Document:

Exhibit 10.2

 

GUARANTY

 

This GUARANTY is made and entered
into by CRIIMI MAE Inc., a Maryland corporation, whose address is 11200
Rockville Pike, Suite 400, Rockville, MD 20852 (“Guarantor”), for the
benefit of Deutsche Bank AG, Cayman Islands Branch, a branch of a foreign
banking institution, whose address is 60 Wall Street, 10th Floor,
New York, New York  10005 (“Buyer”).  This Guaranty is made with reference to the
following facts (with some capitalized terms being defined below):

 

A.                                   Seller
and Buyer have entered into that certain Master Repurchase Agreement, dated
June 30, 2004 (the “Repurchase Agreement”), pursuant to which the Buyer
may, from time to time, purchase, Securities from the Seller (the
“Transactions”);

 

B.                                     Buyer
has requested, as a condition of entering into the Repurchase Agreement, that
the Guarantor deliver to Buyer this Guaranty;

 

C.                                     Guarantor
is an Affiliate of Seller;

 

D.                                    Guarantor
expects to benefit if Buyer enters into the Repurchase Agreement with Seller,
and desires that Buyer enter into the Repurchase Agreement with Seller; and

 

E.                                      Buyer
would not enter into, and would not be obligated to enter into, the Repurchase
Agreement with Seller unless Guarantor executed this Guaranty.  This Guaranty is therefore delivered to
Buyer to induce Buyer to enter into the Repurchase Agreement.

 

NOW, THEREFORE, in
exchange for good, adequate, and valuable consideration, the receipt of which
Guarantor acknowledges, and to induce Buyer to enter into the Repurchase
Agreement, Guarantor agrees as follows:

 

1.                                       Definitions.  For purposes of this Guaranty, the following
terms shall be defined as set forth below. 
In addition, any capitalized term defined in the Repurchase Agreement
but not defined in this Guaranty shall have the same meaning in this Guaranty
as in the Repurchase Agreement.

 

(a)  “Guarantied Obligations” means (a)
10% of Seller’s obligation to pay the Repurchase Price with respect to the
Eligible CRIIMI Securities due under the Repurchase Documents at the times and
according to the terms required by the Repurchase Documents, without regard to
any modification, suspension, or limitation of such terms not agreed to by
Buyer, such as a modification, suspension, or limitation arising in or pursuant
to any Insolvency Proceeding affecting Seller (even if any such modification,
suspension, or limitation causes Seller’s obligation to become discharged or
unenforceable and even if such modification was made with Buyer’s consent or
agreement); and (b) to pay all reasonable sums expended by Buyer or Buyer’s
designee or nominee acting on Buyer’s behalf in exercising Buyer’s rights and
remedies to enforce this Guaranty, including Buyer’s Legal Costs relating
thereto.  Notwithstanding anything to
the contrary herein, Guarantied Obligations shall not include

 

 

 

Seller’s obligation to pay all or any portion of the
Repurchase Price with respect to the Eligible GNMA Securities.

 

(b)  “Insolvency Proceeding” means any
case under Title 11 of the United States Code or any successor statute or any
other insolvency, bankruptcy, reorganization, liquidation, or like proceeding,
or other statute or body of law relating to creditors’ rights, whether brought
under state, federal, or foreign law.

 

(c)  “Legal Costs” means all reasonable
costs and expenses incurred by Buyer in any Proceeding to enforce this
Guaranty, including reasonable attorneys’ fees, disbursements, and other
reasonable charges incurred by Buyer’s attorneys, court costs and expenses, and
reasonable charges for the services of paralegals, law clerks, and all other
personnel whose services are charged to Buyer in connection with Buyer’s
receipt of legal services.

 

(d)  “Buyer Entity” means, as designated
by Buyer from time to time, Buyer or Buyer’s assignee, designee, nominee,
servicer, or wholly owned subsidiary.

 

(e)  “Repurchase Documents” means: (a) the
Repurchase Agreement, as defined in the recitals; (b) any other Transaction
Documents or other documents or instruments relating to any such Transaction
Documents executed by Seller or Guarantor; and (c) any modifications,
extensions, renewals, restatements, or replacements of any of the foregoing,
whether or not consented to by Guarantor. 
If the Repurchase Documents, as so defined, are modified pursuant to any
Insolvency Proceeding, then (whether or not such modification was made with
Buyer’s consent or agreement) Buyer may, at Buyer’s option, deem the definition
of Repurchase Documents either (1) to have been modified to reflect any such
modification, or (2) to continue as it was, without regard to any such
modification.

 

(f)  “Proceeding” means any action, suit,
arbitration, or other proceeding arising out of or relating to the enforcement
of this Guaranty.

 

(g)  “Security” means any security or
collateral held by or for Buyer for the Transactions or the Guarantied
Obligations, whether real or personal property, including any mortgage, deed of
trust, financing statement, security agreement, and other security document or
instrument of any kind securing the Transactions in whole or in part.  “Security” shall include all assets and
property of any kind whatsoever pledged or mortgaged to Buyer pursuant to the
Transaction Documents.   Notwithstanding
anything to the contrary herein, “Security” shall not include the Eligible GNMA
Securities.

 

(h)  “Seller” means: (a) Seller as defined
above, acting on its own behalf; (b) any estate created by the commencement of
an Insolvency Proceeding affecting Seller; (c) any trustee, liquidator,
sequestrator, or receiver of Seller or Seller’s property; and (d) any similar person
duly appointed pursuant to any law governing any Insolvency Proceeding of
Seller.

 

(i)  “State” means the State of New York.

 

2.                                       Absolute
Guaranty of All Guarantied Obligations.  Guarantor unconditionally and irrevocably guarantees Seller’s
prompt and complete payment, observance and fulfillment of all Guarantied
Obligations.  Guarantor shall be liable
for, and obligated to pay,

 

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all Guarantied Obligations.  All assets and property of Guarantor shall be subject to recourse
if Guarantor fails to pay and perform any Guarantied Obligation(s) when and as
required to be paid and performed pursuant to the Repurchase Documents.

 

3.                                       Nature and
Scope of Liability. 
Guarantor’s liability under this Guaranty is primary and not
secondary.  Guarantor’s liability under
this Guaranty shall be in the full amount of all Guarantied Obligations.

 

4.                                       Changes in
Repurchase Documents. 
Without notice to, or consent by, Guarantor, and in Buyer’s sole and
absolute discretion and without prejudice to Buyer or in any way limiting or
reducing Guarantor’s liability under this Guaranty, Buyer may: (a) grant
extensions of time, renewals or other indulgences or modifications to Seller or
any other party under any of the Repurchase Document(s), (b) change, amend or
modify any Repurchase Document(s), (c) authorize the sale, exchange, release or
subordination of any Security, (d) accept or reject additional Security in
accordance with the terms of the Repurchase Agreement, (e) discharge or release
any party or parties liable under the Repurchase Documents, (f) foreclose or
otherwise realize on any Security, or attempt to foreclose or otherwise realize
on any Security, whether such attempt is successful or unsuccessful, in
accordance with the terms of the Repurchase Agreement (g) accept or make
compositions or other arrangements or file or refrain from filing a claim in
any Insolvency Proceeding, (h) make other or additional loans to Seller in such
amount(s) and at such time(s) as Buyer may determine, (i) credit payments in
such manner and order of priority to obligations as Buyer may determine in its
discretion; provided such credits shall be consistent with the requirements of
the Repurchase Agreement, and (j) otherwise deal with Seller and any other
party related to the Transactions or any Security as Buyer may determine in its
sole and absolute discretion.  Without
limiting the generality of the foregoing, Guarantor’s liability under this
Guaranty shall continue even if Buyer alters any obligations under the
Repurchase Documents in any respect or Buyer’s or Guarantor’s remedies or
rights against Seller are in any way impaired or suspended without Guarantor’s
consent.  If Buyer performs any of the actions
described in this paragraph, then Guarantor’s liability shall continue in full
force and effect even if Buyer’s actions impair, diminish or eliminate
Guarantor’s subrogation, contribution, or reimbursement rights (if any) against
Seller, or otherwise adversely affect Guarantor or expand Guarantor’s liability
hereunder.

 

5.                                       Nature of
Guaranty.  Guarantor’s
liability under this Guaranty is a guaranty of payment of the Guarantied
Obligations, and is not a guaranty of collection or collectibility.  Guarantor’s liability under this Guaranty is
not conditioned or contingent upon the genuineness, validity, regularity or
enforceability of any of the Repurchase Documents.  Guarantor’s liability under this Guaranty is a continuing,
absolute, and unconditional obligation under any and all circumstances
whatsoever (except as expressly stated, if at all, in this Guaranty), without
regard to the validity, regularity or enforceability of any of the Guarantied
Obligations.  Guarantor acknowledges
that Guarantor is fully obligated under this Guaranty even if Seller had no
liability at the time of execution of the Repurchase Documents or later ceases
to be liable under any Repurchase Document, whether pursuant to Insolvency
Proceedings or otherwise.  Guarantor
shall not be entitled to claim, and irrevocably covenants not to raise or
assert, any defenses against the Guarantied Obligations that would or might be
available to Seller, other than actual payment of all Guarantied Obligations in
full in accordance with their terms. 
Guarantor waives any right to compel Buyer to proceed first against
Seller or any Security before proceeding against Guarantor.  Guarantor agrees that if any of the
Guarantied

 

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Obligations are or become void or unenforceable
(because of inadequate consideration, lack of capacity, Insolvency Proceedings,
or for any other reason), then Guarantor’s liability under this Guaranty shall
continue in full force with respect to all Guarantied Obligations as if they
were and continued to be legally enforceable, all in accordance with their
terms before giving effect to the Insolvency Proceedings. Guarantor also
recognizes and acknowledges that its liability under this Guaranty may be more
extensive in amount and more burdensome than that of Seller.  Guarantor waives any defense that might
otherwise be available to Guarantor based on the proposition that a guarantor’s
liability cannot exceed the liability of the principal.  Guarantor intends to be fully liable under
the Guarantied Obligations regardless of the scope of Seller’s liability
thereunder.  Without limiting the
generality of the foregoing, if the Transactions are “nonrecourse” as to Seller
or Seller’s liability for the Transactions is otherwise limited in some way,
Guarantor nevertheless intends to be fully liable, to the full extent of all of
Guarantor’s assets, with respect to all Eligible CRIIMI Securities’
Transactions, up to the Guaranteed Obligations, even though Seller’s liability
for the Obligations may be less limited in scope or less burdensome.  Guarantor waives any defenses to this
Guaranty arising or purportedly arising from any waiver of the terms of any
Repurchase Document by Buyer or other failure of Buyer to require full
compliance with the Repurchase Documents. 
Guarantor’s liability under this Guaranty shall continue until all sums
due under the Repurchase Documents with respect to the Eligible CRIIMI
Securities have been paid in full, except as expressly provided otherwise (if
at all) in this Guaranty.  Guarantor’s
liability under this Guaranty shall not be limited or affected in any way by
any impairment or any diminution or loss of value of any Security whether
caused by (a) hazardous substances, (b) Buyer’s failure to perfect a security
interest in any Security, (c) any disability or other defense(s) of Seller, or
(d) any breach by Seller of any representation or warranty contained in any
Repurchase Document.

 

6.                                       Waivers of
Rights and Defenses. 
Guarantor waives any right to require Buyer to (a) proceed against
Seller, (b) proceed against or exhaust any Security, or (c) pursue any other
right or remedy for Guarantor’s benefit. 
Guarantor agrees that Buyer may proceed against Guarantor with respect
to the Guarantied Obligations without taking any actions against Seller and
without proceeding against or exhausting any Security.  Guarantor agrees that Buyer may
unqualifiedly exercise in its sole discretion (or may waive or release,
intentionally or unintentionally) any or all rights and remedies available to
it against Seller without impairing Buyer’s rights and remedies in enforcing
this Guaranty, under which Guarantor’s liabilities shall remain independent and
unconditional.  Guarantor agrees and
acknowledges that Buyer’s exercise (or waiver or release) of certain of such
rights or remedies may affect or eliminate Guarantor’s right of subrogation or
recovery against Seller (if any) and that Guarantor may incur a partially or
totally nonreimbursable liability in performing under this Guaranty.  Guarantor has assumed the risk of any such
loss of subrogation rights, even if caused by Buyer’s acts or omissions.  If Buyer’s enforcement of rights and
remedies, or the manner thereof, limits or precludes Guarantor from exercising
any right of subrogation that might otherwise exist, then the foregoing shall
not in any way limit Buyer’s rights to enforce this Guaranty.  Without limiting the generality of any other
waivers in this Guaranty, Guarantor expressly waives any statutory or other
right that Guarantor might otherwise have to: (i) limit Guarantor’s liability
after a nonjudicial foreclosure sale to the difference between the Guarantied
Obligations and the fair market value of the property or interests sold at such
nonjudicial foreclosure sale or to any other extent, (ii) otherwise limit Buyer’s
right to recover a deficiency judgment after any foreclosure sale, or (iii)
require Buyer to exhaust its Security before Buyer may obtain a personal
judgment for any deficiency.  Guarantor
acknowledges and agrees that any nonrecourse or exculpation 

 

4

 

provided for in any Repurchase Document, or any other
provision of a Repurchase Document limiting Buyer’s recourse to specific
Security or limiting Buyer’s right to enforce a deficiency judgment against
Seller or any other person, shall have absolutely no application to Guarantor’s
liability under this Guaranty.  To the
extent that Buyer collects or receives any sums or payments from Seller or any
proceeds of a foreclosure or similar sale, Buyer shall apply such amounts in
accordance with the terms of the Repurchase Agreement.  Without limiting the foregoing, any amounts
collected by Buyer with respect to the Eligible CRIIMI Securities shall be
applied against the Eligible CRIIMI Securities, and Buyer shall not have the
right to apply such amounts first to that portion of Seller’s indebtedness and
obligations to Buyer that is not covered by this Guaranty.

 

7.                                       Additional
Waivers.  Guarantor waives
diligence and all demands, protests, presentments and notices of every kind or
nature, including notices of protest, dishonor, nonpayment, acceptance of this
Guaranty and the creation, renewal, extension, modification or accrual of any
of the Guarantied Obligations.  Guarantor
further waives the right to plead any and all statutes of limitations as a
defense to Guarantor’s liability under this Guaranty or the enforcement of this
Guaranty.  No failure or delay on
Buyer’s part in exercising any power, right or privilege under this Guaranty
shall impair or waive any such power, right or privilege.

 

8.                                       No Duty to
Prove Loss.  To the extent
that Guarantor at any time incurs any liability under this Guaranty, Guarantor
shall immediately pay Buyer (to be applied on account of the Guarantied
Obligations) the amount provided for in this Guaranty, without any requirement
that Buyer demonstrate that Buyer has exercised (to any degree) or exhausted
any of Buyer’s rights or remedies with respect to Seller or any Security.

 

9.                                       Full
Knowledge.  Guarantor
acknowledges, represents, and warrants that Guarantor has had a full and
adequate opportunity to review the Repurchase Documents, the transaction
contemplated by the Repurchase Documents, and all underlying facts relating to
such transaction.  Guarantor represents
and warrants that Guarantor fully understands: (a) the remedies Buyer may
pursue against Seller and/or Guarantor in the event of a default under the
Repurchase Documents, (b) the value (if any) and character of any Security, and
(c) Seller’s financial condition and ability to perform under the Repurchase
Documents.  Guarantor agrees to keep
itself fully informed regarding all aspects of the foregoing and the
performance of Seller’s obligations to Buyer. 
Buyer has no duty, whether now or in the future, to disclose to Guarantor
any information pertaining to Seller, the Transactions or any Security.  At any time provided for in the Repurchase
Documents, Guarantor agrees and acknowledges that an Insolvency Proceeding
affecting Guarantor, or other actions or events relating to Guarantor
(including Guarantor’s death, disability, or change in financial position), as
set forth in the Repurchase Documents, may be event(s) of default under the
Repurchase Documents.

 

10.                                 Representations
and Warranties.  Guarantor
acknowledges, represents and warrants as follows, and acknowledges that Buyer
is relying upon the following acknowledgments, representations, and warranties
by Guarantor in making the Transactions:

 

(a)  No Conflict.  The execution, delivery, and performance of this Guaranty will
not violate any provision of any law, regulation, judgment, order, decree,
determination, or award of any court, arbitrator or governmental authority, or
of any mortgage, indenture, loan, or security agreement, lease, contract or
other agreement, instrument or 

 

5

 

undertaking to which Guarantor is a party or that
purports to bind Guarantor or any of Guarantor’s property or assets.

