# ** **

## Section 13.01                          Indemnificationand Expenses.  (a)  Each Sellerjointly and severally, agrees to indemnify and hold harmless each of theBuyers, the Agent, the Sole Lead Arranger and their respective Affiliates andSubsidiaries and their present and former respective officers, directors,employees, agents, advisors and other representatives (each, an “IndemnifiedParty”) from and against any and all claims, damages, losses, liabilities,costs, and expenses (including, without limitation, attorneys’ fees anddisbursements) (“Costs”) that may be incurred by or asserted or awardedagainst any Indemnified Party, in each case relating to or arising out of thisAgreement, any other Repurchase Document or any transaction contemplated herebyor thereby, or any amendment, supplement or modification of, or any waiver orconsent under or in respect of, this Agreement, any other Repurchase Documentor any transaction contemplated hereby or thereby, except to the extent suchclaim, damage, loss, liability, cost, or expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted fromsuch Indemnified Party’s gross negligence or willful misconduct.  Costs subject to this Section 13.01shall include but not be limited to Costs incurred in connection with theviolation of any Environmental Law, the correction of any environmentalcondition or the removal of any Materials of Environmental Concern, in eachcase in any way affecting any Seller’s or any of its Affiliates’ properties orany of the Mortgage Assets.  Withoutlimiting the generality of the

 

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## foregoing, each Seller agreesto hold any Indemnified Party harmless from and indemnify such IndemnifiedParty against all Costs with respect to all Mortgage Assets relating to orarising out of any violation or alleged violation of any law, rule orregulation, except to the extent such claim, damage, loss, liability, cost, orexpense is found in a final, non appealable judgment by a court of competentjurisdiction to have resulted from such Indemnified Party’s gross negligence orwillful misconduct.  In the case of aninvestigation, litigation or other proceeding to which the indemnity in this Section 13.01applies, such indemnity shall be effective whether or not such investigation,litigation or proceeding is brought by any Seller, its directors, shareholdersor creditors or an Indemnified Party or any other Person or any IndemnifiedParty is otherwise a party thereto and whether or not any transactioncontemplated hereby is consummated.  EachSeller agrees not to assert any claim against any Indemnified Party, or any oftheir respective directors, officers, employees, attorneys, agents, and advisers,on any theory of liability, for special, indirect, consequential, or punitivedamages arising out of or otherwise relating to the Repurchase Documents, anyof the transactions contemplated herein or the actual or proposed use of theproceeds of any Transaction.  In anysuit, proceeding or action brought by an Indemnified Party in connection withany Mortgage Asset for any sum owing thereunder, or to enforce any provisionsof any Mortgage Asset, each Seller will save, indemnify and hold suchIndemnified Party harmless from and against all expense, loss or damagesuffered by reason of any defense, set-off, counterclaim, recoupment orreduction or liability whatsoever of the account debtor or obligor thereunder,arising out of a breach by any Seller of any obligation thereunder or arising outof any other agreement, indebtedness or liability at any time owing to or infavor of such account debtor or obligor or its successors from any Seller.  Each Seller also agrees to reimburse anIndemnified Party as and when billed by such Indemnified Party for all theIndemnified Party’s costs and expenses incurred in connection with theenforcement or the preservation of the Agent’s and each Buyer’s rights underthis Agreement, any other Repurchase Document or any transaction contemplatedhereby or thereby, including without limitation the fees and disbursements ofits counsel.

 

### (b)                                 EachSeller shall, whether or not any transaction contemplated hereby isconsummated: (i) pay as when billed by the Agent, and in any event withinthree (3) days after demand from the Agent, all reasonable out-of-pocketcosts and expenses (including, without limitation, all actual and reasonablefees and disbursements of outside legal counsel, accounting, consulting,brokerage or other similar professional fees or expenses, and any reasonablefees and expenses associated with travel or other costs relating to anyappraisals or examinations conducted in connection with any Transactions or anyproposed Purchased Assets, and the amount of such costs and expenses shall,until paid, bear interest at the greater of (x) 5.25% perannumin excess of the Prime Rate in effect from time to time or (y) 0.50% perannum in excess of the Federal Funds Rate in effect from time to time(or at such greater rate plus 6.00%, at any time the Post-Default Rate isapplicable to any Transaction)) (A) of the Agent in connection with thedevelopment, preparation, execution and delivery of, and any amendment,supplement or modification to, this Agreement, any other Repurchase Document orany other documents prepared in connection herewith or therewith and thedocuments and instruments referred to herein and therein (including, withoutlimitation, all reasonable fees, disbursements and expenses of Cadwalader,Wickersham & Taft LLP and/or other counsel incurred as of the date ofthis Agreement, which amount shall be deducted from the Purchase Price paid forthe first Transaction hereunder) and (B) of the Agent in connection withthe enforcement of this Agreement and the other Repurchase Documents and anyamendment, waiver or consent relating

 

