**Exhibit 10.11**

 

**EXECUTION COPY**

 

 

**ANNEX I to MASTER REPURCHASE AGREEMENT**

**(GOLDMAN SACHS MORTGAGE COMPANY)**

 

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**TABLE OF CONTENTS**

 
| 1.  | APPLICABILITY;  OTHER APPLICABLE ANNEXES                      |   |
|-----|---------------------------------------------------------------|--------|
| 2.  | ADDITIONAL AND  SUBSTITUTE DEFINITIONS                        |   |
| 3.  | INITIATION;  CONFIRMATION; TERMINATION; FEES                  |   |
| 4.  | MANDATORY  PAYMENT OR DELIVERY OF ADDITIONAL ASSETS           |   |
| 5.  | INCOME PAYMENTS  AND PRINCIPAL PAYMENTS                       |   |
| 6.  | CAUTIONARY SECURITY  INTEREST                                 |   |
| 7.  | PAYMENT, TRANSFER AND  CUSTODY                                |   |
| 8.  | CERTAIN  RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS  |   |
| 9.  | RESERVED                                                      |   |
| 10. | REPRESENTATIONS                                               |   |
| 11. | NEGATIVE COVENANTS OF  SELLER                                 |   |
| 12. | AFFIRMATIVE  COVENANTS OF SELLER                              |   |
| 13. | SINGLE-PURPOSE ENTITY                                         |   |
| 14. | EVENTS OF DEFAULT;  REMEDIES                                  |   |
| 15. | SINGLE AGREEMENT                                              |   |
| 16. | NOTICES AND OTHER  COMMUNICATIONS                             |   |
| 17. | NON-ASSIGNABILITY                                             |   |
| 18. | GOVERNING  LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL |   |
| 19. | NO RELIANCE; DISCLAIMERS                                      |   |
| 20. | INDEMNITY AND EXPENSES                                        |   |
| 21. | DUE DILIGENCE                                                 |   |
| 22. | SERVICING                                                     |   |
| 23. | TREATMENT FOR TAX  PURPOSES                                   |   |
| 24. | INTENT                                                        |   |
| 25. | MISCELLANEOUS                                                 |   |

 

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**SupplementalTerms and Conditions**

 

This Annex I forms a part of the MasterRepurchase Agreement dated as of January 3, 2005 between Gramercy WarehouseFunding II LLC, as seller, and Goldman Sachs Mortgage Company, as buyer(together with Annex I, the “Agreement”).  Capitalized terms used in this Annex Iwithout definition shall have the respective meanings assigned to such terms inthe Agreement.  This Annex I isintended to supplement the Agreement and shall, wherever possible, beinterpreted so as to be consistent with the Agreement; however, in the event ofany conflict or inconsistency between the provisions of this Annex I, onthe one hand, and the provisions of the Agreement, on the other, the provisionsof this Annex I shall govern and control. All references in the Agreement and in this Annex I to “the Agreement”shall be deemed to mean and refer to the Agreement, as supplemented andmodified by this Annex I or as otherwise modified after the date hereof.

** **

**1.**                                      APPLICABILITY;OTHER APPLICABLE ANNEXES

 

(a)                                  Paragraph1 of the Agreement (“Applicability”) is hereby deleted and replaced with thefollowing:

 

From time to time the parties hereto may enter intotransactions in which Seller agrees to transfer to Buyer one or more EligibleLoans against the transfer of funds by Buyer, with a simultaneous agreement byBuyer to transfer to Seller such Eligible Loans at a date certain (or suchearlier date, in accordance with the terms hereof), against the transfer offunds by Seller.  Each such transactionshall be referred to herein as a “Transaction” and, unless otherwise agreed inwriting, shall be governed by the Agreement, including any supplemental termsor conditions contained in this Annex I and in any other annexes identifiedherein or therein as applicable hereunder.

 

(b)                                 Inaddition to this Annex I and the Schedules hereto, the following Annexesand any Schedules thereto shall form a part of the Agreement and shall beapplicable thereunder:

 

Annex II – Names and Addresses for CommunicationsBetween Parties.

** **

**2.**                                      ADDITIONALAND SUBSTITUTE DEFINITIONS

 

(a)                                  Thefollowing capitalized terms in Paragraph 2 of the Agreement (“Definitions”) arehereby deleted in their entirety:

 

(i)                                     “AdditionalPurchased Securities”;

 

(ii)                                  “Buyer’sMargin Amount”;

 

(iii)                               “Buyer’sMargin Percentage”;

 

(iv)                              “MarginNotice Deadline”;

 

(v)                                 “PrimeRate”;

 

(vi)                              “Seller’sMargin Amount”; and

 

(vii)                           “Seller’sMargin Percentage”.

 

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(b)                                 Thefollowing capitalized terms shall have the respective meanings set forth below,in lieu of the meanings for such terms set forth in Paragraph 2 of theAgreement (“Definitions”):

 

“Act of Insolvency” shall mean, with respect toany party, (i) the commencement by such party as debtor of any case orproceeding under any bankruptcy, insolvency, reorganization, liquidation,moratorium, dissolution, delinquency or similar law, or such party seeking theappointment or election of a receiver, conservator, trustee, custodian orsimilar official for such party or any substantial part of its property, or theconvening of any meeting of creditors for purposes of commencing any such caseor proceeding or seeking such an appointment or election, (ii) the making bysuch party of a general assignment for the benefit of creditors, or (iii) theadmission in writing by such party of such party’s inability to pay such party’sdebts as they become due.

 

“Confirmation” shall have the meaning specifiedin Section 3(d) of this Annex I.

 

“Income” shall mean, with respect to anyPurchased Loan at any time, any payment or other cash distribution thereon ofprincipal, interest, dividends, fees, reimbursements or proceeds or other cashdistributions thereon (including casualty or condemnation proceeds).

 

“Margin Deficit” shall have the meaningspecified in Section 4(a) of this Annex I.

 

“Margin Excess” shallhave the meaning specified in Section 4(b) of this Annex I.

 

“Market Value” shall mean, with respect to anyPurchased Loan as of any relevant date, the lesser of (x) market value ofsuch Purchased Loan on such date, as determined by Buyer in its good faith butsole discretion, and (y) the par amount of such Purchased Loan.

 

For purposes of Buyer’s determination, (i) theMarket Value may be determined by reference to an Appraisal, discounted cashflow analysis or other method (which method shall be selected by Buyer in goodfaith), (ii) any amounts or claims secured by related Eligible Property orProperties ranking senior to or pari passu with the lien of the Purchased Loanmay be deducted from the Market Value of the Purchased Loan, (iii) theMarket Value of any Defaulted Loan or Delinquent Loan shall be zero (unlessBuyer otherwise specifies), (iv) Buyer may consider the representations andwarranties set forth in Exhibit V (including a breach thereof), andexceptions thereto in its determination of the Market Value of the PurchasedLoans and (iv) for the avoidance of doubt, Buyer may reduce Market Valuefor any actual or potential risks (including risk of delay) posed by any liensor claims on the related Eligible Property or Properties.  Seller shall cooperate in good faith withBuyer in its in good faith determination of the market value of each item ofunderlying collateral (including, without limitation, providing all informationand documentation in the possession of Seller regarding such item of underlyingcollateral or otherwise required by Buyer).

 

“Pricing Rate” shall mean, for any PurchasedLoan and any Pricing Rate Period, an annual rate equal to the LIBOR Rate forsuch Pricing Rate Period plus the Applicable Spread for the applicable LoanType and shall be subject to adjustment and/or conversion as provided inSections 3(j), 3(k) and 3(s) of this Annex I. The Pricing Rate shall be computed on the basis of a 360-day year andthe actual number of days elapsed.

 

“Purchase Price” shall mean, with respect toany Purchased Loan the price at which such Purchased Loan is transferred bySeller to Buyer on the applicable Purchase Date.  The Purchase Price as of any Purchase Datefor any Purchased Loan of a particular Loan Type shall be an amount (expressedin dollars) equal to the product obtained by multiplying (i) the Market Valueof such Purchased Loan by (ii) the Purchase Percentage for the related LoanType.

 

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“Purchase Date” shall mean, with respect to anyPurchased Loan, the date on which such Purchased Loan is transferred by Sellerto Buyer.

 

“Purchased Securities” shall mean, the “PurchasedSecurities” as defined in the Securities Repurchase Agreement.

 

“Repurchase Date” with respect to any PurchasedLoan shall mean the Facility Termination Date or such earlier date specified inthe related Confirmation, or if applicable, the related Early Repurchase Dateor Accelerated Repurchase Date.

 

“Repurchase Price” shall mean, with respect toany Purchased Loan as of any date, the price at which such Purchased Loan is tobe transferred from Buyer to Seller upon termination of the relatedTransaction; in each case, such price shall equal the sum of the Purchase Priceof such Purchased Loan and the accrued Price Differential with respect to suchPurchased Loan as of the date of such determination, minus all Income and cashactually received by Buyer in respect of such Transaction and applied towardsthe Repurchase Price and/or Price Differential pursuant to this Annex I.

 

(c)                                  Inaddition to the terms defined in Paragraph 2 of the Agreement  (“Definitions”) not otherwise deletedpursuant to Section 2(a) of this Annex I and the terms defined in Section 2(b)of this Annex I, the following capitalized terms shall have the respectivemeanings set forth below:

 

“Accelerated Repurchase Date” shall have themeaning specified in Section 14(b)(i) of this Annex I.

 

“Accepted Servicing Practices” shall mean withrespect to any Purchased Loan, in conformity with those accepted and prudentservicing practices in the industry for loans of the same type and in a mannerat least equal in quality to the servicing the applicable servicer provides forassets similar to such Purchased Loans that it owns.

 

“Affiliate” shall mean, when used with respectto any specified Person, any other Person directly or indirectly controlling,controlled by, or under common control with, such Person.  Control shall mean the possession, direct orindirect, of the power to direct or cause the direction of the management andpolicies of a Person, whether through the ownership of voting securities, bycontract or otherwise and “controlling” and “controlled” shall have meaningscorrelative thereto.

 

“Aggregate Repurchase Price” shall mean, as ofany date of determination, the aggregate Repurchase Price (excluding anyaccrued and unpaid Price Differential) of all Transactions outstanding as ofsuch date.

 

“Agreement” shall have the meaning specified inthe introductory paragraph of this Annex I.

 

“Alternative Rate” shall have the meaningspecified in Section 3(k) of this Annex I.

 

“Alternative Rate Transaction” shall mean, withrespect to any Pricing Rate Period, any Transaction with respect to which thePricing Rate for such Pricing Rate Period is determined with reference to theAlternative Rate.

 

“Applicable Spread” shall mean, (i) withrespect to a Purchased Loan, so long as no Event of Default shall have occurredand be continuing, the per annum rate specified in Schedule 1 attached heretoas being the “Applicable Spread” for the Purchased Loans in such Loan Type, and(ii) in each case, after

 

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the occurrence and during the continuance of an Eventof Default, the applicable per annum rate described in clause (i) of thisdefinition, plus 400 basis points (4.0%).

 

“Appraisal” shall mean an appraisal of any Eligible Property prepared by a licensed appraiserapproved by Buyer in its reasonable discretion, in accordance with the UniformStandards of Professional Appraisal Practice of the Appraisal Foundation, incompliance with the requirements of Title 11 of the Financial InstitutionReform, Recovery and Enforcement Act and utilizing customary valuation methodssuch as the income, sales/market or cost approaches, as any of the same may beupdated by recertification from time to time by the appraiser performing suchAppraisal.

 

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

 

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

 

“Assignment of Leases” shall mean, with respectto any Purchased Loan which is a mortgage loan, any assignment of leases, rentsand profits or equivalent instrument, whether contained in the related Mortgageor executed separately, assigning to the holder or holders of such Mortgage allof the related Mortgagor’s interest in the leases, rents and profits derivedfrom the ownership, operation, leasing or disposition of all or a portion ofthe related Mortgaged Property as security for repayment of such PurchasedLoan.

 

“Assignment of Mortgage” shall mean, withrespect to any Mortgage, an assignment of the mortgage, notice of transfer orequivalent instrument in recordable form, sufficient under the laws of thejurisdiction wherein the related property is located to reflect the assignmentand pledge of the Mortgage.

 

“Bailee” shall mean Dechert LLP or such otherthird party as Buyer and Seller shall mutually approve in their solediscretion.

 

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

 

“Bankruptcy Code” shall mean the United StateBankruptcy Code of 1978, as amended from time to time.

 

“Blocked Account” shall have the meaningspecified in Section 5 of this Annex I.

 

“Blocked Account Agreement” shall mean theBlocked Account Agreement, in the form attached hereto as Exhibit VI (orsuch other form as shall have been approved by Buyer, such approval not to beunreasonably withheld, delayed or conditioned), dated as of the date hereof andexecuted by Buyer, Seller and the Depository Bank (and any successor thereto orreplacement thereof executed by Buyer, Seller and the Depository Bank).

 

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

 

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

 

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“Capital Lease Obligations” shall mean, for anyPerson, all obligations of such Person to pay rent or other amounts under alease of (or other agreement conveying the right to use) property to the extentsuch obligations are required to be classified and accounted for as a capitallease on a balance sheet of such Person under GAAP, and, for purposes of theAgreement, the amount of such obligations shall be the capitalized amountthereof, determined in accordance with GAAP.

 

“Change of Control” shall mean the occurrenceof any of the following with respect to any Person:

 

(i)                                     aTransfer of all or substantially all of such Person’s assets (excluding anysuch Transfer in connection with any securitization transaction involving, orthe sale of,  Repurchased Loans orRepurchased Securities or other assets of Seller used in other repurchase orother similar transactions in the ordinary course of such Person’s business);or

 

(ii)                                  amerger, consolidation or other transaction in which more than 50% of the votingcommon equity of such Person or the surviving entity immediately after suchmerger, consolidation or such other transaction is not owned, directly orindirectly, by persons who were, directly or indirectly, equityholders of suchPerson immediately prior thereto; or

 

(iii)                               amajority of the members of the board of directors of such Person changes duringany twelve (12) month period after the date hereof.

 

“Collection Period” shall mean with respect tothe Remittance Date in any month, the period beginning on but excluding theCut-off Date in the month preceding the month in which such Remittance Dateoccurs and continuing to and including the Cut-off Date immediately precedingsuch Remittance Date.

 

“Costs”****shall mean,with respect to any Purchased Loan, all out-of-pocket obligations, costs, fees,indemnities and expenses in respect of such Purchased Loan actually incurred byBuyer.

 

“Custodial Agreement” shall mean the CustodialAgreement entered into by and among Custodian, Seller and Buyer.

 

“Custodial Delivery Certificate” shall mean thedelivery certificate, a form of which is attached hereto as Exhibit III,executed by Seller in connection with its delivery of a Purchased Loan File toBuyer or its designee (including the Custodian) pursuant to Section 7 ofthis Annex I.

 

“Custodian” shall mean Wells Fargo Bank, N.A.or any successor Custodian appointed by Buyer.

 

“Cut-off Date” shall mean the last Business Dayof the calendar month preceding each Remittance Date.

 

“Debt to Equity Ratio” shall mean the ratio ofTotal Indebtedness to Tangible Net Worth without regard to the application ofFAS 140 or FIN 46).

 

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

 

“Defaulted Loan” shall mean any Purchased Loanas to which (A) there is a material breach beyond any applicable cureperiod of a material representation, warranty or covenant by the relatedborrower or obligor under the applicable Purchased Loan Documents or by Sellerunder Exhibit V,

 

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(B) there is a material default beyond anyapplicable cure period under the related Purchased Loan Documents in thepayment when due of interest, principal or any other amounts which materialdefault continues, (C) any other material “Event of Default” under therelated Purchased Loan Document, (D) to the extent that the relatedTransaction is deemed a loan under federal, state or local law Buyer ceases tohave a first priority perfected security interest or (E) the relatedPurchased Loan File or any portion thereof has been released from thepossession of the Custodian under the Custodial Agreement to anyone other thanBuyer or any Affiliate of Buyer except in accordance with the terms of theCustodial Agreement.

 

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

 

“Depository Bank” shall mean such depositorybank appointed by Seller with the prior written consent of Buyer which deliversa deposit account agreement in the form of the Blocked Account Agreement oranother form reasonably acceptable to Buyer.

 

“Diligence Fee” shall mean fees (so long as noEvent of Default is continuing, not to exceed $50,000 annually with respect tothis Agreement and the Securities Repurchase Agreement) payable by Seller toBuyer in respect of Buyer’s out-of-pocket expenses (other than legal expenses)incurred in connection with its review of the Diligence Materials hereunder andunder the Securities Repurchase Agreement.

 

“Diligence Materials” shall mean thePreliminary Due Diligence Package together with the Supplemental Due DiligenceList.

 

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

 

“Early Repurchase Date” shall have the meaningspecified in Section 3(g) of this Annex I.

 

“Early Repurchase Deposit” shall have themeaning specified in Section 3(j) of this Annex I.

 

“Early Repurchase Deposit Application Date”shall have the meaning specified in Section 3(j) of this Annex I.

 

“Early Repurchase Deposit Funding Date” shallhave the meaning specified in Section 3(j) of this Annex I.

 

“EBITDA” shall mean, for each fiscal quarter,with respect to Guarantor and its consolidated Subsidiaries, an amount equal to(a) Net Income for such period (excluding the effect of any extraordinary gainsor losses resulting from the sale of property or non-cash gains or lossesoutside the ordinary course of business) plus (b), without duplication,an amount which, in the determination of Net Income for such period, has beendeducted for (i) interest expense for such period, (ii) total federal, state,foreign or other income or franchise taxes for such period, and (iii) alldepreciation and amortization for such period, all as determined with respectto any consolidated Subsidiary in accordance with the methodology specified inthe definition of Net Income, plus (c) any nonrecurring fees andexpenses incurred on or prior to the date of the execution and delivery of theAgreement, less (d) any non-cash reserve activity.

 

“Eligible Loans” shall mean any of thefollowing types of transitional or stabilized loans listed in (i) through (iv)below, (v) acceptable to Buyer in the exercise of its sole and absolutediscretion, (w)

 

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secured directly or indirectly by an EligibleProperty, (x) which has a loan term equal to or less than 10 years (assumingexercise of all extension options), (y) as to which the applicablerepresentations and warranties set forth in Exhibit V are true and correct inall material respects as of the applicable Purchase Date, and (z) has a maximumLTV  specified in Schedule 1 for therelated Loan Type:

 

(i)                                     performingMezzanine Loans (or participation interests therein).

 

(ii)                                  performingMortgage Loans secured by first liens on Eligible Properties (“FirstMortgage Loans”).

 

(iii)                               seniorsubordinate participation interests (or a senior subordinate promissory notethat is, in effect, similar in nature to a senior subordinate participationinterest) in performing First Mortgage Loans that also secures a seniorpromissory note (or senior interest) in such loan and may also secure a juniorsubordinate promissory note (or junior subordinate interest) in such loan (“SeniorFirst Mortgage B Notes”).

 

(iv)                              juniorparticipation interests (or a junior promissory note that is, in effect,similar in nature to a junior participation interest) in performing FirstMortgage Loans that also secure a senior (or senior subordinate) promissorynote (or senior (or senior subordinate) interest) in such loan (“JuniorFirst Mortgage B Notes”).

 

Buyer may, in its sole and absolute discretion,consider sub-performing and non-performing loans of the types listed in (i)through (iv) above.

 

“Eligible Property” shall mean a property thatis a multifamily, retail, office, industrial, warehouse, condominium orhospitality property or such other property type acceptable to Buyer in theexercise of its good faith business judgment; provided, however, thathealthcare related properties, such as assisted living, nursing homes, acutecare, rehabilitation centers, diagnostic centers and psychiatric centers, shallnot qualify as an Eligible Property.

 

“ERISA” means the Employee Retirement IncomeSecurity Act of 1974, as amended from time to time, and the regulationspromulgated thereunder.  Sectionreferences to ERISA are to ERISA, as in effect at the date of this Annex I and,as of the relevant date, any subsequent provisions of ERISA, amendatorythereof, supplemental thereto or substituted therefor.

