Exhibit 10.1


 


AMENDED
AND RESTATED MASTER REPURCHASE AGREEMENT


 


Dated as of December 7,
2005


 


BETWEEN:


 


CITIGROUP GLOBAL MARKETS REALTY CORP., as buyer (“Buyer”, which term
shall include any “Principal” as defined and provided for in Annex I) or as
agent pursuant hereto (“Agent”),


 


and


 


SPIRIT FINANCE CORPORATION, as seller (“Seller”).


 


1.                                      APPLICABILITY


 


Buyer shall, from time to time, agree to enter into transactions in
which Seller transfers to Buyer Eligible Assets against the transfer of funds
by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Purchased Assets at a date certain, against the transfer of funds by
Seller.  Each such transaction shall be
referred to herein as a “Transaction” and, unless otherwise agreed in writing,
shall be governed by this Agreement.


 


This Agreement amends and restates that certain Master Repurchase
Agreement, dated as of September 13, 2005, as amended by an amendment
dated as of September 22, 2005, between Buyer and Seller.


 


2.                                      DEFINITIONS
AND INTERPRETATION


 


a)                                      Defined
Terms.


 


“Accepted Servicing Standards” shall have the meaning assigned
thereto in the Custody Agreement.


 


“Additional Purchased Assets” shall have the meaning assigned
thereto in Section 6 hereof.


 


“Affiliate” means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person.  For purposes
of this definition, “control” (together with the correlative meanings of “controlled
by” and “under common control with”) means possession, directly or indirectly,
of the power (a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the directors or managing general
partners (or their equivalent) of such Person, or (b) to direct or cause
the direction of the management or


 





















 


policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.


 


“Agent” means Citigroup Global Markets Realty Corp. or any
successor.


 


“Agreement” means this Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.


 


“ALTA” means the American Land Title Association.


 


“Appraised Value” shall mean the value set forth in an appraisal
(described on the Loan Schedule) made in connection with the origination or
acquisition of the related Loan as the value of the Mortgaged Property securing
such Loan.


 


“Appraisal” means, with respect to a Loan, an appraisal of the
related Mortgaged Property securing a Loan (i) from an MAI professional
real estate appraiser who (A) is a member in good standing of the
Appraisal Institute and (B) if the state in which the subject Mortgaged
Property is located certifies or licenses appraisers, is certified or licensed
in such state, (ii) conducted in accordance with the standards of the
Appraisal Institute or such other standards as mutually agreed to by the
parties hereto, and (iii) performed within six months of the date such
Appraisal is delivered to the Buyer, or such other form of appraisal approved
by the Buyer in its sole discretion.


 


“Asset Base”
shall mean, as of any date of determination, the aggregate Collateral Value of
all Purchased Assets.


 


“Asset Base Certificate” shall mean the certificate prepared by
the Seller substantially in the form of Exhibit B, attached hereto.


 


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


 


“Borrower” means the obligor or obligors on a Note, including
any Person that has acquired the related collateral and assumed the obligations
of the original obligor or obligors under the Note and, in the case of Net
Lease Loans, the Tenant of the related Mortgaged Property.


 


“Business Day” shall mean any day other than (i) a Saturday
or Sunday, (ii) a day on which the New York Stock Exchange, the Federal
Reserve Bank of New York, the Custodian or banking and savings and loan
institutions in New York, New York or the city and state in which the Custodian’s
offices are located are closed, or (iii) a day on which trading in
securities on the New York Stock Exchange or any other major securities
exchange in the United States is not conducted.


 


“Buyer’s Margin Amount” means, with respect to any Transaction
as of any date of determination, the amount obtained by application of Buyer’s
Margin Percentage to the Repurchase Price (exclusive of accrued Pricing
Differential) for such Transaction as of such date.


 


2





















 


“Buyer’s Margin Percentage” shall have the meaning assigned thereto
in the Side Letter.


 


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


 


“Cash Equivalents” shall mean (a) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof, (b) certificates
of deposit with maturities of 90 days or less from the date of acquisition and
overnight bank deposits of any commercial bank having capital and surplus in
excess of $500,000,000, (c) repurchase obligations of any commercial bank
satisfying the requirements of clause (b) of this definition, having a
term of not more than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by “S&P”
or P-1 or the equivalent thereof by Moody’s Investors Service, Inc. “Moody’s”
and in either case maturing within 90 days after the day of acquisition, (e) securities
with maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory, the securities of which state, commonwealth, territory, political
subdivision or taxing authority (as the case may be) are rated at least A by
S&P or A by Moody’s, (f) securities with maturities of 90 days or less
from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (b) of this
definition or, (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition.


 


“Change in Control” shall mean the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended from time to time) of outstanding
shares of voting stock of such Person at any time, if after giving effect to
such acquisition such Person or Persons owns twenty percent (20%) or more of
such outstanding voting stock.


 


“Change in Law” means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by Buyer (or
any Affiliate of Buyer) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.


 


“Closing Date” means December 7, 2005.


 


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


 


3





















 


“Collateral” shall have the meaning assigned thereto in Section 9
hereof.


 


“Collateral Value” shall mean with respect to each Purchased
Asset, (i) on the applicable Purchase Date, the value of such Purchased
Asset as ascribed by the Buyer, and (ii) on any date of determination
following the applicable Purchase Date, the least of (a) the outstanding
principal balance of such Purchased Asset, (b) the related Market Value, (c) a
value equal to 60% of the Appraised Value of such Purchased Asset, as applicable
and (d) a value equal to 60% of the cost of acquiring such Purchased
Asset; provided that, the Collateral Value shall be deemed to be zero with
respect to each Purchased Asset that is not an Eligible Asset.


 


 “Collection Account”
shall have the meaning assigned thereto in the Custody Agreement.


 


“Computer Tape” means a computer tape or other electronic medium
generated by or on behalf of Seller and delivered to Buyer and Custodian which
provides information relating to the Purchased Assets, including the
information set forth in the Loan Schedule, in a format acceptable to Buyer.


 


“Confirmation” shall have the meaning assigned thereto in Section 4(b) hereof.


 


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


 


“Custody Agreement” means the Amended and Restated Custody and
Servicing Agreement, dated as of December 7, 2005, as amended, among
Seller, Buyer, Servicer and Custodian.


 


“Custodian” means LaSalle Bank, National Association or its
successors and permitted assigns.


 


“Custodian’s Loan File” shall have the meaning assigned thereto
in the Custody Agreement.


 


“Default” means an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.


 


“Default Rate” means, as of any date of determination, the
lesser of (i) the Pricing Rate plus 4% and (ii) the maximum rate
permitted by applicable law.


 


“Defaulted Loan” means a Loan with respect to which a default
(other than a payment default) occurs that materially and adversely affects the
interests of the Seller and that continues unremedied for the applicable grace
period under the terms of the Loan (or, if no grace period is specified, for 30
days).


 


4





















 


“Delinquent Loan” means a Loan for which any related payment has
not been received on or before the date 30 days after the date on which such
payment is due pursuant to the related Note without regard to any grace period,
provided that a Delinquent Loan shall remain a Delinquent Loan until the
related Borrower cures such delinquency and makes two successive monthly
payments on a timely basis, including any related grace period.


 


“Effective Date” shall mean September 13, 2005.


 


“Eligible Asset” shall have the meaning assigned thereto in the
Side Letter.


 


“ERISA Affiliate” shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section 414(b) or
(c) of the Code of which the Seller is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Seller is a member.


 


“Event of Default” shall have the meaning assigned thereto in Section 19
hereof.


 


“Foreign Buyer” means any Buyer that is organized under the laws
of a jurisdiction other than the one in which Seller is located.  For purposes of this definition, the United
States of America, each state thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.


 


“GAAP” shall mean generally accepted accounting principles in
the United States of America in effect from time to time.


 


“Governmental Authority” shall mean, with respect to any Person,
any nation or government, any state or other political subdivision thereof, or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of their properties.


 


“Guarantee” shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or
otherwise); provided that, the term “Guarantee” shall not include (i) endorsements
for collection or deposit in the ordinary course of business or (ii) obligations
to make servicing advances for delinquent taxes and insurance, or other
obligations in respect of a Mortgaged Property, to the extent required by the
Buyer. The amount of any Guarantee of a Person shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such
Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs
shall have correlative meanings.


 


5





















 


“Hedge Counterparty”: Citibank, N.A. or a Person (i) (A) with
long-term and commercial paper or short-term deposit ratings of “P-1” by Moody’s
and “A-1” by S&P and (B) which shall agree in writing that, in the
event that any of its long-term or commercial paper or short-term deposit
ratings cease to be at or above “A-2” by Moody’s and “A” by S&P, it shall
secure its obligations in accordance with the request of the Buyer or Buyer
shall have the option to treat such failure as an Early Termination Event (as
defined in the ISDA Master Agreement) by such Hedge Counterparty, (ii) that
has entered into a Hedge Instrument and (iii) that is acceptable to the
Buyer.


 


“Hedge Instrument” means any interest rate cap agreement,
interest rate floor agreement, interest rate swap agreement or other interest
rate hedging agreement entered into by the Seller with a Hedge
Counterparty.  Each Hedge Instrument
shall meet the requirements set forth in Section 38 hereof with respect
thereto and shall be a hedging instrument as described in Section 856(c)(6).


 


“Improvements” means all buildings, structures, improvements,
parking areas, landscaping, fixtures and articles of property now erected on,
attached to, or used or adapted for use in the operation of any Mortgaged
Property, including, without limitation, all heating, air conditioning and
incinerating apparatus and equipment, all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire
extinguishing apparatus, gas and electric fixtures, carpeting, floor covering,
underpadding, storm sashes, awnings, signs, furnishings of public spaces, halls
and lobbies, and shrubbery and plants.


 


“Income” means, with respect to any Purchased Asset at any time,
any principal thereof and all interest thereon and all dividends, sale proceeds
(including, without limitation, any proceeds from the securitization of such Purchased
Asset or other disposition thereof) and other collections and distributions
thereon (including, without limitation, any proceeds received in respect of
mortgage insurance), but not including any commitment nor origination fees.


 


“Indebtedness” shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person
to pay the deferred purchase or acquisition price of Property or services,
other than trade accounts payable (other than for borrowed money) arising, and
accrued expenses incurred, in the ordinary course of business so long as such
trade accounts payable are payable within ninety (90) days of the date the
respective goods are delivered or the respective services are rendered; (c) indebtedness
of others secured by a Lien on the Property of such Person, whether or not the
respective indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of
such Person; (f) obligations of such Person under repurchase agreements


 


6





















 


or like arrangements; (g) indebtedness of others Guaranteed by
such Person; (h) all obligations of such Person incurred in connection
with the acquisition or carrying of fixed assets by such Person; (i) indebtedness
of general partnerships of which such Person is a general partner; and (j) any
other indebtedness of such Person by a note, bond, debenture or similar
instrument.


 


 “Investment Company Act”
means the Investment Company Act of 1940, as amended, including all rules and
regulations promulgated thereunder.


 


“Lease” shall mean each lease entered into between a Borrower or
Net Lease Borrower and a Tenant, as amended or restated with the consent of the
Buyer.


 


“LIBO Rate” shall mean with respect to each day a Transaction is
outstanding (or if such day is not a Business Day, the next succeeding Business
Day), the rate (reset on a daily basis) per annum equal to the rate published
by Bloomberg or if such rate is not available, the rate appearing at page 3750
of the Telerate Screen as one-month LIBO Rate on such date, and if such rate shall
not be so quoted, the rate per annum at which the Buyer is offered Dollar
deposits at or about 11:00 A.M., New York City time, on such date by prime
banks in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its Transactions are then being
conducted for delivery on such day for a period of one month and in an amount
comparable to the amount of the Transactions to be outstanding on such day.


 


“Lien” means any lien, claim, charge, restriction, pledge,
security interest, mortgage, deed of trust or other encumbrance.


 


“LLC Agreement” means the limited liability company agreement
entered into by a Net Lease Borrower, as applicable, pursuant to which LLC
Interests are issued by such Net Lease Borrower.


 


“LLC Certificate” means physical certificates evidencing LLC
Interests.


 


“LLC Interests” means LLC membership interests issued pursuant
to an LLC Agreement, evidencing beneficial ownership interests in the related
Net Lease Borrower.


 


“Loan”  means a Mortgage
Loan or Net Lease Loan secured by Specialty Retailers, Drug Stores, Movie
Theatres, Education Facilities, Restaurants, Interstate Travel Plazas,
Automotive Dealerships and Retailers and any other Loan secured by any other
asset type approved by Buyer in its sole discretion, in each case originated by
Seller or any of its Affiliates in accordance with the Underwriting Guidelines.


 


“Loan Documents” shall have the meaning assigned thereto in the
Custody Agreement.


 


“Loan Schedule” means the list of Loans and/or LLC Interests
delivered by Seller to Buyer and Custodian together with each Transaction
Notice and attached by the Custodian to the Trust Receipt and setting forth as
to (i) each Loan the related Borrower name, the address of the related
Mortgaged Property and the outstanding principal balance of the Loan as of the
initial Purchase Date, together with any other information


 


7





















 


specified by Buyer from time to time and (ii) any LLC Interests,
any information specified by Buyer from time to time.


 


“Margin Call” shall have the meaning assigned thereto in Section 6
hereof.


 


“Margin Deficit” shall have the meaning assigned thereto in Section 6
hereof.


 


“Market Value” shall mean the value, determined by the Buyer in
its sole discretion, of the Purchased Assets if sold in their entirety to a
single third-party purchaser.  The Buyer’s
determination of Market Value shall be conclusive upon the parties, absent
manifest error on the part of the Buyer. 
The Buyer shall have the right to mark to market the Purchased Assets on
a daily basis, which Market Value with respect to one or more of the Purchased
Assets may be determined to be zero. The Seller acknowledges that the Buyer’s
determination of Market Value is for the limited purposes of determining (i) the
Purchase Price, (ii) whether there is a Margin Deficit pursuant to Section 6
hereof and (iii) Collateral Value for purchasing purposes hereunder
without the ability to perform customary purchaser’s due diligence and is not
necessarily equivalent to a determination of the fair market value of the
Purchased Assets achieved by obtaining competing bids in an orderly market in
which the originator/servicer is not in default under a repurchase facility and
the bidders have adequate opportunity to perform customary loan and servicing
due diligence.


 


“Master Lease” shall mean a master lease pursuant to which
multiple Mortgaged Properties are leased.


 


“Master Lease FCCR” shall mean the sum of all cash flows for all
Mortgaged Properties under a Master Lease (each, as used to calculate FCCR for
one such Mortgaged Property under such Master Lease).


 


“Master Loan Agreement” means the Master Loan Agreement, dated
as of September 13, 2005, between Spirit Master Funding II, LLC and Seller
and any other master loan agreement between Seller and a Net Lease Borrower
approved by Buyer from time to time, each as amended, supplemented, modified or
restated from time to time subject to the consent of the Buyer.


 


“Master Note” means the master promissory note issued pursuant
to the Master Loan Agreement together with all riders thereto and amendments
thereof or other evidence of indebtedness of a Net Lease Borrower.


 


“Material Adverse Change” means, with respect to a Person, any
material adverse change in the business, condition (financial or otherwise),
operations, performance or properties taken as a whole or prospects of such
Person.


 


“Material Adverse Effect” shall mean a material adverse effect
on (a) the property, business, operations, financial condition or
prospects of the Seller, (b) the ability of the Seller to perform in all
material respects its obligations under any of the Program Documents to which
it is a party, (c) the validity or enforceability in all material respects
of any of the Program Documents, (d) the rights and remedies of the Buyer
under any of


 


8





















 


the Program Documents, (e) the timely repurchase of the Purchased
Assets or other amounts payable in connection therewith or (f) the
Collateral.


 


“Maximum Aggregate LLC Interests Purchase Price” means
$100,000,000.


 


“Maximum Aggregate Purchase Price” means $200,000,000 plus the
Maximum Aggregate LLC Interest Purchase Price.


 


“Moody’s” means Moody’s Investors Service, Inc. and any
successor or successors thereto.


 


“Mortgage” shall mean with respect to a Loan, the mortgage, deed
of trust or other instrument, which creates a first lien on the fee simple or
leasehold estate in such real property which secures the Note.


 


“Mortgage Loan” shall mean each of the mortgage loans which the
Custodian has been instructed to hold for the Buyer pursuant to the Custody and
Servicing Agreement, and which such mortgage loans each include, without
limitation, (i) a Note, the related Mortgage and all other Loan Documents
and (ii) all right, title and interest of the Seller in and to the
Mortgaged Property covered by such Mortgage.


 


“Mortgaged Property” shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by the Master Note.


 


“Multiemployer Plan” shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been or are
required to be made by Seller or any ERISA Affiliate and that is subject to Section 412
of the Code or Section 302 or by Title IV of ERISA.


 


“Net Income” shall mean for any period, the net income of the
Seller for such period as determined in accordance with GAAP.


 


“Net Lease Borrower” means Spirit Master Funding II, LLC, Spirit
Master Funding III, LLC, and any other Affiliates of Seller approved by the
Buyer.


 


“Net Lease Loan” means indebtedness of a Net Lease Borrower
evidenced by a Note or Master Note issued pursuant to a Master Loan Agreement
secured by a Mortgage on a Mortgaged Property owned by such Net Lease Borrower.


 


“Net Worth” means, with respect to any Person, the excess of
total assets of such Person, over total liabilities of such Person, adding back
accumulated depreciation but excluding the impact of “other comprehensive
income”, all as determined in accordance with GAAP.


 


9





















 


“Net Worth Increase Amounts” shall mean, on any date of
determination, 75% of the net proceeds of any issuance of equity securities by
the Seller subsequent to the date of this Agreement.


 


“Net Worth Requirements” shall have the meaning assigned thereto
in Section 14(o) hereof.


 


“Note” means, with respect to any Loan, the Master Note or any
other Note, as applicable, together with all riders thereto and amendments
thereof or other evidence of indebtedness of the related Borrower.


 


“Notice Date” shall have the meaning assigned thereto in Section 4
hereof.


 


“Obligations” means (a) all of Seller’s obligations to pay
the Repurchase Price on the Repurchase Date, and other obligations and
liabilities of Seller, to Buyer, its Affiliates or Custodian arising under, or
in connection with, the Program Documents or otherwise, whether now existing or
hereafter arising; (b) any and all sums paid by Buyer or on behalf of
Buyer pursuant to the Program Documents in order to preserve any Purchased
Asset or its interest therein; (c) in the event of any proceeding for the
collection or enforcement of any of Seller’s indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Asset, or of any exercise by Buyer or such Affiliate
of its rights under the related agreements, including without limitation,
reasonable attorneys’ fees and disbursements and court costs; and (d) all
of Seller’s indemnity obligations to Buyer or Custodian or both pursuant to the
Program Documents.


 


“Origination Fee” shall have the meaning assigned thereto in the
Side Letter.


 


“PBGC” shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.


 


“Permitted Exceptions” shall mean the exceptions to lien
priority including but not limited to: (i) the lien of current real
property taxes and assessments not yet due and payable; (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to mortgage lending
institutions generally and specifically referred to in the lender’s title
insurance policy delivered to the originator of the Loan and (A) referred
to or otherwise considered in the appraisal (if any) made for the originator of
the Loan or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; and (iii) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or
the use, enjoyment, value or marketability of the related Mortgaged Property.


 


“Person” shall mean any legal person, including any individual,
corporation, partnership, association, joint venture, trust, limited liability
company, unincorporated organization, governmental entity or other entity of
similar nature.


 


10





















 


“Plan” shall mean an employee benefit or other plan established
or maintained by the Seller or any ERISA Affiliate and that is subject to Section 412
of the Code or Section 302 or by Title IV of ERISA, other than a
Multiemployer Plan.


 


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


 


“Pricing Rate” means the per annum percentage rate for
determination of the Price Differential calculated as described in Section 3(b) hereof
or as otherwise set forth in the related Confirmation.


 


“Prime Rate” means the prime rate of U.S. commercial banks as
published in The Wall Street Journal (or, if more than one such rate is
published, the average of such rates).


 


“Principal” shall have the meaning given to it in Annex I.


 


“Program Documents” means this Agreement, the Custody Agreement,
any Servicing Agreement, any Securities Account Control Agreement, any
assignment of Hedge Instrument, the Side Letter and any other agreement entered
into by Seller, on the one hand, and Buyer or one of its Affiliates (or
Custodian on its behalf) on the other, in connection herewith or therewith.