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### hereto or thereto and the documents and instruments referred to hereinand therein; (ii) pay and hold each Indemnified Party harmless from andagainst any and all present and future stamp, documentary, issue, sales anduse, value added, property and other similar taxes (other than taxes imposed onnet income) with respect to the matters described in foregoing clause (i) andhold each Indemnified Party harmless from and against any and all liabilitieswith respect to or resulting from any delay or omission to pay such taxes; and (iii) indemnifyeach Indemnified Party from and hold each of them harmless against any and allCosts incurred by any of them as a result of, or arising out of, or in any wayrelated to, or by reason of, the entering into and/or performance of thisAgreement or any other Repurchase Document or the use of the proceeds of anyTransaction hereunder or the consummation of any transactions contemplatedherein or in any other Repurchase Document, including, without limitation, (A) thereasonable out of pocket due diligence, inspection, appraisals, testing andreview costs and expenses incurred by the Agent with respect to Mortgage Assetssubmitted by any Seller for purchase under this Agreement, including, but notlimited to, those actual out of pocket costs and expenses incurred by the Agentpursuant to Sections 11.01 through 11.06 and Section 13.11, (B) thereasonable fees and disbursements of counsel incurred in connection therewithand (C) any environmental liabilities with respect to any real estate orother assets held by any Seller or any of its Affiliates (but excluding anysuch Costs to the extent incurred by reason of the gross negligence or willfulmisconduct of the Person to be indemnified).

###  

### (c)                                  Withoutprejudice to the survival of any other agreement of any Seller hereunder, theagreements and obligations of each Seller contained in this Section 13.01shall survive the repayment of all amounts owing to the Agent and the Buyers byeach Seller under the Repurchase Documents and the termination of thecommitment of the Buyers hereunder.

###  

## Section 13.02                          SingleAgreement.  Each Seller, the Agentand each Buyer acknowledge that, and have entered hereinto and willenter into each Transaction hereunder in consideration of and in reliance uponthe fact that, all Transactions hereunder constitute a single business andcontractual relationship and that each has been entered into in considerationof the other Transactions.  Accordingly,each of the Sellers, the Agent and the Buyers agrees (i) to perform all ofits obligations in respect of each Transaction hereunder, and that a default inthe performance of any such obligations shall constitute a default by it in respectof all Transactions hereunder, (ii) that each of them shall be entitled toset off claims and apply property held by them in respect of any Transactionagainst obligations owing to them in respect of any other Transactionhereunder, (iii) that payments, deliveries, and other transfers made byeither of them in respect of any Transaction shall be deemed to have been madein consideration of payments, deliveries, and other transfers in respect of anyother Transactions hereunder, and the obligations to make any such payments,deliveries, and other transfers may be applied against each other and nettedand (iv) to promptly provide notice to the other after any such set off orapplication.

 

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

 

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## each other party.  Except as otherwise provided in thisAgreement and except for notices given under Article III (which shall beeffective only on receipt), all such communications shall be deemed to havebeen duly given when transmitted by Electronic Transmission or telecopy (uponreceipt of confirmation) or personally delivered or, in the case of a mailednotice, upon receipt.

 

## Section 13.04                          EntireAgreement; Severability.  ThisAgreement together with the other Repurchase Documents and the AccountControl Agreement constitute the entire understanding among the Sellers, theAgent and the Buyers with respect to the subject matter it covers and shallsupersede any existing agreements between the parties containing general termsand conditions for repurchase transactions involving Purchased Assets.  By acceptance of this Agreement, the Sellers,the Agent and the Buyers acknowledge that they have not made, and are notrelying upon, any statements, representations, promises or undertakings notcontained in this Agreement.  Eachprovision and agreement herein shall be treated as separate and independent fromany other provision or agreement herein and shall be enforceablenotwithstanding the unenforceability of any such other provision or agreement.

 

## Section 13.05                          Assignmentsand Participations; Hypothecation of Purchased Assets.

##  

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

###  

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

###  

### (c)                                  Any Buyer may at any time, upon notice to theSellers, sell to any Person which is an Eligible Transferee (each such Person,a “Participant”), participating interests in all or any part of suchBuyer’s interest in the Purchased Assets, or in any other interest of suchBuyer under this Agreement.  In the eventof any such sale of a participating interest, the obligations of the Buyerwhich sold the participating interest under this Agreement to the other partiesto this Agreement shall remain unchanged, such Buyer shall remain solelyresponsible for the performance thereof, and the other parties to thisAgreement shall continue to deal solely and directly with such Buyer inconnection with such Buyer’s rights and obligations under this Agreement andthe other Repurchase Documents.  In noevent shall any Participant have any

 

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### right to approve any amendment to or waiverof any provision of any Repurchase Document, or any consent to any departure bySeller therefrom, except to the extent that such amendment, waiver or consentwould reduce the Repurchase Price or Price Differential owing in respect of anyTransaction, or postpone the Repurchase Date of any Transaction for more thanone (1) year, in each case to the extent subject to suchparticipation.  Each Seller agrees thatif any amounts outstanding under this Agreement are due or unpaid, or shallhave been declared or shall have become due and payable upon the occurrence ofan Event of Default, each Participant shall, to the maximum extent permitted byapplicable law, be deemed to have the right of setoff in respect of itsparticipating interest in amounts owing under this Agreement to the same extentas if the amount of its participating interest were owing directly to it as aBuyer under this Agreement.  Each Selleralso agrees that each Participant shall be entitled to the benefits of, andbound by the obligations imposed on each Buyer in, Sections 5.02 and 13.01 withrespect to its participation in the Transactions outstanding from time to timeas if it were a Buyer; provided, that no Participant shall be entitledto receive any greater amount pursuant to any such Section than a Buyerwould have been entitled to receive in respect of the amount of theparticipation transferred by such Buyer to such Participant had no suchtransfer occurred.

