Exhibit 10.2







Exhibit 10.2

Execution Version






THIS MASTER REPURCHASE AND SECURITIES CONTRACT, dated as of March 31, 2010 (this
“Agreement”), is made by and between STARWOOD PROPERTY MORTGAGE SUB-1, L.L.C., a Delaware
limited liability company (as more specifically defined below, “Seller”) and WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association (as more specifically defined below,
“Buyer”). Seller and Buyer (each a “Party”) hereby agree as follows:



ARTICLE 1




APPLICABILITY




Section 1.01 Applicability. Subject to the terms and conditions of the Repurchase
Documents, on the Closing Date and at the request of Seller, the Parties may enter into
transactions in which Seller agrees to sell, transfer and assign to Buyer certain Assets and all
related rights in and interests related to such Assets on a servicing released basis, against the
transfer of funds by Buyer representing the Purchase Price for such Assets, with a simultaneous
agreement by Buyer to transfer to Seller and Seller to repurchase such Assets in a repurchase
transaction at a date not later than the Maturity Date, against the transfer of funds by Seller
representing the Repurchase Price for such Assets.



ARTICLE 2




DEFINITIONS AND INTERPRETATION




“40 Act”: The Investment Company Act of 1940, as amended, restated or modified from
time to time




“Accelerated Repurchase Date”: Defined in Section 10.02.



“Account Control Agreement”: A bank account control agreement in favor of Buyer with
respect to any bank account related to a Purchased Asset, substantially in the form attached as
Exhibit G hereto.



“Actual Knowledge”: With respect to any Person, the actual knowledge of such Person
without further inquiry or investigation; provided, that for the avoidance of doubt, with respect
to Seller, Guarantor, Manager, the Intermediate Starwood Entities and Sub-Servicer, such actual
knowledge shall include the knowledge of all such Persons collectively and each of their respective
employees, officers, directors and agents (and with respect to agents, solely to those agents who
worked on the acquisition of the Assets or this Transaction) of any of them.




“Additional Advance”: Defined in Section 3.03.



“Affiliate”: With respect to any Person, any other Person directly or indirectly
Controlling, Controlled by, or under common Control with, such Person.


 












 





“Alternative Rate”: A per annum rate based on an index approximating the behavior of
LIBOR, as determined by Buyer in its discretion.



“Anti–Terrorism Laws”: Any Requirements of Law relating to money laundering or
terrorism, including Executive Order 13224 signed into law on September 23, 2001, the regulations
promulgated by the Office of Foreign Assets Control of the Treasury Department, and the Patriot
Act.



“Applicable Percentage”: For each Purchased Asset as of any date, the applicable
percentage determined by Buyer for such Purchased Asset on the Closing Date and set forth in the
Confirmation for such Purchased Asset, up to the Maximum Applicable Percentage.



“Asset”: Any Whole Loan or, in the case of the B Note Assets, a Junior Interest, the
Underlying Mortgaged Property for which is included in the categories for Types of Mortgaged
Property.



“B Note Assets”: Shall mean the Purchased Assets set forth on Exhibit H
attached hereto.




“Bankruptcy Code”: Title 11 of the United States Code.




“Blank Assignment Documents”: Defined in Section 6.02(j).



“Book Value”: For any Purchased Asset as of any date, an amount, as certified by
Seller in the related Transaction Request and Confirmation, equal to the lesser of (a) the
outstanding principal amount or par value thereof as of such date, and (b) the price that Seller
initially paid or advanced in respect thereof, minus principal payments received by Seller, and as
further reduced by losses realized and writedowns taken by Seller.



“Business Day”: Any day other than a Saturday or a Sunday (a) on which banks in the
States of New York, California or North Carolina are not authorized or obligated by law or
executive order to be closed, or (b) if the term “Business Day” is used in connection with the
determination of LIBOR, dealings in Dollar deposits are carried on in the London interbank market.



“Buyer”: Wells Fargo Bank, National Association, in its capacity as Buyer under this
Agreement and the other Repurchase Documents.



“Buyer’s Margin Percentage”: For any Purchased Asset as of any date, the percentage
equivalent of the quotient obtained by dividing one (1) by the Applicable Percentage for such
Purchased Asset as of such date.



“Capital Lease Obligations”: With respect to any Person, the amount of all
obligations of such Person to pay rent or other amounts under a lease of property to the extent and
in the amount that such obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person.


 


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



“Carlson, Bank One and Constellation Purchased Assets”: Each of the Purchased Assets
described on Exhibit I attached hereto.



“Change of Control”: The occurrence of any of the following events: (a) prior to an
internalization of management by Guarantor, if Manager is no longer the manager of Guarantor; (b)
after such time as Guarantor is internally managed, any “person” or “group” (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) shall become, or obtain rights (whether by means of warrants, options or otherwise) to
become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a percentage of the total voting power of all classes of Capital Stock
of Guarantor entitled to vote generally in the election of directors, of 20% or more; (c) change in
Control of Manager and/or Starwood Capital Group Global, L.P. from the Person or Persons who are
directly or indirectly Controlling such entities on the date hereof; or (d) each of either
Guarantor or the Intermediate Starwood Entities shall cease to own and control, of record and
beneficially, directly or indirectly 100% of the outstanding Capital Stock of Seller.
Notwithstanding the foregoing, Buyer shall not be deemed to approve or to have approved any
internalization of management by Guarantor as a result of this definition or any other provision
herein, other than to the extent actually approved pursuant to Section 8.14 or Section
10.01(g).



“Class”: With respect to an Asset, such Asset’s classification as one of the
following: Whole Loan or Junior Interest.



“Closing Certificate”: A true and correct certificate in the form of
Exhibit D, executed by a Responsible Officer of Seller.




“Closing Date”: March 31, 2010.




“Code”: The Internal Revenue Code of 1986, as amended.



“Collection Account”: A segregated interest-bearing account established at Collection
Account Bank, in the name of Seller, pledged to Buyer and subject to a Controlled Account
Agreement.



“Collection Account Bank”: Wells Fargo Bank, National Association, or any other bank
requested by Seller and approved by Buyer in its discretion.



“Commitment Fee”: An amount equal to twenty-five basis points (0.25%) multiplied by
the Maximum Amount.



“Compliance Certificate”: A true and correct certificate in the form of
Exhibit E, executed by a Responsible Officer of Seller.


 


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“Confirmation”: A purchase confirmation in the form of Exhibit B, duly
completed, executed and delivered by Seller and Buyer in accordance with Section 3.01.



“Contingent Liabilities”: With respect to any Person as of any date, all of the
following as of such date: (a) liabilities and obligations (including any Guarantee Obligations) of
such Person in respect of “off–balance sheet arrangements” (as defined in the Off–Balance Sheet
Rules defined below), (b) obligations, including Guarantee Obligations, whether or not required to
be disclosed in the footnotes to such Person’s financial statements, guaranteeing in whole or in
part any Non–Recourse Indebtedness, lease, dividend or other obligation, excluding, however, (i)
contractual indemnities (including any indemnity or price–adjustment provision relating to the
purchase or sale of securities or other assets), and (ii) guarantees of non–monetary obligations
which have not yet been called on or quantified, of such Person or any other Person, and
(c) forward commitments or obligations to fund or provide proceeds with respect to any loan or
other financing which is obligatory and non–discretionary on the part of the lender. The amount of
any Contingent Liabilities described in the preceding clause (b) shall be deemed to be (i) with
respect to a guarantee of interest or interest and principal, or operating income guarantee, the
sum of all payments required to be made thereunder (which, in the case of an operating income
guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through
(x) in the case of an interest or interest and principal guarantee, the stated date of maturity of
the obligation (and commencing on the date interest could first be payable thereunder), or (y) in
the case of an operating income guarantee, the date through which such guarantee will remain in
effect, and (ii) with respect to all guarantees not covered by the preceding clause (i), an amount
equal to the stated or determinable amount of the primary obligation in respect of which such
guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as recorded on the
balance sheet and in the footnotes to the most recent financial statements of such Person.
“Off–Balance Sheet Rules” means the Disclosure in Management’s Discussion and Analysis
About Off–Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release
Nos. 33–8182; 34–47264; FR–67 International Series Release No. 1266 File No. S7–42–02, 68 Fed. Reg.
5982 (Feb. 5, 2003) (codified at 17 CFR Parts 228, 229 and 249).



“Contractual Obligation”: With respect to any Person, any provision of any securities
issued by such Person or any indenture, mortgage, deed of trust, deed to secure debt, contract,
undertaking, agreement, instrument or other document to which such Person is a party or by which it
or any of its property or assets are bound or are subject.



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



“Controlled Account Agreement”: A control agreement with respect to the Collection
Account and the Servicing Agreement Account, each, dated as of the date of this Agreement, each
among Seller, Buyer and Collection Account Bank, each of which agreements shall be substantially in
the form of Exhibit J attached hereto.


 


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“Credit Event”: Defined in the Fee and Pricing Letter, which definition is
incorporated herein by reference.



“Current Mark-to-Market Value”: For any Purchased Asset as of any date, the market
value for such Purchased Asset as of such date as determined by Buyer in its discretion (a) with
reference to the market value of the Underlying Mortgaged Property, and (b) taking into account
such other criteria (other than current interest rates and spreads) as and to the extent that Buyer
deems appropriate in its discretion, including, as appropriate, market conditions, credit quality,
liquidity of position, subordination and delinquency status and aging, which market value, in each
case, may be determined to be zero. The Current Mark-to-Market Value of each Purchased Asset as of
the Closing Date will be set forth in on the Confirmation executed in connection with the related
Transaction, and such Current Mark-to-Market Value will not be adjusted by Buyer for any Purchased
Asset after the Closing Date unless a Credit Event shall occur with respect to the related
Purchased Asset, provided that there shall be no restrictions on Buyer’s ability to recalculate,
solely for internal purposes, the Market Value of any Purchased Asset at any time.



“Custodial Agreement”: The Custodial Agreement, dated as of the date hereof, among
Buyer, Seller and Custodian, substantially in the form of Exhibit K.



“Custodian”: Wells Fargo Bank, National Association, or any successor permitted by
the Custodial Agreement.



“Debt Yield”: With respect to any Purchased Asset(s) and for any relevant calendar
quarter, the percentage equivalent of the quotient obtained by dividing (i) the product of (A) the
underwritten net cash flow for such period from the related Mortgaged Property or Mortgaged
Properties securing the Purchased Asset(s), as determined by Buyer in its sole and absolute
discretion, multiplied by (B) a fraction, (1) the numerator of which shall be 360, and (2) the
denominator of which shall be the number of days in the relevant Test Period, by (ii) the
then-current Purchase Price of such Purchased Asset(s) on the last day of such calendar quarter.



“Debt Yield Test”: (i) The Underlying Mortgaged Property pledged to secure all
Purchased Assets other than the Life Time Purchased Assets must at all times and during all
relevant time periods generate a Debt Yield of at least fifteen percent (15.0%), except that, at
all times when the only Purchased Assets on the Facility are the Carlson, Bank One and
Constellation Purchased Assets, the Purchased Assets must at all times and during all relevant time
periods generate a Debt Yield of at least twelve percent (12%), and (ii) the Debt Yield for the
Underlying Mortgaged Property pledged to secure the Life Time Purchased Assets, must at all times
and during all relevant time periods generate a Debt Yield of at least thirty percent (30%).



“Default”: Any event which, with the giving of notice or the lapse of time, or both,
would become an Event of Default.



“Default Rate”: As of any date, the Pricing Rate in effect on such date plus 400
basis points (4.00%), determined after any Repurchase Date on the basis of periods corresponding to
Pricing Periods.


 


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“Defaulted Asset”: Any Asset or Purchased Asset, as applicable, (a) that is thirty
(30) or more days (or, in the case of payments due at maturity, one (1) day) delinquent in the
payment of principal, interest, fees, distributions or any other amounts payable under the related
Mortgage Loan Documents, (b) for which there is a non–monetary default under the related Mortgage
Loan Documents beyond any applicable notice or cure period, (c) as to whose Underlying Obligor an
Insolvency Event has occurred, or (d) for which Seller, Servicer or Sub-Servicer has received
notice of the foreclosure or proposed foreclosure of any Lien on the related Underlying Mortgaged
Property; provided that with respect to any Junior Interest, in addition to the foregoing such
Junior Interest will also be considered a Defaulted Asset to the extent that the Underlying
Mortgage Loan would be considered a Defaulted Asset as described in this definition.



“Derivatives Contract”: Any rate swap transaction, basis swap, credit derivative
transaction, forward rate transaction, commodity swap, commodity option, forward commodity
contract, equity or equity index swap or option, bond or bond price or bond index swap or option or
forward bond or forward bond price or forward bond index transaction, interest rate option, forward
foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap
transaction, cross–currency rate swap transaction, currency option, spot contract, or any other
similar transaction or any combination of any of the foregoing (including any options to enter into
any of the foregoing), whether or not any such transaction is governed by or subject to any master
agreement, including any obligations or liabilities thereunder.



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




“Dollars” and “$”: Lawful money of the United States of America.




“Early Repurchase Date”: Defined in Section 3.05.



“EBITDA”: With respect to any Person and any Test Period, an amount equal to the sum
of (a) Net Income (or loss) of such Person (prior to any impact from minority interests or joint
venture net income and before deduction of any dividends on preferred stock of such Person), plus
the following (but only to the extent actually included in determination of such Net Income (or
loss)): (i) depreciation and amortization expense, (ii) Interest Expense, (iii) income tax
expense, and (iv) extraordinary or non-recurring gains and losses, plus (b) such Person’s
proportionate share of Net Income of the joint venture investments and unconsolidated Affiliates of
such Person, all with respect to such Test Period, plus (c) amounts deducted in accordance with
GAAP in respect of other non-cash expenses in determining such Net Income for such Person.



“Eligible Asset”: An Asset:


 


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(a) that is listed on the attached Exhibit L;




(b) with respect to which no Representation Breach exists;




(c) that is not a Defaulted Asset;




(d) with respect to which there are no future funding obligations on the part of
Seller, Buyer or any other Person;




(e) whose Underlying Mortgaged Property is located in the United States, whose
Underlying Obligors are domiciled in the United States, and all obligations thereunder and
under the Underlying Mortgage Documents are denominated and payable in Dollars;




(f) whose Underlying Obligors are not Sanctioned Entities; and




(g) that is secured by a perfected, first priority security interest on a “stabilized”
commercial or multi-family property; provided, that notwithstanding the failure of
an Asset or Purchased Asset to conform to the requirements of this definition, Buyer may, in
its discretion and subject to such terms, conditions and requirements and Applicable
Percentage adjustments as Buyer may require in its discretion, designate in writing any such
non–conforming Asset or Purchased Asset as an Eligible Asset, which designation (1) may
include a temporary or permanent waiver of one or more Eligible Asset requirements, and
(2) shall not be deemed a waiver of the requirement that all other Assets and Purchased
Assets must be Eligible Assets (including any Assets that are similar or identical to the
Asset or Purchased Asset subject to the waiver).



“Eligible Assignee”: Any of the following Persons designated by Buyer for purposes of
Section 18.08(c): (a) a bank, financial institution, pension fund, insurance company or
similar Person, an Affiliate of any of the foregoing, and an Affiliate of Buyer, and (b) any other
Person to which Seller has consented; provided, that such consent of Seller shall not be
unreasonably withheld, delayed or conditioned, and shall not be required at any time when a Event
of Default exists. Such Person shall provide to Seller such duly executed IRS forms as Seller
reasonably requests.



“Environmental Laws”: Any federal, state, foreign or local statute, law, rule,
regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in
effect, and any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment, employee health and
safety or hazardous materials, including CERCLA, RCRA, the Federal Water Pollution Control Act, the
Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the Oil Pollution Act
of 1990, the Emergency Planning and the Community Right-to-Know Act of 1986, the Hazardous Material
Transportation Act, the Occupational Safety and Health Act, and any state and local or foreign
counterparts or equivalents.



“Equity Interests”: With respect to any Person, (a) any share, interest,
participation and other equivalent (however denominated) of capital stock of (or other ownership,
equity or profit interests in) such Person, (b) any warrant, option or other right for the



 


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purchase or other acquisition from such Person of any of the foregoing, (c) any security
convertible into or exchangeable for any of the foregoing, and (d) any other ownership or profit
interest in such Person (including partnership, member or trust interests therein), whether voting
or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized
or otherwise existing on any date.




“ERISA”: The Employee Retirement Income Security Act of 1974.




“Event of Default”: Defined in Section 10.01.



“Excess Financing Capacity”: For each Purchased Asset, initially the dollar amount,
if any, specified on the related Confirmation, as such dollar amount reduces on a dollar for dollar
basis with each related Additional Advance under Section 3.03.



“Excluded Assets”: Each of the assets previously owned by Seller, and commonly known
as UTC Executive Plaza, Avenue East Cobb and Valley View Mall.



“Fee and Pricing Letter”: The letter agreement, dated as of the date of this
Agreement, by and between Buyer and Seller.



“Fixed Charge Coverage Ratio”: With respect to any Person and for any Test Period at
any time, the EBITDA for such period, divided by the Fixed Charges for the same period.



“Fixed Charges”: With respect to any Person and for any Test Period at any time, the
sum of (a) debt service, (b) all preferred dividends, (c) Capital Lease Obligations paid or accrued
during such period, (d) capital expenditures (if any), and (e) any amounts payable under any Ground
Lease.



“Funding Expiration Date”: The earliest of (a) May 31, 2010, (b) any Accelerated
Repurchase Date, and (c) any date on which the Funding Expiration Date shall otherwise occur in
accordance with the provisions hereof or Requirements of Law.



“Funding Period”: The period from the Closing Date to and including the Funding
Expiration Date.



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



“Governing Documents”: With respect to any Person, its articles or certificate of
incorporation or formation, by-laws, partnership, limited liability company, operating or trust
agreement and/or other organizational, charter or governing documents.



“Governmental Authority”: Any (a) nation or government, (b) state or local or other
political subdivision thereof, (c) central bank or similar monetary or regulatory authority,
(d) Person, agency, authority, instrumentality, court, regulatory body, central bank or other body
or entity exercising executive, legislative, judicial, taxing, quasi–judicial, quasi–legislative,
regulatory or administrative functions or powers of or pertaining to government, (e) court or



 


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arbitrator having jurisdiction over such Person, its Affiliates or its assets or properties,
(f) stock exchange on which shares of stock of such Person are listed or admitted for trading,
(g) accounting board or authority that is responsible for the establishment or interpretation of
national or international accounting principles, and (h) supra-national body such as the European
Union or the European Central Bank.



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



“Guarantee Agreement”: A Guarantee Agreement, substantially in the form of Exhibit
M, made by Guarantor in favor of Buyer.




“Guarantee Default”: Defined in Section 8.13.



“Guarantee Obligation”: With respect to any Person (the “guaranteeing
person”), any obligation of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit) to induce the creation of the obligations for which the
guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either
case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends, Contractual
Obligation, Derivatives Contract or other obligations or indebtedness (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation, or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum
stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the
maximum stated liability set forth in the instrument embodying such Guarantee Obligation);
provided, that in the absence of any such stated amount or stated liability, the amount of
such Guarantee Obligation shall be such guaranteeing person’s maximum anticipated liability in
respect thereof as reasonably determined by such Person in good faith.


 


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



“Income”: With respect to any Purchased Asset, all of the following (in each case
with respect to the entire par amount of the Asset represented by such Purchased Asset and not just
with respect to the portion of the par amount represented by the Purchase Price advanced against
such Asset): (a) all Principal Payments, (b) all Interest Payments, and (c) all other income,
distributions, receipts, payments, collections, prepayments, recoveries, proceeds (including
insurance and condemnation proceeds) and other payments or amounts of any kind paid, received,
collected, recovered or distributed on, in connection with or in respect of such Purchased Asset,
including principal payments, interest payments, principal and interest payments, prepayment fees,
extension fees, exit fees, defeasance fees, transfer fees, make whole fees, late charges, late fees
and all other fees or charges of any kind or nature, premiums, yield maintenance charges,
penalties, default interest, dividends, gains, receipts, allocations, rents, interests, profits,
payments in kind, returns or repayment of contributions, net sale, foreclosure, liquidation,
securitization or other disposition proceeds, insurance payments, settlements and proceeds;
provided, that any amounts which under the applicable Mortgage Loan Documents are required
to be deposited into and held in escrow or reserve to be used for a specific purpose, such as taxes
and insurance, shall not be included in the term “Income” unless and until (i) an event of
default exists under such Mortgage Loan Documents, (ii) the holder of the related Purchased Asset
has exercised or is entitled to exercise rights and remedies with respect to such amounts,
(iii) such amounts are no longer required to be held for such purpose under such Mortgage Loan
Documents, or (iv) such amounts may be applied to all or a portion of the outstanding indebtedness
under such Mortgage Loan Documents, and provided, further, that “Income”
from Junior Interests shall include, without limitation, Seller’s share of all amounts payable in
respect of the Junior Interest and the Underlying Mortgage Loan pursuant to the Junior Interest
Documents.



“Indebtedness”: With respect to any Person and any date, all of the following with
respect to such Person as of such date: (a) obligations in respect of money borrowed (including
principal, interest, assumption fees, prepayment fees, yield maintenance charges, penalties, exit
fees, contingent interest and other monetary obligations whether choate or inchoate and whether by
loan, the issuance and sale of debt securities or the sale of property or assets to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase such property or
assets, or otherwise), (b) obligations, whether or not for money borrowed (i) represented by notes
payable, letters of credit or drafts accepted, in each case representing extensions of credit,
(ii) evidenced by bonds, debentures, notes or similar instruments, (iii) constituting purchase
money indebtedness, conditional sales contracts, title retention debt instruments or other similar
instruments, upon which interest charges are customarily paid or that are issued or assumed as full
or partial payment for property or services rendered, or (iv) in connection with the issuance of
Preferred Equity or trust preferred securities, (c) Capital Lease Obligations, (d) reimbursement
obligations under any letters of credit or acceptances (whether or not the same have been presented
for payment), (e) Off–Balance Sheet Obligations, (f) obligations to purchase, redeem, retire,
defease or otherwise make any payment in respect of any mandatory redeemable stock issued by such
Person or any other Person (inclusive of forward equity contracts), valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (g) as
applicable, all obligations of



 


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such Person (but not the obligation of others) in respect of any keep well arrangements,
credit enhancements, contingent or future funding obligations under any Purchased Asset or any
obligation senior to any Purchased Asset, unfunded interest reserve amount under any Purchased
Asset or any obligation that is senior to any Purchased Asset, purchase obligation, repurchase
obligation, sale/buy–back agreement, takeout commitment or forward equity commitment, in each case
evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be
satisfied by the issuance of Equity Interests (other than mandatory redeemable stock)), (h) net
obligations under any Derivatives Contract not entered into as a hedge against existing
indebtedness, in an amount equal to the Derivatives Termination Value thereof, (i) all Non–Recourse
Indebtedness, recourse indebtedness and all indebtedness of other Persons which such Person has
guaranteed or is otherwise recourse to such Person, (j) all indebtedness of another Person secured
by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien (other than certain Permitted Liens) on property or assets owned by such
Person, even though such Person has not assumed or become liable for the payment of such
indebtedness or other payment obligation; provided, that if such Person has not assumed or become
liable for the payment of such indebtedness, then for the purposes of this definition the amount of
such indebtedness shall not exceed the market value of the property subject to such Lien, (k) all
Contingent Liabilities, (l) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person or obligations of such Person to pay the
deferred purchase or acquisition price of property or assets, including contracts for the deferred
purchase price of property or assets that include the procurement of services, (m) indebtedness of
general partnerships of which such Person is liable as a general partner (whether secondarily or
contingently liable or otherwise), and (n) obligations to fund capital commitments under any
Governing Document, subscription agreement or otherwise.