 


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


 


“Purchase Date” means the date on which Purchased Assets are to
be transferred by Seller to Buyer.


 


“Purchase Price” shall have the meaning assigned thereto in the
Side Letter.


 


“Purchased Assets” means, with respect to a Transaction, the LLC
Interests, the Loans comprising the Master Note as set forth in the Master Loan
Agreement, or other Loans, together with the related Records, Servicing Rights,
Seller’s rights under any related Hedge Instruments, and other Collateral, such
other property, rights, titles or interests as are specified on a related
Transaction Notice, and all instruments, chattel paper, securities, investment
property, accounts, and general intangibles comprising or relating to all of
the foregoing.  The term “Purchased
Assets” with respect to any Transaction at any time also shall include Additional
Purchased Assets delivered pursuant to Section 6 hereof.


 


“Qualified Originator” shall mean (a) the Seller and (b) any
other originator of Loans as may be approved by the Buyer in its sole
discretion in writing from time to time.


 


11





















 


“Rated Loan” means a Loan (i) with an Investment Grade
Credit Rating or shadow rating from any of the Rating Agencies or (ii) for
which the timely payment of principal and interest is insured by a monoline
insurer, the long-term debt obligations of which have an Investment Grade
Credit Rating but are rated no lower than “AAA” or “Aaa” by any of the Rating
Agencies.


 


“Rating Agencies” means S&P and Moody’s.


 


“Records” means all instruments, agreements and other books,
records, and reports and data generated by other media for the storage of
information maintained by Seller or any other person or entity with respect to
a Purchased Asset. Records shall include the Notes, LLC Certificates, any
Mortgages, the Custodian’s Loan Files and any other instruments necessary to
document or service a Loan or the LLC Interests.


 


“Renewal Fee” as mutually agreed to by the Buyer and the Seller.


 


“Repurchase Date” shall have the meaning assigned thereto in Section 3(b) and
shall also include the date determined by application of Section 20.


 


“Repurchase Price” means the price at which Purchased Assets are
to be transferred from Buyer to Seller upon termination of a Transaction, which
will be determined in each case (including Transactions terminable upon demand)
as the sum of the Purchase Price, the Price Differential, any of the Buyer’s
costs relating to the unwinding of a related Hedge Instrument, as applicable,
as of the date of such determination.


 


“Requirement of Law” means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.


 


“Responsible Officer” shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer’s
behalf as demonstrated by a certificate of corporate resolution.


 


“Restricted Payments” shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or
indirectly.


 


“S&P” means Standard and Poor’s Ratings Services, a division
of The McGraw-Hill Companies, Inc., and any successor or successors
thereto.


 


12





















 


“Securities Account Control Agreement” means an agreement, in
form and substance acceptable to Buyer, among Seller, a securities intermediary
and Buyer, pursuant to which Buyer obtains a perfected security interest in one
or more Hedge Instruments.


 


“Servicer” means (i) Midland Loan Services, Inc., a
Delaware corporation, or (ii) any other servicer approved by Buyer in its
sole discretion.


 


“Servicer Termination Event” shall have the meaning assigned
thereto in the Custody Agreement.


 


“Servicing Agreement” means any agreement (other than the
Custody Agreement) giving rise or relating to Servicing Rights with respect to
a Purchased Asset, including any assignment or other agreement relating to such
agreement.


 


“Servicing Rights” means contractual, possessory or other rights
of Seller, Servicer or any other Person arising under a Servicing Agreement,
the Custody Agreement or otherwise, to administer or service a Purchased Asset
or to possess related Records.


 


“Servicing Transmission” shall mean a computer-readable magnetic
or other electronic format acceptable to the parties containing the information
identified on Exhibit C.


 


“Side Letter” means the Amended and Restated Side Letter, dated
as of December 7, 2005, between Seller and Buyer, as the same may be
amended, restated or modified from time to time.


 


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


 


“Tangible Net Worth” shall mean, with respect to any Person, as
of any date of determination: (i) the consolidated Net Worth of such
Person and its Subsidiaries, less (ii) the consolidated net book value of
all assets of such Person and its Subsidiaries (to the extent reflected as an
asset in the balance sheet of such Person or any Subsidiary at such date) which
will be treated as intangibles under GAAP, including, without limitation, such
items as deferred taxes, net leasehold improvements, good will, trademarks,
trade names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense, but not including lease intangibles.


 


“Tenant” means the tenant of a Mortgaged Property pursuant to a
Lease or sub-lease of such Mortgaged Property, together with such tenant’s
Affiliates and any guarantor of such tenant’s obligations under such Lease.


 


13





















 


“Termination Date” has the meaning assigned thereto in Section 28.


 


“Tier One Asset” shall have the meaning assigned thereto in the
Side Letter.


 


“Total Assets” shall mean with respect to any Person, for any
period, the aggregate assets of such Person and its Subsidiaries during such
period, calculated in accordance with GAAP.


 


 “Total Indebtedness”
shall mean with respect to any Person, for any period, the aggregate
Indebtedness of such Person and its Subsidiaries during such period, less the
amount of any nonspecific consolidated balance sheet reserves maintained in accordance
with GAAP.


 


“Transaction” has the meaning assigned thereto in Section 1.


 


“Transaction Notice” means a written request of Seller to enter
into a Transaction, in the form attached to the Custody Agreement, which is
delivered to Buyer and Custodian.


 


“Triple Net Lease” means a Lease under which the tenant pays all
operating expenses of the property including, without limitation, insurance,
taxes, maintenance and capital expenditures relating to such property.


 


“Trust Receipt” means a Trust Receipt and Certification as
defined in the Custody Agreement.


 


“Trustee Report” means the Trustee Report as defined in the
Indenture dated as of July 26, 2005 between Spirit Master Funding, LLC, a
Delaware limited liability company and Citibank, N.A., a national banking
association, not in its individual capacity, but solely as Indenture Trustee.


 


“Underwriting Guidelines” means the Spirit Finance Corporation
Underwriting Manual, dated as of April 2005, which has been approved in
writing by Buyer, as the same may be amended from time to time.


 


“Underwriting Package” means, with respect to each Loan, the
Spirit Finance Credit Memorandum as defined in the Underwriting Guidelines.


 


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


 


“Unit-Level FCCR” shall mean the FCCR for any unit where unit
information was available as of the date of determination, the ratio of (1) the
sum of the unit’s, (i) pre-tax income, (ii) interest expense, (iii) all
non-cash amounts in respect of depreciation and


 


14





















 


amortization, (iv) all non-recurring expenses, (v) specifically
documented discretionary management fees, and (vi) all operating lease or
rent expense (including with respect to any equipment loans) less (vii) all
non-recurring income and normalized overhead based on parent company’s general
and administrative expenses as a percent of sales (if not available, industry
standards applied), for the related fiscal period, to (2) the sum of the
unit’s, (i) total operating lease or rent expense, (ii) interest
expense and (iii) scheduled principal payments on indebtedness payable in
respect of the unit or obligor, in each case for the period of time as to which
such figure is presented.


 


“Weighted Average Aggregate FCCR” shall mean the FCCR calculated
by weighting Unit-Level FCCR and Master Lease FCCR by Collateral Value of the
related Purchased Assets.


 


“Wet Funded Loan” means a Loan for which the related Custodian’s
Loan File has not been delivered to the Custodian as of the related Purchase
Date.  Upon delivery of the Custodian’s
Loan File to the Custodian, the Loan shall cease to be a Wet Funded Loan.


 


b)                                Capitalized
terms used but not defined in this Agreement shall have the meanings assigned
thereto in the Custody Agreement.


 


c)                                 Interpretation.


 


Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (c) apply unless the context
requires otherwise. The singular includes the plural and conversely. A gender includes
all genders. Where a word or phrase is defined, its other grammatical forms
have a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit is,
unless otherwise specified, a reference to a Section of, or annex or
exhibit to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes
or assigns. A reference to an agreement or document is to the agreement or
document as amended, modified, novated, supplemented or replaced, except to the
extent prohibited by any Program Document. A reference to legislation or to a
provision of legislation includes a modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued under it. A reference to writing includes a facsimile
transmission and any means of reproducing words in a tangible and permanently
visible form. A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing. An Event of Default
subsists until it has been waived in writing by Buyer. The words “hereof”, “herein”,
“hereunder” and similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term “including” is not limiting
and means “including without limitation.” In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from
and including”; the words “to” and “until” each mean “to but excluding”, and
the word “through” means “to and including.” This Agreement may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are independent of each
other and shall each be performed in accordance with their terms. Unless the
context otherwise clearly requires, all accounting terms not expressly defined
herein shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently applied.
References herein to “fiscal year”


 


15





















 


and “fiscal quarter” refer to such fiscal
periods of Seller. Except where otherwise provided in this Agreement any determination,
consent, approval, statement or certificate made or confirmed in writing with
notice to Seller by Buyer or an authorized officer of Buyer provided for in
this Agreement is conclusive and binds the parties in the absence of manifest
error, except where the consent of the Seller is required. A reference to an
agreement includes a security interest, guarantee, agreement or legally
enforceable arrangement whether or not in writing related to such agreement. A
reference to a document includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document, or any information recorded in
computer disk form. Where Seller is required to provide any document to Buyer
under the terms of this Agreement, the relevant document shall be provided in
writing or printed form unless Buyer requests otherwise. At the request of
Buyer, the document shall be provided in computer disk form or both printed and
computer disk form, unless such computer disk copy requires Seller to pay an
unreasonable expense.  This Agreement is
the result of negotiations among and has been reviewed by counsels to Buyer and
Seller, and is the product of all the parties. In the interpretation of this
Agreement, no rule of construction shall apply to disadvantage one party
on the ground that such party proposed or was involved in the preparation of
any particular provision of this Agreement or this Agreement itself. Except
where otherwise expressly stated Buyer may give or withhold, or give
conditionally, approvals and consents and may form opinions and make
determinations and exercise discretion at its absolute discretion.  Any requirement of good faith, discretion or
judgment by Buyer shall not be construed to require Buyer to request or await
receipt of information or documentation not immediately available from or with
respect to Seller, a servicer of the Purchased Assets, any other Person or the
Purchased Assets themselves.


 


3.                                      THE
TRANSACTIONS


 


a)                                 Seller
shall repurchase Purchased Assets from Buyer on each related Repurchase
Date.  Each obligation to repurchase
exists without regard to any prior or intervening liquidation or foreclosure
with respect to each Purchased Asset (but liquidation or foreclosure proceeds
received by Buyer shall be applied to reduce the Repurchase Price except as
otherwise provided herein).  Seller is
obligated to obtain the Purchased Assets from Buyer or its designee (including
the Custodian) at Seller’s expense on (or after) the related Repurchase Date.


 


b)                                Provided
that the applicable conditions in Sections 10(a) and (b) have been
satisfied, each Purchased Asset that is a Loan that is repurchased by Seller on
the 10th day of each month (or, if such 10th day is not a Business Day, the
immediately following Business Day) and each Purchased Asset that is an LLC
Interest that is repurchased by Seller on the 20th day of each month (or, if
such 20th day is not a Business Day, the immediately following Business Day)
following the related initial Purchase Date (the day of the month so determined
for each month, or any other date designated by Seller to Buyer for such a
repurchase on at least one Business Day’s prior notice to Buyer, a “Repurchase
Date,” which term shall also include the date determined by application of Section 20)
shall automatically become subject to a new Transaction unless Buyer is
notified by Seller at least one Business Day prior to the related Repurchase
Date; provided that, if the Repurchase Date so determined is later than the
Termination Date, the Repurchase Date for such Transaction shall automatically
reset to the Termination Date, and the provisions of this sentence as it might
relate to a new Transaction shall expire on such date. For each Purchased Asset
subject to a Transaction, unless otherwise


 


16





















 


agreed, (x)
with respect to the LLC Interests, to the extent Buyer does not have access to
such report through Citibank, N.A., Seller shall provide to Buyer the most
recent Trustee Report immediately upon Seller’s receipt of same, (y) the
accrued and unpaid Price Differential shall be calculated beginning on the
first day and ending on the last day of the calendar month prior to the related
Repurchase Date and settled in cash on each related Repurchase Date and (z) the
Pricing Rate shall be as set forth in the Side Letter.  In the event a Pricing Rate is based on a
LIBO Rate that is not fixed for any such period, Agent shall establish a LIBO
Rate on each Business Day, based on one-month LIBO Rate for each such day, and
the Pricing Rate will change upon each change in LIBO Rate.


 


4.                                      ENTERING
INTO TRANSACTIONS; TRANSACTION NOTICE, CONFIRMATIONS


 


a)                                 Unless
otherwise agreed, Seller shall give Buyer notice by no later than 5:00 p.m.
(New York City time) on the day that is two Business Days prior to any proposed
Purchase Date (the date on which such notice is given, the “Notice Date”). On
the Notice Date, Seller shall request that Buyer enter into a Transaction by
furnishing to Buyer a Transaction Notice, Loan Schedule and Asset Base
Certificate.  The Seller shall deliver to
Custodian a Transaction Notice, the related Loan Schedule and the related
Custodian’s Loan File for each Loan or LLC Interests subject to such
Transaction in accordance with the terms of the Custody Agreement.


 


b)                                In
the event that the parties hereto desire to enter into a Transaction on terms
other than as set forth herein, the parties shall execute a “Confirmation”
specifying such terms prior to entering into such Transaction. Any such
Confirmation and the related Transaction Notice, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between Buyer and
Seller with respect to the Transaction to which the Confirmation relates.


 


5.                                      PAYMENT
AND TRANSFER


 


Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Purchased Assets transferred shall be
transferred to the Custodian pursuant to the Custody Agreement. Any Repurchase
Price received by Buyer after 2:00 p.m. New York City time shall be applied
on the next succeeding Business Day.


 


6.                                      MARGIN
MAINTENANCE


 


a)                                 If
at any time the aggregate Market Value of all Purchased Assets subject to all
Transactions is less than the aggregate Buyer’s Margin Amount for all such
Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require
Seller in such Transactions, at Buyer’s option, to transfer to Buyer cash,
additional Loans or LLC Interests acceptable to Buyer in its sole discretion (“Additional
Purchased Assets”), so that the cash and aggregate Market Value of the
Purchased Assets, including any such Additional Purchased Assets, will
thereupon equal or exceed such aggregate Buyer’s Margin Amount (such
requirement, a “Margin Call”).


 


b)                                Notice
required pursuant to Section 6 may be given by any means provided in Section 36
hereof. Any notice given before 1:00 p.m. New York time on a Business Day
shall be met, and the related Margin Call satisfied, no later than 5:00 p.m.
New York time on the next


 


17





















 


succeeding
Business Day; notice given after 1:00 p.m. New York time on a Business Day
shall be met, and the related Margin Call satisfied, no later than 2:00 p.m.
New York time on the second succeeding Business Day. The failure of Buyer, on
any one or more occasions, to exercise its rights hereunder, shall not change
or alter the terms and conditions to which this Agreement is subject or limit
the right of Buyer to do so at a later date. Seller and Buyer each agree that a
failure or delay by Buyer to exercise its rights hereunder shall not limit or
waive Buyer’s rights under this Agreement or otherwise existing by law or in
any way create additional rights for Seller.


 


7.                                      INCOME
PAYMENTS


 


Where a particular term of a Transaction extends over the date on which
Income is paid in respect of any Purchased Assets subject to that Transaction,
such Income shall be the property of Buyer. Notwithstanding the foregoing, and
provided no Default has occurred and is continuing, all Income received,
whether by Seller, Buyer, Custodian, Servicer or any servicer or any other
Person, in respect of the Purchased Assets shall be applied in accordance with Section 4.1(c) of
the Custody Agreement.


 


8.                                      TAXES;
TAX TREATMENT


 


a)                                 All
payments made by the Seller under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities (including penalties, interest and additions to tax) with respect
thereto imposed by any Governmental Authority thereof or therein, excluding
income taxes, branch profits taxes, franchise taxes or any other tax imposed on
the net income by the United States, a state or a foreign jurisdiction under
the laws of which the Buyer is organized or of its applicable lending office,
or any political subdivision thereof, (all such non-excluded taxes, “Taxes”),
all of which shall be paid by the Seller for its own account not later than the
date when due. If the Seller is required by law or regulation to deduct or
withhold any Taxes from or in respect of any amount payable hereunder, it
shall: (a) make such deduction or withholding; (b) pay the amount so
deducted or withheld to the appropriate Governmental Authority not later than
the date when due; (c) deliver to Buyer, promptly, original tax receipts
and other evidence satisfactory to Buyer of the payment when due of the full
amount of such Taxes; and (d) pay to the Buyer such additional amounts as
may be necessary so that such Buyer receives, free and clear of all Taxes, a
net amount equal to the amount it would have received under this Agreement, as
if no such deduction or withholding had been made.


 


b)                                In
addition, the Seller agrees to pay to the relevant Governmental Authority in
accordance with applicable law any current or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies (including,
without limitation, mortgage recording taxes, transfer taxes and similar fees)
imposed by the United States or any taxing authority thereof or therein that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (“Other Taxes”).


 


c)                                 The
Seller agrees to indemnify the Buyer for the full amount of Taxes (including
additional amounts with respect thereto) and Other Taxes, and the full amount
of Taxes of any


 


18





















 


kind imposed
by any jurisdiction on amounts payable under this Section 8(c), and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, provided that the Buyer shall have provided the Seller
with evidence, reasonably satisfactory to the Seller, of payment of Taxes or Other
Taxes, as the case may be; provided that Buyer gives notice to Seller of all
deficiency notices received by the Buyer.


 


d)                                Any
Foreign Buyer shall provide the Seller with properly completed United States
Internal Revenue Service (IRS) Form W-8BEN or W-8ECI or any successor form
prescribed by the IRS, certifying that such Buyer is entitled to benefits under
an income tax treaty to which the United States is a party which reduces the
rate of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States on or prior to the date upon which
each such Foreign Buyer becomes a Buyer. 
Each Foreign Buyer will resubmit the appropriate form on the earliest of
(A) the third anniversary of the prior submission or (B) on or before
the expiration of thirty (30) days after there is a “change in circumstances”
with respect to such Buyer as defined in Treas. Reg. Section 1.1441(e)(4)(ii)(D).
 For any period with respect to which a
Foreign Buyer has failed to provide the Seller with the appropriate form or
other relevant document pursuant to this Section 8(d) (unless such
failure is due to a change in treaty, law, or regulation occurring subsequent
to the date on which a form originally was required to be provided), such Buyer
shall not be entitled to any “gross-up” of Taxes or indemnification under Section 8(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Foreign Buyer, which is otherwise exempt from a withholding tax, become subject
to Taxes because of its failure to deliver a form required hereunder, the
Seller shall take such steps as such Foreign Buyer shall reasonably request to
assist such Foreign Buyer to recover such Taxes.


 


e)                                 Without
prejudice to the survival of any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section 8 shall
survive the termination of this Agreement. 
Nothing contained in this Section 8 shall require Buyer to make
available any of its tax returns or other information that it deems to be
confidential or proprietary.


 


f)                                   Each
party to this Agreement acknowledges that it is its intent for purposes of U.S.
federal, state and local income and franchise taxes to treat each Transaction
as indebtedness of Seller that is secured by the Purchased Assets and that the
Purchased Assets are owned by Seller in the absence of a Default by
Seller.  All parties to this Agreement
agree to such treatment and agree to take no action inconsistent with this
treatment, unless required by law.


 


9.                                      SECURITY
INTEREST


 


a)                                 Seller
and Buyer intend that the Transactions hereunder be sales to Buyer of the
Purchased Assets and not loans from Buyer to Seller secured by the Purchased
Assets. However, in order to preserve Buyer’s rights under this Agreement in
the event that a court or other forum recharacterizes the Transactions
hereunder as other than sales, and as security for Seller’s performance of all
of its Obligations, Seller hereby grants Buyer a fully perfected first priority
security interest in the following property, whether now existing or hereafter
acquired: (i) the Purchased Assets, (ii) the Records, (iii) all
related Servicing Rights, (iv) all mortgage guaranties and insurance
relating to such Purchased Assets (issued by governmental agencies or
otherwise)


 


19





















 


or the related
Mortgaged Property and any mortgage insurance certificate or other document
evidencing such mortgage guaranties or insurance and all claims and payments
thereunder, (v) all instruments, chattel paper, securities, investment
property and general intangibles and other assets comprising or relating to the
Purchased Assets, (vi) any securities account, including the Collection
Account and all security entitlements to financial assets now or hereafter
carried in or credited to any securities account, (vii) all rights to
Income and the rights to enforce such payments arising from any of the Purchased
Assets, (viii) all guarantees or other support for the Purchased Assets, (ix) any
and all replacements, substitutions, distributions on the Purchased Assets, (x)
any interest in the Purchased Assets or the servicing of the Purchased Assets,
and (xi) any now existing or hereafter arising proceeds and distributions with
respect to any of the foregoing and any other property, rights, titles or
interests as are specified on a Transaction Notice (collectively, the “Collateral”).  Seller acknowledges and agrees that its
rights with respect to the Collateral (including without limitation, its
security interest in the Purchased Assets and any other collateral granted to
Seller pursuant to any other agreement) are and shall continue to be at all
times junior and subordinate to the rights of Buyer hereunder.