 

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

 

“Event of Default” shall have the meaningspecified in Section 14(a) of this Annex I.

 

“Extended Repurchase Monthly Amount” means thequotient of (i) the aggregate Repurchase Price of the Purchased Loans as of theFacility Termination Date, divided by (ii) 6; provided, that to the extentSeller pays the aggregate Repurchase Price in an amount in excess of theExtended Repurchase Monthly Amount in any month, Seller shall receive a creditagainst the next month’s required payment amount (and any subsequent months’payments, if applicable) in an aggregate amount equal to such excess.

 

“Facility Amount” shall mean, as of any date ofdetermination, $200,000,000 less the Securities Aggregate Repurchase Priceoutstanding under the Securities Repurchase Agreement as of such date.

 

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“Facility Termination Date” shall mean January3, 2008 unless extended pursuant to Section 3(q) of this Annex I.

 

“Federal Funds Rate” shall mean, for any day,an interest rate per annum equal to the weighted average of the rates onovernight Federal funds transactions with members of the Federal Reserve Systemarranged by Federal funds brokers on such day, as published for such day, (or,if such day is not a Business Day, for the immediately preceding Business Day)by the Federal Reserve Bank of New York, or, if such rate is not so publishedfor any day which is a Business Day, the average of the quotations atapproximately 10 a.m. (New York time) on such day or such transactions receivedby the Buyer from three Federal funds brokers of recognized standing selectedby the Buyer in its sole discretion.

 

“Fee Letter” shall mean that certain letteragreement, dated the date hereof between Buyer, Goldman, Sachs & Co. andSeller, as the same may be amended, supplemented or otherwise modified fromtime to time.

 

“Filings” shall have the meaning specified inSection 6(b) of this Annex I.

 

“Financial Covenant Compliance Certificate”shall mean an Officer’s Certificate to be delivered by Guarantor within 45 daysafter the end of each fiscal quarter confirming that: (i) as of the fiscalquarter most recently ended, (w) Guarantor’s Debt to Equity Ratio is less thanor equal to 5:1; (x) Guarantor’s Tangible Net Worth is equal to or greater thanthe sum of (i) $129,750,000 and (ii) 75% of the proceeds of any equityissuances after Guarantor’s initial public offering, (y) Guarantor’s Fixed ChargeCoverage Ratio equals or exceeds 1.50:1, and (z) Guarantor’s Minimum Liquidity equals or exceeds, during the firsttwo years after the date of this Agreement, $10,000,000 and, thereafter,$15,000,000; and (ii) Guarantor has cumulative positive EBITDA for the threefiscal quarters most recently ended.

 

“Financing Transaction” shall mean a repurchasetransaction or a financing transaction between Buyer (or an Affiliate of Buyer)and any counterparty.

 

“First Mortgage B Note” shall mean any SeniorFirst Mortgage B Note or Junior First Mortgage B Note.

 

“Fitch” means Fitch Inc.

 

“Fixed Charge Coverage Ratio” shall mean, withrespect to any Person and any period of determination, the quotient of (i)EBITDA of such Person for such period of determination divided by (ii) theFixed Charges for such period.

 

“Fixed Charges” shall mean, with respect to anyPerson and any period of determination, the sum of (a) debt service (includinginterest expense and principal payments), (b) preferred dividends on anypreferred securities and all distributions due to the holders of any preferredlimited partnership interests, (c) the amortized portion of any capital leaseobligations paid or accrued during such period, (d) capital expenditures, and(e) any amounts payable under any ground lease. Fixed Charges shall include a proportionate share of items (a), (b),(c), (d) and (e) of all unconsolidated affiliates.

 

“GAAP” shall mean United States generallyaccepted accounting principles consistently applied as in effect from time totime.

 

“Governmental Authority” shall mean anynational or federal government, any state, regional, local or other politicalsubdivision thereof with jurisdiction and any Person with jurisdictionexercising executive, legislative, judicial, regulatory or administrativefunctions of or pertaining to government.

 

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“Guarantee” shall mean, as to any Person, anyobligation of such Person directly or indirectly guaranteeing any Indebtednessof any other Person or in any manner providing for the payment of anyIndebtedness of any other Person or otherwise protecting the holder of suchIndebtedness against loss (whether by virtue of partnership arrangements, byagreement to keep-well, to purchase assets, goods, securities or services, orto take-or-pay or otherwise); provided that the term “Guarantee” shall notinclude endorsements for collection or deposit in the ordinary course ofbusiness.  The amount of any Guarantee ofa Person shall be deemed to be an amount equal to the maximum reasonablyanticipated liability in respect thereof as determined by such Person in goodfaith in accordance with GAAP.  The terms“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor” shall mean Gramercy Capital Corp.,a Maryland corporation.

 

“Guaranty” shall mean that certain Guarantydated as of the date hereof, made by Guarantor in favor of Buyer, as the samemay be amended, supplemented or otherwise modified from time to time.

 

“Hedging Transactions” shall mean, with respectto any or all of the Purchased Loans, any short sale of U.S. TreasurySecurities or mortgage-related securities, futures contract (includingEurodollar futures) or options contract or any interest rate swap, cap orcollar agreement or similar arrangements providing for protection againstfluctuations in interest rates or the exchange of nominal interest obligations,either generally or under specific contingencies, entered into by Seller or theunderlying obligor with respect to any Purchased Loan and pledged to Seller ascollateral for such Purchased Loan, with one or more counterparties whoseunsecured debt is rated at least AA (or its equivalent) by any Rating Agencyor, with respect to any Hedging Transaction pledged to Seller as additionalcollateral for a Purchased Loan, such other rating requirement applicable tosuch Hedging Transaction set forth in the related Purchased Loan Documents orwhich is otherwise reasonably acceptable to Buyer; provided that Sellershall not grant or permit any liens, security interests, charges, orencumbrances with respect to any such hedging arrangements for the benefit ofany Person other than Buyer.

 

“Indebtedness” shallmean, for any Person: (a) obligations created, issued or incurred by such Person forborrowed money (whether by loan, the issuance and sale of debt securities orthe sale of property to another Person subject to an understanding oragreement, contingent or otherwise, to repurchase such property from suchPerson); (b) obligations of such Person to pay the deferred purchase oracquisition price of property or services, other than trade accounts payable(other than for borrowed money) arising, and accrued expenses incurred, in theordinary course of business so long as such trade accounts payable are payablewithin 90 days of the date the respective goods are delivered or the respectiveservices are rendered; (c) Indebtedness of others secured by a lien on theproperty of such Person, whether or not the respective Indebtedness so securedhas been assumed by such Person; (d) obligations (contingent or otherwise)of such Person in respect of letters of credit or similar instruments issued oraccepted by banks and other financial institutions for account of such Person;(e) Capital Lease Obligations of such Person; (f) obligations of suchPerson under repurchase agreements or like arrangements; (g) Indebtedness ofothers Guaranteed by such Person; (h) all obligations of such Personincurred in connection with the acquisition or carrying of fixed assets by suchPerson; and (i) Indebtedness of general partnerships of which such Personis a general partner.

 

“Indemnified Amounts” and “IndemnifiedParties” shall have the meaning specified in Section 20 of this Annex I.

 

“Independent Director” of any corporation orlimited liability company means an individual who is duly appointed as a memberof the board of directors or board of managers of such corporation or limitedliability company and who is not, and has never been, and will not whileserving as Independent Director, be any of the following:

 

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(i)                                     amember, partner, equityholder, manager, director, officer or employee of Selleror any of its equityholders or affiliates (other than as an independentdirector or manager of an affiliate of Seller that is not in the direct chainof ownership of Seller and that is required by a creditor to be a singlepurpose bankruptcy remote entity, provided that such independent director ormanager is employed by a company that routinely provides professionalindependent directors or managers);

 

(ii)                                  acreditor, supplier or service provider (including provider of professionalservices) to Seller or any of its equityholders or affiliates (other than acompany that routinely provides professional independent managers or directorsand which also provides lien search and other similar services to Seller or anyof its equityholders or affiliates in the ordinary course of business);

 

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

 

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

 

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

 

“LIBOR Rate” shall mean, with respect to anyPricing Rate Period pertaining to a Transaction, a rate per annum determinedfor such Pricing Rate Period in accordance with the following formula (roundedupward to the nearest 1/100th of 1%):

 

LIBOR

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1 - Reserve Requirement

 

“LIBOR” shall mean the rate per annumcalculated as set forth below:

 

(i)                                     Oneach Pricing Rate Determination Date, LIBOR for the next Pricing Rate Periodwill be the rate for deposits in United States dollars for a one-monthperiod which appears on Telerate Page 3750 as of 11:00 a.m., London time, onsuch date; or

 

(ii)                                  Onany Pricing Rate Determination Date on which no such rate appears on TeleratePage 3750 as described above, LIBOR for the next Pricing Rate Period will bedetermined on the basis of the arithmetic mean of the rates at which depositsin United States dollars are offered by the Reference Banks at approximately11:00 a.m., London time, on such date to prime banks in the London interbankmarket for a one-month period.

 

Allpercentages resulting from any calculations or determinations referred to inthis definition will be rounded upwards, if necessary, to the nearest multipleof 1/100th of 1% and all U.S. dollar amounts used in or resulting from suchcalculations will be rounded to the nearest cent (with one-half cent or morebeing rounded upwards).

 

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“LIBOR Transaction” shall mean, with respect toany Pricing Rate Period, any Transaction with respect to which the Pricing Ratefor such Pricing Rate Period is determined with reference to the LIBOR Rate.

 

“Loan Type” shall mean, with respect to anyPurchased Loan, each of the loan types listed in Schedule 1 attached hereto.

 

“LTV” shall mean, with respect to any EligibleProperty or Properties, the ratio of the aggregate outstanding debt (whichshall include the related Eligible Loan and all debt senior to or pari passuwith such Eligible Loan) secured, directly or indirectly, by such EligibleProperty or Properties, taking into consideration, in Buyer’s sole discretion,reserves, letters of credit, and recourse to third parties acceptable to Buyer,to the aggregate value of such Eligible Property or Properties as determined byBuyer in its sole and absolute discretion. For purposes of Buyer’s determination, (i) the value may bedetermined by reference to an Appraisal, discounted cash flow analysis or othercommercially reasonable method and (ii) for the avoidance of doubt, Buyer mayreduce value for any actual or potential risks (including risk of delay) posedby any liens on the related Eligible Property or Properties.

 

“Material Adverse Effect” shall mean a materialadverse effect on (a) the property, business, operations, financial conditionor prospects of Seller or Guarantor, (b) the ability of Seller orGuarantor to perform its obligations under any of the Transaction Documents towhich it is a party, (c) the validity or enforceability of any of the TransactionDocuments, (d) the rights and remedies of Buyer under any of the TransactionDocuments, (e) the timely payment ofthe Repurchase Price of or accrued Price Differential in respect of thePurchased Loans or other amounts payable in connection therewith, or (f) theaggregate Market Value of the Purchased Loans.

 

“Mezzanine Loan” shall mean any loan (includingany participation interest therein) secured by a pledge of the direct orindirect equity ownership interests in a Person that owns a Mortgaged Propertythat also secures a Mortgage Note.

 

“Mezzanine Note” shall mean a note or otherevidence of indebtedness of the owner or owners of direct or indirect equityownership interests in an underlying real property owner secured by a pledge ofsuch ownership interests.

 

“Minimum Liquidity” shall mean, for any Personand any date of determination, the sum of such Person’s Cash, Cash Equivalentsand actual borrowing availability under any credit facilities, as of such dateof determination.

 

“Monthly Statement” shall mean, for eachcalendar month during which the Agreement shall be in effect, Seller’s orServicer’s, as applicable, reconciliation in arrears of beginning balances,interest and principal paid to date and ending balances for each PurchasedLoan, together with a certified written report describing (a) any developmentsor events that are reasonably likely to have a Material Adverse Effect, (b) anyand all written modifications to any Purchased Loan Documents not previouslydescribed in a written report, (c) loan status, collection performance and anydelinquency and loss experience with respect to any Purchased Loan, (d) anupdate as to the expected repurchase for all Purchased Loans in the facilityand (e) such other information as mutually agreed by Seller and Buyer whichreport shall be delivered to Buyer for each calendar month during the term ofthe Agreement within ten (10) days following the end of each such calendarmonth.

 

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

 

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“Mortgage” shall mean the mortgage, deed oftrust, deed to secure debt or other instruments, creating a valid andenforceable first or second lien, as applicable, on or a first or secondpriority ownership interest in a Mortgaged Property.

 

“Mortgage Loan” shall mean a commercialmortgage loan secured by a lien on real property, and includes any FirstMortgage Loan, Senior First Mortgage B Note and Junior First Mortgage B Note.

 

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

 

“Mortgaged Property” shall mean the realproperty or properties securing repayment of the debt evidenced by a MortgageNote, or, in the case of any Mezzanine Loan, owned indirectly by the relatedobligor.

 

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

 

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

 

“New Loan” shall mean an Eligible Loan thatSeller proposes to be included as a Purchased Loan.

 

“Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, any vice chairmanand the chief financial officer of such Person or, for the purpose of executingcertificates, the president, the vice president and counsel responsibletherefor.

 

“Originated Loan” shall mean any loan that isan Eligible Loan and whose related loan documents were prepared by Seller or anAffiliate controlled by Seller.

 

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

 

“Plan” shall mean an employee benefit or otherplan established or maintained during the five year period ended prior to thedate of the Agreement or to which Seller or any ERISA Affiliate makes, isobligated to make or has, within the five year period ended prior to the dateof the Agreement, been required to make contributions and that is covered byTitle IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

 

“Plan Assets” shall mean assets of any (i)employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title Iof ERISA, (ii) plan (as defined in Section 4975(e)(l) of the Code) subject toSection 4975 of the Code, or (iii) governmental plan (as defined in Section3(32) of ERISA) subject to any other federal, state or local laws, rules orregulations substantially similar to Title I of ERISA or Section 4975 of theCode.

 

“Portfolio Loans” shall mean all of thePurchased Loans.  As of the date of theAgreement, the Eligible Loans identified on Schedule 2 hereto have beenapproved by Buyer as suitable for inclusion as Portfolio Loans, subject tosatisfaction of the conditions in this Annex I.

 

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“Portfolio Securities” has the meaningspecified in the Securities Repurchase Agreement.

 

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

 

“Preliminary Due Diligence Package” shall meanwith respect to any New Loan, the following due diligence information relatingto such New Loan to be provided by Seller to Buyer pursuant to this Annex I:

 

(i)                                     Seller’sinternal investment committee memorandum, among other things, outlining theproposed transaction, including potential transaction benefits and all materialunderwriting risks, and Underwriting Issues, anticipated exit strategies andall other characteristics of the proposed transaction that a prudent buyerwould consider material;

 

(ii)                                  currentrent roll, if applicable;

 

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

 

(iv)                              indicativeinterest coverage ratios;

 

(v)                                 indicativeloan-to-value ratio;

 

(vi)                              Seller’sor any Affiliate’s relationship with its potential underlying borrower or anyaffiliate;

 

(vii)                           thirdparty reports, to the extent available and applicable, including:

 

(a)                                  engineeringand structural reports;

 

(b)                                 currentAppraisal;

 

(c)                                  PhaseI environmental report (including asbestos and lead paint report) and, ifapplicable, Phase II or other follow-up environmental report if recommended inPhase I;

 

(d)                                 seismicreports; and

 

(e)                                  operationsand maintenance plan with respect to asbestos containing materials;

 

(viii)                        documentsevidencing such New Loan, or current drafts thereof, including, withoutlimitation, underlying debt and security documents, guaranties, underlyingborrower’s organizational documents, warrant agreements, loan and collateralpledge agreements, and intercreditor agreements, as applicable;

 

(ix)                                alist that specifically identifies any Purchased Loan Documents that relate tosuch Purchased Loan but are not in Seller’s possession;

 

(x)                                   inthe case of a participation interest, all information described in this definitionwhich would otherwise be provided for the underlying Mortgage Loan if itconstituted an Eligible Loan except that, as to items set forth insubparagraphs (vii) and (xii), to the extent Seller possesses such informationor has access to such information because it was provided to the

 

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related lead lender and made available to Seller, andin addition, all documentation evidencing the participation interest;

 

(xi)                                insurancedocumentation as shall be reasonably satisfactory to Buyer; and

 

(xii)                             analysesand reports with respect to such other matters concerning the New Loan as Buyermay in its reasonable discretion require.

 

“Pricing Rate Determination Date” shall meanwith respect to any Pricing Rate Period, the second (2nd) BusinessDay preceding the first day of the Pricing Rate Period.

 

“Pricing Rate Period” shall mean (a) in thecase of the first Pricing Rate Period with respect to any Transaction, theperiod commencing on and including the Purchase Date for such Transaction andending on and including the last day of the calendar month in which thePurchase Date occurs, (b) in the case of any subsequent Pricing Rate Period,the period commencing on and including the first day of a calendar month and endingon and including the last day of such calendar month, and (c) in the case wherethe Remittance Date is not the first day of a calendar month, the periodcommending on and including the Remittance Date and ending on (but excluding)the subsequent Remittance Date; provided, however, that in noevent shall any Pricing Rate Period end subsequent to the Repurchase Date.

 

“Principal Payment” shall mean, with respect toany Purchased Loans, any payment or prepayment of principal received in respectthereof (including casualty or condemnation proceeds to the extent suchproceeds are required under the applicable Purchase Loan Documents to beapplied toward the balance of the underlying loan, or are not otherwiserequired under the underlying loan documents to be reserved, escrowed,readvanced or applied for the benefit of the obligor or the underlying realproperty).  For purposes ofclarification, prepayment premiums, fees or penalties shall not be deemedprincipal.

 

“Purchase Percentage” shall mean, with respectto any Purchased Loan, the “Purchase Percentage” specified in Schedule 1 forthe related Loan Type (or as otherwise specified in the applicableConfirmation).

 

“Purchased Loan Documents” shall mean, withrespect to a Purchased Loan, the documents comprising the Purchased Loan Filefor such Purchased Loan.

 

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

 

“Purchased Loan Information” shall mean, withrespect to each Purchased Loan, the information set forth in Schedule 3attached hereto.

 

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

 

“Purchased Loans” shall mean (i) with respectto any Transaction, the Eligible Loans sold by Seller to Buyer in suchTransaction and (ii) with respect to the Transactions in general, all EligibleLoans sold by Seller to Buyer and any additional cash and/or other assetsdelivered by Seller to Buyer pursuant to Section 4 of this Annex I.

 

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“Quarterly Report” shall mean, for each fiscal quarter during which the Agreement shall bein effect, Seller’s or Servicer’s, as applicable, certified written reportsummarizing, with respect to the Mortgaged Properties securing each PurchasedLoan (or, in the case of a Purchased Loan secured (directly or indirectly) by aportfolio of Mortgaged Properties, such information on a consolidated basis),the net operating income, debt service coverage, occupancy, the revenues perroom (for hospitality properties) and sales per square footage (for retailproperties) and such other information as mutually agreed by Seller and Buyerwhich report shall be delivered to Buyer for each fiscal quarter during theterm of the Agreement within 60 days following the end of each such fiscalquarter.

 

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

 

“Reference Banks” shall mean banks each ofwhich shall (i) be a leading bank engaged in transactions in Eurodollar depositsin the international Eurocurrency market and (ii) have an established place ofbusiness in London.  Initially, theReference Bank shall be JPMorgan Chase Bank. If any such Reference Bank should be unwilling or unable to act as suchor if Buyer shall terminate the appointment of any such Reference Bank or ifany of the Reference Banks should be removed from the Reuters Monitor MoneyRates Service or in any other way fail to meet the qualifications of aReference Bank, Buyer in the exercise of its good faith business judgment maydesignate alternative banks meeting the criteria specified in clauses (i)and (ii) above.