 

(b)  No Third Party Consent Required.  No consent of any person (including creditors
or partners, members, stockholders, or other owners of Guarantor) is required
in connection with Guarantor’s execution of this Guaranty or performance of
Guarantor’s obligations under this Guaranty (other than consents that have been
obtained).  Guarantor’s execution of,
and obligations under, this Guaranty are not contingent upon any consent,
license, permit, approval, or authorization of, exemption by, notice or report
to, or registration, filing, or declaration with, any governmental authority, bureau,
or agency, whether local, state, federal, or foreign.

 

(c)  Authority and Execution.  Guarantor has full power, authority, and
legal right to execute, deliver and perform its obligations under this
Guaranty.  Guarantor has taken all
necessary corporate and legal action to authorize this Guaranty, which has been
duly executed and delivered and is a legal, valid, and binding obligation of
Guarantor, enforceable in accordance with its terms.

 

(d)  No Representations by Buyer.  Guarantor delivers this Guaranty based
solely upon Guarantor’s own independent investigation and based in no part upon
any representation, statement or assurance by Buyer.

 

11.                                 Reimbursement
and Subrogation Rights. 
Except to the extent that Buyer notifies Guarantor to the contrary in
writing from time to time:

 

(a)  General Deferral of Reimbursement.  Guarantor waives any right to be reimbursed
by Seller for any payment(s) made by Guarantor on account of the Guarantied
Obligations, unless and until all Guarantied Obligations have been paid in full
and all periods within which such payments may be set aside or invalidated have
expired.  Guarantor acknowledges that
Guarantor has received adequate consideration for execution of this Guaranty by
virtue of Buyer’s entering into the Transactions (which benefits Guarantor, as
an owner or principal of Seller) and Guarantor does not require or expect, and
is not entitled to, any other right of reimbursement against Seller as
consideration for this Guaranty.

 

(b)  Deferral of Subrogation and Contribution.  Guarantor agrees it shall have no right of
subrogation against Seller or Buyer, no right of subrogation against any
Security unless and until in Buyer’s reasonable determination: (a) such right
of subrogation does not violate (or otherwise produce any result adverse to
Buyer under) any applicable law, including any bankruptcy or insolvency law;
(b) all amounts due under the Repurchase Documents have been paid in full; (c)
all periods within which such payment may be set aside or invalidated have
expired; and (d) Buyer has released, transferred or disposed of all of its
right, title and interest in all Security (such deferral of Guarantor’s
subrogation and contribution rights, the “Subrogation Deferral”).

 

(c)  Effect of Invalidation.  To the extent that a court of competent
jurisdiction determines that Guarantor’s Subrogation Deferral is void or
voidable for any reason, Guarantor agrees, notwithstanding any acts or
omissions by Buyer that Guarantor’s rights of subrogation against Seller or Buyer
and Guarantor’s right of subrogation against any Security 

 

6

 

shall at all times be
junior and subordinate to Buyer’s rights against Seller and to Buyer’s right,
title, and interest in such Security.

 

(d)  Claims in Insolvency Proceeding.  Guarantor shall not file any claim in any
Insolvency Proceeding affecting Seller unless Guarantor simultaneously assigns
and transfers such claim to Buyer, without consideration, pursuant to
documentation fully satisfactory to Buyer. 
Guarantor shall automatically be deemed to have assigned and transferred
such claim to Buyer whether or not Guarantor executes documentation to such
effect, and by executing this Guaranty hereby authorizes Buyer (and grants
Buyer a power of attorney coupled with an interest, and hence irrevocable) to
execute and file such assignment and transfer documentation on Guarantor’s
behalf.  Buyer shall have the sole right
to vote, receive distributions, and exercise all other rights with respect to any
such claim, provided, however, that if and when the Guarantied Obligations have
been paid in full Buyer shall release to Guarantor any further payments
received on account of any such claim.

 

12.                                 Waiver
Disclosure.  Guarantor
acknowledges that pursuant to this Guaranty, Guarantor has waived a substantial
number of defenses that Guarantor might otherwise under some circumstance(s) be
able to assert against Guarantor’s liability to Buyer.  Guarantor acknowledges and confirms that
Guarantor has substantial experience as a sophisticated participant in
substantial commercial mortgage-backed securities transactions and is fully
familiar with the legal consequences of signing this or any other
guaranty.  In addition, Guarantor is
represented by competent counsel. 
Guarantor has obtained from such counsel, and understood, a full
explanation of the nature, scope, and effect of the waivers contained in this
Guaranty (a “Waiver Disclosure”). 
In the alternative, Guarantor has, with advice from such counsel,
knowingly and intentionally waived obtaining a Waiver Disclosure.  Accordingly Guarantor does not require or
expect Buyer to provide a Waiver Disclosure. 
It is not necessary for Buyer or this Guaranty to provide or set forth
any Waiver Disclosure, notwithstanding any principles of law to the
contrary.  Nevertheless, Guarantor
specifically acknowledges that Guarantor is fully aware of the nature, scope,
and effect of all waivers contained in this Guaranty, all of which have been
fully disclosed to Guarantor.  Guarantor
acknowledges that as a result of the waivers contained in this Guaranty:

 

(a)  Actions by Buyer.  Buyer will be able to take a wide range of
actions relating to Seller, the Transactions, and the Repurchase Documents, all
without Guarantor’s consent or notice to Guarantor.  Guarantor’s full and unconditional liability under this Guaranty
will continue whether or not Guarantor has consented to such actions.  Guarantor may disagree with or disapprove
such actions, and Guarantor may believe that such actions should terminate or
limit Guarantor’s obligations under this Guaranty, but such disagreement,
disapproval, or belief on the part of Guarantor will in no way limit
Guarantor’s obligations under this Guaranty.

 

(b)  Interaction with Seller Liability.  Guarantor shall be fully liable for all
obligations hereunder even if the Repurchase Documents are otherwise invalid,
unenforceable, or subject to defenses available to Seller.  Guarantor acknowledges that Guarantor’s full
and unconditional liability under this Guaranty to the extent of the Guaranteed
Obligations (with respect to the Repurchase Documents as if they were fully
enforceable against Seller) will continue notwithstanding any such limitations
on or impairment of Seller’s liability.

 

(c)  Timing of Enforcement.  Buyer will be able to enforce this Guaranty
against Guarantor even though Buyer might also have available other rights and
remedies that 

 

7

 

Buyer could conceivably enforce against the Security or
against other parties.  As a result,
Buyer may require Guarantor to pay or perform the Guarantied Obligations
earlier than Guarantor would prefer to pay or perform the Guarantied
Obligations, including immediately upon the occurrence of a default by Seller.  Guarantor will not be able to assert against
Buyer various defenses, theories, excuses, or procedural requirements that
might otherwise force Buyer to delay or defer the enforcement of this Guaranty
against Guarantor. Guarantor acknowledges that Guarantor intends to allow Buyer
to enforce the Guaranty against Guarantor in such manner.  All of Guarantor’s assets will be available
to satisfy Buyer’s claims against Guarantor under this Guaranty.

 

(d)  Continuation of Liability.  Guarantor’s liability for the Guarantied
Obligations shall continue at all times until the Guarantied Obligations have
actually been paid in full, even if other circumstances have changed such that
in Guarantor’s view Guarantor’s liability under this Guaranty should terminate,
except to the extent that any express conditions to the termination of this
Guaranty, as set forth in this Guaranty, have been satisfied.

 

13.                                 Buyer’s
Disgorgement of Payments. 
Upon payment of all or any portion of the Guarantied Obligations,
Guarantor’s obligations under this Guaranty shall continue and remain in full
force and effect if all or any part of such payment is, pursuant to any
Insolvency Proceeding or otherwise, avoided or recovered directly or indirectly
from Buyer as a preference, fraudulent transfer, or otherwise, irrespective of
(a) any notice of revocation given by Guarantor prior to such avoidance or
recovery, or (b) payment in full of the Transactions.  Guarantor’s liability under this Guaranty shall continue until
all periods have expired within which Buyer could (on account of Insolvency
Proceedings, whether or not then pending, affecting Seller or any other person)
be required to return, repay, or disgorge any amount paid at any time on
account of the Guarantied Obligations.

 

14.                                 Financial
Information.  Guarantor shall
provide Buyer with the following financial and reporting information:

 

(a)  Within 45 days after the last day of each of
the first three fiscal quarters in any fiscal year, Guarantor’s unaudited
consolidated statements of income and statements of changes in cash flow for
such quarter and balance sheets as of the end of such quarter, in each case
presented fairly in accordance with GAAP and certified as being true and
correct by an officer’s certificate; and

 

(b)  Within 90 days after the last day of its
fiscal year, Guarantor’s audited consolidated statements of income and
statements of changes in cash flow for such year and balance sheets as of the
end of such year, in each case presented fairly in accordance with GAAP, and accompanied
by an unqualified report of a nationally recognized independent certified
public accounting firm.

 

15.                                 Consent to
Jurisdiction.  Guarantor
agrees that any Proceeding to enforce this Guaranty may be brought in any state
or federal court located in the State, as Buyer may select from time to
time.  By executing this Guaranty,
Guarantor irrevocably accepts and submits to the nonexclusive personal
jurisdiction of each of the aforesaid courts, generally and unconditionally
with respect to any such Proceeding. 
Guarantor agrees not to assert any basis for transferring jurisdiction
of any such proceeding to another court. 
Guarantor further agrees that a

 

8

 

final judgment against Guarantor in any Proceeding
shall be conclusive evidence of Guarantor’s liability for the full amount of
such judgment.

 

16.                                 Merger; No
Conditions; Amendments.  This
Guaranty and documents referred to herein contain the entire agreement among
the parties with respect to the matters set forth in this Guaranty.  This Guaranty supersedes all prior
agreements among the parties with respect to the matters set forth in this
Guaranty.  No course of prior dealings
among the parties, no usage of trade, and no parol or extrinsic evidence of any
nature shall be used to supplement, modify, or vary any terms of this
Guaranty.  This Guaranty is
unconditional.  There are no unsatisfied
conditions to the full effectiveness of this Guaranty.  No terms or provisions of this Guaranty may
be changed, waived, revoked, or amended without Buyer’s written agreement.  If any provision of this Guaranty is
determined to be unenforceable, then all other provisions of this Guaranty
shall remain fully effective.

 

17.                                 Enforcement.  Guarantor acknowledges that this Guaranty is
an “instrument for the payment of money only,” within the meaning of New York
Civil Practice Law and Rules Section 3213.  In the event of any Proceeding between Guarantor and Buyer in
which Buyer enforces or attempts to enforce this Guaranty, Guarantor shall
reimburse Buyer for all Legal Costs of such Proceeding.

 

18.                                 Fundamental
Changes.  Guarantor shall not
wind up, liquidate, or dissolve its affairs without Buyer’s prior written
consent.

 

19.                                 Further
Assurances.  Guarantor shall
execute and deliver such further documents, and perform such further acts, as
Buyer may request to achieve the intent of the parties as expressed in this
Guaranty, provided in each case that any such documentation is consistent with
this Guaranty and with the Repurchase Documents.

 

20.                                 Counterparts.  This Guaranty may be executed in
counterparts.

 

21.                                 WAIVER OF
TRIAL BY JURY.  GUARANTOR
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING FROM OR RELATING TO
THIS GUARANTY OR THE REPURCHASE DOCUMENTS OR ANY OBLIGATION(S) OF GUARANTOR
HEREUNDER OR UNDER THE REPURCHASE DOCUMENTS.

 

22.                                 Miscellaneous.

 

(a)  Assignability.  Buyer may assign this Guaranty (in whole or in part) together
with any one or more of the Repurchase Documents, without in any way affecting
Guarantor’s or Seller’s liability.  Upon
request in connection with any such assignment Guarantor shall, at Buyer’s
expense, deliver such documentation as Buyer shall reasonably request.  Buyer may from time to time designate any
Buyer Entity to hold and exercise any or all of Buyer’s rights and remedies
under this Guaranty.  This Guaranty
shall benefit Buyer and its successors and assigns (including any Buyer Entity)
and shall bind Guarantor and its heirs, executors, administrators, successors,
and assigns.  Guarantor may not assign
this Guaranty in whole or in part.

 

(b)  Notices. 
All notices, requests, and demands to be made under this Guaranty shall
be given in writing at the address set forth in the opening paragraph of this

 

9

 

Guaranty by any of the following means: (i) personal
service; (ii) overnight delivery service such as Federal Express (which
delivery shall be deemed complete if the delivery service attempts twice to
deliver the notice without success); or (iii) registered or certified, first
class mail, return receipt requested.  A
party’s address may be changed by notice to the other parties given in the same
manner as provided above.  Any notice,
request or demand sent pursuant to subsection (i) or (ii) of this
paragraph shall be deemed received upon personal service (or, in the case of
“ii,” upon completion of two unsuccessful delivery attempts), and, if sent
pursuant to subsection (iii), shall be deemed received three business days
after deposit in the mail.

 

(c)  Interpretation.  This Guaranty shall be enforced and interpreted according to the
laws of the State, disregarding its rules on conflicts of laws.  The word “include” and its variants shall be
interpreted in each case as if followed by the words “without limitation.”

 

23.                                 Business
Purposes.  Guarantor
acknowledges that this Guaranty is executed and delivered for business and
commercial purposes, and not for personal, family, household, consumer, or
agricultural purposes.  Guarantor
acknowledges that Guarantor is not entitled to, and does not require the
benefits of, any rights, protections, or disclosures that would or may be
required if this Guaranty were given for personal, family, household, consumer,
or agricultural purposes.  Guarantor
acknowledges that none of Guarantor’s obligation(s) under this Guaranty
constitute(s) a “debt” within the meaning of the United States Fair Debt
Collection Practices Act, 15 U.S.C. § 1692a(5), and accordingly compliance
with the requirements of such Act is not required if Buyer (directly or acting
through its counsel) makes any demand or commences any action to enforce this
Guaranty.

 

24.                                 No
Third-Party Beneficiaries. 
This Guaranty is executed and delivered for the benefit of Buyer and its
heirs, successors, and assigns, and is not intended to benefit any third party.

 

25.                                 CERTAIN ACKNOWLEDGMENTS BY GUARANTOR.  GUARANTOR ACKNOWLEDGES THAT BEFORE EXECUTING
THIS GUARANTY: (A) GUARANTOR HAS HAD THE OPPORTUNITY TO REVIEW IT WITH AN
ATTORNEY OF GUARANTOR’S CHOICE; (B) BUYER HAS RECOMMENDED TO GUARANTOR THAT
GUARANTOR OBTAIN SEPARATE COUNSEL, INDEPENDENT OF SELLER’S COUNSEL, REGARDING
THIS GUARANTY; AND (C) GUARANTOR HAS CAREFULLY READ THIS GUARANTY AND
UNDERSTOOD THE MEANING AND EFFECT OF ITS TERMS, INCLUDING ALL WAIVERS AND
ACKNOWLEDGMENTS CONTAINED IN THIS GUARANTY AND THE FULL EFFECT OF SUCH WAIVERS
AND THE SCOPE OF GUARANTOR’S OBLIGATIONS UNDER THIS GUARANTY.

 

 

10

 

IN WITNESS WHEREOF, Guarantor has duly
executed this Guaranty as of the date indicated below.

 

 

	
   

  	
  GUARANTOR:

  
	
   

  	
  CRIIMI MAE Inc., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ Mark Libera

  	
   

  
	
   

  	
  Name:  Mark Libera

  
	
   

  	
  Title: Vice
  President and Acting

  
	
   

  	
  General Counsel

  
	
   

  	
  Date: 6/30/04

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledgments

  	
   

  
	
   

  	
   

  
	
  DEUTSCHE
  BANK AG,  CAYMAN

  ISLANDS BRANCH

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Christopher E. Tognola

  	
   

  	
   

  
	
  Name:
  Christopher E. Tognola

  	
   

  
	
  Title: Director

  	
   

  
	
  Date: 6/30/04

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Tobin Cobb

  	
   

  	
   

  
	
  Name: Tobin Cobb

  	
   

  
	
  Title: Managing
  Director

  	
   

  
	
  Date: 6/30/04

  	
   

  
	
   

  	
   

  
	
  CRIIMI
  FINANCING CO., INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Mark Libera

  	
   

  	
   

  
	
  Name:  Mark Libera

  	
   

  
	
  Title: Vice
  President and Acting

  	
   

  
	
  General Counsel

  	
   

  
	
  Date: 6/30/04Exhibit
10.3

 

$95,000,000

 

 

MASTER REPURCHASE
AGREEMENT

 

Dated as of June 30, 2004

 

between

 

CRIIMI Financing Co.,
Inc.,

 

as Seller,

 

and

 

DEUTSCHE BANK AG, CAYMAN
ISLANDS BRANCH,

 

as Buyer.