###  

### (d)                                 Any Buyer may at any time, upon notice to theSellers, sell to any Person which is an Eligible Transferee (each such Person,an “Assignee” and together with any Participants, collectively, the “Transferees”,each a “Transferee”), all or a portion of all of such Buyer’s rights andobligations under this Agreement and the other Repurchase Documents.  Each assignment by a Buyer shall be madepursuant to an Assignment and Acceptance, substantially in the form of Exhibit P,with appropriate completions (an “Assignment and Acceptance”); provided,that such Assignee shall be (i) organized under the laws of the UnitedStates or a State thereof or the District of Columbia or (ii) a branch oragency of a bank or financial institution which is not organized under the lawsof the United States or a State thereof or the District of Columbia which (A) providesto the Agent a duly executed IRSForm W-8ECI and (B) represents that income with respect to theassignment will be “effectively connected” with a U.S. trade or business at alltimes it holds a beneficial interest in the assignment.  Upon such execution, delivery, acceptance andrecording, from and after the effective date determined pursuant to suchAssignment and Acceptance, (x) the Assignee thereunder shall be a party heretoand, to the extent provided in such Assignment and Acceptance, have the rightsand obligations of a Buyer hereunder with the Purchase Amount as set forththerein, and (y) the assigning Buyer thereunder shall, to the extent providedin such Assignment and Acceptance, be released from its obligations under thisAgreement (and, in the case of an Assignment and Acceptance covering all or theremaining portion of an assigning Buyer’s rights and obligations under thisAgreement, such assigning Buyer shall cease to be a party hereto), the obligationsof such assigning Buyer shall be deemed to be so reduced, and the Agent willgive prompt written notice thereof (including identification of the assigningBuyer, the Assignee and the amount of the assignment) to each of the parties tothis Agreement (but the assigning Buyer shall not have any liability for anyfailure to timely provide such notice). Any assignment or transfer by a Buyer of rights or obligations underthis Agreement that does not comply with this Section 13.05 shall betreated for purposes of this Agreement as a sale by such Buyer of aparticipation in such rights and obligations in accordance with clause (c) ofthis Section 13.05.

###  

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

 

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### relating to the Seller and its Affiliates orto any aspect of the Transactions that has been delivered to such Buyer by oron behalf of the Seller or any of its Affiliates pursuant to this Agreement orin connection with the credit evaluation of the Buyers and their Affiliatesprior to becoming a party to this Agreement; provided, that suchTransferee shall have agreed to be bound by the provisions of Section 13.14hereof.  Each Seller agrees to cooperatewith the applicable Buyer in connection with any such sale of participatinginterests or assignments and to enter into such restatements of, andamendments, supplements and other modifications to, this Agreement to giveeffect to any such sale or transfer; provided, that the Seller’s furtherconsent shall be required with respect to any such restatement, amendment,supplement or other modification which adversely changes any economic or othermaterial term of this Agreement.

###  

### (f)                                    For avoidance of doubt, the parties to thisAgreement acknowledge that nothing in this Agreement shall limit or otherwiserestrict the right of any Buyer to grant security interests in its rightshereunder, including, without limitation, (i) any security interest in allor any portion of any Buyer’s rights under this Agreement to any FederalReserve Bank in accordance with Regulation A of the Board of Governors of theFederal Reserve System and any Operating Circular issued by such FederalReserve Bank, and (ii) any pledge or assignment for the benefit of theassignor’s trustee and/or its investors or financing parties to secure itsobligations under any indenture, credit facility or Governing Documents towhich it is a party; provided, that no such pledge or assignment of asecurity interest shall release such Buyer from any of its obligationshereunder or substitute any such pledgee or assignee for such Buyer as a partyhereto.

###  

**SECTION 13.06****                                    GOVERNINGLAW. ****THIS AGREEMENT AND THE OTHERREPURCHASE****DOCUMENTSAND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BEGOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF NEW YORK.**

 

**SECTION 13.07****                                    SUBMISSIONTO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.**

 

### **(A)****                              ****ANY LEGAL ACTION OR PROCEEDINGAGAINST ANY SELLER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER REPURCHASEDOCUMENT TO WHICH SUCH SELLER IS A PARTY MAY BE BROUGHT IN THE COURTS OFTHE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEWYORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE SELLER HEREBYIRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY ANDUNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH SELLER IRREVOCABLY CONSENTS TO THESERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTIONOR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,POSTAGE PREPAID, TO THE SELLER AT ITS ADDRESS AS DESIGNATED IN ACCORDANCE WITH SECTION 13.03OF THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTERSUCH MAILING.  NOTHING HEREIN SHALLAFFECT THE RIGHT OF BUYER TO SERVE PROCESS**

 

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### **IN ANY OTHER MANNER PERMITTED BYLAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SELLER INANY OTHER JURISDICTION.**

###  

### **(B)****                              ****EACH SELLER HEREBY IRREVOCABLYWAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OFVENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR INCONNECTION WITH THIS AGREEMENT OR ANY OTHER REPURCHASE DOCUMENT BROUGHT IN THECOURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLYWAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTIONOR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENTFORUM.**