 

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

 

“Remittance Date” shall mean the first (1st)calendar day of each month, or the next succeeding Business Day, if suchcalendar day shall not be a Business Day.

 

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

 

“Repurchased Security” shall have the meaningset forth in the Securities Repurchase Agreement.

 

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

 

“Reserve Requirement” shall mean, with respectto any Pricing Rate Period, the aggregate (without duplication) of the rates(expressed as a decimal fraction) of reserve requirements in effect during suchPricing Rate Period (including, without limitation, basic, supplemental,marginal and emergency reserves under any regulations of the Board of Governorsof the Federal Reserve System or other governmental authority havingjurisdiction with respect thereto) dealing with reserve requirements prescribedfor eurocurrency funding (currently referred to as “Eurocurrency Liabilities”in Regulation D of such Board of Governors) maintained by Buyer.

 

“Reset Date” shall mean, with respect to anyPricing Rate Period, the second Business Day preceding the first day of suchPricing Rate Period with respect to any Transaction.

 

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

 

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“Securities Aggregate Repurchase Price” shallmean, as of any date of determination, the “Aggregate Repurchase Price” (asdefined in the Securities Repurchase Agreement) as of such date.

 

“SecuritiesRepurchase Agreement” shall meanthe Master Repurchase Agreement dated as of the date hereof between Seller andGoldman, Sachs & Co., as amended supplemented or otherwise modified fromtime to time.

 

“Seller” shall mean Gramercy Warehouse FundingII LLC, a Delaware limited liability company and its permitted successors andassigns.

 

“Servicer” shall mean GKK Manager LLC or anaffiliate thereof, or such other servicer mutually acceptable to Buyer andSeller.

 

“Servicing Agreement” shall mean that certainservicing agreement entered into by Seller and Servicer or such other servicingagreement in each case approved by Buyer in its reasonable discretion.

 

“Servicing Records” has the meaning specifiedin Section 22(b) of this Annex I.

 

“Significant Modification”shall mean (a) any modification or amendment of a Purchased Loan which:

 

(i)                                     reducesthe principal amount of the Purchased Loan in question other than (1) withrespect to a dollar-for-dollar principal payment or (2) reductions of principalto the extent of deferred, accrued or capitalized interest added to principalwhich additional amount was not taken into account by Buyer in determining therelated Purchase Price;

 

(ii)                                  increasesthe principal amount of a Purchased Loan other than increases which are derivedfrom accrual or capitalization of deferred interest which is added to principalor protective advances;

 

(iii)                               modifiesthe payments of principal and interest when due of the Purchased Loan inquestion;

 

(iv)                              changesthe frequency of scheduled payments of principal and interest in respect of aPurchased Loan;

 

(v)                                 subordinatesthe lien priority of the Purchased Loan or the payment priority of thePurchased Loan other than subordinations expressly required under the thenexisting terms and conditions of the Purchased Loan (provided, however,the foregoing shall not preclude the execution and delivery of subordination,nondisturbance and attornment agreements with tenants, subordination to tenantleases, easements, plats of subdivision and condominium declarations andsimilar instruments which in the commercially reasonable judgment of Seller donot materially adversely affect the rights and interest of the holder of thePurchased Loan in question);

 

(vi)                              releases(1) any collateral for the Purchased Loan other than releases required underthe then existing Purchased Loan Documents or releases in connection witheminent domain or under threat of eminent domain or (2) any underlying obligorwith respect to a Purchased Loan;

 

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(vii)                           waives,amends or modifies any cash management or reserve account requirements of thePurchased Loan other than changes required under the then existing PurchasedLoan Documents;

 

(viii)                        waivesany due-on-sale or due-on-encumbrance provisions of the Purchased Loan otherthan waivers required to be given under the then existing Purchased LoanDocuments; and

 

(b)                                 anymodification, amendment or other material action with respect to a PurchasedLoan (or the related mortgage loan, if such Purchased Loan is a Mezzanine Loan)which under the terms of the related intercreditor agreement or participationagreement, as the case may be, requires the consent of Seller or its “operatingadvisor” or the agent (as distinct from consultation rights).

 

“Single-Purpose Entity”shall mean a Person, other than an individual, which is formed or organized solelyfor the purpose of holding, directly or indirectly and subject to thisAgreement and the Securities Repurchase Agreement, the Purchased Loans and thePortfolio Securities, does not engage in any business unrelated to thePurchased Loans and the Portfolio Securities, does not have any assets otherthan the Purchased Loans and the Portfolio Securities or any indebtedness otherthan as permitted by the Agreement and the Securities Repurchase Agreement, hasits own separate books and records and its own accounts, in each case which areseparate and apart from the books and records and accounts of any other Person,holds itself out as being a Person, separate and apart from any other Personand provides in its partnership agreement or limited liability companyagreement (as applicable) for the inclusion of at least one IndependentDirector.  If  the foregoing entity is a limited partnershipor limited liability company, its partnership agreement or limited liabilitycompany agreement (as applicable) shall provide that that the dissolution andwinding up or bankruptcy or insolvency filing of such partnership or limitedliability company shall require the unanimous consent of all partners ormembers (including the affirmative vote of the independent directors) and ifthe foregoing entity is a single-member limited liability company whose singlemember is not itself a Single-Purpose Entity, its limited liability companyagreement shall provide that upon the occurrence of any event thatcauses its sole member to cease to be a member during the term of thisAgreement, at least one of its independent directors shall automatically beadmitted as the sole member and shall preserve and continue the existence ofthe entity without dissolution.

 

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

 

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

 

“Supplemental Due Diligence List” shall mean,with respect to any New Loan, information or deliveries concerning such NewLoan that Buyer shall request in addition to the Preliminary Due DiligencePackage, including, without limitation, acredit approval memorandum representing the final terms of the underlyingtransaction, a loan-to-value ratio computation and a final debt servicecoverage ratio computation for such proposed New Loan.

 

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“Survey” shall mean a certified ALTA/ACSM (orapplicable state standards for the state in which a Mortgaged Property islocated) survey of a Mortgaged Property prepared by a registered independentsurveyor and in form and content reasonably satisfactory to Buyer and thecompany issuing the Title Policy for such Mortgaged Property.

 

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

 

“Tangible Net Worth” shall mean, with respectto any Person, as of any date of determination, (a) all amounts whichwould be included under capital on the balance sheet of such Person at suchdate, determined in accordance with GAAP as of such date, less (b)(i)amounts owing to such Person from Affiliates and (ii) intangible assets of suchPerson as of such date.

 

“Telerate Page 3750” shall mean the displaypage currently so designated on the Dow Jones Telerate Service (or such otherpage as may replace that page on that service for the purpose of displayingcomparable rates or prices).

 

“Title Policy” shall have the meaning specifiedin paragraph 2(d) of Exhibit V.

 

“Total Indebtedness” shall mean, with respectto any Person, as of any date of determination, the aggregate Indebtedness ofsuch Person as of such date less the amount of any nonspecific balance sheetreserves maintained in accordance with GAAP as of such date.

 

“Transaction” shall have the meaning specifiedin Section 1(a) of this Annex I.

 

“Transaction Conditions Precedent” shall havethe meaning specified in Section 3(e) of this Annex I.

 

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

 

“Transaction Documents” shall mean,collectively, the Agreement (including this Annex I and any other annexes andschedules attached to the Agreement), the Blocked Account Agreement, theCustodial Agreement, the Fee Letter, the Servicing Agreement, all TransferDocuments, all Confirmations executed pursuant to this Annex I in connectionwith specific Transactions and all other documents executed in connectionherewith and therewith.

 

“Transfer” shall mean, with respect to anyPerson, any sale or other whole or partial conveyance of all or any portion ofsuch Person’s assets, or any direct or indirect interest therein to a thirdparty (other than in connection with the transfer of a Purchased Loan to Buyerin accordance herewith), including granting of any purchase options, rights offirst refusal, rights of first offer or similar rights in respect of anyportion of such assets or the subjecting of any portion of such assets torestrictions on transfer.

 

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

 

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

 

“UCC” shall mean the Uniform Commercial Code asin effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, theperfection or the effect of perfection or non-perfection of any securityinterest is governed by the Uniform Commercial Code as in effect in ajurisdiction other than New York, “Uniform Commercial Code” shall mean theUniform Commercial Code as in effect in such other jurisdiction for purposes ofthe provisions of this Annex I relating to such perfection or effect ofperfection or non-perfection.

 

“Underwriting Issues” shall mean, with respectto any Eligible Loan as to which Seller intends to request a Transaction, allmaterial information that has come to Seller’s attention that, based on themaking of commercially reasonable inquiries and the exercise of reasonable careand diligence by a reasonable institutional mortgage or mezzanine loan buyer indetermining whether to originate or acquire the Eligible Loan in question underthe circumstances, would, in the context of the totality of the Transaction inquestion, be considered a materially “negative” factor (either separately or inthe aggregate with other information), (including, but not limited to, whetherany of the Eligible Loans were repurchased from any warehouse loan facility ora repurchase transaction due to the breach of a representation and warranty ora material defect in loan documentation or closing deliveries (such as anyabsence of any material Purchased Loan Document(s)).

 

**3.**                                      INITIATION;CONFIRMATION; TERMINATION; FEES

** **

The provisions of Paragraph 3 of the Agreement (“Initiation;Confirmation; Termination”) are hereby deleted and replaced in their respectiveentireties by the following provisions of this Section 3:

 

(a)                                  Sellermay, from time to time, prior to the Facility Termination Date, request thatBuyer enter into a Transaction with respect to one or more New Loans.  Seller shall initiate each request bysubmitting a Preliminary Due Diligence Package for Buyer’s review andapproval.  Notwithstanding anything tothe contrary herein, Buyer shall have no obligation to consider for purchaseany proposed Transaction that has an aggregate Repurchase Price (excluding thePrice Differential with respect to the Purchased Loans as of the date ofdetermination) that when combined with all Purchased Loans which have not beenrepurchased by Seller hereunder exceeds the Facility Amount.  Buyer shall have the right to review all NewLoans proposed to be sold to Buyer in any Transaction and to conduct its owndue diligence investigation of such New Loans as Buyer determines is reasonablynecessary.  Seller agrees to promptlyreimburse Buyer for its Diligence Fees upon request for payment orreimbursement thereof.  Notwithstandingany provision to the contrary herein or any other Transaction Document, Buyershall be entitled to make a determination, in its sole and absolute discretion,whether a New Loan qualifies as an Eligible Loan and whether to reject any orall of the New Loans proposed to be sold to Buyer by Seller.  Buyer shall have no obligation to considerfor purchase any New Loans proposed by Seller after the original FacilityTermination Date or during the Facility Extension Period (if applicable).

 

(b)                                 UponBuyer’s receipt of a complete Preliminary Due Diligence Package with respect toa proposed Transaction, Buyer shall have the right within two (2) BusinessDays, to request in a

 

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Supplemental DueDiligence List such additional Diligence Materials and deliveries that Buyerdeems necessary to properly evaluate the New Loans.  Upon Buyer’s receipt of such additionalDiligence Materials or Buyer’s waiver thereof, Buyer shall within five (5)Business Days either (i) notify Seller of Buyer’s intent to proceed with theTransaction and of its determination with respect to the Purchase Price and theMarket Value for the related New Loans (such notice, a “Preliminary Approval”)or (ii) deny, in Buyer’s sole and absolute discretion, Seller’s request for theapplicable Transaction.  Buyer’s failureto respond to Seller within five (5) Business Days, as applicable, shall bedeemed to be a denial of Seller’s request to enter into the proposedTransaction, unless Buyer and Seller have agreed otherwise in writing.

 

(c)                                  UponSeller’s receipt of Buyer’s Preliminary Approval with respect to a Transaction,Seller shall, if Seller desires to enter into such Transaction with respect tothe related New Loans upon the terms set forth by Buyer in its PreliminaryApproval, deliver the documents set forth below in this Section 3(c) withrespect to each New Loan and related Eligible Property or Properties (to theextent not already delivered in the Preliminary Due Diligence Package orpursuant to a Supplemental Due Diligence List) as a condition precedent toBuyer’s Final Approval and issuance of a Confirmation (as defined below), allin a manner reasonably satisfactory to Buyer and pursuant to documentationreasonably satisfactory to Buyer:

 

(i)                                     Deliveryof Purchased Loan Documents.  Sellershall deliver to Buyer: (x) with respect to any New Loan that is a Pre-ExistingLoan, copies of the Purchased Loan Documents, except for such Purchased LoanDocuments that Seller expressly and specifically disclosed in Seller’sPreliminary Due Diligence Package were not in Seller’s possession; and (y) withrespect to any New Loan that is an Originated Loan, drafts of the PurchasedLoan Documents.

 

(ii)                                  Environmentaland Engineering.  Buyer shall havereceived a “Phase 1” (and, if necessary, “Phase 2”) environmental report, anasbestos survey, if applicable, and an engineering report, each in formreasonably satisfactory to Buyer, by an engineer and an environmentalconsultant, approved by Buyer in its reasonable discretion.

 

(iii)                               Appraisal.  If obtained by Seller, Buyer shall havereceived either an Appraisal (from the closing of the financing of the relatedEligible Property or Properties) or a Draft Appraisal of the related EligibleProperty or Properties.  If Buyerreceives only a Draft Appraisal prior to entering into a Transaction, Seller shalluse its best efforts to deliver an Appraisal on or before thirty (30) daysafter the Purchase Date.

 

(iv)                              Insurance.  Buyer shall have received certificates orother evidence of insurance detailing insurance coverage in respect of therelated Eligible Property or Properties of types (including but not limited tocasualty, general liability and terrorism insurance coverage (consistent withmarket standard requirements)), in amounts, with insurers and otherwise incompliance with the terms, provisions and conditions set forth in the PurchasedLoan Documents and otherwise reasonably satisfactory to Buyer.  Such certificates or other evidence shallindicate that Seller (or as to a New Loan that is a participation interest, thelead lender on the related whole loan in which Seller is a participant) will benamed as an additional insured as its interest may appear and shall contain aloss payee endorsement in favor of such additional insured with respect to thepolicies required to be maintained under the Purchased Loan Documents.

 

(v)                                 Survey.  Buyer shall have received all surveys of therelated Eligible Property or Properties that are in Seller’s possession.

 

(vi)                              LienSearch Reports.  Buyer or Buyer’scounsel shall have received, as reasonably requested by Buyer, satisfactoryreports of UCC, tax lien, judgment and litigation

 

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searches and any existing Title Policies relating tothe New Loan, Eligible Property or Properties, Seller and related underlyingobligor, such searches to be conducted in each location Buyer shall reasonablydesignate; provided that such materials were a part of the closing file for thefinancing of such Eligible Property or Properties.

 

(vii)                           Opinionsof Counsel.  Buyer shall have receivedcopies of all legal opinions with respect to the New Loan which shall be inform and substance reasonably satisfactory to Buyer.

 

(viii)                        TitlePolicy.

 

(a)                                  Withrespect to any New Loan that is a Mortgage Loan, Seller shall have delivered toBuyer (1) an unconditional commitment to issue a Title Policy or Policies infavor of Seller and Seller’s successors and/or assigns with respect to Seller’sinterest in the related real property with an amount of insurance that shall benot less than the related Repurchase Price or such other amount as Buyer shallrequire in its reasonable discretion or (2) an endorsement or confirmatoryletter from the existing title company to an existing Title Policy (in anamount not less than the related Repurchase Price or such other amount as Buyershall require in its reasonable discretion) in favor of Seller and Seller’ssuccessors and/or assigns that adds such parties as an additional insured.

 

(b)                                 Withrespect to any New Loan that is a First Mortgage B-Note, Seller shall havedelivered to Buyer a copy of an unconditional commitment to issue a TitlePolicy or endorse an existing Title Policy in favor of the lead lender to whomthe related obligor issued the related Mortgage Note, in an amount not lessthan the amount of such Mortgage Note and, if the First Mortgage B-Note isevidenced by a separate promissory note rather than a participationcertificate, in an amount not less than the amount of all Mortgage Notessecured by the Mortgage that secures the related promissory notes.

 

(c)                                  Withrespect to a Mezzanine Loan, (i) Seller shall have delivered to Buyer suchevidence as Buyer on a case-by-case basis, in its sole discretion, shallrequire of the ownership of the real property underlying the New Loanincluding, without limitation, a copy of a Title Policy, issued by a titleinsurer and with such endorsements (including, without limitation, a “MezzanineLender’s Endorsement”, if obtained by Seller), in each case acceptable to Buyerin its sole discretion, showing that title is vested in the related obligor orin an entity in whom such obligor holds an equity interest and (ii) if obtainedby Seller, Seller shall have delivered to Buyer an Eagle 9 UCC Title Policywhich policy shall (x) provide an amount of insurance that shall be not lessthan the related Repurchase Price or such other amount as Buyer shall requirein its sole discretion, (y) shall insure Seller’s security interest in theequity interests pledged and (z) be assignable by its terms with a transfer ofthe Mezzanine Loan, as applicable.

 

(ix)                                AdditionalReal Estate Matters.  To the extentobtained by Seller, Seller shall have delivered to Buyer such other real estaterelated certificates and documentation as may have been requested by Buyer,such as: (y) certificates of occupancy issued by the appropriate GovernmentalAuthority and either letters certifying that the related Eligible Property orProperties is in compliance with all applicable zoning laws issued by theappropriate Governmental Authority or evidence that the related Title Policyincludes a zoning endorsement and (z) abstracts of all leases in effect at theMortgaged Property delivered in connection with the New Loan.

 

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(x)            First Mortgage BNotes.  In the case of a FirstMortgage B Note, in addition to the delivery of the items in clauses (vi),(vii) and (viii), Buyer shall have received all documentation specified inclauses (i) through (v) and (ix) as if the underlying Mortgage Loan were thedirect collateral to the extent Seller possesses such documentation or hasaccess to such documentation because it was provided to the related lead lenderand made available to Seller and, to the extent applicable, all documentsevidencing a participation interest, including, but not limited to, an originalparticipation certificate, if applicable, and the related participationagreement and/or the related intercreditor agreement.

 

(xi)           Other Documents.  Buyer shall have received such otherdocuments as Buyer or its counsel shall reasonably deem necessary.

 

Within five (5)Business Days of Seller’s delivery of the documents and materials contemplatedin clauses (i) through (xi) above, Buyer shall either (A) if the Purchased LoanDocuments with respect to the New Loan are not reasonably satisfactory in formand substance to Buyer, notify Seller that Buyer has not approved the New Loanor (B) notify Seller that Buyer agrees to purchase the New Loan, subject tosatisfaction (or waiver by Buyer) of the Transaction Conditions Precedent (a “FinalApproval”) set forth in Section 3(e), below.  Buyer’s failure to respond to Seller withinfive (5) Business Days shall be deemed to be a denial of Seller’s request thatBuyer purchase the New Loan, unless Buyer and Seller have agreed otherwise inwriting.

 

(d)           Buyer shall promptly deliver toSeller a written confirmation of any Final Approval in the form of Exhibit Iattached hereto of each proposed Transaction (a “Confirmation”); provided,that unless otherwise agreed by Seller, Buyer shall deliver a separateConfirmation with respect to each New Loan which will be the subject of aTransaction.  Each Confirmation shall bedeemed incorporated herein by reference with the same effect as if set forth hereinat length.  With respect to any Transaction,the Pricing Rate shall be determined initially on the Pricing RateDetermination Date applicable to the first Pricing Rate Period for suchTransaction, and shall be reset on each Reset Date for the next succeedingPricing Rate Period for such Transaction. Buyer or its agent shall determine in accordance with the terms of theAgreement the Pricing Rate on each Pricing Rate Determination Date for therelated Pricing Rate Period and notify Seller of such rate for such period onthe Reset Date.