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  APPLICABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  INITIATION; CONFIRMATION;
  TERMINATION; FEES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  MARGIN
  MAINTENANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  INCOME PAYMENTS
  AND PRINCIPAL PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SECURITY
  INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PAYMENT, TRANSFER AND CUSTODY

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF
  PURCHASED SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RESERVED

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  NEGATIVE COVENANTS OF
  SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATIVE COVENANTS
  OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  SINGLE-PURPOSE
  ENTITY

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SINGLE
  AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  RECORDING OF COMMUNICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NOTICES AND
  OTHER COMMUNICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  ENTIRE
  AGREEMENT; SEVERABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  NON-ASSIGNABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  NO WAIVERS, ETC.

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  USE OF EMPLOYEE PLAN ASSETS

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  INTENT

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  DISCLOSURE
  RELATING TO CERTAIN FEDERAL PROTECTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  CONSENT
  TO JURISDICTION; WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  NO RELIANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  TAX TREATMENT

  	
   

  

 

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  ANNEX
  I

  	
  Names
  and Addresses for Communications between Parties

  
	
   

  	
   

  
	
  SCHEDULE I-A

  	
  Original Purchase Percentages, CF Sweep
  Purchase Percentages, Buyer’s Margin Percentages and Applicable Spreads

  
	
   

  	
   

  
	
  SCHEDULE II

  	
  Exceptions to Seller’s Representations and
  Warranties

  
	
   

  	
   

  
	
  EXHIBIT
  I

  	
  Form
  of Confirmation

  
	
   

  	
   

  
	
  EXHIBIT
  II

  	
  Authorized
  Representatives of Seller

  
	
   

  	
   

  
	
  EXHIBIT III

  	
  Monthly Reporting Package

  

 

 

MASTER REPURCHASE AGREEMENT, dated as of June 30,
2004, by and among CRIIMI FINANCING CO., INC., a Maryland corporation (the “Seller”)
and DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH, a branch of a foreign banking
institution (the “Buyer”).

 

1.             APPLICABILITY

 

From time to time the parties hereto may enter into
transactions in which the Seller agrees to transfer to the Buyer securities or
other assets (“Securities”) against the transfer of funds by Buyer, with
a simultaneous agreement by Buyer to transfer to Seller such Securities at a
date certain or on demand, 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, including any supplemental terms or conditions
contained in any exhibits identified herein as applicable hereunder.

 

2.             DEFINITIONS

 

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

 

“Act of Insolvency” shall mean with respect to
any party, (i) the commencement by such party as debtor of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
moratorium, dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian or
similar official for such party or any substantial part of its property, or the
convening of any meeting of creditors for purposes of commencing any such case
or proceeding or seeking such an appointment or election, (ii) the commencement
of any such case or proceeding against such party, or another seeking such an
appointment or election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor Protection
Act of 1970, which (A) is consented to or not timely contested by such party,
(B) results in the entry of an order for relief, such an appointment or
election, the issuance of such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed within 15 days, (iii) the
making by such party of a general assignment for the benefit of creditors, or
(iv) the admission in writing by such party of such party’s inability to pay
such party’s debts as they become due.

 

“Additional Purchased Securities” shall mean
Securities provided by Seller to Buyer pursuant to Paragraph 4(a) hereof.

 

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

 

“Agreement” shall mean this Master Repurchase
Agreement, dated as of June 30, 2004 by and among CRIIMI Financing Co., Inc.
and Deutsche Bank AG, Cayman Islands Branch, as such agreement may be modified
or supplemented from time to time.

 

 

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

 

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

 

“Applicable Spread” shall mean, with respect to
any Transaction:

 

(i)            so long
as no Event of Default shall have occurred and be continuing, the incremental
per annum rate (expressed as a number of “basis points”, each basis point being
equivalent to 1/100 of 1%) specified in Schedule I-A attached to this Agreement
as being the “Applicable Spread” for the related Purchased Securities, and

 

(ii)           after the
occurrence and during the continuance of an Event of Default, the applicable
incremental per annum rate described in clause (i) of this definition, plus 300
basis points (3.0%).

 

“Business Day” shall mean a day other than (i)
a Saturday or Sunday, or (ii) a day in which the New York Stock Exchange or
banks in the State of New York or Illinois are authorized or obligated by law
or executive order to be closed.

 

“Buyer” shall mean Deutsche Bank AG, Cayman
Islands Branch, or any successor.

 

“Buyer’s Margin Amount” shall mean, with
respect to any Transaction for Eligible CRIIMI Securities as of any date, the
amount obtained by application of the Buyer’s Margin Percentage to the
Repurchase Price for such Transaction as of such date.

 

“Buyer’s Margin Percentage” shall mean, with
respect to any Transaction for Eligible CRIIMI Securities as of any date, the
reciprocal of the “Margin Maintenance Percentage” specified in Schedule I-A
attached to this Agreement (i.e., the percentage that when multiplied by the
applicable percentage set forth in Schedule I-A under the heading “Margin
Maintenance Percentage” equals 1.00). 
The Buyer’s Margin Percentage for each of the applicable percentages set
forth in Schedule I-A is set forth below:

 

	
  Eligible CRIIMI Securities

  	
   

  	
  Margin
  Maintenance

  Percentage

  Set Forth on Schedule I-A

  	
   

  	
  Buyer’s
  Margin

  Percentage

  	
   

  
	
  Class E Bond

  	
   

  	
  85

  	
  %

  	
  117.6471

  	
  %

  
	
  Junior D
  Certificates

  	
   

  	
  90

  	
  %

  	
  111.1111

  	
  %

  

 

“CBO REIT II” shall mean CBO REIT II, Inc., a
Maryland corporation.

 

“CF Sweep Event” shall mean, with respect to
any Transaction for Eligible CRIIMI Securities as of any date, a determination
by Buyer that (i) the Repurchase Price of the related Purchased Security as of such
date exceeds (ii) the product obtained by multiplying the aggregate Market
Value of such Purchased Security as of such date by the “CF Sweep Purchase
Percentage” for such Purchased Security, as set forth in Schedule I-A attached
to this Agreement.

 

2

 

“Change of Control” shall mean:

 

(A)  any
transaction or event, or transactions or events, as a result of which any
Person or “group” (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) (other than Brascan Real Estate
Financial Investments LLC) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Sponsor (or other securities convertible into such
securities) representing more than 35% of the combined voting power of all
securities of the Sponsor entitled to vote in the election of the directors of
the Sponsor;

 

(B)  any
transaction or event as a result of which either (1) Sponsor ceases to own,
beneficially or of record, indirectly at least 51% of the voting power and
economic interest of Seller or (2) CBO REIT II ceases to own, beneficially
or of record, 100% of the voting power and economic interest of Seller; or

 

(C)  the
consummation of a merger or consolidation of Sponsor with or into another
entity or any other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by persons who were not stockholders of Sponsor immediately prior to such
merger, consolidation or other reorganization.

 

“Class B Certificate” and “Class E
Securities” shall have the respective meaning specified in the definition
of Eligible CRIIMI Securities.

 

“Collection Period” shall mean with respect to
the applicable Remittance Date in any month, the period beginning on and including
the Remittance Date in the month preceding the month in which such applicable
Remittance Date occurs and continuing to but excluding such applicable
Remittance Date.

 

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

 

“CRIIMI Securities Cash Management Account”
shall mean a segregated interest bearing account, in the name of Seller in
trust for Buyer, established at the Securities Intermediary.

 

“Custodial Agreement” shall mean the Custodial
Agreement, dated as of June 30, 2004, by and among the Custodian, the Seller
and the Buyer.

 

“Custodian” shall mean LaSalle Bank National
Association, or any successor Custodian appointed by Buyer with the prior
written consent of Seller (which consent shall not be unreasonably withheld or
delayed).

 

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

 

3

 

“Deficit Cure Amount” shall mean, with respect
to any Transaction for Eligible CRIIMI Securities as of any date, the amount
(expressed in dollars) obtained by dividing (i) the Repurchase Price of the
related Purchased Security as of such date by (ii) the “Original Purchase
Percentage” for such Purchased Security, as set forth in Schedule I-A attached
to this Agreement.

 

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

 

“Eligible CRIIMI Securities” shall mean the
CRIIMI MAE Class D Trust Certificate-Class B in the face amount of $59,001,000
(the “Class B Certificate”), and the CRIIMI MAE Commercial Mortgage Trust,
Commercial Mortgage Bond, Series 1998-C1 Class E securities in the outstanding
principal amount of $70,889,000 (the “Class E Securities”).

 

“Eligible GNMA Securities” means mortgage
pass-through certificates issued by the Government National Mortgage
Association.

 

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

 

“ERISA Affiliate” shall mean any corporation or
trade or business that is a member of any group of organizations (i) described
in Section 414(b) or (c) of the Code of which 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 Seller is a member.

 

“Event of Default” shall have the meaning
specified in Section 14 of this Agreement.

 

“Exit Fee” shall mean the fee equal to 0.25% of
the Repurchase Price with respect to any Transaction for Eligible CRIIMI
Securities payable pursuant to Section 3(f) of this Annex I.

 

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

 

“Facility Amount” shall mean $95,000,000.

 

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

 

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

 

“GNMA Securities Cash Management Account” shall
mean a segregated interest bearing account, in the name of Seller in trust for
Buyer, established at the Securities Intermediary.

 

“Governmental Authority” shall mean any
national or federal government, any state, regional, local or other political
subdivision thereof with jurisdiction and any Person with

 

4

 

jurisdiction
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guaranty” shall mean the Guaranty, dated as of
the date hereof, from the Sponsor to the Buyer, of payment of 10% of the
Purchase Price outstanding from time to time with respect to Transactions for
Eligible CRIIMI Securities, plus any related reasonable third party costs of
enforcement of such Guaranty.

 

“Hedging Transactions” shall mean, with respect
to any or all of the Purchased Securities, any short sale of U.S. Treasury
Securities or mortgage-related securities, futures contract (including
Eurodollar futures) or options contract or any interest rate swap, cap or
collar agreement or similar arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies, entered into by Seller, with
one or more counterparties reasonably acceptable to the Buyer.

 

“Income” shall mean, with respect to any
Purchased Security at any time, the sum of (x) any principal thereof and all
interest, dividends or other distributions thereon and (y) all net sale
proceeds received by Seller in connection with a sale of such Purchased
Security (other than net sale proceeds received from Buyer in accordance with
this Agreement).

 

“Indemnified Amounts” and “Indemnified
Parties” shall have the meaning specified in Section 27 of this Agreement.

 

“ISDA Master Agreement” shall mean any ISDA
Master Agreement (including respective schedules, annexes and confirmations)
executed by the Seller and Buyer or an Affiliate of the Buyer in connection
with a hedging transaction.

 

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

 

(i)            On each
Pricing Rate Determination Date, LIBOR for the next Pricing Rate Period will be
the rate for deposits in United States dollars for a one-month period which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date; or

 

(ii)           On any
Pricing Rate Determination Date on which no such rate appears on Telerate Page
3750 as described above, LIBOR for the next Pricing Rate Period will be
determined on the basis of the arithmetic mean of the rates at which deposits
in United States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such date to prime banks in the London interbank
market for a one-month period.  If on
such date only one or none of the Reference Banks provide such quotations,
LIBOR shall be deemed to be the arithmetic mean of the offered quotations that
leading banks in The City of New York selected by Buyer and approved by the
Seller are quoting on such date for one-month U.S. Dollar deposits in an amount
reasonably determined by Buyer to be representative of a single transaction in
such market at such time by reference to the principal London offices of
leading banks in the London interbank market; provided that if LIBOR cannot be
determined in accordance with one of the foregoing procedures, LIBOR shall be
the LIBOR as determined on the previous determination date.

 

5

 

All percentages resulting from any calculations or
determinations referred to in this definition will be rounded upwards, if
necessary, to the nearest multiple of 1/100 of 1% and all U.S. dollar amounts
used in or resulting from such calculations will be rounded to the nearest cent
(with one-half cent or more being rounding upwards).

 

“LIBO Rate” shall mean, with respect to any
Pricing Rate Period pertaining to a Transaction, a rate per annum determined
for such Pricing Rate Period in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):

 

	
   

  	
  LIBOR

  	
   

  
	
   

  	
  1 – Reserve Requirement

  	
   

  

 

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

 

“Margin Deficit” shall have the meaning
specified in Paragraph 4(a) hereof.

 

“Margin Notice Deadline” shall mean 11:00 a.m.
(New York City time).

 

“Market Value” shall mean, with respect to any
Transaction for Eligible CRIIMI Securities as of any relevant date, the market
value for the related Purchased Security on such date, as determined by Buyer
from time to time in its sole good faith business judgment.

 

“Multiemployer Plan” shall mean a multiemployer
plan defined as such in Section 3(37) of ERISA to which contributions have
been, or were required to have been, made by Seller or any ERISA Affiliate and
which is covered by Title IV of ERISA.

 

“Original Purchase Percentage” shall mean, with
respect to any Transaction as of any day, the “Original Purchase Percentage”
specified for the applicable Eligible CRIIMI Securities or Eligible GNMA
Securities in Schedule I-A attached to this Annex I.

 

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

 

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

 

“Price Differential” shall mean, with respect
to any Transaction as of any date, the aggregate amount obtained by daily
application of the Pricing Rate for such Transaction to the Repurchase Price
for such Transaction on a 360-day-per-year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and

 

6

 

ending on (but
excluding) the date of determination (reduced by any amount of such Price
Differential previously paid by Seller to Buyer with respect to such
Transaction).

 

“Pricing Rate” shall mean, for any Pricing Rate
Period, an annual rate equal to the LIBO Rate for such Pricing Rate Period plus
the relevant Applicable Spread for such Transaction and shall be subject to
adjustment and/or conversion as provided in Sections 3(g) and 3(h) of this
Agreement (i.e. in such event the rate equal to the LIBO Rate plus the relevant
Applicable Spread shall not apply).

 

“Pricing Rate Determination Date” shall mean
with respect to any Pricing Rate Period with respect to any Transaction, the
second (2nd) Business Day preceding the first day of such Pricing Rate Period.

 

“Pricing Rate Period” shall mean, (a) in the
case of the first Pricing Rate Period with respect to any Transaction, the period
commencing on and including the Purchase Date for such Transaction and ending
on and excluding the following Remittance Date, and (b) in the case of any
subsequent Pricing Rate Period, the period commencing on and including such
Remittance Date and ending on and excluding the following Remittance Date; provided,
however, that in no event shall any Pricing Rate Period end subsequent
to the Repurchase Date.

 

“Principal Payment” shall mean, with respect to
any Purchased Security, any payment or prepayment of principal received by the
Securities Intermediary in respect thereof.

 

“Purchase Date” shall mean the date on which
Purchased Securities are to be transferred by Seller to Buyer.

 

“Purchase Price” shall mean, with respect to
any Purchased Security, the price at which such Purchased Security is
transferred by Seller to Buyer on the applicable Purchase Date.  The Purchase Price as of any Purchase Date
for any Purchased Security shall be an amount (expressed in United States
Dollars) equal to the product obtained by multiplying (i) the Market Value of
such Purchased Security by (ii) the “Original Purchase Percentage” for such
Purchased Security, as set forth in Schedule I-A attached to this Agreement; provided,
that notwithstanding the foregoing, the Seller may request that the Purchase
Price set forth in a Confirmation be determined by applying a percentage lower
than the Original Purchase Percentage set forth in Schedule I-A attached to
this Annex I and, in such event, such lower percentage shall be deemed the
“Original Purchase Percentage” for purposes of the calculation of the Target
Price but not for any other purpose under the Agreement..

 

“Purchased Securities” shall mean, (i) with
respect to any Transaction, the Eligible CRIIMI Securities or Eligible GNMA
Securities sold by Seller to Buyer in such Transaction, and (ii) with respect
to the Transactions in general, all Eligible CRIIMI Securities and Eligible
GNMA Securities sold by Seller to Buyer and any additional collateral delivered
by Seller to Buyer pursuant to Section 4(a) of this Agreement.

 

“Reference Banks” shall mean banks each of
which shall (i) be a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market and (ii) have an established
place of business in London.  Initially,
the Reference Banks shall be JPMorgan Chase Bank, Barclays Bank, Plc and
Deutsche Bank AG.  If any such Reference
Bank should be

 

7

 

unwilling or
unable to act as such or if the Buyer shall terminate the appointment of any
such Reference Bank or if any of the Reference Banks should be removed from the
Reuters Monitor Money Rates Service or in any other way fail to meet the
qualifications of a Reference Bank, the Buyer in the exercise of its good faith
business judgment may designate alternative banks meeting the criteria
specified in clauses (i) and (ii) above.

 

“Relevant System” shall mean (a) The Depository
Trust Company in New York, New York, or (b) such other clearing organization or
book-entry system as is designated in writing by the Buyer.