“Indemnified Amount”: Defined in Section 13.01.




“Indemnified Person”: Defined in Section 13.01.



“Independent Director” or “Independent Manager”: An individual who has prior
experience as an independent director, independent manager or independent member with at least
three (3) years of employment experience and who is provided by CT Corporation, Corporation Service
Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company,
Lord Securities Corporation or, if none of those companies is then providing professional
Independent Directors or Independent Managers, another nationally recognized company reasonably
approved by Buyer, in each case that is not an Affiliate of Seller and that provides professional
Independent Directors and Independent Managers and other corporate services in the ordinary course
of its business, and which individual is duly appointed as a member of the board of directors or
board of managers of such corporation or limited liability company and is not, has never been, and
will not while serving as Independent Director or Independent Manager be, any of the following:




(a) a member, partner, equityholder, manager, director, officer or employee of Seller,
any Principal, any of their respective equityholders or Affiliates (other than (a) as an
Independent Director or Independent Manager of Seller or Principal and (b) as an Independent
Director or Independent Manager of an Affiliate of Seller or Principal or any


 


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of their respective single-purpose entity equityholder that is not in the direct chain
of ownership of Seller or Principal and that is required by a creditor to be a single
purpose bankruptcy remote entity, provided that such Independent Director or
Independent Manager is employed by a company that routinely provides professional
Independent Directors or Independent Managers);




(b) a creditor, supplier or service provider (including provider of professional
services) to Seller, any single-purpose entity equityholder, or any of their respective
equityholders or Affiliates (other than a nationally-recognized company that routinely
provides professional Independent Directors or Independent Managers and other corporate
services to Seller, any single-purpose entity equityholder, or any of their respective
equityholders or Affiliates in the ordinary course of business);




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




(d) a Person that controls (whether directly, indirectly or otherwise) any of the
individuals described in the preceding clauses (a), (b) or (c).



An individual who otherwise satisfies the preceding definition other than clause (a) by reason
of being the Independent Director or Independent Manager of a “special purpose entity” affiliated
with Seller or Principal shall not be disqualified from serving as an Independent Director or
Independent Manager of Seller if the fees that such individual earns from serving as Independent
Directors or Independent Managers of affiliates of Seller or Principal in any given year constitute
in the aggregate less than 5% of such individual’s annual income for that year.




“Ineligible Asset”: Defined in Section 3.03.



“Initial Interest Rate Protection Agreement”: The ISDA Master Agreement, including
the Schedule and Credit Support Annex thereto, and the Confirmation entered into thereunder, each
dated as of March 1, 2010, between Deutsche Bank AG and Guarantor, without giving effect to any
amendment, supplement or modification thereto after the date thereof.



“Insolvency Action”: With respect to any Person, the taking by such Person of any
action resulting in an Insolvency Event, other than solely under clause (g) of the definition
thereof.



“Insolvency Event”: With respect to any Person, (a) the filing of a decree or order
for relief by a court having jurisdiction in the premises with respect to such Person or any
substantial part of its assets or property in an involuntary case under any applicable Insolvency
Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of its assets or
property, or ordering the winding–up or liquidation of such Person’s affairs, and such decree or
order shall remain unstayed and in effect for a period of thirty (30) days, (b) the commencement by
such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect,
(c) the consent by such Person to the entry of an order for relief in an involuntary case under any
Insolvency Law, (d) the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such
Person



 


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or for any substantial part of its assets or property, (e) the making by such Person of any
general assignment for the benefit of creditors, (f) the admission in a legal proceeding of the
inability of such Person to pay its debts generally as they become due, (g) the failure by such
Person generally to pay its debts as they become due, or (h) the taking of action by such Person in
furtherance of any of the foregoing.



“Insolvency Proceeding”: Any case, action or proceeding before any court or other
Governmental Authority relating to any Insolvency Event.



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



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



“Interest Payments”: With respect to any Purchased Asset and any period, all payments
of interest, income, receipts, dividends, and any other collections and distributions received from
time to time in connection with such Purchased Asset.



“Intermediate Starwood Entities”: Individually or collectively, Principal and SPT
Real Estate Sub I, LLC, a Delaware limited liability company.



“Internal Control Event”: Material weakness in, or fraud that involves management or
other employees who have a significant role in, the internal controls of Seller, Manager, any
Intermediate Starwood Entity or Guarantor over financial reporting, in each case as described in
the Securities Laws.



“Investment”: With respect to any Person, any acquisition or investment (whether or
not of a controlling interest) by such Person, whether by means of (a) the purchase or other
acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit
to, capital contribution to, guaranty or credit enhancement of Indebtedness of, or purchase or
other acquisition of any Indebtedness of, another Person, including any partnership or joint
venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of assets of another Person that constitute the business or a division
or operating unit of another Person. Any binding commitment or option to make an Investment in any
other Person shall constitute an Investment. Except as expressly provided otherwise, for purposes
of determining compliance with any covenant contained in this Agreement, the amount of any
Investment shall be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.



“Irrevocable Redirection Notice”: A notice in form of acceptable to Buyer in its
discretion, sent by Seller or by Servicer or Sub-Servicer on Seller’s behalf directing the
remittance of Income with respect to a Purchased Asset to the Servicing Agreement Account or
Collection Account, as applicable, and executed by the applicable Underlying Obligor, Servicer,
Sub-Servicer or other Person with respect to such Purchased Asset.


 


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“Junior Interest”: (a) A junior participation interest in a performing commercial
real estate loan, or (b) a “B-note” in an “A/B structure” in a performing commercial real estate
loan.



“Junior Interest Documents”: Shall mean, for any Junior Interest, the Junior Interest
Note together with any co-lender agreements, participation agreements and/or other intercreditor
agreements or other documents governing or otherwise relating to such Junior Interest.



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



“Knowledge”: With respect to any Person, means collectively (i) the actual knowledge
of such Person, (ii) notice of any fact, event, condition or circumstance that would cause a
reasonably prudent Person to conduct an inquiry that would give such Person actual knowledge,
whether or not such Person actually undertook such an inquiry, and (iii) all knowledge that is
imputed to a Person under any statute, rule, regulation, ordinance, or official decree or order.



“LIBOR”: For any Pricing Period, the rate (expressed as a percentage per annum and
rounded upward, if necessary, to the next nearest 1/100 of 1%) for deposits in Dollars, for a
one-month period, that appears on Reuters Screen LIBOR01 (or the successor thereto) as the London
interbank offered rate for deposits in Dollars as of 11:00 a.m., London time, on the Pricing Rate
Reset Date for such Pricing Period. If such rate does not appear on Reuters Screen LIBOR01 as of
11:00 a.m., London time, on such Pricing Rate Reset Date, Buyer shall request the principal London
office of any of the Reference Banks in the London interbank market selected by Buyer to provide
such banks’ offered quotation (expressed as a percentage per annum) to leading banks in the
international Eurocurrency market for deposits in Dollars for a one-month period as of 11:00 a.m.,
London time, on such Pricing Rate Reset Date for amounts of not less than the aggregate Repurchase
Price of all Purchased Assets. If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, Buyer shall request any three major banks in New York City selected by Buyer to provide
such banks’ rate (expressed as a percentage per annum) for loans in Dollars to leading banks in the
international Eurocurrency market for a one-month period as of approximately 11:00 a.m., New York
City time on the applicable Pricing Rate Reset Date for amounts of not less than the aggregate
Repurchase Price of all Purchased Assets. If at least two such rates are so provided, LIBOR shall
be the arithmetic mean of such rates.



“LIBO Rate”: For any Pricing Period, the rate (expressed as a percentage per annum
and rounded upward, if necessary, to the next nearest 1/100 of 1%) determined for such Pricing
Period in accordance with the following formula:



LIBOR for such Pricing

Period






     1 – Reserve Requirement     





 


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“Lien”: Any mortgage, statutory or other lien, pledge, charge, right, claim, adverse
claim, attachment, levy, hypothecation, assignment, security interest, UCC financing statement or
encumbrance of any kind on or otherwise relating to any Person’s assets or properties in favor of
any other Person or any preference, priority or other security agreement or preferential
arrangement of any kind.



“Life Time Purchased Assets”: Each of the Purchased Assets described on Exhibit
N attached hereto.



“Liquidity”: With respect to Guarantor and on any relevant date, the amount of cash
or cash equivalents held by Guarantor.




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




“Margin Call”: Defined in Section 4.01.




“Margin Deficit”: Defined in Section 4.01.



“Market Value”: Defined in the Fee and Pricing Letter, which definition is
incorporated herein by reference.



“Material Adverse Effect”: A material adverse effect on or material adverse change in
or to (a) the property, assets, business, operations, financial condition, credit quality or
prospects of Seller, any Intermediate Starwood Entity or Guarantor, (b) the ability of Seller to
pay and perform the Repurchase Obligations, (c) the validity, legality, binding effect or
enforceability of any Repurchase Document, Mortgage Loan Document, Purchased Asset or security
interest granted hereunder or thereunder, (d) the rights and remedies of Buyer or any Indemnified
Person under any Repurchase Document, Mortgage Loan Document or Purchased Asset, or (e) the
perfection or priority of any Lien granted under any Repurchase Document or Mortgage Loan Document.



“Material Modification”: Any material extension, amendment, waiver, termination,
rescission, cancellation, release or other modification to the terms of, or any collateral,
guaranty or indemnity for, or the exercise of any material right or remedy of a holder (including
all lending, corporate and voting rights, remedies, consents, approvals and waivers) of, any
Purchased Asset or Mortgage Loan Document.



“Materials of Environmental Concern”: Any hazardous, toxic or harmful substances,
materials, wastes, pollutants or contaminants defined as such in or regulated under any
Environmental Law.



“Maturity Date”: The earliest of (a)  May 31, 2013, (b) any Accelerated Repurchase
Date, and (c) any date on which the Maturity Date shall otherwise occur in accordance with the
Repurchase Documents or Requirements of Law.



“Maximum Amount”: $280,000,000; provided, that on and after the earlier of the
Funding Expiration Date and the Maturity Date, the Maximum Amount on any date shall be the
aggregate Repurchase Price outstanding for all Transactions as of such earlier date, as such



 


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amount declines over time as Purchased Assets are subsequently repurchased and Margin Deficits
are subsequently satisfied.



“Maximum Applicable Percentage”: For each Purchased Asset as of any date, the maximum
applicable percentage determined by Buyer for such Purchased Asset on the Closing Date and set
forth in the Confirmation for such Purchased Asset.



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



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



“Mortgage Loan Documents”: With respect to any Purchased Asset, those documents
executed in connection with, evidencing or governing such Purchased Asset and the related
Underlying Mortgaged Property.



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



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




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



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



“Multiemployer Plan”: A Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.



“Net Cash Flow”: With respect to any Purchased Asset and for any period, the net cash
flow of such Purchased Asset for such period as underwritten by Buyer in its discretion.



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



“Non–Recourse Indebtedness”: With respect to any Person and any date, indebtedness of
such Person as of such date for borrowed money in respect of which recourse for payment (except for
customary exceptions for fraud, misapplication of funds, environmental indemnities, Insolvency
Events, non-approved transfers or other events) is contractually limited to specific assets of such
Person encumbered by a Lien securing such Indebtedness.


 


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“Non-Utilization Fee”: Defined in the Fee and Pricing Letter, which definition is
incorporated herein by reference.



“Off–Balance Sheet Obligations”: With respect to any Person and any date, to the
extent not included as a liability on the balance sheet of such Person, all of the following with
respect to such Person as of such date: (a) monetary obligations under any financing lease or
so–called “synthetic,” tax retention or off–balance sheet lease transaction which, upon the
application of any Insolvency Laws, would be characterized as indebtedness, (b) monetary
obligations under any sale and leaseback transaction which does not create a liability on the
balance sheet of such Person, or (c) any other monetary obligation arising with respect to any
other transaction which (i) is characterized as indebtedness for tax purposes but not for
accounting purposes, or (ii) is the functional equivalent of or takes the place of borrowing but
which does not constitute a liability on the balance sheet of such Person (for purposes of this
clause (c), any transaction structured to provide tax deductibility as interest expense of any
dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a
borrowing).




“Participant”: Defined in Section 18.08(b).



“Patriot Act”: The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001.



“Permitted Liens”: Any of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding has been commenced: (a) Liens for state, municipal,
local or other local taxes not yet due and payable, (b) Liens imposed by Requirements of Law, such
as materialmen’s, mechanics’, carriers’, workmen’s, repairmen’s and similar Liens, arising in the
ordinary course of business securing obligations that are not overdue for more than thirty (30)
days, and (c) Liens granted pursuant to or by the Repurchase Documents.



“Person”: An individual, corporation, limited liability company, business trust,
partnership, trust, unincorporated organization, joint stock company, sole proprietorship, joint
venture, Governmental Authority or any other form of entity.



“Plan”: An “employee benefit plan” as defined in Section 3(3) of ERISA, subject to
Title I of ERISA in respect of which, Seller, Guarantor or any Intermediate Starwood Entity is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA, be deemed to be an
“employer” as defined in Section 3(5) of ERISA.



“Pledge Agreement”: A Pledge Agreement from Starwood Property Mortgage, L.L.C. in favor of
Buyer, covering one-hundred percent (100%) of the equity ownership interest of pledgor in Seller.



“Price Differential”: (a) For any Pricing Period or portion thereof and any
Transaction outstanding, the sum of the products, for each day during such Pricing Period or
portion thereof, of (i) 1/360th of the Pricing Rate in effect for such Pricing Period during which
such day occurs, times (ii) the Purchase Price for such Purchased Asset as of such day, and (b) for
any Pricing Period or portion thereof and all Transactions outstanding, the sum of the amounts
calculated in accordance with the preceding clause (a) for all Transactions.


 


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“Pricing Margin”: Defined in the Fee and Pricing Letter, which definition is
incorporated herein by reference.



“Pricing Period”: For any Purchased Asset, (a) in the case of the first Remittance
Date, the period from the Purchase Date for such Purchased Asset to but excluding such Remittance
Date, and (b) in the case of any subsequent Remittance Date, the one-month period commencing on and
including the prior Remittance Date and ending on but excluding such Remittance Date;
provided, that no Pricing Period for a Purchased Asset shall end after the Repurchase Date
for such Purchased Asset.



“Pricing Rate”: For any Pricing Period, the LIBO Rate for such Pricing Period plus
the Pricing Margin, which shall be subject to adjustment and/or conversion as provided in
Sections 12.01 and 12.02; provided, that while an Event of Default exists, the
Pricing Rate shall be the Default Rate.



“Pricing Rate Reset Date”: (a) In the case of the first Pricing Period for any
Purchased Asset, the Purchase Date for such Purchased Asset, and (b) in the case of any subsequent
Pricing Period, two (2) Business Days prior to the Remittance Date on which such Pricing Period
begins.



“Principal”: Starwood Property Mortgage, L.L.C., a Delaware limited liability
company, the entity that is the sole member of Seller.



“Principal Payments”: For any Purchased Asset, all payments and prepayments of
principal received and applied (or which was required to be applied in accordance with the related
Mortgage Loan Documents) as principal toward the Purchase Price for such Purchased Asset, including
insurance and condemnation proceeds and recoveries from liquidation or foreclosure.



“Purchase Agreement”: Any purchase agreement between Seller and any Transferor
pursuant to which Seller purchased or acquired an Asset which is subsequently sold to Buyer
hereunder.



“Purchase Date”: For any Purchased Asset, the date on which such Purchased Asset is
transferred by Seller to Buyer.



“Purchase Price”: For any Purchased Asset, (a) as of the Purchase Date for such
Purchased Asset, an amount equal to the product of the Market Value of such Purchased Asset, times
the Applicable Percentage for such Purchased Asset, and (b) as of any other date, the amount
described in the preceding clause (a), (i) reduced by any amount of Margin Deficit transferred by
Seller to Buyer pursuant to Section 4.01 and applied to the Purchase Price of such
Purchased Asset, (ii) reduced by any Principal Payments remitted to the Collection Account and
which were applied to the Purchase Price of such Purchased Asset by Buyer, (iii) reduced by any
payments made by Seller in reduction of the outstanding Purchase Price, and (iv) increased by any
amount of Excess Financing Capacity transferred to Seller by Buyer pursuant to
Section 3.03, in each case before or as of such determination date with respect to such
Purchased Asset.


 


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“Purchased Assets”: (a) For any Transaction, each Asset sold by Seller to Buyer in
such Transaction, and (b) for the Transactions in general, all Assets sold by Seller to Buyer, in
each case including, to the extent relating to such Asset or Assets, all of Seller’s right, title
and interest in and to (i) Mortgage Loan Documents, (ii) Servicing Rights, (iii) Servicing Files,
(iv) mortgage guaranties and insurance (issued by Governmental Authorities or otherwise) and
claims, payments and proceeds thereunder, (v) insurance policies, certificates of insurance and
claims, payments and proceeds thereunder, (vi) the principal balance of such Assets, not just the
amount advanced, (vii) amounts and property from time to time on deposit in the Collection Account
and the Collection Account itself, (viii) collection, escrow, reserve, collateral or lock–box
accounts and all amounts and property from time to time on deposit therein, to the extent of
Seller’s or the holder’s interest therein, (ix) Income, (x) amounts and property from time to time
on deposit in the Servicer Accounts, together with the Servicer Accounts themselves, (xi) security
interests of Seller in Derivatives Contracts entered into by Underlying Obligors, (xii) rights of
Seller under any letter of credit, guarantee, warranty, indemnity or other credit support or
enhancement, (xviii) all of the “Pledged Collateral”, as such term is defined in the Pledge
Agreement, and (ixx) supporting obligations of any kind; provided, that (A) Purchased Assets shall
not include any obligations of Seller, and (B) for purposes of the grant of security interest by
Seller to Buyer and the other provisions of Article 11, Purchased Assets shall include all
of the following: general intangibles, accounts, chattel paper, deposit accounts, securities
accounts, instruments, securities, financial assets, uncertificated securities, security
entitlements and investment property (as such terms are defined in the UCC) and replacements,
substitutions, conversions, distributions or proceeds relating to or constituting any of the items
described in the preceding clauses (i) through (ixx).




“Rating Agencies”: Each of Fitch, Inc., Moody’s and S&P.



“Reference Banks”: Banks each of which shall (a) be a leading bank in the
international Eurocurrency market, and (b) have an established place of business in London.
Initially, the Reference Banks shall be JPMorgan Chase Bank, Barclays Bank, PLC and Deutsche Bank
AG. If any such Reference Bank should be unwilling or unable to act as such or if Buyer shall
terminate the appointment of any such Reference Bank or if any of the Reference Banks should be
removed from the Reuters Monitor Money Rates Service or in any other way fail to meet the
qualifications of a Reference Bank, Buyer may designate alternative banks meeting the criteria
specified in the preceding clauses (a) and (b).




“Refinanced Loan”: Defined in Section 3.05(d).



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



“Release”: Any generation, treatment, use, storage, transportation, manufacture,
refinement, handling, production, removal, remediation, disposal, presence or migration of
Materials of Environmental Concern on, about, under or within all or any portion of any property or
Mortgaged Property.


 


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“Remedial Work”: Any investigation, inspection, site monitoring, containment,
clean–up, removal, response, corrective action, mitigation, restoration or other remedial work of
any kind or nature because of, or in connection with, the current or future presence, suspected
presence, Release or threatened Release in or about the air, soil, ground water, surface water or
soil vapor at, on, about, under or within all or any portion of any property or Mortgaged Property
of any Materials of Environmental Concern, including any action to comply with any applicable
Environmental Laws or directives of any Governmental Authority with regard to any Environmental
Laws.



“Remittance Date”: The fifth (5th) day of each month (or if such day is
not a Business Day, the next following Business Day), or such other day as is mutually agreed to by
Seller and Buyer.



“Reportable Event”: Any event set forth in Section 4043(c) of ERISA, other than an
event as to which the notice period is waived under Pension Benefit Guaranty Commission Reg. §4043.



“Representation Breach”: Any representation, warranty, certification, statement or
affirmation made by Seller or Guarantor in any Repurchase Document (including in Schedule
1(a) or 1(b)) or in any certificate, notice, report or other document prepared and
delivered by or on behalf of Seller, Manager, any Intermediate Starwood Entity or Guarantor
pursuant to any Repurchase Document proves to be incorrect, false or misleading in any material
respect when made, and in the case of the representations and warranties contained in Schedule
1(a) or 1(b) only, without regard to any Knowledge or lack of Knowledge thereof by
Seller or (unless otherwise waived in writing), by Buyer, and without regard to any qualification,
representation or warranty relating to such Knowledge or lack of Knowledge.



“Repurchase Date”: For any Purchased Asset, the earliest of (a) the Maturity Date,
(b) any Early Repurchase Date therefor, and (c) the Business Day on which Seller is to repurchase
such Purchased Asset as specified by Seller and agreed to by Buyer in the related Confirmation.



“Repurchase Documents”: Collectively, this Agreement, the Custodial Agreement, the
Controlled Account Agreements, the Pledge Agreement, the Guarantee Agreement, all Confirmations,
all UCC financing statements, amendments and continuation statements filed pursuant to any other
Repurchase Document, and all additional documents, certificates, agreements or instruments, the
execution of which is required, necessary or incidental to or desirable for performing or carrying
out any other Repurchase Document.



“Repurchase Obligations”: All obligations of Seller to pay the Repurchase Price on
the Repurchase Date and all other obligations and liabilities of Seller to Buyer arising under or
in connection with the Repurchase Documents, whether now existing or hereafter arising, and all
interest and fees that accrue after the commencement by or against Seller, any Intermediate
Starwood Entity or Guarantor of any Insolvency Proceeding naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (in
each case, whether due or accrued).


 


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“Repurchase Price”: For any Purchased Asset as of any date, an amount equal to the
sum of (a) the outstanding Purchase Price as of such date, (increased as set forth in the
definition of Purchase Price by the amount of all related Additional Advances previously made under
Section 3.03), (b) the accrued and unpaid Price Differential for such Purchased Asset as of
such date, and (c) all other amounts due and payable as of such date by Seller to Buyer under this
Agreement or any Repurchase Document.