 

(e)           Provided each of the TransactionConditions Precedent set forth in this Section 3(e) shall have been satisfied(or waived by Buyer), and subject to Seller’s rights under Section 3(f), Buyershall transfer the Purchase Price to Seller with respect to each New Loan forwhich it has issued a Confirmation on the Purchase Date specified in suchConfirmation (provided Seller has not objected to such Confirmation within thetime frame permitted under Section 3(f)), and the related Purchased Loan shallbe concurrently transferred by Seller to Buyer or its nominee.  For purposes of this Section 3(e), the “TransactionConditions Precedent” shall be satisfied with respect to any proposedTransaction if:

 

(1)           No (A) monetary ormaterial non-monetary Default or (B) Event of Default under the Agreement shallhave occurred and be continuing as of the Purchase Date for such proposedTransaction;

 

(2)           Guarantor shall havedelivered a true and accurate Financial Covenant Compliance Certificate in atimely manner with respect to the most recently ended fiscal quarter;

 

(3)           Seller shall havedelivered to the Buyer an Officer’s Certificate of the Seller certifying that(A) the representations and warranties made by Seller in any of the TransactionDocuments are true and correct in all material respects as of the Purchase Datefor such Transaction and unless waived by Buyer (except such representationswhich by their terms speak

 

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as of a specified date).  If requested by Buyer, Seller shall alsodeliver an Officer’s Certificate covering such matters as Buyer may requestwith respect to matters relating to the Agreement or the other TransactionDocuments;

 

(4)           Buyershall have (A) determined, in accordance with the applicable provisions of Section 3(a)of this Annex I that the New Loan proposed to be sold to Buyer by Seller insuch Transaction is an Eligible Loan and (B) obtained internal credit approvalfor the inclusion of such New Loan as a Purchased Loan in a Transaction;

 

(5)           Theapplicable Purchased Loan File described in Section 7(b) shall have beendelivered to Custodian or Bailee and Buyer shall have received a Trust Receiptfrom Custodian or Bailee with respect to such Purchased Loan File;

 

(6)           Sellershall have delivered to each Mortgagor or obligor or related servicer or leadlender under any Purchased Loan a direction letter in accordance with Section 5(a)of this Annex I unless such Mortgagor or obligor or related servicer or leadlender is already remitting payments to the Servicer whereupon Seller shalldirect the Servicer to remit all such amounts into the Blocked Account inaccordance with Section 5(a) of this Annex I and to service such paymentsin accordance with the Servicing Agreement and the provisions of this Annex I;

 

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

 

(8)           NoPurchased Loan shall be a Delinquent Loan or a Defaulted Loan;

 

(9)           Buyershall have received fully executed originals of all Transfer Documents and anopinion of counsel of Seller, in form and substance reasonably satisfactory toBuyer, covering the enforceability, authority, execution, delivery andperfection of the assignment of the Purchased Loan and all Transfer Documents,and such other matters as Buyer may reasonably require;

 

(10)         Buyershall have determined that after giving effect to the proposed Transaction, (i)the Repurchase Price (exclusive of accrued and unpaid Price Differential) of nosingle Purchased Loan exceeds 25% of the Aggregate Repurchase Price and (ii)the aggregate Repurchase Price (exclusive of accrued and unpaid PricingDifferential) of Purchased Loans secured directly or indirectly by EligibleProperties which are hotels, lodging or hospitality properties does not exceed35% of the Aggregate Repurchase Price;

 

(11)         Noevent shall have occurred or circumstance shall exist which has a MaterialAdverse Effect;

 

(12)         Thereshall not have occurred (i) a material adverse change in the financialcondition of the Buyer which affects (or can reasonably be expected to affect)materially and adversely the ability of the Buyer to fund its obligations underthis Agreement; (ii) a material change in financial markets, an outbreak orescalation of hostilities or a material change in national or internationalpolitical, financial or economic conditions; (iii) a general suspension oftrading on major stock exchanges or suspension of trading in Guarantor’s stock;or (iv) a disruption in or moratorium on commercial banking activities orsecurities settlement services.

 

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(f)            EachConfirmation, together with the Agreement, shall be conclusive evidence of theterms of the Transaction covered thereby unless objected to in writing bySeller no more than two (2) Business Days after the date such Confirmation isreceived by Seller.  An objection sent bySeller with respect to any Confirmation must state specifically that thewriting is an objection, must specify the provision(s) of such Confirmation beingobjected to by Seller, must set forth such provision(s) in the manner thatSeller believes such provisions should be stated, and must be received by Buyerno more than two (2) Business Days after such Confirmation is received bySeller.  Buyer, in its sole discretion,may issue another Confirmation addressing Seller’s objections or may elect notto proceed with the proposed Transaction.

 

(g)           Sellershall be entitled to terminate a Transaction on demand, and repurchase therelated Purchased Loan on any Business Day prior to the Repurchase Date (an “EarlyRepurchase Date”); provided, however, that:

 

(i)            NoEvent of Default shall be continuing or would occur or result from such earlyrepurchase,

 

(ii)           Sellernotifies Buyer in writing of its intent to terminate such Transaction andrepurchase the related Purchased Loan no later than five (5) Business Daysprior to the Early Repurchase Date, and

 

(iii)          Sellershall pay to Buyer on the Early Repurchase Date, an amount equal to the sum ofthe Repurchase Price for such Transaction, all Costs and any other amountspayable by Seller and outstanding under the Agreement (including, withoutlimitation, Section 3(m) of this Annex I) with respect to such Transactionagainst transfer to Seller or its agent of the related Purchased Loan.

 

(h)           Onthe Repurchase Date (or the Early Repurchase Date, as applicable), terminationof the applicable Transactions will be effected by transfer to Seller or, ifrequested by Seller, its designee of the related Purchased Loans, and any Incomein respect thereof received by Buyer (and not previously credited ortransferred to, or applied to the obligations of, Seller pursuant to Section 4or Section 5) against the simultaneous transfer of the Repurchase Price,all Costs and any other amounts payable and outstanding under the Agreement(including without limitation, Sections 3(m), 3(n) and 3(o) of this Annex I, ifany) to an account of Buyer.

 

(i)            Solong as no Default or Event of Default has occurred and is then continuing, theRepurchase Price with respect to one or more Purchased Loans may be paid inpart at any time upon two (2) Business Days prior written notice; provided,however, that any such payment shall be accompanied by an amount representingaccrued Price Differential with respect to such Purchased Loan(s) on the amountof such payment and all other amounts then due under the TransactionDocuments.  Each partial payment of theRepurchase Price that is voluntary (as opposed to mandatory under the terms ofthe Agreement) shall be in an amount of not less than One Hundred ThousandDollars ($100,000).

 

(j)            Inlieu of repaying the Repurchase Price, in whole or in part, with respect to theTransactions when and as otherwise required or permitted by the Agreement,Seller may elect to deposit any such amount (the “Early Repurchase Deposit”)with Buyer (the date of such deposit, the “Early Repurchase Deposit FundingDate”) until such date as the application of the Early Repurchase Deposittowards the Repurchase Price would not cause Buyer to incur the costs describedin Section 3(m) hereof (the “Early Repurchase Deposit Application Date”).  The Early Repurchase Deposit shall be held inan interest-bearing account controlled by Buyer and, at Buyer’s option, shallbe accompanied by a payment

 

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(as estimated byBuyer) equal to the difference between the interest earned on the EarlyRepurchase Deposit and the Price Differential that will accrue on a portion ofthe relevant Transaction equal to the Early Repurchase Deposit during theperiod from the Early Repurchase Deposit Funding Date to the Early RepurchaseDeposit Application Date.

 

(k)           Ifprior to the first day of any Pricing Rate Period with respect to anyTransaction, Buyer shall have reasonably determined (which determination shallbe conclusive and binding upon Seller absent manifest error) that, by reason ofcircumstances affecting the relevant market, adequate and reasonable means donot exist for ascertaining the LIBOR Rate for such Pricing Rate Period.  If such notice is given, the Pricing Ratewith respect to such Transaction for such Pricing Rate Period, and for anysubsequent Pricing Rate Periods until such notice has been withdrawn by Buyer,shall be a per annum rate equal to the sum of (i) the Federal Funds Rate, (ii)0.25% and (iii) the Applicable Spread (the “Alternative Rate”).

 

(l)            Notwithstandingany other provision herein, if after the date of the Agreement, the adoption ofor any change in any Requirement of Law or in the interpretation or applicationthereof shall make it unlawful for Buyer to effect LIBOR Transactions ascontemplated by the Transaction Documents, (a) the commitment of Buyerhereunder to enter into new LIBOR Transactions and to continue LIBORTransactions as such shall forthwith be canceled, and (b) the LIBORTransactions then outstanding shall be converted automatically to AlternativeRate Transactions on the last day of the then current Pricing Rate Period orwithin such earlier period as may be required by law.  If any such conversion of a LIBOR Transactionoccurs on a day that is not the last day of the then current Pricing RatePeriod with respect to such LIBOR Transaction, Seller shall pay to Buyer suchamounts, if any, as may be required pursuant to Section 3(n).

 

(m)          Upondemand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from anynet loss or expense (not to include any lost profit or opportunity) (including,without limitation, reasonable attorneys’ fees and disbursements) which Buyer actuallysustains or incurs as a consequence of (i) default by Seller interminating any Transaction after Seller has given a notice in accordance with Section 3(g)of a termination of a Transaction, (ii) any payment of all or any portion ofthe Repurchase Price, as the case may be, on any day other than a RemittanceDate (including, without limitation, any such loss or expense arising from thereemployment of funds obtained by Buyer to maintain Transactions hereunder orfrom fees payable to terminate the deposits from which such funds wereobtained, provided Seller shall not be obligated to reimburse Buyer for theincremental cost of reemploying funds or terminating deposits which arisesolely as a result of Buyer depositing funds or employing funds at a ratecalculated other than by reference to LIBOR (as defined herein)) or (iii)default by Seller in selling Eligible Loans after Seller has notified Buyer ofa proposed Transaction and Buyer has agreed to purchase such Eligible Loans inaccordance with the provisions of the Agreement.  A certificate as to such costs, losses,damages and expenses, setting forth the calculations therefor shall besubmitted promptly by Buyer to Seller and shall be conclusive and binding on Sellerin the absence of manifest error.

 

(n)           If(A) the Transactions are characterized by a U.S. Federal, state or localtaxing authority in a manner other than as described in Section 23 of thisAnnex I, or (B) after the date of the Agreement, the adoption of or anychange in any Requirement of Law or in the interpretation or applicationthereof by any Governmental Authority or compliance by Buyer with any requestor directive (whether or not having the force of law) from any central bank orother Governmental Authority having jurisdiction over Buyer made subsequent tothe date hereof:

 

(i)            shallsubject Buyer to any tax of any kind whatsoever with respect to the TransactionDocuments, any Purchased Loan or any Transaction, or change the basis oftaxation

 

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of payments to Buyer in respect thereof (except forchanges in the rate of tax on Buyer’s overall net income);

 

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

 

(iii)          shallimpose on Buyer any other condition due to the Agreement or the Transactions;

 

and the result of any of the foregoing is to increasethe cost to Buyer of entering into, continuing or maintaining Transactions orto reduce any amount receivable under the Transaction Documents in respectthereof; then, in any such case, Seller shall pay Buyer, within ten (10)Business Days after written demand therefor is received by Seller, anyadditional amounts necessary to compensate Buyer for such increased costpayable or reduced amount receivable.  IfBuyer becomes aware that it is entitled to claim any additional amountspursuant to this Section 3(o), it shall notify Seller in writing of theevent by reason of which it has become so entitled within a reasonable periodafter Buyer becomes aware thereof.  Acertificate as to the calculation of any additional amounts payable pursuant tothis subsection shall be submitted by Buyer to Seller and shall beconclusive and binding upon Seller in the absence of manifest error.  This covenant shall survive the terminationof the Agreement and the repurchase by Seller of any or all of the PurchasedLoans.

 

(o)           IfBuyer shall have reasonably determined that the adoption of or any change inany Requirement of Law regarding capital adequacy or in the interpretation orapplication thereof or compliance by Buyer or any corporation controlling Buyerwith any request or directive regarding capital adequacy (whether or not havingthe force of law) from any Governmental Authority made subsequent to the datehereof does have the effect of reducing the rate of return on Buyer’s or suchcorporation’s capital as a consequence of its obligations hereunder to a levelbelow that which Buyer or such corporation could have achieved but for suchadoption, change or compliance (taking into consideration Buyer’s or suchcorporation’s policies with respect to capital adequacy) by an amount deemed byBuyer to be material, then from time to time, within five (5) Business Daysafter submission by Buyer to Seller of a written request therefor, Seller shallpay to Buyer such additional amount or amounts as will compensate Buyer forsuch reduction.  A certificate as to thecalculation of any additional amounts payable pursuant to this subsection shallbe submitted by Buyer to Seller and shall be conclusive and binding upon Sellerin the absence of manifest error.  Thiscovenant shall survive the termination of the Agreement and the repurchase bySeller of any or all of the Purchased Loans.

 

(p)           Ifany of the events described in Section 3(k), Section 3(l), Section 3(n)or Section 3(o) result in Buyer’s election to use the Alternative Rate orBuyer’s request for additional amounts, then Seller shall have the option tonotify Buyer in writing of its intent to terminate the Transactions andrepurchase the Purchased Loans no later than one (1) Business Day after noticeis given to Buyer in accordance with Section 3(g).  The election by Seller to terminate theTransactions in accordance with this Section 3(p) shall not relieve Sellerfor liability with respect to any additional amounts or increased costsactually incurred by Buyer prior to the actual repurchase of the PurchasedLoans.

 

(q)           Thefacility under the Agreement shall terminate on January 3, 2008, unlessextended as provided herein. Provided that (i) no Event of Default has occurredand is continuing, (ii) Seller shall have paid to Buyer the applicable fees inaccordance with the Fee Letter and (iii) Seller shall have exercised itsextension option under the Securities Repurchase Agreement, Seller may elect bywritten

 

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notice not laterthan 45 days prior to such Facility Termination Date to extend the FacilityTermination Date for a period ending on the Remittance Date that is six monthsafter the initial Facility Termination Date (such period, the “FacilityExtension Period”).  During theFacility Extension Period, the Applicable Spread with respect to eachTransaction shall be increased as set forth in Schedule 1.  On each Remittance Date during the FacilityExtension Period, Seller shall be obligated to pay the Extended RepurchaseMonthly Amount, in addition to payments in respect of the accrued PriceDifferential and any other amounts due and payable under this Agreement, whichshall be applied to reduce the Repurchase Price of each Purchased Loan prorata.

 

(r)            Fromand after the Facility Termination Date (including during the FacilityExtension Period, if applicable), Buyer shall have no further obligation topurchase any New Loans.  On the FacilityTermination Date, Seller shall be obligated to repurchase all of the PurchasedLoans and transfer payment of the aggregate Repurchase Price for each suchPurchased Loan, together with the accrued and unpaid Price Differential and allCosts and other amounts due and payable to Buyer hereunder.  Following the Facility Termination Date,Buyer shall not be obligated to transfer any Purchased Loans to Seller untilpayment in full to Buyer of all amounts due hereunder; provided, however, uponSeller’s request, Buyer shall transfer to Seller the Purchased Loans withrespect to which Buyer shall have received the full Repurchase Price and suchother amounts payable to Buyer in respect of such Purchased Loans in accordancewith the requirements of this Annex I, provided an Event of Default is not thencontinuing and the transfer of such Purchased Loans would not result in aMargin Deficit.

 

**4.**             MANDATORY PAYMENT OR DELIVERYOF ADDITIONAL ASSETS

** **

Paragraphs 4 (a) through (f) of the Agreement (“MarginMaintenance”) shall be deleted in their entirety and replaced with thefollowing provisions of this Section 4:

 

(a)           Buyermay determine and re-determine the Asset Base on any Business Day and on asmany Business Days as it may elect.  Ifat any such time the aggregate Repurchase Price of the Portfolio Loans isgreater than the aggregate Asset Base as determined by Buyer in its solediscretion and notified to Seller on any Business Day (a “Margin Deficit”),then Seller shall, no later than one (1) Business Day after receipt of suchnotice, either deliver to Buyer (A) cash (which shall be applied to reduce theRepurchase Price of each Purchased Loan to be determined by Seller) or (B)additional assets acceptable to Buyer in its sole and absolute discretion insuch amounts that after giving effect to such delivery of cash or other assets,the aggregate Repurchase Price of the Portfolio Loans does not exceed the AssetBase as re-determined by Buyer after giving effect to the delivery of cash (orother assets) by Seller to Buyer pursuant to this Section 4.

 

(b)           Ifat any time the aggregate Repurchase Price of the Portfolio Loans is less thanthe aggregate Asset Base as determined by Buyer in its sole discretion andnotified to Seller on any Business Day Seller requests such notification (a “Margin Excess”), then Seller may,upon providing written notice to Buyer by 3 p.m. on the Business Day prior tothe date funds are requested, request that Buyer advance additional funds (notto exceed such Margin Excess) (a “Margin Excess Advance”) to Seller inrespect of the Purchased Loans.  On thedate set forth in such request, Buyer shall transfer cash to Seller in theamount of such Margin Excess Advance. Each Margin Excess Advance by Buyer to Seller shall increase theRepurchase Price of one or more Purchased Loans (such aggregate increase not toexceed such Margin Excess Advance) as Buyer shall determine in its solediscretion.

 

**5.**             INCOME PAYMENTS AND PRINCIPALPAYMENTS

** **

Paragraph 5 of the Agreement (“Income Payments”) ishereby deleted and replaced in its entirety by the following provisions of thisSection 5:

 

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(a)           Onor before the date hereof, Seller and Buyer shall establish and maintain withthe Depository Bank a deposit account owned by, in the name of and under thesole control of Buyer with respect to which the Blocked Account Agreement shallhave been executed (such account, together with any replacement or successorthereof, the “Blocked Account”). Seller shall cause all Income with respect to the Purchased Loans orother assets (if cash) delivered under Section 4 to be deposited in theBlocked Account no later than the next Business Day following its collectionand receipt thereof.  Simultaneously withthe transfer of any Purchased Loan under Section 3, Seller shall deliverto each Mortgagor or obligor (or the related collection account bank, asapplicable), or the related lead lender or servicer under a Purchased Loan anirrevocable direction letter in form and substance satisfactory to Buyerinstructing such Person to remit to the Blocked Account all amounts payable toSeller under the related Purchased Loan (unless such Mortgagor or obligor orrelated servicer or lender is already remitting payments to the Servicer,whereupon Seller shall direct Servicer to remit all such amounts into theBlocked Account and service such payments in accordance with the ServicingAgreement and the provisions hereof) and shall provide to Buyer written proofof such delivery.  If a Mortgagor orobligor (or the related collection account bank) or the related lead lender orservicer under a Purchased Loan forwards any Income with respect to suchPurchased Loan to Seller rather than directly to the Blocked Account, Sellershall (i) deliver an additional irrevocable direction letter to the applicablePerson and cause such Person to forward such amounts directly to the BlockedAccount and (ii) hold such amounts in trust for Buyer and immediately depositin the Blocked Account any such amounts. All Income in respect of the Portfolio Loans, which may include paymentsin respect of associated Hedging Transactions, shall be deposited directlyinto, or, if applicable, remitted directly from the applicable underlyingcollection account to, the Blocked Account.

 

(b)           Solong as no Event of Default shall have occurred and be continuing, all Incomeon deposit in the Blocked Account in respect of the Portfolio Loans and theassociated Hedging Transactions during each Collection Period shall be appliedby the Buyer on the related Remittance Date as follows:

 

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

 

(ii)           *second*, to Buyer an amount equal to allCosts and other amounts payable by Seller and outstanding hereunder and underthe other Transaction Documents (other than the Repurchase Price);

 

(iii)          *third*, if a Principal Payment in respectof any Purchased Loan has been made during such Collection Period, to Buyer inrespect of the Repurchase Price an amount equal to the greater of (i) theproduct of the amount of such Principal Payment multiplied by the PurchasePercentage and (ii) such greater amount, such that after giving effect tosuch payment of the applicable Repurchase Price, the aggregate Repurchase Priceof the Portfolio Loans is less than or equal to the Asset Base, as determinedby Buyer after giving effect to such payment;

 

(iv)          *fourth*, during the Facility ExtensionPeriod, to Buyer the Extended Repurchase Monthly Amount;

 

(v)           *fifth*, during the Facility ExtensionPeriod, to Buyer in respect of the Aggregate Repurchase Price until theAggregate Repurchase Price for all of the Purchased Loans has been reduced tozero; and

 

(vi)          *sixth*, to remit to Seller the remainder,if any.