 


The parties acknowledge and agree that the perfection of such security
interest is intended to be accomplished through possession of the related
Purchased Assets by Buyer, the Custodian or by any other Person on Buyer’s
behalf, and that such possession unless otherwise agreed is for Buyer’s own
account.


 


b)                                Seller
hereby irrevocably constitutes and appoints Buyer and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of Seller and
in the name of Seller or in its own name, from time to time in Buyer’s
discretion, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to accomplish the
purposes of this Agreement, to file such financing statement or statements
relating to the Purchased Assets and the Collateral without Seller’s signature
thereon as Buyer at its option may deem appropriate, and, without limiting the
generality of the foregoing, Seller hereby gives Buyer the power and right, on
behalf of Seller, without assent by, but with notice to, Seller, if an Event of
Default shall have occurred and be continuing, to do the following:


 


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


 


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


 


(iii)                               (A) to
direct any party liable for any payment under any Purchased Assets to make
payment of any and all moneys due or to become due thereunder directly to Buyer
or as Buyer shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any


 


20





















 


time in
respect of or arising out of any Purchased Assets; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents in
connection with any Purchased Assets; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Purchased Assets or any proceeds thereof and to
enforce any other right in respect of any Purchased Assets; (E) to defend
any suit, action or proceeding brought against Seller with respect to any
Purchased Assets; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as Buyer may deem appropriate; and (G) generally,
to sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any Purchased Assets as fully and completely as though Buyer were the
absolute owner thereof for all purposes, and to do, at Buyer’s option and
Seller’s expense, at any time, and from time to time, all acts and things which
Buyer deems necessary to protect, preserve or realize upon the Purchased Assets
and the Collateral and Buyer’s Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as Seller might do.


 


Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof.  This
power of attorney is a power coupled with an interest and shall be irrevocable
until all Obligations have been paid in full and this Agreement is terminated
in accordance with the terms hereof.


 


Seller also authorizes Buyer, if an Event of Default shall have
occurred, from time to time, to execute, in connection with any sale provided
for in Section 20 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Purchased
Assets.  The powers conferred on Buyer
hereunder are solely to protect Buyer’s interests in the Purchased Assets and
shall not impose any duty upon it to exercise any such powers.  Buyer shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be
responsible to Seller for any act or failure to act hereunder, except for its
or their own gross negligence or willful misconduct.


 


10.                               CONDITIONS
PRECEDENT


 


a)                                 As
conditions precedent to the first Transaction to occur on or after the
Effective Date, Buyer shall have completed the due diligence review pursuant to
Section 39, and such review shall be satisfactory to Buyer in its sole
discretion.  Buyer shall have received on
or before the day of such first Transaction the following, in form and
substance satisfactory to Buyer and duly executed by each party thereto:


 


(i)                                     The
Program Documents duly executed and delivered by the parties thereto and being
in full force and effect, free of any modification, breach or waiver;


 


(ii)                                  Evidence
that all other actions necessary or, in the opinion of Buyer, desirable to
perfect and protect Buyer’s interest in the Purchased Assets and other
Collateral have been taken, including, without limitation, duly executed and
filed Uniform Commercial Code financing statements on Form UCC-1;


 


21





















 


(iii)                               A
certified copy of Seller’s corporate resolutions, approving the Program
Documents and Transactions thereunder (either specifically or by general
resolution), and all documents evidencing other necessary limited liability
company or corporate action or governmental approvals as may be required in
connection with the Program Documents;


 


(iv)                              An
incumbency certificate of the secretary of Seller, certifying the names, true
signatures and titles of Seller’s representatives duly authorized to request
Transactions hereunder and to execute the Program Documents and the other
documents to be delivered thereunder;


 


(v)                                 Opinions
of Seller’s counsel as to such matters as Buyer may reasonably request (including,
without limitation, perfected security interest in the Collateral) and in form
and substance acceptable to Buyer;


 


(vi)                              A
copy of the Underwriting Guidelines certified by an officer of the Seller;


 


(vii)                           Evidence
of establishment of the Collection Account; and


 


(viii)                        Any
other documents reasonably requested by Buyer.


 


b)                                The
obligation of Buyer to enter into each Transaction (including the initial
Transaction) pursuant to this Agreement is subject to the following conditions
precedent:


 


(i)                                     Buyer
or its designee shall have received on or before the day of a Transaction with
respect to such Purchased Assets the following, in form and substance
satisfactory to Buyer and (if applicable) duly executed:


 


(A)                              Transaction
Notice and Loan Schedule delivered pursuant to Section 4(a);


 


(B)                                The
Trust Receipt with respect to such Purchased Assets, with the Loan Schedule attached;
and


 


(C)                                Such
certificates, customary opinions of counsel or other documents as Buyer may
reasonably request, provided that such opinions of counsel shall not be
required routinely in connection with each Transaction but shall only be
required from time to time as deemed necessary by Buyer in good faith.


 


(ii)                                  No
Default or Event of Default shall have occurred and be continuing.


 


(iii)                               Buyer
shall not have determined that the introduction of or a change in any
requirement of law or in the interpretation or administration of any
requirement of law applicable to Buyer has made it unlawful, and no
Governmental Authority shall have asserted that it is unlawful, for Buyer to
enter into Transactions with a Pricing Rate based on LIBO Rate.


 


22





















 


(iv)                              All
representations and warranties in the Program Documents shall be true and
correct on the date of such Transaction and Seller is in compliance with the
terms and conditions of the Program Documents.


 


(v)                                 The
then aggregate outstanding Purchase Price for all Purchased Assets, when added
to the Purchase Price for the requested Transaction, shall not exceed the
Maximum Aggregate Purchase Price with respect to all Purchased Assets.


 


(vi)                              Buyer
shall have determined that all actions necessary or, in the opinion of Buyer,
desirable to maintain the Buyer’s perfected interest in the Purchased Assets
and other Collateral have been taken, including, without limitation, duly
executed and filed Uniform Commercial Code financing statements on Form UCC-1.


 


(vii)                           Seller
shall have paid to Buyer all fees and expenses owed to Buyer in accordance with
this Agreement.


 


(viii)                        Buyer
or its designee shall have received any other documents reasonably requested by
Buyer.


 


(ix)                                There
is no Margin Deficit at the time immediately prior to or immediately following
such Transaction.


 


(x)                                   No
event or events shall have been reasonably determined by Buyer to have occurred
resulting in the effective absence of a “repo market” respecting loans or
mortgage-backed or asset-backed securities such that Buyer is or was unable to
finance or fund purchases under this Agreement through the “repo market” or
Buyer’s customers.


 


(xi)                                Each
secured party (including any party that has a precautionary security interest
in a Loan or LLC Interests) has released all of its right, title and interest
in, to and under such Loan or LLC Interests (including, without limitation, any
security interest that such secured party or secured party’s agent may have by
virtue of its possession, custody or control thereof) and has filed Uniform
Commercial Code termination statements in respect of any Uniform Commercial
Code filings made in respect of such Loan or LLC Interests, and each such
release and Uniform Commercial Code termination statement has been delivered to
the Buyer prior to such Transaction.


 


(xii)                             Seller
shall have delivered in such Transaction to Buyer, with respect to a Loan, the
Underwriting Package (A) for each Loan that is a Tier One Asset, not less
than four Business Days prior to the date of the related Transaction Notice and
(B) for each Loan that is not a Tier One Asset, not less than ten Business
Days prior to the date of the related Transaction Notice, and Buyer shall have
approved each such Loan in its sole discretion. Buyer agrees that it shall
notify Seller of its approval or disapproval of each such proposed Loan within
ten Business Days after its receipt of the complete Underwriting Package and
supplemental requests (whether requested orally or in writing) related to such
proposed Loan. For purposes of this provision, an Underwriting Package received
by Buyer after 1:00 p.m. New York City time shall be deemed to be received
on the following Business Day.


 


23





















 


(xiii)                          Each
Loan constituting a Purchased Asset in such Transaction shall have an interest
rate not less than: (A) with respect to a fixed-rate Loan, the 10-year
U.S. Dollar Interest Rate Swaps plus 1.75% as of the initial Purchase Date of
such Purchased Asset or (B) with respect to a floating-rate Loan, LIBO
Rate plus 1.75% as of the initial Purchase Date of such Purchased Asset.


 


(xiv)                         Satisfaction
of any conditions precedent to the first Transaction on or after the Effective
Date as set forth in clause (a) of this Section 10 that were not
satisfied prior to such first Purchase Date.


 


(xv)                            With
respect to the LLC Interests, Seller shall have directed all payments on the
LLC Interest to be deposited into a cash account entitled “Citigroup Global
Markets Realty Corp.”, for the benefit of Buyer.


 


11.                               RELEASE
OF PURCHASED ASSETS


 


Upon timely payment in full of the Repurchase Price and all other
Obligations owing with respect to a Purchased Asset, if no Default or Event of
Default has occurred and is continuing, Buyer shall, and shall direct Custodian
to, release such Purchased Asset unless such release would give rise to or
perpetuate a Margin Deficit. Except as set forth in Sections 6 and 16, Seller
shall give at least three Business Days’ prior written notice to Buyer if such
repurchase shall occur on other than a Repurchase Date set forth in Section 3(b).


 


If such a Margin Deficit is applicable, Buyer shall notify Seller of
the amount thereof and Seller may thereupon satisfy the Margin Call in the
manner specified in Section 6.


 


12.                               RELIANCE


 


With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to Seller in acting upon, any request or other
communication that Buyer reasonably believes to have been given or made by a
person authorized to enter into a Transaction on Seller’s behalf.


 


13.                               REPRESENTATIONS
AND WARRANTIES


 


Seller hereby represents and warrants, and shall on and as of the
Purchase Date for any Transaction and on and as of each date thereafter through
and including the related Repurchase Date be deemed to represent and warrant,
that:


 


a)                                 Existence.  The Seller (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and qualifies as a real estate investment
trust under Section 856 of the Code and is in compliance with all
provisions of the Code governing its status as a real estate investment trust, (b) has
all requisite corporate or other power, and has all governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry
on its business as now being, or as proposed to be, conducted, except where the
lack of such licenses, authorizations, consents and approvals would not be
reasonably


 


24





















 


likely to have
a Material Adverse Effect, (c) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect, and (d) is in compliance in
all material respects with all Requirements of Law, except where failure so to
comply would not have a Material Adverse Effect.


 


b)                                Financial
Condition.  The Seller has heretofore
furnished to the Buyer a copy of its audited consolidated balance sheets which
include its consolidated Subsidiaries, each as of December 31, 2004.  All such financial statements are materially
complete and correct and fairly present the consolidated financial condition of
the Seller and its Subsidiaries and the consolidated results of their
operations for the fiscal year ended on said date, all in accordance with GAAP
applied on a consistent basis. Since December 31, 2004, there has been no
development or event or any prospective development or event which has had or should
reasonably be expected to have a Material Adverse Effect.


 


c)                                 Litigation.  There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
the Seller or any of its Subsidiaries or affecting any of the property thereof
before any Governmental Authority, (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would
be reasonably likely to have a Material Adverse Effect or (ii) which
questions the validity or enforceability of any of the Program Documents or any
action to be taken in connection with the transactions contemplated hereby and
there is a reasonable likelihood of a Material Adverse Effect or adverse
decision.


 


d)                                No
Breach.  Neither (a) the
execution and delivery of the Program Documents or (b) the consummation of
the transactions therein contemplated in compliance with the terms and
provisions thereof will conflict with or result in a breach of the charter or
by-laws (or other organizational or governing documents) of the Seller, or any
applicable law, rule or regulation, or any order, writ, injunction or
decree of any Governmental Authority, or other material agreement or instrument
to which the Seller, or any of its Subsidiaries, is a party or by which any of
them or any of their property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument, or
(except for the Liens created pursuant to this Agreement) result in the creation
or imposition of any Lien upon any property of the Seller or any of its
Subsidiaries, pursuant to the terms of any such agreement or instrument.


 


e)                                 Action.  The Seller has all necessary corporate or
other power, authority and legal right to execute, deliver and perform its
obligations under each of the Program Documents to which it is a party; the
execution, delivery and performance by the Seller of each of the Program
Documents to which it is a party has been duly authorized by all necessary
corporate or other action on its part; and each Program Document has been duly
and validly executed and delivered by the Seller and constitutes a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms.


 


f)                                   Approvals.  No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority, or any other
Person, are necessary for the execution, delivery or performance by the Seller
of the Program Documents to which it is a party


 


25





















 


or for the
legality, validity or enforceability thereof, except for filings and recordings
in respect of the Liens created pursuant to this Agreement.


 


g)                                Margin
Regulations.  Neither a Transaction
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation T, U or X.


 


h)                                Taxes.  The Seller and its Subsidiaries have filed
all Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Seller and its Subsidiaries in respect of taxes and other governmental charges
are adequate.


 


i)                                    Investment
Company Act.  Neither the Seller nor
any of its Subsidiaries is an “investment company”, or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of
1940, as amended from time to time. The Seller is not subject to any Federal or
state statute or regulation which limits its ability to incur indebtedness.


 


j)                                    No
Legal Bar.  With the caveat as set
forth in 13(d), the execution, delivery and performance of this Agreement and
the Transactions hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or Contractual Obligation of the Seller or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien (other than the Liens created hereunder) on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.


 


k)                                 No
Default.  Neither the Seller nor any
of its Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which should reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing under this Agreement.


 


l)                                    Collateral;
Collateral Security.


 


(i)                                     The
Seller has not assigned, pledged, or otherwise conveyed or encumbered any
Purchased Asset to any other Person, and immediately prior to the sale of any
such Purchased Asset to the Buyer, the Seller was the sole owner of such
Purchased Asset and had good and marketable title thereto, free and clear of
all Liens, in each case except for Liens to be released simultaneously with the
Liens granted in favor of the Buyer hereunder and no Person other than the
Seller has any Lien on any Purchased Asset.


 


(ii)                                  The
provisions of this Agreement are effective to create in favor of the Buyer a
valid security interest in all right, title and interest of the Seller in, to
and under the Collateral.


 


(iii)                               Upon
receipt by the Custodian of each Note, endorsed in blank by a duly authorized
officer of the payee or last endorsee, the Buyer shall have a fully perfected


 


26





















 


first priority
security interest therein, in the Loan evidenced thereby and in the Seller’s
interest in the related Mortgaged Property.


 


(iv)                              Upon
receipt by the Custodian of each LLC Certificate, the Buyer shall have a fully
perfected first priority security interest in the related LLC Interests.


 


(v)                                 Upon
the filing of financing statements on Form UCC-1, naming the Buyer as “Secured
Party” and the Seller as “Debtor” and describing the Collateral, the security
interests granted hereunder in the Collateral will constitute fully perfected
first priority security interests under the Uniform Commercial Code in all
right, title and interest of the Seller in, to and under such Collateral, which
can be perfected by filing under the Uniform Commercial Code.


 


m)                              Chief
Executive Office; Chief Operating Office. 
The Seller’s chief executive office on the Effective Date is located at
14631 N. Scottsdale Rd., Suite 200, Scottsdale, Arizona 85254 and the
chief operating office is located at 14631 N. Scottsdale Rd., Suite 200,
Scottsdale, Arizona 85254.


 


n)                                Location
of Books and Records.  The location
where the Seller keeps its books and records, including all computer tapes and
records relating to the Purchased Assets and any Collateral, is its chief
executive office or chief operating office or the offices of the Custodian and
the Servicer.


 


o)                                True
and Complete Disclosure.  The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Seller to the Buyer in connection with the
negotiation, preparation or delivery of this Agreement and the other Program
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by or on
behalf of the Seller to the Buyer in connection with this Agreement and the
other Program Documents and the transactions contemplated hereby and thereby
will be true, complete and accurate in every material respect, or (in the case
of projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to a Responsible
Officer that, after due inquiry, could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Program
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Buyer for use in connection with the
transactions contemplated hereby or thereby.


 


p)                                ERISA.  Each Plan to which the Seller or its
Subsidiaries make direct contributions, and, to the knowledge of the Seller,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
State law. No event or condition has occurred and is continuing as to which the
Seller would be under an obligation to furnish a report to the Buyer under Section 14(a)(vi) hereof.


 


27





















 


q)                                Licenses.  The Buyer will not be required solely as a
result of purchasing the Purchased Assets to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in
any state in which it currently so required or (ii) under any state
consumer lending, fair debt collection or other applicable state statute or
regulation.


 


r)                                   True
Sales.  Any and all interest of a
Qualified Originator in, to and under any Mortgage funded in the name of or
acquired by such Qualified Originator or seller which is an Affiliate of the
Seller has been sold, transferred, conveyed and assigned to the Seller pursuant
to a legal sale and such Qualified Originator retains no interest in such Loan.


 


s)                                 No
Burdensome Restrictions.  No
Requirement of Law or Contractual Obligation of the Seller or any of its
Subsidiaries has a Material Adverse Effect.


 


t)                                   Subsidiaries.  All of the Subsidiaries of the Seller at the
date hereof are listed on Schedule A to this Agreement.


 


u)                                Origination
and Acquisition of Loans.  The Loans
were originated or acquired by the Seller or a Qualified Originator, and the
origination and collection practices used by the Seller or Qualified
Originator, as applicable, with respect to the Loans have been, in all material
respects legal, proper, prudent and customary in the franchise or commercial,
as applicable, mortgage loan origination business and in accordance with the
Underwriting Guidelines.  The servicing
of each of the Loans has been in all material respects, legal, proper, prudent
and customary in the commercial mortgage loan servicing business and in
accordance with the Accepted Servicing Practices.


 


v)                                Seller
Solvent; Fraudulent Conveyance. As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of the Seller
is greater than the fair value of the liabilities (including, without
limitation, contingent liabilities if and to the extent required to be recorded
as a liability on the financial statements of the Seller in accordance with
GAAP) of the Seller and the Seller is and will be solvent, is and will be able
to pay its debts as they mature and does not and will not have an unreasonably
small amount of capital to engage in the business in which it is engaged and
proposes to engage. Seller does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Seller is
not contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Seller or any of its
assets. Seller is not transferring any Purchased Asset with any intent to
hinder, delay or defraud any of its creditors.


 


w)                              FCCR.  (i) The Weighted Average Aggregate FCCR
for all of the Purchased Assets is not less than 1.5; and (ii) (A) no
more than five percent (5%) of the Purchased Assets (by aggregate Collateral
Value) have a Unit-Level FCCR of between 1.25 and 1.10; provided that if the
aggregate Collateral Value of the Purchased Assets is less than $100,000,000,
then no more than the greater of (1) five percent (5%) of the Purchased
Assets (by aggregate Collateral Value) or (2) $6,500,000 in Collateral
Value of the Purchased Assets have a Unit-Level FCCR of between 1.25 and 1.10
and (B) no more than five percent (5%) of Purchased Assets have a Master
Lease FCCR of between 1.25 and 1.10; provided that if the aggregate Collateral
Value of the Purchased Assets is less than $100,000,000, then no more than the
greater of (1) five percent


 


28





















 


(5%) of the
Purchased Assets (by aggregate Collateral Value) or (2) $6,500,000 in
Collateral Value of the Purchased Assets have a Master Lease FCCR of between
1.25 and 1.10.


 


x)                                  Program
Documents.  The Program Documents and
any other agreement executed and delivered in connection with the Loans and the
LLC Interests are genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms. The Program
Documents are in full force and effect, and the enforceability of the Program
Documents have not been contested by any other party.  No default or event of default exists under
any of the Program Documents that could reasonably be expected to have a
Material Adverse Effect or that has not been cured or remedied on a timely
basis.  Neither the Seller nor any other
party to the Program Documents have waived the performance by any other party
of any action, if the failure to perform such action would cause the Program
Documents to be in default, nor has the Seller waived any default resulting
from any action or inaction by such party, in each case if such waiver could
reasonably be expected to have a Material Adverse Effect.