“Requirements of Law”: With respect to any Person or property or assets of such
Person and as of any date, all of the following applicable thereto as of such date: all Governing
Documents and existing and future laws, statutes, rules, regulations, treaties, codes, ordinances,
permits, certificates, orders and licenses of and interpretations by any Governmental Authority
(including Environmental Laws, ERISA, regulations of the Board of Governors of the Federal Reserve
System, and laws, rules and regulations relating to usury, licensing, truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection practices and
privacy), judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or
other Governmental Authority.



“Reserve Requirement”: For any Pricing Period, the aggregate of the rates (expressed
as a decimal fraction) of reserve requirements (if any) arising from any Requirement of Law enacted
or imposed after the date hereof and in effect during such Pricing Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for Eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of such Board of Governors) maintained by
Buyer.



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



“Retained Interest”: (a) With respect to any Purchased Asset, (i) all duties,
obligations and liabilities of Seller thereunder, including payment and indemnity obligations,
(ii) all obligations of agents, trustees, servicers, administrators or other Persons under the
documentation evidencing such Purchased Asset, and (iii) if any portion of the Indebtedness related
to such Purchased Asset is owned by another lender or is being retained by Seller, the interests,
rights and obligations under such documentation to the extent they relate to such portion, and
(b) with respect to any Purchased Asset with an unfunded commitment on the part of Seller, all
obligations to provide additional funding, contributions, payments or credits.



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



“Sanctioned Entity”: (a) A country or a government of a country, (b) an agency of the
government of a country, (c) an organization directly or indirectly controlled by a country or its
government, (d) a Person resident in or determined to be resident in a country, that in each case
is subject to a country sanctions program administered and enforced by the Office of



 


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Foreign Assets Control, or (e) a Person named on the list of Specially Designated Nationals
maintained by the Office of Foreign Assets Control.



“Securities Laws”: The Securities Act of 1933, the Securities Exchange Act of 1934,
the Sarbanes-Oxley Act of 2002 and the applicable accounting and auditing principles, rules,
standards and practices promulgated, approved or incorporated by the Securities and Exchange
Commission or the Public Company Accounting Oversight Board.




“Seller”: The Seller named in the preamble of this Agreement.



“Servicer”: Wells Fargo Bank, National Association, as servicer of all of the
Purchased Assets.



“Servicing Agreement Account”: The “Servicing Account” under the Sub-Servicing
Agreement, which shall be a segregated interest bearing account established at the Collection
Account Bank, in the name of Seller, pledged to Buyer and subject to a Controlled Account
Agreement.



“Servicer Account”: Any account established by Servicer in connection with the
servicing of any Asset or Purchased Asset including, without limitation, the Servicing Agreement
Account.



“Servicing File”: With respect to any Purchased Asset, the file retained and
maintained by Seller, Servicer and/or Sub-Servicer including the originals or copies of all
Mortgage Loan Documents and other documents and agreements relating to such Purchased Asset,
including to the extent applicable all servicing agreements, files, documents, records, data bases,
computer tapes, insurance policies and certificates, appraisals, other closing documentation,
payment history and other records relating to or evidencing the servicing of such Purchased Asset,
which file shall be held by Seller and/or the Servicer for and on behalf of Buyer.



“Servicing Rights”: All right, title and interest of Seller or any Affiliate of
Seller in and to any and all of the following: (a) rights to service and collect the Purchased
Assets, (b) amounts received by Seller or any other Person for servicing the Purchased Assets,
(c) late fees, penalties or similar payments with respect to the Purchased Assets, (d) agreements
and documents creating or evidencing any such rights to service, documents, files and records
relating to the servicing of the Purchased Assets, and rights of Seller or any other Person
thereunder, (e) escrow, reserve and similar amounts with respect to the Purchased Assets,
(f) rights to appoint, designate and retain any other servicers, sub-servicers, special servicers,
agents, custodians, trustees and liquidators with respect to the Purchased Assets, and (g) accounts
and other rights to payment related to the Purchased Assets.




“Single Employer Plan”: Any Plan that is not a Multiemployer Plan.



“Solvent”: With respect to any Person at any time, having a state of affairs such
that all of the following conditions are met at such time: (a) the fair value of the assets and
property of such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established and liabilities



 


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evaluated for purposes of Section 91(32) of the Bankruptcy Code, (b) the present fair salable
value of the assets and property of such Person in an orderly liquidation of such Person is not
less than the amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person is able to realize upon its assets and
property and pay its debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business, (d) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature, and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for which such Person’s
assets and property would constitute unreasonably small capital.



“Special Purpose Entity”: A corporation, limited partnership or limited liability
company that, since the date of its formation (unless otherwise indicated in this Agreement) and at
all times on and after the date hereof, has complied with and shall at all times comply with the
provisions of Article 9.




“Sub-Servicer”: Defined in Section 17.01.




“Sub-Servicing Agreement”: Defined in Section 17.01.



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



“Tangible Net Worth”: With respect to any Person and any date, all amounts which
would be included under capital or shareholder’s equity (or any like caption) on a balance sheet of
such Person, minus (a) amounts owing to such Person from any Affiliate thereof, or from officers,
employees, partners, members, directors, shareholders or other Persons similarly affiliated with
such Person or any Affiliate thereof, (b) intangible assets (other than the Initial Interest Rate
Protection Agreement), and (c) prepaid taxes and/or expenses, all on or as of such date.



“Term Sheet”: The letter and/or summary of terms and conditions dated February 26,
2010 between and among Buyer, Seller and Guarantor.



“Test Period”: The time period from the first day of each calendar quarter, through
and including the last day of such calendar quarter.



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



 


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partners, members, directors, shareholders or other Persons similarly affiliated with such
Person or any Affiliate thereof, (b) intangible assets (other than the Initial Interest Rate
Protection Agreement), and (c) prepaid taxes and expenses, all on or as of such date.



“Total Indebtedness”: With respect to any Person and any date, all amounts of
Indebtedness (other than Contingent Liabilities not reflected on such Person’s consolidated balance
sheet), plus the proportionate share of all Indebtedness (other than Contingent Liabilities not
reflected on such Person’s consolidated balance sheet) of all non-consolidated Affiliates of such
Person, on or as of such date.



“Transaction”: With respect to any Asset, the sale and transfer of such Asset from
Seller to Buyer pursuant to the Repurchase Documents against the transfer of funds from Buyer to
Seller representing the Purchase Price or any additional Purchase Price for such Asset.




“Transaction Request”: Defined in Section 3.01(a).




“Transferor”: The seller of an Asset under a Purchase Agreement.



“Type”: With respect to a Mortgaged Property, such Mortgaged Property’s
classification as one of the following: retail, office or health club.



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



“Underlying Mortgage Loan”: With respect to any Junior Interest, a mortgage loan made
in respect of the related Underlying Mortgaged Property.




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




(a) Whole Loan, the Mortgaged Property securing such Whole Loan; and




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



“Underlying Obligor”: Individually and collectively, as the context may require, the
Mortgagor and other obligor or obligors under an Asset, including (i) any Person that has not
signed the related Mortgage Note but owns an interest in the related Underlying Mortgaged Property,
which interest has been encumbered to secure such Asset, and (ii) any other Person who has assumed
or guaranteed the obligations of such Mortgagor under the Mortgage Loan Documents relating to an
Asset.


 


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“Underwriting Package”: Defined in the Fee and Pricing Letter, which definition is
incorporated herein by reference.



“Whole Loan”: A performing first priority commercial real estate whole loan for which
the Underlying Mortgage Property has stabilized, as determined by Buyer in its discretion.



Section 2.01 Rules of Interpretation. Headings are for convenience only and do not
affect interpretation. The following rules of this Section 2.01 apply unless the context
requires otherwise. The singular includes the plural and conversely. A gender includes all genders.
Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. A
reference to an Article, Section, Subsection, Paragraph, Subparagraph, Clause, Annex, Schedule,
Appendix, Attachment, Rider or Exhibit is, unless otherwise specified, a reference to an Article,
Section, Subsection, Paragraph, Subparagraph or Clause of, or Annex, Schedule, Appendix,
Attachment, Rider or Exhibit to, this Agreement, all of which are hereby incorporated herein by
this reference and made a part hereof. A reference to a party to this Agreement or another
agreement or document includes the party’s permitted successors, substitutes or assigns. A
reference to an agreement or document is to the agreement or document as amended, modified,
novated, supplemented or replaced, except to the extent prohibited by any Repurchase Document. A
reference to legislation or to a provision of legislation includes a modification, codification,
replacement, amendment or re-enactment of it, a legislative provision substituted for it and a
rule, regulation or statutory instrument issued under it. A reference to writing includes a
facsimile or electronic transmission and any means of reproducing words in a tangible and
permanently visible form. A reference to conduct includes an omission, statement or undertaking,
whether or not in writing. An Event of Default exists until it has been cured or waived in writing
by Buyer. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement, unless the context clearly requires or
the language provides otherwise. The word “including” is not limiting and means “including without
limitation.” The word “any” is not limiting and means “any and all” unless the context clearly
requires or the language provides otherwise. In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and including,” the words
“to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”
The words “will” and “shall” have the same meaning and effect. A reference to day or days without
further qualification means calendar days. A reference to any time means New York time. This
Agreement may use several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their respective terms. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed in accordance with
GAAP, and all accounting determinations, financial computations and financial statements required
hereunder shall be made in accordance with GAAP, without duplication of amounts, and on a
consolidated basis with all Subsidiaries. All terms used in Articles 8 and 9 of the UCC, and used
but not specifically defined herein, are used herein as defined in such Articles 8 and 9. A
reference to “fiscal year” and “fiscal quarter” means such fiscal periods of Seller. A reference
to an agreement includes a security interest, guarantee, agreement or legally enforceable
arrangement whether or not in writing. A reference to a document includes an agreement (as so
defined) in writing or a certificate, notice, instrument or document, or any information recorded
in computer disk form. Whenever Seller is required to provide any document to Buyer under the
Repurchase



 


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Documents, the relevant document shall be provided in writing or printed form unless Buyer
requests otherwise. At the request of Buyer, the document shall be provided in computer disk form
or both printed and computer disk form. The Repurchase Documents are the result of negotiations
between the Parties, have been reviewed by counsel to Buyer and counsel to Seller, and are the
product of both Parties. No rule of construction shall apply to disadvantage one Party on the
ground that such Party proposed or was involved in the preparation of any particular provision of
the Repurchase Documents or the Repurchase Documents themselves. Except where otherwise expressly
stated, Buyer may give or withhold, or give conditionally, approvals and consents, and may form
opinions and make determinations, in its sole and absolute discretion. Reference in any Repurchase
Document to Buyer’s discretion shall mean, unless otherwise expressly stated herein or therein,
Buyer’s sole and absolute discretion, and the exercise of such discretion shall be final and
conclusive. In addition, unless otherwise expressly provided in the applicable Repurchase
Document, whenever Buyer has a decision or right of determination, opinion or request, exercises
any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action
or to approve or disapprove, or any arrangement or term is to be satisfactory or acceptable to or
approved by (or any similar language or terms) Buyer, the decision of Buyer with respect thereto
shall be in the sole and absolute discretion of Buyer, and such decision shall be final and
conclusive. Any requirement of good faith, discretion or judgment by Buyer shall not be construed
to require Buyer to request or await receipt of information or documentation not immediately
available from or with respect to Seller or the Purchased Assets.



ARTICLE 3




THE TRANSACTIONS





Section 3.01 Procedures.



(a) Prior to the Closing Date, Seller shall have delivered to Buyer a complete Underwriting
Package for each of the Assets described on Exhibit L. Seller and Buyer hereby enter into
Transactions, as evidenced by Seller sending Buyer a notice substantially in the form of
Exhibit A (“Transaction Request”) describing each Transaction and each proposed
Asset and any related Underlying Mortgaged Property and other security therefor in reasonable
detail. Included therewith is a schedule specifying what (if any) specific exceptions to the
representations and warranties of Seller set forth in this Agreement (including in
Schedules 1(a) and 1(b) applicable to the Class of such Asset) Seller will take
with respect to any Asset. Seller shall promptly deliver to Buyer any supplemental materials
requested at any time by Buyer in its discretion, provided the same are either in Seller’s
possession or are reasonably obtainable by Seller. On the Closing Date, Buyer shall determine in
its discretion whether or not it is willing to purchase any or all of the proposed Assets, and if
so, on what terms and conditions. It is expressly agreed and acknowledged that Buyer is entering
into the Transactions on the basis of all such representations and warranties and on the
completeness and accuracy of the information contained in the applicable Underwriting Package, and
any incompleteness or inaccuracies in the related Underwriting Package will only be acceptable to
Buyer if disclosed in writing to Buyer by Seller in advance of the Closing Date, and then only if
Buyer opts to purchase the related Purchased Asset from Seller notwithstanding such incompleteness
and inaccuracies. In the event



 


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of a Representation Breach, Seller shall immediately repurchase the related Asset or Assets in
accordance with Section 3.05.



(b) The Confirmation for each Transaction shall describe the related Asset, its Purchase Date,
Market Value, Applicable Percentage, Purchase Price and such other terms and conditions as Buyer
may require in its discretion. Upon the execution of a Confirmation by Buyer and Seller, the
related Transaction shall become effective and shall be subject to all of the terms and conditions
of the Repurchase Documents. Buyer’s approval of the purchase of an Asset on such terms and
conditions as Buyer may require in its discretion shall be evidenced only by its execution and
delivery of the related Confirmation. For the avoidance of doubt, Buyer shall not (i) be deemed to
have approved the purchase of an Asset by virtue of the approval or entering into by Buyer of a
rate lock agreement, the Initial Interest Rate Protection Agreement, total return swap or any other
agreement with respect to such Asset, or (ii) be obligated to purchase an Asset notwithstanding a
Confirmation executed by the Parties unless and until all applicable conditions precedent in
Article 6 have been satisfied or waived by Buyer in its discretion.



(c) Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms
of the Transaction covered thereby, and shall be construed to be cumulative to the extent possible.
If terms in a Confirmation are inconsistent with terms in this Agreement with respect to a
particular Transaction, the Confirmation shall prevail. Whenever the Applicable Percentage, Excess
Financing Capacity or any other term of a Transaction (other than the Pricing Rate, Market Value
and outstanding Purchase Price) with respect to an Asset is revised or adjusted in accordance with
this Agreement, an amended and restated Confirmation reflecting such revision or adjustment and
that is otherwise acceptable to the Parties shall be prepared by Seller and executed by the
Parties.



(d) The fact that Buyer has conducted or has failed to conduct any partial or complete
examination or any other due diligence review of any Asset or Purchased Asset shall in no way
affect any rights Buyer may have under the Repurchase Documents or otherwise with respect to any
representations or warranties or other rights or remedies thereunder or otherwise, including the
right to determine at any time that such Asset or Purchased Asset is not an Eligible Asset, if such
Asset or Purchased Asset does not meet the requirements therefor, as set forth in the definition of
“Eligible Asset”.



(e) No Transaction shall be entered into if (i) any Margin Deficit, Default or Event of
Default exists or would exist as a result of such Transaction, (ii) the Repurchase Date for the
Purchased Assets subject to such Transaction would be later than the Maturity Date, or (iii) after
giving effect to such Transaction, the aggregate Repurchase Price of all Purchased Assets subject
to Transactions then outstanding would exceed the Maximum Amount.



Section 3.02 Transfer of Purchased Assets; Servicing Rights. Seller hereby sells,
transfers, conveys and assigns to Buyer on a servicing-released basis all of Seller’s right, title
and interest (but no Retained Interest) in and to such Purchased Asset, together with all related
Servicing Rights. On the Closing Date ownership of and title to all Purchased Assets shall be
transferred to and vest in Buyer or its designee against the simultaneous transfer of the Purchase
Price to the account of Seller specified in Annex 1 (or if not specified therein, in the



 


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related Confirmation or as directed by Seller). After the Closing Date, Seller shall have no
right to sell to Buyer, repurchase from Buyer and/or re-sell Eligible Assets to Buyer, and may not
substitute other Eligible Assets for Purchased Assets. Buyer has the right to designate the
servicer and sub-servicer of the Purchased Assets, and the Servicing Rights and other servicing
provisions under this Agreement are not severable from or to be separated from the Purchased Assets
under this Agreement, and such Servicing Rights and other servicing provisions of this Agreement
constitute (a) “related terms” under this Agreement within the meaning of Section 101(47)(A)(i) of
the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit
enhancement related to the Repurchase Documents.



Section 3.03 Excess Financing Capacity. If at any time prior to the expiration of the
Funding Period, Excess Financing Capacity exists for any Purchased Asset, Seller may request, but
not more frequently than twice per calendar week, and only upon the delivery of not less than three
(3) business days’ prior written notice to Buyer, that Buyer make additional advances in respect of
the Purchase Price thereof (each, an “Additional Advance”) in an amount up to the then-current
Excess Financing Capacity for such Purchased Asset. With each such request, Seller shall also
deliver to Buyer a description of any material change with respect to the related Purchased Asset
or the related Mortgaged Property, together with copies of any material documents or information
received by Seller to be added to the Underwriting Package in connection therewith as Buyer
requests. Provided that (a) Seller delivers to Buyer a certificate stating that each of the
Purchased Assets continues to be an Eligible Asset as of the date of any request for each
Additional Advance, (b) no uncured Default under Sections 10.01(a) or 10.01(f), or any uncured
Event of Default or Margin Deficit exist, and (c) no material adverse change exists with respect to
Seller, Guarantor, the Purchased Asset or the Mortgaged Property securing the Purchased Asset, then
the proceeds of each Additional Advance shall be paid to Seller by Buyer within one (1) Business
Day of the related request; provided, however, that if any Purchased Asset shall not be an Eligible
Asset (an “Ineligible Asset”), as of the date of request for an Additional Advance Buyer shall have
no further obligation under this Section 3.03 with respect to such Ineligible Asset; provided,
however, that subject to the limitations and condition set forth below, Buyer shall still be
required to fund such request and all subsequent and otherwise contractually compliant requests for
Additional Advances under this Section 3.03 with respect to the other Purchased Assets.
Notwithstanding the foregoing, it is acknowledged and agreed that any Additional Advance shall be
funded to Seller net of all amounts necessary to (a) repurchase any Ineligible Asset for which
Buyer has sent a repurchase notice under Section 3.05(b) and (b) satisfy any then-currently
unsatisfied Margin Calls. For purposes of this Agreement, all Additional Advances will be treated
as delayed disbursements of the Purchase Price of the related Purchased Asset.



Section 3.04 Maximum Amount. The aggregate outstanding Purchase Price for all
Purchased Assets as of any date shall not exceed the Maximum Amount. If such aggregate outstanding
Purchase Price exceeds the Maximum Amount, Seller shall within three (3) Business Days after notice
from Buyer, pay to Buyer an amount necessary to reduce such aggregate outstanding Purchase Price to
an amount equal to or less than the Maximum Amount.



Section 3.05 Early Repurchases; Mandatory Repurchases. (a) The terms and provisions
governing early repurchases and mandatory repurchases under Section 3.05(a) are set forth
in the Fee and Pricing Letter, and are hereby incorporated by reference.


 


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(b) In addition to other rights and remedies of Buyer under any Repurchase Document, Seller
shall repurchase any Purchased Asset that no longer qualifies as an Eligible Asset, as determined
by Buyer in its discretion, within three (3) Business Days of the receipt by Seller of a related
repurchase notice from Buyer.



(c) Notwithstanding the foregoing, at any time during the existence of an uncured Default or
Event of Default, Seller cannot repurchase a Purchased Asset in connection with a full payoff of
the underlying Whole Loan by the Underlying Obligor, unless one-hundred percent (100%) of the net
proceeds due in connection with the payoff in question shall be paid directly to Buyer. The
portion of all such net proceeds in excess of the then-current Repurchase Price of the related
Purchased Asset will be applied in Buyer’s sole and absolute discretion to reduce any other amounts
due and payable to Buyer under the Agreement, and then to reduce the Repurchase Prices of the other
Purchased Assets in such order and in such amounts as Buyer shall determine in its discretion.



(d) Additional terms and provisions governing early repurchases and mandatory repurchases
under Section 3.05(d) are set forth in the Fee and Pricing Letter, and are hereby
incorporated by reference.



Section 3.06 Repurchase. On the Repurchase Date for each Purchased Asset, Seller
shall transfer to Buyer the Repurchase Price for such Purchased Asset as of the Repurchase Date,
and Buyer shall transfer to Seller such Purchased Asset, whereupon the Transaction with respect to
such Purchased Asset shall terminate. Buyer shall be deemed to have simultaneously released its
security interest in such Purchased Asset, shall authorize Custodian to release to Seller the
Mortgage Loan Documents for such Purchased Asset and, to the extent any UCC financing statement
filed against Seller specifically identifies such Purchase Asset, Buyer shall deliver an amendment
thereto or termination thereof evidencing the release of such Purchased Asset from Buyer’s security
interest therein. Any such transfer or release shall be without recourse to Buyer and without
representation or warranty by Buyer, except that Buyer shall represent to Seller, to the extent
that good title was transferred and assigned by Seller to Buyer hereunder on the Closing Date, that
Buyer is the sole owner of the related Purchased Asset, free and clear of any other interests or
Liens created by Buyer. Any Income with respect to such Purchased Asset received by Buyer or
Collection Account Bank after payment of the Repurchase Price therefor shall be remitted to Seller.
Notwithstanding the foregoing, on or before the Maturity Date, Seller shall repurchase all
Purchased Assets by paying to Buyer the outstanding Repurchase Price therefor and all other
outstanding Repurchase Obligations.




Section 3.07 Payment of Price Differential and Fees.



(a) Notwithstanding that Buyer and Seller intend that the Transactions hereunder be sales to
Buyer of the Purchased Assets, Seller shall pay to Buyer the accrued value of the Price
Differential for each Purchased Asset on each Remittance Date. Buyer shall give Seller notice of
the Price Differential and any fees and other amounts due under the Repurchase Documents on or
prior to the second (2nd) Business Day preceding each Remittance Date; provided, that
Buyer’s failure to deliver such notice shall not affect Seller’s obligation to pay such amounts.
If the Price Differential includes any estimated Price Differential, Buyer shall



 


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recalculate such Price Differential after the Remittance Date and, if necessary, make
adjustments to the Price Differential amount due on the following Remittance Date.