 

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If onany Remittance Date, the amounts deposited in the Blocked Account shall beinsufficient to make the payments required under clauses (i) through (iv) ofthis Section 5(b), the same shall constitute an Event of Defaulthereunder.

 

(c)           Ifan Event of Default shall have occurred and be continuing, all Income ondeposit in the Blocked Account in respect of the Purchased Loans and the associatedHedging Transactions shall be applied on the Business Day next following theBusiness Day on which such funds are deposited in the Blocked Account asfollows:

 

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

 

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

 

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

 

(iv)          *fourth*, to Seller, the remainder.

 

(d)           If at any time during the term of anyTransaction any Income is distributed to Seller or Seller has otherwisereceived such Income and has made a payment in respect of such Income to Buyerpursuant to this Section 5, and for any reason such amount isrequired to be returned by Buyer to an obligor under such Purchased Loan(either before or after the Repurchase Date), Buyer may provide Seller withnotice of such required return, and Seller shall pay the amount of suchrequired return to Buyer by 11:00 a.m., New York time, on the Business Dayfollowing Seller’s receipt of such notice.

 

(e)           Subjectto the other provisions hereof, Seller shall be responsible for all Costs inrespect of any Purchased Loans to the extent it would be so obligated if thePurchased Loans had not been sold to Buyer. Buyer shall provide Seller with notice of any Costs promptly uponreceiving such notice, and Seller shall pay the amount of any Costs to Buyer by11:00 a.m., New York time, on the later of (i) five (5) Business Days afterBuyer has informed Seller that such amount is due under the Purchased LoanDocuments and (ii) three (3) Business Days following Seller’s receipt of suchnotice.

 

**6.**             CAUTIONARY SECURITY INTEREST

** **

Paragraph 6 of the Agreement (“Security Interest”) ishereby deleted and replaced in its entirety by the following provisions of thisSection 6:

 

(a)           Buyerand Seller intend that all Transactions hereunder be sales to Buyer of thePurchased Loans for all purposes (other than for U.S. Federal, state and localincome or franchise tax purposes) and not loans from Buyer to Seller secured bythe Purchased Loans.  However, in theevent any Transaction is deemed tobe a loan, Seller shall be deemed to have pledged to Buyer as security for theperformance by Seller of its obligations under such Transaction and shall bedeemed to have granted to Buyer a security interest in (i) the Blocked Account,(ii) all of the Purchased Loans, (iii) all “general intangibles,” “accounts”and “chattel paper” as defined in the UCC relating to or constituting any andall of the foregoing, (iv) all Income from the Purchased Loans and (v) allreplacements, substitutions or distributions on or proceeds, payments andprofits of, and records and files relating to, any and all of the foregoing(excluding any Margin Excess Advances).

 

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(b)           Tothe extent Buyer is deemed to have a security interest with respect to thePurchased Loans as provided in Section 6(a) hereof, and with respect tothe security interests granted in subsection (c) of this Section 6,Buyer shall have all of the rights and may exercise all of the remedies of asecured creditor under the UCC and any other applicable law.  In furtherance of the foregoing, (i) Seller,at its sole cost and expense, shall cause to be filed as a protective filingwith respect to the Purchased Loans and as a UCC filing with respect to thesecurity interests granted in subsection (c)) of this Section 6 oneor more UCC financing statements in form satisfactory to Buyer (to be filed inthe filing office indicated therein), in such locations as may be necessary toperfect and maintain perfection and priority of the outright transfer and thesecurity interest granted hereby (including under Section 22 of this AnnexI) and, in each case, continuation statements and any amendments thereto(collectively, the “Filings”), and shall forward copies of such Filingsto Buyer upon completion thereof, and (ii) Seller shall from time to time, atits own expense, deliver and cause to be duly filed all such further filings,instruments and documents and take all such further actions as may be necessaryor desirable or as may be requested by Buyer with respect to the perfection andpriority of the outright transfer of the Purchased Loans and the security interestdeemed granted hereunder and in the Purchased Loans and the rights and remediesof the Buyer with respect to the Purchased Loans (including under Section 22of this Annex I) (including the payments of any fees and taxes required inconnection with the execution and delivery of the Agreement).

 

(c)           Sellerhereby pledges to Buyer, as security for the performance by Seller of itsobligations under all Transactions, all Hedging Transactions relating toPurchased Loans entered into by Seller and all proceeds thereof.  Seller shall take all action as is necessaryor desirable to obtain consent to assignment of any such Hedging Transaction toBuyer and shall cause the counterparty under each such Hedging Transaction to enterinto such document or instrument satisfactory to Buyer, Seller and suchcounterparty, pursuant to which such counterparty will covenant and agree toaccept notice from Buyer to redirect payments under such Hedging Transaction asBuyer may direct.  So long as no Event ofDefault shall be continuing, Buyer agrees that it will not redirect paymentsunder any Hedging Transaction pledged to Buyer pursuant to the terms of this Section 6(c).

 

(d)           Inconnection with the repurchase by Seller of any Purchased Loan in accordanceherewith, upon receipt of the Repurchase Price by Buyer, Buyer will deliver toSeller, at Seller’s expense, such documents and instruments as may bereasonably necessary to reconvey such Purchased Loan and any income relatedthereto to Seller.

 

**7.**             PAYMENT, TRANSFER AND CUSTODY

** **

Paragraph 7 of the Agreement (“Payment and Transfer”)is hereby deleted and replaced in its entirety by the following provisions ofthis Section 7:

 

(a)           Subjectto the terms and conditions of the Agreement, on the Purchase Date for eachTransaction, ownership of the Purchased Loans and all rights thereunder shallbe transferred to Buyer or its designee (including the Custodian) against thesimultaneous transfer of the Purchase Price to an account of Seller specifiedin the Confirmation relating to such Transaction.  On the Purchase Date for the firstTransaction, Buyer will provide Seller with a power of attorney, substantiallyin the form attached as Exhibit IV-2 hereto, in recordable form, allowingSeller to administer, operate and service such Purchased Loans.  Provided no Event of Default beyond anyapplicable cure period shall have occurred and be continuing, the power ofattorney shall be binding upon Buyer and Buyer’s successors and assigns.

 

(b)           Withrespect to each Table Funded Purchased Loan, Seller shall cause the Bailee todeliver to the Custodian (with a copy to Buyer) by no later than 1:00 p.m. (NewYork time), on the Purchase Date, by facsimile the related promissory note (orthe participation certificate, as applicable), the Insured Closing Letter andEscrow Instructions, if any, the Bailee Agreement and a Trust Receipt issued

 

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by the Baileethereunder on or before the related Purchase Date.  In connection with the sale of each PurchasedLoan, not later than 1:00 p.m., two (2) Business Days prior to the relatedPurchase Date (or on the related Purchase Date, as may be agreed by Buyer andSeller on a case by case basis) (or with respect to a Table Funded PurchasedLoan not later than 1:00 p.m. (New York time) on the third Business Dayfollowing the applicable Purchase Date), Seller shall deliver or cause Baileeto deliver (with a copy to Buyer) and release to the Custodian (together withthe Custodial Delivery Certificate in the form attached hereto as Exhibit III),and shall cause the Custodian to deliver a Trust Receipt on the Purchase Date(or in the case of a Table Funded Purchased Loan, not later than two (2)Business Days following the receipt by the Custodian) confirming the receipt ofthe following original documents (collectively, the “Purchased Loan File”),pertaining to each of the Purchased Loans identified in the Custodial DeliveryCertificate delivered therewith:

 

(i)            Withrespect to each Purchased Loan that is a Mortgage Loan (including a FirstMortgage B Note), the following documents, as applicable:

 

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

 

(B)           Theoriginal or a copy of the loan agreement and the guarantee, if any, executed inconnection with the Purchased Loan.

 

(C)           Theoriginal Mortgage with evidence of recording thereon, or a copy thereoftogether with an officer’s certificate of Seller certifying that suchrepresents a true and correct copy of the original and that such original hasbeen submitted for recordation in the appropriate governmental recording officeof the jurisdiction where the Mortgaged Property is located.

 

(D)          Theoriginals of all assumption, modification, consolidation or extensionagreements with evidence of recording thereon, or copies thereof together withan officer’s certificate of Seller certifying that such represent true andcorrect copies of the originals and that such originals have each beensubmitted for recordation in the appropriate governmental recording office ofthe jurisdiction where the Mortgaged Property is located.

 

(E)           Theoriginal Assignment of Mortgage to Buyer for each Purchased Loan, in form andsubstance acceptable for recording and signed in the name of the Last Endorsee(in the event that the Purchased Loan was acquired by the Last Endorsee in amerger, the signature must be in the following form:  “[Last Endorsee], successor by merger to[name of predecessor]”; in the event that the Purchased Loan was acquired ororiginated while doing business under another name, the signature must be inthe following form: “[Last Endorsee], formerly known as [previous name]”).

 

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(F)           Theoriginals of all intervening assignments of mortgage with evidence of recordingthereon, or copies thereof together with an officer’s certificate of Seller certifyingthat such represent true and correct copies of the originals and that suchoriginals have each been submitted for recordation in the appropriategovernmental recording office of the jurisdiction where the Mortgaged Propertyis located.

 

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

 

(H)          Theoriginal of any security agreement, chattel mortgage or equivalent documentexecuted in connection with the Purchased Loan.

 

(I)            Theoriginal Assignment of Leases, if any, with evidence of recording thereon, or acopy thereof together with an officer’s certificate of Seller, certifying thatsuch copy represents a true and correct copy of the original that has beensubmitted for recordation in the appropriate governmental recording office ofthe jurisdiction where the Mortgaged Property is located.

 

(J)            Theoriginals of all intervening assignments of assignment of leases and rents, ifany, or copies thereof, with evidence of recording thereon, or copies thereoftogether with an officer’s certificate of Seller certifying that such representtrue and correct copies of the originals and that such originals have each beensubmitted for recordation in the appropriate governmental recording office ofthe jurisdiction where the Mortgaged Property is located.

 

(K)          Acopy of the UCC financing statements, certified as true and correct by Seller,and all necessary UCC continuation statements with evidence of filing thereonor copies thereof certified by Seller to have been sent for filing, and UCCassignments to Buyer, which UCC assignments shall be in form and substanceacceptable for filing in the applicable jurisdictions.

 

(L)           Theoriginal environmental indemnity agreement or similar guaranty or indemnity,whether stand-alone or incorporated into the applicable loan documents (ifany).

 

(M)         Theoriginal omnibus assignment to Buyer or such other documents necessary andsufficient to transfer to Buyer all of Seller’s right, title and interest inand to the Purchased Loan (if any).

 

(N)          Adisbursement letter from the Mortgagor to the original mortgagee or otherevidence that the Purchased Loan has been fully disbursed (if applicable).

 

(O)          Mortgagor’scertificate or title affidavit (if any).

 

(P)           Asurvey of the Mortgaged Property (if any) as accepted by the title company forissuance of the Title Policy.

 

(Q)          Theoriginal of any participation agreement, intercreditor agreement and/orservicing agreement executed in connection with such Purchased Loan.

 

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(R)           Acopy of all servicing agreements and Servicing Records related to suchPurchased Loan, which Seller shall deliver to Servicer (with a copy to Buyer).

 

(S)           Acopy of the Mortgagor’s opinions of counsel.

 

(T)           Anassignment of any management agreements, permits, contracts and other materialagreements (if any).

 

(U)          Reportsof UCC, tax lien, judgment and litigation searches as requested by Buyer,conducted by search firms reasonably acceptable to Buyer with respect to thePurchased Loan, Seller and the related underlying obligor, such searches to beconducted in each location Buyer shall reasonably designate and such reportsreasonably satisfactory to Buyer.

 

(V)           Theoriginal or a copy of the intercreditor or loan coordination agreement (if any)executed in connection with the Purchased Loan to the extent the subjectborrower, or an affiliate thereof, has encumbered its assets with senior,junior or similar financing, whether mortgage financing or mezzanine loanfinancing.

 

(W)         Copiesof all documents relating to the formation and organization of the relatedobligor under such Purchased Loan, together with all consents and resolutionsdelivered in connection with such obligor’s obtaining such Purchased Loan.

 

(X)          Allother material documents and instruments evidencing, guaranteeing, insuring orotherwise constituting or modifying or otherwise affecting such Purchased Loan,or otherwise executed or delivered in connection with, or otherwise relatingto, such Purchased Loan, including all documents establishing or implementingany lockbox pursuant to which Seller is entitled to receive any payments fromcash flow of the underlying real property.

 

(Y)           Evidencethat the Purchased Loan has been fully disbursed (if applicable).

 

IfSeller cannot deliver, or cause to be delivered, any of the documents and/orinstruments required above to be delivered as originals, Seller shall deliver aphotocopy thereof and, unless waived by Buyer, an Officer’s Certificate ofSeller certifying that such copy represents a true and correct copy of theoriginal.  Seller shall then, in theevent that Seller has a legitimate and reasonable opportunity to obtain theoriginal documents in question if the document in question exists in originalform (1) use reasonable efforts to obtain and deliver the original documentwithin 180 days after the related Purchase Date (or such longer period afterthe related Purchase Date as Buyer may consent to, which consent shall not beunreasonably withheld so long as Seller is, as certified in writing to Buyer noless often than monthly, in good faith attempting to obtain the original) and(2) after the expiration of such reasonable efforts period, deliver toBuyer a certification that states, despite Seller’s reasonable efforts, Sellerwas unable to obtain such original document.

 

(ii)           Withrespect to each Purchased Loan which is a Mezzanine Loan secured by a pledge ofthe equity ownership interests in an entity that owns Eligible Property, thefollowing, as applicable:

 

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(A)          Theoriginal Mezzanine Note signed in connection with the Purchased Loan bearingall intervening endorsements, endorsed “Pay to the order of                    without recourse” and signed in the name of the Last Endorsee by an authorizedPerson (in the event that the Mezzanine Note was acquired by the Last Endorseein a merger, the signature must be in the following form:  “[Last Endorsee], successor by merger to[name of predecessor]”; in the event that the Purchased Loan was acquired ororiginated by the Last Endorsee while doing business under another name, thesignature must be in the following form: “[Last Endorsee], formerly known as [previous name]”) or a lost noteaffidavit in a form reasonably approved by Buyer with a copy of the applicableMezzanine Note attached thereto.

 

(B)           Theoriginal or a copy of the loan agreement and the guarantee, if any, executed inconnection with the Purchased Loan.

 

(C)           Theoriginal or a copy of the intercreditor or loan coordination agreement executedin connection with the Purchased Loan to the extent the subject borrower, or anaffiliate thereof, has encumbered its assets with senior, junior or similarfinancing, whether mortgage financing or mezzanine loan financing.

 

(D)          Theoriginal security agreement executed in connection with the Purchased Loan.

 

(E)           Copiesof all documents relating to the formation and organization of the borrowerunder such Purchased Loan, together with all consents and resolutions deliveredin connection with such borrower’s obtaining the Purchased Loan.

 

(F)           Allother material documents and instruments evidencing, guaranteeing, insuring orotherwise constituting or modifying or otherwise affecting such Purchased Loan,or otherwise executed or delivered in connection with, or otherwise relatingto, such Purchased Loan, including all documents establishing or implementingany lockbox pursuant to which Seller is entitled to receive any payments from cashflow of the underlying real property.

 

(G)           Anomnibus assignment to Buyer or other documents necessary and sufficient totransfer to Buyer all of Seller’s right, title and interest in and to thePurchased Loan.

 

(H)          Theoriginal of any participation agreement executed in connection with suchPurchased Loan.

 

(I)            Acopy of all servicing agreements and Servicing Records related to suchPurchased Loan, which Seller shall deliver to Servicer (with a copy to Buyer).

 

(J)            Acopy of the borrower’s opinions of counsel.

 

(K)          Acopy of the UCC financing statements, certified as true and correct by Seller,and all necessary UCC continuation statements with evidence of filing thereonor copies thereof certified by Seller to have been sent for filing, and UCCassignments to Buyer, which UCC assignments shall be in form and substanceacceptable for filing in the applicable jurisdictions.

 

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(L)           Theoriginal certificates representing the pledged equity interests to the extentsuch interests are in certificated form.

 

(M)         Stockor similar powers relating to each pledged equity interest, executed in blank,if such equity interests are in certificated form.

 

(N)          Assignmentof any management agreements, agreements among equity interest holders or othermaterial contracts.

 

(O)          Ifthe pledged equity interests are not certificated, evidence (which may be anOfficer’s Certificate confirming such circumstances or in the form of anexecuted instruction to register such pledge by the mezzanine borrower andacknowledgment by the entity in which such pledged equity interests are held)that the pledged equity interests have been transferred to, or otherwise madesubject to a first priority security interest in favor of, Seller.

 

(P)           Copiesof all material documents evidencing or securing the related mortgage loan andany other documents affecting the related mortgaged property to the extent inpossession of Seller.

 

(Q)          Ifthe mezzanine borrower is an Affiliate of Seller, a pledge agreement and anyUCC financing statements, executed by the owner(s) of all the equity interestsof the mezzanine borrower as debtor in favor of Seller as secured party (whichpledge agreement and UCC financing statements shall be transferred by Seller toBuyer), covering all equity interests in the mezzanine borrower, if notpreviously delivered to Buyer, together with any related original certificatesof equity ownership and blank assignments thereof, all to give Buyer a securityinterest in such equity as additional collateral for Seller’s obligations.

 

(R)           Evidencethat the Purchased Loan has been fully disbursed (if applicable).

 

Inconnection with the transfer of any Purchased Loan, if Seller cannot deliver,or cause to be delivered, any of the documents and/or instruments referred toabove, required to be delivered as originals, Seller shall deliver a photocopythereof and, unless waived by Buyer, an Officer’s Certificate of Sellercertifying that such copy represents a true and correct copy of the original.  Seller shall then, in the event that Sellerhas a legitimate and reasonable opportunity to obtain the original documents inquestion if the document in question exists in original form (1) use reasonableefforts to obtain and deliver the original document within 180 days after therelated Purchase Date (or such longer period after the related Purchase Date asBuyer may consent to, which consent shall not be unreasonably withheld so longas Seller is, as certified in writing to Buyer no less often than monthly, ingood faith attempting to obtain the original) and (2) after the expirationof such reasonable efforts period, deliver to Buyer a certification thatstates, despite Seller’s reasonable efforts, Seller was unable to obtain suchoriginal document.