###  

### **(C)****                              ****EACH OF THE PARTIES TO THISAGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM ORCAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHERREPURCHASE DOCUMENTS OR ANY DEALINGS, COURSE OF DEALINGS, COURSE OF CONDUCTBETWEEN THEM, OR ANY STATEMENTS (WHETHER ORAL OR WRITTEN) OR OTHER ACTIONS OFANY PARTY, RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR THE RELATIONSHIPTHAT IS BEING ESTABLISHED HEREBY, INCLUDING, WITHOUT LIMITATION, ANY ACTION OFTHE AGENT OR ANY BUYER RELATING TO THE ADMINISTRATION OF THE TRANSACTIONS ORTHE ENFORCEMENT OF THE REPURCHASE DOCUMENTS, AND NONE OF THE PARTIES HERETOWILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURYTRIAL CANNOT BE OR HAS NOT BEEN WAIVED.**

###  

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

###  

### **(E)****                                ****EACH PARTY HERETO ACKNOWLEDGESTHAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESSRELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THISAGREEMENT, AND THAT EACH WILL CONTINUE TO**

 

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### **RELY ON THIS WAIVER IN THEIRRELATED FUTURE DEALINGS.  EACH PARTYHERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITHITS LEGAL COUNSEL AND THAT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIALRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.**

###  

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

###  

## Section 13.08                          Amendments;Waivers; Remedies Cumulative.  Exceptas otherwise expressly provided in this Agreement, any provision of thisAgreement may be modified or supplemented only by an instrument in writingsigned by each of the Sellers, the Agent and the Buyers.  Any provision of this Agreement may be waivedby the Agent; provided, that no failure or delay on the part of theAgent in exercising any right, power or privilege hereunder or under any otherRepurchase Document and no course of dealing with respect to any right, poweror privilege hereunder or under any other Repurchase Document shall operate asa waiver thereof; nor shall any single or partial exercise of any right, poweror privilege hereunder or under any other Repurchase Document preclude anyother or further exercise thereof or the exercise of any other right, power orprivilege hereunder or thereunder.  Therights, powers and remedies herein or in any other Repurchase Documentexpressly provided are cumulative and not exclusive of any rights, powers orremedies which the Agent or any Buyer would otherwise have.  No notice to or demand on any Seller in anycase shall entitle any Seller to any other or further notice or demand insimilar or other circumstances or constitute a waiver of the rights of theAgent or any Buyer to any other or further action in any circumstances withoutnotice or demand.  An Event of Defaultshall be deemed to be continuing unless expressly waived by the Agent inwriting.

 

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

 

### (b)                                 Itis understood that any party’s right to liquidate Purchased Assets delivered toit in connection with Transactions hereunder or to exercise any other remediespursuant to Section 10.02 hereof is a contractual right to liquidate suchTransaction as described in Sections 555 and 559 of Title 11 of the UnitedStates Code, as amended.

 

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### (c)                                  Theparties agree and acknowledge that if a party hereto is an “InsuredDepository Institution,” as such term is defined in the Federal DepositInsurance Act, as amended (“FDIA”), then each Transaction hereunder is a“Qualified Financial Contract,” as that term is defined in FDIA and anyrules, orders or policy statements thereunder (except insofar as the type ofPurchased Assets subject to such Transaction would render such definitioninapplicable).

###  

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

###  

## Section 13.10                          Jointand Several Liability.

##  

### (a)                                  EachSeller hereby acknowledges and agrees that the Seller shall be jointly andseverally liable to the Agent and each Buyer to the maximum extent permitted byapplicable law for all representations, warranties, covenants, obligations andindemnities of all of the Sellers hereunder.

###  

### (b)                                 EachSeller hereby agrees that, to the extent another Seller shall have paid morethan its proportionate share of any payment made hereunder, the Seller shall beentitled to seek and receive contribution from and against any other Sellerwhich has not paid its proportionate share of such payment; providedhowever,that the provisions of this clause shall in no respect limit the obligationsand liabilities of any Seller to the Agent or any Buyer, and, notwithstandingany payment or payments made by any Seller (the “paying Seller”) hereunder orany set-off or application of funds of the paying Seller by the Agent or anyBuyer, the paying Seller shall not be entitled to be subrogated to any of therights of the Agent or any Buyer against any other Seller or any collateralsecurity or guarantee or right of offset held by the Agent or any Buyer, norshall the paying Seller seek or be entitled to seek any contribution orreimbursement from the other Seller in respect of payments made by the payingSeller hereunder, until all amounts owing to the Agent or any Buyer by theSellers under the Repurchase Documents are paid in full.  If any amount shall be paid to the payingSeller on account of such subrogation rights at any time when all such amountsshall not have been paid in full, such amount shall be held by the payingSeller in trust for the Agent and any applicable Buyer, segregated from otherfunds of the paying Seller, and shall, forthwith upon receipt by the payingSeller, be turned over to the Agent and any applicable Buyer in the exact formreceived by the paying Seller (duly indorsed by the paying Seller to the Agentor any applicable Buyer, if required), to be applied against amounts owing tothe Agent and any Buyer by the Sellers under the Repurchase Documents, whethermatured or unmatured, in such order as the Agent may determine.