 


14.                               COVENANTS
OF SELLER


 


Seller hereby covenants with Buyer as follows:


 


a)                                 Financial
Statements.  The Seller shall deliver
to the Buyer:


 


(i)                                     annual
consolidated audited financial statements of the Seller and its Affiliates no
later than 90 days after year-end and quarterly unaudited statements of the
Seller and its Affiliates no later than 45 days after quarter-end, all in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments);


 


(ii)                                  as
soon as reasonably practicable, (A) quarterly and annual consolidating
financial statements reflecting material inter-company adjustments and (B) all
form 10-K, registration statements and other “corporate finance” filings made
with the Securities and Exchange Commission (“SEC”) (other than 8-K and Section 16
filings); provided, however, that the Seller will provide Buyer
with a copy of the Seller’s or its affiliates’ annual SEC Form 10-K filing
no later than 90 days after year-end, all in accordance with GAAP, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments);


 


(iii)                               on
a quarterly basis, an officer’s certificate as set forth in Exhibit A
hereto, stating that the Seller is in compliance with the Net Worth
Requirements and the details of such compliance;


 


(iv)                              monthly
portfolio performance data with respect to the Notes and associated Collateral,
including, without limitation, any outstanding delinquencies, prepayments in
whole or in part;


 


29





















 


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


 


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


 


(A)                              any
reportable event, as defined in Section 4043(b) of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not
by regulation or otherwise waived the requirement of Section 4043(a) of
ERISA that it be notified within thirty (30) days of the occurrence of such
event (provided that a failure to meet the minimum funding standard of Section 412
of the Code or Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under Section 412(m)
of the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section 412(d) of
the Code) (a “Reportable Event”); and any request for a waiver under Section 412(d) of
the Code for any Plan;


 


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


 


(C)                                the
institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Seller or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such Multiemployer
Plan;


 


(D)                               the
complete or partial withdrawal from a Multiemployer Plan by the Seller or any
ERISA Affiliate that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by the Seller or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;


 


30





















 


(E)                                 the
institution of a proceeding by a fiduciary of any Multiemployer Plan against
the Seller or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within thirty (30) days; and


 


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


 


(vii)                           The
Seller will furnish to the Buyer, at the time it furnishes the financial
statements pursuant to paragraph (iii) above, a certificate of a
Responsible Officer of the Seller to the effect that, to the best of such
Responsible Officer’s knowledge, the Seller during such fiscal period has
observed or performed all of its covenants and other agreements, and satisfied
every material condition, contained in this Agreement and the other Program
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate (and, if any Default or Event
of Default has occurred and is continuing, describing the same in reasonable
detail and describing the action the Seller has taken or proposes to take with
respect thereto).


 


b)                                Litigation.  The Seller will promptly, and in any event
within one (1)  Business Day after service of process, give to the Buyer
notice of all legal or arbitrable proceedings affecting the Seller or any of
its Subsidiaries that questions or challenges the validity or enforceability of
any of the Program Documents or as to which there is a reasonable likelihood of
adverse determination which would result in a Material Adverse Effect or in
which the matter in controversy exceeds $1,000,000.


 


c)                                 Existence,
Etc.  Each of the Seller and its
Subsidiaries will:


 


(i)                                     With
respect to the Seller and Net Lease Borrowers only, preserve and maintain its
legal existence and all of its material rights, privileges, licenses and
franchises;


 


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


 


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


 


31





















 


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


 


(v)                                 permit
representatives of the Buyer, during normal business hours upon one (1) Business
Day’s prior written notice at a mutually desirable time or at any time during
the continuance of an Event of Default, to examine, copy and make extracts from
its books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably requested
by the Buyer.


 


d)                                Prohibition
of Fundamental Changes.  The Seller
shall not enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets; provided, that the Seller may merge or consolidate with (a) any
Subsidiary of the Seller or (b) any other Person if the Seller is the
surviving entity, or the Buyer consents to such merger or consolidation; and
provided further, that if after giving effect thereto, no Default would exist
hereunder.


 


e)                                 Margin
Deficit.  If at any time there exists
a Margin Deficit, the Seller shall cure same in accordance with Section 6(a) hereof.


 


f)                                   Notices.
The Seller shall give notice to the Buyer promptly:


 


(i)                                     upon
the Seller becoming aware of, and in any event within one (1) Business Day
after, the occurrence of any Default or Event of Default or any event of
default or default under any other material agreement of the Seller;


 


(ii)                                  upon
the Seller becoming aware of any default related to any Purchased Asset or Collateral,
any Material Adverse Effect or any event or change in circumstances which
should reasonably be expected to have a Material Adverse Effect;


 


(iii)                               upon
the Seller becoming aware during the normal course of its business that the
Mortgaged Property in respect of any Loan or Loans with an aggregate unpaid
principal balance of at least $250,000 has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to materially and adversely affect the value of such
Loan;


 


(iv)                              upon
the entry of a judgment or decree against the Seller or any of its Subsidiaries
in an amount in excess of $1,000,000; and


 


(v)                                 upon
the termination of the Custody and Servicing Agreement or any other Servicing
Agreement; and


 


32





















 


(vi)                              of
a move of the Seller’s chief executive office or chief operating office from
the addresses referred to in Section 13(m), which such notice shall be
written notice thirty (30) days prior to such move.


 


Each notice pursuant to this Section 14(f) (other than (v) and
(vi)) shall be accompanied by a statement of a Responsible Officer of the
Seller setting forth details of the occurrence referred to therein and stating
what action the Seller has taken or proposes to take with respect thereto.


 


g)                                Servicing.  The Seller shall cause the Servicer to
service, or cause to be serviced, the Purchased Assets, in accordance with
Accepted Servicing Practices, pending any delivery of such servicing to the
Buyer pursuant to the Custody and Servicing Agreement or any other Servicing
Agreement, employing at least the same procedures and exercising the same care
that the Servicer customarily employs in servicing mortgaged properties and
mortgage loans for its own account.  The
Seller shall cause the Servicer to hold or cause to be held all escrow funds
collected with respect to such Purchased Assets in trust accounts and shall
apply the same for the purposes for which such funds were collected.  If the Seller should discover that, for any
reason whatsoever, the Seller or any entity responsible to the Buyer by
contract for managing or servicing any such Purchased Asset has failed to
perform fully the Servicer’s obligations with respect to the servicing of the
Purchased Assets or any of the obligations of such entities with respect to the
Loans or the LLC Interests, the Seller shall promptly notify the Buyer.  Prior to any Person other than Midland Loan
Services, Inc. becoming the Servicer or a subservicer of the Purchased
Assets, the Buyer shall have the right to approve each such Servicer and the
form of all Servicing Agreements or servicing side letter agreements with
respect thereto.


 


h)                                Underwriting
Guidelines.  The Seller shall notify
the Buyer in writing of any material modifications to the Underwriting
Guidelines prior to implementation of such change, and unless the Buyer objects
in writing within ten (10) Business Days of receipt of notice, the
proposed modifications shall be deemed acceptable.


 


i)                                    Lines
of Business.  The Seller will not
engage to any substantial extent in any line or lines of business activity
other than financing, acquiring, leasing, selling or exchanging commercial real
estate, interests in commercial real estate or interests in entities that own
or operate commercial real estate, and the businesses generally carried on by
it as of the Initial Purchase Date.


 


j)                                    Transactions
with Affiliates.  The Seller will not
enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transaction is (a) not expressly prohibited under
this Agreement, (b) in the ordinary course of the Seller’s business and (c) upon
fair and reasonable terms no less favorable to the Seller than it would obtain
in a comparable arm’s length transaction with a Person which is not an
Affiliate.


 


k)                                 Limitation
on Liens.  The Seller will not, nor
will it permit or allow others to, create, incur or permit to exist any Lien,
security interest or claim on or to any of its Collateral, except for: (i) Liens
(not otherwise permitted hereunder) which are created in connection with the
purchase of fixed assets and equipment necessary in the ordinary course of the
Seller’s


 


33





















 


business or to
finance residual certificates issued in connection with securitizations of
mortgage loans completed by the Seller which are financed solely based on a
pledge of such residual certificates; and (ii) Liens on the Collateral
created pursuant to this Agreement. The Seller will defend the Collateral
against, and will take such other action as is necessary to remove, any Lien,
security interest or claim on or to the Collateral, other than the security
interests created under this Agreement, and the Seller will defend the right,
title and interest of the Buyer in and to any of the Collateral against the
claims and demands of all persons whomsoever. 
The Seller will not permit or allow any of its Subsidiaries to create,
incur or permit to exist any Lien, security interest or claim on or to any
Mortgaged Property that is related to a Purchased Asset, except in accordance
with the Program Documents and any Master Loan Agreement.


 


l)                                    Limitation
on Sale of Assets.  Except for sales
and securitizations of Purchased Assets with respect to which the Seller has
paid the Repurchase Price as set forth herein, the Seller and its Subsidiaries,
taken as a collective whole, shall not convey, sell, lease, assign, transfer or
otherwise dispose of (collectively, “Transfer”), all or substantially
all of its Property, business or assets (including, without limitation,
receivables and leasehold interests) whether now owned or hereafter acquired or
allow any Subsidiary to Transfer substantially all of Seller’s consolidated
assets taken as a whole to any Person; provided, that the Seller may after
prior written notice to the Buyer allow such action with respect to any
Subsidiary which is not a material part of the Seller’s overall business
operations.


 


m)                              Limitation
on Distributions.  Without the Buyer’s
consent, except for customary cash dividends and distributions of its common
stock, the Seller shall not make any payment on account of, or set apart assets
for a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any stock or senior or subordinate debt of
the Seller, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Seller.


 


n)                                Maintenance
of Net Worth/Liquidity.  The Seller
shall ensure that, as of the end of each quarter, it meets the Net Worth
requirements (the “Net Worth Requirements”) as follows:


 


(i)                                     The
Seller shall not permit its Tangible Net Worth at the end of each fiscal
quarter to be less than (i) $400,000,000 plus (ii) Net Worth Increase
Amounts.


 


(ii)                                  The
Seller shall ensure that, as of the end of each fiscal quarter, the Seller,
together with its consolidated Subsidiaries, has cash and Cash Equivalents in
an amount of not less than $15,000,000.


 


(iii)                               The
Seller shall not permit the ratio of Total Indebtedness to Tangible Net Worth
to exceed 4:1.


 


(iv)                              The
Seller shall not permit the ratio of Total Indebtedness to Total Assets to
exceed 0.7:1.


 


o)                                Restricted
Payments.  The Seller shall not make
any Restricted Payments following an Event of Default.


 


34





















 


p)                                Servicing
Transmission.  The Seller shall
provide to the Buyer two (2) Business Days prior to each Repurchase Date (i) the
Servicing Transmission, with respect to the Mortgaged Properties serviced under
the Custody and Servicing Agreement by the Servicer which were a part of the
Purchased Assets prior to the first day of the current month, summarizing the
Servicer’s delinquency and loss experience with respect to Mortgaged Properties
serviced by the Servicer (including, in the case of the Mortgaged Properties
and, specifically, the Leases thereof, the following categories: current, 30-59,
60-89, 90-119, 120-149 and 150+ days delinquent) and (ii) any other
information reasonably requested by the Buyer with respect to the Mortgaged
Properties.  The Servicer shall also
include in the Servicing Transmission such information relating to the
servicing of the Purchased Assets as may be required by the Buyer under the
Custody and Servicing Agreement.


 


q)                                No
Amendment or Waiver.  The Seller will
not, nor will it permit or allow others to amend, modify, terminate or waive
any provision of any Purchased Asset to which the Seller is a party in any
manner which shall reasonably be expected to materially and adversely affect
the value of such Purchased Asset as Collateral.  The Seller will not, nor will it permit or
allow others to amend, modify, terminate or waive any provision of any LLC
Agreement pursuant to which Purchased Assets have been issued without the prior
written consent of the Buyer.


 


r)                                   Maintenance
of Property; Insurance.  The Seller
shall keep or cause the related operator of the Mortgaged Properties to keep
the related Mortgaged Property in good working order and condition.  The Seller shall maintain or cause the
related mortgagor or Tenant under a Mortgage or Lease as operator of the Mortgaged
Property to maintain the insurance in form and amount as required under the
related Mortgage or Lease and shall not reduce such coverage without the
written consent of the Buyer, and shall also maintain or cause the Tenant under
the terms of the Lease to maintain such insurance with financially sound and
reputable insurance companies, and with respect to property and risks of a
character usually maintained by entities engaged in the same or similar
business similarly situated, against loss, damage and liability of the kinds
and in the amounts customarily maintained by such entities.  The Schedule of Insurance attached as Schedule B
hereto sets forth the insurance in effect on the Initial Purchase Date.


 


s)                                 Further
Identification of Collateral. The Seller will furnish to the Buyer from
time to time statements and schedules further identifying and describing the
Purchased Assets and such other reports in connection with the Purchased Assets
as the Buyer may reasonably request, all in reasonable detail.


 


t)                                   Purchased
Asset Determined to be Defective. 
Upon discovery by the Seller or the Buyer of any breach of any
representation or warranty listed on Appendix A hereto applicable to any
Purchased Asset that would result in the Purchased Asset not being an Eligible
Asset, the party discovering such breach shall promptly give notice of such
discovery to the other.


 


u)                                Illegal
Activities; Anti-Money Laundering Laws. The Seller has not engaged, is not
engaging, and shall not in the future engage in any conduct or activity that
could subject its assets to forfeiture or seizure, including without
limitation, conduct or activities in violation of the Racketeer Influenced and
Corrupt Organizations Act, the Bank Secrecy Act or narcotic drug


 


35





















 


laws.  The Seller has complied with all applicable
anti-money laundering laws and regulations, including without limitation the
USA Patriot Act of 200l (collectively, the “Anti Money Laundering Laws”).  As and to the extent required by the Anti
Money Laundering Laws, the Seller (i) has conducted the requisite due
diligence in connection with the origination of each Purchased Asset for
purposes of the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable mortgagor, dealership guarantor, other obligor,
and their respective principals, and the origin of the assets used by the said
mortgagor to purchase the property in question, and (ii) maintains, and
will maintain, sufficient information to identify the applicable mortgagor and
its principals, for purposes of the Anti-Money Laundering Laws.  No Purchased Asset is subject to
nullification pursuant to Executive Order 13224 (the “Executive Order”) or the
regulations promulgated by the Office of Foreign Assets Control of the United
States Department of the Treasury (the “OFAC Regulations”) or in violation of
the Executive Order or the OFAC Regulations, and no mortgagor or any of its
principals, is subject to the provisions of such Executive Order or the OFAC
Regulations nor listed as a “blocked person” for purposes of the OFAC
Regulations.


 


v)                                Origination
Fee.  Seller shall pay to Buyer the
Origination Fee on or prior to the Effective Date.


 


15.                               REPURCHASE
DATE PAYMENTS/COLLECTIONS


 


On each Repurchase Date, Seller shall remit or shall cause to be
remitted to Buyer the Repurchase Price together with any other Obligations then
due and payable.


 


16.                               REPURCHASE
OF PURCHASED ASSETS; CHANGE OF LAW


 


a)                                 Upon
discovery by Seller of a breach of any of the representations and warranties
set forth in Appendix A to this Agreement, Seller shall give prompt written
notice thereof to Buyer.  Upon any such
discovery by Buyer, Buyer will notify Seller. 
It is understood and agreed that the representations and warranties set
forth in Appendix A to this Agreement shall survive delivery of the respective
Custodian’s Loan Files to the Custodian and shall inure to the benefit of Buyer
and Buyer’s successors and assigns.  The
fact that Buyer has conducted or has failed to conduct any partial or complete
due diligence investigation in connection with its purchase of any Loan or LLC
Interests shall not affect Buyer’s right to demand repurchase as provided under
this Agreement.  Seller shall within five
Business Days of the earlier of Seller’s discovery or Seller’s receiving
notice, with respect to any Loan or LLC Interests, of (i) any breach of a
representation or warranty contained in Appendix A to this Agreement or (ii) any
failure to deliver any of the items required to be delivered as part of the
Custodian’s Loan File within the time period required for delivery pursuant to
the Custody Agreement, promptly cure such breach or delivery failure in all
material respects.  If within five
Business Days after the earlier of Seller’s discovery of such breach or
delivery failure or Seller’s receiving notice thereof such breach or delivery
failure has not been remedied by Seller, Seller shall promptly upon receipt of
written instructions from Buyer purchase such Loan or LLC Interests, as
applicable, at a purchase price equal to the Repurchase Price with respect to
such Loan or LLC Interests, as applicable, by depositing such Repurchase Price
in the Collection Account; provided, however, that, with the exception of the
delivery of a Note or LLC Certificate, if the Seller is diligently


 


36





















 


pursuing a
cure of such breach or delivery failure, Seller shall have ten days in addition
to such five Business Day period to cure such breach or delivery failure in all
material respects.


 


b)                                If
Buyer determines that the introduction of, any change in, or the interpretation
or administration of any requirement of law has made it unlawful or
commercially impracticable to engage in any Transactions with a Pricing Rate
based on LIBO Rate, then Seller (i) shall, upon its receipt of notice of
such fact and demand from Buyer (with a copy of such notice to Custodian),
repurchase the Purchased Assets subject to the Transaction on the next
succeeding Business Day and, at Seller’s election, concurrently enter into a
new Transaction with Buyer with a Pricing Rate based on the Prime Rate plus the
margin set forth in the Side Letter as part of the Pricing Rate and (ii) may
elect, by giving notice to Buyer and Custodian, that all new Transactions shall
have Pricing Rates based on the Prime Rate plus such margin.


 


c)                                 If
Buyer determines in its sole discretion that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on Buyer’s capital or on the capital of any Affiliate of Buyer as a
consequence of such Change in Law on this Agreement, then from time to time
Seller will compensate Buyer or Buyer’s Affiliate, as applicable, for such
reduced rate of return suffered as a consequence of such Change in Law.  Buyer shall provide Seller with prompt notice
as to any Change in Law.  Notwithstanding
any other provisions in this Agreement, in the event of any such Change in Law,
Seller will have the right to terminate all Transactions then outstanding
without any prepayment penalty as of a date selected by Seller, which date
shall be prior to the then applicable Repurchase Date and which date shall
thereafter for all purposes hereof be deemed to be the Repurchase Date.


 


17.                               RESERVED


 


18.                               REPURCHASE
TRANSACTIONS


 


Buyer may, in its sole election, engage in repurchase transactions with
the Purchased Assets or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Purchased Assets with a counterparty of Buyer’s choice, in
all cases subject to Buyer’s obligation to reconvey the Purchased Assets (and
not substitutes therefor) on the Repurchase Date.  In the event Buyer engages in a repurchase
transaction with any of the Purchased Assets or otherwise pledges or hypothecates
any of the Purchased Assets, Buyer shall have the right to assign to Buyer’s
counterparty any of the applicable representations or warranties in Appendix A
to this Agreement and the remedies for breach thereof, as they relate to the
Purchased Assets that are subject to such repurchase transaction.