 

(c)           Fromtime to time, Seller shall forward to the Custodian additional originaldocuments or additional documents evidencing any assumption, modification,consolidation or extension of a Purchased Loan approved in accordance with theterms of the Agreement, and upon receipt of any such other documents, theCustodian shall hold such other documents on behalf of Buyer and as Buyer shallrequest from time to time.  With respectto any documents which have been delivered or are being delivered to recordingoffices for recording and have not been returned to Seller in time to permittheir delivery

 

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hereunder at thetime required, in lieu of delivering such original documents, Seller shalldeliver to Buyer a true copy thereof with an officer’s certificate certifyingthat such copy is a true, correct and complete copy of the original, which hasbeen transmitted for recordation.  Sellershall deliver such original documents to the Custodian promptly when they arereceived.  With respect to all of thePurchased Loans delivered by Seller to Buyer or its designee (including theCustodian), Seller shall execute an omnibus power of attorney substantially inthe form of Exhibit IV-1 attached hereto irrevocably appointing Buyer itsattorney-in-fact with full power to (i) complete and record any Assignment ofMortgage, (ii) complete the endorsement of any Mortgage Note or Mezzanine Noteand (iii) take such other steps as may be necessary or desirable to enforceBuyer’s rights against any Purchased Loans and the related Purchased Loan Filesand the Servicing Records.  Buyer shalldeposit the Purchased Loan Files representing the Purchased Loans, or cause thePurchased Loan Files to be deposited directly, with the Custodian to be held bythe Custodian on behalf of Buyer.  ThePurchased Loan Files shall be maintained in accordance with the CustodialAgreement.  Any Purchased Loan Files notdelivered to Buyer or its designee (including the Custodian) are and shall beheld in trust by Seller or its designee for the benefit of Buyer as the ownerthereof.  Seller or its designee shallmaintain a copy of the Purchased Loan File and the originals of the PurchasedLoan File not delivered to Buyer or its designee.  The possession of the Purchased Loan File bySeller or its designee is at the will of Buyer for the sole purpose ofservicing the related Purchased Loan, and such retention and possession bySeller or its designee is in a custodial capacity only.  The books and records (including, withoutlimitation, any computer records or tapes) of Seller or its designee shall bemarked appropriately to reflect clearly the transfer, subject to the terms andconditions of the Agreement, of the related Purchased Loan to Buyer.  Seller or its designee (including theCustodian) shall release its custody of the Purchased Loan File only inaccordance with written instructions from Buyer, unless such release isrequired as incidental to the servicing of the Purchased Loans or is inconnection with a repurchase of any Purchased Loan by Seller or is pursuant tothe order of a court of competent jurisdiction.

 

(d)           Inaddition to any documents or instruments that are required to be delivered bySeller to Buyer hereunder in connection with the transfer of Purchased Loans bySeller to Buyer, on the date of the Agreement, Buyer shall have received all of the following items and documents, eachof which shall be satisfactory to Buyer in form and substance:

 

(i)            TransactionDocuments.

 

(A)          TheAgreement (including this Annex I), duly executed and delivered by Seller andBuyer;

 

(B)           TheGuaranty, duly executed and delivered by the Guarantor;

 

(C)           TheCustodial Agreement, duly executed and delivered by Seller, Buyer andCustodian;

 

(D)          TheBlocked Account Agreement, duly executed and delivered by Seller, Buyer andDepository Bank;

 

(E)           TheServicing Agreement, duly executed and delivered by Seller, Buyer and Servicer;and

 

(F)           TheFee Letter, duly executed and delivered by Seller, Buyer and Goldman, Sachs& Co.

 

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(ii)           OrganizationalDocuments. Certified copies of the Seller’s and Guarantor’s organizationaldocuments and resolutions or other documents evidencing the authority of Sellerand Guarantor with respect to the execution, delivery and performance of theTransaction Documents to which it is a party and each other document to bedelivered by Seller and Guarantor from time to time in connection with theTransaction Documents (and Buyer may conclusively rely on such certificationsuntil it receives notice in writing from Seller to the contrary);

 

(iii)          LegalOpinion.  Opinions of counsel to theSeller and Guarantor in form and substance satisfactory to Buyer as to (i)authority, enforceability of the Transaction Documents to which it is a partyand such other matters as may be requested by Buyer and (ii) nonconsolidation;and

 

(iv)          OtherDocuments.  Such other documents asBuyer may reasonably request.

 

**8.**             CERTAIN RIGHTS OF BUYER WITHRESPECT TO THE PURCHASED LOANS

** **

Paragraph 8 of the Agreement (“Segregation ofPurchased Securities”) is hereby deleted and replaced in its entirety by thefollowing provisions of this Section 8:

 

(a)           Subjectto the terms and conditions of the Agreement, title to all Purchased Loansshall pass to Buyer on the applicable Purchase Date, and Buyer shall have freeand unrestricted use of its interest in the Purchased Loans in accordance withthe terms and conditions of the Purchased Loans.  Nothing in the Agreement or any otherTransaction Document shall preclude Buyer from engaging in repurchasetransactions with the Purchased Loans with Persons in conformity with the termsand conditions of the Purchased Loans or otherwise selling, transferring,pledging, repledging, hypothecating, or rehypothecating all or a portion of itsinterest in the Purchased Loans to Persons in conformity with the terms andconditions to the Purchased Loans, but no such transaction shall relieve Buyerof its obligations to transfer the Purchased Loans to Seller pursuant to Section 3of this Annex I or of Buyer’s obligation to credit or pay Income to, or applyIncome to the obligations of, Seller pursuant to Section 5 of this Annex Ior otherwise affect the rights, obligations and remedies of any party to theAgreement.

 

(b)           Subjectto the terms and conditions of the Agreement, any documents delivered to theCustodian pursuant to Section 7(b) and 7(c) of this Annex I shall only bereleased in accordance with the terms and conditions of the CustodialAgreement.

 

**9.**             RESERVED.

** **

**10.**          REPRESENTATIONS

** **

Paragraph 10 of the Agreement (“Representations”) ishereby supplemented by the following:

 

(a)           Sellerrepresents and warrants to Buyer that as of the Purchase Date for the purchaseof any Purchased Loan by Buyer from Seller and any Transaction thereunder andas of the date of the Agreement and at all times while the Agreement and anyTransaction thereunder is in full force and effect:

 

(i)            Organization.  Seller is duly organized, validly existingand in good standing under the laws and regulations of the state of Seller’sorganization and is duly licensed, qualified, and in good standing in everystate where such licensing or qualification is necessary for the transaction ofSeller’s business, except where lack of such licenses or qualifications wouldnot be

 

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reasonably likely to result in a Material AdverseEffect.  Seller has the power to own andhold the assets it purports to own and hold, and to carry on its business asnow being conducted and proposed to be conducted, and has the power to execute,deliver, and perform its obligations under the Agreement and the otherTransaction Documents.

 

(ii)           DueExecution; Enforceability.  TheTransaction Documents have been duly executed and delivered by Seller, for goodand valuable consideration.  TheTransaction Documents constitute the legal, valid and binding obligations ofSeller, enforceable against Seller in accordance with their respective termssubject to bankruptcy, insolvency, and other limitations on creditors’ rightsgenerally and to equitable principles.

 

(iii)          Non-Contravention;Consents.  Neither the execution anddelivery of the Transaction Documents, nor consummation by Seller of thetransactions contemplated by the Transaction Documents (or any of them), norcompliance by Seller with the terms, conditions and provisions of theTransaction Documents (or any of them) will (x) conflict with or result in abreach or violation of any of the terms, conditions or provisions of any judgmentor order, writ, injunction, decree or demand of any court applicable to Seller,or (y) result in the creation or imposition of any lien or any otherencumbrance upon any of the assets of Seller, other than pursuant to theTransaction Documents.  Seller has allnecessary licenses, permits and other consents from Governmental Authoritiesnecessary to acquire, own and sell the Portfolio Loans and for the performanceof its obligations under the Transaction Documents except where the failure tohave any such license, permit or consent would not be reasonably likely toresult in a Material Adverse Effect.

 

(iv)          Litigation;Requirements of Law.  There is noaction, suit, proceeding, investigation, or arbitration pending or, to the bestknowledge of Seller, threatened against Seller, or any of its assets which mayresult in any Material Adverse Effect, or which may have an adverse effect onthe validity of the Transaction Documents or any action taken or to be taken inconnection with the obligations of Seller under any of the TransactionDocuments.  Seller is in compliance inall material respects with all Requirements of Law.  Seller is not in default in any materialrespect with respect to any judgment, order, writ, injunction, decree, rule orregulation of any arbitrator or Governmental Authority.

 

(v)           NoBroker.  Seller has not dealt withany broker, investment banker, agent or other Person (other than Buyer or anAffiliate of Buyer) who may be entitled to any commission or compensation inconnection with the sale of the Purchased Loans pursuant to any TransactionDocuments.

 

(vi)          GoodTitle to Purchased Loans. Immediately prior to the purchase of any Purchased Loans by Buyer fromSeller, such Purchased Loans are free and clear of any lien, security interest,claim, option, charge, encumbrance or impediment to transfer (including any “adverseclaim” as defined in Section 8-102(a)(1) of the UCC but excluding anyliens or encumbrances to be released simultaneously with the sale to Buyerhereunder), and are not subject to any rights of setoff, any prior sale,transfer, assignment, or participation by Seller or any agreement by Seller toassign, convey, transfer or participate, in whole or in part, and Seller is thesole legal record and beneficial owner of and owns and has the right to selland transfer such Purchased Loans to Buyer and, upon transfer of such PurchasedLoans to Buyer, Buyer shall be the owner of such Purchased Loans (other thanfor U.S. Federal, state and local income and franchise tax purposes) free ofany adverse claim, subject to Seller’s rights pursuant to the Agreement.  In the event the related Transaction isrecharacterized as a secured financing of the Purchased Loans and with respectto the security interests granted in Sections 6(a) and 6(c), the 

 

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provisions of the Agreement are effective to create infavor of Buyer a valid security interest in all rights, title and interest ofSeller in, to and under the Purchased Loans and the collateral specified inSections 6(a) and 6(c), Buyer shall have a valid, perfected and enforceablefirst priority security interest in the Purchased Loans and such othercollateral, subject to no lien or rights of others other than as grantedherein.

 

(vii)         NoDefault.  No Default or Event ofDefault exists under or with respect to the Transaction Documents.

 

(viii)        Representationsand Warranties Regarding Purchased Loans; Delivery of Purchased Loan File.  Seller represents and warrants to Buyer thateach Purchased Loan sold hereunder, as of the applicable Purchase Date for theTransaction in question conforms to the applicable representations andwarranties set forth in Exhibit V attached hereto, except as have beendisclosed to Buyer in writing prior to Buyer’s issuance of a Confirmation withrespect to the related Purchased Loan. It is understood and agreed that the representations and warranties setforth in Exhibit V hereto, if any, shall survive delivery of the respectivePurchased Loan File to Buyer or its designee (including the Custodian).  With respect to each Purchased Loan, theMortgage Note or Mezzanine Note, the Mortgage (if any), the Assignment ofMortgage (if any) and any other documents required to be delivered under theAgreement and the Custodial Agreement for such Purchased Loan have beendelivered (or with respect to Table Funded Loans shall be delivered inaccordance with Section 7(b)) to Buyer or the Custodian on its behalf orsuch requirement will have been expressly waived in writing by Buyer.  Seller or its designee is in possession of acomplete, true and accurate Purchased Loan File with respect to each PurchasedLoan, except for such documents the originals of which have been delivered tothe Custodian.

 

(ix)           AdequateCapitalization; No Fraudulent Transfer. Seller has, as of such Purchase Date, adequate capital for the normalobligations reasonably foreseeable in a business of its size and character andin light of its contemplated business operations.  Seller is generally able to pay, and as ofthe date hereof is paying, its debts as they come due.  Seller has not become, or is presently,financially insolvent nor will Seller be made insolvent by virtue of Seller’sexecution of or performance under any of the Transaction Documents within themeaning of the bankruptcy laws or the insolvency laws of any jurisdiction.  Seller has not entered into any TransactionDocument or any Transaction pursuant thereto in contemplation of insolvency orwith intent to hinder, delay or defraud any creditor.  Seller has not received any written noticethat any payment or other transfer made to or on account of Seller from or onaccount of any Mortgagor or any other person obligated under any Purchased LoanDocuments is or may be void or voidable as an actual or constructive fraudulenttransfer or as a preferential transfer.

 

(x)            OrganizationalDocuments.  Seller has delivered toBuyer certified copies of its organizational documents, together with allamendments thereto.

 

(xi)           NoEncumbrances.  There are (i) nooutstanding rights, options, warrants or agreements on the part of Seller for apurchase, sale or issuance, in connection with the Purchased Loans and (ii) noagreements on the part of Seller to issue, sell or distribute the PurchasedLoan.

 

(xii)          FederalRegulations.  Seller is not (A) an “investmentcompany,” or a company “controlled by an investment company,” within themeaning of the Investment Company Act of 1940, as amended, or (B) a “holdingcompany,” or a “subsidiary company of a holding company,” or an “affiliate” ofeither a “holding company” or a “subsidiary company of a holding

 

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company,” as such terms are defined in the PublicUtility Holding Company Act of 1935, as amended.

 

(xiii)         Taxes. Seller has filed or caused to be filedall tax returns which would be delinquent if they had not been filed on orbefore the date hereof and has paid all taxes due and payable on or before thedate hereof and all other taxes, fees or other charges imposed on it and any ofits assets by any Governmental Authority; no tax liens have been filed againstany of Seller’s assets and, to Seller’s knowledge, no claims are being assertedwith respect to any such taxes, fees or other charges.

 

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

 

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

 

(xvi)        Fulland Accurate Disclosure.  Noinformation contained in the Transaction Documents, or any written statementfurnished by or on behalf of Seller pursuant to the terms of the TransactionDocuments, contains any untrue statement of a material fact or omits to state amaterial fact necessary to make the statements contained herein or therein notmisleading in light of the circumstances under which they were made when suchstatements and omissions are considered in the totality of the circumstances inquestion.

 

(xvii)       FinancialInformation.  All financial dataconcerning Seller and to Seller’s knowledge after due inquiry, the PurchasedLoans that has been delivered by or on behalf of Seller to Buyer is true,complete and correct in all material respects and has been prepared inaccordance with GAAP.  Since the deliveryof such data, except as otherwise disclosed in writing to Buyer, there has beenno change in the financial position of Seller or the Purchased Loans, or in theresults of operations of Seller, which change is reasonably likely to have in aMaterial Adverse Effect on Seller.

 

(xviii)      Jurisdictionof Organization.  The Seller’sjurisdiction of organization is the State of Delaware.

 

(xix)         Locationof Books and Records.  The locationwhere Seller keeps its books and records, including all computer tapes andrecords relating to the Purchased Securities is its chief executive office at420 Lexington Avenue, New York, New York 10170.

 

(xx)          RegulationT, U and X.  Neither the enteringinto nor consummation of any Transaction hereunder, nor the use of the proceedsthereof, will violate any provisions of Regulation T, U or X. If requested byBuyer, Seller, any applicable Affiliate of Seller and the recipient of anyportion of the proceeds of, or any portion of, any Transaction shall furnish toBuyer a statement on Federal Reserve Form G-3 referred to in Regulation U.

 

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(b)           Onthe Purchase Date for any Transaction, Seller shall be deemed to have made allof the representations set forth in Paragraph 10 of the Agreement and Section 10(a)of this Annex I as of such Purchase Date.

 

**11.**          NEGATIVECOVENANTS OF SELLER

** **

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

 

(a)           subjectto Seller’s right to repurchase, take any action which would directly orindirectly impair or adversely affect Buyer’s title to the Purchased Loans;

 

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

 

(c)           create,incur or permit to exist any lien, encumbrance or security interest in or onthe Purchased Loans, except as described in Section 6 of this Annex I;

 

(d)           create,incur or permit to exist any lien, encumbrance or security interest in or onany of the other collateral subject to the security interest granted by Sellerpursuant to Section 6 of this Annex I;

 

(e)           create,incur or permit any lien, security interest, charges, or encumbrances withrespect to any Hedging Transaction for the benefit of any Person other thanBuyer;

 

(f)            materiallymodify or terminate any of the organizational documents of Seller or take anyaction which would cause it to cease to be a Single-Purpose Entity;

 

(g)           consentor assent to a Significant Modification or any extension or termination of anynote, loan agreement, mortgage, pledge agreement or guaranty relating to thePurchased Loans or other material agreement or instrument relating to thePurchased Loans without the prior written consent of Buyer;

 

(h)           takeany action or permit such action to be taken which would result in a Change inControl;

 

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

 

(j)            sponsoror maintain any Plans or make any contributions to, or have any liability orobligation (direct or contingent) with respect to any Plan and shall not permitany ERISA Affiliate to sponsor or maintain any Plans or make any contributionsto, or have any liability or obligation (direct or contingent) with respect toany Plan;

 

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(k)           engagein any transaction that would cause any obligation or action taken or to betaken hereunder (or the exercise by Buyer of any of its rights under theAgreement, the Purchased Loans or any Transaction Document) to be a non-exemptprohibited transaction under Section 406 of ERISA, Section 4975**ofthe Code or substantially similar provisions under any other federal, state orlocal laws, rules or regulations; or

 

(l)            makeany future advances under any Purchased Loan to any underlying obligor whichare not permitted by the related Purchased Loan Documents.

 

**12.**          AFFIRMATIVECOVENANTS OF SELLER

** **

(a)           Sellershall promptly notify Buyer of any event and/or condition which is likely tohave a Material Adverse Effect.

 

(b)           Sellershall give notice to Buyer of the following (accompanied by an Officer’sCertificate setting forth details of the occurrence referred to therein andstating what actions Seller has taken or proposes to take with respectthereto):

 

(i)            promptlyupon receipt of notice or knowledge of the occurrence of any Default or Eventof Default;

 

(ii)           withrespect to any Purchased Loan sold to Buyer hereunder, immediately upon receiptof any Principal Payment (in full or in part);

 

(iii)          withrespect to any Purchased Loan sold to Buyer hereunder, immediately upon receiptof notice or knowledge that the related Mortgaged Property has been damaged bywaste, fire, earthquake or earth movement, windstorm, flood, tornado or othercasualty, or otherwise damaged so as to affect adversely the value of suchMortgaged Property;

 

(iv)          promptlyupon receipt of notice or knowledge of (i) any Purchased Loan which becomes aDefaulted Loan, (ii) any lien or security interest (other than securityinterests created hereby) on, or claim asserted against, any Purchased Loan or,to Seller’s knowledge, the underlying collateral therefor or (iii) any event orchange in circumstances that has or could reasonably be expected to have anadverse affect on the Market Value of a Purchased Loan; and

 

(v)           promptly,and in any event within 10 days after service of process on any of thefollowing, give to Buyer notice of all litigation, actions, suits,arbitrations, investigations (including, without limitation, any of theforegoing which are pending or threatened) or other legal or arbitrableproceedings affecting Seller or affecting any of the assets of Seller beforeany Governmental Authority that (i) questions or challenges the validity orenforceability of any of the Transaction Documents or any action to be taken inconnection with the transactions contemplated hereby, (ii) makes a claim orclaims in an aggregate amount greater than $5,000,000, or (iii) which,individually or in the aggregate, if adversely determined could reasonably belikely to have a Material Adverse Effect.

 

(c)           Sellershall provide Buyer with copies of such documents as Buyer may reasonablyrequest evidencing the truthfulness of the representations set forth in Section 10.

 

(d)           Sellershall defend the right, title and interest of Buyer in and to the PurchasedLoans against, and take such other action as is necessary to remove, the liens,security interests, claims,

 

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encumbrances,charges and demands of all Persons (other than security interests granted toBuyer hereunder).

 

(e)           Sellerwill permit Buyer or its designated representative to inspect any of Seller’srecords with respect to all or any portion of the Purchased Loans and theconduct and operation of its business related thereto, at such reasonable timesand with reasonable frequency requested by Buyer or its designatedrepresentative, and to make copies of extracts of any and all thereof.