 

“Remittance Date” shall mean with respect to
the Transaction for Eligible CRIIMI Securities, the fifth (5th)
calendar day of each month, and, with respect to the Transaction for Eligible
GNMA Securities, the sixteenth (16th) calendar day of each
month or, in each case, the next succeeding Business Day, if such calendar day
shall not be a Business Day, or such other day as is mutually agreed to by
Seller and Buyer.

 

“Replacement Collateral” shall have the meaning
specified in Section 14(b)(ii) of this Agreement.

 

“Repurchase Date” shall mean the third
anniversary of the date of this Agreement in 2007 (or if such day is not a
Business Day, the next Business Day); provided, however, that if
all of the Extension Conditions described in Section 3(e) of this Agreement
shall be timely satisfied, the Repurchase Date shall be extended for an
additional twelve (12) months following the initial Repurchase Date.

 

“Repurchase Price” shall mean, with respect to
any Purchased Securities as of any date, the price at which such Purchased
Securities are to be transferred from Buyer to Seller upon termination of the
related Transaction; such price will be determined in each case as the sum of
the Purchase Price of such Purchased Securities and the Price Differential with
respect to such Purchased Securities as of the date of such determination,
minus all Income and cash actually received by Buyer in respect of such
Transaction pursuant to this Agreement.

 

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

 

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

 

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

 

8

 

“Securities” shall have the meaning specified
in Section 1.

 

“Securities Intermediary” shall mean LaSalle
Bank National Association, or any successor Securities Intermediary appointed
by Buyer with the prior written consent of Seller (which consent shall not be
unreasonably withheld or delayed).

 

“Securitization Document” shall mean, with
respect to any Eligible CRIIMI Securities, any pooling and servicing agreement,
trust agreement, indenture or other agreement governing the issuance and
administration of such Eligible CRIIMI Securities.

 

“Seller” shall mean CRIIMI Financing Co., Inc.,
a Maryland corporation.

 

“Single-Purpose Entity” shall mean a Person,
other than an individual, which is formed or organized solely for the purpose
of holding, directly and subject to this Agreement, the Eligible CRIIMI
Securities and Eligible GNMA Securities, does not engage in any business
unrelated to the Eligible CRIIMI Securities and Eligible GNMA Securities and
the financing thereof, does not have any assets other than the Eligible CRIIMI
Securities and Eligible GNMA Securities and the financing thereof, or any
indebtedness other than as permitted by this Agreement, has its own separate books
and records and its own accounts, in each case which are separate and apart
from the books and records and accounts of any other Person, and holds itself
out as being a Person, separate and apart from any other Person.

 

“Sponsor” shall mean CRIIMI MAE Inc., a
Maryland corporation.

 

“Target Price” shall mean, with respect to any
Transaction of any date, the amount (expressed in dollars) obtained by
multiplying (i) the Market Value of the related Purchased Securities as of such
date by (ii) the “Original Purchase Percentage” for such Purchased Securities,
as set forth in Schedule I-A attached to this Agreement.

 

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

 

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

 

“Transaction Documents” shall mean,
collectively, this Agreement, any applicable Annexes to this Agreement, the
Guaranty, the Custodial Agreement, and all Confirmations executed pursuant to
this Agreement in connection with specific Transactions.

 

“Trustee” shall mean, with respect to any
Eligible CRIIMI Securities, the trustee under the Securitization Document
applicable to such Eligible CRIIMI Securities.

 

“UCC” shall have the meaning specified in
Section 6 of this Agreement.

 

9

 

3.             INITIATION;
CONFIRMATION; TERMINATION; FEES

 

(a)           Subject
to the terms and conditions set forth in this Agreement (including, without
limitation, the “Transaction Conditions Precedent” specified in Section 3(b) of
this Agreement), an agreement to enter into a Transaction shall be made in
writing at the initiation of Seller as provided below; provided, however,
that (i) the aggregate Repurchase Price (excluding the Price Differential with
respect to the Purchased Securities as of the date of determination) for all
Transactions shall not exceed the Facility Amount and (ii) the Buyer shall not
have any obligation to enter into a Transaction with the Seller (A) after the
three year anniversary date of the date of this Agreement or (B) more than one
time with respect to the Eligible CRIIMI Securities and the Eligible GNMA
Securities (i.e. the Seller may not sell, repurchase and resell).  For all purposes of this Agreement, each of
the Transactions with respect to the Eligible CRIIMI Securities as a whole and
the Eligible GNMA Securities as a whole shall be deemed the subject of
individual separate Transactions. 
Seller shall give Buyer written notice of each proposed
Transaction.  On the Purchase Date for a
Transaction, the Purchased Securities shall be transferred to Buyer or its
designee against the transfer of the Purchase Price to an account of Seller.

 

(b)           Provided
each of the Transaction Conditions Precedent (as hereinafter defined) shall
have been satisfied (or waived by Buyer), Buyer shall promptly deliver to
Seller a written confirmation in the form of Exhibit I attached hereto of each
Transaction (a “Confirmation”). 
Such Confirmation shall describe the Purchased Securities (including
CUSIP number, if any), shall identify Buyer and Seller, and shall set forth:

 

(i)            the Purchase Date,

 

(ii)           the Purchase Price for
such Purchased Securities,

 

(iii)          the Repurchase Date,

 

(iv)          the Pricing Rate
applicable to the Transaction (including the Applicable Spread) and

 

(v)           any additional terms or
conditions not inconsistent with this Agreement.  With respect to any Transaction, the Pricing Rate shall be
determined initially on the Pricing Rate Determination Date applicable to the
first Pricing Rate Period for such Transaction, and shall be reset on each
Reset Date for the next succeeding Pricing Rate Period for such
Transaction.  Buyer or its agent shall
determine in accordance with the terms of this Agreement the Pricing Rate on
each Pricing Rate Determination Date for the related Pricing Rate Period and
notify Seller of such rate for such period on the Reset Date.  For purposes of this Section 3(b), the
“Transaction Conditions Precedent” shall be deemed to have been satisfied with
respect to any proposed Transaction if:

 

(A)          no Default or Event of
Default under this Agreement shall have occurred and be continuing as of the
Purchase Date for such proposed Transaction;

 

10

 

(B)           the representations and
warranties made by Seller and Sponsor in the Transaction Documents shall be
true and correct in all material respects as of the Purchase Date for such
Transaction (except to the extent such representations and warranties are made
as of a particular date); and

 

(C)           the aggregate Purchase
Price with respect to the Eligible CRIIMI Securities and the Eligible GNMA
Securities shall not exceed $42,000,000 and $53,000,000, respectively, without
the prior written approval of the Buyer.

 

(c)           Absent
manifest error, each Confirmation, together with this Agreement, shall be
conclusive evidence of the terms of the Transaction(s) covered thereby unless
specific objection is made by Seller no less than three (3) Business Days after
the date thereof.  In the event of any
conflict between the terms of such Confirmation and the terms of this
Agreement, this Agreement shall prevail. 
An objection sent by Seller with respect to any Confirmation must state
specifically that the writing is an objection, must specify the provision(s) of
such Confirmation being objected to by Seller, must set forth such provision(s)
in the manner that Seller believes such provisions should be stated, and must
be received by Buyer no more than three (3) Business Days after such
Confirmation is received by Seller.

 

(d)           No
Transaction shall be terminable on demand by Buyer (other than upon the
occurrence and during the continuance of an Event of Default by Seller).  Seller shall be entitled to terminate a
Transaction on demand and repurchase all of the Purchased Securities subject to
a Transaction (or in the case of the Transaction with respect to the Eligible
CRIIMI Securities, the Class B Certificate and/or the Class E Securities) on
any Business Day prior to the Repurchase Date (an “Early Repurchase Date”);
provided, however, that:

 

(i)            Seller repurchases on
such Early Repurchase Date, all of the Purchased Securities subject to such
Transaction,

 

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

 

(iii)          on such Early Repurchase
Date Seller pays to Buyer an amount equal to the sum of the Repurchase Price
for such Transaction, the Exit Fee, if any, and any other amounts payable under
this Agreement (including, without limitation, Section 3(i) of this Agreement)
with respect to such Transaction against transfer to the Seller or its agent of
such Purchased Securities, and

 

(iv)          in the event the
Transaction being terminated on demand relates to the Eligible GNMA Securities,
then on such Early Repurchase Date, in addition to the amounts set forth in
subclause (iii) above, Seller pays to Buyer, on account of each Purchased
Security that is an Eligible CRIIMI

 

11

 

Security, an amount sufficient to eliminate any Margin
Deficit or CF Sweep Event.

 

Such notice shall set forth the Early Repurchase Date
and shall identify with particularity the Purchased Securities to be
repurchased on such Early Repurchase Date.

 

(e)           On
the Repurchase Date, termination of the Transactions will be effected by transfer
to Seller or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Section 5 of this Agreement)
against the simultaneous transfer of the Repurchase Price to an account of
Buyer.  Notwithstanding the foregoing,
provided all of the Extension Conditions (as hereinafter defined) shall have
been satisfied, the Repurchase Date shall be extended with respect to all of
the Transactions until the first (1st) anniversary of the originally scheduled
Repurchase Date (all of the other terms and conditions of such Transactions
remaining the same).  For purposes of
the preceding sentence, the “Extension Conditions” shall be deemed to have been
satisfied if:

 

(i)            Seller shall have
given Buyer written notice, not less than thirty (30) days prior to the
originally scheduled Repurchase Date, of Seller’s desire to extend the
Repurchase Date,

 

(ii)           no Default or Event of
Default under this Agreement shall have occurred and be continuing as of the
originally scheduled Repurchase Date, and

 

(iii)          Seller shall have paid
Buyer an extension fee in an amount equal to 0.15% (15 basis points) of the
aggregate outstanding Repurchase Price of all Transactions for Eligible CRIIMI
Securities as of the originally scheduled Repurchase Date.

 

In the event the Repurchase Date is extended pursuant
to this Section 3(e), then Seller shall be required to (i) terminate all
Transactions in part by paying 25% of the aggregate outstanding Repurchase
Price, determined as of the originally scheduled Repurchase Date, by not later
than each of the Remittance Dates occurring in September and December of 2007
and March of 2008 (i.e. pay 50% of such aggregate outstanding Repurchase Price
by the December 2007 Remittance Date, etc.) (including, without limitation, by
terminating Transactions on demand on Early Repurchase Dates pursuant to
Section 3(d)) and (ii) pay any unpaid portion of the Repurchase Price of all
Transactions on the Repurchase Date.

 

(f)            In
the event a Transaction for Eligible CRIIMI Securities is terminated prior to
the related Repurchase Date, the Seller shall pay Buyer the Exit Fee on the
related Early Repurchase Date; provided, that notwithstanding the foregoing,
(1) the Exit Fee shall be waived if the reason for the early termination is the
related Eligible CRIIMI Security is, simultaneous with the early termination,
included in a collateralized debt obligation transaction in which Deutsche Bank
Securities Inc. or an Affiliate thereof acts a sole lead manager and sole
bookrunner and (2) no Exit Fee shall be due and payable in connection with (i)
any principal payments made on the Eligible CRIIMI Securities, (ii) partial
terminations pursuant to Section 3(e) or (iii) a transfer pursuant to Section
14(b) hereof.

 

12

 

(g)           If
prior to the first day of any Pricing Rate Period with respect to any
Transaction, (i) Buyer shall have determined in the exercise of its reasonable
business judgment (which determination shall be conclusive and binding upon
Seller) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBO Rate for
such Pricing Rate Period, or (ii) the LIBO Rate determined or to be determined
for such Pricing Rate Period will not adequately and fairly reflect the cost to
Buyer (as determined and certified by Buyer) of making or maintaining
Transactions during such Pricing Rate Period, Buyer shall give telecopy or
telephonic notice thereof to Seller as soon as practicable thereafter.  If such notice is given, the Pricing Rate
with respect to such Transaction for such Pricing Rate Period, and for any
subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer,
shall be a per annum rate equal to the U.S. Federal Funds Rate plus 125 basis
points (1.25%) (the “Alternative Rate”).

 

(h)           Notwithstanding
any other provision herein, if the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof shall make it unlawful
for Buyer to effect Transactions as contemplated by the Transaction Documents,
(a) the commitment of Buyer hereunder to enter into new Transactions and to
continue Transactions as such shall forthwith be canceled, and (b) the
Transactions then outstanding shall be converted automatically to Alternative
Rate Transactions on the last day of the then current Pricing Rate Period or
within such earlier period as may be required by law.  If any such conversion of a Transaction occurs on a day which is
not the last day of the then current Pricing Rate Period with respect to such
Transaction, Seller shall pay to Buyer such amounts, if any, as may be required
pursuant to Section 3(i) of this Agreement.

 

(i)            Upon
demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any
net loss or reasonable expense (not to include any lost profit or opportunity)
(including, without limitation, reasonable attorneys’ fees and disbursements)
which Buyer may sustain or incur as a consequence of (i) default by the Seller
in terminating any Transaction after the Seller has given a notice in
accordance with Section 3(d) of a termination of a Transaction, (ii) any
payment of the Repurchase Price on any day other than a Remittance Date
(including, without limitation, any such reasonable loss or expense arising
from the reemployment of funds obtained by Buyer to maintain Transactions
hereunder or from fees payable to terminate the deposits from which such funds
were obtained) or (iii) a default by Seller in selling Eligible CRIIMI
Securities or Eligible GNMA Securities after Seller has notified Buyer of a
proposed Transaction and Buyer has agreed to purchase such Eligible CRIIMI
Securities or Eligible GNMA Securities in accordance with the provisions of
this Agreement.  A certificate as to
such costs, losses, damages and expenses, setting forth the calculations
therefor shall be submitted promptly by Buyer to Seller and shall be prima
facie evidence of the information set forth therein absent manifest error.

 

(j)            If
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:

 

(i)            shall subject Buyer to
any tax of any kind whatsoever with respect to the Transaction Documents, any
Purchased Security or any Transaction, or

 

13

 

change the basis of taxation of payments to Buyer in
respect thereof (except for income taxes and any changes in the rate of tax on
Buyer’s overall net income);

 

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

 

(iii)          shall impose on Buyer
any other condition;

 

and the result of any of the foregoing is to increase
the cost to Buyer, by an amount which Buyer deems, in the exercise of its
reasonable good faith business judgment, to be material, of entering into,
continuing or maintaining Transactions or to reduce any amount receivable under
the Transaction Documents in respect thereof; then, in any such case, Seller
shall promptly pay Buyer, upon its demand, any additional amounts necessary to
compensate Buyer for such increased cost or reduced amount receivable.  If Buyer becomes entitled to claim any
additional amounts pursuant to this Section 3(j), it shall, within ten (10)
Business Days of such event, notify Seller of the event by reason of which it
has become so entitled.  Such
notification as to the calculation of any additional amounts payable pursuant
to this subsection shall be submitted by Buyer to Seller and shall be prima
facie evidence of such additional amounts absent manifest error.  This covenant shall survive the termination
of this Agreement and the repurchase by Seller of any or all of the Purchased
Securities.

 

(k)           If
Buyer shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of return on Buyer’s
or such corporation’s capital as a consequence of its obligations hereunder to
a level below that which Buyer or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Buyer’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
Buyer, in the exercise of its reasonable business judgment, to be material,
then from time to time, after submission by Buyer to Seller of a written
request therefor, Seller shall pay to Buyer such additional amount or amounts
as will compensate Buyer for such reduction. 
Such notification as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller and
shall be prima facie evidence of such additional amounts absent manifest
error.  This covenant shall survive the
termination of this Agreement and the repurchase by Seller of any or all of the
Purchased Securities.

 

(l)            No
amount shall be payable by Seller under Section 3(j) or Section 3(k)
with respect to any period in excess of one hundred twenty (120) days
prior to the date of demand by the Buyer unless the effect of the applicable
change in or adoption of the Requirement of Law is retroactive by its terms to
a period prior to the date of such change in or adoption of the

 

14

 

Requirement of Law, in which case any additional
amount or amounts shall be payable for the retroactive period but only if the
Buyer provides its written demand not later than one hundred twenty (120)
days after the change in or the adoption of the Requirement of Law.

 

4.             MARGIN
MAINTENANCE

 

(a)           If
at any time, the Market Value of any of the Purchased Securities which are
Eligible CRIIMI Securities shall be less than the Buyer’s Margin Amount for
such Purchased Securities (a “Margin Deficit”), then Buyer may by notice
to Seller in writing require Seller to transfer to Buyer (A) cash or (B)
additional collateral acceptable to Buyer in its sole discretion at such market
value as is determined by Buyer in its good faith business judgment, so that
the sum obtained by adding the Market Value of each of the Purchased Securities
which are Eligible CRIIMI Securities plus such cash and additional collateral
shall equal or exceed the Deficit Cure Amount for such Purchased Securities
which are Eligible CRIIMI Securities, as of the same date.  Seller’s failure to cure any Margin Deficit
as required by the preceding sentence shall constitute an Event of Default
under the Transaction Documents and shall entitle Buyer to exercise its
remedies under Section 14 of this Agreement (including, without limitation, the
liquidation remedy provided for in Section 14(a)(iv) of this Agreement).