 


19.                               EVENTS
OF DEFAULT


 


With respect to any Transactions covered by or related to this
Agreement, the occurrence of any of the following events shall constitute, if
declared as such by Buyer, an “Event of Default” other than the events
described in (f) and (g) below which, upon their occurrence, shall
automatically constitute an Event of Default:


 


37





















 


a)                                 Seller
fails to transfer the Purchased Assets to Buyer on the applicable Purchase Date
(provided Buyer has tendered the related Purchase Price); or


 


b)                                Seller
either fails to repurchase the Purchased Assets on the applicable Repurchase
Date or fails to perform its obligations under Section 6; or


 


c)                                 any
representation, warranty or certification made or deemed made herein or in any
other Program Document by the Seller or any certificate furnished to the Buyer
pursuant to the provisions thereof, shall prove to have been false or
misleading in any material respect (which falsity is not cured within ten (10) Business
Days of the earlier of (i) the receipt of notice by the Seller and (ii) actual
knowledge of the Seller thereof, and could reasonably result in a Material
Adverse Effect) as of the time made or furnished (other than the representations
and warranties set forth in Appendix A which shall be considered solely for the
purpose of determining the Purchase Price of the Loans or LLC Interests, as
applicable); unless (i) the Seller shall have made any such
representations and warranties with knowledge that they were materially false
or misleading at the time made and that such falsity could reasonably result in
a Material Adverse Effect, or (ii) any such representations and warranties
have been determined by the Buyer in its sole discretion to be materially false
or misleading on a regular basis and that such falsity could reasonably result
in a Material Adverse Effect); or


 


d)                                the
Seller shall fail to observe or perform any covenant or agreement contained in
this Agreement or any other Program Document and such failure to observe or
perform shall continue unremedied for a period of five (5) Business Days
after the earlier of (i) receipt of notice by the Seller or (ii) actual
knowledge of the Seller; or


 


e)                                 a
final judgment or judgments for the payment of money in excess of $2,000,000 in
the aggregate (to the extent that it is, in the reasonable determination of the
Buyer, uninsured and provided that any insurance or other credit posted in
connection with an appeal shall not be deemed insurance for these purposes)
shall be rendered against the Seller or any of its Subsidiaries by one or more
courts, administrative tribunals or other bodies having jurisdiction over them
and the same shall not be discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within sixty (60) days from the date of entry thereof and the Seller or any
such Subsidiary shall not, within said period of sixty (60) days, or such
longer period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed during
such appeal; or


 


f)                                   the
Seller shall admit in writing its inability to pay its debts as such debts
become due; or


 


g)                                the
Seller or any of its Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file
a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or winding-up,
or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in


 


38





















 


writing to,
any petition filed against it in an involuntary case under the Bankruptcy Code
or (vi) take any corporate or other action for the purpose of effecting
any of the foregoing; or


 


h)                                a
proceeding or case shall be commenced, without the application or consent of
the Seller or any of its Subsidiaries, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of, or taking of possession by, a receiver, custodian, trustee,
examiner, liquidator or the like of the Seller or any such Subsidiary or of all
or any substantial part of its property, or (iii) similar relief in
respect of the Seller or any such Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) or more days; or an order for relief against
the Seller or any such Subsidiary shall be entered in an involuntary case under
the Bankruptcy Code; or


 


i)                                    without
the express prior written consent of Buyer, the Custody and Servicing Agreement
or any Program Document shall for whatever reason (including an event of
default thereunder) be terminated or the lien on the Collateral created by this
Agreement or Seller’s material obligations hereunder shall cease to be in full
force and effect, or the enforceability thereof shall be contested by the
Seller; or


 


j)                                    any
Material Adverse Effect or the Buyer reasonably determines that there exists a
material impairment of the Seller’s ability to perform its obligations under
this Agreement, the Note or any other Program Document; or


 


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


 


l)                                    any
Change in Control of the Seller shall have occurred without the prior consent
of the Buyer; or


 


39





















 


m)                              the
Seller shall grant, or suffer to exist, any Lien on any of the Purchased Assets
or the Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Purchased Assets or the Collateral in favor of the Buyer or shall be Liens in
favor of any Person other than the Buyer; or


 


n)                                the
Buyer shall reasonably request, specifying the reasons for such request,
information, and/or written responses to such requests, regarding the financial
well-being of the Seller and such information and/or responses shall not have
been provided within five (5) Business Days of such request; or


 


o)                                the
Seller or any subsidiary or Affiliate of the Seller shall default under, or
fail to perform as required under, or shall otherwise materially breach the
terms of any instrument, agreement or contract between the Seller or such other
entity, on the one hand, and the Buyer or any of the Buyer’s Affiliates on the
other; or the Seller or any subsidiary or Affiliate of the Seller shall default
under, or fail to perform as requested under, the terms of any repurchase
agreement, loan and security agreement or similar credit facility or agreement
for borrowed funds entered into by the Seller or such other entity and any
third party, which default or failure entitles any party to require
acceleration or prepayment of any indebtedness thereunder in an amount greater
than $250,000.


 


20.                               REMEDIES


 


Upon the occurrence of an Event of Default, Buyer, at its option (which
option shall be deemed to have been exercised immediately upon the occurrence
of an Event of Default pursuant to Section 19(f) or (g) hereof),
shall have any or all of the following rights and remedies, which may be
exercised by Buyer:


 


a)                                      The
Repurchase Date for each Transaction hereunder shall be deemed immediately to
occur.


 


b)                                     (i) Seller’s obligations hereunder to repurchase all
Purchased Assets at the Repurchase Price therefor on the Repurchase Date in
such Transactions shall thereupon become immediately due and payable; all
Income paid after such exercise or deemed exercise shall be remitted to and
retained by Buyer and applied to the aggregate Repurchase Prices and any other
amounts owing by Seller hereunder; Seller shall immediately deliver to Buyer or
its designee any and all original papers, records and files relating to the
Purchased Assets subject to such Transaction then in Seller’s possession and/or
control; and all right, title and interest in and entitlement to such Purchased
Assets and Servicing Rights thereon shall be deemed transferred to Buyer.


 


(ii)                                  Buyer
shall have the right to (A) sell, on or following the Business Day following
the date on which the Repurchase Price became due and payable pursuant to Section 20(b) without
notice or demand of any kind, at a public or private sale and at such price or
prices as Buyer may reasonably deem satisfactory any or all Purchased Assets or
(B) in its sole discretion, exercised in good faith, elect, in lieu of
selling all or a portion of such Purchased Assets, to give Seller credit for
such Purchased Assets in an amount equal to the Market Value of the Purchased
Assets against the aggregate unpaid


 


40





















 


Repurchase
Price and any other amounts owing by Seller hereunder.  Seller shall remain liable to Buyer for any
amounts that remain owing to Buyer following a sale and/or credit under the
preceding sentence.  The proceeds of any
disposition of Purchased Assets shall be applied first to the costs and
expenses incurred by Buyer in connection with or as a result of an Event of
Default; second to the aggregate Repurchase Prices; third to all other Obligations;
and any amounts remaining shall be paid to Seller.


 


(iii)                               The
parties recognize that it may not be possible to purchase or sell all of the
Purchased Assets on a particular Business Day, or in a transaction with the
same purchaser, or in the same manner because the market for such Purchased
Assets may not be liquid.  In view of the
nature of the Purchased Assets, the parties agree that liquidation of a
Transaction or the underlying Purchased Assets does not require a public
purchase or sale and that a good faith private purchase or sale shall be deemed
to have been made in a commercially reasonable manner.  Accordingly, Buyer may elect the time and
manner of liquidating any Purchased Asset and nothing contained herein shall
obligate Buyer to liquidate any Purchased Asset on the occurrence of an Event
of Default or to liquidate all Purchased Assets in the same manner or on the
same Business Day or constitute a waiver of any right or remedy of Buyer.  Notwithstanding the foregoing, the parties to
this Agreement agree that the Transactions have been entered into in
consideration of and in reliance upon the fact that all Transactions hereunder
constitute a single business and contractual obligation and that each
Transaction has been entered into in consideration of the other Transactions.


 


c)                                 Seller
hereby acknowledges, admits and agrees that Seller’s obligations under this
Agreement are 10% recourse obligations of Seller to which Seller pledges its
full faith and credit.  In addition to
its rights hereunder, Buyer shall have the right to proceed against any of
Seller’s assets which may be in the possession of Buyer, any of Buyer’s
Affiliates or its designee (including the Custodian, to the extent acting as a
custodian for the benefit of the Buyer), including the right to liquidate such
assets and to set-off the proceeds against monies owed by Seller to Buyer
pursuant to this Agreement.  Buyer may
set off cash, the proceeds of the liquidation of the Purchased Assets and
Additional Purchased Assets, any other Collateral or its proceeds and all other
sums or obligations owed by Buyer to Seller hereunder against all of Seller’s
Obligations to Buyer, whether under this Agreement, under a Transaction, or
under any other agreement between the parties, or otherwise, whether or not
such Obligations are then due, without prejudice to Buyer’s right to recover
any deficiency.


 


d)                                Buyer
shall have the right to obtain physical possession of the Records and all other
files of Seller relating to the Purchased Assets and all documents relating to
the Purchased Assets which are then or may thereafter come into the possession
of Seller or any third party acting for Seller and Seller shall deliver to
Buyer such assignments as Buyer shall request.


 


e)                                 Buyer
may direct all Persons servicing the Purchased Assets to take such action with
respect to the Purchased Assets as Buyer determines appropriate.


 


f)                                   Seller
shall be liable to Buyer for the amount of all expenses (plus interest thereon
at a rate equal to the Default Rate), and all costs and expenses incurred in
connection with hedging or covering transactions related to the Purchased
Assets.


 


41





















 


g)                                Seller
shall cause all sums received by it or on its behalf with respect to the Purchased
Assets to be deposited with Custodian (or such other Person as Buyer may
direct) after receipt thereof.


 


h)                                Buyer
shall without regard to the adequacy of the security for the Obligations, be
entitled to the appointment of a receiver by any court having jurisdiction,
without notice, to take possession of and protect, collect, manage, liquidate,
and sell the Purchased Assets and any other Collateral or any portion thereof,
collect the payments due with respect to the Purchased Assets and any other Collateral
or any portion thereof, and do anything that Buyer is authorized hereunder to
do.  Seller shall pay all costs and
expenses incurred by Buyer in connection with the appointment and activities of
such receiver.


 


Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives, to the extent
permitted by law, any right Seller might otherwise have to require Buyer to
enforce its rights by judicial process. 
Seller also waives, to the extent permitted by law, any defense Seller
might otherwise have to the Obligations, arising from use of nonjudicial
process, enforcement and sale of all or any portion of the Purchased Assets and
any other Collateral or from any other election of remedies.  Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm’s length.


 


In addition to all the rights and remedies specifically provided
herein, Buyer shall have all other rights and remedies provided by applicable
federal, state, foreign, and local laws, whether existing at law, in equity or
by statute.


 


Buyer shall have, except as otherwise expressly provided in this
Agreement, the right to exercise any of its rights and/or remedies without
presentment, demand, protest or further notice of any kind other than as
expressly set forth herein, all of which are hereby expressly waived by Seller.


 


Seller hereby authorizes Buyer, at Seller’s expense, to file such
financing statement or statements relating to the Purchased Assets and the
Collateral without Seller’s signature thereon as Buyer at its option may deem
appropriate, and appoints Buyer as Seller’s attorney-in-fact to execute any
such financing statement or statements in Seller’s name and to perform all
other acts which Buyer deems appropriate to perfect and continue the lien and
security interest granted hereby and to protect, preserve and realize upon the
Purchased Assets and the Collateral, including, but not limited to, the right
to endorse notes, complete blanks in documents and execute assignments on
behalf of Seller as its attorney-in-fact. 
This power of attorney is coupled with an interest and is irrevocable without
Buyer’s consent.


 


21.                               DELAY
NOT WAIVER; REMEDIES ARE CUMULATIVE


 


No failure on the part of Buyer to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Buyer of any right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. 
All rights and remedies of Buyer provided for herein are cumulative and
in addition to any and all other rights and remedies provided by law,


 


42





















 


the Program Documents and the other
instruments and agreements contemplated hereby and thereby, and are not
conditional or contingent on any attempt by Buyer to exercise any of its rights
under any other related document.  Buyer
may exercise at any time after the occurrence of an Event of Default one or
more remedies, as it so desires, and may thereafter at any time and from time
to time exercise any other remedy or remedies.


 


22.                               USE
OF EMPLOYEE PLAN ASSETS


 


No assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) shall be
used by either party hereto in a Transaction.


 


23.                               INDEMNITY


 


a)                                 Seller
agrees to pay on demand (i) all reasonable out-of-pocket costs and
expenses of Buyer in connection with the preparation, execution, delivery,
modification, administration and amendment of the Program Documents (including,
without limitation, (A) all collateral review and UCC search and filing
fees and expenses and (B) the reasonable fees and expenses of counsel for
Buyer with respect thereto, with respect to advising Buyer as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement, with respect to negotiations with Seller or
with other creditors of Seller or any of their Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto) and (ii) all costs and
expenses of Buyer in connection with the enforcement of this Agreement, whether
in any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors’ rights generally (including, without
limitation, the reasonable fees and expenses of counsel for Buyer) whether or
not the transactions contemplated hereby are consummated.


 


b)                                Seller
agrees to indemnify and hold harmless Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and advisors (each,
an “Indemnified Party”) from and against (and will reimburse each Indemnified
Party as the same is incurred) any and all claims, damages, losses, liabilities
and expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation,
litigation or other proceeding (whether or not such Indemnified Party is a
party thereto) relating to, resulting from or arising out of any of the Program
Documents and all other documents related thereto, any breach of a
representation or warranty of Seller or Seller’s officer in this Agreement or
any other Program Document, and all actions taken pursuant thereto) (i) the
Transactions, the actual or proposed use of the proceeds of the Transactions,
this Agreement or any of the transactions contemplated thereby, including,
without limitation, any acquisition or proposed acquisition or any indemnity
payable under any Servicing Agreement or other servicing arrangement, (ii) the
actual or alleged presence of hazardous materials on any Property or any
environmental action relating in any way to any Property or (iii) the
actual or alleged violation of any federal, state, municipal or local predatory
lending laws, except to the extent such claim, damage, loss, liability


 


43





















 


or expense is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party’s gross negligence or willful
misconduct.  Seller also agrees not to
assert any claim against Buyer or any of its Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Program Documents, the actual or proposed
use of the proceeds of the Transactions, this Agreement or any of the
transactions contemplated thereby.  THE
FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES,
WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OF THE INDEMNIFIED PARTIES.


 


c)                                 If
Seller fails to pay when due any costs, expenses or other amounts payable by it
under this Agreement, including, without limitation, reasonable fees and
expenses of counsel and indemnities, such amount may be paid on behalf of
Seller by Buyer, in its sole discretion and Seller shall remain liable for any
such payments to Buyer.  No such payment
by Buyer shall be deemed a waiver of any of Buyer’s rights under the Program
Documents.


 


d)                                Without
prejudice to the survival of any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section shall
survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Assets by Buyer against full
payment therefor.


 


24.                               WAIVER
OF REDEMPTION AND DEFICIENCY RIGHTS


 


Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Purchased Assets as a result of restrictions upon Buyer or
Custodian contained in the Program Documents or any other instrument delivered
in connection therewith, and any right that it may have to direct the order in
which any of the Purchased Assets shall be disposed of in the event of any
disposition pursuant hereto.


 


25.                               REIMBURSEMENT


 


All sums reasonably expended by Buyer in connection with the exercise
of any right or remedy provided for herein shall be and remain Seller’s
obligation.  Seller agrees to pay, with
interest at the Default Rate to the extent that an Event of Default has
occurred, the reasonable out-of-pocket expenses and reasonable attorneys’ fees
incurred by Buyer and/or Custodian in connection with the enforcement of the
Program Documents, the taking of any action, including legal action, required
or permitted to be taken by Buyer (without duplication to Buyer) and/or
Custodian pursuant thereto, any “due diligence” or loan agent reviews conducted
by Buyer or on its behalf or any refinancing or restructuring in the nature of
a “workout”.  If Buyer determines that,
due to the introduction of, any change in, or the compliance by Buyer with (i) any
eurocurrency reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any future
Transactions, then Seller agrees to pay to Buyer, from time to time, upon
demand by Buyer (with a copy to Custodian) the actual cost of additional amounts
as specified by Buyer to


 


44





















 


compensate Buyer for such increased
costs.  Notwithstanding any other
provisions in this Agreement, in the event of any such change in the
eurocurrency reserve requirement or the interpretation of any law, regulation
or any guideline or request from any central bank or other Governmental
Authority, Seller will have the right to terminate all Transactions then
outstanding as of a date selected by Seller, which date shall be prior to the
applicable Repurchase Date and which date shall thereafter for all purposes
hereof, be deemed to be the Repurchase Date. 
In addition, Buyer shall promptly notify Seller if any events in clause (i) or
(ii) of this Section 25 occur.


 


In addition to any rights and remedies of Buyer hereunder and by law,
Buyer shall have the right, without prior notice to Seller, any such notice
being expressly waived by Seller to the extent permitted by applicable law,
upon any amount becoming due and payable by Seller hereunder (whether at the
stated maturity, by acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits, indebtedness
or claims, in any currency, in each case whether direct or indirect, absolute
or contingent, matured or unmatured, at any time held or owing by Buyer or any
Affiliate thereof to or for the credit or the account of Seller or any
Affiliate thereof.  Buyer agrees promptly
to notify Seller after any such set off and application made by Buyer; provided
that the failure to give such notice shall not affect the validity of such set
off and application.


 


26.                               FURTHER
ASSURANCES


 


Seller agrees to do such further acts and things and to execute and
deliver to Buyer such additional assignments, acknowledgments, agreements,
powers and instruments as are reasonably required by Buyer to carry into effect
the intent and purposes of this Agreement, to perfect the interests of Buyer in
the Purchased Assets or to better assure and confirm unto Buyer its rights,
powers and remedies hereunder.


 


27.                               ENTIRE
AGREEMENT; PRODUCT OF NEGOTIATION


 


This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a sale
and repurchase of Purchased Assets and Additional Purchased Assets thereto, and
it, together with the other Program Documents, and the other documents
delivered pursuant hereto or thereto, contains the entire final agreement of
the parties.  No prior negotiation,
agreement, understanding or prior contract shall have any validity hereafter.


 


28.                               TERMINATION


 


This Agreement shall remain in effect until the earlier of (i) 364
days following the earlier of the first Purchase Date, provided that such date
may be extended, in Buyer’s sole discretion, upon written request of the Seller
delivered to Buyer not less than 60 days prior to such date, or (ii) at
Buyer’s option, the occurrence of an Event of Default (such date, the “Termination
Date”).  However, no such termination
shall affect Seller’s outstanding obligations to Buyer at the time of such
termination.  Pursuant to any extension
of this Agreement, the Seller shall pay to the Buyer the Renewal Fee.  Seller’s obligations to indemnify Buyer
pursuant to this


 


45





















 


Agreement shall survive the termination
hereof.  Failure of Buyer to respond to
Seller’s request for an extension pursuant to clause (i) above shall be
deemed a rejection of such request.


 


29.                               ASSIGNMENT


 


a)                                 The
Program Documents are not assignable by Seller. 
Buyer may from time to time assign all or a portion of its rights and
obligations under this Agreement and the Program Documents; provided, however,
that Buyer shall maintain, for review by Seller upon written request, a
register of assignees and a copy of an executed assignment and acceptance by
Buyer and assignee (“Assignment and Acceptance”), specifying the percentage or
portion of such rights and obligations assigned.  Upon such assignment, (a) such assignee
shall be a party hereto and to each Program Document to the extent of the
percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and (b) Buyer
shall, to the extent that such rights and obligations have been so assigned by
it to either (i) an Affiliate of Buyer which assumes the obligations of
such Buyer or (ii) to another Person which assumes the obligations of
Buyer, be released from its obligations hereunder accruing thereafter and under
the Program Documents.  Unless otherwise
stated in the Assignment and Acceptance, Seller shall continue to take directions
solely from Buyer unless otherwise notified by Buyer in writing.  Buyer may distribute to any prospective
assignee any document or other information delivered to Buyer by Seller.  Notwithstanding any assignment by Buyer
pursuant to this Section 29, Buyer shall remain liable as to the Transactions.


 


b)                                Buyer
may sell to one or more Persons participations in all or a portion of its
rights and obligations under this Agreement or otherwise enter into one or more
syndications of its rights and obligations under this Agreement.  In the event of any such sale or syndication,
Buyer shall be entitled, after consultation with the Seller, to change the
structure, terms (including pricing) or amount, if Buyer determines that such
changes are advisable in order to achieve a successful sale or syndication;
provided, however that such change to the structure, terms (including pricing)
or amount is not reasonably likely to trigger an Event of Default.  With respect to any such sale or syndication,
Seller agrees to (a) provide and cause its officers, directors and
advisors to provide Buyer and any other proposed buyer that becomes part of the
syndicate of Buyers upon request with all information reasonably deemed
necessary by Buyer to effectuate such sale or syndication, (b) assist
Buyer upon its reasonable request in the preparation of an offering memorandum
to be used in connection with such sale or syndication and (c) make
available the officers, directors and advisors of the Seller and its
affiliates, from time to time, to attend and make presentations regarding the
business and prospects of the Seller and its affiliates, as appropriate, at a
meeting or meetings of prospective buyers. 
Notwithstanding the terms of Section 8, each participant of Buyer
shall be entitled to the additional compensation and other rights and
protections afforded Buyer under Section 8 to the same extent as Buyer
would have been entitled to receive them with respect to the participation sold
to such participant.