 

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

 

(g)           Sellershall provide (or cause to be provided to) Buyer with the following financialand reporting information:

 

(i)            theMonthly Statement;

 

(ii)           within10 days of Seller’s receipt, all operating statements and occupancy informationthat Seller or Servicer has received relating to the Portfolio Loans;

 

(iii)          theQuarterly Report;

 

(iv)          theFinancial Covenant Compliance Certificate;

 

(v)           assoon as available and in any event within fifty-five (55) days after the end ofeach of the first three quarterly fiscal periods of each fiscal year of Seller,the unaudited, consolidated balance sheets of Seller, which shall incorporateits consolidated subsidiaries, as at the end of such period and the relatedunaudited, consolidated statements of income and retained earnings and of cashflows for Seller, which shall incorporate its consolidated Subsidiaries, forsuch period and the portion of the fiscal year through the end of such period,accompanied by an Officer’s Certificate of Seller, which certificate shallstate that said consolidated financial statements fairly present theconsolidated financial condition and results of operations Seller and itsconsolidated Subsidiaries in accordance with GAAP, consistently applied, as atthe end of, and for, such period (subject to normal year-end auditadjustments);

 

(vi)          withinsixty (60) days following the end of each quarter, or within one hundred twenty(120) days following the end of each fiscal year, as the case may be, anOfficer’s Certificate of Seller in form and substance reasonably satisfactoryto Buyer that Seller during such fiscal period or year has observed orperformed all of its covenants and other agreements, and satisfied everycondition, contained in the Agreement and the other Transaction Documents to beobserved, performed or satisfied by it, and that there has been no Event ofDefault and no event or circumstance has occurred that is reasonably likely toresult in a Material Adverse Effect;

 

(vii)         assoon as available and in any event within one hundred (100) days after the endof each fiscal year of Seller, the consolidated balance sheets of Seller, whichshall incorporate its consolidated Subsidiaries, if any, as at the end of suchfiscal year and the related consolidated

 

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statements of income and retained earnings and of cashflows for Seller, which shall incorporate its consolidated Subsidiaries, ifany, for such year, accompanied by an opinion thereon of independent certifiedpublic accountants of recognized national standing, which opinion shall not bequalified as to scope of audit or going concern and shall state that saidconsolidated financial statements fairly present the consolidated financialcondition and results of operations of Seller and its consolidated Subsidiariesas at the end of, and for, such fiscal year in accordance with GAAP;

 

(viii)        withinten (10) Business Days after Buyer’s reasonable request, such furtherinformation with respect to the operation of any Mortgaged Property, Purchased Loan,the financial affairs of the Seller and any Plan and Multiemployer Plan as maybe requested by Buyer, including all business plans prepared by or for Seller;provided, however, that with respect to information not previously known to, orin the possession of, Seller relating to any Multiemployer Plan, Seller shallonly be required to provide such information as may be obtained through goodfaith efforts;

 

(ix)           withinsixty (60) Business Days after the end of each calendar year, such informationas may be reasonably requested by Buyer, its successors and assigns, andtransferees, in connection with the Portfolio Loans, and that are necessary forthe party requesting such information in preparing its tax return and payingtaxes in any country or jurisdiction where such tax return or taxes are due;and

 

(x)            suchother reports as Buyer shall reasonably require.

 

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

 

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

 

(j)            Sellershall advise Buyer in writing of the opening of any new chief executive officeor the closing of any such office and of any change in Seller’s name or theplaces where the books and records pertaining to the Purchased Securities areheld not less than the later of fifteen (15) Business Days prior to taking anysuch action or 90 days before any financial statement filing will lapse, loseperfection or become materially misleading.

 

(k)           Sellershall observe, perform and satisfy all the terms, provisions, covenants andconditions required to be observed, performed or satisfied by it, and shall paywhen due all costs, fees and expenses required to be paid by it, under theTransaction Documents.  Seller shall payand discharge all taxes, levies, liens and other charges, if any, on its assetsand on the Purchased Loans that, in each case, in any manner would create anylien or charge upon the Purchased Loans, except for any such taxes as are beingappropriately contested in good faith by appropriate proceedings diligentlyconducted and with respect to which adequate reserves have been provided inaccordance with GAAP.

 

(l)            Sellershall maintain its existence as a limited liability company, organized solelyand in good standing under the law of the State of Delaware and shall notdissolve, liquidate, merge with or into any other Person or otherwise changeits organizational structure or identity or incorporate in any otherjurisdiction.

 

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

 

(n)           Sellershall provide Buyer with notice of each modification of any Purchased LoanDocuments consented to by Seller (including such modifications which do notconstitute a Significant Modification).

 

(o)           Sellershall provide Buyer with notice of the occurrence of any “appraisal reductionevent”, “control appraisal period” or similar event under any participationagreement related to any Purchased Loan.

 

(p)           Sellershall provide Buyer with reasonable access to operating statements, theoccupancy status and other property level information, with respect to the MortgagedProperties, plus any such additional reports as Buyer may reasonably request.

 

(q)           Seller may propose, and Buyer will consider butshall be under no obligation to approve, strategies for the foreclosure orother realization upon the security for any Purchased Loan that has become aDefaulted Loan.

 

(r)            Seller shall not cause any Purchased Loan to beserviced by any servicer other than a servicer expressly approved in writing byBuyer.

 

**13.**          SINGLE-PURPOSE ENTITY

** **

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

 

(a)           It is and intends toremain solvent and it has paid and will pay its debts and liabilities(including employment and overhead expenses) from its own assets as the sameshall become due.

 

(b)           It has complied and willcomply with the provisions of its certificate of formation and its limitedliability company agreement.

 

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

 

(d)           It has maintained andwill maintain all of its books, records, financial statements and bank accountsseparate from those of its affiliates, its members and any other Person, and itwill file its own tax returns (except to the extent consolidation is requiredunder GAAP or as a matter of law).

 

(e)           It has been, is and willbe, and at all times will hold itself out to the public as, a legal entityseparate and distinct from any other entity (including any Affiliate), shallcorrect any known misunderstanding regarding its status as a separate entity,shall conduct business in its own name, shall not identify itself or any of itsAffiliates as a division or part of the other and shall maintain and utilizeseparate stationery, invoices and checks.

 

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(f)            It has not owned andwill not own any property or any other assets other than the Purchased Loansand Portfolio Securities, cash and its interest under any associated HedgingTransactions.

 

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

 

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

 

(i)            It has not incurred andwill not incur any indebtedness or obligation, secured or unsecured, direct orindirect, absolute or contingent (including guaranteeing any obligation), otherthan (A) obligations under the Transaction Documents and the SecuritiesRepurchase Agreement, (B) obligations under the documents evidencing thePurchased Loans and Portfolio Securities and (C) unsecured trade payables,in an aggregate amount not to exceed $100,000 at any one time outstanding,incurred in the ordinary course of acquiring, owning, financing and disposingof the the Purchased Loans and Portfolio Securities; provided, however,that any such trade payables incurred by Seller shall be paid within 30 days ofthe date incurred.

 

(j)            It has not made and willnot make any loans or advances to any other Person, and shall not acquireobligations or securities of any member or affiliate of any member or any otherPerson (other than in connection with the origination or acquisition ofPurchased Loans and Portfolio Securities).

 

(k)           It will maintainadequate capital for the normal obligations reasonably foreseeable in abusiness of its size and character and in light of its contemplated businessoperations.

 

(l)            Neither it nor Guarantorwill seek its dissolution, liquidation or winding up, in whole or in part, orsuffer any Change of Control, consolidation or merger.

 

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

 

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

 

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

 

(p)           It has no liabilities,contingent or otherwise, other than those normal and incidental to theacquisition, origination, ownership, servicing, administration, enforcement,financing and disposition of the Purchased Loans and Portfolio Securities.

 

(q)           It has conducted and shall conductits business consistent with the requirements of being a Single-Purpose Entity.

 

(r)            It shall not maintain any employees.

 

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**14.**          EVENTSOF DEFAULT; REMEDIES

** **

Paragraph 11 (“Events of Default”) of the Agreement ishereby amended by the deletion in their entirety of the first paragraph thereof(other than the clauses referenced in Section 14(a) below) and Paragraphs11(a) through (i) thereof and by the addition of the provisions (a) through (c)of Section 14 of this Annex I:

 

(a)           Togetherwith clauses (iii) through (v) and (vii) of the first paragraph of Paragraph 11of the Agreement, the following shall constitute an event of default hereunder(each an “Event of Default”):

 

(i)            failureof Seller to repurchase or the failure of Buyer to transfer the Purchased Loanon the applicable Repurchase Date (except when such failure to transfer is aresult of Buyer’s inability to obtain necessary consents to, or fulfillrestrictions on, such transfer);

 

(ii)           failureof Seller to apply any Income received by Seller in accordance with theprovisions hereof;

 

(iii)          (A)the Transaction Documents shall for any reason not cause, or shall cease tocause, Buyer to be the owner or, if recharacterized as a secured financing, asecured party with respect to any of the Purchased Loans or the collateralspecified in Section 6(a) and 6(c) free of any adverse claim, liens andother rights of others (other than as granted herein) or (B) if a Transactionis recharacterized as a secured financing, the Transaction Documents withrespect to any Transaction shall for any reason cease to create a valid firstpriority security interest in favor of Buyer in any of the Purchased Loans orthe collateral specified in Sections 6(a) and 6(c) or (C) if theTransaction Documents shall cease to be in full force and effect or if theirenforceability is challenged by Seller;

 

(iv)          failureof Seller to make the payments required under Section 4 or Section 5(b)on any Remittance Date which failure is not remedied within one (1) BusinessDay;

 

(v)           failureof Seller to make any other payment owing to Buyer which has become due,whether by acceleration or otherwise, under the terms of the Agreement whichfailure is not remedied within the applicable period (in the case of a failurepursuant to Section 4) or, if no period is specified, five (5) BusinessDays after notice thereof to Seller; provided, however, thatBuyer shall not be required to provide notice in the event of a failure bySeller to repurchase on the Repurchase Date;

 

(vi)          breachby Seller in the due performance or observance of any term, covenant oragreement contained in Section 11(k) of this Annex I;

 

(vii)         Changeof Control shall have occurred with respect to the Seller or Guarantor;

 

(viii)        anyrepresentation made by Seller or Buyer shall have been incorrect or untrue inany material respect when made or repeated or deemed to have been made orrepeated; providedthat the representations and warranties setforth in Section 10(a) (vi) or (viii) (in the case of (vi), with respectto the affected or Purchased Loans only) made by Seller shall not be consideredan Event of Default if incorrect or untrue in any material respect, if Buyerterminates the related Transaction and Seller repurchases the related PurchasedLoans on an Early Repurchase Date no later than ten (10) Business Days afterreceiving written notice of such incorrect or untrue representation;  provided, however, that ifSeller shall have made any such representation with

 

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knowledge that it was materially incorrect or untrueat the time made, such misrepresentation shall constitute an Event of Default;

 

(ix)                                afinal judgment by any competent court in the United States of America for thepayment of money (in the case of Seller) or for the payment of money in anamount greater than $5,000,000 (in the case of Guarantor) shall have beenrendered against Seller or Guarantor, as the case may be, and remainedundischarged or unpaid for a period of forty-five (45) days, during whichperiod execution of such judgment is not effectively stayed;

 

(x)                                   Guarantorshall have defaulted or failed to perform under any note, indenture, loanagreement, guaranty, swap agreement or any other contract, agreement ortransaction to which it is a party, and which default (A) involves the failureto pay a matured obligation in excess of $10,000,000, or (B) involving anobligation of at least $10,000,000 is a monetary default or a materialnon-monetary default and results in acceleration or permits the acceleration ofthe obligation by any other party to or beneficiary of such note, indenture,loan agreement, guaranty, swap agreement or other contract agreement ortransaction; provided, however, that any such default, failure toperform or breach shall not constitute an Event of Default if Guarantor curessuch default, failure to perform or breach, as the case may be, within thegrace period, if any, provided under the applicable agreement;

 

(xi)                                Asof the end of any fiscal quarter (A) Guarantor’s (1) Debt to Equity Ratio isgreater than 5:1, (2) Tangible Net Worth is less than the sum of (x)$129,750,000 and (y) 75% of the proceeds of any equity issuances occurringafter Guarantor’s initial public offering, (3) Fixed Charge Coverage Ratio isless than 1.50:1, or (4) Minimum Liquidity is less than $10,000,000, for thefirst two years after the date of this Agreement, and less than $15,000,000thereafter; or (B) Guarantor fails to maintain cumulative positive EBITDA forthe three fiscal quarters most recently ended.

 

(xii)                             ifSeller or Buyer shall breach or fail to perform any of the terms, covenants,obligations or conditions of the Agreement, other than as specificallyotherwise referred to in this definition of “Event of Default”, and such breachor failure to perform is not remedied within ten (10) Business Days, or if suchbreach is not curable by the payment of a sum of money, thirty (30) days afternotice thereof to Seller or Buyer from the applicable party or its successorsor assigns;

 

(xiii)                          an Actof Insolvency shall have occurred with respect to the Seller or Guarantor;

 

(xiv)                         an “eventof default” beyond any applicable notice and cure period shall have occurredunder (A) the Securities Repurchase Agreement, (B) any repurchase facility orloan facility entered into by Seller and Buyer or any affiliate thereof or (C)any facility with Buyer or any affiliate thereof in which Seller is aguarantor; or

 

(xv)                            (A) any of the representations, warranties andcovenants of Guarantor in the Guaranty or any Financial Covenant ComplianceCertificate shall have been incorrect or untrue in any material respect whenmade or repeated or deemed to have been made or repeated and suchmisrepresentation or breach of warranty or covenant has not been cured withinten (10) Business Days of after receiving written notice of such incorrect oruntrue representation or such breach of covenant or (B) Guarantor shallhave defaulted or failed to perform under the Guaranty.

 

(b)                                 Ifan Event of Default shall occur and be continuing with respect to Seller, thefollowing rights and remedies shall be available to Buyer:

 

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

 

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

 

(A)                              Seller’sobligations hereunder to repurchase all Purchased Loans shall becomeimmediately due and payable on and as of the Accelerated Repurchase Date andall Income deposited in the Blocked Account shall be retained by Buyer andapplied to the aggregate unpaid Repurchase Price and any other amounts owing bySeller hereunder; and

 

(B)                                tothe extent permitted by applicable law, the Repurchase Price with respect toeach Transaction (determined as of the Accelerated Repurchase Date) shall beincreased by the aggregate amount obtained by daily application of, on a 360day per year basis for the actual number of days during the period from andincluding the Accelerated Repurchase Date to but excluding the date of paymentof the Repurchase Price (as so increased), (x) the Pricing Rate applicable uponan Event of Default for such Transaction multiplied by (y) the Repurchase Pricefor such Transaction (decreased by (I) any amounts actually remitted to Buyerby Seller from time to time pursuant to Section 5 and applied to suchRepurchase Price to the extent such amounts are not already included in thecomputation of the Repurchase Price and (II) any amounts applied to theRepurchase Price pursuant Section 14(b)(iii) of this Annex I); and

 

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

 

(iii)                               Buyermay, after ten (10) days notice to Seller of Buyer’s intent to take such action(provided that no such notice shall be required in the circumstances set forthin Section 9-611(d) of the UCC), (A) immediately sell, at a public orprivate sale in a commercially reasonable manner and at such price or prices asBuyer may reasonably deem satisfactory any or all of the Purchased Loans or (B)in its sole discretion elect, in lieu of selling all or a portion of suchPurchased Loans, to give Seller credit for such Purchased Loans in an amountequal to the Market Value of such Purchased Loans against the aggregate unpaidRepurchase Price for such Purchased Loans and any other amounts owing by Sellerunder the Transaction Documents.  Theproceeds of any disposition of Purchased Loans effected pursuant to this Section 14(b)(iii)shall be applied, (v) first, to the costs and expenses incurred by Buyer inconnection with Seller’s default; (w) second, to costs of cover and/or HedgingTransactions, if any; (x) third, to the Repurchase Price; (y) fourth, to anyother outstanding obligation of Seller to Buyer or its Affiliates pursuant tothe Transaction Documents, and (z) the balance, if any, to Seller.

 

(iv)                              Theparties recognize that it may not be possible to purchase or sell all of thePurchased Loans on a particular Business Day, or in a transaction with the samepurchaser, or in the same manner because the market for such Purchased Loansmay not be liquid.  In view of the natureof the Purchased Loans, the parties agree that, to the extent permitted byapplicable law,

 

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liquidation of a Transaction or the Purchased Loansshall not require a public purchase or sale and that a good faith privatepurchase or sale shall be deemed to have been made in a commercially reasonablemanner.  Accordingly, Buyer may elect, inits sole discretion, the time and manner of liquidating any Purchased Loans,and nothing contained herein shall (A) obligate Buyer to liquidate anyPurchased Loans on the occurrence and during the continuance of an Event ofDefault or to liquidate all of the Purchased Loans in the same manner or on thesame Business Day or (B) constitute a waiver of any right or remedy of Buyer.

 

(v)                                 Sellershall be liable to Buyer for the amount of all reasonable expenses, includingreasonable legal fees and expenses, actually incurred by Buyer in connectionwith or as a consequence of an Event of Default with respect to Seller, (B) allcosts incurred in connection with covering transactions or Hedging Transactions(including short sales) or entering into replacement transactions (C) alldamages, losses, judgment costs and expenses of any kind which may be imposedon, incurred by or asserted against Buyer relating to or arising out of suchHedging Transactions or covering transactions and (D) any other loss, damage,cost or expense directly arising or resulting from the occurrence of an Eventof Default with respect to Seller.

 

(vi)                              Buyermay exercise any or all of the remedies available to Buyer immediately upon theoccurrence of an Event of Default and at any time during the continuancethereof.  All rights and remedies arisingunder the Transaction Documents, as amended from time to time, are cumulativeand not exclusive of any other rights or remedies which Buyer may have.

 

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

 

(viii)                        Withoutlimiting any other rights or remedies of Buyer, Buyer shall have the right toset off and apply any and all deposits (general or special, time or demand,provisional or final) at any time held by or for account of Buyer or Buyer’sAffiliates on behalf of Seller to any obligations of Seller hereunder to Buyer,irrespective of whether Buyer shall have made any demand under the Agreement orthe other Transaction Documents.

 

(ix)                                Buyer shall have, in addition to its rights andremedies under the Transaction Documents, all of the rights and remediesprovided by applicable federal, state, foreign, and local laws (including,without limitation, if the Transactions are recharacterized as securedfinancings, the rights and remedies of a secured party under the UCC of theState of New York, to the extent that the UCC is applicable, and the right tooffset any mutual debt and claim), in equity, and under any other agreementbetween Buyer and Seller, exercisable upon ten (10) days notice from Buyer toSeller.  Without limiting the generalityof the foregoing, Buyer shall be entitled to set off the proceeds of theliquidation of the Purchased Loans against all of Seller’s obligations toBuyer, whether or not such obligations are then due, without prejudice to Buyer’sright to recover any deficiency.

 

(c)                                  Ifan Event of Default occurs and is continuing with respect to Buyer, thefollowing rights and remedies shall be available to Seller:

 

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(i)                                     Upontender by Seller of payment of the aggregate Repurchase Price for all PurchasedLoans, together with all other amounts due hereunder to Buyer, Buyer’s right,title and interest in such Purchased Loans shall be deemed transferred toSeller, and Buyer shall simultaneously deliver such Purchased Loans to Seller.

 

(ii)                                  Sellershall have all the rights and remedies provided herein or provided byapplicable federal, state, foreign, local and any other applicable laws, inequity, and under any other agreement between Buyer and Seller (including theright to offset any debt or claim).

 

(iii)                               IfSeller exercises the option referred to in Section 14(c)(i) hereof andBuyer fails to deliver any Purchased Loans to Seller, after three (3) BusinessDays’ notice to Buyer, Seller may purchase loans that are in as similar anamount and interest rate as is reasonably practicable and in the same Loan Typeas such Purchased Loans.

 

**15.**                               SINGLE AGREEMENT

** **

Clause (ii) of Paragraph 12 of the Agreement (“SingleAgreement”) is hereby deleted.

 

**16.**                               NOTICES AND OTHERCOMMUNICATIONS

** **

Paragraph 13 of the Agreement (“Notices and OtherCommunications”) is hereby deleted and replaced in its entirety by thefollowing provisions of this Section 16:

 

All notices, consents, approvals and requests requiredor permitted hereunder shall be given in writing and shall be effective for allpurposes if hand delivered or sent by (a) hand delivery, with proof ofattempted delivery, (b) certified or registered United States mail, postageprepaid, (c) expedited prepaid delivery service, either commercial or UnitedStates Postal Service, with proof of attempted delivery, or (d) by telecopier(with answerback acknowledged); provided that such telecopied noticemust also be delivered by one of the means set forth in (a), (b) or (c) above,to the addresses specified in Annex II hereto or at such other address andperson as shall be designated from time to time by any party hereto, as thecase may be, in a written notice to the other parties hereto in the mannerprovided for in this Section 16.  Anotice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery, (b) in thecase of registered or certified mail, when delivered or the first attempteddelivery on a Business Day, (c) in the case of expedited prepaid deliveryupon the first attempted delivery on a Business Day; or (d) in the case telecopier,upon receipt of answerback confirmation, provided that such telecopiednotice was also delivered as required in this Section.  A party receiving a notice which does notcomply with the technical requirements for notice under this Section mayelect to waive any deficiencies and treat the notice as having been properlygiven.