###  

### (c)                                  EachSeller shall remain obligated under this Section 13.10 notwithstandingthat, without any reservation of rights against the Seller and without noticeto or further assent by the Seller, any demand by the Agent for payment of anyamounts owing to the Agent or any Buyer by any other Seller under theRepurchase Documents may be rescinded by

 

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### the Agent and any the payment of any such amounts may be continued, andthe liability of any other party upon or for any part thereof, or anycollateral security or guarantee therefor or right of offset with respectthereto, may, from time to time, in whole or in part, be renewed, extended,amended, modified, accelerated, compromised, waived, surrendered or released bythe Agent, and this Agreement and the other Repurchase Documents and any otherdocuments executed and delivered in connection therewith may be amended,modified, supplemented or terminated, in whole or in part, as the Agent maydeem advisable from time to time, and any collateral security, guarantee orright of offset at any time held by the Agent for the payment of amounts owingto the Agent or any Buyer by the Sellers under the Repurchase Documents may besold, exchanged, waived, surrendered or released.  The Agent shall not have any obligation toprotect, secure, perfect or insure any Lien at any time held by it as securityfor amounts owing to the Agent or any Buyer by the Sellers under the RepurchaseDocuments, or any property subject thereto. When making any demand hereunder against any Seller, the Agent may, but shallbe under no obligation to, make a similar demand on any other Seller, and anyfailure by the Agent to make any such demand or to collect any payments fromany other Seller, or any release of such other Seller shall not relieve anySeller in respect of which a demand or collection is not made or the Sellersnot so released of their obligations or liabilities hereunder, and shall notimpair or affect the rights and remedies, express or implied, or as a matter oflaw, of the Agent or the Buyer against the Sellers.  For the purposes hereof “demand” shallinclude the commencement and continuance of any legal proceedings.

###  

### (d)                                 EachSeller waives any and all notice of the creation, renewal, extension or accrualof any amounts at any time owing to the Agent or any Buyer by any other Sellerunder the Repurchase Documents and notice of or proof of reliance by the Agentor the Buyers upon the Seller or acceptance of the obligations of the Sellerunder this Section 13.10, and all such amounts, and any of them, shallconclusively be deemed to have been created, contracted or incurred, orrenewed, extended, amended or waived, in reliance upon the obligations of theSellers under this Section 13.10; and all dealings between the Sellers, onthe one hand, and the Agent and the Buyers, on the other hand, likewise shallbe conclusively presumed to have been had or consummated in reliance upon theobligations of the Sellers under this Section 13.10.  Each Seller waives diligence, presentment,protest, demand for payment and notice of default or nonpayment to or upon theSeller with respect to any amounts at any time owing to the Agent or the Buyersby the Seller under the Repurchase Documents, other than such notices as areexpressly required to be given under this Agreement or any of the otherRepurchase Documents.  Each Sellerunderstands and agrees that it shall continue to be liable under this Section 13.10without regard to (a) the validity, regularity or enforceability of anyother provision of this Agreement or any other Repurchase Document, any amountsat any time owing to the Agent or the Buyers by the Sellers under theRepurchase Documents, or any other collateral security therefor or guarantee orright of offset with respect thereto at any time or from time to time held bythe Agent or any Buyer, (b) any defense, set-off or counterclaim (otherthan a defense of payment or performance) which may at any time be available toor be asserted by any Seller against the Agent or any Buyer, or (c) anyother circumstance whatsoever (with or without notice to or knowledge of theSellers) which constitutes, or might be construed to constitute, an equitableor legal discharge of the Sellers for any amounts owing to the Agent or theBuyers by the Sellers under the Repurchase Documents, or of the Sellers underthis Agreement, in bankruptcy or in any other instance.  When pursuing its rights and remedieshereunder against any Seller, the Agent and any Buyer may, but shall be underno obligation to, pursue such rights

 

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

###  

### (e)                                  Anythingherein or in any other Repurchase Document to the contrary notwithstanding, themaximum liability of any Seller hereunder in respect of the liabilities of theother Sellers under this Agreement and the other Repurchase Documents shall inno event exceed the amount which can be guaranteed by the Seller underapplicable federal and state laws relating to the insolvency of debtors.