 


30.                               AMENDMENTS,
ETC.


 


No amendment or waiver of any provision of this Agreement nor any
consent to any failure to comply herewith or therewith shall in any event be
effective unless the same shall be in writing and signed by Seller and Buyer,
and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.


 


46





















 


31.                               SEVERABILITY


 


If any provision of Program Document is declared invalid by any court
of competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.


 


32.                               BINDING
EFFECT; GOVERNING LAW


 


This Agreement
shall be binding and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Seller may not assign or transfer any of
its rights or obligations under this Agreement or any other Program Document
without the prior written consent of Buyer. 
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK.


 


33.                               CONSENT
TO JURISDICTION


 


SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE NON EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR
RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING.  SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION
SELLER MAY HAVE TO, NON EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR
RELATING TO THE PROGRAM DOCUMENTS. 
SELLER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND
COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY BUYER
IN CONNECTION WITH THIS AGREEMENT OR THE OTHER PROGRAM DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN
THIS SECTION 33 AND TO SELLER’S ADDRESS SPECIFIED IN SECTION 36 OR
SUCH OTHER ADDRESS AS SELLER SHALL HAVE PROVIDED IN WRITING TO BUYER.  NOTHING IN THIS SECTION 33 SHALL AFFECT
THE RIGHT OF THE BUYER TO (I) SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY APPLICABLE LAW, OR (II) BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.


 


34.                               SINGLE
AGREEMENT


 


Seller and Buyer acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions


 


47





















 


hereunder constitute a single business and
contractual relationship and have been made in consideration of each
other.  Accordingly, Seller and Buyer
each agree (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, and (ii) that payments, deliveries and other transfers made by
any of them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfer in respect of any
other Transaction hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.


 


35.                               INTENT


 


Seller and Buyer recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of the
United States Code, as amended (“USC”) (except insofar as the Loans or LLC
Interests subject to such Transaction or the term of such Transaction would
render such definition inapplicable), a “forward contract” as that term is
defined in Section 101 of Title 11 of the USC and a “securities contract”
as that term is defined in Section 741 of Title 11 of the USC (except
insofar as the Loans or LLC Interests subject to such Transaction or the term
of such Transaction would render such definition inapplicable).


 


It is understood that Buyer’s right to liquidate the Purchased Assets
delivered to it in connection with the Transactions hereunder or to exercise
any other remedies pursuant to Section 20 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the USC.


 


36.                               NOTICES
AND OTHER COMMUNICATIONS


 


Except as provided herein, any notice required or permitted by this
Agreement shall be in writing and shall be effective and deemed delivered only
when received by the party to which it is sent; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation (without
error message) of such transmission.  Any
such notice shall be sent to a party at the address or facsimile transmission
number set forth below:


 


	
  if to Seller:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Spirit
  Finance Corporation

  	
   

  
	
   

  	
  14631 N.
  Scottsdale Road

  	
   

  
	
   

  	
  Suite 200

  	
   

  
	
   

  	
  Scottsdale,
  AZ 85254

  	
   

  
	
   

  	
  Attention:

  	
  Catherine
  Long

  
	
   

  	
  Telephone:

  	
  (480) 606-0820

  
	
   

  	
  Facsimile:

  	
  (480) 606-0826

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy
  to:

  
	
   

  	
  Kutak Rock
  LLP

  
	
   

  	
  1801
  California St., Suite 3100

  
	
   

  	
  Denver,
  Colorado 80202

  
				



 


48





















 


	
   

  	
  Attention:

  	
  Paul E.
  Belitz, Esq.

  
	
   

  	
  Telephone:

  	
  (303) 297-2400

  
	
   

  	
  Facsimile:

  	
  (303) 292-7799

  
	
   

  	
   

  	
   

  
	
  if to Buyer
  or Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Citigroup
  Global Markets Realty Corp.

  	
   

  
	
   

  	
  390
  Greenwich Street

  	
   

  
	
   

  	
  New York,
  New York 10013

  	
   

  
	
   

  	
  Attention:
  Christian Anderson

  	
   

  
	
   

  	
  Telephone:
  (212) 723-9714

  	
   

  
	
   

  	
  Facsimile:
  (212) 723-8591

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Citigroup
  Global Markets Realty Corp.

  	
   

  
	
   

  	
  390
  Greenwich Street

  	
   

  
	
   

  	
  New York,
  New York 10013

  	
   

  
	
   

  	
  Attention:
  James Xanthos

  	
   

  
	
   

  	
  Telephone:
  (212) 723-4144

  	
   

  
	
   

  	
  Facsimile:
  (212) 723-8591

  	
   

  
				



 


as such address or number may
be changed by like notice.


 


37.                               CONFIDENTIALITY


 


Buyer
acknowledges that Seller is a public company subject to the Securities Act of
1933 and Securities Exchange Act of 1934 and that the information furnished by
Seller to Buyer in the Collection Report, Asset Base Certificate and otherwise
under this Agreement may constitute material non-public information (“Confidential
Information”) within the meaning of such acts. 
Except as consented to by Seller, Buyer hereby agrees that it will keep
all Confidential Information confidential and not disclose such Confidential
Information to any third party and will not engage in, directly or indirectly,
any transactions involving the Seller’s publicly traded securities based upon
such Confidential Information. Notwithstanding the foregoing provisions of this
Section 37, nothing herein shall prevent any division or department of the
Buyer from engaging in any lawful transaction in the Seller’s publicly traded
securities in connection with the ordinary course of the business of such
division or department, provided that the decision to enter into such
transaction is, as required by applicable law, not based, in whole or in part,
on any part of the Confidential Information that is material non-public
information.


 


This Agreement and its terms, provisions, supplements and amendments,
and transactions and notices hereunder, are proprietary to Buyer and Agent and
shall be held by Seller (and Seller shall cause Servicer to hold it) in strict
confidence and shall not be disclosed to any third party without the consent of
Buyer except for (i) disclosure to Seller’s direct and indirect parent
companies, directors, attorneys, agents or accountants, provided that such
attorneys or accountants likewise agree to be bound by this covenant of
confidentiality or (ii) upon prior written notice to Buyer, disclosure
required by law, rule, regulation or order of a court or other regulatory body
or (iii) to the extent necessary in dealing with obligors or tenants in
connection with Purchased Assets or (iv) with prior written notice to
Buyer, to any approved Hedge


 


49





















 


Counterparty to the extent necessary to
obtain any Hedge Instrument hereunder or (v) with prior written notice to
Buyer, any required Securities and Exchange Commission or state securities’ law
disclosures or filings; provided that Seller shall not file the Side Letter
with the Securities and Exchange Commission or state securities office, unless
otherwise agreed by Buyer in writing, and the Seller agrees to use best efforts
not to file the terms of the Side Letter with any such filing.  Notwithstanding anything herein to the
contrary, each party (and each employee, representative, or other agent of each
party) may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the transaction and all materials of any
kind (including opinions or other tax analyses) that are provided to it relating
to such tax treatment and tax structure. 
For this purpose, tax treatment and tax structure shall not include (i) the
identity of any existing or future party (or any Affiliate of such party) to
this Agreement or (ii) any specific pricing information or other
commercial terms, including the amount of any fees, expenses, rates or payments
arising in connection with the transactions contemplated by this Agreement.


 


38.                               HEDGE
INSTRUMENTS


 


The Seller shall notify the Buyer two Business Days prior to entering
into any Hedge Instruments.


 


39.                               DUE
DILIGENCE


 


Seller agrees to promptly provide Buyer and its agents with access to,
copies of and extracts from any and all documents, records, agreements,
instruments or information (including, without limitation, any of the foregoing
in computer data banks and computer software systems) relating to its financial
condition, the performance of its obligations under the Program Documents, the
documents contained in the Servicing File or the Purchased Assets in the possession,
or under the control, of Seller.  In
addition, Buyer has the right to perform continuing due diligence reviews of
(x) Seller and its Affiliates, directors, officers, employees and significant
shareholders, including, without limitation, their respective financial
condition and performance of their obligations under the Program Documents, (y)
the Servicing File and the Purchased Assets and (z) the Servicer.  Seller shall also make available to Buyer a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Purchased Assets. 
Without limiting the generality of the foregoing, Seller acknowledges
that Buyer shall enter into transactions with Seller based solely upon the information
provided by Seller to Buyer and the representations, warranties and covenants
contained herein, and that Buyer, at its option, has the right at any time to
conduct a partial or complete due diligence review on some or all of the
Purchased Assets, including, without limitation, ordering new credit reports,
new Appraisals on the related Mortgaged Properties and otherwise re-generating
the information used to originate such Purchased Assets.  Seller shall pay Buyer’s out-of-pocket costs
and expenses incurred by Buyer in connection with any due diligence hereunder.


 


[Signature Page Follows]


 


50





















 


IN WITNESS WHEREOF, Seller and Buyer have caused their names to be
signed to this Agreement by their respective officers thereunto duly authorized
as of the date first above written.


 


 


	
   

  	
  SPIRIT
  FINANCE CORPORATION, as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Christopher H. Volk

  	
   

  
	
   

  	
  Name:
  Christopher H. Volk

  
	
   

  	
  Title:
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIGROUP
  GLOBAL MARKETS REALTY

  CORP., as Buyer

  
	
   

  	
  and Agent,
  as applicable

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  Xanthos

  	
   

  
	
   

  	
  Name: James
  Xanthos

  
	
   

  	
  Title:
  Authorized Signer

  



 





















 


Annex I


 


Buyer Acting as Agent


 


This Annex I forms a part of the Amended and Restated Master Repurchase
Agreement, dated as of December 7, 2005 (the “Agreement”), between Citigroup
Global Markets Realty Corp. and Spirit Financial Corporation.  This Annex I sets forth the terms and
conditions governing all transactions in which a party selling assets or buying
assets, as the case may be (“Agent”), in a Transaction is acting as agent for
one or more third parties (each, a “Principal”).  Capitalized terms used but not defined in
this Annex I shall have the meanings ascribed to them in the Agreement.


 


1.                                       Additional Representations.  Agent hereby makes the following
representations, which shall continue during the term of any Transaction:
Principal has duly authorized Agent to execute and deliver the Agreement on its
behalf, has the power to so authorize Agent and to enter into the Transactions
contemplated by the Agreement and to perform the obligations of Seller or
Buyer, as the case may be, under such Transactions, and has taken all necessary
action to authorize such execution and delivery by Agent and such performance
by it.


 


2.                                       Identification
of Principals.  Agent agrees (a) to
provide the other party, prior to the date on which the parties agree to enter
into any Transaction under the Agreement, with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing from
time to time with the consent of the other party), and (b) to provide the
other party, before the close of business on the next business day after orally
agreeing to enter into a Transaction, with notice of the specific Principal or
Principals for whom it is acting in connection with such Transaction.  If (i) Agent fails to identify such
Principal or Principals prior to the close of business on such next business
day or (ii) the other party shall determine in its sole discretion that
any Principal or Principals identified by Agent are not acceptable to it, the
other party may reject and rescind any Transaction with such Principal or
Principals, return to Agent any Purchased Assets or portion of the Purchase
Price, as the case may be, previously transferred to the other party and refuse
any further performance under such Transaction, and Agent shall immediately
return to the other party any portion of the Purchase Price or Purchased
Assets, as the case may be, previously transferred to Agent in connection with
such Transaction; provided, however, that
(A) the other party shall promptly (and in any event within one business
day) notify Agent of its determination to reject and rescind such Transaction
and (B) to the extent that any performance was rendered by any party under
any Transaction rejected by the other party, such party shall remain entitled
to any Price Differential or other amounts that would have been payable to it
with respect to such performance if such Transaction had not been
rejected.  The other party acknowledges
that Agent shall not have any obligation to provide it with confidential
information regarding the financial status of its Principals; Agent agrees,
however, that it will assist the other party in obtaining from Agent’s
Principals such information regarding the financial status of such Principals
as the other party may reasonably request.


 


1





















 


3.                                       Limitation
of Agent’s Liability.  The parties
expressly acknowledge that if the representations of Agent under the Agreement,
including this Annex I, are true and correct in all material respects during
the term of any Transaction and Agent otherwise complies with the provisions of
this Annex I, then (a) Agent’s obligations under the Agreement shall not
include a guarantee of performance by its Principal or Principals and (b) the
other party’s remedies shall not include a right of setoff in respect of rights
or obligations, if any, of Agent arising in other transactions in which Agent
is acting as principal.


 


4.                                       Multiple
Principals.


 


(a)                                  In
the event that Agent proposes to act for more than one Principal hereunder,
Agent and the other party shall elect whether (i) to treat Transactions
under the Agreement as transactions entered into on behalf of separate
Principals or (ii) to aggregate such Transactions as if they were
transactions by a single Principal. 
Failure to make such an election in writing shall be deemed an election
to treat Transactions under the Agreement as transactions on behalf of a single
Principal.


 


(b)                                 In
the event that Agent and the other party elect (or are deemed to elect) to
treat Transactions under the Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent will provide the other party,
together with the notice described in Section 2(b) of this Annex I,
notice specifying the portion of each Transaction allocable to the account of
each of the Principals for which it is acting (to the extent that any such
Transaction is allocable to the account of more than one Principal); (ii) the
portion of any individual Transaction allocable to each Principal shall be
deemed a separate Transaction under the Agreement; (iii) the margin
maintenance obligations of Seller under Section 6 of the Agreement shall
be determined on a Transaction-by-Transaction basis (unless the parties agree
to determine such obligations on a Principal-by-Principal basis); and (iv) Buyer’s
and Seller’s remedies under the Agreement upon the occurrence of an Event of
Default shall be determined as if Agent had entered into a separate Agreement
with the other party on behalf of each of its Principals.


 


(c)                                  In
the event that Agent and the other party elect to treat Transactions under the
Agreement as if they were transactions by a single Principal, the parties agree
that (i) Agent’s notice under Section 2(b) of this Annex I need
only identify the names of its Principals but not the portion of each
Transaction allocable to each Principal’s account; (ii) the margin
maintenance obligations of Seller under Section 6 of the Agreement shall,
subject to any greater requirement imposed by applicable law, be determined on
an aggregate basis for all Transactions entered into by Agent on behalf of any
Principal; and (iii) Buyer’s and Seller’s remedies upon the occurrence of
an Event of Default shall be determined as if all Principals were a single
Seller or Buyer, as the case may be.


 


(d)                                 Notwithstanding
any other provision of the Agreement (including, without limitation, this Annex
I), the parties agree that any Transactions by Agent on


 


2





















 


behalf of an
employee benefit plan under ERISA shall be treated as Transactions on behalf of
separate Principals in accordance with Section 4(b) of this Annex I
(and all margin maintenance obligations of the parties shall be determined on a
Transaction- by-Transaction basis).


 


5.                                       Interpretation
of Terms.  All references to “Seller”
or “Buyer”, as the case may be, in the Agreement shall, subject to the
provisions of this Annex I (including, among other provisions, the limitations
on Agent’s liability in Section 3 of this Annex I), be construed to
reflect that (i) each Principal shall have, in connection with any
Transaction or Transactions entered into by Agent on its behalf, the rights,
responsibilities, privileges and obligations of a “Seller” or “Buyer”, as the
case may be, directly entering into such Transaction or Transactions with the
other party under the Agreement, and (ii) Agent’s Principal or Principals
have designated Agent as their sole agent for performance of Seller’s
obligations to Buyer or Buyer’s obligations to Seller, as the case may be, and
for receipt of performance by Buyer of its obligations to Seller or Seller of
its obligations to Buyer, as the case may be, in connection with any
Transaction or Transactions under the Agreement (including, among other things,
as Agent for each Principal in connection with transfers of Securities, cash or
other property and as agent for giving and receiving all notices under the
Agreement).  Both Agent and its Principal
or Principals shall be deemed “parties” to the Agreement and all references to
a “party” or “either party” in the Agreement shall be deemed revised
accordingly.


 


3





















 


EXHIBIT A


 


QUARTERLY
CERTIFICATION


 


I,                                     ,
                                ,
the [OFFICER] of Spirit Finance Corporation (the “Seller”), do hereby certify
that:


 


(i)                                     the
Seller is in compliance with all provisions and terms of the Amended and
Restated Master Repurchase Agreement (the “Repurchase Agreement”) by and
between Citigroup Global Markets Realty Corp. (the “Buyer”) and the Seller
dated as of December 7, 2005;


 


(ii)                                  the
Seller’s Tangible Net Worth at the end of the most recent fiscal quarter was
not less than (i) $400,000,000 plus (ii) Net Worth Increase Amounts;


 


(iii)                               as
of the end of the most recent fiscal quarter, Seller, together with its
consolidated Subsidiaries, has cash and Cash Equivalents in an amount of not
less than $15,000,000;


 


(iv)                              as
of the end of the most recent fiscal quarter, the ratio of Total Indebtedness
to Tangible Net Worth of Seller did not exceed 4:1;


 


(v)                                 as
of the end of the most recent fiscal quarter, the ratio of Total Indebtedness
to Total Assets of Seller did not exceed 0.7:1; and


 


(vi)                              there
have not been any modifications to the Underwriting Guidelines that have not
been approved by the Buyer.


 


A-1





















 


IN WITNESS WHEREOF, I have signed this certificate and affixed the seal
of the Seller.


 


Date:                 ,
200  .


 


	
   

  	
  [

  	
   

  	
  ]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
						



 


 


I,                                     ,
the                           
of the Seller, do hereby certify that                                   
is the duly elected or appointed, qualified and acting                           of
the Seller, and the signature set forth above is the genuine signature of such
officer in the date hereof.


 


 


	
   

  	
  SPIRIT
  FINANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


A-2





















 


EXHIBIT B


 


ASSET BASE CERTIFICATE


 


SPIRIT
FINANCE CORPORATION


ASSET BASE
CERTIFICATE


AS OF


[Date]


 


	
   

  	
   

  	
  TOTAL LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Purchased
  Assets Collateral Value as shown on Loan Schedule (Appraised Values)

  	
   

  	
   

  	
   

  
	
  (a)  Total Collateral Value =

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)  Less Mortgage Loan Collateral Values that are not “Eligible
  Mortgage Loans” =

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)  Total Eligible Mortgage Loan Collateral Value

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Master
  Repurchase Agreement Advance Rate

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Asset Base (up to facility limit of
  $                            )

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Purchased
  Assets Outstanding (prior Asset Base Certificate):

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Purchase
  Request As Of:

  	
  [Date]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal
  Repayments

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchased
  Assets Outstanding as of

  	
  [DateME]

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess
  Availability (Deficiency) versus Borrowing Base

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maximum
  Aggregate Purchase Price (Loans)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Unused
  Aggregate Purchase Price

  	
   

  	
  $

  	
  (                           

  	
  )

  



 


B-1





















 


EXHIBIT C


 


SERVICING TRANSMISSION


 


[to follow]


 


B-2





















 


SCHEDULE A


 


SUBSIDIARIES


 


Spirit
Finance Corporation


 


(a
Maryland Corporation)


 


Spirit
Finance Acquisitions, LLC


 


(a
Delaware LLC)


 


Spirit
Management Company


 


(a
Maryland Corporation)


 


Spirit
Property Holdings, LLC


 


(A
Delaware LLC)


 


Spirit
Pocono Corporation


 


(a
Pennsylvania Corporation)


 


Spirit
Master Funding, LLC


 


(a
Delaware LLC)


 


Spirit
Master Funding II, LLC


 


(a
Delaware LLC)


 


Spirit
Master Funding III, LLC


 


(a
Delaware LLC)


 


Spirit
SPE Missoula, LLC


 


(a
Delaware LLC)


 


Spirit
SPE Raleigh, LLC


 


(a
Delaware LLC)


 


i





















 


Spirit
SPE Johnston, LLC


 


(a
Delaware LLC)


 


Spirit
SPE Columbia, LLC


 


(a
Delaware LLC)


 


Spirit
SPE US Plainview, LLC (1)


 


(a
Delaware LLC)


 


Spirit
SPE Covina, LLC


 


(a
Delaware LLC)


 


Spirit
SPE Portfolio


 


2005-1,
LLC


 


(a
Delaware LLC)


 


Spirit
SPE Portfolio


 


2005-2,
LLC


 


(a
Delaware LLC)


 


Spirit
SPE Portfolio


 


2005-3,
LLC


 


(a
Delaware LLC)


 


Spirit
SPE Portfolio


 


2005-5,
LLC


 


(a
Delaware LLC)


 


Spirit
SPE General Holdings, LLC


 


(a
Delaware LLC)


 


Spirit
Limited Holdings, LLC


 


(a
Delaware LLC)


 


ii





















 


Spirit
SPE General Holdings II, LLC


 


(a
Delaware LLC)


 


Spirit
SPE Portfolio 2005-4, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Vernon, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Levelland, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Lubbock, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Burkburnett, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Wichita Falls, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Childress, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Amarillo 522, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Amarillo 526, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Amarillo 527, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Amarillo 533, LP


 


(a
Delaware limited partnership)


 


iii





















 


Spirit
SPE US Snyder, LP


 


(a
Delaware limited partnership)


 


Spirit
SPE US Perryton, LP


 


(a
Delaware limited partnership)


 


iv





















 


SCHEDULE B


 


INSURANCE


 


[to
follow]


 


i





















 


APPENDIX A


 


REPRESENTATIONS AND WARRANTIES


 


i





















 


Representations, Warranties and
Indemnities in Favor of


Buyer and Subsequent Purchasers
with Respect to the Loans and the LLC Interests


 


(I)                                    By delivering a Transaction Notice, Seller
shall be deemed to represent and warrant to Buyer, unless otherwise disclosed
to and approved by Buyer, with respect to each such Loan transferred on any
Purchase Date and, unless otherwise expressly disclosed by Seller in the list
of exceptions to these representations and warranties listed in the schedule of
exceptions delivered by Seller (the “Exception Schedule”) and approved by
Buyer, as of each Purchase Date (or such other date as specified below), as
follows:


 


(a)                                  Immediately prior to the
transfer and assignment of the Loan to Buyer, Seller had good and insurable fee
title to, and was the sole owner and holder of, the Loan, free and clear of any
and all liens, encumbrances and other interests on, in or to the Loan.  Unless the Mortgage is in the name of the
Collateral Agent, the related Assignment of Mortgage and assignment of leases
and rents (if any), constitutes the legal, valid and binding assignment of the
Mortgage and the related assignment of leases and rents from Seller to the
Collateral Agent on behalf of the Buyer. The endorsement of each Note is
genuine, properly endorsed and constitutes the legal, valid and binding
assignment of the Note and, together with the Assignment of Mortgage and
assignment of leases and rents (if any), legally and validly conveys all right,
title and interest in the subject Loan from Seller to Buyer.