 

(b)           If
any time the aggregate Market Value of any Purchased Security which is an
Eligible CRIIMI Security multiplied by the “Original Purchase Percentage” for
such Purchased Security shall be greater than the aggregate Repurchase Price
for the Transaction relating to such Purchased Security (a “Margin Excess”)
then Seller may by written notice to Buyer require Buyer to transfer to Seller
cash or additional collateral previously delivered to Buyer pursuant to
Paragraph 4(a), in an amount (expressed in dollars) or with a market
value, as the case may be, up to the Margin Excess; provided, that any
such transfer of cash (1) shall not be in an amount less than $1,000,000 and
(2) shall be evidenced by amended and restated Confirmations.

 

(c)           If
any notice is given by Buyer under Paragraph 4(a) of this Agreement on any
Business Day prior to the Margin Notice Deadline, the Seller shall transfer
cash or additional collateral as provided in Paragraph 4(a) by no later than
the close of business on the immediately following Business Day.  If any notice is given by Buyer under
Paragraph 4(a) of this Agreement on any Business Day after the Margin Notice
Deadline, the Seller shall transfer cash or additional collateral as provided
in Paragraph 4(a) by no later than the close of business on the second
following Business Day.  If any notice
is given by Seller under Paragraph 4(b) of the Agreement prior to the close of
business on any Business Day, the Buyer shall transfer cash as provided in
Paragraph 4(b) no later than the close of business in the relevant market on
the second following Business Day. 
Notice required pursuant to Paragraph 4(a) or 4(b) of this Agreement may
be given by any means of telecopier or telegraphic transmission and shall be
delivered in accordance with the terms of this Agreement.  The failure of Buyer or Seller, on any one
or more occasions, to exercise its rights under Paragraph 4(a) or 4(b) of this
Agreement shall not change or alter the terms and conditions to which this
Agreement is subject or limit the right of Buyer or Seller to do so at a later
date.  Buyer and Seller agree that any
failure or delay by Buyer or Seller to exercise its rights under Paragraph 4(a)
or 4(b) of this Agreement shall not limit such party’s rights under this
Agreement or otherwise existing by law or in any way create additional rights
for such party.

 

15

 

(d)           Any
cash transferred to Buyer pursuant to Paragraph 4(a) of this Agreement with
respect to any Purchased Securities which are Eligible CRIIMI Securities shall
be attributed to such Purchased Security for which there was a Margin Deficit.

 

5.             INCOME PAYMENTS
AND PRINCIPAL PAYMENTS

 

(a)           Concurrently
with the execution and delivery of this Agreement by Seller and Buyer, the
Buyer shall establish the CRIIMI Securities Cash Management Account for
Transactions for Eligible CRIIMI Securities and GNMA Securities Cash Management
Account for Transactions for Eligible GNMA Securities at the Securities
Intermediary.  Buyer shall have sole
dominion and control over each of the CRIIMI Securities Cash Management Account
and the GNMA Securities Cash Management Account, subject to the terms and
provisions of this Agreement.  All
Income in respect of the Purchased Securities, as well as any interest received
from the reinvestment of such Income, shall be deposited directly into the
CRIIMI Securities Cash Management Account (in the case of Income, payments and
interest from Eligible CRIIMI Securities) and the GNMA Securities Cash
Management Account (in the case of Income, payments and interest from Eligible
GNMA Securities) and shall be remitted by the Securities Intermediary in
accordance with the applicable provisions of Sections 5 and 14(a)(i) of this
Agreement.

 

(b)           Reserved.

 

(c)           So
long as no Event of Default with respect to any Purchased Security or CF Sweep
Event with respect to any Purchased Security that is an Eligible CRIIMI
Security shall have occurred and be continuing, all Income received by the
Securities Intermediary in respect of the Eligible CRIIMI Securities in the
CRIIMI Securities Cash Management Account or in respect of the Eligible GNMA
Securities in the GNMA Securities Cash Management Account, as applicable (other
than Principal Payments and net sale proceeds) during each Collection Period
shall be applied by the Securities Intermediary on the related Remittance Date
as follows:

 

(i)            first, to remit to Buyer an
amount equal to the Price Differential which has accrued and is outstanding as
of such Remittance Date with respect to the related Transaction for Eligible
CRIIMI Securities or Eligible GNMA Securities; and

 

(ii)           second, to remit to Seller
the remainder, if any.

 

(d)           If
a CF Sweep Event with respect to any Purchased Security that is an Eligible
CRIIMI Security shall have occurred and be continuing, all Income received by
the Securities Intermediary in respect of the Eligible GNMA Securities in the
GNMA Securities Cash Management Account (other than Principal Payments and net
sale proceeds) during each Collection Period shall be applied by the Securities
Intermediary on the related Remittance Date as follows:

 

(i)            first, to remit to Buyer an
amount equal to the Price Differential which has accrued and is outstanding as
of such Remittance Date with respect to the related Transaction for Eligible
GNMA Securities; and

 

16

 

(ii)           second, to remit to Seller
the remainder, if any.

 

(e)           So
long as no Event of Default with respect to any Purchased Security shall have
occurred, any Principal Payment and any net sale proceeds in excess of the
related Repurchase Price in respect of any Eligible GNMA Securities which is a
portion of the Income received by the Securities Intermediary during each
Collection Period in the GNMA Securities Cash Management Account shall be
applied by the Securities Intermediary on the related Remittance Date as
follows:

 

(i)            first, to make a payment to
Buyer on account of the Repurchase Price of the Purchased Securities that are
Eligible GNMA Securities until such Repurchase Price is paid in full; and

 

(ii)           second, to remit to Seller
the remainder, if any.

 

(f)            So
long as no Event of Default with respect to any Purchased Security or CF Sweep
Event with respect to any Purchased Security that is an Eligible CRIIMI
Security shall have occurred, any Principal Payment and any net sale proceeds
in excess of the related Repurchase Price in respect of any Eligible CRIIMI
Securities which is a portion of the Income received by the Securities
Intermediary in the CRIIMI Securities Cash Management Account during each
Collection Period shall be applied by the Securities Intermediary on the
related Remittance Date in the following order of priority:

 

(i)            first, to make a payment to
Buyer on account of the Repurchase Price of the Purchased Securities that are
Eligible CRIIMI Securities in respect of which such Principal Payment has been
received, until the Repurchase Price for such Purchased Securities has been
reduced to the Target Price for such Purchased Securities as of the date of
such payment (as determined by Buyer after giving effect to such Principal Payment);

 

(ii)           second, to make a payment on
account of the Repurchase Price of any other Purchased Securities that are
Eligible CRIIMI Securities as to which the Repurchase Price exceeds the Target
Price (for this purpose, making such payment in the order of those Purchased
Securities with the largest to smallest excess of Repurchase Price over Target
Price), until the aggregate Repurchase Price for all of such Purchased
Securities has been reduced to the aggregate Target Price for all of the
Purchased Securities as of the date of such payment (as determined by Buyer
after giving effect to such Principal Payment and application of net sale
proceeds); and

 

(iii)          third, to remit to Seller
the remainder of such Principal Payment or net sale proceeds.

 

(g)           If
a CF Sweep Event with respect to any Purchased Security that is an Eligible
CRIIMI Security shall have occurred, all Income (including Principal Payments
and any net sale proceeds in excess of the related Repurchase Price) received
by the Securities Intermediary in the CRIIMI Securities Cash Management Account
in respect of such Purchased Security shall be

 

17

 

applied by the Securities Intermediary on the Business
Day next following the Business Day on which such funds are deposited in the
CRIIMI Securities Cash Management Account as follows:

 

(i)            first, to remit to Sponsor
an amount to pay Sponsor’s “general and administrative” costs ; provided,
the amount remitted to the Sponsor pursuant to this clause first shall not
exceed $250,000 during any Collection Period;

 

(ii)           second, to remit to Buyer an
amount equal to the Price Differential which has accrued and is outstanding in
respect of the related Transaction for Eligible CRIIMI Securities as of such
Business Day;

 

(iii)          third, to make a payment to
Buyer on account of the Repurchase Price of the Purchased Securities that are
Eligible CRIIMI Securities in respect of which such CF Sweep Event occurred,
until the Repurchase Price for such Purchased Securities has been reduced to
the amount (expressed in dollars) obtained by multiplying (i) the Market Value
of such Purchased Securities as of such date by (ii) the “CF Sweep Purchase
Percentage” applicable to such Purchased Securities, as set forth in Schedule
I-A attached to this Agreement as of the date of such payment (as determined by
Buyer after giving effect to such Principal Payment and application of net sale
proceeds);

 

(iv)          fourth, to make a payment on
account of the Repurchase Price of any other Purchased Securities that are
Eligible CRIIMI Securities as to which a CF Sweep Event shall have occurred
(for this purpose, making such payment in the order of such Purchased
Securities whose Repurchase Price exceeds the product of the related Market
Value by the related “CF Purchase Sweep Percentage” by the largest to smallest
excess), until the aggregate Repurchase Price for all of such Purchased
Securities has been reduced to the amount (expressed in dollars) obtained by
multiplying (i) the Market Value of such Purchased Securities as of such date
by (ii) the “CF Sweep Purchase Percentage” applicable to such Purchased
Securities, as set forth in Schedule I-A attached to this Agreement, as of the
date of such payment (as determined by Buyer after giving effect to such Principal
Payment and application of net sale proceeds);

 

(v)           fifth, to make a payment to
Buyer on account of the Repurchase Price of such Purchased Securities that are
Eligible CRIIMI Securities in respect of which such Principal Payment has been
received, until the Repurchase Price for such Purchased Securities has been
reduced to the Target Price for such Purchased Securities, as of the date of
such payment (as determined by Buyer after giving effect to such Principal
Payment and application of net sale proceeds);

 

(vi)          sixth, to make a payment on
account of the Repurchase Price of any other Purchased Securities that are
Eligible CRIIMI Securities as to which the

 

18

 

Repurchase Price exceeds the Target Price (for this
purpose, making such payment in the order of those Purchased Securities with
the largest to smallest excess of Repurchase Price over Target Price), until
the aggregate Repurchase Price for all of such Purchased Securities has been
reduced to the aggregate Target Price for all of such Purchased Securities, as
of the date of such payment (as determined by Buyer after giving effect to such
Principal Payment and application of net sale proceeds); and

 

(vii)         seventh, to remit to Seller
the remainder.

 

(h)           If
an Event of Default shall have occurred and be continuing, all Income received
by the Securities Intermediary in respect of the Eligible CRIIMI Securities and
Eligible GNMA Securities shall be applied by the Securities Intermediary on the
Business Day next following the Business Day on which such funds are deposited
in the Cash Management Account as follows:

 

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

 

(ii)           second, to make a payment to
Buyer on account of the Repurchase Price of the Purchased Securities until the
Repurchase Price for all of the Purchased Securities has been reduced to zero;
and

 

(iii)          third, to remit to Seller
the remainder.

 

6.             SECURITY INTEREST

 

The Buyer and Seller intend that all Transactions
hereunder be sales to the Buyer of the Purchased Securities and not loans from
the Buyer to Seller secured by the Purchased Securities; provided, that
so long as an Event of Default has not occurred and is not continuing, the
Seller may treat the Transaction as a loan for accounting and federal, state
and local income and franchise tax purposes. 
However, in the event any such Transaction is deemed to be a loan,
Seller hereby pledges all of its right, title, and interest in, to and under
and grants a first priority lien on, and security interest in, all of the
following property, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located (collectively, the “Collateral”)
to the Buyer to secure the payment and performance of all other amounts or
obligations owing to the Buyer pursuant to this Agreement and the related
documents described herein:

 

(a)           the
Purchased Securities and all “securities accounts” (as defined in Section
8-501(a) of the UCC) to which any or all of the Purchased Securities are
credited;

 

(b)           the
CRIIMI Securities Cash Management Account and all monies from time to time on
deposit in the CRIIMI Securities Cash Management Account;

 

(c)           the
GNMA Securities Cash Management Account and all monies from time to time on
deposit in the GNMA Securities Cash Management Account;

 

19

 

(d)           all
“general intangibles”, “accounts” and “chattel paper” as defined in the UCC
relating to or constituting any and all of the foregoing; and

 

(e)           all
replacements, substitutions or distributions on or proceeds, payments, Income
and profits of, and records (but excluding any financial models or other
proprietary information) and files relating to any and all of any of the
foregoing.

 

The Buyer’s security interest in the Collateral shall
terminate only upon termination of the Seller’s obligations under this
Agreement and the documents delivered in connection herewith and
therewith.  Upon such termination, Buyer
shall prepare and file in the appropriate jurisdictions such UCC termination
statements and other release documents as may be commercially reasonable and to
return the Purchased Securities to Seller. 
For purposes of the grant of the security interest pursuant to Paragraph
6 of this Agreement, this Agreement shall be deemed to constitute a security
agreement under the New York Uniform Commercial Code (the “UCC”).  Buyer shall have all of the right and, upon
the occurrence and during the continuance of an Event of Default, may exercise
all of the remedies of a secured creditor under the UCC and the other laws of
the State of New York.  In furtherance
of the foregoing, (a) Buyer may cause to be filed in such locations as may be
necessary to perfect and maintain perfection and priority of the security
interest granted hereby, UCC financing statements and continuation statements
(collectively, the “Filings”), and shall forward copies of such Filings
to Seller upon completion thereof, and (b) Seller shall from time to time take
such further actions as may be reasonably requested by Buyer to maintain and
continue the perfection and priority of the security interest granted hereby
(including marking its records and files to evidence the interests granted to
Buyer hereunder).

 

7.             PAYMENT, TRANSFER AND
CUSTODY

 

(a)           On
the Purchase Date for each Transaction, ownership of the Purchased Securities
shall be transferred to Buyer or its designee (including the Custodian),
without recourse but subject to the terms of this Agreement, against the
simultaneous transfer of the Purchase Price to an account of Seller specified
in the Confirmation relating to such Transaction.

 

(b)           On
or prior to the applicable Purchase Date, the Seller shall deliver the related
Purchased Securities, together with appropriate assignment forms necessary to
re-register such Purchased Securities in the name of the Buyer or other
designee of the Buyer in accordance with the Custodial Agreement and the Buyer
or its other designee shall have all rights of conversions, exchange,
subscription and any other rights, privileges and options pertaining to such
Purchased Securities as the owner thereof, and in connection therewith, the
right to deposit and deliver any and all of the Purchased Securities with any
committee, depositary transfer, agent, register or other designated agency upon
such terms and conditions as the Buyer may determine.  The Purchased Securities shall be held by the Buyer or its
designee, as exclusive bailee and agent for the Buyer, either directly or
through the facilities of a Relevant System, as “securities intermediary” (as
defined in Section 8-102(a)(14) of the UCC and 31 C.F.R. Section 357.2) and
credited to the “securities account” (as defined in Section 8-501(a) of the
UCC) of the Buyer.  The Buyer, as
“entitlement holder” (as defined in Section 8-102(a)(7) of the UCC) with
respect to the Purchased Securities, shall be entitled to receive all cash
dividends and distributions paid in respect thereof.  Any such dividends or distributions with respect to the Purchased
Securities

 

20

 

received by the Seller shall be promptly remitted to
the CRIIMI Securities Cash Management Account or the GNMA Securities Cash
Management Account, as applicable.

 

(c)           With
respect to Purchased Securities that shall be delivered or held in
uncertificated form and the ownership of which is registered on books
maintained by the issuer thereof or its transfer agent, the Seller shall cause
the registration of such security or other item of investment property in the
name of Buyer or its designee and at the request of the Buyer, shall take such
other and further steps, and shall execute and deliver such documents or
instruments necessary in the reasonable opinion of the Buyer, to effect a
legally valid transfer to Buyer hereunder. 
With respect to Purchased Securities that shall be delivered or held in
definitive, certificated form, the Seller shall deliver to the Buyer or its
designee (which shall be the Custodian initially) the original of the relevant
certificate, together with an appropriate assignment form necessary to register
such certificate in the name of the Buyer or its designee.  Unless otherwise instructed by Buyer, any
delivery of a security or other item of investment property in definitive,
certificated form shall be made to the Custodian.  With respect to Purchased Securities that shall be delivered
through a Relevant System in book entry form and credited to or otherwise held
in a securities account, the Seller shall take such actions necessary to
provide instruction to the relevant financial institution or other entity,
which instruction shall be sufficient if complied with to register the transfer
of Purchased Securities from Seller to Buyer or its designee.  In connection with any account to which the
Purchased Securities are credited or otherwise held, the Seller shall execute
and deliver such other and further documents or instruments necessary, in the
reasonable opinion of the Buyer, to effect a legally valid transfer to Buyer
hereunder.  Any account to which the
Purchased Securities are credited or otherwise held shall be designated in
accordance with the Custodial Agreement or such variation thereon as the Buyer
may direct.  Any delivery of a Portfolio
Security in accordance with this paragraph, or any other method acceptable to
the Buyer, shall be sufficient to cause the Buyer to be the “entitlement
holder” (as defined in Section 8-102(a)(7) of the UCC) with respect to the
Purchased Securities and, if the Transaction is recharacterized as a secured
financing, to have a perfected first priority security interest therein.  No Purchased Securities, whether
certificated or uncertificated, shall remain in the name, or possession, of
Seller or any of its agents or in any securities account in the name of Seller
or any of its agents.