###  

## Section 13.11                          PeriodicDue Diligence Review.  Each Selleracknowledges that the Agent has the right to perform continuing duediligence reviews with respect to the Purchased Assets, for purposes ofverifying compliance with the representations, warranties and specificationsmade hereunder, or otherwise, and the Seller agrees that upon reasonable (butno less than three (3) Business Day’s) prior notice unless an Event ofDefault shall have occurred and be continuing, in which case no notice isrequired, to any Seller, the Agent or its authorized representatives will bepermitted during normal business hours to examine, inspect, and make copies andextracts of, the Mortgage Asset Files and any and all documents, records,agreements, instruments or information relating to such Purchased Assets in thepossession or under the control of any Seller and/or the Custodian.  Each Seller also shall make available to theAgent a knowledgeable financial or accounting officer for the purpose ofanswering questions respecting the Mortgage Asset Files and the PurchasedAssets.  Without limiting the generalityof the foregoing, each Seller acknowledges that the Buyers may purchaseMortgage Assets from the Seller based solely upon the information provided bySeller to the Agent in the Underwriting Package and, with respect to WetMortgage Assets, the Transaction Request Package and the representations,warranties and covenants contained herein, and that the Agent, at its option,has the right at any time to conduct a partial or complete due diligence reviewon some or all of the Purchased Assets purchased in a Transaction, includingwithout limitation ordering new credit reports and new appraisals on therelated Mortgaged Properties and otherwise re-generating the information usedto originate such Purchased Asset.  TheAgent may underwrite such Purchased Assets itself or engage a mutually agreedupon third party underwriter to perform such underwriting.  Each Seller agrees to cooperate with theAgent and any third party underwriter in connection with such underwriting,including, but not limited to, providing the Agent and any third partyunderwriter with reasonable access to any and all documents, records,agreements, instruments or information relating to such Purchased Assets in thepossession, or under the control, of the Seller.  The Sellers shall pay all out-of-pocket costsand expenses (including fees and expenses of counsel, if any) incurred by theAgent in connection with the Agent’s activities pursuant to this Section 13.11(“Due Diligence Costs”); provided that, in the event that aDefault or an Event of Default shall have occurred, the Sellers shall reimbursethe Agent for all Due Diligence Costs for any and all reasonable out-of-pocketcosts and expenses incurred by the Agent in connection with any due diligencereview conducted by the the Agent pursuant to this

 

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

 

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

 

#### (i)                                     inthe name of the Seller, or in its own name, or otherwise, to take possession ofand endorse and collect any checks, drafts, notes, acceptances or otherinstruments for the payment of moneys due under any mortgage insurance or withrespect to any other Purchased Items and to file any claim or to take any otheraction or proceeding in any court of law or equity or otherwise deemedappropriate by the Agent for the purpose of collecting any and all such moneysdue under any such mortgage insurance or with respect to any other PurchasedItems whenever payable;

####  

#### (ii)                                  topay or discharge taxes and Liens levied or placed on or threatened against thePurchased Items;

####  

#### (iii)                               (A) to direct anyparty liable for any payment under any Purchased Items to make payment of anyand all moneys due or to become due thereunder directly to the Agent or as theAgent shall direct; (B) to ask or demand for, collect, receive payment ofand receipt for, any and all moneys, claims and other amounts due or to becomedue at any time in respect of or arising out of any Purchased Items; (C) tosign and endorse any invoices, assignments, verifications, notices and otherdocuments in connection with any Purchased Items; (D) to commence andprosecute any suits, actions or proceedings at law or in equity in any court ofcompetent jurisdiction to collect the Purchased Items or any proceeds thereofand to enforce any other right in respect of any Purchased Items; (E) todefend any suit, action or proceeding brought against the Seller with respectto any Purchased Items; (F) to settle, compromise or adjust without theSeller’s consent any suit, action or proceeding described in clause (E) aboveand, in connection therewith, to give such discharges or releases as the Agentmay deem appropriate; and (G) generally, to sell, transfer, pledge andmake any agreement with respect to or otherwise deal with any Purchased Itemsas fully and completely as though the Agent were the absolute owner thereof forall purposes, and to do, at the Agent’s option and the Seller’s expense, at anytime, and from time to time, all acts and things which the Agent deemsnecessary to protect, preserve or realize upon the Purchased Items and theAgent’s Liens thereon and to effect the intent of this Agreement, all as fullyand effectively as the Seller might do;

 

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#### (iv)                              todirect the actions of the Custodian with respect to the Purchased Items underthe Custodial Agreement; and

####  

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

####  

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

 

### (b)                                 Thepowers conferred on the Agent hereunder are solely to protect the interests ofthe Agent and the Buyers in the Purchased Items and Purchase Assets and shallnot impose any duty upon it to exercise any such powers.  The Agent shall be accountable only foramounts that it actually receives as a result of the exercise of such powers,and neither it nor any of its officers, directors, employees or agents shall beresponsible to any Seller for any act or failure to act hereunder, except forits or their own gross negligence or willful misconduct.

###  

## Section 13.13                          LegalMatters.  (a)  If there is anyconflict between the terms of this Agreement or any Transaction enteredinto hereunder and the Custodial Agreement, this Agreement shall prevail.

 

### (b)                                 ThisAgreement may be executed in any number of counterparts, all of which takentogether shall constitute one and the same instrument, and any of the partieshereto may execute this Agreement by signing any such counterpart.

###  

### (c)                                  Thecaptions and headings appearing herein are for included solely for convenienceof reference and are not intended to affect the interpretation of any provisionof this Agreement.

###  

### (d)                                 EachSeller hereby acknowledges that:

###  

#### (i)                                     ithas been advised by counsel in the negotiation, execution and delivery of thisAgreement and the other Repurchase Documents;

####  

#### (ii)                                  neitherthe Agent nor any Buyer has any fiduciary relationship to any Seller; and

####  

#### (iii)                               no joint venture existsbetween any Seller and the Agent or any Buyer.

####  

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

 