 


(b)                                 Seller has full right and
authority to sell, contribute, assign and transfer the Loan to Buyer.  The entire agreement with the related Borrower
(whether originated by Seller or a different originator) is contained in the
Loan Documents and there are no warranties, agreements or options regarding
such Loan or the related Mortgaged Property not set forth therein.  Other than the Loan Documents, there are no
agreements between any predecessor in interest in the Loan and the Borrower.


 


(c)                                  The information pertaining
to the Loan set forth in the Loan Schedule is true and correct in all
material respects.  The Loan is an
Eligible Asset. The Loan was originated or acquired in accordance with, and
fully complies with, the Underwriting Guidelines in all material respects.  The related Custodian’s Loan File contains
all of the documents and instruments required to be contained therein.


 


(d)                                 The following (“Permitted
Exceptions”): (i) liens for real estate taxes and special assessments not
yet due and payable or due but not yet delinquent, (ii) covenants,
conditions and restrictions, rights-of-way, easements and other matters of
public record, such exceptions being of a type or nature that are acceptable to
mortgage lending institutions generally, (iii) certain purchase options
and (iv) other matters to which like properties are commonly subject,
which matters referred to in clauses (i), (ii), (iii), and (iv) do not,
individually or in the aggregate, materially interfere with the value of the
Mortgaged Property, do not materially interfere or restrict the current use or
operation of the Mortgaged Property relating to the Loan and do not materially
interfere 


 





















 


with the security intended to be provided by the
Mortgage, the current use or operation of the Mortgaged Property or the current
ability of the Mortgaged Property to generate net operating income sufficient
to service the Loan.  Financing
Statements have been filed and/or recorded (or, if not filed and/or recorded,
have been submitted in proper form for filing and recording), in all public
places necessary to perfect a valid first priority security interest in all
items of personal property pledged by the Borrower, if any, in connection with
such Loan and in all cases, subject to any applicable purchase money security
interest and to the extent perfection may be effected pursuant to applicable
law solely by recording or filing Financing Statements.


 


(e)                                  With respect to each Loan,
the related Mortgage constitutes a valid, legally binding and enforceable first
priority lien upon the related Mortgaged Property securing such Loan and the
improvements located thereon and forming a part thereof, prior to all other
liens and encumbrances, except for Permitted Exceptions.  The lien of the Mortgage is insured by an
ALTA lender’s title insurance policy (“Title Policy”), or its equivalent as
adopted in the applicable jurisdiction, issued by a nationally recognized title
insurance company, insuring the originator of the Loan, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Loan after all advances of principal, subject only to
Permitted Exceptions (or, if a title insurance policy has not yet been issued
in respect of the Loan, a policy meeting the foregoing description is evidenced
by a commitment for title insurance “marked up” (or by “pro-forma” otherwise
agreed to in a closing instruction letter countersigned by the title company)
as of the closing date of the Loan). 
Each Title Policy (or, if it has yet to be issued, the coverage to be
provided thereby) is in full force and effect, all premiums thereon have been paid
and no material claims have been made thereunder and no claims have been paid
thereunder.  Seller has not, by act or
omission, done anything that would materially impair the coverage under such
Title Policy.  Immediately following the
transfer and assignment of the Loan to Buyer, such Title Policy (or, if it has
yet to be issued, the coverage to be provided thereby) will inure to the
benefit of Buyer without the consent of or notice to the insurer.


 


(f)                                    Seller has not waived any
material default, breach, violation or event of acceleration existing under the
Mortgage or Mortgage Note.


 


(g)                                 The Borrower has not waived
any material default, breach, violation or event of acceleration by the Tenant
existing under the Lease.


 


(h)                                 There is no valid offset,
defense or counterclaim to the payment or performance obligations of the Loan.


 


(i)                                     The Mortgaged Property
securing any Loan is free and clear of any damage that would materially and
adversely affect its value as security for the Loan.  No proceeding for the condemnation of all or
any material portion of the Mortgaged Property has been commenced and the
Mortgaged Property is free and clear of any damage that would materially and
adversely affect the value or use of such Mortgaged Property.


 





















 


(j)                                     The Loan complied with all
applicable usury laws in effect at its date of origination.


 


(k)                                  The proceeds of the Loan
have been fully disbursed and there is no requirement for future advances
thereunder.  All costs, fees and expenses
incurred in making, closing and recording the Loan, including, but not limited
to, mortgage recording taxes and recording and filing fees relating to the
origination of such Loan, have been paid. 
Any and all requirements as to completion of any on-site or off-site
improvement by the Borrower and as to disbursements of any escrow funds
therefor that were to have been complied with have been complied with.


 


(l)                                     The Borrower under the
related Mortgage Note, Mortgage and all other Loan Documents had the power,
authority and legal capacity to enter into, execute and deliver the same, and,
as applicable, such Mortgage Note, Mortgage and Loan Documents have been duly
authorized, properly executed and delivered by the parties thereto, and each is
the legal, valid and binding obligation of the maker thereof (subject to any
non recourse provisions contained in any of the foregoing agreements and any
applicable state anti deficiency legislation), enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).


 


(m)                               All improvements upon the
Mortgaged Property securing any Loan are insured under insurance policies (as
described in Schedule A the “Insurance Schedule”).  The Loan documents require the Borrower to
maintain, or cause the Tenant to maintain, and the Lease requires the Tenant to
maintain insurance coverage described on the Insurance Schedule and all
insurance required under applicable law including, without limitation,
insurance against loss by hazards with extended coverage in an amount (subject
to a customary deductible) at least equal to the full replacement cost of the
improvements located on such Mortgaged Property, including without limitation,
flood insurance if any portion of the improvements located upon the Mortgaged
Property was, at the time of the origination of the Loan, in a flood zone area
as identified in the Federal Register by the Federal Emergency Management
Agency as a 100 year flood zone or special hazard area, and flood insurance was
available under the then current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance carrier.  The Loan Documents require the Borrower to
maintain, or to cause the Tenant to maintain on the Mortgaged Property securing
any Loan a fire and extended perils insurance policy, in an amount not less
than the replacement cost and the amount necessary to avoid the operation of
any co-insurance provisions with respect to the Mortgaged Property. All such
insurance policies contain a standard “additional insured” clause (or similar
clause) naming the Borrower (as landlord under the related Lease), its
successors and assigns (including, without limitation, subsequent owners of the
Mortgaged Property), as additional insured, and may not be reduced, terminated
or canceled without thirty (30) days’ prior written notice to the additional
insured.  In addition, the Mortgage
requires the Borrower to (i) cause Seller, as the Mortgagee, to be named
as an additional insured mortgagee, and (ii) maintain (or to require the
Tenant to


 





















 


maintain) in respect of the Mortgaged Property
workers’ compensation insurance (if applicable), commercial general, liability
insurance in amounts generally required by Seller, and at least 6 months rental
or business interruption insurance.  The
related Loan Documents obligate the Borrower to maintain such insurance and, at
such Borrower’s failure to do so, authorizes the mortgagee to maintain such
insurance at the Borrower’s cost and expense and to seek reimbursement therefor
from such Borrower.  Each such insurance
policy, as applicable, is required to name the holder of the Mortgage as an
additional insured or contain a mortgagee endorsement naming the holder of the
Mortgage as loss payee and requires prior notice to the holder of the Mortgage
of termination or cancellation, and no such notice has been received, including
any notice of nonpayment of premiums, that has not been cured.  There have been no acts or omissions that
would impair the coverage of any such insurance policy or the benefits of the
mortgage endorsement.  All insurance
contemplated in this section is maintained with insurance companies with a
General Policy Rating of “A” or better by S&P or A:VI or better by Best’s
Insurance Guide and are licensed to do business in the state wherein the
Borrower or the Mortgaged Property subject to the policy, as applicable, is
located.


 


(n)                                 The Mortgaged Property
securing any Loan was subject to one or more environmental site assessments or
reports (or an update of a previously conducted assessment or report) prior to
the origination of such Loan, and Seller has no knowledge of any material and
adverse environmental conditions or circumstance affecting such Mortgaged
Property that was not disclosed in the related assessment or report(s).  There are no material and adverse
environmental conditions or circumstances affecting the Mortgaged Property
securing any such Loan other than, with respect to any adverse environmental
condition described in such report, those conditions for which remediation has
been completed and, thereafter, to the extent that such report or remediation
program so recommended, (i) a program of annual integrity testing and/or
monitoring was recommended and implemented in connection with the Mortgaged
Property securing any such Loan or an adjacent or neighboring property; (ii) an
operations and maintenance plan or periodic monitoring of such mortgaged
Property or nearby properties was recommended and implemented or (iii) a
follow-up plan was otherwise required to be taken under CERCLA (as defined
below) or under regulations established thereunder from time to time by the
Environmental Protection agency and such plan has been implemented in the case
of (i), (ii) and (iii) above, the Seller determined in accordance
with the Underwriting Guidelines that adequate funding was available for such
program or plan, as applicable.  Seller
has not taken any action with respect to the Loan or the Mortgaged Property
securing such Loan that could subject Buyer, or its successors and assigns in
respect of the Loan, to any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) or any
other applicable federal, state or local environmental law, and Seller has not
received any actual notice of a material violation of CERCLA or any applicable
federal, state or local environmental law with respect to the Mortgaged
Property securing such Loan that was not disclosed in the related report.  The Mortgage or other Loan Documents require
the Borrower (and the Leases require the Tenant) to comply with all applicable
federal, state and local environmental laws and regulations.


 





















 


(o)                                 The Loan is not
cross-collateralized with any mortgage loan that is not a Purchased Asset.


 


(p)                                 The terms of the Mortgage,
Mortgage Note, and other Loan Documents have not been impaired, waived,
altered, modified, satisfied, canceled or subordinated in any material respect,
except by written instruments that are part of the Custodian’s Loan File,
recorded or filed in the applicable public office if necessary to maintain the
priority of the lien of the related Mortgage, delivered to Buyer or its
designee.


 


(q)                                 There are no delinquent
taxes, ground rents, assessments for improvements or other similar outstanding
lienable charges affecting the Mortgaged Property which are or may become a
lien of priority equal to or higher than the lien of the Mortgage.  For purposes of this representation and
warranty, real property taxes and assessments shall not be considered unpaid
until the date on which interest and/or penalties would be payable thereon.


 


(r)                                    Except for Loans secured by
Ground Leases, the interest of the Borrower in the Mortgaged Property consists
of a fee simple estate in real property.


 


(s)                                  Each Loan is a whole loan
and not a participation interest.


 


(t)                                    The assignment of the
Mortgage referred to in the Custodian’s Loan File constitutes the legal, valid
and binding assignment of such Mortgage from the relevant assignor to Buyer or
to the Collateral Agent.  The Assignment
of Leases and Rents set forth in the Mortgage or separate from the Mortgage and
related to and delivered in connection with each Loan establishes and creates a
valid, subsisting and, subject only to Permitted Exceptions, enforceable first
priority lien and first priority security interest in the Borrower’s interest
in all leases, subleases, licenses or other agreements pursuant to which any
person is entitled to occupy, use or possess all or any portion of the real
property subject to the Mortgage, and each assignor thereunder has the full
right to assign the same.  The related
assignment of Mortgage or any assignment of leases and rents not included in a
Mortgage, executed and delivered in favor of Buyer is in recordable form and
constitutes a legal, valid and binding assignment, sufficient to convey to the
assignee named therein all of the assignor’s right, title and interest in, to
and under such assignment of leases and rents.


 


(u)                                 All escrow deposits relating
to the Loan that are required to be deposited with the related Seller or its
agent have been so deposited.


 


(v)                                 As of the date of
origination of such Loan and, as of the Transfer Date, as the case may be, the
Mortgaged Property securing such Loan was and is free and clear of any
mechanics’ and materialmen’s liens or liens in the nature thereof which create
a lien prior to that created by the Mortgage, except those which are insured
against by the Title Policy referred to in (e) above.


 


(w)                               As of the date of the
origination of the Loan, no improvement that was included for the purpose of
determining the appraised value of the related Mortgaged


 





















 


Property securing such Loan at the time of
origination of the Loan lay outside the boundaries and building restriction
lines of such property in any way that would materially and adversely affect
the value of such Mortgaged Property or the ability to operate the Mortgaged
Property under the related Lease (unless affirmatively covered by the title
insurance referred to in paragraph (e) above), and no improvements on
adjoining properties encroached upon such Mortgaged Property to any material
extent.


 


(x)                                   (i) There exists no
material default, breach or event of acceleration under the Loan, the Master
Loan Agreement or any of the Loan Documents or the Lease, (ii) there
exists no event (other than payments due but not yet delinquent) that, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute such a material default, breach or event of acceleration and (iii) no
payment on any Loan is, or has previously been 30 or more days delinquent,
however, that this representation and warranty does not cover any default,
breach or event of acceleration that specifically pertains to any matter
otherwise covered or addressed by any other representation and warranty made by
Seller with respect to the Loans.


 


(y)                                 In connection with the
origination of each Loan, Seller inspected or caused to be inspected the
Mortgaged Property securing the Loan by inspection, appraisal or otherwise as
required in Seller’s Underwriting Guidelines then in effect.


 


(z)                                   The Loan contains no equity
participation by or shared appreciation rights in the lender or beneficiary
under the Mortgage, and does not provide for any contingent or additional
interest in the form of participation in the cash flow of the Mortgaged
Property securing the Loan, or for negative amortization.


 


(aa)                            No holder of the Loan has
advanced funds or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the Mortgaged Property securing the Loan,
directly or indirectly, for the payment of any amount required by the Loan
(other than amounts paid by the Tenant as specifically provided under the
related Lease).


 


(bb)                          To Seller’s knowledge, based
on due diligence customarily performed in the origination or acquisition of
comparable mortgage loans by Seller, as of the date of origination or
acquisition of the Loans, the related Borrowers were in compliance with all
applicable laws relating to the ownership and operation of the Mortgaged
Properties securing the Loan as they were then operated and were in possession
of all material licenses, permits and authorizations required by applicable
laws for the ownership and operation of such Mortgaged Properties as they were
operated; and, to the Seller’s knowledge, (1) the Tenant is not in default
of its obligations under any such applicable license, permit or agreement and (2) each
such license, permit and agreement is in full force and effect.  With respect to Mortgaged Properties that are
operated as franchised properties, and except with respect to Loans for which
the related Tenant is the franchisor, the Tenant of such Mortgaged Property has
entered into a legal, valid, and binding franchise agreement and such Tenant
has represented in the applicable lease documents that, as of the date of
origination or acquisition of the Loan, there were no defaults under the
franchise agreement by such Tenant.


 





















 


(cc)                            The origination, servicing
and collection practices Seller used with respect to the Loan, have complied with
applicable law in all material respects and are consistent and in accordance
with the terms of the related Loan Documents and in accordance with the
applicable servicing standard and customary industry standards.


 


(dd)                          The Mortgage or Mortgage
Note, together with applicable state law, contains customary and enforceable
provisions (subject to the exceptions set forth in paragraph (l) above) such as
to render the rights and remedies of the holders thereof adequate for the
practical realization against the Mortgaged Property securing the Loan of the
principal benefits of the security intended to be provided thereby, including
the right of foreclosure under the laws of the state in which the Mortgaged
Property securing the Loan is located governing foreclosures of mortgages and
deeds of trust under power of sale.


 


(ee)                            The Mortgage provides that
insurance proceeds and condemnation proceeds will be applied for one of the
following purposes: either to restore or repair the Mortgaged Property securing
the Loan, to repay the principal of the Loan or as otherwise directed by the
holder of such Mortgage.


 


(ff)                                There are no actions, suits,
legal, arbitration or administrative proceedings or investigations by or before
any court or governmental authority or, to the best of Seller’s knowledge,
pending against or affecting the Borrower, the Mortgaged Property securing the
Loan that, if determined adversely to such Borrower, Mortgaged Property
securing the Loan, would materially and adversely affect the value of the
Mortgaged Property securing the Loan or the ability of the Borrower to pay
principal, interest or any other amounts due under the Loan or the Lease, as
applicable.


 


(gg)                          If the Mortgage is a deed of
trust, a trustee, duly qualified under applicable law to serve as such, is
properly designated and serving under such Mortgage.  Except in connection with a trustee’s sale or
as otherwise required by applicable law, after default by the Borrower, no fees
or expenses are payable to such trustee.


 


(hh)                          Except in cases where either
(i) a release of a portion of the Mortgaged Property securing the Loan was
contemplated at origination of the Loan and such portion was not considered
material for purposes of underwriting the Loan, or (ii) release is
conditioned upon the satisfaction of certain underwriting and legal
requirements and the payment of a release price, the Mortgage Note or Mortgage
do not require the holder thereof to release all or any portion of the
Mortgaged Property securing the Loan from the lien of the Mortgage except upon
payment in full of all amounts due under the Loan.


 


(ii)                                  The Mortgage does not permit
the Mortgaged Property securing the Loan to be encumbered by any lien junior to
or of equal priority with the lien of the Mortgage (excluding any lien relating
to another Loan that is cross collateralized with the Loan) without the prior
written consent of the holder thereof.


 





















 


(jj)                                  The Borrower is not a debtor
in any state or federal bankruptcy or insolvency proceeding.


 


(kk)                            As of the date of
origination or acquisition of each Mortgage by Seller, each Borrower which is
not a natural person was duly organized and validly existing under the laws of
the state of its jurisdiction.


 


(ll)                                  The Loan contains provisions
for the acceleration of the payment of the unpaid principal balance of the Loan
if, without complying with the requirements of the Loan, the Mortgaged Property
securing the Loan, or any controlling interest in the Borrower, is directly or
indirectly transferred or sold.


 


(mm)                      The Loan Documents for each
of the Loans provide that the Borrower is to provide periodic financial and
operating reports including, without limitation, annual profit and loss
statements, statements of cash flow and other related information that Buyer
reasonably requests from time to time.


 


(nn)                          To Seller’s actual
knowledge, based upon zoning letters, zoning report, the title insurance policy
insuring the lien of the Mortgage, historical use and/or other due diligence
customarily performed by Seller in connection with the origination of the Loan,
the improvements located on or forming part of such Mortgaged Property securing
the Loan comply in all material respects with applicable zoning laws and
ordinances (except to the extent that they may constitute legal non-conforming
uses).