 

(d)           As
a condition to Buyer’s purchase of any Purchased Securities, Seller shall
deliver to Buyer on or prior to the Purchase Date:

 

(i)            copies of the executed
Securitization Document governing such Purchased Securities, and the offering
documents related to such Purchased Securities, each certified by the Seller as
a true, correct and complete copy of the original document delivered to the
Seller, and any ancillary documents required to be delivered to holders of the
Purchased Securities under such Securitization Document;

 

(ii)           one or more officer’s
certificates with respect to the completeness of the documents delivered and
one or more opinions of counsel as may be reasonably requested by Buyer,

 

21

 

(iii)          an instruction letter
from the Seller to the Trustee under such Securitization Document, instructing
the Trustee to remit all sums required to be remitted to the holder of such
Purchased Securities under such Securitization Document to the Securities
Intermediary or as otherwise directed in a written notice signed by Seller and
Buyer,

 

(iv)          copies of all distribution
statements, if any, delivered to the Seller pursuant to such Securitization
Document during the three-month period immediately preceding such Purchase
Date, and

 

(v)           any other documents or
instruments necessary in the reasonable opinion of the Buyer to consummate the
sale of such Securities to the Buyer or, if such Transaction is recharacterized
as a secured financing, to create and perfect in favor of Buyer a valid
perfected first priority security interest in such Securities.

 

(e)           Unless
an Event of Default shall have occurred and be continuing, Buyer shall exercise
all voting and corporate rights with respect to the Purchased Securities in
accordance with Seller’s written instructions; provided, however,
that Buyer shall not be required to follow Seller’s instructions concerning any
vote or corporate right if doing so would, in Buyer’s good faith business
judgment, impair the Purchased Securities or be inconsistent with or result in
any violation of any provision of the Transaction Documents.  Upon the occurrence and during the
continuation of an Event of Default, Buyer shall be entitled to exercise all
voting and corporate rights with respect to the Purchased Securities without
regard to Seller’s instructions. 
Further, if the Event of Default results from an Act of Insolvency with
respect to Seller or the Sponsor, then to the extent Seller controls or is
entitled to control selection of the special servicer, Buyer may transfer such
special servicing to an entity satisfactory to Buyer.

 

8.             SALE, TRANSFER,
HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES

 

(a)           Title
to all Purchased Securities shall pass to Buyer on the applicable Purchase
Date, and Buyer shall have free and unrestricted use of all Purchased
Securities.  Nothing in this Agreement
or any other Transaction Document shall preclude Buyer from engaging in
repurchase transactions with the Purchased Securities or otherwise selling,
transferring, pledging, repledging, hypothecating, or rehypothecating the
Purchased Securities, but no such transaction shall relieve Buyer of its
obligations to transfer the Purchased Securities to Seller pursuant to Sections
3 or 11 of this Agreement or of Buyer’s obligation to credit or pay Income to,
or apply Income to the obligations of, Seller pursuant to Section 5 hereof.

 

(b)           Nothing
contained in this Agreement or any other Transaction Document shall obligate
Buyer to segregate any Purchased Securities delivered to Buyer by Seller.  Notwithstanding anything to the contrary in
this Agreement or any other Transaction Document, no Purchased Security shall
remain in the custody of the Seller or an Affiliate of the Seller.

 

22

 

9.             RESERVED

 

10.          REPRESENTATIONS

 

(a)           Each
of Buyer and Seller represents and warrants to the other that (i) it is duly
authorized to execute and deliver this Agreement, to enter into Transactions
contemplated hereunder and to perform its obligations hereunder and has taken
all necessary action to authorize such execution, delivery and performance, (ii)
it will engage in such Transactions as principal (or, if agreed in writing, in
the form of an annex hereto or otherwise, in advance of any Transaction by the
other party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its behalf
(or on behalf of any such disclosed principal), (iv) it has obtained all
authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full
force and effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law, ordinance or
rule applicable to it or its organizational documents or any agreement by which
it is bound or by which any of its assets are affected.  On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.

 

(b)           In
addition to the representations and warranties in subsection (a) above, Seller
represents and warrants to Buyer that as of the Purchase Date for the purchase
of any Purchased Securities by Buyer from Seller and any Transaction thereunder
and as of the date of this Agreement:

 

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

 

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

 

(iii)          Non-Contravention.  Neither the execution and delivery of the
Transaction Documents, nor consummation by Seller of the transactions
contemplated by the Transaction Documents (or any of them), nor compliance by
Seller with the terms, conditions and provisions of the Transaction Documents
(or any of them) will conflict with or result in a breach of any of the terms,
conditions or provisions of (i) the organizational documents of Seller, (ii)
any contractual obligation to which Seller is now a party or the rights under
which have been assigned to Seller or the obligations under which

 

23

 

have been assumed by Seller or to which the assets of
Seller are subject or constitute a default thereunder, or result thereunder in
the creation or imposition of any lien upon any of the assets of Seller, other
than pursuant to the Transaction Documents, (iii) any judgment or order, writ,
injunction, decree or demand of any court applicable to Seller, or (iv) any
applicable Requirement of Law, in the case of clauses (ii)-(iv) above, to the
extent that such conflict or breach would have a material adverse effect upon
Seller’s ability to perform its obligations hereunder.  Seller has all necessary licenses, permits
and other consents from Governmental Authorities necessary to acquire, own and
sell the Purchased Securities and for the performance of its obligations under
the Transaction Documents.

 

(iv)          Litigation;
Requirements of Law.  Except as set
forth on Schedule II, there is no action, suit, proceeding, investigation,
or arbitration pending or, to the best knowledge of Seller, threatened against
Seller, the Sponsor or any of their respective assets, nor is there any action,
suit, proceeding, investigation, or arbitration pending or threatened against
the Sponsor which may result in any material adverse change in the business,
operations, financial condition, properties, or assets of Seller or the
Sponsor, or which may have an adverse effect on the validity of the Transaction
Documents or the Purchased Securities or any action taken or to be taken in
connection with the obligations of Seller under any of the Transaction
Documents.  Seller is in compliance in
all material respects with all Requirements of Law.  Neither Seller nor the Sponsor is in default in any material
respect with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any arbitrator or Governmental Authority.

 

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

 

(vi)          Good Title to
Purchased Securities.  Immediately
prior to the purchase of any Purchased Securities by Buyer from Seller, such
Purchased Securities are free and clear of any lien, encumbrance or impediment
to transfer (including any “adverse claim” as defined in Section 8-102(a)(1) of
the UCC), and Seller is the record and beneficial owner of and has good and
marketable title to and the right to sell and transfer such Purchased
Securities to Buyer and, upon transfer of such Purchased Securities to Buyer,
Buyer shall be the owner of such Purchased Securities free of any adverse
claim.  In the event the related
Transaction is recharacterized as a secured financing of the Purchased
Securities, the provisions of this Agreement are effective to create in favor
of the Buyer a valid security interest in all rights, title and interest of the
Seller in, to and under the Collateral and the Buyer shall have a valid,
perfected first priority security

 

24

 

interest in the Purchased Securities (and without
limitation on the foregoing, the Buyer, as entitlement holder, shall have a
“security entitlement” to the Purchased Securities).

 

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

 

(viii)        Representations in Securitization
Documents.  All of the Purchased
Securities have been validly issued and are fully paid and non-assessable and
not subject to preemptive rights and have been offered, issued and sold in
compliance with all Requirements of Law. 
To the extent that an Affiliate of the Seller is a party thereto, the
Securitization Documents are genuine, in full force and effect and the legal,
valid and binding obligation of such Affiliate enforceable in accordance with
their terms.  The Securitization
Documents have not been altered or modified in any material respect, except as
disclosed to the Buyer in writing.  The
Seller has not waived the performance of any action or any default, breach or
violation resulting from action or inaction under a Securitization Document and
has not been made aware of any such waiver. 
Except as disclosed to the Buyer in writing, there is no default,
breach, violation or event of acceleration existing under a Securitization
Document and no event has occurred which, with the passage of time or giving of
notice or both and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration thereunder.  Each Purchased Security is freely assignable
and the related Securitization Document permits the Seller to sell, assign or
pledge such Purchased Security.

 

(ix)           Reserved.

 

(x)            Adequate
Capitalization; No Fraudulent Transfer. 
Seller has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.  Seller is generally able to pay, and as of the date hereof is
paying, its debts as they come due. 
Seller has not become, or is presently, financially insolvent nor will
Seller be made insolvent by virtue of Seller’s execution of or performance
under any of the Transaction Documents within the meaning of the bankruptcy
laws or the insolvency laws of any jurisdiction.  Seller has not entered into any Transaction Document or any Transaction
pursuant thereto in contemplation of insolvency or with intent to hinder, delay
or defraud any creditor.

 

(xi)           Consents.  No consent, approval or other action of, or
filing by Seller with, any Governmental Authority or any other Person is
required to authorize, or is otherwise required in connection with, the
execution, delivery and

 

25

 

performance of any of the Transaction Documents (other
than consents, approvals and filings that have been obtained or made, as
applicable).

 

(xii)          Ownership.  Seller does not have any legal or beneficial
owner other than CBO REIT II.

 

(xiii)         Organizational
Documents.  Seller has delivered to
Buyer certified copies of its organizational documents, together with all amendments
thereto, if any.

 

(xiv)        No Encumbrances.  There are (i) no outstanding rights,
options, warrants or agreements on the part of Seller for a purchase, sale or
issuance, in connection with the Purchased Securities, (ii) no agreements on
the part of the Seller to issue, sell or distribute the Purchased Securities,
and (iii) no obligations on the part of the Seller (contingent or otherwise) to
purchase, redeem or otherwise acquire any securities or any interest therein or
to pay any dividend or make any distribution in respect of the Purchased
Securities.

 

(xv)         Federal Regulations.  Seller is not (A) an “investment company,”
or a company “controlled by an investment company,” within the meaning of the
Investment Company Act of 1940, as amended, or (B) a “holding company,” or a
“subsidiary company of a holding company,” or an “affiliate” of either a
“holding company” or a “subsidiary company of a holding company,” as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended.

 

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

 

(xvii)       ERISA.  Seller does not have any Plans or any ERISA
Affiliates and makes no contributions to any Plans or any Multiemployer Plans.

 

(xviii)      Judgments/Bankruptcy.  There are no judgments against Seller or the
Sponsor unsatisfied of record or docketed in any court located in the United
States of America and no Act of Insolvency has ever occurred with respect to
Seller.

 

26

 

(xix)         Full and Accurate
Disclosure.  No information
contained in the Transaction Documents, or any written statement furnished by
or on behalf of Seller pursuant to the terms of the Transaction Documents,
taken as a whole, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made.

 

(xx)          Financial Information.  All financial data concerning the Purchased
Securities that has been delivered by or on behalf of Seller to Buyer was, at
the time so delivered, accurate and complete in all material respects.  All consolidated financial statements of
Sponsor that have been delivered by or on behalf of Sponsor to Buyer were
prepared in conformity with GAAP, except as set forth therein.  All projections and pro forma financial
information so delivered were based on good faith estimates and assumptions
believed by Seller to be reasonable at the time when made.  Since March 31, 2004, except as otherwise
disclosed in subsequent press releases or filings with the SEC, there has been
no material adverse change in the operations or financial condition of Sponsor
from that set forth in the most recent consolidated financial statements filed
by Sponsor.

 

(xxi)         Jurisdiction of
Organization.  Seller’s jurisdiction
of organization is Maryland.

 

(c)           In
addition to the representations and warranties in subsection (a) above, Buyer
represents and warrants to Seller that as of the Purchase Date for the purchase
of any Purchased Securities by Buyer from Seller and any Transaction thereunder
and as of the date of this Agreement:

 

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

 

(ii)           Requirements of Law.  Buyer is in compliance in all material
respects with all Requirements of Law.

 

11.          NEGATIVE
COVENANTS OF SELLER

 

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

 

(a)           take
any action which would directly or indirectly impair or adversely affect
Buyer’s title to the Purchased Securities;

 

27

 

(b)           transfer,
assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose
of, or pledge or hypothecate, directly or indirectly, any interest in the
Purchased Securities (or any of them) to any Person other than Buyer, or engage
in repurchase transactions or similar transactions with respect to the
Purchased Securities (or any of them) with any Person other than Buyer;

 

(c)           permit
a Change of Control to occur;

 

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

 

(e)           create,
incur or permit to exist any lien, encumbrance or security interest in or on
any of the other Collateral subject to the security interest granted by Seller
pursuant to Paragraph 6 of this Agreement;

 

(f)            modify
in any material respect or terminate any of the organizational documents of
Seller;

 

(g)           consent
or assent to any amendment or supplement to, or termination of, any
Securitization Document, or other material agreement or instrument relating to
the Purchased Securities (other than with respect to ministerial amendments and
modifications);

 

(h)           admit
any additional legal or beneficial owner in Seller, or permit the respective
sole legal and beneficial owner of Seller to assign or transfer all or any
portion of its ownership interest in Seller;

 

(i)            at
any time after an Event of Default has occurred and is continuing, vote or take
any action to exercise any rights afforded to a holder of the Purchased
Securities under the related Securitization Documents; or

 

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

 

12.          AFFIRMATIVE
COVENANTS OF SELLER

 

(a)           Seller
shall as soon as reasonably possible notify Buyer of any material adverse
change in its business operations and/or financial condition; provided, however,
that nothing in this Section 12 shall relieve Seller of its obligations under
this Agreement.

 

(b)           Seller
shall provide Buyer with copies of such documents as Buyer may reasonably
request evidencing the truthfulness of the representations set forth in Section
10.

 

(c)           Seller
(1) shall defend the right, title and interest of the Buyer in and to the
Collateral against, and take such other action as is necessary to remove, the
Liens, security

 

28

 

interests, claims and demands of all Persons (other
than security interests by or through Buyer) and (2) shall, at Buyer’s
reasonable request, take all action necessary to ensure that Buyer will have a
first priority security interest in the Purchased Securities subject to any of
the Transactions in the event such Transactions are recharacterized as secured
financings.

 

(d)           Seller
shall notify Buyer and the Securities Intermediary of the occurrence of any
Default or Event of Default with respect to Seller as soon as possible but in
no event later than the second (2nd) Business Day after an authorized officer
of Seller identified as such on Exhibit II obtained actual knowledge of
such event.

 

(e)           Reserved.

 

(f)            With
respect to each Purchased Security, in the event Seller maintains a hedging
strategy and enters into Hedging Transactions such strategy and Hedging
Transactions shall be subject to the mutual agreement with the Buyer.  With respect to any such Hedging Transaction
so agreed to, the payments and related value (positive or negative) due
thereunder and under any Transaction shall be netted.

 

(g)           Seller
shall promptly (and in any event not later than two (2) Business Days following
receipt with respect to clauses (i) and (ii) below) deliver to Buyer (i)
any notice of the occurrence of an event of default under or report received by
Seller pursuant to the Securitization Documents; (ii) any notice of transfer of
servicing under the Securitization Documents and (iii) any other information
with respect to the Purchased Securities as may be reasonably requested by
Buyer from time to time.

 

(h)           Seller
will permit Buyer or its designated representative to inspect Seller’s records
with respect to the Collateral and the conduct and operation of its business
related thereto upon reasonable prior written notice from Buyer or its
designated representative, at such reasonable times and with reasonable
frequency, and to make copies of any extracts thereof as may reasonably be
requested by Buyer, subject to the terms of any confidentiality agreement
between the Buyer and the Seller.  Buyer
shall act in a commercially reasonable manner in requesting and conducting any
inspection relating to the conduct and operation of Seller’s business.