(b) Seller shall pay to Buyer all fees and other amounts as and when due as set forth in this
Agreement including, without limitation:




(i) the Non-Utilization Fee, which shall be due and payable on a monthly basis on
each Remittance Date beginning on the first Remittance Date following the end of the
Funding Period, for the time period from the last day of the Funding Period until
such First Remittance Date; and




(ii) a ratable portion of the Commitment Fee shall be due and payable on the
Purchase Date (and on the date of each Additional Advance under Section
3.03) based on either the Purchase Price of each Purchased Asset or the amount
of each related Additional Advance, with the first payment due no earlier than the
Closing Date and the final payment due on the last day of the Funding Period,
whether or not the aggregate Purchase Price for all Purchased Assets is equal to the
Maximum Amount; provided that Buyer shall provide Seller and Guarantor with a
one-time dollar for dollar credit in an amount not to exceed the Commitment Fee, to
be used solely as a credit against the commitment fee and/or any other up-front fees
that would otherwise be due and payable by Seller, Guarantor or any of their
Affiliates in connection with either a subsequent increase in the Maximum Amount or
a new credit facility to Seller, Guarantor or any of their Affiliates, but only if
such an increase or new facility is (a) requested by Seller, (b) approved by Buyer
in its sole and absolute discretion and (c) accepted by Seller.




Section 3.08 Payment, Transfer and Custody.



(a) Unless otherwise expressly provided herein, all amounts required to be paid or deposited
by Seller hereunder shall be paid or deposited in accordance with the terms hereof no later than
3:00 p.m. on the day when due, in immediately available Dollars and without deduction, setoff or
counterclaim, and if not received before such time shall be deemed to be received on the next
Business Day. Whenever any payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next following Business Day, and such extension of
time shall in such case be included in the computation of such payment. If Seller fails to pay all
or part of any Repurchase Price amount by 5:00 p.m., New York City time on any date when due, Buyer
may require Seller to pay (in addition to, and together with, such past-due Repurchase Price) a
late fee equal to one percent (1%) of the total amount of the late payment, plus interest on such
past-due Repurchase Price as provided in Section 18.16, until all such past-due Repurchase
Price is received in full by Buyer. Amounts payable to Buyer and not otherwise required to be
deposited into the Collection Account shall be deposited into an account of Buyer. Seller shall
have no rights in, rights of withdrawal from, or rights to give notices or instructions regarding
Buyer’s account, the Collection Account or the Servicing Agreement Account. Amounts in the
Collection Account and/or the Servicing Agreement Account may be invested at the direction and in
the discretion of Buyer in cash equivalents before they are distributed in accordance with
Article 5.


 


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(b) Any Mortgage Loan Documents not delivered to Buyer or Custodian are and shall be held in
trust by Seller or its agent for the benefit of Buyer as the owner thereof. Seller or its agent
shall maintain a copy of the Mortgage Loan Documents and the originals of the Mortgage Loan
Documents not delivered to Buyer or Custodian. The possession of Mortgage Loan Documents by Seller
or its agent is in a custodial capacity only at the will of Buyer for the sole purpose of assisting
Sub-Servicer with its duties under the Sub-Servicing Agreement. Each Mortgage Loan Document
retained or held by Seller or its agent shall be segregated on Seller’s books and records from the
other assets of Seller or its agent, and the books and records of Seller or its agent shall be
marked to reflect clearly the sale of the related Purchased Asset to Buyer on a servicing-released
basis. Seller or its agent shall release its custody of the Mortgage Loan Document only in
accordance with written instructions from Buyer, unless such release is required as incidental to
the sub-servicing of the Purchased Assets by Sub-Servicer or is in connection with a repurchase of
any Purchased Asset by Seller, in each case in accordance with the Custodial Agreement.



Section 3.09 Repurchase Obligations Absolute. All amounts payable by Seller under the
Repurchase Documents shall be paid without notice (except as expressly required in the Repurchase
Documents), demand, counterclaim, setoff, deduction or defense (as to any Person and for any reason
whatsoever) and without abatement, suspension, deferment, diminution or reduction (as to any Person
and for any reason whatsoever), and the Repurchase Obligations shall not be released, discharged or
otherwise affected, except as expressly provided herein, by reason of: (a) any damage to,
destruction of, taking of, restriction or prevention of the use of, interference with the use of,
title defect in, encumbrance on or eviction from, any Purchased Asset or related Underlying
Mortgaged Property, (b) any Insolvency Proceeding relating to Seller or any Underlying Obligor, or
any action taken with respect to any Repurchase Document or Mortgage Loan Document by any trustee
or receiver of Seller or any Underlying Obligor or by any court in any such proceeding, (c) any
claim that Seller has or might have against Buyer under any Repurchase Document or otherwise,
(d) any default or failure on the part of Buyer to perform or comply with any Repurchase Document
or other agreement with Seller, (e) the invalidity or unenforceability of any Purchased Asset,
Repurchase Document or Mortgage Loan Document, or (f) any other occurrence whatsoever, whether or
not similar to any of the foregoing, and whether or not Seller has notice or Knowledge of any of
the foregoing. The Repurchase Obligations shall be full recourse to Seller. This
Section 3.09 shall survive the termination of the Repurchase Documents and the payment in
full of the Repurchase Obligations.



ARTICLE 4




MARGIN MAINTENANCE





Section 4.01 Margin Deficit.



(a) If on any date (i) the Market Value of a Purchased Asset is less than (ii) the product of
(A) Buyer’s Margin Percentage multiplied by (B) the outstanding Repurchase Price for such Purchased
Asset as of such date (the excess, if any, of (ii) over (i), a “Margin Deficit”), then
Seller shall, within three (3) Business Days after notice from Buyer (a “Margin Call”),
transfer cash to Buyer in an amount at least equal to such Margin Deficit. Buyer shall



 


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apply the funds received in satisfaction of a Margin Deficit to the Repurchase Obligations in
such manner as Buyer determines in its discretion, to amounts due and owing under the Repurchase
Documents on such date. Additional terms and provisions governing Margin Deficits and Margin Calls
under this Section 4.01(a) are set forth in the Fee and Pricing Letter, and are hereby
incorporated by reference.



(b) Buyer’s election in its discretion not to deliver a Margin Call notice at any time there
is a Margin Deficit shall not waive the Margin Deficit or in any way limit or impair Buyer’s right
to deliver a Margin Call notice at any time when the same or any other Margin Deficit exists (and
the conditions to the delivery of such Margin Call notice under Section 4.01(a) above are
satisfied). Buyer’s rights under this Section 4.01 are in addition to and not in lieu of
any other rights of Buyer under the Repurchase Documents or Requirements of Law.



(c) All cash transferred to Buyer pursuant to this Section 4.01 with respect to a
Purchased Asset shall be deposited into the Collection Account, except as directed by Buyer in its
discretion, and notwithstanding any provision in Section 5.02 to the contrary, shall be
applied to reduce the Purchase Price of such Purchased Asset.



(d) Additional terms and provisions concerning the Debt Yield Test are set forth in the Fee
and Pricing Letter, and are hereby incorporated by reference.



ARTICLE 5




APPLICATION OF INCOME




Section 5.01 Collection Account; Servicing Agreement Account. The Collection Account
shall be established at Collection Account Bank and the Servicing Agreement Account shall be
established at the Collection Account Bank. Buyer shall have sole dominion and control (including,
without limitation, “control” within the meaning of Section 9-104(a) of the UCC) over the
Collection Account and the Servicing Agreement Account. Neither Seller nor any Person claiming
through or under Seller shall have any claim to or interest in the Collection Account or the
Servicing Agreement Account. All Income received by Seller, Buyer or Collection Account Bank in
respect of the Purchased Assets, as well as any interest received from the reinvestment of such
Income, (other than amounts of reinvestment income permitted to be retained by Servicer as
additional servicing compensation in accordance with Section 3.03(e) of the Sub-Servicing
Agreement) shall be deposited directly into the Collection Account (in the case of amounts
deposited by Servicer, such deposits to the Collection Account shall occur from the Servicing
Agreement Account in accordance with Sections 3.04 and 3.12 of the Sub-Servicing
Agreement) and shall be applied to and remitted by Collection Account Bank in accordance with this
Article 5. Notwithstanding the foregoing, so long as the Sub-Servicing Agreement is in
full force and effect and the Manager is acting as Sub-Servicer thereunder, all amounts to be paid
or are otherwise received from, or on behalf of, a related Underlying Obligor shall be paid
directly to the Servicing Agreement Account and, thereafter, remitted to the Collection Account in
accordance with the terms of the Sub-Servicing Agreement.



Section 5.02 Before an Event of Default. If no Event of Default exists, all Income
described in Section 5.01 and deposited into the Collection Account during each Pricing



 


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Period shall be applied by Collection Account Bank by no later than the next following
Remittance Date in the following order of priority:



first, to pay all then-currently due and payable servicing fees to Buyer (or its designated
Servicer), and to reimburse Buyer (or its designated Servicer) for any and all costs, expenses,
advances and similar amounts incurred by Buyer (or its designated Servicer) in connection with the
servicing of the Purchased Assets;



second, to the extent such payments are actually remitted by the Underlying Obligor to the
Collection Account, to remit the tax (and insurance, if applicable) escrow portion and any tenant
improvement, capital expenditure or other reserve portion of any payments received from each
Underlying Obligor to the respective escrow agents pursuant to the escrow agreements for the
related Mortgage Loan or Underlying Mortgage Loans, and whether or not any event of default exists
with respect to the related Mortgage Loan or Underlying Mortgage Loan;



third, to pay to Buyer an amount equal to the Price Differential accrued with respect to all
Purchased Assets as of such Remittance Date;



fourth, to pay to Buyer an amount equal to all default interest, late fees, fees, expenses and
Indemnified Amounts then due and payable from Seller and other applicable Persons to Buyer under
the Repurchase Documents;



fifth, to pay to Buyer an amount sufficient to eliminate any outstanding Margin Deficit
(without limiting Seller’s obligation to satisfy a Margin Deficit in a timely manner as required by
Section 4.01);




sixth, to pay any custodial fees and expenses due and payable under the Custodial Agreement;



seventh, to pay the Applicable Percentage of any Principal Payments to Buyer, but only to the
extent that such remittance would not result in the creation of a Margin Deficit, to be applied to
reduce the outstanding Purchase Price of Purchased Assets in such order as Buyer shall determine in
its discretion;



eighth, to pay to Buyer any other amounts due and payable from Seller and other applicable
Persons to Buyer under the Repurchase Documents;



ninth, to pay to Seller any remainder for its own account, subject, however, to the covenants
and other requirements of the Repurchase Documents.



Section 5.03 After an Event of Default. If an Event of Default exists, all Income
deposited into the Collection Account in respect of the Purchased Assets shall be applied by
Collection Account Bank, on the Business Day next following the Business Day on which each amount
of Income is so deposited, in the following order of priority:



first, to pay all then-currently due and payable servicing fees to Buyer (or its designated
Servicer), and to reimburse Buyer (or its designated Servicer) for any and all costs,



 


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expenses, advances and similar amounts incurred by Buyer (or its designated Servicer) in
connection with the servicing of the Purchased Assets;



second, to the extent such payments are actually remitted by the Underlying Obligor to the
Collection Account, to remit the tax (and insurance, if applicable) escrow portion of any payments
received from each Underlying Obligor to the respective escrow agents pursuant to the escrow
agreements for the related Mortgage Loan or Underlying Mortgage Loans, and whether or not any event
of default exists with respect to the related Mortgage Loan or Underlying Mortgage Loan;



third, to pay to Buyer an amount equal to the Price Differential accrued with respect to all
Purchased Assets as of such Remittance Date;



fourth, to pay to Buyer an amount equal to all default interest, late fees, fees, expenses and
Indemnified Amounts then due and payable from Seller and other applicable Persons to Buyer under
the Repurchase Documents;




fifth, to pay any custodial fees and expenses due and payable under the Custodial Agreement;



sixth, to pay to Buyer an amount equal to the aggregate Repurchase Price of all Purchased
Assets (to be applied in such order and in such amounts as determined by Buyer in its discretion,
until such Purchase Price has been reduced to zero) plus all other amounts due to Buyer under the
Repurchase Documents;




seventh, to pay to Buyer all other Repurchase Obligations due to Buyer; and




eighth, to pay to Seller any remainder for its own account.



Section 5.04 Seller to Remain Liable. If the amounts remitted to Buyer as provided in
Sections 5.02 and 5.03 are insufficient to pay all amounts due and payable from
Seller to Buyer under this Agreement or any Repurchase Document on a Remittance Date, a Repurchase
Date, upon the occurrence of an Event of Default or otherwise, Seller shall nevertheless remain
liable for and shall pay to Buyer when due all such amounts.



ARTICLE 6




CONDITIONS PRECEDENT




Section 6.01 Conditions Precedent to Initial Transaction. Buyer shall not be
obligated to enter into any Transaction or purchase any Asset until the following conditions have
been satisfied in the discretion of Buyer, or waived by Buyer in its discretion, on and as of the
Closing Date and the initial Purchase Date:



(a) Buyer has received the following documents, each dated the Closing Date or as of the
Closing Date unless otherwise specified: (i) each Repurchase Document duly executed and delivered
by the parties thereto, (ii) an official good standing certificate dated a



 


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recent date with respect to Seller (including in each jurisdiction where any Underlying
Mortgaged Property is located to the extent necessary for Buyer to enforce its rights and remedies
thereunder), (iii) certificates of the secretary or an assistant secretary of Seller with respect
to attached copies of the Governing Documents and applicable resolutions of Seller, and the
incumbencies and signatures of officers of Seller executing the Repurchase Documents to which it is
a party, evidencing the authority of Seller with respect to the execution, delivery and performance
thereof, (iv) a Closing Certificate, (v) an executed power of attorney of Seller in the form of
Exhibit O, (vi) such opinions from counsel to Seller as Buyer may require in its
discretion, including with respect to corporate matters, perfection of security interests,
Investment Company Act of 1940 matters, and the applicability of Bankruptcy Code safe harbors, and
(vii) all other documents, certificates, information, financial statements, reports, approvals and
opinions of counsel as it may require in its discretion;



(b) (i) UCC financing statements have been filed against Seller in all filing offices required
by Buyer, (ii) Buyer has received such searches of UCC filings, tax liens, judgments, pending
litigation and other matters relating to Seller and the Purchased Assets as Buyer may require in
its discretion, and (iii) the results of such searches are satisfactory to Buyer in its discretion;



(c) Buyer has received payment from Seller of all fees and expenses then payable under this
Agreement and the other Repurchase Documents, as contemplated by Section 13.02; and



(d) Buyer has completed to its satisfaction such due diligence and modeling as it may require
in its discretion.



Section 6.02 Conditions Precedent to All Transactions. Buyer shall not be obligated
to enter into any Transaction, purchase any Asset, or be obligated to take, fulfill or perform any
other action hereunder, until the following additional conditions have been satisfied in the
discretion of Buyer, or waived by Buyer in its discretion, with respect to each Asset on and as of
the Purchase Date therefor:



(a) Buyer has received the following documents: (i) a Transaction Request, (ii) an
Underwriting Package, (iii) a Confirmation, (iv) Irrevocable Redirection Notices, (v) a trust
receipt and other items required to be delivered under the Custodial Agreement, and (vi) all other
documents, certificates, information, financial statements, reports, approvals and opinions of
counsel as Buyer may require in its discretion;



(b) immediately before such Transaction and after giving effect thereto and to the intended
use thereof, no Representation Breach (including with respect to any Purchased Asset), Default,
Event of Default, Margin Deficit or Material Adverse Effect exists;



(c) Buyer has completed its due diligence review of the Underwriting Package, Mortgage Loan
Documents and such other documents, records and information as Buyer in its discretion deems
appropriate, and the results of such reviews are satisfactory to Buyer in its discretion;


 


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(d) Buyer has in its discretion (i) determined that such Asset is an Eligible Asset,
(ii) approved the purchase of such Asset, (iii) obtained all necessary internal credit and other
approvals for such Transaction, and (iv) executed the Confirmation;



(e) the aggregate outstanding Purchase Price of all Transactions does not exceed the Maximum
Amount after giving effect to such Transaction;



(f) the Purchase Date is not later than the Closing Date and the Repurchase Date is not later
than the Maturity Date;



(g) Seller has satisfied all requirements and conditions and have performed all covenants,
duties, obligations and agreements contained in the Repurchase Documents to be performed by Seller
on or before the Purchase Date;



(h) to the extent the related Mortgage Loan Documents or Junior Interest Documents contain
notice, cure and other provisions in favor of a pledgee under a repurchase or warehouse facility,
and without prejudice to the sale treatment of such Asset to Buyer, Buyer has received evidence
that Seller has given notice to the applicable Persons of Buyer’s interest in such Asset and
otherwise satisfied any other applicable requirements under such pledgee provisions so that Buyer
is entitled to the rights and benefits of a pledgee under such pledgee provisions;



(i) (i) Buyer has received a copy of the Initial Interest Rate Protection Agreement and
related documents, and (ii) no termination event, default or event of default (however defined)
exists thereunder; and



(j) Buyer shall have received blank assignments of all Mortgage Loan Documents in appropriate
form for recording in the jurisdiction in which the underlying real estate is located (the
“Blank Assignment Documents”).



Each Confirmation delivered by Seller shall constitute a certification by Seller that all of
the conditions precedent in this Article 6 have been satisfied, unless any such condition
precedent was expressly waived in the related Confirmation.



The failure of Seller to satisfy any of the conditions precedent in this Article 6
with respect to any Transaction or Purchased Asset shall, unless such failure was waived in writing
by Buyer in its discretion on or before the related Purchase Date, give rise to the right of Buyer
at any time to rescind the related Transaction, whereupon Seller shall immediately pay to Buyer the
Repurchase Price of such Purchased Asset.



ARTICLE 7




REPRESENTATIONS AND WARRANTIES OF SELLER




Seller represents and warrants, on and as of the date of this Agreement, each Purchase Date,
and at all times when any Repurchase Document or Transaction is in full force and effect, except as
set forth in Schedule 2, as follows:


 


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Section 7.01 Seller. Seller has been duly organized and validly exists in good
standing as a limited liability company under the laws of the State of Delaware. Seller (a) has
all requisite power, authority, legal right, licenses and franchises, (b) is duly qualified to do
business in all jurisdictions necessary, and (c) has been duly authorized by all necessary action,
to (w) own, lease and operate its properties and assets, (x) conduct its business as presently
conducted, (y) execute, deliver and perform its obligations under the Repurchase Documents to which
it is a party, and (z) acquire, own, sell, assign, pledge and repurchase the Purchased Assets.
Seller’s exact legal name is set forth in the preamble and signature pages of this Agreement.
Seller’s location (within the meaning of Article 9 of the UCC), and the office where Seller keeps
all records (within the meaning of Article 9 of the UCC) relating to the Purchased Assets is at the
address of Seller referred to in Annex 1. Seller has not changed its name or location
within the past twelve (12) months. Seller’s organizational identification number is 4786854 and
its tax identification number is 27-1869666. Seller is a wholly-owned Subsidiary of Guarantor.
The fiscal year of Seller is the calendar year. Seller has no Indebtedness, Contractual
Obligations or investments other than (a) ordinary trade payables, (b) in connection with Assets
acquired or originated for the Transactions, and (c) the Repurchase Documents. Seller has no
Guarantee Obligations.



Section 7.02 Repurchase Documents. Each Repurchase Document to which Seller is a
party has been duly executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by Insolvency Laws and general principles of equity. The execution,
delivery and performance by Seller of each Repurchase Document to which it is a party do not and
will not (a) conflict with, result in a breach of, or constitute (with or without notice or lapse
of time or both) a default under, any (i) Governing Document, Indebtedness, Guarantee Obligation or
Contractual Obligation applicable to Seller or any of its properties or assets, (ii) Requirements
of Law, or (iii) approval, consent, judgment, decree, order or demand of any Governmental
Authority, or (b) result in the creation of any Lien (other than Permitted Liens) on any of the
properties or assets of Seller. All approvals, authorizations, consents, orders, filings, notices
or other actions of any Person or Governmental Authority required for the execution, delivery and
performance by Seller of the Repurchase Documents to which it is a party and the sale of and grant
of a security interest in each Purchased Asset to Buyer, have been obtained, effected, waived or
given and are in full force and effect. The execution, delivery and performance of the Repurchase
Documents do not require compliance by Seller with any “bulk sales” or similar law. There is no
material litigation, proceeding or investigation pending or, to Seller’s Knowledge, threatened,
against Seller, Manager, any Intermediate Starwood Entity or Guarantor before any Governmental
Authority (a) asserting the invalidity of any Repurchase Document, (b) seeking to prevent the
consummation of any Transaction, or (c) seeking any determination or ruling that could reasonably
be expected to have a Material Adverse Effect.



Section 7.03 Solvency. None of Seller, Manager, any Intermediate Starwood Entity or
Guarantor is or has ever been the subject of an Insolvency Proceeding. Seller, Manager, each
Intermediate Starwood Entity and Guarantor are Solvent and the Transactions do not and will not
render Seller, Manager, any Intermediate Starwood Entity or Guarantor not Solvent. Seller is not
entering into the Repurchase Documents or any Transaction with the intent to hinder, delay or
defraud any creditor of Seller, Manager, any Intermediate Starwood Entity or Guarantor. Seller has
received or will receive reasonably equivalent value for the Repurchase



 


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Documents and each Transaction. Seller has adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of its contemplated
business operations. Seller is generally able to pay, and as of the date hereof is paying, its
debts as they come due.



Section 7.04 Taxes. Seller, Manager, each Intermediate Starwood Entity and Guarantor
have filed all required federal income tax returns and all other material tax returns, domestic and
foreign, required to be filed by them and have paid all material taxes (including mortgage
recording taxes), assessments, fees, and other governmental charges payable by them, or with
respect to any of their properties or assets, which have become due, and income or franchise taxes
have been paid or are being contested in good faith by appropriate proceedings diligently conducted
and for which appropriate reserves have been established in accordance with GAAP. Seller, Manager,
each Intermediate Starwood Entity and Guarantor have paid, or have provided adequate reserves for
the payment of, all such taxes for all prior fiscal years and for the current fiscal year to date.
There is no material action, suit, proceeding, investigation, audit or claim relating to any such
taxes now pending or, to Seller’s Knowledge, threatened by any Governmental Authority which is not
being contested in good faith as provided above. None of Seller, Manager, any Intermediate
Starwood Entity or Guarantor has entered into any agreement or waiver or been requested to enter
into any agreement or waiver extending any statute of limitations relating to the payment or
collection of taxes, or is aware of any circumstances that would cause the taxable years or other
taxable periods of Seller, Manager, any Intermediate Starwood Entity or Guarantor not to be subject
to the normally applicable statute of limitations. No tax liens have been filed against any assets
of Seller, Manager, any Intermediate Starwood Entity or Guarantor. Seller does not intend to treat
any Transaction as being a “reportable transaction” as defined in Treasury Regulation
Section 1.6011–4. If Seller determines to take any action inconsistent with such intention, it
will promptly notify Buyer, in which case Buyer may treat each Transaction as subject to Treasury
Regulation Section 301.6112–1 and will maintain the lists and other records required thereunder.