 

**17.**                               NON-ASSIGNABILITY

** **

The provisions of Paragraph 15 of the Agreement (“Nonassignability;Termination”) are hereby deleted and replaced in their respective entireties bythe following provisions of this Section 17:

 

(a)                                  Therights and obligations of Seller under the Transaction Documents, the HedgingTransactions and under any Transaction shall not be assigned by Seller withoutthe prior written consent of Buyer. Buyer may assign or participate its rights and obligations under theTransaction Documents and under any Transaction and its rights and interests inany Hedging Transaction, in each case, without the prior written consent ofSeller.  Seller agrees to use its goodfaith efforts to include in the participation agreement or intercreditoragreement, as applicable, relating to each Purchased Loan a provision

 

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expresslyrecognizing Goldman Sachs Mortgage Company, together with its successors andassigns, as a permitted transferee of each such Purchased Loan.

 

Notwithstanding anything to the contrary containedherein, with respect to Seller, (A) Buyer shall remain responsible forreviewing and determining the eligibility of any New Loan for purposes of anyTransaction and (B) Seller shall continue to deal solely and directly withBuyer in connection with any Transaction. As long as an Event of Default on the part of Seller shall have occurredand be continuing, Buyer may assign or participate its rights and obligationsunder the Transaction Documents and/or any Transaction to any Person.

 

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

 

(c)                                  Withrespect to any issuance by Buyer of a participation in any Transaction,(i) Buyer shall act as agent for all participants in any dealings withSeller in connection with such Transactions and will maintain, on behalf ofSeller, a record of ownership that identifies all participants, and (ii) Sellershall not be obligated to deal directly with any party other than Buyer inconnection with such Transactions, or to pay or reimburse Buyer for any coststhat would not have been incurred by Buyer had no participation interests insuch Transactions been issued.

 

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

 

**18.**                               GOVERNING LAW; CONSENTTO JURISDICTION; WAIVER OF JURY TRIAL

** **

The language in Paragraph 16 of the Agreement (“GoverningLaw”) which reads “without giving effect to the conflict of law principalsthereof” is hereby deleted. Paragraph 18 of the Agreement (“Use of EmployeePlan Assets”) is hereby deleted in its entirety.  Paragraph 17 (“No Waivers, Etc.”) is herebydeleted and replaced in its entirety by the following provisions of this Section 18:

 

(a)                                  Eachparty irrevocably and unconditionally submits to the non-exclusive jurisdictionof any United States Federal or New York State court sitting in Manhattan, andany appellate court from any such court, solely for the purpose of any suit,action or proceeding brought to enforce its obligations under the Agreement orrelating in any way to the Agreement or any Transaction under the Agreement.

 

(b)                                 Tothe extent that either party has or hereafter may acquire any immunity(sovereign or otherwise) from any legal action, suit or proceeding, fromjurisdiction of any court or from set off or any legal process (whether serviceor notice, attachment prior to judgment, attachment in aid of execution ofjudgment, execution of judgment or otherwise) with respect to itself or any ofits property, such party hereby irrevocably waives and agrees not to plead orclaim such immunity in respect of any action brought to enforce its obligationsunder the Agreement or relating in any way to the Agreement or any Transactionunder the Agreement.

 

(c)                                  Eachparty hereby irrevocably waives, to the fullest extent it may effectively doso, the defense of an inconvenient forum to the maintenance of such action orproceeding in any such court and any right of jurisdiction on account of itsplace of residence or domicile and irrevocably consents to the service of anysummons and complaint and any other process by the mailing of copies of suchprocess to

 

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them at theirrespective address specified herein. Each party hereby agrees that a final judgment in any such action orproceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law.  Nothing in this Section 18 shall affectthe right of Buyer to serve legal process in any other manner permitted by lawor affect the right of Buyer to bring any action or proceeding against Selleror its property in the courts of other jurisdictions.

 

(d)                                 EACHPARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE AGREEMENT, ANYOTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER ORTHEREUNDER.

 

**19.**                               NO RELIANCE; DISCLAIMERS

** **

(a)                                  Eachof Buyer and Seller hereby acknowledges, represents and warrants to the otherthat, in connection with the negotiation of, the entering into, and theperformance under, the Transaction Documents and each Transaction thereunder:

 

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

 

(ii)                                  Ithas 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 (includingdecisions regarding the suitability of any Transaction) based upon its ownjudgment and upon any advice from such advisors as it has deemed necessary andnot upon any view expressed by the other party;

 

(iii)                               Itis a sophisticated and informed Person that has a full understanding of all theterms, conditions and risks (economic and otherwise) of the TransactionDocuments and each Transaction thereunder and is capable of assuming and willingto assume (financially and otherwise) those risks;

 

(iv)                              Itis entering into the Transaction Documents and each Transaction thereunder forthe purposes of managing its borrowings or investments or hedging itsunderlying assets or liabilities and not for purposes of speculation;

 

(v)                                 Itis not acting as a fiduciary or financial, investment or commodity tradingadvisor for the other party and has not given the other party (directly orindirectly through any other Person) any assurance, guaranty or representationwhatsoever as to the merits (either legal, regulatory, tax, business,investment, financial accounting or otherwise) of the Transaction Documents orany Transaction thereunder;

 

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

 

(i)                                     Buyerhas assumed and relied upon, with Seller’s consent and without independentverification, the accuracy and completeness of the information provided bySeller and reviewed by Buyer.  Buyer hasnot made any independent inquiry of any aspect of the New Loans or PurchasedLoans or the underlying collateral. Buyer’s view is based on economic,

 

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market and other conditions as in effect on, and theinformation made available to Buyer as of, the date of any such determinationor communication of information, and such view may change at any time withoutprior notice to Seller.

 

(ii)                                  MarketValue determinations and other information provided to Seller constitute astatement of Buyer’s view of the value of one or more loans or other assets ata particular point in time and neither (x) constitute a bid for a particulartrade, (y) indicate a willingness on the part of Buyer or any Affiliate thereofto make such a bid, nor (z) reflect a valuation for substantially similarassets at the same or another point in time, or for the same assets at anotherpoint in time.

 

(iii)                               MarketValue determinations and other information provided to Seller may varysignificantly from valuation determinations and other information which may beobtained from other sources.

 

(iv)                              MarketValue determinations and other information provided to Seller are communicatedto Seller solely for its use and may not be relied upon by any other person andmay not be disclosed or referred to publicly or to any third party without theprior written consent of Buyer, which consent Buyer may withhold or delay inits sole and absolute discretion.

 

(v)                                 Buyermakes no representations or warranties with respect to any Market Valuedeterminations or other information provided to Seller. Buyer shall not beliable for any incidental or consequential damages arising out of anyinaccuracy in such valuation determinations and other information provided toSeller, including as a result of any act of gross negligence or breach of anywarranty.

 

(vi)                              MarketValue indications and other information provided to Seller in connection with Section 3(b)are only indicative of the initial Market Value of the New Loan submitted toBuyer for consideration thereunder, and may change without notice to Sellerprior to, or subsequent to, the transfer by Seller of the New Loan pursuant to Section 3(e).  No indication is provided as to Buyer’sexpectation of the future value of such Purchased Loan or the underlyingcollateral.

 

(vii)                           InitialMarket Value indications and other information provided to Seller in connectionwith Section 3(b) are to be used by Seller for the sole purpose ofdetermining whether to proceed in accordance with Section 3 and for noother purpose.

 

**20.**                               INDEMNITY AND EXPENSES

** **

(a)                                  Sellerhereby agrees to hold Buyer and its Affiliates and each of their respectiveofficers, directors, employees and agents (“Indemnified Parties”)harmless from and indemnify the Indemnified Parties against any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, taxes (including stamp, excise, sales or other taxes which may bepayable or determined to be payable with respect to any of the Purchased Loansor in connection with any of the transactions contemplated by the Agreement (orthe recharacterization of any Transaction) and the documents delivered inconnection herewith and therewith, other than net income taxes of Buyer), fees,costs, expenses (including reasonable attorneys fees and disbursements and anyand all servicing and enforcement costs with respect to the Purchased Loans) ordisbursements (all of the foregoing, collectively “Indemnified Amounts”)which may at any time (including, without limitation, such time as theAgreement shall no longer be in effect and the Transactions shall have beenrepaid in full) be imposed on or asserted against any Indemnified Party in anyway whatsoever arising out of or in connection with, or relating to, theAgreement or any Transactions thereunder or any action taken or omitted to betaken by any Indemnified Party under or in

 

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connection withany of the foregoing; provided, that Seller shall not be liable forIndemnified Amounts resulting from the gross negligence or willful misconductof any Indemnified Party.  Withoutlimiting the generality of the foregoing, Seller agrees to hold Buyer harmlessfrom and indemnify Buyer against all Indemnified Amounts with respect to allPurchased Loans relating to or arising out of any violation or allegedviolation of any environmental law, rule or regulation or any consumer creditlaws, including without limitation ERISA, that, in each case, results fromanything other than Buyer’s gross negligence or willful misconduct.  In any suit, proceeding or action brought byBuyer in connection with any Purchased Loan for any sum owing thereunder, or toenforce any provisions of any Purchased Loan Documents, Seller will save,indemnify and hold Buyer harmless from and against all expense, loss or damagesuffered by reason of any defense, set-off, counterclaim, recoupment orreduction or liability whatsoever of the account debtor or obligor thereunder,arising out of a breach by Seller of any obligation thereunder or arising outof any other agreement, indebtedness or liability at any time owing to or infavor of such account debtor or obligor or its successors from Seller.  Seller also agrees to reimburse anIndemnified Party as and when billed by such Indemnified Party for all suchIndemnified Party’s costs and expenses incurred in connection with theenforcement or the preservation of such Indemnified Party’s rights under theAgreement and any other Transaction Document or any transaction contemplatedhereby or thereby, including without limitation the reasonable fees anddisbursements of its counsel.  Seller herebyacknowledges its obligations hereunder are recourse obligations of Seller.

 

(b)                                 Selleragrees to pay as and when billed by Buyer all of the out-of-pocket costs andexpenses incurred by Buyer in connection with the development, preparation andexecution of, and any amendment, supplement or modification to, the Agreement,this Annex I and the other Transaction Documents or any other documentsprepared in connection herewith or therewith. Seller agrees to pay as and when billed by Buyer all of the out-of-pocketcosts and expenses incurred in connection with the consummation andadministration of the transactions contemplated hereby and thereby includingwithout limitation (i) all the reasonable fees, disbursements and expensesof counsel to Buyer, not to exceed $15,000 for each Transaction and(ii) all the Due Diligence Fees, testing and review costs and expensesincurred by Buyer in connection with the evaluation of any New Loan and withrespect to any Transaction.

 

**21.**                               DUEDILIGENCE

** **

Seller acknowledges that Buyer has the right toperform continuing due diligence reviews with respect to the Purchased Loans,for purposes of verifying compliance with the representations, warranties andspecifications made hereunder, or determining or re-determining the Asset Basefor purposes of Section 4 of this Annex I, or otherwise, and Seller agreesthat Buyer, at its option, has the right atany time to conduct a partial or complete due diligence review on any or all ofthe Purchased Loans, including, without limitation, ordering new credit reportsand Appraisals on the applicable collateral and otherwise regenerating theinformation used to originate such Purchased Loans.  Upon reasonable (but no less than one (1)Business Day) prior notice to Seller, Buyer or its authorized representativeswill be permitted during normal business hours to examine, inspect, and makecopies and extracts of, the Purchased Loan Files and any and all documents,records, agreements, instruments or information relating to any Purchased Loanin the possession or under the control of Seller, any servicer or sub-servicerand/or Custodian.  Seller also shall makeavailable to Buyer a knowledgeable financial or accounting officer for thepurpose of answering questions respecting the Purchased Loan Files and thePurchased Loans. Seller agrees to cooperate with Buyer and any third partyunderwriter designated by Buyer in connection with such underwriting,including, but not limited to, providing Buyer and any third party underwriterwith access to any and all documents, records, agreements, instruments orinformation relating to such Purchased Loans in the possession, or under thecontrol, of such Seller.

 

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**22.**                               SERVICING

 

(a)                                  Notwithstandingthe purchase and sale of the Purchased Loans by Seller to Buyer hereunder, GKKManager LLC or such other Servicer shall continue to service the PurchasedLoans at Seller’s sole cost and for the benefit of Buyer and, if Buyer shallexercise its rights to pledge or hypothecate the Purchased Loans prior to theRepurchase Date pursuant to Section 8 or 17 of this Annex I, Buyer’sassigns; provided, however, that the obligations of Seller toservice any of the Purchased Loans shall cease automatically upon the earliestof (i) an Event of Default, (ii) the date on which the aggregate RepurchasePrice for the Portfolio Loans together with all accrued and unpaid PriceDifferential, unpaid Costs and other amounts payable by Seller to Buyerhereunder have been paid in full or (iii) the transfer of servicing approved bySeller and Buyer, which Buyer’s consent shall not be unreasonablywithheld.  Seller shall service and shallcause the Servicer to service the Purchased Loans in accordance with AcceptedServicing Practices.

 

(b)                                 Selleragrees that Buyer is the owner of all servicing records, including but notlimited to any and all servicing agreements (the “Servicing Agreements”),files, documents, records, data bases, computer tapes, copies of computertapes, proof of insurance coverage, insurance policies, appraisals, otherclosing documentation, payment history records, and any other records relatingto or evidencing the servicing of Purchased Loans (the “Servicing Records”)so long as the Purchased Loans are subject to the Agreement.  Seller covenants to safeguard such ServicingRecords and to deliver them promptly to Buyer or its designee (including theCustodian) at Buyer’s request.

 

(c)                                  Uponthe occurrence and continuance of an Event of Default, Buyer may, in its solediscretion, (i) sell its right to the Purchased Loans on a servicing releasedbasis or (ii) terminate Servicer or any sub-servicer of the Purchased Loanswith or without cause, in each case without payment of any termination fee orsuch other costs or expenses to Buyer, it being agreed that Seller will pay anyand all fees, costs and expenses required to terminate the Servicing Agreementand to effectuate a transfer of servicing to a designee of the Buyer; provided,however, that Buyer shall cause any successor servicer to deliver toSeller reports generated for Buyer relating to the Purchased Loans.

 

(d)                                 Sellershall not, and shall not permit Servicer to, employ sub-servicers to servicethe Purchased Loans without the prior written approval of Buyer which shall notbe unreasonably withheld.  If thePurchased Loans are serviced by a sub-servicer, Seller shall irrevocably assignall rights, title and interest in the Servicing Agreements with suchsub-servicer to Buyer.

 

(e)                                  Sellershall cause Servicer and any sub-servicers engaged by Seller to execute aletter agreement with Buyer acknowledging Buyer’s security interest in thePurchased Loans and the Servicing Agreements and agreeing that each suchsub-servicer shall deposit all Income with respect to the Purchased Loans inthe Blocked Account, all in such manner as shall be reasonably acceptable toBuyer.

 

(f)                                    Inthe event Seller or its Affiliate is servicing any Purchased Loan, Seller shallpermit Buyer to inspect Seller’s or its Affiliate’s servicing facilities, as thecase may be, for the purpose of satisfying Buyer that Seller or its Affiliate,as the case may be, has the ability to service such Purchased Loans as providedin the Agreement.

 

(g)                                 Sellershall cause the Servicer to provide a copy of each report and notice sent toSeller to be sent to Buyer concurrently therewith.

 

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**23.**                               TREATMENT FOR TAXPURPOSES

** **

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

 

**24.**                               INTENT

** **

The provisions of Paragraph 19 of the Agreement (“Intent”)are hereby deleted and replaced in their respective entireties by the followingprovisions of this Section 24:

 

The parties recognize that each Transaction is a “repurchaseagreement” as that term is defined in Section 101 of Title 11 of theUnited States Code, as amended (except in so far as the type of asset subjectto the Transaction or the term of that Transaction would render such definitioninapplicable).  The parties recognizethat each Transaction is a “securities contract” as that term is defined in Section 741of Title 11 of the United States Code, as amended.

 

**25.**                               MISCELLANEOUS

** **

The provisions of Paragraph 20 of the Agreement (“DisclosureRelating to Certain Federal Protections”) are hereby deleted in their entiretyand replaced by the following provisions of this Section 26:

 

(a)                                  Timeis of the essence under the Transaction Documents and all Transactionsthereunder and all references to a time shall mean New York time in effect onthe date of the action unless otherwise expressly stated in the TransactionDocuments.

 

(b)                                 Allrights, remedies and powers of Buyer hereunder and in connection herewith areirrevocable and cumulative, and not alternative or exclusive, and shall be inaddition to all other rights, remedies and powers of Buyer whether under law, equityor agreement.  In addition to the rightsand remedies granted to it in the Agreement to the extent applicable, Buyershall have all rights and remedies of a secured party under the UCC and anyother applicable law.

 

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

 

(d)                                 Theheadings in the Transaction Documents are for convenience of reference only andshall not affect the interpretation or construction of the TransactionDocuments.

 

(e)                                  Eachprovision of the Agreement shall be interpreted in such manner as to beeffective and valid under applicable law, but if any provision of the Agreementshall be prohibited by or be invalid under such law, such provision shall beineffective to the extent of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions of theAgreement.

 

(f)                                    ThisAnnex I, together with the Agreement contain a final and complete integrationof all prior expressions by the parties with respect to the subject matterhereof and thereof and shall constitute

 

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the entireagreement among the parties with respect to such subject matter, supersedingall prior oral or written understandings.

 

(g)                                 Theparties understand that the Agreement is a legally binding agreement that mayaffect such party’s rights.  Each partyrepresents to the other that it has received legal advice from counsel of itschoice regarding the meaning and legal significance of the Agreement and thatit is satisfied with its legal counsel and the advice received from it.

 

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

 

(i)                                     Buyeragrees not to seek before any court or governmental agency to have any directoror officer of the Seller held personally liable for any action or inactions ofthe Seller or any obligations of the Seller under the Agreement or the relatedTransaction Documents, except if such actions or inactions are the result of thegross negligence, fraud or willful misconduct of such director or officer.

 

[SIGNATURES COMMENCE ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties have executed thisAnnex I as of the        day of December 2004.

 

 
|   | BUYER:                                                                |
|--------|-----------------------------------------------------------------------|
|   |                                                                  |
|   | **GOLDMAN  SACHS MORTGAGE COMPANY**,   a New York limited partnership |
|   | ** **                                                            |
|   | By:                                                                   | **Goldman  Sachs Real Estate Funding Corp.,**its  general partner |
|   |                                                                  | ** ** |
|   |                                                                  | ** ** |
|   |                                                                  | By: | ** ** | ** ** |
|   |                                                                  |   | Name: |
|   |                                                                  |   | Title: |
|   |                                                                  |
|   |                                                                  |
|   | SELLER:                                                               |
|   |                                                                  |
|   | **GRAMERCY  WAREHOUSE FUNDING II LLC,**                               |
|   | a Delaware  limited liability company                                 |
|   |                                                                  |
|   | By:                                                                   | GKK CAPITAL LP, |
|   |                                                                  | a Delaware  limited partnership, |
|   |                                                                  | its sole member  and manager |
|   |                                                                  |   |
|   | By:                                                                   | GRAMERCY CAPITAL  CORP., |
|   |                                                                  | a Maryland  corporation, its general partner |
|   |                                                                  |   |
|   |                                                                  |   |
|   |                                                                  | By: |   |   |
|   |                                                                  |   |  Name: Hugh Hall |
|   |                                                                  |   |  Its: Chief Operating Officer |
|        |                                                                       |  |  |  |  |  |  |

 

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