 

(i)            If
the Seller shall at any time become entitled to receive or shall receive any
rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for the Purchased Securities, or otherwise in respect thereof, the
Seller shall accept the same as the Buyer’s agent, hold the same in trust for
the Buyer and deliver the same forthwith to the Buyer in the exact form
received, duly endorsed by the Seller to the Buyer, if required, together with
an undated bond power covering such certificate duly executed in blank to be
held by the Buyer hereunder as additional collateral security for the
Transactions.  If any sums of money or
property so paid or distributed in respect of the Purchased Securities shall be
received by the Seller, the Seller shall, until such money or property is
applied in accordance with Section 5 hereof, hold such money or property
in trust for the Buyer, segregated from other funds of the Seller, as
additional collateral security for the Transactions.

 

(j)            At
any time from time to time upon the reasonable request of Buyer, at the sole
expense of Seller, Seller will promptly and duly execute and deliver such
further instruments and

 

29

 

documents and take such further actions as Buyer may reasonably
request for the purposes of obtaining or preserving the full benefits of this
Agreement including the first priority security interest granted hereunder and
of the rights and powers herein granted (including, among other things, filing
such UCC financing statements as Buyer may reasonably request).  If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Buyer, duly endorsed in a manner reasonably
satisfactory to the Buyer, to be held as Collateral pursuant to this Agreement,
and the documents delivered in connection herewith.

 

(k)           Seller
shall provide Buyer with the following financial and reporting information:

 

(i)            Within 45 days after
the last day of each of the first three fiscal quarters in any fiscal year,
Sponsor’s unaudited consolidated statements of income and statements of changes
in cash flow for such quarter and balance sheets as of the end of such quarter,
in each case presented fairly in accordance with GAAP and certified as being
true and correct by an officer’s certificate;

 

(ii)           Within 90 days after
the last day of its fiscal year, Sponsor’s audited consolidated statements of
income and statements of changes in cash flow for such year and balance sheets
as of the end of such year, in each case presented fairly in accordance with
GAAP, and accompanied by an unqualified report of a nationally recognized independent
certified public accounting firm;

 

(iii)          Within 45 days after the
last day of each calendar quarter in any fiscal year, an officer’s certificate
from the Seller addressed to Buyer certifying that, as of such calendar month,
(x) Seller is in compliance with all of the terms, conditions and requirements
of this Agreement, and (y) no Event of Default exists; and

 

(iv)          Within 15 days after
each month end, a monthly reporting package containing the items identified on
Exhibit III attached hereto, together with such other reports as the Buyer may
reasonably request.

 

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

 

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

 

(n)           Seller
shall observe, perform and satisfy all the terms, provisions, covenants and
conditions required to be observed, performed or satisfied by it, and shall pay
when due all costs,

 

30

 

fees and expenses required to be paid by it, under the
Transaction Documents.  Seller shall pay
and discharge all taxes, levies, liens and other charges on its assets and on
the Collateral that, in each case, in any manner would create any lien or
charge upon the Collateral, except for any such taxes as are being
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves have been provided in
accordance with GAAP or, if applicable, appropriate accounting requirements of
the Securities and Exchange Commission.

 

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

 

13.          SINGLE-PURPOSE
ENTITY

 

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

 

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

 

(b)           It
has complied and will comply with the provisions of its organizational
documents.

 

(c)           It
has done or caused to be done and will, to the extent under its control, do all
things necessary to observe corporate formalities and to preserve its
existence.

 

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

 

(e)           It
has been, is and will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including any
Affiliate), shall correct any known misunderstanding regarding its status as a
separate entity, shall conduct business in its own name, shall not identify
itself or any of its Affiliates as a division or part of the other, shall
maintain and utilize separate stationery, invoices and checks, and shall pay to
any Affiliate that incurs costs for office space and administrative services
that it uses, the amount of such costs allocable to its use of such office space
and administrative services.

 

(f)            It
has not owned and will not own any property or any other assets other than
Purchased Securities, assets owned in connection with compliance under
Section 4(a) hereof, cash and its interest under any associated Hedging
Transactions.

 

31

 

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

 

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

 

(i)            It
has not incurred and will not incur any indebtedness or obligation, secured or
unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than (A) obligations under the Transaction Documents and
(B) unsecured trade payables, in an aggregate amount not to exceed $200,000 at
any one time outstanding, incurred in the ordinary course of acquiring, owning,
financing and disposing of Purchased Securities; provided, however,
that any such trade payables incurred by Seller shall be paid within 60 days of
the invoice date.

 

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

 

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

 

(l)            It
shall not seek its dissolution, liquidation or winding up, in whole or in part,
or suffer any Change of Control, consolidation or merger with respect to
Seller.

 

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

 

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

 

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

 

(p)           The
Seller shall not take any of the following actions: (i) permit its shareholders
to dissolve or liquidate the Seller, in whole or in part; (ii) consolidate or
merge with or into any other entity (where such member is not the surviving
entity) or convey or transfer all or substantially all of its properties and
assets to any entity; or (iii) institute any proceeding to be adjudicated as
bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it, or file a petition or answer or consent
seeking reorganization or relief under the Bankruptcy Code, or effect any
similar procedure under any similar law, or consent to the filing of any such
petition or to the appointment of a receiver, rehabilitator, conservator,
liquidator, assignee, trustee or sequestrator (or other similar official) of
the Seller or of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, or make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any of the foregoing.

 

32

 

(q)           It
has no liabilities, contingent or otherwise, other than those normal and
incidental to the acquisition, ownership, financing and disposition of
Purchased Securities.

 

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

 

(s)           It
shall not maintain any employees.

 

14.          EVENTS OF
DEFAULT; REMEDIES

 

After the occurrence and during the continuance of an
Event of Default, Seller hereby appoints Buyer as attorney-in-fact of Seller
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing or endorsing any instruments that Buyer may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.  In the event that:

 

(i)            Seller fails to
repurchase or Buyer fails to transfer Purchased Securities upon the applicable
Repurchase Date;

 

(ii)           Seller or Buyer fails
to comply with Section 4 hereof;

 

(iii)          an Act of Insolvency
occurs with respect to Seller or Sponsor;

 

(iv)          Seller shall admit to
Buyer its inability to, or its intention not to, perform any of its obligations
hereunder;

 

(v)           either (A) the
Transaction Documents shall for any reason not cause, or shall cease to cause,
Buyer to be the owner free of any adverse claim of any of the Purchased
Securities, or (B) if a Transaction is recharacterized as a secured financing,
the Transaction Documents with respect to any Transaction shall for any reason
cease to create a valid first priority security interest in favor of Buyer in
any of the Purchased Securities;

 

(vi)          in the event that the
Buyer or any of its Affiliates is a party to an ISDA Master Agreement with
Seller and an event occurs which would constitute an Event of Default, a
Termination Event or an Additional Termination Event under any Transaction
between Seller and the Buyer or any of its Affiliates, regardless of whether
such Transaction is in effect on the date of such occurrence (capitalized terms
used in this paragraph (vi) shall have the respective meanings ascribed to them
in the ISDA Master Agreement (including respective Schedules and Confirmations)
between Seller and the Buyer and/or any of its Affiliates);

 

(vii)         failure of the Buyer to
receive on any Remittance Date the accreted value of the Price Differential
(less any amount of such Price Differential previously paid by Seller to
Buyer);

 

33

 

(viii)        failure of the Seller to
make any other payment owing to the Buyer which has become due, whether by
acceleration or otherwise under the terms of this Agreement which failure is
not remedied within the applicable period (in the case of a failure pursuant to
Paragraph 4) or five Business Days (in the case of any other such failure);

 

(ix)           any governmental,
regulatory, or self-regulatory authority shall have taken any action to remove,
limit, restrict, suspend or terminate the rights, privileges, or operations of
Seller, which suspension has a material adverse effect on the financial
condition or business operations of Seller;

 

(x)            any representation
made by Seller shall have been incorrect or untrue in any material respect when
made or repeated or deemed to have been made or repeated (other than the
representations and warranties set forth in Section 10(b)(viii)
[Representations in Securitization Documents] or (xix) [Full and Accurate
Disclosure] or (xx) [Financial Information] (in the case of (xx), with respect
to the affected Purchased Securities only) made by the Seller, which shall not
be considered an Event of Default unless incorrect or untrue in any material
respect, and Seller does not within three (3) Business Days after receiving
notice of such incorrect or untrue representation or warranty terminate the
related Transaction, as applicable, and repurchase the related Purchased
Securities on an Early Repurchase Date (unless the Seller shall have made any
such representation with knowledge that it was materially incorrect or untrue
at the time made));

 

(xi)           the Sponsor shall have
defaulted or failed to perform under the Guaranty;

 

(xii)          a final judgment by any
competent court in the United States of America for the payment of money in an
amount greater than $250,000 (in the case of the Seller) or $5 million (in the
case of the Sponsor) shall have been rendered against Seller or the Sponsor,
and remained undischarged or unpaid for a period of sixty (60) days, during
which period execution of such judgment is not effectively stayed by bonding
over or other means acceptable to Buyer; or

 

(xiii)         if Seller shall breach or
fail to perform any of the terms, covenants, obligations or conditions of this
Agreement, other than as specifically otherwise referred to in this definition
of “Event of Default”, and such breach or failure to perform is not remedied
within ten (10) Business Days after notice thereof to Seller from Buyer or its
successors or assigns (each of (i) through (xiii), an “Event of Default”).

 

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

 

(i)            At the option of
Buyer, exercised by written notice to Seller (which option shall be deemed to
have been exercised, even if no notice is given,

 

34

 

immediately upon the occurrence of an Act of
Insolvency), the Repurchase Date for each Transaction hereunder shall, if it
has not already occurred, be deemed immediately to occur (the date on which
such option is exercised or deemed to have been exercised being referred to
hereinafter as the “Accelerated Repurchase Date”).

 

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

 

(A)          Seller’s obligations
hereunder to repurchase all Purchased Securities shall become immediately due
and payable on and as of the Accelerated Repurchase Date; and

 

(B)           to the extent permitted
by applicable law, the Repurchase Price with respect to each Transaction
(determined as of the Accelerated Repurchase Date) shall be increased by the
aggregate amount obtained by daily application of, on a 360 day per year basis
for the actual number of days during the period from and including the
Accelerated Repurchase Date to but excluding the date of payment of the
Repurchase Price (as so increased), (x) the Pricing Rate (or, if applicable,
the Alternative Rate plus 300 basis points (3.00%)) for such Transaction
multiplied by (y) the Repurchase Price for such Transaction (decreased by (I)
any amounts actually remitted to Buyer by the Securities Intermediary or Seller
from time to time pursuant to Section 5 of this Agreement and applied to such
Repurchase Price, and (II) any amounts applied to the Repurchase Price pursuant
to Section 14(a)(iii) of this Agreement); and (C) the Custodian shall, upon the
request of Buyer, deliver to Buyer all instruments, certificates and other
documents then held by the Custodian relating to the Purchased Securities.

 

(iii)          Upon the occurrence of
an Event of Default with respect to Seller, Buyer may (A) immediately sell, at
a public or private sale (provided any such sale of the Eligible
GNMA Securities shall be made in a recognized market) in a commercially
reasonable manner and at such price or prices as Buyer may reasonably deem
satisfactory any or all of the Purchased Securities or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give Seller credit for such Purchased Securities in an amount
equal to the Market Value of such Purchased Securities against the aggregate
unpaid Repurchase Price for such Purchased Securities and any other amounts
owing by Seller under the Transaction Documents.  The Buyer shall use commercially reasonable efforts to provide to
the Seller written notice of any such sale. 
The proceeds of any disposition of Purchased Securities effected
pursuant to this Section 14(a)(iii) shall be applied, (v) first,
to the reasonable costs and expenses incurred by Buyer in connection with
Seller’s default; (w) second, to costs of cover and/or Hedging
Transactions, if any; (x) third, to

 

35

 

the Repurchase Price; (y) fourth, to the Exit Fee and
any other outstanding obligation of Seller to Buyer or its Affiliates; and (z) fifth,
to return any excess to Seller.

 

(iv)          The parties recognize
that it may not be possible to purchase or sell all of the Eligible CRIIMI
Securities on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Eligible CRIIMI
Securities may not be liquid.  In view
of the nature of the Eligible CRIIMI Securities, the parties agree that
liquidation of a Transaction or the Eligible CRIIMI Securities 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, in its sole
discretion, the time and manner of liquidating any Eligible CRIIMI Securities,
and nothing contained herein shall (A) obligate Buyer to liquidate any Eligible
CRIIMI Securities on the occurrence and during the continuance of an Event of
Default or to liquidate all of the Eligible CRIIMI Securities in the same
manner or on the same Business Day or (B) constitute a waiver of any right or
remedy of Buyer.

 

(v)           Seller shall be liable
to Buyer for (A) the amount of all expenses, including reasonable legal fees
and expenses, actually incurred by Buyer in connection with or as a consequence
of an Event of Default with respect to Seller, (B) all costs incurred in
connection with covering transactions or Hedging Transactions, and (C) any
other loss, damage, cost or expense directly arising or resulting from the
occurrence of an Event of Default with respect to Seller (but excluding
consequential damages and any lost profit or opportunity).

 

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

 

(vii)         Subject to the notice and
grace periods set forth herein, Buyer may exercise any or all of the remedies
available to Buyer immediately upon the occurrence of an Event of Default and
at any time during the continuance thereof. 
All rights and remedies arising under the Transaction

 

36

 

Documents, as amended from time to time, are
cumulative and not exclusive of any other rights or remedies which Buyer may
have.

 

(viii)        Buyer may enforce its
rights and remedies hereunder without prior judicial process or hearing, and
Seller hereby expressly waives any defenses Seller might otherwise have to
require Buyer to enforce its rights by judicial process.  Seller also waives any defense Seller might
otherwise have arising from the use of nonjudicial process, disposition of any
or all of the Purchased Securities, 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.

 

(b)           If
an Event of Default occurs and is continuing with respect to Buyer, the
following rights and remedies shall be available to Seller:

 

(i)            Upon tender by Seller
of payment of the aggregate Repurchase Price for all Purchased Securities,
Buyer’s right, title and interest in such Purchased Securities shall be deemed
transferred to Seller, and Buyer shall deliver such Purchased Securities to
Seller at Buyer’s expense.

 

(ii)           If Seller exercises the
option referred to in Section 14(b)(i) hereof and Buyer fails to deliver any
Purchased Securities to Seller, Seller may (A) purchase securities (“Replacement
Collateral”), that are in as similar an amount and interest rate as is
reasonably practicable as such Purchased Securities or (B) in its sole
discretion elect, in lieu of purchasing Replacement Collateral, to be deemed to
have purchased Replacement Collateral at a price therefor equal to the Market
Value of such Purchased Securities as of such date.

 

(iii)          Buyer shall be liable to
Seller for any excess of the price paid (or deemed paid) by Seller for
Replacement Collateral therefor over the Repurchase Price for the Purchased
Securities replaced thereby.

 

15.          SINGLE AGREEMENT

 

Buyer and Seller acknowledge that, and have entered
hereinto and will enter into each Transaction hereunder in consideration of and
in reliance upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and have been made in consideration of
each other.  Accordingly, each of Buyer
and Seller agrees (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, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing
to them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries

 

37

 

and other
transfers in respect of any other Transactions hereunder, and the obligations
to make any such payments, deliveries and other transfers may be applied
against each other and netted.

 

16.          RECORDING
OF COMMUNICATIONS

 

EACH OF
BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM TIME TO
TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS BETWEEN ITS
EMPLOYEES, IF ANY, AND THOSE OF THE OTHER PARTY WITH RESPECT TO TRANSACTIONS;
PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD COMMUNICATIONS SHALL BE LIMITED TO
COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF THE APPLICABLE
PARTY.  EACH OF BUYER AND SELLER HEREBY
CONSENTS TO THE ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT,
ARBITRATION, OR OTHER PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED
TRANSCRIPT OF SUCH A TAPE RECORDING SHALL BE DEEMED TO BE A WRITING
CONCLUSIVELY EVIDENCING THE PARTIES’ AGREEMENT.

 

17.          NOTICES AND OTHER
COMMUNICATIONS

 

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

 

18.          ENTIRE AGREEMENT;
SEVERABILITY

 

This Agreement shall supersede any existing agreements
between the parties containing general terms and conditions for repurchase
transactions.  Each provision and
agreement herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.

 

38

 

19.          NON-ASSIGNABILITY

 

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

 

(b)           Buyer
shall be entitled to assign its rights and obligations under the Transaction
Documents and/or under any Transaction to any other Person and/or issue one or
more participation interests with respect to any or all of the Transactions to
any other Person, in each case, without the Seller’s consent and, in connection
therewith, may bifurcate or allocate (i.e. senior/subordinate) amounts owed to
Buyer; provided, however, that (i) Buyer shall act as exclusive
agent for all participants in any dealings with Seller in connection with such
Transactions, (ii) Seller shall not be obligated to deal directly with any
party other than Buyer in connection with such Transactions, or to pay or
reimburse Buyer for any costs that would not have been incurred by Buyer had no
participation interests in such Transactions been issued and
(iii) following the consummation of any such arrangement or participation,
the initial Buyer shall remain the party solely responsible for the calculation
of the Market Value for all purposes of this Agreement, irrespective of whether
such Person continues to own a beneficial interest in the Transactions.  The Seller shall cooperate with any reasonable
request of the Buyer in connection with any such assignment or participation; provided,
the Buyer shall reimburse the Seller for Seller’s reasonable out-of-pocket
costs incurred in complying with such cooperation covenant.