Section 7.05 Financial Condition. The audited balance sheet of Guarantor as at the
fiscal year most recently ended for which such audited balance sheet is available, and the related
audited statements of income and retained earnings and of cash flows for the fiscal year then
ended, setting forth in each case, except for the 2009 calendar year, in comparative form the
figures for the previous year, reported on without a “going concern” or like qualification arising
out of the audit conducted by Guarantor’s independent certified public accountants, copies of which
have been delivered to Buyer, are complete and correct and present fairly the financial condition
of Guarantor as of such date and the results of its operations and cash flows for the fiscal year
then ended. All such financial statements, including related schedules and notes, were prepared in
accordance with GAAP except as disclosed therein. Guarantor does not have any material contingent
liability or liability for taxes or any long term lease or unusual forward or long term commitment,
including any Derivative Contract, which is not reflected in the foregoing statements or notes.
Since the date of the financial statements and other information delivered to Buyer prior to the
Closing Date, neither Seller nor Guarantor has sold, transferred or otherwise disposed of any
material part of its property or assets (except pursuant to the Repurchase Documents) or, except
pursuant to the Purchase Agreement, acquired any property or assets (including Equity Interests of
any other Person) that are material in relation to the financial condition of Seller.


 


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Section 7.06 True and Complete Disclosure. The information, reports, certificates,
documents, financial statements, operating statements, forecasts, books, records, files, exhibits
and schedules furnished by or on behalf of Seller to Buyer in connection with the Repurchase
Documents and the Transactions, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of Seller to Buyer in connection with
the Repurchase Documents and the Transactions will be true, correct and complete in all material
respects, or in the case of projections will be based on reasonable estimates prepared and
presented in good faith, on the date as of which such information is stated or certified.



Section 7.07 Compliance with Laws. Seller has complied in all material respects with
all Requirements of Laws, and, to Seller’s Actual Knowledge, no Purchased Asset contravenes any
Requirements of Laws. Neither Seller nor any Affiliate of Seller (a) is an “enemy” or an “ally of
the enemy” as defined in the Trading with the Enemy Act of 1917, (b) is in violation of any
Anti-Terrorism Laws, (c) is a blocked person described in Section 1 of Executive Order 13224 or to
its Knowledge engages in any dealings or transactions or is otherwise associated with any such
blocked person, (d) is in violation of any country or list based economic and trade sanction
administered and enforced by the Office of Foreign Assets Control, (e) is a Sanctioned Entity,
(f) has more than 10% of its assets located in Sanctioned Entities, or (g) derives more than 10% of
its operating income from investments in or transactions with Sanctioned Entities. The proceeds of
any Transaction have not been and will not be used to fund any operations in, finance any
investments or activities in or make any payments to a Sanctioned Entity. Seller is a “qualified
purchaser” as defined in the Investment Company Act of 1940. None of Seller, Manager, any
Intermediate Starwood Entity or Guarantor (a) is or is controlled by an “investment company” as
defined in such Act or is exempt from the provisions of such Act, (b) is a “broker” or “dealer” as
defined in, or could be subject to a liquidation proceeding under, the Securities Investor
Protection Act of 1970, or (c) is subject to regulation by any Governmental Authority limiting its
ability to incur the Repurchase Obligations. No properties presently or previously owned or leased
by Seller, Manager, any Intermediate Starwood Entity or Guarantor, or any of their respective
predecessors contain or previously contained any Materials of Environmental Concern which
constitute or constituted a violation of Environmental Laws or reasonably could be expected to give
rise to liability of Seller, Manager, any Intermediate Starwood Entity or Guarantor thereunder.
Seller has no Actual Knowledge of any violation, alleged violation, non-compliance, liability or
potential liability of Seller, Manager, any Intermediate Starwood Entity or Guarantor under any
Environmental Law. Materials of Environmental Concern have not been released, transported,
generated, treated, stored or disposed of in violation of Environmental Laws or in a manner which
reasonably could be expected to give rise to liability of Seller, Manager, any Intermediate
Starwood Entity or Guarantor thereunder. Seller and all Affiliates of Seller are in compliance
with the Foreign Corrupt Practices Act of 1977 and any foreign counterpart thereto. Neither Seller
nor any Affiliate of Seller has made, offered, promised or authorized a payment of money or
anything else of value (a) in order to assist in obtaining or retaining business for or with, or
directing business to, any foreign official, foreign political party, party official or candidate
for foreign political office, (b) to any foreign official, foreign political party, party official
or candidate for foreign political office, or (c) with the intent to induce the recipient to misuse
his or her official



 


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position to direct business wrongfully to Seller, any Affiliate of Seller or any other Person,
in violation of the Foreign Corrupt Practices Act.



Section 7.08 Compliance with ERISA. With respect to Guarantor, any Intervening
Starwood Entity or Seller, during the immediately preceding five (5) year period, (a) neither a
Reportable Event nor an “accumulated funding deficiency” as defined in the Code or ERISA has
occurred, (b) each Plan has complied in all material respects with the applicable provisions of the
Code and ERISA, (c) no termination of a Single Employer Plan has occurred resulting in any
liability that has remained underfunded, and (d) no Lien in favor of the Pension Benefit Guaranty
Commission or a Plan has arisen. The present value of all accrued benefits under each Single
Employer Plan (based on the assumptions used to fund such Plan) relating to Guarantor, any
Intervening Starwood Entity or Seller did not, as of the last annual valuation date prior to the
date hereof, exceed the value of the assets of such Plan allocable to such accrued benefits. None
of Guarantor, any Intervening Starwood Entity or Seller is currently subject to any liability for a
complete or partial withdrawal from a Multiemployer Plan.



Section 7.09 No Default or Material Adverse Effect. No Event of Default and, to
Seller’s Knowledge, no Default exists. Seller believes that it is and will be able to pay and
perform each agreement, duty, obligation and covenant contained in the Repurchase Documents and
Mortgage Loan Documents to which it is a party, and that it is not subject to any agreement,
obligation, restriction or Requirements of Law which would unduly burden its ability to do so or
could reasonably be expected to have a Material Adverse Effect. Seller has no Knowledge of any
actual or prospective development, event or other fact that could reasonably be expected to have a
Material Adverse Effect. No Internal Control Event has occurred.



Section 7.10 Purchased Assets. Each Purchased Asset is an Eligible Asset. Each
representation and warranty set forth in the Repurchase Documents (including those set forth in
Schedules 1(a) and 1(b) applicable to the Class of such Purchased Asset) with
respect to each Purchased Asset is true and correct. Seller has delivered to Custodian true,
correct and complete copies of the Mortgage Loan Documents and Junior Interest Documents, as
applicable, relating to each Purchased Asset. Seller has no Actual Knowledge of any fact which
could reasonably lead it to expect that any Purchased Asset will not be paid in full. None of the
Mortgage Loan Documents has any marks or notations indicating that it has been sold, assigned,
pledged, encumbered or otherwise conveyed to any Person other than Buyer. If any Mortgage Loan
Document requires the holder or transferee of the related Purchased Asset to be a qualified
transferee, qualified institutional lender or qualified lender (however defined), Seller meets such
requirement. Assuming that Buyer also meets such requirement, the assignment and pledge of such
Purchased Asset to Buyer pursuant to the Repurchase Documents do not violate such Mortgage Loan
Document. Seller and all Affiliates of Seller (a) have sold and transferred all Servicing Rights
with respect to the Purchased Assets to Buyer, and (b) have no retained interests.



Section 7.11 Purchased Assets Acquired from Transferors. With respect to each
Purchased Asset purchased by Seller from a Transferor, (a) such Purchased Asset was acquired and
transferred pursuant to a Purchase Agreement, (b) such Transferor received reasonably equivalent
value in consideration for the transfer of such Purchased Asset, (c) no such transfer was made for
or on account of an antecedent debt owed by such Transferor to Seller or an



 


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Affiliate of Seller, (d) no such transfer is or may be voidable or subject to avoidance under
the Bankruptcy Code, and (e) the representations and warranties made by such Transferor to Seller
or such Affiliate in such Purchase Agreement and set forth on the attached Exhibit Q hereto
are hereby incorporated herein by reference and are hereby remade by Seller to Buyer on each date
as of which they speak in such Purchase Agreement.



Section 7.12 Transfer and Security Interest. The Repurchase Documents constitute a
valid and effective transfer to Buyer of all right, title and interest of Seller in, to and under
all Purchased Assets (together with all related Servicing Rights), free and clear of any Liens
(other than Permitted Liens). With respect to the protective security interest granted by Seller in
Section 11.01, upon the delivery of the Confirmations and the Mortgage Loan Documents to Custodian,
the execution and delivery of the Controlled Account Agreements and the filing of the UCC financing
statements as provided herein, such security interest shall be a valid first priority perfected
security interest to the extent such security interest can be perfected by possession, filing or
control under the UCC, subject only to Permitted Liens. Upon receipt by Custodian of each Mortgage
Loan Document required to be endorsed in blank by Seller and payment by Buyer of the Purchase Price
for the related Purchased Asset, Buyer shall either (a) own such Purchased Asset and the related
Mortgage Loan Documents or (b) have a valid first priority perfected security interest in such
Purchased Asset and the related Mortgage Loan Documents. At Buyer’s election (and at Buyer’s sole
cost and expense, only if completed and recorded by Buyer prior to a Default or Event of Default),
Buyer may complete and record any or all of the Blank Assignment Documents as further evidence of
Buyer’s ownership interest in the related Purchased Assets. Seller has not authorized the filing
of and is not aware of any UCC financing statements filed against Seller as debtor that include the
Purchased Assets, other than any financing statement that has been terminated or filed pursuant to
this Agreement.



Section 7.13 No Broker. Neither Seller nor any Affiliate of Seller has dealt with any
broker, investment banker, agent or other Person, except for Buyer or an Affiliate of Buyer, who
may be entitled to any commission or compensation in connection with any Transaction.



Section 7.14 Initial Interest Rate Protection Agreement. (a) Guarantor has entered
into the Initial Interest Rate Protection Agreement, (b) such Initial Interest Rate Protection
Agreement is in full force and effect, and (c) no termination event, default or event of default
(however defined) exists thereunder.



Section 7.15 Separateness. Seller is in compliance with the requirements of
Article 9.



Section 7.16 REIT Status. Guarantor has not engaged in any material “prohibited
transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code. Guarantor for its
current “tax year” (as defined in the Code) is entitled to a dividends paid deduction under the
requirements of Section 857 of the Code with respect to any dividends paid by it with respect to
each such year for which it claims a deduction in its Form 1120-REIT filed with the United States
Internal Revenue Service for such year.


 


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Section 7.17 Investment Company Act. Neither Seller, any Intermediate Starwood Entity
or Guarantor is an “investment company”, or a company “controlled” by an “investment company”,
within the meaning of the 40 Act.



Section 7.18 Conveyance of Excluded Assets. At the time Seller transferred ownership
of the Excluded Assets, such transfer was accomplished through a dividend of such Excluded Assets
to Principal in accordance with the organizational documents and requirements of Seller and
Principal, and without recourse and without any representation or warranty or continuing obligation
or liability to Seller, Manager, any Intermediate Starwood Entity or Guarantor.



ARTICLE 8




COVENANTS OF SELLER




From the date hereof until the Repurchase Obligations are paid in full and the Repurchase
Documents are terminated, Seller shall perform and observe the following covenants, which shall be
given independent effect.



Section 8.01 Existence; Governing Documents; Conduct of Business. Seller shall
(a) preserve and maintain its legal existence, (b) qualify and remain qualified in good standing in
each jurisdiction where the failure to be so qualified would have a Material Adverse Effect,
(c) comply with its Governing Documents, including all special purpose entity provisions, and
(d) not modify, amend or terminate its Governing Documents in any material respect, without Buyer’s
prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed.
Seller shall (a) continue to engage in the same (and no other) general lines of business as
presently conducted by it, (b) maintain and preserve all of its material rights, privileges,
licenses and franchises necessary for the operation of its business, and (c) maintain Seller’s
status as a qualified transferee, qualified institutional lender or qualified lender (however
defined) if and to the extent required under the Mortgage Loan Documents. Seller shall not
(a) change its name, organizational number, tax identification number, fiscal year, method of
accounting, identity, structure or jurisdiction of organization (or have more than one such
jurisdiction), move the location of its principal place of business and chief executive office, as
defined in the UCC) from the location referred to in Section 7.01, or (b) move, or consent
to Custodian moving, the Mortgage Loan Documents from the location thereof on the Closing Date,
unless in each case Seller has given at least thirty (30) days prior notice to Buyer and has taken
all actions required under the UCC to continue the first priority perfected security interest of
Buyer in the Purchased Assets. Seller shall enter into each Transaction as principal, unless Buyer
in its discretion agrees before a Transaction that Seller may enter into such Transaction as agent
for a principal and under terms and conditions disclosed to Buyer.



Section 8.02 Compliance with Laws, Contractual Obligations and Repurchase Documents.
Seller shall comply in all material respects with all Requirements of Laws, including those
relating to any Purchased Asset and to the reporting and payment of taxes. No part of the proceeds
of any Transaction shall be used for any purpose that violates Regulation T, U or X of the Board of
Governors of the Federal Reserve System. Seller shall conduct the requisite due diligence in
connection with the origination or acquisition of each Asset for



 


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purposes of complying with the Anti–Terrorism Laws, including with respect to the legitimacy
of the applicable Underlying Obligor and the origin of the assets used by such Person to purchase
the Underlying Mortgaged Property, and will maintain sufficient information to identify such Person
for purposes of the Anti–Terrorism Laws. Seller shall maintain the Custodial Agreement and
Controlled Account Agreement in full force and effect. Seller shall not directly or indirectly
enter into any agreement that would be violated or breached by any Transaction or the performance
by Seller of any Repurchase Document.



Section 8.03 Structural Changes. Seller shall not enter into merger or consolidation,
or liquidate, wind up or dissolve, or sell all or substantially all of its assets or properties, or
permit any changes in the ownership of its Equity Interests which results in a Change of Control of
Seller, without the consent of Buyer in its discretion (unless, in any of the foregoing cases, the
Repurchase Obligations are paid in full in connection with any such transaction). Seller shall
ensure that all direct Equity Interests of Seller shall continue to be owned by the owner or owners
thereof as of the date hereof. Seller shall ensure that neither the Equity Interests of Seller nor
any property or assets of Seller shall be pledged to any Person other than Buyer. Seller shall not
enter into any transaction with an Affiliate of Seller unless such transaction is on market and
arm’s-length terms and conditions.



Section 8.04 Protection of Buyer’s Interest in Purchased Assets. With respect to each
Purchased Asset, Seller shall take all action necessary or required by the Repurchase Documents,
Mortgage Loan Documents or Requirements of Law, or reasonably requested by Buyer, to perfect,
protect and more fully evidence Buyer’s ownership of and first priority perfected security interest
in such Purchased Asset and related Mortgage Loan Documents, including executing or causing to be
executed such other instruments or notices as may be necessary or appropriate and filing and
maintaining effective UCC financing statements, continuation statements and assignments and
amendments thereto. Seller shall comply with all requirements of the Custodial Agreement with
respect to each Purchased Asset, including the delivery to Custodian of all required Mortgage Loan
Documents. Seller shall (a) not assign, sell, transfer, pledge, hypothecate, grant, create, incur,
assume or suffer or permit to exist any security interest in or Lien (other than Permitted Liens)
on any Purchased Asset to or in favor of any Person other than Buyer, (b) defend such Purchased
Asset against, and take such action as is necessary to remove, any such Lien, and (c) defend the
right, title and interest of Buyer in and to all Purchased Assets against the claims and demands of
all Persons whomsoever. Notwithstanding the foregoing, if Seller grants a Lien on any Purchased
Asset in violation of this Section 8.04 or any other Repurchase Document, Seller shall be
deemed to have simultaneously granted an equal and ratable Lien on such Purchased Asset in favor of
Buyer to the extent such Lien has not already been granted to Buyer; provided, that such equal and
ratable Lien shall not cure any resulting Default or Event of Default. Seller shall not materially
amend, modify, waive or terminate any provision of the Purchase Agreement or the Sub-Servicing
Agreement. Seller shall mark its computer records and tapes to evidence the interests granted to
Buyer hereunder. Seller shall not take any action to cause any Purchased Asset that is not
evidenced by an instrument or chattel paper (as defined in the UCC) to be so evidenced. If a
Purchased Asset becomes evidenced by an instrument or chattel paper, the same shall be immediately
delivered to Custodian on behalf of Buyer, together with endorsements required by Buyer in its
discretion.


 


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Section 8.05 Actions of Seller Relating to Distributions, Indebtedness, Guarantee
Obligations, Contractual Obligations, Investments and Liens. At any time after the occurrence
and during the continuance of any Default under Sections 10.01(a) or 10.01(f), any
Event of Default or any breach of the Debt Yield Test, Seller shall not declare or make any payment
on account of, or set apart assets for, a sinking or similar fund for the purchase, redemption,
defeasance, retirement or other acquisition of any Equity Interest of Seller, Manager, any
Intermediate Starwood Entity or Guarantor, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash or property or in
obligations of Seller, Manager, any Intermediate Starwood Entity or Guarantor. Seller shall not
contract, create, incur, assume or permit to exist any Indebtedness, Guarantee Obligations,
Contractual Obligations or Investments, except to the extent (a) arising or existing under the
Repurchase Documents, (b) existing as of the Closing Date, as referenced in the financial
statements delivered to Buyer prior to the Closing Date, and any renewals, refinancings or
extensions thereof in a principal amount not exceeding that outstanding as of the date of such
renewal, refinancing or extension, (c) incurred after the Closing Date to originate or acquire
Assets or to provide funding with respect to Assets, (d) pursuant to the Initial Interest Rate
Protection Agreement entered into in order to manage risks related to Assets, and (e) unsecured
trade payables and personal property leases and financings incurred in the ordinary course of
business, so long as the maximum outstanding amount of all liabilities described in this clause (e)
shall at no time exceed an amount equal to three hundred thousand dollars ($300,000). Seller shall
not (a) contract, create, incur, assume or permit to exist any Lien on or with respect to any of
its property or assets (including the Purchased Assets) of any kind (whether real or personal,
tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens, or
(b) except as provided in the preceding clause (a), grant, allow or enter into any agreement or
arrangement with any Person that prohibits or restricts or purports to prohibit or restrict the
granting of any Lien on any of the foregoing.



Section 8.06 Maintenance Records. Seller shall keep and maintain all documents,
books, records and other information (including with respect to the Purchased Assets) that are
reasonably necessary or advisable in the conduct of its business.




Section 8.07 Financial Covenants.



(a) Seller shall comply with the Debt Yield Test at all times. Buyer shall have the right, in
its discretion, to test for compliance with the Debt Yield Test for any calendar quarter, which may
be tested at such times as Buyer determines, and any failure of Buyer to do so as of any particular
date shall not constitute a waiver of Buyer’s right to do so at any time thereafter. Buyer agrees
that in the event that it declares a Debt Yield Test compliance breach and Seller pays any and all
amounts payable in full with respect to such compliance breach in accordance with Section
4.01(d), the Buyer shall not declare an additional Debt Yield Test compliance breach with
respect to the calendar quarter that was the subject of the cured compliance breach; provided that
this sentence shall not prevent Buyer from making any declaration of any other Event of Default
hereunder and shall not act to prevent Buyer from declaring a breach of the Debt Yield Test at any
other time.



(b) Seller shall not permit its Net Income during any fiscal year to be less than zero.


 


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Section 8.08 Delivery of Income. Seller shall, and pursuant to Irrevocable
Redirection Notices shall cause the Underlying Obligors under the Purchased Assets and all other
applicable Persons to, deposit all Income in respect of the Purchased Assets into the Servicing
Agreement Account or the Collection Account in accordance with Section 5.01 hereof on the
day the related payments are due. Seller, Servicer and Sub-Servicer (a) shall comply with and
enforce each Irrevocable Redirection Notice, (b) shall not amend, modify, waive, terminate or
revoke any Irrevocable Redirection Notice without Buyer’s consent in its discretion, and (c) shall
take all reasonable steps to enforce each Irrevocable Redirection Notice. In connection with each
principal payment or prepayment under a Purchased Asset, Seller shall provide or cause to be
provided to Buyer and Custodian sufficient detail to enable Buyer and Custodian to identify the
Purchased Asset to which such payment applies. If Seller receives any rights, whether in addition
to, in substitution of, as a conversion of, or in exchange for any Purchased Assets, or otherwise
in respect thereof, Seller shall accept the same as Buyer’s agent, hold the same in trust for Buyer
and immediately deliver the same to Buyer or its designee in the exact form received, together with
duly executed instruments of transfer, stock powers or assignment in blank and such other
documentation as Buyer shall reasonably request. If any Income is received by Seller or any
Affiliate of Seller, Seller shall pay or deliver such Income to Buyer on behalf of Buyer within two
(2) Business Days after receipt, and, until so paid or delivered, hold such Income in trust for
Buyer, segregated from other funds of Seller.



Section 8.09 Delivery of Financial Statements and Other Information. Seller shall
deliver the following to Buyer, as soon as available and in any event within the time periods
specified:



(a) within forty-five (45) days after the end of each fiscal quarter and each fiscal year of
Guarantor, (i) the unaudited balance sheets of Guarantor as at the end of such period, (ii) the
related unaudited statements of income, retained earnings and cash flows for such period and the
portion of the fiscal year through the end of such period, setting forth in each case in
comparative form the figures for the previous year, and (iii) a Compliance Certificate;



(b) within ninety (90) days after the end of each fiscal year of Guarantor, (i) the audited
balance sheets of Guarantor as at the end of such fiscal year, (ii) the related statements of
income, retained earnings and cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, (iii) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be qualified as to scope of
audit or going concern and shall state that said financial statements fairly present the financial
condition and results of operations of Guarantor as at the end of and for such fiscal year in
accordance with GAAP, (iv) a projections of Guarantor of the operating budget and cash flow budget
of Guarantor for the following fiscal year, to the extent such is prepared and (v) a Compliance
Certificate;



(c) all reports submitted to Guarantor by independent certified public accountants in
connection with each annual, interim or special audit of the books and records of Guarantor made by
such accountants, including any management letter commenting on Guarantor’s internal controls;


 


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(d) with respect to each Purchased Asset and related Underlying Mortgaged Property, on or
before each Remittance Date, all remittance, servicing, securitization, exception and other
reports, if any, and all operating and financial statements and rent rolls of all Underlying
Obligors for all Mortgaged Properties during the prior month, when and as received from
Sub-Servicer, an Underlying Obligor, a third-party servicer or from any other source;



(e) all financial statements, reports, notices and other documents that Guarantor sends to
holders of its Equity Interests or makes to or files with any Governmental Authority, promptly
after the delivery or filing thereof;



(f) any other material agreements, correspondence, documents or other information not included
in the Underwriting Package on the Closing Date, which is related to Seller or the Purchased
Assets, as soon as possible after the discovery thereof by Seller, any Intermediate Starwood Entity
or Guarantor; and



(g) such other information regarding the financial condition, operations or business of
Seller, Guarantor or any Underlying Obligor as Buyer may reasonably request including, without
limitation, any such information which is otherwise necessary to allow Buyer to monitor compliance
with the terms of the Repurchase Documents.