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## Terms are in the public domainother than due to a breach of this covenant, or (iii) in the event of aDefault or an Event of Default, the Agent or any Buyer determines suchinformation to be necessary or desirable to disclose in connection with themarketing and sales of the Purchased Assets or otherwise to enforce or exercisethe Agent’s or any Buyer’s rights hereunder; provided, that nothingherein shall prevent any party from disclosing any such information (i) toany other party to this Agreement, (ii) to any Transferee or potential Transfereewhich agrees to comply with the provisions of this Section, or (iii) toits Affiliates, employees, directors, agents, attorneys, accountants and otherprofessional advisors or other Persons deemed necessary or appropriate in thereasonable judgment of the disclosing party, in each case who are made aware ofand instructed to comply with the provisions of this Section 13.14; and, provided,further, that no disclosure made with respect to any Repurchase Documentshall include a copy of such Repurchase Document to the extent that a summarywould suffice in lieu thereof and in the event that it is necessary for a copyof any Repurchase Document to be disclosed, any specific terms set forth insuch Repurchase Document with respect to fees, pricing, advance rates and thelike shall be redacted therefrom prior to disclosure of such RepurchaseDocument.  The provisions set forth inthis section shall survive the termination of this Agreement for a periodof one year following such termination.

 

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

 

## Section 13.16                          Rightof Set-off.  In addition to anyrights now or hereafter granted under applicable law or otherwise, andnot by way of limitation of such rights, each Seller hereby grants to the Agentand each Buyer a right of offset, to secure repayment of all amounts owing tothe Agent or any Buyer by the Sellers under the Repurchase Documents, upon anyand all monies, securities, collateral or other property of the Seller and theproceeds therefrom, now or hereafter held or received by the Agent or any Buyeror any entity under the control of the Agent or any Buyer and their respectivesuccessors and assigns (including, without limitation, branches and agencies ofthe Agent, wherever located), for the account of the Seller, whether forsafekeeping, custody, pledge, transmission, collection, or otherwise, and alsoupon any and all deposits (general or specified) and credits of the Seller atany time existing.  Each of the Agent andthe Buyers is hereby authorized at any time and from time to time upon theoccurrence and during the continuance of an Event of Default, without notice toany Seller, to offset, appropriate, apply and enforce such right of offsetagainst any and all items hereinabove referred to against any amounts owing toany of the Buyers or the Agent by the Sellers under the Repurchase Documents,irrespective of whether any of the Buyers or the Agent shall have made anydemand hereunder and although such amounts, or any of them, shall be contingentor unmatured and regardless of any other collateral securing such amounts.  Each Seller shall be deemed directly indebtedto the Agent and the Buyers in the full amount of all amounts owing to theBuyers and the Agent by the Sellers under the Repurchase Documents, and Buyershall be entitled to exercise the rights of offset provided for above.  ANY AND ALL RIGHTS TO REQUIRE ANY OF THEBUYERS OR THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANYOTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING TO ANY OF THE BUYERS OR THEAGENT BY THE SELLERS

 

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

 

## Section 13.17                          Treatmentof Certain Information. Notwithstanding anything to the contrary contained herein or inany related document, all Persons may disclose to any and all Persons, withoutlimitation of any kind, the federal income tax treatment of any of thetransactions contemplated by this Agreement or any other related document, anyfact relevant to understanding the federal tax treatment of such transactionsand all materials of any kind (including opinions or other tax analyses)relating to such federal income tax treatment.

 

## Section 13.18                          IncreasedCosts, Illegality, Etc.  (a)  Inthe event that the Agent shall have determined (which determinationshall, absent manifest error, be final and conclusive and binding upon allparties hereto):

 

#### (i)                                     onany date that, by reason of any changes arising after the date of thisAgreement affecting the interbank Eurodollar market, adequate and fair means donot exist for ascertaining the applicable Pricing Rate on the basis providedfor in the definition of Eurodollar Rate; or

####  

#### (ii)                                  atany time, that the Agent or the Buyers shall incur increased costs or reductionsin the amounts received or receivable hereunder with respect to any Transactionbecause of (x) any change since the date of this Agreement in any applicablelaw or governmental rule, regulation, order or request (whether or not havingthe force of law) (or in the interpretation or administration thereof andincluding the introduction of any new law or governmental rule, regulation,order or request), such as, for example, but not limited to, (A) a changein the basis of taxation of payments to the Agent or the applicable Buyer inrespect of any amounts payable hereunder (except for changes in the rate of taxon, or determined by reference to, the net income or profits of the Agent orthe applicable Buyer imposed by the jurisdiction in which its principal officeis located) or (B) a change in official reserve requirements, but, in allevents, excluding reserves required under Regulation D to the extentcovered by Section 13.18(c) and/or (y) other circumstances arisingafter the date hereof, affecting the Agent or any Buyer or the interbankEurodollar market or the position of the Agent or any Buyer in such market; or

####  

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

####  

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

 

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such notice by the Agent no longer exist, and anyTransaction Request or Election Notice that is pending shall be deemedrescinded by the Seller, and (y) in the case of clause (ii) above, theSellers shall pay to the Agent for the ratable benefit of the Buyers, uponwritten demand therefor, such additional amounts (in the form of an increasedrate of, or a different method of calculating, interest or otherwise as theAgent in its sole discretion shall determine) as shall be required tocompensate the Agent and the Buyers for such increased costs or reductions inamounts received or receivable hereunder (a written notice as to the additionalamounts owed to the Agent and the Buyers, showing the basis for the calculationthereof, submitted to the Sellers by the Agent shall, absent manifest error, befinal and conclusive and binding on all the parties hereto).