 


(oo)                          Each Mortgaged Property is
located within one of the 50 United States or the District of Columbia.


 


(pp)                          With respect to Loans and Net Lease Loans
secured by Mortgaged Property located in California or “seismic zones” 3 or 4, (i) the
related Borrower has obtained, and is required under the Loan Documents to
maintain, earthquake insurance with respect to the Improvements on such
Mortgaged Property or is required to cause the Tenant to maintain (and the
Tenant has obtained) earthquake insurance if such Mortgaged Property is located
in any such area or (ii) the Originator’s investment committee has
approved self-insurance by the Borrower with respect to earthquake risk or (iii) a
seismic study was performed in connection with the origination of such Loan and
such study indicates a probable maximum loss of less than 20% of the appraised
value of such Mortgaged Property.


 


(qq)                          Seller does not have
knowledge of any circumstance or condition with respect to such Loan, the
Mortgaged Property securing the Loan, the Lease or the Borrower’s or the Tenant’s
credit standing that could reasonably be expected to cause Buyer to regard such
Loan as unacceptable security, cause such Loan or Lease to become delinquent or
have a material adverse effect on the value or marketability of such Loan.


 


(rr)                                The Mortgaged Property
securing the Loan has adequate rights of access to public rights-of-way and is
served by utilities, including, without limitation, adequate water, sewer,
electricity, gas, telephone, sanitary sewer, and storm drain facilities. All
public utilities necessary to the continued use and enjoyment of the


 





















 


Mortgaged Property securing the Loan as presently
used and enjoyed are located in such public right-of-way abutting such
Mortgaged Property or are the subject of access easements for the benefit of
the Mortgaged Property, and all such utilities are connected so as to serve
such Mortgaged Property without passing over other property or are the subject
of access easements for the benefit of such Mortgaged Property. All roads
necessary for the full use of the Mortgaged Property securing the Loan for its
current purpose have been completed and dedicated to public use and accepted by
all governmental authorities or are the subject of access easements for the benefit
of such Mortgaged Property.


 


(ss)                            With respect to any Loan
where all or a material portion of the Mortgaged Property securing such Loan is
a leasehold estate, and the related Mortgage does not also encumber the related
lessor’s fee interest in such Mortgaged Property, based upon the terms of the
Ground Lease and any estoppel letter or other writing received from the Ground
Lessor included in the related Custodian’s Loan File and, if applicable, the
related Mortgage:


 


(1)                                  The Ground Lease or a
memorandum regarding such Ground Lease has been duly recorded.  The Ground Lessor has permitted the interest
of the Ground Lessee to be encumbered by the related Mortgage.  To the best of Seller’s knowledge, there has
been no material change in the terms of the Ground Lease since its recordation,
except by any written instruments which are included in the related Custodian’s
Loan File.


 


(2)                                  The Ground Lease may not be
amended, modified, canceled or terminated without the prior written consent of
the lender and that any such action without such consent is not binding on the
lender, its successors or assigns.


 


(3)                                  The Ground Lease has an
original term (or an original term plus one or more optional renewal terms,
which, under all circumstances, may be exercised, and is enforceable, by the
lender) that extends not less than 20 years beyond the stated maturity of the
related Loan.


 


(4)                                  Based on the title insurance
policy referenced in (e) above, the Ground Leasehold interest is not
subject to any liens or encumbrances superior to, or of equal priority with,
the Mortgage, subject to Permitted Encumbrances and liens that encumber the
Ground Lessor’s fee interest.


 


(5)                                  The Ground Lease is
assignable to the lender and its assigns without the consent of the lessor
thereunder.


 


(6)                                  The Ground Lease is in full
force and effect and no default has occurred under the Ground Lease and there
is no existing condition which, but for the passage of time or the giving of
notice, would result in a material default under the terms of the Ground Lease.


 





















 


(7)                                  The Ground Lessor is
required to give notice of any default by the related lessee to the lender.


 


(8)                                  The lender is permitted a
reasonable opportunity (including, where necessary, sufficient time to gain
possession of the interest of the lessee under the Ground Lease through legal
proceedings, or to take other action so long as the lender is proceeding
diligently) to cure any default under the Ground Lease, which is curable after
the receipt of notice of any default, before the Ground Lessor thereunder may
terminate the Ground Lease.


 


(9)                                  Either (i) the Ground Lease does not impose
restrictions on subletting or (ii) the Ground Lessor has consented to the
existing Ground Lease with respect to the related Mortgaged Property securing
the related Loan.  The Ground
Lessor is not permitted to disturb the possession, interest or quiet enjoyment
of any subtenant of the lessee in the relevant portion of the Mortgaged
Property subject to the Ground Lease for any reason, or in any material manner,
which would adversely affect the security provided by the related Mortgage.


 


(10)                            Any related insurance
proceeds or condemnation award (other than in respect of a total or
substantially total loss or taking) is required to be applied either to the
repair or restoration of all or part of the related Mortgaged Property, with
the lender or a trustee appointed by it having the right to hold and disburse
such proceeds as repair or restoration progresses, or to the payment of the
outstanding principal balance of the Loan, together with any accrued interest,
except that in the case of condemnation awards, the Ground Lessor may be
entitled to a portion of such award.


 


(11)                            Any related insurance
proceeds, or condemnation award in respect of a total or substantially total loss
or taking of the related Mortgaged Property is required to be applied first to
the payment of the outstanding principal balance of the Loan, together with any
accrued interest (except as provided by applicable law or in cases where a
different allocation would not be viewed as commercially unreasonable by any
institutional investor, taking into account the relative duration of the Ground
Lease and the related Mortgage and the ratio of the market value of the related
Mortgaged Property to the outstanding principal balance of such Loan).  Until the principal balance and accrued
interest are paid in full, neither the lessee nor the Ground Lessor under the
Ground Lease has an option to terminate or modify the Ground Lease without the
prior written consent of the lender as a result of any casualty or partial
condemnation, except to provide for an abatement of the rent.


 


(12)                            Provided that the lender cures any defaults which are
susceptible to being cured, the Ground Lessor has agreed to enter into a 


 





















 


new lease
upon termination of the Ground Lease for any reason, including rejection of the
Ground Lease in a bankruptcy proceeding.


 


(tt)                                None of the Loans are
construction loans.


 


(uu)                          Each Lease for the related
Mortgaged Property was not delinquent (giving effect to any applicable grace
period) in the payment of any monthly Lease payments (other than percentage
rents that are being recalculated with respect to certain Leases set forth in
the Lease Schedule) as of the Closing Date, and has not been during the time
owned by Seller, 30 days or more delinquent in respect of any monthly Lease
payment required thereunder.


 


(vv)                          Lessor estoppels containing
protection provisions have been obtained from the owner of the fee simple
interest in each Mortgaged Property in which Seller has only a ground leasehold
interest.


 


(ww)                      Neither each Lease nor any
other agreement, document or instrument executed in connection with such Lease
has been waived, modified, altered, satisfied, cancelled or subordinated in any
material respect, and such Lease has not been terminated or cancelled, nor has
any instrument been executed that would effect any such waiver, modification,
alteration, satisfaction, termination, cancellation, subordination or release,
except in each case by a written instrument that is part of the related
Custodian’s Loan File.


 


(xx)                              The Loan is not a Defaulted
Loan or a Delinquent Loan as of the Closing Date.


 


(yy)                          There are no pending
actions, suits or proceedings by or before any court or governmental authority
against or affecting, any Lease, such Mortgaged Property or, to Seller’s
knowledge, the Tenant, that is reasonably likely to be determined adversely
and, if determined adversely, would materially and adversely effect the value
of the Lease or use or value of the Mortgaged Property, or the ability of the
Tenant to pay any amounts due under the Lease.


 


(zz)                              All of the material
improvements built or to be built on the Mortgaged Property that were included
for the purpose of determining the appraised value of the Mortgaged Property
lay within the boundaries of such Mortgaged Property and there are no
encroachments into the building setback restriction lines of such Mortgaged
Property in any way that would materially and adversely affect the value of the
Mortgaged Property or the ability of the Tenant to pay any amounts due under
the Lease (unless affirmatively covered in the applicable Title Policy
described in (h) above.)


 


(aaa)                      There is no valid dispute,
claim, offset, defense or counterclaim to Seller’s rights in the Lease.


 


(bbb)                   Each Lease or other agreement, document or
instrument executed in connection with such Lease is the legal, valid and
binding and enforceable obligation


 





















 


of the Tenant (subject to certain creditors’ rights
exceptions and other exceptions of general application) and is in full force
and effect.


 


(ccc)                      Each Lease, together with
applicable state law, contains customary and enforceable provisions such as to
render the rights and remedies of the lessors thereof adequate for the
practical realization against the related Mortgaged Property of the principal
benefits of the security intended to be provided thereby.


 


(ddd)                   With respect to each Mortgaged Property:


 


(1)                                  such Mortgaged Property is
not subject to any lease other than a sublease and/or the related Lease; no
person has any possessory interest in, or right to occupy, the leased property
except under and pursuant to the Lease or such sublease; the Tenant (or
sub-tenant) is in occupancy of the Mortgaged Property and is paying rent
pursuant to the Lease; and, in the case of any sublease, the Tenant remains
primarily liable on the Lease;


 


(2)                                  except with respect to those
Properties with respect to which the Tenant can terminate the related Lease
during the last 42 months of the lease term in the event of a casualty and any
insurance proceeds related thereto are payable to the Tenant, the obligations
of the Tenant, including, but not limited to, the obligation to pay fixed and
additional rent, are not affected by reason of: any damage to or destruction of
any portion of the leased property; any taking of the leased property or any
part thereof by condemnation or otherwise; or any prohibition, limitation,
interruption, cessation, restriction, prevention or interference of the Tenant’s
use, occupancy or enjoyment of the leased property, except the Tenant’s rights
to abate or terminate its obligation to pay fixed or additional rent are
coupled with insurance proceeds or condemnation awards going to the lessor; or
the right to abate as a result of a landlord’s default;


 


(3)                                  Seller as lessor under the
Lease does not have any monetary obligations under the Lease that have not been
satisfied;


 


(4)                                  the Tenant has not been
released, in whole or in part, from its obligations under the terms of the
Lease;


 


(5)                                  all obligations related to
the initial construction of the improvements on the Mortgaged Property have
been satisfied and except for the obligation to rebuild such improvements after
a casualty (which obligation is limited by available insurance proceeds),
Seller does not have any nonmonetary obligations under the Lease and has made
no representation or warranty under the Lease, the breach of which would result
in the abatement of rent, a right of setoff or termination of the Lease;


 





















 


(6)                                  there is no right of
rescission, set-off, abatement (except in the case of casualty or
condemnation), diminution, defense or counterclaim to the Lease, nor does the
operation of any of the terms of the Lease, or the exercise of any rights
thereunder, render the Lease unenforceable, in whole or in part, or subject to
any right of rescission, set-off, abatement, diminution, defense or
counterclaim, and no such right has been asserted;


 


(7)                                  the Tenant has agreed to
indemnify the lessor from any claims of any nature relating to the Lease and
the related leased property other than the lessor’s gross negligence or willful
misconduct, including, without limitation, arising as a result of violations of
environmental and hazardous waste laws resulting from the Tenant’s operation of
the property;


 


(8)                                  any obligation or liability
imposed on the lessor by any easement or reciprocal easement agreement is also
an obligation of the Tenant under the Lease;


 


(9)                                  the Tenant is required to
make rental payments as directed by the lessor and its successors and assigns;
and


 


(10)                            except in certain cases
where the Tenant may exercise a right of first refusal, the Lease is freely
assignable by the lessor and its successors and assigns to any person without
the consent of the Tenant, and in the event the lessor’s interest is so
assigned, the Tenant is obligated to recognize the assignee as lessor under
such Lease, whether under the Lease or by operation of law.


 


(eee)                      In connection with Leases
with a guaranty:


 


(1)                                  such guaranty, on its face,
is unconditional, irrevocable and absolute, and is a guaranty of payment and
not merely of collection and contains no conditions to such payment, other than
a notice and right to cure; and the guaranty provides that it is the guaranty
of both the performance and payment of the financial obligations of the Tenant
under the Lease and does not provide for offset, counterclaim or defense; and


 


(2)                                  such guaranty is binding on
the successors and assigns of the guarantor and inures to the benefit of the
lessor’s successors and assigns and cannot be released or amended without the
lessor’s consent or unless a predetermined performance threshold is achieved.


 


(fff)                            No fraudulent acts were
committed by Seller during the origination process with respect to the Lease
related to such Mortgaged Property.


 





















 


(ggg)                   The origination, servicing and collection of
monthly Lease payments on such Lease is in all respects legal, proper and
prudent and in accordance with customary industry standards.


 


(hhh)                   To the extent required under applicable law,
Seller was authorized to transact and do business in the jurisdiction in which
such Mortgaged Property is located, except where such failure to qualify would
not result in a material adverse effect on the enforceability of the related
Lease.


 


(iii)                               The Custodian’s Loan File
contains a survey with respect to such Mortgaged Property, which survey was
deemed sufficient to delete the standard title survey exception (to the extent
the deletion of such exception is available in the related state).


 


(jjj)                               The Seller did not
intentionally select such Loan, whether individually or together with other
Loans, in a manner adverse to Buyer or in a manner that results in Buyer
receiving Loans that are of lesser quality than Loans pledged to other lenders
pursuant to any other facility to which Seller or any of its Affiliates are a
party.


 


(kkk)                      With respect to any of the
Properties which are the subject of a Master Lease (noting that not all
properties subject to such Master Lease are included in the Properties), the
lessor under the Master Lease has assigned its interest in the Leases of the
Properties to Seller and Seller and the other lessors under the Master Leases
have entered into inter-lessor agreements by which the rents and the rights to
enforce the provisions of the Master Leases pertinent to any of the Properties
have also been assigned to Seller.


 


(lll)                               Such Mortgaged Property is (i) free
of any damage that would materially and adversely affect the use or value of
such Mortgaged Property, (ii) in good repair and condition so as not to
materially and adversely affect the use or value of such Mortgaged Property;
and all building systems contained in such Mortgaged Property are in good
working order so as not to materially and adversely affect the use or value of
such Mortgaged Property.


 


(mmm)             All security deposits collected in
connection with such Mortgaged Property are being held in accordance with all
applicable laws.


 


(nnn)                   Seller has taken (or has caused to
be taken) all such actions and precautions as a reasonably prudent lender would
take to protect and preserve the Collateral and its security interest in all
Collateral, including without limitation, notation of Seller as lien holder on
any certificates of title to property the nature of which is such that
ownership thereof is evidenced by a certificate of title, where such notation
is required under applicable law to perfect the interest therein.


 


(ooo)                   Each Mortgage, Security Agreement and
every other Loan Document, contains customary and enforceable provisions so as
to render the rights and remedies of the holder thereof adequate for the
practical realization of the benefits of the


 





















 


security
interests intended to be provided thereby, including, where applicable, by
judicial foreclosure, subject to the limitations described in the next
succeeding sentence. There is no exemption under existing law available to the
related Borrower which would interfere with the mortgagee’s or secured party’s
right to foreclose or to realize upon such related Mortgage, Security Agreement
or other Loan Document, if any, as applicable, other than which may be
available under the insolvency laws, other laws of general application relating
to or affecting the enforcement of creditors’ rights generally, applicable debt
relief or homestead statutes or general principles of equity.


 


(ppp)                   [reserved]


 


(qqq)                   As of the date of origination, the LTV
(as defined in the Underwriting Guidelines) of such Loan (other than Net Lease
Loans) does not exceed the required LTV specified in the Underwriting
Guidelines for such Loan type. With respect to Net Lease Loans, as of the date
of origination, the fair market value of the Mortgaged Property relating to
such Net Lease Loan, as determined by an Appraisal, was at least 100% of the
principal amount of such Net Lease Loan.


 


(rrr)                            There has been performed, not more than
six months prior to the origination date for such Loan, an Appraisal of the
related Mortgaged Property.


 


(sss)                      All principal, interest and any other
amounts due under such Loan are payable in U.S. dollars.  Interest and, as applicable, principal, is
payable on a monthly basis.


 


(ttt)                            Neither the Borrower nor any officer,
director, employee, member or Affiliate thereof is an officer, director,
employee, shareholder or partner or Affiliate of the Originator or Seller.


 


(uuu)                   The information furnished to Buyer by
Seller and its Affiliates in connection with Buyer’s investigation of each
Loan, whether before or after the date hereof, is true and correct in all
material respects and does not omit any information necessary to make the
statements contained therein not misleading.


 


(vvv)                   There is no action, suit, legal or
arbitration proceeding or administrative proceeding or investigation pending
or, to the best of Seller’s knowledge, threatened against or affecting any
Loan, Loan Document, Borrower or Collateral that have a reasonable probability
of having a material adverse effect on the Mortgaged Property or the related
Loan.


 


(www)             Seller is not subject to any judgment,
writ, decree, injunction or order of any federal, foreign, state or local court
or Governmental Authority relating to the acquisition, collection,
administration or enforcement of any Loan or the foreclosure, acquisition or
disposition of any Collateral or, in each case, any transactions or activities
incidental thereto.


 


(xxx)                         The transfer and assignment of the Loans
by Seller pursuant to this Agreement (i) does not constitute a sale of all
or substantially all of Seller’s assets and 


 





















 


(ii) is not subject
to the bulk transfer, bulk sales or any similar statutory provisions in effect
in any applicable jurisdiction.


 





















 


(II)                                By delivering a Transaction Notice, Seller shall be deemed to
represent and warrant to Buyer, unless otherwise disclosed to and approved by
Buyer, with respect to each of the LLC Interests transferred on any Purchase
Date and, unless otherwise expressly disclosed by Seller in the Exception Schedule and
approved by Buyer, as of each Purchase Date (or such other date as specified
below), as follows:


 


(a)                                     Immediately
prior to the transfer and assignment to the Buyer, the Seller has good title to
and is the 100% owner and holder of the LLC Interests.  Immediately prior to the transfer and
assignment to the Buyer, the LLC Interests are not subject to an assignment or
pledge and the Seller has full right and authority to sell and assign the LLC
Interests.  The Seller is transferring
such LLC Interests to the Buyer free and clear of any and all liens, pledges,
charges or security interests of any nature encumbering the LLC Interests.


 


(b)                                    The initial
issuance and sale of the LLC Interests was duly authorized by all requisite
action on the part of the applicable Net Lease Borrower.  The LLC Interests conform as of the related
Purchase Date to the description thereof contained in the related LLC
Agreement, are duly and validly authorized, executed, and delivered in
accordance with the related LLC Agreement, and are validly issued and
outstanding and entitled to the benefits of such LLC Agreement.  The LLC Interests are fully paid and
non-assessable and have been offered, issued and sold to the Seller in
compliance with all applicable laws.


 


(c)                                     The LLC
Interests are in certificated form and held by Seller.


 


(d)                                    Other than with
respect to the Transaction contemplated by this Agreement, there are (i) no
outstanding rights, options, warrants or agreements for a purchase, sale or
issuance, in connection with the LLC Interests, (ii) no agreements on the
part of the Seller to sell or distribute the LLC Interests, and (iii) no
obligations on the part of the Seller (contingent or otherwise) to purchase,
repurchase, redeem or otherwise acquire any securities or any interest therein
(other than from the Buyer) or to pay any dividend or make any distribution in
respect of the LLC Interests (other than to the Buyer).


 


(e)                                     The information
set forth on the Loan Schedule is true and correct in all material
respects as of the first day of the month for which such Loan Schedule relates
or such other date as may be indicated in such schedule.


 


(f)                                       Except as
otherwise permitted by the Agreement, the terms of the related Program
Documents and the related LLC Interests have not been impaired, altered or
modified in any material respect.


 


(g)                                    The LLC
Interests are assignable by the Buyer in accordance with the LLC Agreement.  The related Program Documents permit the
Buyer to sell, assign, pledge or transfer such LLC Interests.


 


(h)                                    All reports
provided by the Seller to the Buyer in connection with the Transaction
contemplated hereunder are true and correct in all material respects.


 





















 


(i)                                        The related Net
Lease Borrower is not in default under any material provisions of any
agreement, contract, instrument or indenture to which such Net Lease Borrower
is a party or by which it is bound, nor has any event occurred which, with
notice or lapse of time or both, would constitute a default under any such
agreement, contract, instrument or indenture, which event of default could have
a material adverse effect on the performance by the Seller of its obligations
under the Program Documents to which it is a party.