Section 8.10 Delivery of Notices. Seller shall promptly (and in no event later than
one (1) Business Day from the date of each such occurrence) notify Buyer of the occurrence of any
of the following of which Seller has Knowledge, together with a certificate of a Responsible
Officer of Seller setting forth details of such occurrence and any action Seller has taken or
proposes to take with respect thereto:




(a) a Representation Breach;



(b) any of the following: (i) with respect to any Purchased Asset or related Underlying
Mortgaged Property: material change in Market Value, material loss or damage, material licensing or
permit issues, violation of Requirements of Law, discharge of or damage from Material of
Environmental Concern or any other actual or expected event or change in circumstances that could
reasonably be expected to result in a default or material decline in value or cash flow, and
(ii) with respect to Seller: violation of Requirements of Law, material decline in the value of
Seller’s assets or properties, an Internal Control Event or other event or circumstance that could
reasonably be expected to have a Material Adverse Effect;



(c) the existence of any Default, Event of Default or material default under or related to a
Purchased Asset, Mortgage Loan Document, Indebtedness, Guarantee Obligation or Contractual
Obligation of Seller;




(d) the resignation or termination of Sub-Servicer under the Sub-Servicing Agreement;



(e) the establishment of a rating by any Rating Agency applicable to Seller, Guarantor,
Manager or any Intermediate Starwood Entity, and any downgrade in or withdrawal of such rating
once established;


 


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(f) the commencement of, settlement of or material judgment in any litigation, action, suit,
arbitration, investigation or other legal or arbitrable proceedings before any Governmental
Authority that (i) affects Seller, Guarantor, any Purchased Asset or any Underlying Mortgaged
Property, (ii) questions or challenges the validity or enforceability of any Repurchase Document,
Transaction, Purchased Asset or Mortgage Loan Document, or (iii) individually or in the aggregate,
if adversely determined, could reasonably be likely to have a Material Adverse Effect; and




(g) promptly upon Knowledge thereof, notice of any change in Guarantor’s status as a REIT.



Section 8.11 Hedging. The terms and provisions governing Hedging under this
Section 8.11 are set forth in the Fee and Pricing Letter, and are hereby incorporated by
reference.



Section 8.12 Escrow Imbalance. Seller shall, no later than ten (10) Business Days
after learning of any material overdraw, deficit or imbalance in any escrow or reserve account
relating to a Purchased Asset, use reasonable efforts to cause the applicable Underlying Obligor to
correct and eliminate the same, including by depositing funds into such account.



Section 8.13 Guarantee Agreement. If at any time (a) the obligations of any Guarantor
under the Guarantee Agreement shall cease to be in effect, (b) any Insolvency Event has occurred
with respect to Guarantor, or (c) any violation of any provision set forth in Section 9 of
the Guarantee Agreement should occur and be continuing (any of the foregoing events, a
“Guarantee Default”), then, within sixty (60) days after the occurrence of any such
Guarantee Default, Seller shall cause a replacement guarantor acceptable to Buyer in its discretion
to assume in writing all obligations of Guarantor under the Guarantee Agreement or become a
Guarantor, as Buyer deems necessary in its discretion to correct such Guarantee Default.



Section 8.14 Management Internalization. Seller shall not permit Guarantor to
internalize its management without Buyer’s prior written approval, which shall not be unreasonably
withheld.



Section 8.15 REIT Status. Guarantor shall at all times continue to be (i) qualified
as a REIT as defined in Section 856 of the Code without giving any effect to any cure or corrective
periods or allowances, (ii) entitled to a dividends paid deduction under Section 857 of the Code
with respect to dividends paid by it with respect to each taxable year for which it claims a
deduction on its Form 1120 REIT filed with the United States Internal Revenue Service for such
year, or the entering into by it of any material “prohibited transactions” as defined in Sections
857(b) and 856(c) of the Code, and (iii) a publicly traded company listed, quoted or traded on and
in good standing in respect of any Stock Exchange.



Section 8.16 Certain Post-Closing Obligations.Section 8.17 Each of the following
post-closing conditions must be satisfied on or before the dates specified therein, as determined
by Buyer in its sole discretion:



(a) On or before May 31, 2010, for all of the accounts described in Section 17.02
which are maintained in connection with the Purchased Assets described on Exhibit R hereto,
Seller shall use all reasonable, good faith best efforts to cause the Underlying



 


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Obligors to enter into the contractual arrangements with Buyer and Seller that are necessary in
order to create a perfected security interest in favor of Seller (for the joint benefit of both
Seller and Buyer) in all such accounts, including, without limitation, an Account Control Agreement
in form and substance reasonably acceptable to Buyer in its sole discretion.



(b) On or before April 2, 2010, Seller shall provide Buyer with evidence of the delivery of
executed copies of irrevocable direction notices, each in form and substance acceptable to Buyer in
its discretion, to all depository institutions that maintain escrow accounts in connection with
any Purchased Assets. On or before April 30, 2010, Seller shall provide Buyer with copies of all
such irrevocable direction notices, countersigned by the related Mortgagors and the related
depository institutions.



(c) On or before May 2, 2010, Seller shall resolve, to Buyer’s satisfaction determined in its
discretion, all of the open items listed on the Custodian’s exception report, a copy of which is
attached hereto as Exhibit 8.16(c), which evidence shall include, without limitation, (a)
for all unrecorded documents, the delivery to Buyer of either recorded copies or evidence that they
have been delivered for recording, and (b) for all newly filed UCC-1 financing statements, the
delivery to Buyer of recorded copies of the same, together with currently dated and clean copies of
new UCC searches at all related filing locations.



(d) On or before April 30, 2010, Seller shall provide Buyer with evidence reasonably
acceptable to Buyer that insurance coverage reasonably acceptable to Buyer is currently in full
force and effect in connection with the Underlying Mortgage Loan commonly known as Constellation
Place.



(e) On or before April 30, 2010, Seller shall provide Buyer with (i) a re-issued original copy
of the existing $5,000,000 Letter of Credit, originally issued by U.S. Bank, National Association
in connection with the Whole Loans commonly known as the Lifetime Fitness loans, naming Seller
as sole beneficiary and containing a written acknowledgement from the issuing bank of Buyer’s
security interest therein, and (ii) issued original copies of the two (2) existing Letters of
Credit in the aggregate face amount of $2,960,313.66, originally issued by Citibank, N.A., as
re-issued by Wells Fargo Bank, National Association in connection with the Whole Loans commonly
known as the 301 Carlson Parkway Loan and the 401 Carlson Parkway Loan, respectively in the face
amounts of $550,198.57 and $531,384.75, naming Seller as sole beneficiary and containing written
acknowledgements from the issuing bank of Buyer’s security interests therein.



(f) On or before 5:00 PM on April 2, 2010, Seller shall deliver a fully executed, currently
dated and properly completed Compliance Certificate to Buyer.



ARTICLE 9




SINGLE-PURPOSE ENTITY




Section 9.01 Covenants Applicable to Seller. Seller shall (a) own, and, other than
the Excluded Assets, has owned no assets, and shall not engage in any business, other than the
assets and transactions specifically contemplated by this Agreement and any other


 


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Repurchase Document, (b) not incur any Indebtedness or other obligation, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any obligation), other than
(i) with respect to the Mortgage Loan Documents and the Retained Interests, (ii) commitments to
make loans which may become Eligible Assets, and (iii) as otherwise permitted under this Agreement,
(c) not make any loans or advances to any Affiliate or third party and shall not acquire
obligations or securities of its Affiliates, in each case other than in connection with the
origination or acquisition of Assets for purchase under the Repurchase Documents, (d) pay its debts
and liabilities (including, as applicable, shared personnel and overhead expenses) only from its
own assets, (e) comply with the provisions of its Governing Documents, (f) do all things necessary
to observe organizational formalities and to preserve its existence, and shall not amend, modify,
waive provisions of or otherwise change its Governing Documents in any material respect without the
prior written approval of Buyer, (g) maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates (except that such financial statements may be
consolidated to the extent consolidation is required under GAAP or as a matter of Requirements of
Law; provided, that (i) appropriate notation shall be made on such financial statements to indicate
the separateness of Seller from such Affiliate and to indicate that Seller’s assets and credit are
not available to satisfy the debts and other obligations of such Affiliate or any other Person and
(ii) such assets shall also be listed on Seller’s own separate balance sheet) and file its own tax
returns (except to the extent consolidation is required or permitted under Requirements of Law),
(h) be, and at all times shall hold itself out to the public as, a legal entity separate and
distinct from any other entity (including any Affiliate), shall correct any known misunderstanding
regarding its status as a separate entity, shall conduct business in its own name, and shall not
identify itself or any of its Affiliates as a division of the other, (i) maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations and shall remain Solvent, (j) not engage in or suffer
any change of Control, dissolution, winding up, liquidation, consolidation or merger in whole or in
part or convey or transfer all or substantially all of its properties and assets to any Person
(except as contemplated herein), (k) not commingle its funds or other assets with those of any
Affiliate or any other Person and shall maintain its properties and assets in such a manner that it
would not be costly or difficult to identify, segregate or ascertain its properties and assets from
those of others, (l) maintain its properties, assets and accounts separate from those of any
Affiliate or any other Person, (m) not hold itself out to be responsible for the debts or
obligations of any other Person, (n) not, without the prior unanimous written consent of all of its
Independent Directors, take any Insolvency Action, (o) (i) have at all times at least one
Independent Director, or such greater number if necessary to comply with customary industry
standards then-currently applicable to bankruptcy remote entities, and (ii) provide Buyer with
up-to-date contact information for all Independent Director(s) and a copy of the agreement pursuant
to which each Independent Director consents to and serves as an “Independent Director” for
Seller, (p) the Governing Documents for Seller shall provide (i) that Buyer be given at least two
(2) Business Days prior notice of the removal and/or replacement of the Independent Director,
together with the name and contact information of the replacement Independent Director and evidence
of the replacement’s satisfaction of the definition of Independent Director and (ii) that the
Independent Director of Seller shall not have any fiduciary duty to anyone including the holders of
the Equity Interest in Seller and any Affiliates of Seller except Seller and the creditors of
Seller with respect to taking of, or otherwise voting on, the Insolvency Action; provided,
that the foregoing shall not



 


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eliminate the implied contractual covenant of good faith and fair dealing, (q) not enter into
any transaction with an Affiliate of Seller except on commercially reasonable terms similar to
those available to unaffiliated parties in an arm’s-length transaction, (r) maintain a sufficient
number of employees in light of contemplated business operations, (s) use separate stationary,
invoices and checks bearing its own name, and (t) allocate fairly and reasonably any overhead for
shared office space and for services performed by an employee of an affiliate, and (u) not pledge
its assets to secure the obligations of any other Person, and (v) not form, acquire or hold any
Subsidiary or own any Equity Interest in any other entity.



Section 9.02
Additional Covenants Applicable to Seller. (a) Seller (i) shall be a
Delaware limited liability company, (ii) shall have at least one Independent Director or
Independent Manager serving as manager of such company, (iii) shall not take any Insolvency Action
and shall not cause or permit the members or managers of such entity to take any Insolvency Action,
either with respect to itself or, if the company is a Principal, with respect to Seller, in each
case unless all of its Independent Directors or Independent Managers then serving as managers of
the company shall have consented in writing to such action, and (iv) shall have either (A) a member
which owns no economic interest in the company, has signed the company’s limited liability company
agreement and has no obligation to make capital contributions to the company, or (B) two natural
persons or one entity that is not a member of the company, that has signed its limited liability
company agreement and that, under the terms of such limited liability company agreement becomes a
member of the company immediately prior to the resignation or dissolution of the last remaining
member of the company.



ARTICLE 10




EVENTS OF DEFAULT AND REMEDIES




Section 10.01 Events of Default. Each of the following events shall be an “Event
of Default”:



(a) Seller fails to make a payment of (i) Repurchase Price (other than Price Differential)
when due, whether by acceleration or otherwise, (ii) Price Differential when due, or (iii) any
other amount (including all unpaid Margin Deficits) when due, in each case under the Repurchase
Documents;



(b) Seller fails to observe or perform in any material respect any other Repurchase Obligation
of Seller under the Repurchase Documents or the Mortgage Loan Documents to which Seller is a party,
and (except in the case of a failure to perform or observe the Repurchase Obligations of Seller
under Section 8.04 and 18.08(a)) such failure continues unremedied for five (5)
Business Days after the earlier of receipt of notice thereof from Buyer or the discovery of such
failure by Seller (or such longer period as agreed to by Buyer in its discretion, not to exceed
fifteen (15) days from the date of the underlying breach, but only if such underlying breach is
capable of being cured and so long as Seller diligently and continuously takes all actions
necessary to cure such underlying breach);



(c) any Representation Breach (other than a breach of any of the representations and
warranties set forth on Schedules 1(a) and 1(b) hereto, which will not, in and



 


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of themselves, be Events of Default) exists and continues unremedied for ten (10) Business
Days after the earlier of receipt of notice thereof from Buyer or the discovery of such
Representation Breach by Seller;



(d) Seller or Guarantor defaults beyond any applicable grace period in paying any amount or
performing any obligation under any Indebtedness, Guarantee Obligation or Contractual Obligation
with an outstanding amount of at least $100,000 with respect to Seller, or $25,000,000 with respect
to Guarantor, and the effect of such default is to permit the acceleration thereof (regardless of
whether such default is waived or such acceleration occurs);



(e) Seller or Guarantor defaults beyond any applicable grace period in paying any amount or
performing any obligation due to Buyer or any Affiliate of Buyer under any other financing,
hedging, security or other agreement between Seller or Guarantor and Buyer or any Affiliate of
Buyer;



(f) an Insolvency Event occurs with respect to Seller, any Intermediate Starwood Entity or
Guarantor;



(g) a Change of Control occurs with respect to Seller, Manager, any Intermediate Starwood
Entity or Guarantor, without the prior written consent of Buyer, not to be unreasonably withheld;



(h) a final judgment or judgments for the payment of money in excess of $100,000 with respect
to Seller, or $25,000,000 with respect to Guarantor, in each case in the aggregate and in each case
that is not insured against is entered against Seller or Guarantor by one or more Governmental
Authorities and the same is not satisfied, discharged (or provision has not been made for such
discharge) or bonded, or a stay of execution thereof has not been procured, within thirty (30) days
from the date of entry thereof;



(i) a Governmental Authority takes any action to (i) condemn, seize or appropriate, or assume
custody or control of, all or any substantial part of the property of Seller, (ii) displace the
management of Seller or curtail its authority in the conduct of the business of Seller, or
(iii) terminate the activities of Seller as contemplated by the Repurchase Documents;



(j) Seller, any Intermediate Starwood Entity or Guarantor admits in writing that it is not
Solvent or is not able to perform any of its Repurchase Obligations, Contractual Obligations,
Guarantee Obligations, Capital Lease Obligations or Off-Balance Sheet Obligations;



(k) any provision of the Repurchase Documents, any right or remedy of Buyer or obligation,
covenant, agreement or duty of Seller thereunder, or any Lien, security interest or control granted
under or in connection with the Repurchase Documents or Purchased Assets terminates, is declared
null and void, ceases to be valid and effective, ceases to be the legal, valid, binding and
enforceable obligation of Seller or any other Person, or the validity, effectiveness, binding
nature or enforceability thereof is contested, challenged, denied or repudiated by Seller or any
other Person, in each case directly, indirectly, in whole or in part, except that, Seller have a
period of three (3) Business Days from the date of each such violation



 


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to either repurchase the related Purchased Asset from Buyer pursuant to Section 3.05
or cure the related breach, as such cure is determined by Buyer in its discretion;



(l) Buyer ceases for any reason to have a valid and perfected first priority security interest
in any Purchased Asset except that, Seller have a period of three (3) Business Days from the date
of each such violation to cure the related breach, as such cure is determined by Buyer in its
discretion;



(m) Seller, any Intermediate Starwood Entity or Guarantor is required to register as an
“investment company” (as defined in the 40 Act) or the arrangements contemplated by the Repurchase
Documents shall require registration of Seller, Manager, any Intermediate Starwood Entity or
Guarantor as an “investment company”;



(n) Seller engages in any conduct or action where Buyer’s prior consent is required by any
Repurchase Document and Seller fails to obtain such consent;



(o) Seller, Sub-Servicer, Guarantor, Manager, any Intermediate Starwood Entity or any other
Person or, due to the action or inaction of any of the foregoing, (but not merely as a result of
the unprompted failure by any Underlying Obligor to make a payment under a Purchased Asset) any
Underlying Obligor or any other Person fails to deposit to the Servicing Agreement Account or the
Collection Account all Income and other amounts as required by Section 5.01 and other
provisions of this Agreement within two (2) Business Days of when due;



(p) Guarantor’s audited annual financial statements or the notes thereto or other opinions or
conclusions stated therein are qualified or limited by reference to the status of Guarantor as a
“going concern” or a reference of similar import, other than a qualification or limitation
expressly related to Buyer’s rights in the Purchased Assets;



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



(r) Guarantor breaches any of the obligations, terms or conditions set forth in the Guarantee
Agreement and such breach remains uncured for at least three (3) Business Days; or



(s) Any Material Modification is made to any Purchased Asset or any Mortgage Loan Document
without the prior written consent of Buyer.



Section 10.02 Remedies of Buyer as Owner of the Purchased Assets. If an Event of
Default exists, at the option of Buyer, exercised by notice to Seller (which option shall be deemed
to be exercised, even if no notice is given, automatically and immediately upon the occurrence of
an Event of Default under Section 10.01(f)), the Repurchase Date for all Purchased



 


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Assets shall be deemed automatically and immediately to occur (the date on which such option
is exercised or deemed to be exercised, the “Accelerated Repurchase Date”). If Buyer
exercises or is deemed to have exercised the foregoing option:



(a) All Repurchase Obligations shall become immediately due and payable on and as of the
Accelerated Repurchase Date.



(b) All amounts in the Collection Account and/or the Servicing Agreement Account and all
Income paid after the Accelerated Repurchase Date shall be retained by Buyer and applied in
accordance with Article 5.



(c) Buyer may complete any assignments, allonges, endorsements, powers or other documents or
instruments executed in blank and otherwise obtain physical possession of all Mortgage Loan
Documents and other instruments, certificates and documents then held by Custodian under the
Custodial Agreement. Buyer may obtain physical possession of all Servicing Files, Servicing
Agreements and other files and records of Seller, Servicer or Sub-Servicer. Seller shall deliver
to Buyer such assignments and other documents with respect thereto as Buyer shall request.



(d) Buyer may in its discretion immediately, at any time and from time to time, exercise
either of the following remedies with respect to any or all of the Purchased Assets: (i)  sell
such Purchased Assets on a servicing-released basis in a recognized market and by means of a public
or private sale at such price or prices as Buyer accepts in its discretion, and apply the net
proceeds thereof in accordance with Article 5, or (ii) retain such Purchased Assets and
give Seller credit against the Repurchase Price for such Purchased Assets (or if the amount of such
credit exceeds the Repurchase Price for such Purchased Assets, to other Repurchase Obligations due
and any other amounts then owing to Buyer by any other Person pursuant to any Repurchase Document,
in such order and in such amounts as determined by Buyer in its discretion), in an amount equal to
the market value of such Purchased Assets. Until such time as Buyer exercises either such remedy
with respect to a Purchased Asset, Buyer may hold such Purchased Asset for its own account and
retain all Income with respect thereto.



(e) The Parties agree that the Purchased Assets are of such a nature that they may decline
rapidly in value, and may not have a ready or liquid market. Accordingly, Buyer shall not be
required to sell more than one Purchased Asset on a particular Business Day, to the same purchaser
or in the same manner. Buyer may determine in its discretion whether, when and in what manner a
Purchased Asset shall be sold, it being agreed that both a good faith public and a good faith
private sale shall be deemed to be commercially reasonable. Except as expressly required herein or
in the other Repurchase Documents, Buyer shall not be required to give notice to Seller or any
other Person prior to exercising any remedy in respect of an Event of Default. If no prior notice
is given, Buyer shall give notice to Seller of the remedies exercised by Buyer promptly thereafter.
Buyer shall act in good faith in exercising its rights and remedies under this Article 10.



(f) Seller shall be liable to Buyer for (i) any amount by which the Repurchase Obligations due
to Buyer exceed the aggregate of the net proceeds and credits referred to in the preceding
clause (d), (ii) the amount of all actual out-of-pocket expenses, including reasonable



 


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legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of
an Event of Default, (iii) any costs and losses payable under Section 12.03, and (iv) any
other actual loss, damage, cost or expense resulting from the occurrence of an Event of Default.



(g) Buyer shall be entitled to an injunction, an order of specific performance or other
equitable relief to compel Seller to fulfill any of its obligations as set forth in the Repurchase
Documents, including this Article 10, if Seller fails or refuses to perform its obligations
as set forth herein or therein.



(h) Seller hereby appoints Buyer as attorney-in-fact of Seller for purposes of carrying out
the Repurchase Documents, including executing, endorsing and recording any instruments or documents
and taking any other actions that Buyer deems necessary or advisable to accomplish such purposes,
which appointment is coupled with an interest and is irrevocable.



(i) Buyer may, without prior notice to Seller, exercise any or all of its set-off rights
including those set forth in Section 18.17. This Section 10.02(i) shall be without
prejudice and in addition to any right of set-off, combination of accounts, Lien or other rights to
which any Party is at any time otherwise entitled.



(j) All rights and remedies of Buyer under the Repurchase Documents, including those set forth
in Section 18.17, are cumulative and not exclusive of any other rights or remedies which
Buyer may have and may be exercised at any time when an Event of Default exists. Such rights and
remedies may be enforced without prior judicial process or hearing. Seller agrees that nonjudicial
remedies are consistent with the usages of the trade, are responsive to commercial necessity and
are the result of a bargain at arm’s-length. Seller hereby expressly waives any defenses Seller
might have to require Buyer to enforce its rights by judicial process or otherwise arising from the
use of nonjudicial process, disposition of any or all of the Purchased Assets, or any other
election of remedies.



ARTICLE 11




SECURITY INTEREST




Section 11.01 Grant. Buyer and Seller intend that all Transactions shall be sales to
Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the Purchased Assets.
However, to preserve and protect Buyer’s rights with respect to the Purchased Assets and under the
Repurchase Documents in the event that any Governmental Authority recharacterizes the Transactions
as other than sales, and as security for Seller’s performance of the Repurchase Obligations, Seller
hereby grants to Buyer a Lien on and security interest in all of the right, title and interest of
Seller in, to and under the Purchased Assets (which for this purpose shall be deemed to include the
items described in the proviso in the definition thereof), and the transfers of the
Purchased Assets to Buyer shall be deemed to constitute and confirm such grant, to secure the
payment and performance of the Repurchase Obligations (including the obligation of Seller to pay
the Repurchase Price, or if the Transactions are recharacterized as loans, to repay such loans for
the Repurchase Price).