 

### (b)                                 Ifthe Agent determines at any time that any applicable law or governmental rule,regulation, order or request (whether or not having the force of law) adoptedafter the date hereof concerning capital adequacy, or any change ininterpretation or administration thereof by any governmental authority, centralbank or comparable agency, will have the effect of increasing the amount ofcapital required or expected to be maintained by the Buyers based on theexistence of the Buyers’ obligations hereunder, then the Sellers shall pay tothe Agent, for the ratable benefit of the Buyers, upon its written demandtherefor, such additional amounts as shall be required to compensate the Buyersfor the increased cost to the Buyers as a result of such increase ofcapital.  In determining such additionalamounts, the Agent will act reasonably and in good faith and will use averagingand attribution methods which are reasonable and consistent with its policiesand the policies of its holding company with respect to capital adequacy, providedthat the Agent’s determination of compensation owing under this Section 13.18(b) shall,absent manifest error, be final and conclusive and binding on all the partieshereto.  The Agent, upon determining thatany additional amounts will be payable pursuant to this Section 13.18(b),will give prompt written notice thereof to the Sellers, which notice shall showthe basis for calculation of such additional amounts, although the failure togive any such notice shall not, subject to Section 13.18(d), release ordiminish any of the Seller’s obligations to pay or cause the payment ofadditional amounts pursuant to this Section 13.18(b).

###  

### (c)                                  Inthe event that the Agent shall determine (which determination shall, absentmanifest error, be final and conclusive and binding on all the parties hereto)at any time that by reason of Regulation D the Buyers are required to maintainreserves in respect of any liabilities during any period that it has aTransaction, the Pricing Rate applicable to which is based upon the EurodollarRate, outstanding (each such period, a “Eurocurrency Reserve Period”),then the Agent shall promptly give notice (by telephone confirmed in writing)to the Sellers of such determination specifying the additional amounts requiredto indemnify the Buyers against the cost of maintaining such reserves (suchwritten notice to provide a computation of such additional amounts), and theSellers shall directly pay to the Agent, for the benefit of the Buyers, suchspecified amounts as additional interest at the time that it is otherwiserequired to pay interest in respect of such Transaction or, if later demandedby the Agent, promptly on demand.  TheAgent agrees that if it gives notice to the Sellers of the existence of aEurocurrency Reserve Period, it shall promptly notify the Sellers of anytermination thereof, at which time the Sellers shall cease to be obligated topay additional Price Differential to the Agent pursuant to the first sentenceof this Section 13.18(c) until such time, if any, as a subsequentEurocurrency Reserve Period shall occur.

 

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## Section 13.19                          IntendedThird Party Beneficiaries.  EachAffiliated Hedge Counterparty is an intended third party beneficiary ofSections 5.01 and 6.01 of this Agreement and no provision set forth in any suchSection (including in any related definition) shall be amended orotherwise modified without the written consent of each Affiliated HedgeCounterparty.

 

[SIGNATURES FOLLOW]

 

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INWITNESS WHEREOF, the parties have entered into this Agreement as of the dateset forth above.

 
|   | **GRAMERCY  WAREHOUSE FUNDING I  LLC**, a Delaware limited liability company,  as a Seller |
|--------|--------------------------------------------------------------------------------------------|
|   |                                                                                       |   |
|   | By:                                                                                        | GKK CAPITAL LP, a  Delaware limited  partnership, its sole member and manager |
|   |                                                                                       |   |
|   |                                                                                       | By: | Gramercy Capital Corp.,  a Maryland  corporation, its general partner |
|   |                                                                                       |   |   |
|   |                                                                                       |   |   |
|   |                                                                                       |   | By: |   |   |
|   |                                                                                       |   |   | Name: Hugh Hall |
|   |                                                                                       |   |   | Title: Chief Operating  Officer |
|   |                                                                                       |   |   |   |
|   |                                                                                       |   |   |   |
|   |                                                                                       | Address for Notices: |
|   |                                                                                       | 420 Lexington Avenue |
|   |                                                                                       | New York, New York  10170 |
|   |                                                                                       | Attention: Bob Foley |
|   |                                                                                       | Telecopier No: (212)  297-1090 |
|   |                                                                                       | Telephone No: |

 

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|   | **WACHOVIA BANK, NATIONAL  ASSOCIATION**, as the  Agent and as a Buyer |
|--------|------------------------------------------------------------------------|
|   |                                                                   |   |   |   |
|   |                                                                   |   |   |   |
|   | By:                                                                    |   |   |
|   |                                                                   | Name: |
|   |                                                                   | Title: |
|   |                                                                   |   |   |   |
|   |                                                                   | Address for Notices: |
|   |                                                                   | 301 South College  Street |
|   |                                                                   | Charlotte, North  Carolina 28288 |
|   |                                                                   | Attn: |
|   |                                                                   | Telecopier No.: |
|        |                                                                        |  |  |  |  |

 

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|   | **[BUYER]**, as a Buyer |
|--------|-------------------------|
|   |                    |   |   |   |
|   |                    |   |   |   |
|   | By:                     |   |   |
|   |                    | Name: |
|   |                    | Title: |
|   |                    |   |   |   |
|   |                    | Address for Notices: |
|   |                    | [                       ] |
|   |                    | Attn: |
|   |                    | Telecopier No.: |
|        |                         |  |  |  |  |

 

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