 

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

 

20.          GOVERNING LAW

 

This Agreement shall be governed by the laws of the
State of New York without giving effect to the conflict of law principles
thereof.

 

21.          NO WAIVERS, ETC.

 

No express or implied waiver of any Event of Default
by either party shall constitute a waiver of any other Event of Default and no
exercise of any remedy hereunder by any party shall constitute a waiver of its
right to exercise any other remedy hereunder. 
No modification or waiver of any provision of this Agreement and no
consent by any party to a departure herefrom shall be effective unless and
until such shall be in writing and duly executed by both of the parties
hereto.  Without limitation on any of
the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b)
hereof will not constitute a waiver of any right to do so at a later date.

 

22.          USE OF
EMPLOYEE PLAN ASSETS

 

(a)           If
assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) are intended to be used
by either party hereto (the “Plan Party”) in a Transaction, the Plan
Party shall so notify the other party prior to

 

39

 

the Transaction. 
The Plan Party shall represent in writing to the other party that the
Transaction does not constitute a prohibited transaction under ERISA or is
otherwise exempt therefrom, and the other party may proceed in reliance thereon
but shall not be required so to proceed.

 

(b)           Subject
to the last sentence of subparagraph (a) of this Paragraph, any such
Transaction in which Seller is the Plan Party shall proceed only if Seller
furnishes or has furnished to Buyer its most recent available audited statement
of its financial condition and its most recent subsequent unaudited statement
of its financial condition.

 

(c)           By
entering into a Transaction in which Seller is the Plan Party pursuant to this
Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date
of Sponsor’s latest such financial statements, there has been no material
adverse change in Seller’s financial condition which Seller has not disclosed
to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a
Seller in any outstanding Transaction in which it is the Plan Party.

 

23.          INTENT

 

(a)           The
parties 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 (except insofar as the type of Securities subject to such Transaction
or the term of such Transaction would render such definition inapplicable), and
a “securities contract” as that term is defined in Section 741 of Title 11 of
the United States Code, as amended (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).

 

(b)           It
is understood that either party’s right to liquidate Securities delivered to it
in connection with Transactions hereunder or to exercise any other remedies
pursuant to Paragraph 11 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.

 

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

 

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

 

40

 

24.          DISCLOSURE
RELATING TO CERTAIN FEDERAL PROTECTIONS

 

The parties acknowledge that they have been advised
that:

 

(a)           in
the case of Transactions in which one of the parties is a broker or dealer
registered with the Securities and Exchange Commission (“SEC”) under
Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the
Securities Investor Protection Corporation has taken the position that the provisions
of the Securities Investor Protection Act of 1970 (“SIPA”) do not
protect the other party with respect to any Transaction hereunder;

 

(b)           in
the case of Transactions in which one of the parties is a government securities
broker or a government securities dealer registered with the SEC under Section
15C of the 1934 Act, SIPA will not provide protection to the other party with
respect to any Transaction hereunder; and

 

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

 

25.          CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL

 

(a)           Each
party irrevocably and unconditionally (i) submits to the non-exclusive
jurisdiction of any United States Federal or New York State court sitting in
Manhattan, and any appellate court from any such court, solely for the purpose
of any suit, action or proceeding brought to enforce its obligations under this
Agreement or relating in any way to this Agreement or any Transaction under
this Agreement and (ii) waives, to the fullest extent it may effectively do so,
any defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.

 

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

 

(c)           The
parties hereby irrevocably waive, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding and irrevocably consent to the service of any summons and complaint
and any other process by the mailing of copies of such process to them at their
respective address specified herein. 
The parties hereby agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this Section 25 shall affect the
right of the Buyer to serve legal process in any other manner permitted by law
or affect the right of the Buyer to bring any action or proceeding against the
Seller or its property in the courts of other jurisdictions.

 

41

 

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

 

26.          NO RELIANCE

 

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

 

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

 

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

 

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

 

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

 

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

 

27.          INDEMNITY

 

(a)           The
Seller hereby agrees to indemnify the Buyer, the Buyer’s designee and each of
its officers, directors, employees and agents (“Indemnified Parties”)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, taxes (including stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Agreement and the documents delivered in connection
herewith, other than income taxes of the Buyer but excluding consequential
damages and any lost profit or opportunity), fees, costs, expenses (including
reasonable attorneys fees and disbursements) or disbursements (all of the

 

42

 

foregoing, collectively “Indemnified Amounts”)
which may at any time (including, without limitation, such time as this
Agreement shall no longer be in effect and the Transactions shall have been
repaid in full) be imposed on or asserted against any Indemnified Party in any
way whatsoever arising out of or in connection with, or relating to, this
Agreement or any Transactions thereunder or any action taken or omitted to be
taken by any Indemnified Party under or in connection with any of the
foregoing; provided, that Seller shall not be liable for Indemnified
Amounts resulting from the gross negligence or willful misconduct of any
Indemnified Party.  Seller also agrees
to reimburse Buyer as and when billed by Buyer for all Buyer’s reasonable costs
and out-of-pocket expenses incurred in connection with the enforcement or the
preservation of Buyer’s rights under this Agreement or any Transaction
contemplated hereby, including without limitation the reasonable fees and
disbursements of its counsel.  Seller
hereby acknowledges that, the obligation of Seller hereunder is a recourse
obligation of Seller.

 

(b)           In
the event a claim against any Indemnified Party arises that is covered by the
indemnity provisions of this Section 27, notice shall be given promptly by
Buyer to Seller; provided, however, that the failure to give such notice shall
not result in a waiver of any right to indemnification hereunder except to the
extent that Seller’s ability to defend against the event with respect to which
indemnification is sought is materially adversely affected by the failure of
Buyer to give such notice promptly. Seller shall have the right to contest and
defend by all appropriate legal proceedings such claim and to control all
settlements (unless the Indemnified Party seeking indemnification agrees to
assume the cost of settlement and to forgo such indemnity) and to select lead
counsel to defend any and all such claims at the sole cost and expense of such
Seller; provided, however, that Seller shall not be entitled to assume the
defense of any such claim, without the express written consent of Buyer, which
may be provided in Buyer’s sole discretion, if such claim (i) seeks injunctive
relief, (ii) involves a class action, (iii) involves allegations of
criminal activities, or (iv) involves allegations of violations of any
domestic or foreign federal or state securities laws or regulations or any
domestic or foreign federal or state antitrust Laws; and provided, further,
however, that Seller may not effect any settlement that could result in
any cost, expense or liability to, or have any adverse effect upon, any
Indemnified Party, unless such party consents in writing to such settlement and
the Seller agrees to indemnify such party therefor; and provided, further,
that counsel selected by the Seller is reasonably satisfactory to the Buyer. In
connection with any such claim, action or proceeding, the parties shall
cooperate with each other and provide each other with access to relevant books
and records in their possession.

 

28.          MISCELLANEOUS

 

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

 

43

 

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

 

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

 

(d)           Without
limiting the rights and remedies of Buyer under the Transaction Documents,
Seller shall pay Buyer’s reasonable actual out-of-pocket costs and expenses,
including reasonable fees and expenses of attorneys, incurred in connection with
the preparation, negotiation, execution and consummation of, and any amendment,
supplement or modification to, the Transaction Documents and the Transactions
thereunder; provided, the Seller’s responsibility to pay for Buyer’s
counsel’s legal fees and disbursements in connection with the preparation,
negotiation, execution and consummation of the Transaction Documents shall be
capped at $50,000 plus reasonable disbursements.  Seller agrees to pay Buyer on demand upon delivery of an itemized
statement detailing same, all reasonable costs and expenses (including
reasonable expenses for legal services of every kind) of any subsequent
enforcement of any of the provisions hereof, or of the performance by Buyer of
any obligations of Seller in respect of the Purchased Securities, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral and for the custody, care or
preservation of the Collateral (including insurance costs) and defending or
asserting rights and claims of Buyer in respect thereof, by litigation or
otherwise.  In addition, Seller agrees
to pay Buyer on demand all reasonable costs and expenses (including reasonable
expenses for legal services) incurred in connection with registering the
Collateral in the name of Buyer or its nominee.  All such expenses shall be recourse obligations of Seller to
Buyer under this Agreement.

 

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

 

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

 

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

 

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

 

44

 

prepared the same, it being agreed that all parties
have participated in the preparation of this Agreement.

 

(i)            The
parties recognize that each Transaction is a “securities contract” as that term
is defined in Section 741 of Title 11 of the United States Code, as amended.

 

29.          TAX TREATMENT

 

Each party to this Agreement acknowledges that its
intent for accounting purposes and purposes of U.S. federal, state and
local income and franchise taxes, to treat the Transactions as indebtedness of
Seller that is secured by the Purchased Securities and that the Purchased
Securities are owned by CBO REIT II for federal income tax purposes
(Seller being a disregarded entity for federal income tax purposes) so long as
no Event of Default has occurred. All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.

 

45

 

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

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE
  BANK AG, CAYMAN ISLANDS

  BRANCH

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Christopher E. Tognola

  	
   

  
	
   

  	
  Name: 

  	
  Christopher E. Tognola

  	
   

  
	
   

  	
  Title: 

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tobin Cobb

  	
   

  
	
   

  	
  Name: 

  	
  Tobin Cobb

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  CRIIMI
  FINANCING CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Mark Libera

  	
   

  
	
   

  	
  Name: 

  	
   Mark Libera

  	
   

  
	
   

  	
  Title: 

  	
   Vice
  President and Acting General Counsel

  
									

 

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  ANNEX
  I

  	
  Names
  and Addresses for Communications between Parties

  
	
  SCHEDULE I-A

  	
  Original Purchase Percentages, CF Sweep
  Purchase Percentages, Buyer’s Margin Percentages and Applicable Spreads

  
	
  EXHIBIT
  I

  	
  Form
  of Confirmation

  
	
  EXHIBIT
  II

  	
  Authorized
  Representatives of Seller

  
	
  EXHIBIT III

  	
  Monthly Reporting Package

  
	
  EXHIBIT IV

  	
  Form of Power of Attorney

  

 

 

ANNEX I

 

Names and Addresses for
Communications Between Parties

 

	
  Buyer:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Deutsche Bank AG,
  Cayman Islands Branch

  	
   

  
	
   

  	
  60 Wall Street

  	
   

  
	
   

  	
  New York, New York
  10005

  
	
   

  	
  Attention:

  	
  Chris Tognola

  
	
   

  	
  Telephone:

  	
  (212) 250-4541

  
	
   

  	
  Telecopy:

  	
  (212) 797-4489

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sidley Austin Brown
  & Wood LLP

  	
   

  
	
   

  	
  787 Seventh Avenue

  	
   

  
	
   

  	
  New York, New York
  10019

  
	
   

  	
  Attention:

  	
  Brian Krisberg, Esq.

  
	
   

  	
  Telephone:

  	
  (212) 839-8735

  
	
   

  	
  Telecopy:

  	
  (212) 839-5599

  
	
   

  	
   

  
	
  Seller:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CRIIMI Financing Co.,
  Inc.

  	
   

  
	
   

  	
  c/o CRIIMI MAE Inc.

  	
   

  
	
   

  	
  11200 Rockville
  Pike, Suite 400

  	
   

  
	
   

  	
  Rockville,
  Maryland  20852

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
  Telecopy:

  	
   

  	
   

  
					

 

 

SCHEDULE
I-A

 

Original Purchase
Percentages, CF Sweep Purchase Percentages

Margin Maintenance
Percentages and Applicable Spreads

 

	
   

  	
   

  	
  Original

  Purchase

  Percentages

  	
   

  	
  CF Sweep

  Purchases

  Percentages

  	
   

  	
  Margin

  Maintenance

  Percentages

  	
   

  	
  Applicable

  Spreads

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (bps)

  	
   

  
	
  Eligible
  CRIIMI Securities:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Junior D
  Certificates

  	
   

  	
  80.0

  	
  %

  	
  85.0

  	
  %

  	
  90.0

  	
  %

  	
  125

  	
   

  
	
  Class E Bond

  	
   

  	
  75.0

  	
  %

  	
  80.0

  	
  %

  	
  85.0

  	
  %

  	
  125

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligible
  GNMA Securities

  	
   

  	
  86.5

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  10

  	
   

  

 

 

EXHIBIT
I

 

CONFIRMATION STATEMENT

DEUTSCHE BANK AG,

Cayman Islands Branch

 

Ladies and Gentlemen:

 

Deutsche Bank AG, Cayman Islands Branch, is pleased to
deliver our written CONFIRMATION of our agreement to enter into
the Transaction pursuant to which Deutsche Bank AG, Cayman Islands Branch shall
purchase from you the Purchased Securities identified in the Master Repurchase
Agreement, dated as of June   , 2004 (the “Agreement”),
between Deutsche Bank AG, Cayman Islands Branch (the “Buyer”) and CRIIMI
Financing Co., Inc. (collectively, the “Seller”) as follows below and on
the attached Schedule 1.  Capitalized
terms used herein without definition have the meanings given in the Agreement.

 

	
  Purchase Date:

  	
   

  	
               ,
  200  

  
	
   

  	
   

  	
   

  
	
  Purchased
  Securities:

  	
   

  	
  As identified on attached Schedule 1

  
	
   

  	
   

  	
   

  
	
  Aggregate
  Principal Amount of Purchased Securities:

  	
   

  	
  As identified on attached Schedule 1

  
	
   

  	
   

  	
   

  
	
  Repurchase Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Purchase Price:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Pricing Rate:

  	
   

  	
  one month LIBOR plus
             %

  
	
   

  	
   

  	
   

  
	
  Buyer’s Margin
  Percentage:

  	
   

  	
  As identified in Schedule 2

  
	
   

  	
   

  	
   

  
	
  Margin Notice
  Deadline:

  	
   

  	
  11:00 a.m.

  
	
   

  	
   

  	
   

  
	
  Governing
  Agreements:

  	
   

  	
  As identified on attached Schedule 1

  
	
   

  	
   

  	
   

  
	
  Name and address
  for communications:

  	
   

  	
  Buyer:

  	
  Deutsche Bank AG, Cayman Islands Branch

  
	
   

  	
   

  	
   

  	
  60 Wall Street

  New York, New York 10022

  
	
   

  	
   

  	
   

  	
  Attention:

  	
  Chris Tognola

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (212) 250-4541

  
	
   

  	
   

  	
   

  	
  Telecopy:

  	
  (212) 797-4489

  
	
   

  	
   

  	
  Seller:

  	
  CRIIMI Financing Co., Inc.

  
	
   

  	
   

  	
   

  	
  c/o
  CRIIMI MAE Inc.

  11200 Rockville Pike, Suite 400

  Rockville, Maryland  20852 

  
	
   

  	
   

  	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Telecopy:

  	
   

  	
   

  

 

 

	
   

  	
  DEUTSCHE
  BANK AG, CAYMAN ISLANDS

  BRANCH

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Christopher E. Tognola

  	
   

  
	
   

  	
  Name: 

  	
  Christopher E. Tognola

  	
   

  
	
   

  	
  Title:  

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tobin Cobb

  	
   

  
	
   

  	
  Name: 

  	
  Tobin Cobb

  	
   

  
	
   

  	
  Title:  

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
  AGREED AND ACKNOWLEDGED:

  	
   

  
	
   

  	
   

  
	
  CRIIMI
  FINANCING CO., INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Mark Libera

  	
   

  	
   

  
	
  Name:  Mark
  Libera

  	
   

  
	
  Title:  Vice
  President and Acting General Counsel

  	
   

  
								

 

2

 

Schedule 1 to Confirmation Statement

 

	
  Purchased Securities:

  
	
   

  
	
  Aggregate Principal Amount:

  
	
   

  
	
  CUSIP NO.:

  
	
   

  
	
  Securitization Document (including trustee):

  

 

3

 

EXHIBIT
II

 

AUTHORIZED
REPRESENTATIVES OF SELLER

 

	
  Name

  	
   

  	
  Specimen
  Signature

  
	
   

  	
   

  	
   

  
	
  Mark Libera

  	
   

  	
  /s/ Mark Libera

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT
III

 

MONTHLY REPORTING PACKAGE

 

I.              Trustee
Reports

 

II.            CMBS
Monthly Report

 

III.           Schedule
of Cumulative Visible Losses

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