 


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Section 11.02 Effect of Grant. If any circumstance described in Section 11.01
occurs, (a) this Agreement shall also be deemed to be a security agreement as defined in the UCC,
(b) Buyer shall have all of the rights and remedies provided to a secured party by Requirements of
Law (including the rights and remedies of a secured party under the UCC and the right to set off
any mutual debt and claim) and under any other agreement between Buyer and Seller, (c) without
limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the
liquidation of the Purchased Assets against all of the Repurchase Obligations, without prejudice to
Buyer’s right to recover any deficiency, (d) the possession by Buyer or any of its agents,
including Custodian, of the Mortgage Loan Documents, the Purchased Assets and such other items of
property as constitute instruments, money, negotiable documents, securities or chattel paper shall
be deemed to be possession by the secured party for purposes of perfecting such security interest
under the UCC and Requirements of Law, and (e) notifications to Persons (other than Buyer) holding
such property, and acknowledgments, receipts or confirmations from Persons (other than Buyer)
holding such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, securities intermediaries, bailees or agents (as applicable) of the secured
party for the purpose of perfecting such security interest under the UCC and Requirements of Law.
The security interest of Buyer granted herein shall be, and Seller hereby represents and warrants
to Buyer that it is, a first priority perfected security interest. For the avoidance of doubt,
(i) each Purchased Asset secures the Repurchase Obligations of Seller with respect to all other
Transactions and all other Purchased Assets, including any Purchased Assets that are junior in
priority to the Purchased Asset in question, and (B) if an Event of Default exists, no Purchased
Asset will be released from Buyer’s Lien or transferred to Seller until the Repurchase Obligations
are indefeasibly paid in full provided, however, notwithstanding the foregoing,
Buyer shall be required to release its Lien on any Purchased Asset in the event of a repayment in
full by the underlying borrower of any Mortgage Loan or Junior Interest and Seller’s payment of the
Repurchase Price with respect to such Purchased Asset in accordance with Section 3.05.
Notwithstanding the foregoing, the Repurchase Obligations shall be full recourse to Seller.



Section 11.03 Seller to Remain Liable. The parties agree that the grant of a security
interest under this Article 11 shall not constitute or result in the creation or assumption by
Buyer of any Retained Interest or other obligation of Seller or any other Person in connection with
any Purchased Asset, whether or not Buyer exercises any right with respect thereto. Seller shall
remain liable under the Purchased Assets and Mortgage Loan Documents to perform all of Seller’s
duties and obligations thereunder to the same extent as if the Repurchase Documents had not been
executed.



Section 11.04 Waiver of Certain Laws. Seller agrees, to the extent permitted by
Requirements of Law, that neither it nor anyone claiming through or under it will set up, claim or
seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or
hereafter in force in any locality where any Purchased Assets may be situated in order to prevent,
hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of
the Purchased Assets, or the final and absolute putting into possession thereof, immediately after
such sale, of the purchasers thereof, and Seller, for itself and all who may at any time claim
through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit
of all such laws and any and all right to have any of the properties or assets constituting the
Purchased Assets marshaled upon any such sale, and agrees that Buyer or any court having



 


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jurisdiction to foreclose the security interests granted in this Agreement may sell the
Purchased Assets as an entirety or in such parcels as Buyer or such court may determine.



ARTICLE 12




INCREASED COSTS; CAPITAL ADEQUACY




Section 12.01 Market Disruption. If prior to any Pricing Period, Buyer determines
that, by reason of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBO Rate for such Pricing Period, Buyer shall give prompt notice
thereof to Seller, whereupon the Pricing Rate for such Pricing Period, and for all subsequent
Pricing Periods until such notice has been withdrawn by Buyer, shall be the Alternative Rate.



Section 12.02 Illegality. If the adoption of or any change in any Requirements of Law
or in the interpretation or application thereof after the date hereof shall make it unlawful for
Buyer to effect or continue Transactions as contemplated by the Repurchase Documents, (a) any
commitment of Buyer hereunder to enter into new Transactions shall be terminated and the Funding
Expiration Date shall be deemed to have occurred, (b) the Pricing Rate shall be converted
automatically to the Alternative Rate on the last day of the then current Pricing Period or within
such earlier period as may be required by Requirements of Law, and (c) if required by such adoption
or change, the Maturity Date shall be deemed to have occurred.



Section 12.03 Breakfunding. Seller shall indemnify Buyer and hold Buyer harmless from
any loss, cost or expense (including legal fees and expenses) which Buyer may sustain or incur
arising from (a) the failure by Seller to terminate any Transaction after Seller has given a notice
of termination pursuant to Section 3.05, (b) any payment to Buyer on account of the
outstanding Repurchase Price, including a payment made pursuant to Section 3.05 but
excluding a payment made pursuant to Section 5.02, on any day other than a Remittance Date
(based on the assumption that Buyer funded its commitment with respect to the Transaction in the
London Interbank Eurodollar market and using any reasonable attribution or averaging methods which
Buyer deems appropriate and practical) (upon request, Buyer shall provide Seller with notice of the
underlying calculation methodology), (c) any failure by Seller to sell Eligible Assets to Buyer
after Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such
Eligible Assets in accordance with this Agreement, or (d) any conversion of the Pricing Rate to the
Alternative Rate because the LIBO Rate is not available for any reason on a day which is not the
last day of the then current Pricing Period. Notwithstanding the foregoing, in no event shall any
amounts be payable under this Section 12.03 in connection with any voluntary and
contractually permissible repurchase by Seller of a Purchased Asset from Buyer.



Section 12.04 Increased Costs. If the adoption of or any change in any Requirements
of Law or in the interpretation or application thereof by any Governmental Authority or compliance
by Buyer with any request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority having jurisdiction over Buyer made after the date of this
Agreement (a) shall subject Buyer to any tax of any kind whatsoever with respect to the Repurchase
Documents, any Purchased Asset or any Transaction, or change the basis of taxation of payments to
Buyer in respect thereof (except for income taxes and any



 


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changes in the rate of tax on Buyer’s overall net income), (b) shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of Buyer, or (c) shall impose on Buyer
any other condition; and the result of any of the preceding clauses (a), (b) and (c) is to increase
the cost to Buyer, by an amount which Buyer deems to be material, of entering into, continuing or
maintaining Transactions, or to reduce any amount receivable under the Repurchase Documents in
respect thereof, then, in any such case, Seller shall pay to Buyer such additional amount or
amounts as reasonably necessary to fully compensate Buyer for such increased cost or reduced amount
receivable.



Section 12.05 Capital Adequacy. If Buyer determines that the adoption of or any
change in any Requirements of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation Controlling Buyer with any request or
directive regarding capital adequacy (whether or not having the force of law) from any Governmental
Authority made after the date of this Agreement has or shall have the effect of reducing the rate
of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to
a level below that which Buyer or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect
to capital adequacy) by an amount deemed by Buyer in its discretion to be material, then, in any
such case, Seller shall pay to Buyer such additional amount or amounts as reasonably necessary to
fully compensate Buyer for such reduction.



Section 12.06 Withholding Taxes. (a) All payments made by Seller to Buyer or any
other Indemnified Person under the Repurchase Documents and by Underlying Obligors with respect to
the Purchased Assets shall be made free and clear of and without deduction or withholding for or on
account of any taxes. If any taxes are required to be withheld from any amounts payable to Buyer
and/or any other Indemnified Person, then the amount payable to such Person will be increased (such
increase, the “Additional Amount”) such that every net payment made under this Agreement
after withholding for or on account of any taxes (including any taxes on such increase) is not less
than the amount that would have been paid absent such deduction or withholding provided,
however, that Seller shall not be required to pay any Additional Amount to Buyer, any
Eligible Assignee or any other Person that is not organized under the laws of the United States or
any state thereof if Buyer or such Person fails to comply with Section 12.06(b). The
foregoing obligation to pay Additional Amounts, however, will not apply with respect to net income
or franchise taxes imposed on Buyer and/or any other Indemnified Person, with respect to payments
required to be made by Seller under the Repurchase Documents, by a taxing jurisdiction in which
Buyer and/or any other Indemnified Person is organized, conducts business or is paying taxes (as
the case may be). Promptly after Seller pays any taxes referred to in this Section 12.06,
Seller will send Buyer appropriate evidence of such payment.



(b) If a Person acquires any of the rights and obligations of Buyer as an Eligible Assignee
under this Agreement, and such Person is not organized under the laws of the United States, any
state thereof or the District of Columbia (a “Non-U.S. Person”), such Non-U.S. Person shall
deliver to Seller on or before the date on which such Person becomes a party to this Agreement, two
duly completed and executed copies of, as applicable, IRS Form W-8BEN or IRS Form W-8ECI or any
successor forms thereto designated as such by the IRS. If the Non-



 


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U.S. Person is eligible for and wishes to claim exemption from or reduction in U.S. federal
withholding tax through benefit of a treaty, such Person shall deliver a Form W-8ECI. If the
Non-U.S. Person is eligible for and wishes to claim exemption from U.S. federal withholding tax
under Section 871(h) or Section 881(c) of the Code with respect to payments of “portfolio
interest,” such Person shall deliver both the Form W-8BEN and a statement certifying that such
Person is not a bank, a “10 percent shareholder” or a “controlled foreign corporation” within the
meaning of Section 881(c)(3) of the Code. If any previously delivered form or statement becomes
inaccurate with respect to the Non-U.S. Person that delivered it, the Non-U.S. Person shall
promptly notify Seller of this fact.



Section 12.07 Payment and Survival of Obligations. Buyer may at any time send Seller
a notice showing the calculation of any amounts payable pursuant to this Article 12, and
Seller shall pay such amounts to Buyer within ten (10) Business Days after Seller receives such
notice. The obligations of Seller under this Article 12 shall apply to Eligible Assignees
and Participants and survive the termination of the Repurchase Documents.



ARTICLE 13




INDEMNITY AND EXPENSES





Section 13.01 Indemnity.



(a) Seller shall release, defend, indemnify and hold harmless Buyer, Affiliates of Buyer and
its and their respective officers, directors, shareholders, partners, members, owners, employees,
agents, attorneys, Affiliates and advisors (each an “Indemnified Person” and collectively
the “Indemnified Persons”), on a net after-tax basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, taxes (other than
income taxes of Buyer), fees, costs, expenses (including legal fees and expenses), penalties or
fines of any kind that may be imposed on, incurred by or asserted against such Indemnified Person
(collectively, the “Indemnified Amounts”) in any way relating to, arising out of or
resulting from or in connection with (i) the Repurchase Documents, the Mortgage Loan Documents, the
Purchased Assets, the Transactions, any Underlying Mortgaged Property or related property, or any
action taken or omitted to be taken by any Indemnified Person in connection with or under any of
the foregoing, or any transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of any Repurchase Document or
Transaction, (ii) any claims, actions or damages by an Underlying Obligor or lessee with respect to
a Purchased Asset, (iii) any violation or alleged violation of, non–compliance with or liability
under any Requirements of Law, (iv) ownership of, Liens on, security interests in or the exercise
of rights or remedies under any of the items referred to in the preceding clause (i), (v) any
accident, injury to or death of any person or loss of or damage to property occurring in, on or
about any Underlying Mortgaged Property or on the adjoining sidewalks, curbs, parking areas,
streets or ways, (vi) any use, nonuse or condition in, on or about, or possession, alteration,
repair, operation, maintenance or management of, any Underlying Mortgaged Property or on the
adjoining sidewalks, curbs, parking areas, streets or ways, (vii) any failure by Seller to perform
or comply with any Repurchase Document, Mortgage Loan Document or Purchased Asset,
(viii) performance of any labor or services or the furnishing of any materials or other property in
respect of any Underlying Mortgaged Property or Purchased



 


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Asset, (ix) any claim by brokers, finders or similar Persons claiming to be entitled to a
commission in connection with any lease or other transaction involving any Repurchase Document,
Purchased Asset or Underlying Mortgaged Property, (x) any taxes attributable to the execution,
delivery, filing or recording of any Repurchase Document, Mortgage Loan Document or any memorandum
of any of the foregoing, (xi) any Lien or claim arising on or against any Purchased Asset or
related Underlying Mortgaged Property under any Requirements of Law or any liability asserted
against Buyer or any Indemnified Person with respect thereto, (xii) (1) a past, present or future
violation or alleged violation of any Environmental Laws in connection with any property or
Mortgaged Property by any Person or other source, whether related or unrelated to Seller or any
Underlying Obligor, (2) any presence of any Materials of Environmental Concern in, on, within,
above, under, near, affecting or emanating from any Underlying Mortgaged Property, (3) the failure
to timely perform any Remedial Work, (4) any past, present or future activity by any Person or
other source, whether related or unrelated to Seller or any Underlying Obligor in connection with
any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or
other release, generation, production, manufacturing, processing, refining, control, management,
abatement, removal, handling, transfer or transportation to or from any Underlying Mortgaged
Property of any Materials of Environmental Concern at any time located in, under, on, above or
affecting any Underlying Mortgaged Property, (5) any past, present or future actual Release
(whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable) to, from,
on, within, in, under, near or affecting any Underlying Mortgaged Property by any Person or other
source, whether related or unrelated to Seller or any Underlying Obligor, (6) the imposition,
recording or filing or the threatened imposition, recording or filing of any Lien on any Underlying
Mortgaged Property with regard to, or as a result of, any Materials of Environmental Concern or
pursuant to any Environmental Law, or (7) any misrepresentation or failure to perform any
obligations pursuant to any Repurchase Document or Mortgage Loan Document relating to environmental
matters in any way, (xiii) the Term Sheet or any business communications or dealings between the
Parties relating thereto, or (xiv) Seller’s conduct, activities, actions and/or inactions in
connection with, relating to or arising out of any of the foregoing clauses of this
Section 13.01, that, in each case, results from anything whatsoever other than any
Indemnified Person’s gross negligence or willful misconduct, as determined by a court of competent
jurisdiction pursuant to a final, non–appealable judgment. In any suit, proceeding or action
brought by an Indemnified Person in connection with any Purchased Asset for any sum owing
thereunder, or to enforce any provisions of any Purchased Asset, Seller shall defend, indemnify and
hold such Indemnified Person harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the
account debtor or Underlying Obligor arising out of a breach by Seller of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or Underlying Obligor from Seller. In the case of an investigation,
litigation or other proceeding to which the indemnity in this Section 13.01 applies, such
indemnity shall be effective whether or not such investigation, litigation or proceeding is brought
by Seller, an Indemnified Person or any other Person or any Indemnified Person is otherwise a party
thereto and whether or not any Transaction is entered into.



(b) If for any reason the indemnification provided in this Section 13.01 is
unavailable to the Indemnified Person or is insufficient to hold an Indemnified Person harmless,
even though such Indemnified Person is entitled to indemnification under the express terms



 


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thereof, then Seller shall contribute to the amount paid or payable by such Indemnified Person
as a result of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative benefits received by such Indemnified Person on the one hand and Seller on the
other hand, the relative fault of such Indemnified Person, and any other relevant equitable
considerations.



(c) An Indemnified Person may at any time send Seller a notice showing the calculation of
Indemnified Amounts, and Seller shall pay such Indemnified Amounts to such Indemnified Person
within ten (10) Business Days after Seller receives such notice. The obligations of Seller under
this Section 13.01 shall apply to Eligible Assignees and Participants and survive the
termination of this Agreement.



Section 13.02 Expenses. Seller shall promptly on demand pay to or as directed by
Buyer all third-party out-of-pocket costs and expenses (including legal, accounting and advisory
fees and expenses) incurred by Buyer in connection with (a) the development, evaluation,
preparation, negotiation, execution, consummation, delivery and administration of, and any
amendment, supplement or modification to, or extension, renewal or waiver of, the Repurchase
Documents and the Transactions, (b) any Asset or Purchased Asset, including due diligence,
inspection, testing, review, recording, registration, travel custody, care, insurance or
preservation, with the total amount of all such reimbursable costs and expenses otherwise due under
this clause (b) not to exceed $50,000 per calendar year, (c) the enforcement of the Repurchase
Documents or the payment or performance by Seller of any Repurchase Obligations, and (d) any actual
or attempted sale, exchange, enforcement, collection, compromise or settlement relating to the
Purchased Assets.



ARTICLE 14




INTENT




Section 14.01 The Parties intend (a) for each Transaction to qualify for the safe harbor
treatment provided by the Bankruptcy Code and for Buyer to be entitled to all of the rights,
benefits and protections afforded to Persons under the Bankruptcy Code with respect to a
“repurchase agreement” as defined in Section 91(47) of the Bankruptcy Code and a “securities
contract” as defined in Section 741(7) of the Bankruptcy Code and that payments under this
Agreement are deemed “margin payments” or “settlement payments,” as defined in Section 91 of the
Bankruptcy Code, (b) for the grant of a security interest set forth in Article 11 to also
be a “securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code and a
“repurchase agreement” as that term is defined in Section 91(47)(A)(v) of the Bankruptcy Code, and
(c) that Buyer (for so long as Buyer is a “financial institution,” “financial participant” or other
entity listed in Section 555, 559 or 362(b)(6) of the Bankruptcy Code) shall be entitled to the
“safe harbor” benefits and protections afforded under the Bankruptcy Code with respect to a
“repurchase agreement” and a “securities contract,” including (x) the rights, set forth in
Article 10 and in Section 555, 559 and 561 of the Bankruptcy Code, to liquidate the
Purchased Assets and terminate this Agreement, and (y) the right to offset or net out as set forth
in Article 10 and Section 18.17 and in Section 362(b)(6) of the Bankruptcy Code.


 


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Section 14.02 The Parties acknowledge and agree that (a) Buyer’s right to liquidate Purchased
Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies
pursuant to Articles 10 and 11 and as otherwise provided in the Repurchase
Documents is a contractual right to liquidate such Transactions as described in Section 555, 559
and 561 of the Bankruptcy Code.



Section 14.03 The Parties acknowledge and agree that if a Party is an “insured depository
institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”),
then each Transaction hereunder is a “qualified financial contract,” as that term is defined in
FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).



Section 14.04 The Parties acknowledge and agree that this Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation
under any Transaction shall constitute a “covered contractual payment entitlement” or “covered
contractual payment obligation,” respectively, as defined in and subject to FDICIA (except insofar
as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).



Section 14.05 The Parties expressly represent, warrant, acknowledge and agree that this
Agreement constitutes a “master netting agreement” as defined in Section 91(38A) of the Bankruptcy
Code.



ARTICLE 15




DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS





The Parties acknowledge that they have been advised and understand that:



(a) in the case of Transactions in which one of the Parties is a broker or dealer registered
with the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of
1934, the Securities Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 do not protect the other Party with respect to any
Transaction;



(b) in the case of Transactions in which one of the Parties is a government securities broker
or a government securities dealer registered with the Securities and Exchange Commission under
Section 14C of the Securities Exchange Act of 1934, the Securities Investor Protection Act of 1970
will not provide protection to the other Party with respect to any Transaction;



(c) in the case of Transactions in which one of the Parties is a financial institution, funds
held by the financial institution pursuant to a Transaction are not a deposit and therefore are not
insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance
Fund, as applicable; and


 


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(d) in the case of Transactions in which one of the Parties is an “insured depository
institution” as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code,
funds held by the financial institution pursuant to a Transaction are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance
Fund or the Bank Insurance Fund, as applicable.



ARTICLE 16




NO RELIANCE




Each Party acknowledges, represents and warrants to the other Party that, in connection with
the negotiation of, entering into, and performance under, the Repurchase Documents and each
Transaction:



(a) It is not relying (for purposes of making any investment decision or otherwise) on any
advice, counsel or representations (whether written or oral) of the other Party, other than the
representations expressly set forth in the Repurchase Documents;



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



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



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



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



(f) No partnership or joint venture exists or will exist as a result of the Transactions or
entering into and performing the Repurchase Documents.



ARTICLE 17




SERVICING




This Article 17 shall apply to all Purchased Assets.


 


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Section 17.01 Servicing Rights. The terms and provisions governing Servicing Rights
under Section 17.01 are set forth in the Fee and Pricing Letter, and are hereby
incorporated by reference.



Section 17.02 Accounts Related to Purchased Assets. All accounts directly related to
the Purchased Assets shall be maintained at institutions in accordance with and pursuant to the
terms and conditions of the existing agreements including, without limitation, this Agreement;
provided, however, that if any institution in which such accounts are currently held is not
reasonably acceptable to Buyer, then at Buyer’s request, Seller shall cause the Underlying Obligor
to enter into the contractual arrangements with Buyer and Seller that are necessary in order to
create a perfected security interest in favor of Buyer in all such accounts, including, without
limitation, an Account Control Agreement in form and substance reasonably acceptable to Buyer in
its sole discretion. Section 17.03 Servicing Reports. Seller shall deliver and cause
Sub-Servicer to deliver to Buyer and Custodian a monthly remittance report on or before the 15th
day of each month containing servicing information, including those fields reasonably requested by
Buyer from time to time, on an asset-by-asset and in the aggregate, with respect to the Purchased
Assets for the month (or any portion thereof) before the date of such report.



ARTICLE 18




MISCELLANEOUS




Section 18.01 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.



Section 18.02 Submission to Jurisdiction; Service of Process. Each Party irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the State of New York sitting in the Borough of Manhattan and of the United States
District Court of the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to the Repurchase Documents, or for recognition
or enforcement of any judgment, and each Party irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such State court
or, to the fullest extent permitted by applicable law, in such Federal court. Each Party agrees
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement or the other Repurchase Documents shall affect any right that Buyer may otherwise
have to bring any action or proceeding arising out of or relating to the Repurchase Documents
against Seller or its properties in the courts of any jurisdiction. Each Party irrevocably and
unconditionally waives, to the fullest extent permitted by Requirements of Law, any objection that
it may now or hereafter have to the laying of venue of any action or proceeding arising out of or
relating to the Repurchase Documents in any court referred to above, and the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court. Each Party
irrevocably consents to service of process in the manner provided for notices in Section 18.12.
Nothing in this Agreement will affect the right of any party hereto to serve process in any other
manner permitted by applicable law.


 


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Section 18.03 IMPORTANT WAIVERS.



(a) SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO ASSERT A
COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT
BY BUYER OR ANY INDEMNIFIED PERSON.



(b) TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE BETWEEN
THEM, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH OR RELATED TO
THE REPURCHASE DOCUMENTS, THE PURCHASED ASSETS, THE TRANSACTIONS, ANY DEALINGS OR COURSE OF CONDUCT
BETWEEN THEM, OR ANY STATEMENTS (WRITTEN OR ORAL) OR OTHER ACTIONS OF EITHER PARTY. NEITHER PARTY
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.



(c) TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, SELLER HEREBY WAIVES ANY RIGHT TO CLAIM OR
RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING ANY INDEMNIFIED PERSON, ANY SPECIAL, EXEMPLARY,
PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED ON
STATUTE, CONTRACT, TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE LIKELIHOOD OF SUCH
DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION, INCLUDING ANY CLAIM OR ACTION
ALLEGING GROSS NEGLIGENCE, RECKLESS DISREGARD, WILLFUL OR WONTON MISCONDUCT, FAILURE TO EXERCISE
REASONABLE CARE OR FAILURE TO ACT IN GOOD FAITH. NO INDEMNIFIED PERSON SHALL BE LIABLE FOR ANY
DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS
DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS
IN CONNECTION WITH ANY REPURCHASE DOCUMENT OR THE TRANSACTIONS.



(d) SELLER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BUYER OR AN INDEMNIFIED
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BUYER OR AN INDEMNIFIED PERSON WOULD NOT SEEK
TO ENFORCE ANY OF THE WAIVERS IN THIS SECTION 18.03 IN THE EVENT OF LITIGATION OR OTHER
CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE ALL–ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE REPURCHASE
DOCUMENTS, REGARDLESS OF THEIR LEGAL THEORY.


 


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(e) EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 18.03 ARE A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS ALREADY RELIED ON SUCH WAIVERS IN
ENTERING INTO THE REPURCHASE DOCUMENTS, AND THAT SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS
IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED
SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL AND
OTHER RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.



(f) THE WAIVERS IN THIS SECTION 18.03 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO ANY OF THE REPURCHASE DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.



(g) THE PROVISIONS OF THIS SECTION 18.03 SHALL SURVIVE TERMINATION OF THE REPURCHASE
DOCUMENTS AND THE PAYMENT IN FULL OF THE OBLIGATIONS.



Section 18.04 Integration. The Repurchase Documents supersede and integrate all
previous negotiations, contracts, agreements and understandings (whether written or oral) between
the Parties relating to a sale and repurchase of Purchased Assets and the other matters addressed
by the Repurchase Documents, and contain the entire final agreement of the Parties relating to the
subject matter thereof.



Section 18.05 Single Agreement. Seller agrees that (a) each Transaction is in
consideration of and in reliance on the fact that all Transactions constitute a single business and
contractual relationship, and that each Transaction has been entered into in consideration of the
other Transactions, (b) a default by it in the payment or performance of any its obligations under
a Transaction shall constitute a default by it with respect to all Transactions, (c) Buyer may set
off claims and apply properties and assets held by or on behalf of Buyer with respect to any
Transaction against the Repurchase Obligations owing to Buyer with respect to other Transactions,
and (d) payments, deliveries and other transfers made by or on behalf of Seller with respect to any
Transaction shall be deemed to have been made in consideration of payments, deliveries and other
transfers with respect to all Transactions, and the obligations of Seller to make any such
payments, deliveries and other transfers may be applied against each other and netted.



Section 18.06 Use of Employee Plan Assets. No assets of an employee benefit plan
subject to any provision of ERISA shall be used by either Party in a Transaction.



Section 18.07 Survival and Benefit of Seller’s Agreements. The Repurchase Documents
and all Transactions shall be binding on and shall inure to the benefit of the Parties and their
successors and permitted assigns. All of Seller’s representations, warranties, agreements and
indemnities in the Repurchase Documents shall survive the termination of the



 


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Repurchase Documents and the payment in full of the Repurchase Obligations, and shall apply to
and benefit Eligible Assignees and Participants. No other Person shall be entitled to any benefit,
right, power, remedy or claim under the Repurchase Documents.




Section 18.08 Assignments and Participations.



(a) Seller shall not sell, assign or transfer any of its rights or the Repurchase Obligations
under this Agreement without the prior written consent of Buyer in its discretion, and any attempt
by Seller to do so without such consent shall be null and void.



(b) Buyer may at any time, without the consent of or notice to Seller, sell participations to
any Person (other than a natural person or Seller or any Affiliate of Seller) (a
“Participant”) in up to forty-nine percent (49%) (in the aggregate, in one or more
transactions, including any assignments under Section 18.08(c)) of Buyer’s rights and/or
obligations under the Repurchase Documents; provided, that (i) Buyer’s obligations and
Seller’s rights and obligations under the Repurchase Documents shall remain unchanged, (ii) Buyer
shall remain solely responsible to Seller for the performance of such obligations, and (iii) Seller
shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and
obligations under the Repurchase Documents. No Participant shall have any right to approve any
amendment, waiver or consent with respect to any Repurchase Document, except to the extent that the
Repurchase Price or Price Differential of any Purchased Asset would be reduced or the Repurchase
Date of any Purchased Asset would be postponed. Each Participant shall be entitled to the benefits
of Article 12 to the same extent as if it had acquired its interest by assignment pursuant
to Section 18.08(c), but shall not be entitled to receive any greater payment thereunder
than Buyer would have been entitled to receive with respect to the participation sold to such
Participant. To the extent permitted by Requirements of Law, each Participant shall be entitled to
the benefits of Sections 10.02(j) and 18.17 to the same extent as if it had
acquired its interest by assignment pursuant to Section 18.08(c).



(c) Buyer may at any time, upon notice to Seller, sell and assign to any Eligible Assignee up
to forty-nine percent (49%) (in the aggregate, in one or more transactions, and including any
participations under Section 18.08(b)) of the rights and obligations of Buyer under the
Repurchase Documents. Each such assignment shall be made pursuant to an Assignment and Acceptance
substantially in the form of Exhibit F (an “Assignment and Acceptance”). From and
after the effective date of such Assignment and Acceptance, (i) such Eligible Assignee shall be a
Party and, to the extent provided therein, have the rights and obligations of Buyer under the
Repurchase Documents with respect to the percentage and amount of the Repurchase Price allocated to
it; provided that Buyer shall remain solely responsible to Seller for the performance of Buyer’s
obligations under the Repurchase Documents, (ii) Seller shall continue to deal solely and directly
with Buyer in connection with Buyer’s rights and obligations under the Repurchase Documents, and
(iii) Buyer will give prompt written notice thereof (including identification of the Eligible
Assignee and the amount of Repurchase Price allocated to it) to each Party (but Buyer shall not
have any liability for any failure to timely provide such notice). Any sale or assignment by Buyer
of rights or obligations under the Repurchase Documents that does not comply with this
Section 18.08(c) shall be treated for purposes of the Repurchase Documents as a sale by
such Buyer of a participation in such rights and obligations in accordance with
Section 18.08(b).


 


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(d) Seller shall cooperate with Buyer in connection with any such sale and assignment of
participations or assignments and shall enter into such restatements of, and amendments,
supplements and other modifications to, the Repurchase Documents to give effect to any such sale or
assignment; provided, that none of the foregoing shall change any economic or other
material term of the Repurchase Documents in a manner adverse to Seller without the consent of
Seller in its discretion.



Section 18.09 Ownership and Hypothecation of Purchased Assets. Title to all Purchased
Assets shall pass to and vest in Buyer on the applicable Purchase Dates and, subject to the terms
of the Repurchase Documents, Buyer or its designee shall have free and unrestricted use of all
Purchased Assets and be entitled to exercise all rights, privileges and options relating to the
Purchased Assets as the owner thereof, including rights of subscription, conversion, exchange,
substitution, voting, consent and approval, and to direct any servicer or trustee. Buyer or its
designee may engage in repurchase transactions with the Purchased Assets or otherwise sell, pledge,
repledge, transfer, hypothecate, or rehypothecate the Purchased Assets, all on terms that Buyer may
determine in its discretion; provided, that no such transaction shall affect the
obligations of Buyer to transfer the Purchased Assets to Seller on the applicable Repurchase Dates
free and clear of any pledge, Lien, security interest, encumbrance, charge or other adverse claim.



Section 18.10 Confidentiality. All information regarding the terms set forth in any
of the Repurchase Documents or the Transactions shall be kept confidential and shall not be
disclosed by either Party to any Person except (a) to the Affiliates of such Party or its or their
respective directors, officers, employees, agents, advisors and other representatives who are
informed of the confidential nature of such information and instructed to keep it confidential,
(b) to the extent requested by any regulatory authority or required by Requirements of Law, (c) to
the extent required to be included in the financial statements of either Party or an Affiliate
thereof, (d) to the extent required to exercise any rights or remedies under the Repurchase
Documents, Purchased Assets or Underlying Mortgaged Properties, (e) to the extent required to
consummate and administer a Transaction, (f) to any actual or prospective Participant or Eligible
Assignee which agrees to comply with this Section 18.10; provided, that no such
disclosure made with respect to any Repurchase Document shall include a copy of such Repurchase
Document to the extent that a summary would suffice, but if it is necessary for a copy of any
Repurchase Document to be disclosed, all pricing and other economic terms set forth therein shall
be redacted before disclosure.



Section 18.11 No Implied Waivers. No failure on the part of Buyer to exercise, or
delay in exercising, any right or remedy under the Repurchase Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy thereunder preclude any
further exercise thereof or the exercise of any other right. The rights and remedies in the
Repurchase Documents are cumulative and not exclusive of any rights and remedies provided by law.
Application of the Default Rate after an Event of Default shall not be deemed to constitute a
waiver of any Event of Default or Buyer’s rights and remedies with respect thereto, or a consent to
any extension of time for the payment or performance of any obligation with respect to which the
Default Rate is applied. Except as otherwise expressly provided in the Repurchase Documents, no
amendment, waiver or other modification of any provision of the Repurchase Documents shall be
effective without the signed agreement of Seller and Buyer.


 


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Any waiver or consent under the Repurchase Documents shall be effective only if it is in
writing and only in the specific instance and for the specific purpose for which given.



Section 18.12 Notices and Other Communications. Unless otherwise provided in this
Agreement, all notices, consents, approvals, requests and other communications required or
permitted to be given to a Party hereunder shall be in writing and sent prepaid by hand delivery,
by certified or registered mail, by expedited commercial or postal delivery service, or by
facsimile or email if also sent by one of the foregoing, to the address for such Party specified in
Annex I or such other address as such Party shall specify from time to time in a notice to
the other Party. Any of the foregoing communications shall be effective when delivered or upon the
first attempted delivery on a Business Day. A Party receiving a notice that does not comply with
the technical requirements of this Section 18.12 may elect to waive any deficiencies and
treat the notice as having been properly given.



Section 18.13 Counterparts; Electronic Transmission. Any Repurchase Document may be
executed in counterparts, each of which shall be deemed to be an original, but all of which shall
together constitute but one and the same instrument.



Section 18.14 No Personal Liability. No administrator, incorporator, Affiliate,
owner, member, partner, stockholder, officer, director, employee, agent or attorney of Buyer, any
Indemnified Person, Seller, any Intermediate Starwood Entity or Guarantor, as such, shall be
subject to any recourse or personal liability under or with respect to any obligation of Buyer,
Seller, any Intermediate Starwood Entity or Guarantor under the Repurchase Documents, whether by
the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute
or otherwise; it being expressly agreed that the obligations of Buyer, Seller and Guarantor under
the Repurchase Documents are solely their respective corporate, limited liability company or
partnership obligations, as applicable, and that any such recourse or personal liability is hereby
expressly waived. This Section 18.14 shall survive the termination of the Repurchase
Documents.



Section 18.15 Protection of Buyer’s Interests in the Purchased Assets; Further
Assurances.



(a) Seller shall cause the Repurchase Documents and/or all financing statements and
continuation statements and any other necessary documents covering the right, title and interest of
Buyer to the Purchased Assets to be promptly recorded, registered and filed, and at all times to be
kept recorded, registered and filed, all in such manner and in such places as may be required by
law fully to preserve and protect such right, title and interest. Seller shall deliver to Buyer
file–stamped copies of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or filing. Seller
shall execute any and all documents reasonably required to fulfill the intent of this
Section 18.15.



(b) Seller will promptly at its expense execute and deliver such instruments and documents and
take such other actions as Buyer may reasonably request from time to time in order to perfect,
protect, evidence, exercise and enforce Buyer’s rights and remedies under and with respect to the
Repurchase Documents, the Transactions and the Purchased Assets.


 


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(c) If Seller fails to perform any of its Repurchase Obligations promptly after written
request from Buyer, Buyer may (but shall not be required to) perform or cause to be performed such
Repurchase Obligation, and the costs and expenses incurred by Buyer in connection therewith shall
be payable by Seller. Without limiting the generality of the foregoing, if Seller shall fail to do
so promptly after written request from Buyer, Seller authorizes Buyer, at the option of Buyer and
the expense of Seller, at any time and from time to time, to take all actions and pay all amounts
that Buyer deems necessary or appropriate to protect, enforce, preserve, insure, service,
administer, manage, perform, maintain, safeguard, collect or realize on the Purchased Assets and
Buyer’s Liens and interests therein or thereon and to give effect to the intent of the Repurchase
Documents. No Default or Event of Default shall be cured by the payment or performance of any
Repurchase Obligation by Buyer on behalf of Seller. Buyer may make any such payment in accordance
with any bill, statement or estimate procured from the appropriate public office or holder of the
claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or
into the validity of any tax assessment, sale, forfeiture, tax Lien, title or claim except to the
extent such payment is being contested in good faith by Seller in appropriate proceedings and
against which adequate reserves are being maintained in accordance with GAAP.



(d) Without limiting the generality of the foregoing, Seller will no earlier than six (6) or
later than three (3) months before the fifth (5th) anniversary of the date of filing of each UCC
financing statement filed in connection with any Repurchase Document or any Transaction,
(i) deliver and file or cause to be filed an appropriate continuation statement with respect to
such financing statement, and (ii) deliver or cause to be delivered to Buyer an opinion of counsel,
in form and substance reasonably satisfactory to Buyer, confirming and updating the opinion
delivered pursuant to Section 6.01(a) with respect to perfection and otherwise to the
effect that the security interests hereunder continue to be enforceable and perfected security
interests, subject to no other Liens of record except as provided herein or otherwise permitted
hereunder, which opinion may contain usual and customary assumptions, limitations and exceptions.



(e) Except as provided in the Repurchase Documents, the sole duty of Buyer, Custodian or any
other designee or agent of Buyer with respect to the Purchased Assets shall be to use reasonable
care in the custody, use, operation and preservation of the Purchased Assets in its possession or
control. Buyer shall incur no liability to Seller or any other Person for any act of Governmental
Authority, act of God or other destruction in whole or in part or negligence or wrongful act of
custodians or agents selected by and supervised by Buyer with reasonable care, or Buyer’s failure
to provide adequate protection or insurance for the Purchased Assets. Buyer shall have no
obligation to take any action to preserve any rights of Seller in any Purchased Asset against prior
parties, and Seller hereby agrees to take such action. Buyer shall have no obligation to realize
upon any Purchased Asset except through proper application of any distributions with respect to the
Purchased Assets made directly to Buyer or its agent(s). So long as Buyer and Custodian shall act
in good faith in their handling of the Purchased Assets, Seller waives or is deemed to have waived
the defense of impairment of the Purchased Assets by Buyer and Custodian.



Section 18.16 Default Rate. To the extent permitted by Requirements of Law, Seller
shall pay interest at the Default Rate on the amount of all Repurchase Obligations not paid



 


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when due under the Repurchase Documents until such Repurchase Obligations are paid or
satisfied in full.



Section 18.17 Set-off. In addition to any rights now or hereafter granted under the
Repurchase Documents, Requirements of Law or otherwise, Seller, on behalf of itself and Guarantor,
hereby grants to Buyer and each Indemnified Person, to secure repayment of the Repurchase
Obligations, a right of set-off upon any and all of the following: monies, securities, collateral
or other property of Seller and Guarantor and any proceeds from the foregoing, now or hereafter
held or received by Buyer, any Affiliate of Buyer or any Indemnified Person, for the account of
Seller or Guarantor, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general, specified, special, time, demand,
provisional or final) and credits, claims or Indebtedness of Seller or Guarantor at any time
existing, and any obligation owed by Buyer or any Affiliate of Buyer to Seller or Guarantor and to
set–off against any Repurchase Obligations or Indebtedness owed by Seller or Guarantor and any
Indebtedness owed by Buyer or any Affiliate of Buyer to Seller or Guarantor, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, whether or not arising under the
Repurchase Documents and irrespective of the currency, place of payment or booking office of the
amount or obligation and in each case at any time held or owing by Buyer, any Affiliate of Buyer or
any Indemnified Person to or for the credit of any Seller or Guarantor, without prejudice to
Buyer’s right to recover any deficiency. Each of Buyer, each Affiliate of Buyer and each
Indemnified Person is hereby authorized upon any amount becoming due and payable by Seller or
Guarantor to Buyer or any Indemnified Person under the Repurchase Documents, the Repurchase
Obligations or otherwise or upon the occurrence of an Event of Default, without notice to Seller or
Guarantor, any such notice being expressly waived by Seller and Guarantor to the extent permitted
by any Requirements of Law, to set–off, appropriate, apply and enforce such right of set–off
against any and all items hereinabove referred to against any amounts owing to Buyer or any
Indemnified Person by Seller or Guarantor under the Repurchase Documents and the Repurchase
Obligations, irrespective of whether Buyer, any Affiliate of Buyer or any Indemnified Person shall
have made any demand under the Repurchase Documents and regardless of any other collateral securing
such amounts, and in all cases without waiver or prejudice of Buyer’s rights to recover a
deficiency. Seller and Guarantor shall be deemed directly indebted to Buyer and the other
Indemnified Persons in the full amount of all amounts owing to Buyer and the other Indemnified
Parties by Seller and Guarantor under the Repurchase Documents and the Repurchase Obligations, and
Buyer and the other Indemnified Persons shall be entitled to exercise the rights of set–off
provided for above. ANY AND ALL RIGHTS TO REQUIRE BUYER OR OTHER INDEMNIFIED PERSONS TO EXERCISE
THEIR RIGHTS OR REMEDIES WITH RESPECT TO THE PURCHASED ASSETS OR OTHER INDEMNIFIED PERSONS UNDER
THE REPURCHASE DOCUMENTS, PRIOR TO EXERCISING THE FOREGOING RIGHT OF SET–OFF, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER AND GUARANTOR.



Buyer or any Indemnified Person shall promptly notify the affected Seller or Guarantor after
any such set–off and application made by Buyer or such Indemnified Person, provided that the
failure to give such notice shall not affect the validity of such set–off and application. If an
amount or obligation is unascertained, Buyer may in good faith estimate that obligation and set-off
in respect of the estimate, subject to the relevant Party accounting to the other Party when the
amount or obligation is ascertained. Nothing in this Section 18.17 shall be



 


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effective to create a charge or other security interest. This Section 18.17 shall be
without prejudice and in addition to any right of set-off, combination of accounts, Lien or other
rights to which any Party is at any time otherwise entitled.



Section 18.18 Seller’s Waiver of Setoff. Seller hereby waives any right of setoff it
may have or to which it may be or become entitled under the Repurchase Documents or otherwise
against Buyer, any Affiliate of Buyer, any Indemnified Person or their respective assets or
properties.



Section 18.19 Periodic Due Diligence Review. Buyer may perform continuing due
diligence reviews with respect to the Purchased Assets, Seller and Affiliates of Seller, including
ordering new third party reports, for purposes of, among other things, verifying compliance with
the representations, warranties, covenants, agreements, duties, obligations and specifications made
under the Repurchase Documents or otherwise. Upon reasonable prior notice to Seller, unless a
Default or Event of Default exists, in which case no notice is required, Buyer or its
representatives may during normal business hours inspect any properties and examine, inspect and
make copies of the books and records of Seller and Affiliates of Seller, the Mortgage Loan
Documents and the Servicing Files. Seller shall make available to Buyer one or more knowledgeable
financial or accounting officers and representatives of the independent certified public
accountants of Seller for the purpose of answering questions of Buyer concerning any of the
foregoing. Seller shall cause Servicer and Sub-Servicer to cooperate with Buyer by permitting
Buyer to conduct due diligence reviews of the Servicing Files. Buyer may purchase Purchased Assets
from Seller based solely on the information provided by Seller to Buyer in the Underwriting
Materials and the representations, warranties, duties, obligations and covenants contained herein,
and Buyer may at any time conduct a partial or complete due diligence review on some or all of the
Purchased Assets, including ordering new credit reports and new appraisals on the Underlying
Mortgaged Properties and otherwise re-generating the information used to originate and underwrite
such Purchased Assets. Buyer may underwrite such Purchased Assets itself or engage a mutually
acceptable third-party underwriter to do so.



Section 18.20 Time of the Essence. Time is of the essence with respect to all
obligations, duties, covenants, agreements, notices or actions or inactions of Seller under the
Repurchase Documents.



Section 18.21 Patriot Act Notice. Buyer hereby notifies Seller that Buyer is required
by the Patriot Act to obtain, verify and record information that identifies Seller.



Section 18.22 Successors and Assigns; No Third Party Beneficiaries. Subject to the
foregoing, the Repurchase Documents and any Transactions shall be binding upon and shall inure to
the benefit of the Parties and their successors and permitted assigns. Nothing in the Repurchase
Documents, express or implied, shall give to any Person other than the Parties any benefit or any
legal or equitable right, power, remedy or claim under the Repurchase Documents.



Section 18.23 Right of First Offer: Guarantor shall provide Buyer with a right of
first offer, which will expire by its terms on the first anniversary of the Closing Date, with
respect to any refinancing of the Facility or the initial secured credit or master repurchase
facility of Guarantor (a “Qualified Financing”). If Seller or Guarantor wishes to obtain a
Qualified



 


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Financing, Guarantor shall send written notice thereof to Buyer describing the general
parameters of the Qualified Financing that it is seeking. If Buyer wishes to offer to provide such
Qualified Financing, Buyer shall deliver a term sheet setting forth all of the material terms for
such Qualified Financing it would be willing to provide within ten (10) Business Days after receipt
of Guarantor’s notice. If Buyer does not deliver a term sheet within such ten (10) Business Day
period or, if Buyer delivers such term sheet, but Buyer and Guarantor are unable to agree on such
terms, each in its sole discretion, within ten (10) Business Days after delivery of such term sheet
by Buyer, then Seller, Guarantor and/or its Affiliates may obtain such Qualified Financing from
another lender at any time thereafter and neither Buyer nor its Affiliates shall have any right to
provide such Qualified Financing, so long as the terms for such Qualified Financing provided by the
third party lender are not materially less favorable to Seller, Guarantor and/or its Affiliates
than those offered by Buyer in its term sheet.



[ONE OR MORE UNNUMBERED SIGNATURE PAGES FOLLOW]



 


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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date
first above written.



	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	STARWOOD PROPERTY MORTGAGE	 	 
	 

	 	 	 	SUB-1, L.L.C., a Delaware limited liability
company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Its:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL	 	 
	 

	 	 	 	ASSOCIATION, a
national banking association	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Its:
	 	 
	 

	 	 	 	Title: