Document:

Exhibit 10.31.a

 

EXECUTION COPY

 

AMENDED
AND RESTATED 

MASTER REPURCHASE AGREEMENT

 

Dated as of February 15, 2006

 

Between:

 

BEAR,
STEARNS FUNDING, INC.,

as Buyer

 

and

 

CAPITAL
TRUST, INC.,

as Seller jointly and severally with the other Seller

 

and

 

CT BSI
FUNDING CORP.,

as Seller jointly and severally with the other Seller

 

APPLICABILITY

 

From
time to time the parties hereto may enter into transactions in which Bear,
Stearns Funding, Inc. (“Buyer”) may, in its sole discretion, agree to purchase
Eligible Loans from Capital Trust, Inc. and/or CT BSI Funding Corp. (individually
“Seller” and collectively “Sellers”), with a simultaneous agreement by Buyer to
transfer to Seller such Eligible Loans at a date certain or on demand of Seller
subject to and in accordance with the exercise of Buyer’s remedies under this
Agreement, against the transfer of funds by Seller. Each such transaction shall
be referred to herein as a “Transaction” and shall be governed by this
Agreement, as the same shall be amended from time to time.

 

1.             DEFINITIONS

 

“Accelerated Repurchase Date” shall have the
meaning set forth in Section 14 of this Agreement.

 

“Accepted Servicing Practices” shall mean with
respect to any Purchased Loan, those mortgage or mezzanine loan servicing
practices of prudent lending institutions which service loans of the same type
as such Purchased Loan in the jurisdiction where the related underlying real
estate directly or indirectly securing such Purchased Loan is located.

 

“Act of Insolvency” shall mean with respect to
Buyer or either Seller, (i) the commencement by such party as debtor of
any case or proceeding under any bankruptcy,

 

 

insolvency,
reorganization, liquidation, dissolution or similar law, or such party seeking
the appointment of a receiver, trustee, custodian or similar official for such
party or any substantial part of its property, or (ii) the commencement of any
such case or proceeding against such party, or another seeking such an
appointment, 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, 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 a party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by a
party of such party’s inability to pay such party’s debts as they become due.

 

“Additional Loans” shall have the meaning set
forth in Section 3(a) of this Agreement.

 

“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 Amended and
Restated Master Repurchase Agreement dated as of February 15, 2006, by and
between Buyer and Seller.

 

“Assignment of Mortgage” shall mean, with
respect to any Mortgage, an assignment of the mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related property is located to reflect the assignment
and pledge of the Mortgage.

 

“Authorized Representative of Seller” shall
mean the individuals, set forth on Exhibit II hereto.

 

“Bailee” shall mean an attorney, title company
or other closing agent, appointed by Seller and reasonably acceptable to Buyer,
who is party to a Bailee Agreement and executes a Trust Receipt in connection
with a Table Funded Loan.

 

“Bailee Agreement” shall mean a written
agreement between Seller and a Bailee relating to the bailment in connection
with Table Funded Loans, naming Buyer as a third party beneficiary and
substantially in the form of Exhibit XIII hereto.

 

“BSIL Repurchase Agreement” shall mean the
Master Repurchase Agreement, dated as of February 15, 2006, between Bear,
Stearns International Limited, Capital Trust, Inc. and CT BSI Funding Corp.

 

“Trust Receipt” shall mean the trust receipt
and certification attached to the form of Bailee Agreement at Exhibit XIII
hereto.

 

2

 

“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 are authorized or obligated by law or executive
order to be closed.

 

“Buyer” shall mean Bear, Stearns Funding, Inc.,
or any successor.

 

“Buyer’s Margin Ratio” shall mean, with respect
to any Transaction, as of any date, a percentage agreed to by Buyer and Seller
or, in the absence of any such agreement, the percentage obtained by dividing
the Purchase Price of the Purchased Loans on the Purchase Date by the Market
Value on such date for such Transaction.

 

“CDO Assets” shall mean the aggregate of the
CDO I Assets and the CDO II Assets.

 

“CDO I Assets” shall mean Eligible Assets, as
specified in the CTRE CDO 2004-1 Indenture, which are to be designated as CDO I
Assets.

 

“CDO II Assets” shall mean Eligible Assets, as
specified in the CTRE CDO 2005-1 Indenture, which are to be designated as CDO
II Assets.

 

“Collateral” shall have the meaning set forth
in Section 5 of this Agreement.

 

“Collection Account” shall mean a segregated
interest bearing account established and maintained at the Depository, in the
name of and for the benefit of Buyer pursuant to the terms of the Depository
Agreement.

 

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

 

“Commitment Expiration Date” shall mean August
15, 2008.

 

“Confirmation” shall have the meaning specified
in Section 2(b) of this Agreement.

 

“Custodial Agreement” shall mean the Custodial
Agreement, dated as of August 16, 2005, among the Custodian, Sellers and Buyer,
as amended, restated, modified and in effect from time to time.

 

“Custodial Delivery” shall mean the form
executed by Seller in order to deliver the Purchased Loan Schedule and the
Purchased Loan File to Buyer or its designee (including the Custodian) pursuant
to Section 6, a form of which is attached hereto as Exhibit IV.

 

“Custodian” shall mean Deutsche Bank Trust
Company Americas or any successor Custodian appointed by Buyer and Seller with
the prior written consent of Seller (which consent shall not be unreasonably
withheld).

 

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“Cut-off Date” shall mean the second Business
Day preceding each Remittance Date.

 

“Debt” means, with respect to any Person at any
date, all indebtedness or other obligations of such Person in accordance with
GAAP excluding any indebtedness secured by the unfunded equity commitments of
shareholders.

 

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

 

“Depository” shall mean PNC Bank, National
Association or any successor Depository appointed by Seller and approved by
Buyer, which approval shall not be unreasonably withheld, conditioned or
delayed.

 

“Depository Agreement” shall mean the agreement
governing the Collection Account between the Depository and Buyer and Seller
and their respective successors and assigns as the same may be modified,
amended or supplemented from time to time.

 

“Diligence Materials” shall mean the
Preliminary Due Diligence Package together with the Supplemental Due Diligence
List.

 

“Direction Letter” shall mean a letter signed
by Seller directing the Servicer to send all Income with respect to the
Purchased Loans, as well as any payments in respect of associated Hedging
Transactions, to the Collection Account held by the Depository within one (1)
Business Day of receipt.

 

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

 

“Early Repurchase Date” shall have the meaning
specified in Section 2(g) of this Agreement.

 

“EBITDA” shall mean earnings before interest,
tax, depreciation and amortization.

 

“Eligible Loans” shall mean any of the
following types of loans, which loans shall not provide for any restrictions
(other than notice) on transfer to or by Buyer and otherwise are acceptable to
Buyer in the exercise of its commercially reasonable business judgment, and are
secured directly or indirectly by a property that is a multifamily, retail,
office, warehouse, industrial, or hospitality property (or any other property
type acceptable to Buyer), is located in the United States of America, its
territories or possessions, meet all of the other requirements of this Amended
and Restated Master Repurchase Agreement, and which would not, if the same
became Eligible Loans, cause the aggregate Purchase Price of all Eligible Loans
to exceed the Maximum Aggregate Purchase Price:

 

(i)            Whole Loans that are performing (i.e., current and not in monetary or material non-monetary
default such that remedies can be

 

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exercised by any Person)
commercial mortgage loans secured by first liens on multifamily and commercial
real property with respect to which the ratio of loan to value as determined by
Buyer, in the exercise of its commercially reasonable judgment, for the real
property securing directly such loan (including for purposes of this
calculation, such loan and any loan senior to or pari passu
with such loan and secured, directly or indirectly, by the related property)
does not exceed the percentage stated in the Confirmation.

 

(ii)           Subordinate interests in Whole Loans
(“B Notes”) that are  performing (i.e.,
current and not in monetary or material non-monetary default such that remedies
can be exercised by any Person), commercial mortgage loans secured by first
liens on multifamily and commercial real property with respect to which the
ratio of loan to value as determined by Buyer, in the exercise of its
commercially reasonable judgment, for the real property securing directly such
loan (including for purposes of this calculation, such loan and any loan senior
to or pari passu with such loan and secured,
directly or indirectly, by the related property) does not exceed the percentage
stated in the Confirmation.

 

(iii)          Mezzanine Loans that are performing (i.e., current and not in monetary or material non-monetary
default such that remedies can be exercised by any Person) and with respect to
which the ratio of total loan to value as determined by Buyer, in the exercise
of its commercially reasonable judgment, for the real property securing
indirectly such loan (including for purposes of this calculation, such loan and
any loan senior to or pari passu with
such loan and secured, directly or indirectly, by the related property) does
not exceed the percentage stated in the Confirmation.

 

(iv)          any other investment presented to and
approved by Buyer in its sole discretion which does not conform to the criteria
set forth in clauses (i), (ii) and (iii) above and which Buyer elects in its
sole discretion to purchase, in which case the criteria for the ratio of total
loan to value and any modifications to the Maximum Aggregate Purchase Price
with respect to such loan, shall be set forth in the related Confirmation for
the Transaction under which such loan or interest is purchased by Buyer.

 

An Eligible Loan must have the related loan document
files segregated and held by the Custodian. Non-performing loans and loans
secured by undeveloped land, coop shares and construction loans are not
eligible for inclusion as Eligible Loans.

 

“ERISA” means 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.

 

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“ERISA Affiliate” means 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)(l1) of ERISA
and Section 412(c)(ll) 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 set
forth in Section 13 of this Agreement.

 

“Exit Fee” shall have the meaning specified in
Section 2(g).

 

“Filings” shall have the meaning specified in
Section 5 of this Agreement.

 

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

 

“Governmental Authority” shall mean any
national or federal government, any state, regional, local or other political
subdivision thereof with jurisdiction and any Person with jurisdiction
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Hedging Transactions” shall mean, with respect
to any or all of the Purchased Loans, 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
Buyer or its Affiliates as counterparties or one or more other counterparties
acceptable to Buyer.

 

“Income” shall mean, with respect to any
Eligible Loan at any time, any principal (including any principal prepayments)
thereof and all interest, dividends or other distributions thereon and with
respect to any associated Hedging Transaction, all proceeds thereof.

 

“Indemnified Amounts” and “Indemnified
Parties” shall have the meaning specified in Section 19 of this Agreement.

 

“Intercreditor Agreement” shall mean the
agreement between Seller and the holder of the senior co-lender interest (such
as a “B” noteholder’s interest in an “A/B” loan structure) in a commercial
mortgage loan secured by a first lien on multifamily and commercial real
property.

 

“LIBOR” shall mean, unless otherwise agreed to
by the parties hereto, the rate per annum (rounded upwards, if necessary, to
the next 1/100th of 1%) calculated on each Pricing Rate Determination Date for
the next Pricing Rate Period as equal to the rate for U.S. dollar deposits for
a one month period which appears on Telerate Page 3750 as of 10:00 am, New York
City time, on such Pricing Rate Determination Date; provided,

 

6

 

however,
that if such rate does not appear on Telerate Page 3750, “LIBOR” determined on
each Pricing Rate Determination Date for the next Pricing Rate Period shall
mean a rate per annum equal to the rate at which U.S. dollar deposits are
offered in immediately available funds in the London Interbank Market to the
London office of National Westminster Bank, Plc (or its successors) by leading
banks in the Eurodollar market at 10:00 a.m., New York City time, on the
Pricing Rate Determination Date. “Telerate Page 3750” means the display
designated as “Page 3750” on the Associated Press-Dow Jones Telerate Service
(or such other page as may replace Page 3750 on the Associated Press-Dow Jones
Telerate Service or such other service as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
British Banker’s Association interest settlement rates for U.S. Dollar
deposits). LIBOR determined on the basis of the rate displayed on Telerate Page
3750 in accordance with the provisions hereof shall be subject to corrections,
if any, made in such rate and displayed by the Associated Press-Dow Jones
Telerate Service within one (1) hour of the time when such rate is first
displayed by such Service.

 

“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 LIBOR .

 

“Loan Information” shall mean, with respect to
each Purchased Loan, the information substantially in the form set forth in
Exhibit VIII attached hereto.

 

“Margin Call” shall have the meaning set forth
in Section 3(a) of this Agreement.

 

“Margin Deficit” shall have the meaning set
forth in Section 3(a) of this Agreement.

 

“Market Value” shall mean, with respect to any
Purchased Loans, as of any relevant date, the market value for such Purchased
Loans on such date, as determined by Buyer in the exercise of its commercially
reasonable judgment exercised in good faith and may be determined on each
Business Day during the term of this Agreement, or less frequently from time to
time if Buyer elects in its sole discretion. Any provision hereof to the
contrary notwithstanding, a Market Value of zero shall, unless otherwise determined
by Buyer in its sole discretion, be assigned to (i) any Purchased Loan that has
been delinquent for at least sixty (60) days, (ii) any Purchased Loan released
by the Custodian for more than 10 Business Days other than with the consent of
Buyer or (iii) any Purchased Loan has become a specially serviced loan as
defined in the applicable servicing agreement.

 

“Maximum Aggregate Purchase Price” shall mean
the sum of the Maximum Committed Aggregate Purchase Price and the Maximum CDO
Aggregate Purchase Price.

 

“Maximum CDO Aggregate Purchase Price” shall
mean $50,000,000 less the aggregate Purchase Price for CDO Assets owed to Bear,
Stearns International Limited under the BSIL Repurchase Agreement.

 

7

 

“Maximum Committed Aggregate Purchase Price”
shall mean $150,000,000 less the aggregate amount owed, excluding the aggregate
Purchase Price for CDO Assets, to Bear, Stearns International Limited under the
BSIL Repurchase Agreement; provided, however, that for the
purposes of calculating the Purchase Fee hereunder, the Maximum Committed
Aggregate Purchase Price shall be deemed to be as provided in Section 2(e)
hereof.

 

“MERS” shall mean the Mortgage Electronic
Registration Systems, Inc.

 

“MERS Purchased Loan” shall mean Purchased Loan
that is registered with MERS.

 

“Mezzanine Loan” shall mean a loan secured by
pledges of substantially all of the equity ownership interests in entities that
own directly or indirectly multifamily and commercial properties.

 

“Mezzanine Loan Documents” shall mean any and
all documents required in connection with the financing of a Mezzanine Loan.

 

“Mezzanine Note” shall mean a note evidencing
Mezzanine Loan indebtedness.

 

“Modified Debt” shall mean Debt reduced by
(i) amounts of liabilities resulting from the sale of participation
interests, (ii) liabilities resulting from consolidation of Debt associated with
securitizations where Seller has no recourse obligation for the Debt and which
Debt was not issued by Seller or its subsidiaries and (iii) liabilities
resulting from the consolidation of vehicles managed by Seller or a Subsidiary
of Seller where Seller has less than a 50% equity interest.

 

“Modified Recourse Debt” shall mean Debt
reduced by (i) amounts of liabilities resulting from the sale of participation
interests, (ii) liabilities resulting from consolidation of Debt associated
with securitizations where Seller has no recourse obligation for the Debt and
(iii) liabilities resulting from the consolidation of vehicles managed by
Seller or a Subsidiary of Seller where Seller has less than a 50% equity
interest.

 

“Moody’s” shall mean Moody’s Investor Service,
Inc. or any successor thereto.

 

“Mortgage” shall mean a mortgage, deed of
trust, deed to secure debt or other instrument, creating a valid and
enforceable first priority lien on or a first priority ownership interest in an
estate in fee simple in real property or a financeable leasehold interest in
real property, and in each case, the improvements thereon, securing a mortgage
note or similar evidence of indebtedness.

 

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

 

“Mortgagor” shall mean the obligor on a
Mortgage Note and the grantor of the related Mortgage.

 

8

 

“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.

 

“Net Worth” means with respect to any Person at
any date, the excess of the total assets over total liabilities of such Person
on such date, each to be determined in accordance with GAAP consistent with
those applied in the preparation of the most recent audited financial
statements.

 

“New Loan” shall mean any loan that Seller
proposes to be included as  an Eligible
Loan.

 

“Non-Usage Fee” shall have the meaning
specified in Section 2(h) herein.

 

“Originated Loan” shall mean any loan that is
an Eligible Loan and whose Purchased Loan Documents were prepared by or on
behalf of Seller or Buyer.

 

“Outstanding Purchase Price” shall mean, with
respect to any Transaction, the original Purchase Price reduced by all
principal payments and paydowns received by Buyer (other than payments with
respect to accrued Price Differential) and plus any additional amounts advanced
by Buyer with respect to the related Eligible Loans.

 

“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.

 

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

 

“Preliminary Due Diligence Package” shall mean
with respect to any New Loan, a summary memorandum outlining the proposed
transaction, including potential transaction benefits and material underwriting
risks, all Underwriting Issues and all other characteristics of the proposed
transaction that a reasonable buyer would consider material, together with due
diligence information relating to the New Loan to be provided by Seller to
Buyer pursuant to this Agreement, including, but not limited to:

 

With respect to each Eligible Loan:

 

(i)                                     the
Loan Information;

 

9

 

(ii)                                  description
of the property or properties;

 

(iii)                               description of the
borrower, including experience with other projects (real estate owned) and net
worth and liquidity statements if available. In the event that such statements
are not available, evidence of the credit strength of the borrower acceptable
to Buyer;

 

(iv)                              description
of the ownership structure of the borrower (including, without limitation,
independent director(s)/member(s));

 

(v)                                 term
sheet outlining the transaction generally, including description of existing or
proposed senior debt;

 

(vi)                              debt
service coverage and loan to value ratios;

 

(vii)                           Seller’s relationship with
the Borrower, if any;

 

(viii)                        with respect to any New Loan
that is a Pre-Existing Loan, a list that specifically and expressly identifies
any Purchased Loan Documents that relate to such New Loan but are not in Seller’s
possession;

 

(ix)                                any
exceptions to the representations and warranties set forth in Exhibit VI or
Exhibit VII to this Agreement;

 

(x)                                   asset
summary books which include, to the extent provided to Seller, the following:

 

(A)                              loan
detail and asset description, including market information on competing
properties, terrorism and other insurance coverage;

 

(B)                                map,
photo;

 

(C)                                current
rent roll;

 

(D)                               historical,
current and pro forma cash flow and operating information;

 

(E)                                 appraisal,
environmental, engineering summary;

 

(F)                                 information
relating to valuation, security or underwriting issues, special or unique loan
features and structural issues;

 

(xi)                              Securitization
Documents and Intercreditor Agreements, if any;

 

(xii)                           legal opinions delivered
with respect to the Eligible Loan  in
Seller’s possession; and

 

(xiii)                        closing binder in respect of
the Purchased Loan (or if not yet prepared, an execution copy of the loan
agreement).

 

10

 

“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 Outstanding
Purchase 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 ending on (but excluding) the Repurchase Date
(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 with respect to any Transaction, an annual rate equal to LIBOR for such
Pricing Rate Period plus the relevant spread for such Transaction as determined
pursuant to the Side Letter and indicated on the applicable Confirmation.

 

“Pricing Rate Determination Date” shall mean in
the case of the first Pricing Rate Period with respect to any Transaction, the
first day on which the Pricing Rate Period begins.

 

“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 including the last day of the month in which the Purchase Date
occurs and (b) in the case of any subsequent Pricing Rate Period, the period
commencing on the first calendar day of each month and ending on and including
the last calendar day of such month; 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 Loans, any payment or prepayment of principal or any proceeds of
redemption which are applied to principal and received by the Depository in
respect thereof.

 

“Property” shall mean the real property
securing repayment of the debt evidenced by a Mortgage Note.

 

“Purchase Agreement” shall mean the agreement
pursuant to which Seller acquired the Purchased Loan.

 

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

 

“Purchase Fee” shall have the meaning specified
in Section 2(e).

 

“Purchase Price” shall mean, with respect to
any Purchased Loans, the price at which such Purchased Loans are sold by Seller
to Buyer on the applicable Purchase Date as set forth in the Side Letter or the
Confirmation, as applicable.

 

“Purchased Loan” or “Purchased Loans”
shall mean (i) with respect to any Transaction, the Eligible Loans sold by
Seller to Buyer in such Transaction until such Eligible Loans are repurchased
by Seller pursuant to this Agreement and (ii) with respect to the Transactions
in general, all Eligible Loans sold by Seller to Buyer and any

 

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Additional Loans
delivered by Seller to Buyer pursuant to Section 3(a) of this Agreement until
(x) such Eligible Loans are repurchased by Seller pursuant to this Agreement or
(y) such Additional Loans are re-delivered to Seller by Buyer pursuant to
Section 3 of this Agreement.

 

 “Purchased
Loan Documents” shall mean, with respect to a Purchased Loan, the documents
comprising the Purchased Loan File for such Purchased Loan.

 

“Purchased Loan File” shall mean the documents
specified as the “Purchased Loan File” in Section 6(b), together with any
additional documents and information required to be delivered to Buyer or its
designee (including the Custodian) pursuant to this Agreement.

 

“Purchased Loan Schedule” shall mean a schedule
of Purchased Loans attached to each Trust Receipt and Custodial Delivery
containing information substantially similar to the Loan Information.

 

 “Remittance
Date” shall mean the eleventh (11th) calendar day of each month,
or the next succeeding Business Day, if such calendar day shall not be a
Business Day or such other day of the month as shall be agreed upon by both
Buyer and Seller.

 

“Repurchase Date” shall mean the date on which
Seller is to repurchase the Purchased Loans from Buyer, which shall be the date
specified in the related Confirmation or determined by application of the
provisions hereof.

 

“Repurchase Price” shall mean, with respect to
any Purchased Loans as of any date, the price at which such Purchased Loans 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
Outstanding Purchase Price of such Purchased Loans and the accrued but unpaid
Price Differential with respect to such Purchased Loans as of the date of such
determination.

 

“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.

 

“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.

 

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

 

“Seller” and “Sellers” shall mean
Capital Trust, Inc., a Maryland corporation, and CT BSI Funding Corp., a
Delaware corporation, individually and collectively as applicable and in all
cases jointly and severally.

 

12

 

“Servicing Agreement” has the meaning specified
in Section 21(b).

 

“Servicing Records” has the meaning specified
in Section 21(b).

 

“Side Letter” shall mean the letter dated as of
February 15, 2006, by and between Buyer and Seller, relating to the pricing of
Transactions hereunder.

 

“Standard & Poor’s” shall mean Standard
& Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.

 

“Subsidiary” shall mean, with respect to
Seller, an entity that is wholly owned or controlled by Seller but excluding
any vehicles where Seller has less than a 50% equity interest.

 

“Supplemental Due Diligence List” shall mean,
with respect to any New Loans, information or deliveries concerning the New
Loans that Buyer shall reasonably request in addition to the Preliminary Due
Diligence Package.

 

“Survey” shall mean a certified ALTA/ACSM (or
applicable state standards for the state in which the Eligible Loans are
located) survey of a Property prepared by a registered independent surveyor and
in form and content satisfactory to Buyer and the company issuing the Title
Policy for such Property.

 

“Table Funded Loan” shall mean a Purchased
Loan, designated in the related Confirmation as a Table Funded Loan, where the
Purchased Loan File is in the custody of the Bailee or enroute to the
Custodian.

 

“Title Policy” shall have the meaning specified
in paragraph 8 of the first section of Exhibit VI.

 

“Transaction Conditions Precedent” shall have
the meaning specified in Section 2(b) of this Agreement.

 

“Transaction Documents” shall mean,
collectively, this Agreement, the Custodial Agreement, the Servicing Agreement,
the Side Letter and all Confirmations executed pursuant to this Agreement in
connection with specific Transactions.

 

“Trust Receipt” shall mean a trust receipt
issued by Custodian to Buyer confirming the Custodian’s possession of certain
Purchased Loan Files which are the property of and held by Custodian for the
benefit of Buyer (or any other holder of such trust receipt).

 

“UCC” shall have the meaning specified in
Section 5 of this Agreement.

 

“Underwriting Issues” shall mean, with respect
to any New Loans as to which Seller intends to request a Transaction, all
material information that has come to Seller’s attention that, based on the
making of commercially reasonable inquiries and the exercise of commercially
reasonable care and diligence under the circumstances, would be

 

13

 

considered a materially “negative”
factor (either separately or in the aggregate with other information), or a
material defect in loan documentation or closing deliveries (such as any
absence of any material Purchased Loan Document(s)), to a commercially
reasonable institutional Buyer in determining whether to originate or acquire
the New Loans in question.

 

“Undrawn Available Amount” shall mean the
excess of the maximum drawable amount of a Purchased Loan (as agreed to by
Buyer and Seller) over the aggregate Purchase Price of such Purchased Loan
(calculated on an asset-by-asset basis).

 

“Whole Loan” shall mean a commercial mortgage
loan or note secured by a first lien on multifamily and commercial real
property.

 

2.             INITIATION;
CONFIRMATION; REVOLVING TRANSACTIONS; TERMINATION; FEES

 

(a)           On
or after the date hereof and prior to the Commitment Expiration Date and
subject to the terms and conditions set forth in this Agreement (including,
without limitation, the “Transaction Conditions Precedent” specified in Section
2(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 entering into any
Transaction shall be in Buyer’s sole and absolute discretion and that the
aggregate Repurchase Price (excluding the Price Differential with respect to
the Purchased Loans as of the date of determination) for all Transactions shall
not exceed the Maximum Aggregate Purchase Price. Seller shall give Buyer
written notice of each proposed Transaction and Buyer shall inform Seller of
its determination with respect to any assets proposed to be sold to Buyer by
Seller solely in accordance with Exhibit IX attached hereto. Buyer shall have
the right to review all Eligible Loans proposed to be sold to Buyer in any
Transaction and to conduct, at its own expense, its own due diligence
investigation of such Eligible Loans as Buyer determines. Upon receipt of all
Diligence Materials and other required documentation, Buyer shall complete its
due diligence review and financial modeling with respect to the assets proposed
to be sold to Buyer by Seller. Buyer shall be entitled to make a determination,
in the exercise of its sole discretion, that it shall not purchase any or all
of the assets proposed to be sold to Buyer by Seller, such determination to be
made in accordance with Exhibit IX attached hereto. On the Purchase Date for
the Transaction which shall be not less than one (1) Business Day following the
approval of an Eligible Loan by Buyer in accordance with Exhibit IX hereto, the
Purchased Loans shall be transferred to Buyer or its agent against the transfer
of the Purchase Price in immediately available funds to an account designated
by Seller. To the extent Buyer enters into a Transaction with Seller with
respect to a Purchased Loan which is an Eligible Loan of the type described in
Clause (iv) of the definition thereof (i.e., such
Eligible Loan does not satisfy the characteristics described in clauses
(i)-(iii) of the definition thereof), then such loan shall be deemed to be an
Eligible Loan for all purposes of this Agreement.

 

(b)           Upon
agreeing to enter into a Transaction hereunder, 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 substantially in the form of Exhibit I attached hereto of each
Transaction (a “Confirmation”). In the absence of execution

 

14

 

and delivery by
Buyer of a Confirmation for a proposed Transaction, Buyer shall under no
circumstance be deemed to have agreed to enter into such Transaction. Such
Confirmation shall describe the Purchased Loan(s) (and, in this connection,
shall set forth (a) the name of the borrower with respect to the related Purchased
Loan, (b) a description (including the date) of the loan agreement or other
document, agreement or instrument pursuant to which the related Purchased Loan
is made or governed, and (c) the initial or then outstanding principal amount
of the related Purchased Loan) which shall be the subject of the proposed
Transaction, shall identify Buyer and Seller, and shall set forth (i) the
Purchase Date, (ii) the Purchase Price for such Purchased Loan(s), (iii) the
Repurchase Date, (iv) the Pricing Rate applicable to the Transaction and (v)
any additional terms or conditions not inconsistent with this Agreement. Each
Confirmation shall be deemed incorporated herein by reference with the same
effect as if set forth herein at length. 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 the Side Letter, 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 2(b),
the “Transaction Conditions Precedent” shall be deemed to have been satisfied
with respect to any proposed Transaction if:

 

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

 

(2)           Seller
shall have certified to Buyer in writing the acquisition cost of such Purchased
Loans (including therein reasonable supporting documentation required by Buyer,
if any);

 

(3)           the
representations and warranties made by Seller in any of the Transaction
Documents shall be true and correct in respect of the Eligible Loan in question
in all material respects as of the Purchase Date for such Transaction;

 

(4)           Buyer
shall have received the Diligence Materials and completed to Buyer’s
satisfaction its due diligence review and financial modeling with respect to
the assets proposed to be sold to Buyer by Seller;

 

(5)           Buyer
or the Custodian on behalf of Buyer shall have received the applicable
Transaction documents and other documents and opinions specified in Section 6
of this Agreement. The Custodian shall have delivered a trust receipt
satisfactory to Buyer no later than 3 p.m. on the Purchase Date;

 

(6)           Buyer
shall have determined, in accordance with the applicable provisions of Section
2(a) of this Agreement, that the assets proposed to be sold to Buyer by Seller
in such Transaction are Eligible Loans;

 

(7)           none
of the following shall have occurred and be continuing:

 

(i)            an
event or events shall have occurred resulting in the effective absence of a “securities
market” for securities backed by mortgage loans; or

 

15

 

(ii)           there
shall have occurred a material adverse change in the “repo market” or
comparable “lending market”.

 

If any
of the events in this subparagraph (7) shall occur, Buyer agrees to reimburse
Seller for the Purchase Fee on a pro rata basis;

 

(8)           the
purchase by Buyer from Seller of the Purchased Loans which are not CDO Assets  shall be completed prior to the Commitment
Expiration Date and the aggregate of the Purchase Prices for all Transactions
shall not exceed the Maximum Aggregate Purchase Price; and

 

(9)           on
or prior to the Purchase Date for the initial Transaction hereunder and from
time to time thereafter as Buyer shall reasonably request, Seller shall have
delivered to Buyer an opinion of Seller’s counsel, in form and substance
reasonably acceptable to Buyer, addressing the matters set forth at Exhibit
XII.

 

Notwithstanding
anything to the contrary contained in this Agreement, in no event shall any
Transaction hereunder be consummated until such time as Buyer has received all
of the following, each in form and substance reasonably satisfactory to Buyer:  (i) the fully executed Custodial Agreement
and related trust receipt; (ii) a Depository Agreement with respect to the
Collection Account executed by the Depository; (iii) such legal opinions as
Buyer may reasonably require; (iv) a Direction Letter, (v) Seller’s
organizational documents, to the extent not delivered as of the date hereof,
and (vi) a fully executed Side Letter and the Servicing Agreement.

 

(c)           Each
Confirmation shall be executed by Seller and Buyer and, together with this
Agreement, shall be conclusive evidence of the terms of the Transaction(s)
covered thereby.

 

(d)           Seller
may, at its option so long as an Event of Default shall not have occurred and
be continuing, increase or decrease the Outstanding Purchase Price with respect
to any Transaction subsequent to the Purchase Date; provided, however,
that such action on the part of Seller shall not be permitted if it would
create a Margin Deficit.

 

(e)           Seller
shall pay Buyer on or prior to the initial Purchase Date a one-time, up front
amount (the “Purchase Fee”) as set forth in the Side Letter; provided, however,
that solely for purposes of calculating the Purchase Fee hereunder, the Maximum
Committed Aggregate Purchase Price shall be deemed to be $75,000,000.

 

(f)            Each
Transaction entered into between Buyer and Seller shall remain outstanding from
the initial Purchase Date until the earlier of the Repurchase Date or the
Commitment Expiration Date. The spread over LIBOR stated in the related
Confirmation for each Transaction will not change for such Transaction until February
15, 2008.

 

(g)           Seller
shall be entitled to terminate a Transaction and repurchase any or all of the
Purchased Loans from Buyer on two (2) Business Days’ notice on any Business Day
prior to the Repurchase Date (an “Early Repurchase Date”).

 

16

 

If Seller terminates any Transaction pursuant to the
preceding sentence, then, except as provided below, Seller shall pay to Buyer a
termination fee (the “Exit Fee”) on the Early Repurchase Date. The Exit Fee
shall be calculated as the product of (i) the Outstanding Purchase Price and
(ii) the following amount:  (A) if the
Early Repurchase Date is less than one year from the Repurchase Date, no Exit
Fee will be payable, (B) if the Early Repurchase Date is at least one year but
less than two years from the Repurchase Date, [****], and (C) if the Early
Repurchase Date is at least two years from the Repurchase Date, [****]. Additionally:

 

(i)            No
Exit Fee will be payable for the early repurchase of Purchased Assets resulting
from (a) the sale of the underlying assets to Buyer, or any of its Affiliates,
(b) the sale of the underlying assets to Buyer, or any of its Affiliates, under
a Master Repurchase Agreement, (c) the sale of the underlying assets to a
securitization vehicle for which Buyer, or any of its Affiliates, are acting in
a lead or co-lead manager or co-manager role, (d) maturity of the underlying
loan, (e) contractual defaults by either party to the underlying loan documents
and agreements, (f) any paydowns, prepayments or defaults on the Purchased
Assets, (g) any roll of a Purchased Asset into a new Transaction, (h) pay-offs
resulting from a margin call or Market Value calculation dispute between Seller
and Buyer including, without limitation, for a Margin Call in accordance with
Section 13(ix) hereof, (i) Seller’s Termination of a Transaction in response to
a demand by Buyer pursuant to Section 2(i) hereof or (j) in the event
additional costs are imposed by Buyer pursuant to Section 2(j) hereof and
Seller elects to terminate a transaction or transactions as a result thereof.

 

(ii)           Additional
Purchased Assets acceptable to Buyer may be substituted and no Exit Fee will be
payable in connection with such substitutions. No other substitutions will be
exempt from payment of the Exit Fee.

 

(iii)          No
Exit Fee will be payable for the early repurchase of any Purchased Asset which
is a CDO I Asset or a CDO II Asset.

 

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

 

(h)           In
the event that an Undrawn Available Amount exists at the end of any calendar
quarter, Seller shall remit to Buyer a non-usage fee (the “Non-Usage Fee”)
reasonably promptly upon written notice from Buyer to Seller that such Undrawn
Available Amount exists. The Non-Usage Fee shall be calculated as the product
of (i) the Undrawn Available Amount and (ii) [****] divided by 360 for each day
such Undrawn Available Amount exists during such calendar quarter.

 

**** Material omitted
pursuant to a request for confidential treatment under Rule 24b-2. Material
filed separately with the Securities Exchange Commission.

 

17

 

(i)            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 Loan or any Transaction, or change the basis of
taxation of payments to Buyer in respect thereof (except for any taxes on Buyer’s
overall net income); or

 

(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 LIBOR hereunder;

 

and
the result of any of the foregoing is to increase the cost to Buyer, by an amount
which Buyer deems to be material, of entering into, continuing or maintaining
Transactions or to reduce any amount receivable under the 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 which is actually incurred by Buyer.
If Buyer becomes entitled to claim any additional amounts pursuant to this
Section 2(i), it shall promptly notify Seller of the event by reason of which
it has become so entitled. In the event that Seller elects to terminate a
Transaction in response to a demand by Buyer pursuant to this Section 2(i), no
Exit Fee with respect to such termination shall be due by Seller and the
Purchase Fee relating to that Transaction shall be refunded on a pro rata basis.
A certificate as to the calculation of any additional amounts payable pursuant
to this subsection shall be submitted by Buyer to Seller and shall be
conclusive and binding upon Seller in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the repurchase by
Seller of any or all of the Purchased Loans.

 

(j)            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 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 which is actually
incurred by Buyer. A certificate as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller and
shall be conclusive and

 

18

 

binding upon
Seller in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the repurchase by Seller of any or all of the
Purchased Loans.

 

(k)           Any
provision hereof to the contrary notwithstanding, Seller shall pay all
reasonable fees and expenses of Buyer (including all reasonable legal fees)
associated with the purchase of any Eligible Loan under this Agreement and
shall pay the fees and expenses of counsel to Buyer in connection with the
preparation and execution of this Agreement and all other Transaction
Documents.

 

(l)            Any
provision hereof to the contrary notwithstanding, Transactions entered into
hereunder shall be at the sole discretion of Buyer. Buyer is not required to
enter into any Transaction and Buyer may, in its sole discretion, reject for
inclusion in any Transaction any Eligible Loans offered for sale hereunder by
Seller.

 

(m)          In
the event that the Repurchase Date in respect of the CDO Assets occurs more
than six (6) months after the related Purchase Date, the pricing terms set
forth in the Side Letter relating to the CDO Assets shall no longer be
applicable and the pricing terms set forth for all other Eligible Assets shall
apply to such CDO Assets; provided, however, that such CDO Assets
shall still be included in any calculation of the Maximum CDO Aggregate
Purchase Price.

 

3.             MARGIN
MAINTENANCE

 

(a)           If
at any time the product of the aggregate Market Value of all Purchased Loans
and Buyer’s Margin Ratio shall be less than the aggregate outstanding
Repurchase Price for such Purchased Loans, (a “Margin Deficit”), then Buyer may
by notice to Seller (a “Margin Call”) require Seller to transfer to Buyer (A)
cash or (B) Additional Loans acceptable to Buyer in its sole and absolute
discretion (such cash or Additional Loans paid by Seller to Buyer are herein
referred to as “Additional Loans”), so that the sum of cash plus the product of
(i) the aggregate Market Value of the Purchased Loans and such Additional Loans
and (ii) Buyer’s Margin Ratio shall at least equal the aggregate outstanding
Repurchase Price. Any cash received by Buyer pursuant to a Margin Call shall be
applied to reduce the Outstanding Purchase Price. Seller’s failure to cure any
Margin Deficit as required by the preceding sentence prior to expiration of one
(1) Business Day after notice 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(iv) of this Agreement).

 

(b)           If
any Margin Call is given by Buyer under Section 3(a) of this Agreement, Seller
shall transfer cash or Additional Loans as provided in Section 3(a) by no later
than one (1) Business Day after the giving of such notice. Notice required
pursuant to Section 3(a) of this Agreement may be given by any means, including
by telephone, telecopier or email transmission. The failure of Buyer on any one
or more occasions, to exercise its rights under Section 3(a) of this Agreement
shall not constitute a waiver of such default or 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 to exercise its rights under Section 3(a) 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.

 

19

 

(c)           If
at any time the product of the aggregate Market Value of all Purchased Loans
and Buyer’s Margin Ratio shall be greater than the aggregate outstanding
Repurchase Price for such Purchased Loans (a “Margin Excess”), then Seller may
by notice to Buyer require Buyer to transfer to Seller (1) cash or (2)
Purchased Loans that become subject to this Agreement as Additional Loans so
that the product of (i) the aggregate Market Value of the Purchased Loans and
such Additional Loans and (ii) Buyer’s Margin Ratio shall not exceed the
aggregate outstanding Repurchase Price. In no event shall any Purchased Loans
that did not become subject to this Agreement in the form of Additional Loans
be released from the lien of this Agreement due to a Margin Excess.

 

(d)           If
any notice is given by Seller under Section 3(c) of this Agreement, Buyer shall
transfer cash or Additional Loans as provided in Section 3(c) by no later than
one (1) Business Day after the giving of such notice. Notice required pursuant
to Section 3(c) of this Agreement may be given by any means, including by
telephone, telecopier or email transmission. Buyer and Seller agree that any
failure or delay by Seller on any one or more occasions to exercise its rights
under Section 3(c) of this Agreement shall not constitute a waiver of such
rights or limit such party’s rights under Section 3(c) of this Agreement
or otherwise existing by law or in any way create additional rights for such
party. In addition, in no event shall Buyer be required to create a Margin
Deficit in order to comply with Section 3(d) of this Agreement.

 

(e)           Any
cash transferred to Buyer pursuant to Section 3(a) of this Agreement shall be
used to reduce the Repurchase Price.

 

(f)            If
any representation or warranty within this Agreement is in fact not accurate,
then notwithstanding any of the knowledge qualifiers, Buyer has the right to
mark the asset to market with such frequency as deemed prudent in accordance
with this Section 3.

 

4.             INCOME
PAYMENTS AND PRINCIPAL PAYMENTS

 

(a)           The
Collection Account shall be established at the Depository concurrently with the
execution and delivery of this Agreement by Seller and Buyer. Buyer shall have
sole dominion and control over the Collection Account. Seller shall instruct
the Servicer to deposit all Income in respect of the Purchased Loans, as well
as any payments in respect of associated Hedging Transactions, into the
Collection Account within one (1) Business Day of receipt. The amounts on
deposit in the Collection Account shall be remitted by the Depository in
accordance with the Depository Agreement and the applicable provisions of Sections
4(b), 4(c), 4(d), 4(e) and 16 of this Agreement. Seller shall direct the
Servicer to remit all payments to Depository until such time as Buyer directs
the borrower otherwise. If any payments are made by the borrower to Seller
after the Purchase Date, or in the event that Seller receives any payments in
respect of associated Hedging Transactions after the Purchase Date, Seller
shall wire such payments to the Collection Account with the Depository within
one (1) Business Day of receipt.

 

(b)           So
long as an Event of Default hereunder shall not have occurred and be continuing
and so long as such action would not result in the creation of a Margin
Deficit, all Income received by the Depository in respect of the Purchased
Loans and the associated Hedging Transactions shall be paid to Seller on the
Business Day next following the Business Day on which such funds are deposited
in the Collection Account.

 

20

 

(c)           So
long as no Event of Default shall have occurred and be continuing, and in the
event that a Margin Deficit exists with respect to the Purchased Loans, then
until Seller cures such Margin Deficit, all Income received by the Depository
in respect of the Purchased Loans and the associated Hedging Transactions shall
be applied by the Depository on the Business Day next following the Business
Day on which such funds are deposited in the Collection 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 Loans as of such Business Day;

 

(ii)           second, to transfer cash to Buyer, so that the product of
the aggregate Market Value of the Purchased Loans (including any Additional
Loans) and Buyer’s Margin Ratio will at least equal the aggregate Outstanding
Purchase Price; and

 

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

 

(d)           If
an Event of Default shall have occurred and be continuing, all Income
(including all Principal Payments) received by the Depository in respect of the
Purchased Loans and the associated Hedging Transactions shall be applied by the
Depository on the Business Day next following the Business Day on which such
funds are deposited in the Collection 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 Loans as of such Business Day;

 

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

 

(iii)          third, to remit to Buyer an amount equal to any costs or
expenses due and owing by Seller as of such Business Day; and

 

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

 

(e)           Buyer
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all amounts held by Buyer
against any other obligations at any time owing to Buyer, or an Affiliate of
Buyer to or for the credit or the account of Seller or a Subsidiary of Seller
against any of or all the obligations of Seller now or hereafter existing under
this Agreement irrespective of whether or not Buyer shall have made any demand
under this Agreement (and without prior notice to Seller) and although such
obligations may be unmatured, whereupon such obligations owing by Buyer or its
Affiliates to Seller or its Subsidiaries shall, to the extent (and only to the
extent) of such set off actually made by Buyer, be discharged. The rights of
Buyer under this Section are in addition to other rights and remedies
(including other rights of setoff) which Buyer may have.

 

21

 

5.             SECURITY
INTEREST

 

Buyer and Seller intend that all Transactions
hereunder be sales to Buyer of the Purchased Loans and not loans from Buyer to
Seller secured by the Purchased Loans. 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 Buyer to secure the payment and performance of all amounts
or obligations owing to Buyer pursuant to this Agreement and the related
documents described herein:

 

(a)                                  the
Purchased Loans, including those identified in the Confirmations, Servicing
Agreements, Servicing Records, Hedging Transactions, insurance relating to the
Purchased Loans, and all “deposit accounts” (as defined in the UCC, including,
without limitation, collection and escrow accounts) relating to the Purchased
Loans;

 

(b)                                 the
Collection Account and all monies from time to time on deposit in the
Collection Account;

 

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

 

(d)                                 all
“supporting obligations” and “letter of credit rights” as defined in the UCC
relating to or constituting any and all of the foregoing;

 

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

 

(f)                                    all
proceeds of the foregoing.

 

Buyer’s security interest in the Collateral shall
terminate only upon termination of a Transaction with respect to such
Collateral under this Agreement and the documents delivered in connection
herewith and therewith. For purposes of the grant of the security interest
pursuant to this Section 5 of this Agreement, this Agreement shall be deemed to
constitute a security agreement under the Uniform Commercial Code as in effect
in any applicable jurisdiction (the “UCC”). Buyer shall have all of the rights
and may exercise all of the remedies of a secured creditor under the UCC and
the other laws of any applicable jurisdiction, including the State of New York.
In furtherance of the foregoing, (i) Buyer shall cause to be filed as a
protective filing with respect to the Purchased Loans and as a UCC filing with
respect to the security interests granted in this Section 5 (i) a UCC financing
statement in the form of Schedule 1-A attached hereto (to be filed in
the filing office indicated therein), (ii) amendments to such UCC financing
statement in the form of Schedule 1-B attached hereto and having
attached to each such UCC financing statement amendment a description of the
Purchased Loans which identifies the Purchased Loans by setting forth (a) the
name of the borrower with respect to each Purchased 

 

22

 

Loan, (b) the loan agreement (including the date) or
other document, agreement or instrument pursuant to which each Purchased Loan
was made or is governed, and (c) the initial or then outstanding principal
amount of each Purchased Loan, and (iii) such other UCC filings, in such
locations as may be necessary to perfect and maintain perfection and priority
of the outright transfer and the security interest granted hereby and, in each
case, continuation statements and any amendments thereto (collectively, the “Filings”),
and shall forward copies of such Filings to Seller upon completion thereof, and
(b) Seller shall from time to time, at its own expense, deliver and cause to be
duly filed all such further filings, instruments and documents and take all
such further actions as may be necessary or desirable or as may be requested by
Buyer with respect to the perfection and priority of the outright transfer of
the Purchased Loans and the security interest deemed granted hereunder and in
the Purchased Loans and the rights and remedies of Buyer with respect to the
Purchased Loans (including the payments of any fees and taxes required in
connection with the execution and delivery of the Agreement).

 

6.             PAYMENT,
TRANSFER AND CUSTODY

 

(a)           On
the Purchase Date for each Transaction, ownership of the Purchased Loans shall
be transferred to Buyer or its designee (including the Custodian) against the
simultaneous transfer of the Purchase Price in immediately available funds to
an account of Seller specified in the Confirmation relating to such Transaction.
Buyer shall have the right to request Seller to provide an officer’s
certificate of Seller with respect to any copy of a document required to be
delivered certifying that to its knowledge such represents a true and correct
copy of the original.

 

(b)           On
or before each Purchase Date, Seller shall deliver or cause to be delivered to
Buyer or its designee the Custodial Delivery in the form attached hereto as
Exhibit IV. In connection with each sale, transfer, conveyance and assignment
of a Purchased Loan, on or prior to each Purchase Date with respect to such
Purchased Loan, Seller shall deliver or cause to be delivered and released to the
Custodian the following original documents (collectively, the “Purchased Loan
File”), pertaining to each of the Purchased Loans identified in the Custodial
Delivery delivered therewith:

 

With respect to each Purchased Loan which is a Whole
Loan or with respect to a B Note a copy of the documents in (ii) – (xxiii)
below to the extent the same exist and are available to Seller.

 

(i)            The
original Mortgage Note bearing all intervening endorsements, endorsed “Pay to
the order of            
without recourse” and signed in the name of the last endorsee (the “Last
Endorsee”) by an authorized Person (in the event that the Purchased Loan was
acquired by the Last Endorsee in a merger, the signature must be in the
following form:  “[Last Endorsee],
successor by merger to [name of predecessor]”; in the event that the Purchased
Loan was acquired or originated by the Last Endorsee while doing business under
another name, the signature must be in the following form:  “[Last Endorsee], formerly known as [previous
name]”).

 

23

 

(ii)           A
copy of any guarantee executed in connection with the Mortgage Note (if any)
together with an officer’s certificate of Seller certifying that such
represents a true and correct copy of the original.

 

(iii)          Except
with respect to MERS Purchased Loans, a copy of the Mortgage with evidence of
recording thereon, or a copy thereof together with an officer’s certificate of
Seller certifying that such represents a true and correct copy of the original
and that such original has been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Property is
located.

 

(iv)          Copies
of all assumption, modification, consolidation or extension agreements with
evidence of recording thereon, or copies thereof together with an officer’s
certificate of Seller certifying that such represent true and correct copies of
the originals and that such originals have each been submitted for recordation
in the appropriate governmental recording office of the jurisdiction where the
Property is located.

 

(v)           Except
with respect to MERS Purchased Loans, the original Assignment of Mortgage, in
blank, for each Purchased Loan secured by a Mortgage, in form and substance
acceptable for recording and signed in the name of the Last Endorsee (in the
event that such Purchased Loan was acquired by the Last Endorsee in a merger,
the signature must be in the following form: 
“[Last Endorsee], successor by merger to [name of predecessor]”; in the
event that such Purchased Loan was acquired or originated while doing business
under another name, the signature must be in the following form:  “[Last Endorsee], formerly known as [previous
name]”).

 

(vi)          Except
with respect to MERS Purchased Loans, copies of all intervening assignments of
mortgage with evidence of recording thereon, or copies thereof together with an
officer’s certificate of Seller certifying that such represent true and correct
copies of the originals and that such originals have each been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Property is located.

 

(vii)         Copies
of any attorney’s opinion of title and abstract of title or the original
mortgagee title insurance policy, or if the original mortgagee title insurance
policy has not been issued, the irrevocable marked commitment to issue the same
together with an officer’s certificate of Seller certifying that such represent
true and correct copies of the originals.

 

(viii)        A
copy of any security agreement, chattel mortgage or equivalent document
executed in connection with the Purchased Loan together with an officer’s
certificate of Seller certifying that such represent true and correct copies of
the originals.

 

24

 

(ix)           A
copy of any assignment of leases and rents, if any, with evidence of recording
thereon, or a copy thereof together with an officer’s certificate of Seller,
certifying that such copy represents a true and correct copy of the original
that has been submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Property is located.

 

(x)            Copies
of all intervening assignments of assignment of leases and rents, if any, or
copies thereof, with evidence of recording thereon.

 

(xi)           A
copy of the UCC financing statements, certified as true and correct by Seller,
and all necessary UCC continuation statements with evidence of filing thereon
or copies thereof certified by Seller to have been sent for filing, and UCC
assignments from Seller to Buyer or its designee, which UCC assignments shall
be in form and substance acceptable for filing.

 

(xii)          A
copy of any environmental indemnity agreement (if any).

 

(xiii)         A
copy of any omnibus assignment in blank (if any).

 

(xiv)        A
copy of the disbursement letter from the Mortgagor to the original mortgagee
(if any).

 

(xv)         A
copy of the Mortgagor’s certificate or title affidavit (if any).

 

(xvi)        A
survey of the Property (if any) as accepted by the title company for issuance
of the Title Policy and a copy of the Title Policy.

 

(xvii)       A
copy of the Mortgagor’s opinion of counsel (if any).

 

(xviii)      A
copy of any assignment of permits, contracts and agreements (if any).

 

(xix)         A
copy of any assignment of any interest rate cap agreement or other interest
rate protection agreement entered into by the Mortgagor or its affiliates.

 

(xx)          A
copy of the fully executed intercreditor agreement or any other agreement that
allocates assets among the parties, if any.

 

(xxi)         A copy
of any estoppel letter from the mortgagor.

 

(xxii)        A
copy of any executed servicing agreement.

 

(xxiii)       A
copy of the Purchase Agreement.

 

(xxiv)       A
copy of any loan agreement.

 

(xxv)        any
other documents or instruments necessary in the reasonable opinion of Buyer to
consummate the sale of such Purchased Loan to Buyer

 

25

 

subject to the
terms of this Agreement or required to be delivered pursuant to the terms of
this Agreement, 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 Purchased Loan.

 

With respect to each Purchased Loan which is a
Mezzanine Loan:

 

(i)            The
original Mezzanine Note signed in connection with the Purchased Loan bearing
all intervening endorsements, endorsed “Pay to the order of              
without recourse” and signed in the name of the Last Endorsee by an authorized
Person (in the event that the Mezzanine Note was acquired by the Last Endorsee
in a merger, the signature must be in the following form:  “[Last Endorsee], successor by merger to
[name of predecessor]”; in the event that the Purchased Loan was acquired or
originated by the Last Endorsee while doing business under another name, the
signature must be in the following form: 
“[Last Endorsee], formerly known as [previous name]”).

 

(ii)           The
original of the loan agreement and the guarantee, if any, executed in
connection with the Purchased Loan.

 

(iii)          The
original intercreditor or loan coordination agreement, if any, executed in
connection with the Purchased Loan.

 

(iv)          The
original security agreement executed in connection with the Purchased Loan.

 

(v)           Copies
of all documents relating to the formation and organization of the borrower of
such Purchased Loan, together with all consents and resolutions delivered in
connection with such borrower’s obtaining the Purchased Loan.

 

(vi)          All
other documents and instruments evidencing, guaranteeing, insuring or otherwise
constituting or modifying or otherwise affecting such Purchased Loan, or
otherwise executed or delivered in connection with, or otherwise relating to,
such Purchased Loan, including all documents establishing or implementing any
lockbox pursuant to which Seller is entitled to receive any payments from cash
flow of the underlying real property.

 

(vii)         Except
with respect to MERS Purchased Loans, the assignment of Purchased Loan (in
blank) sufficient to transfer to Buyer all of Seller’s rights, title and
interest in and to the Purchased Loan.

 

(viii)                        A
copy of the borrower’s opinion of counsel (if any).

 

(ix)                                A
copy of the UCC financing statements, certified as true and correct by Seller,
and all necessary UCC continuation statements with evidence of filing thereon
or copies thereof certified by Seller to have been sent for filing, and

 

26

 

UCC assignments
from Seller to Buyer or its designee, which UCC assignments shall be in form
and substance acceptable for filing.

 

(x)            The
pledge agreement and original certificates representing the pledged equity
interests (if any).

 

(xi)           Stock
powers relating to each pledged equity interest, executed in blank, if an
original stock certificate is provided.

 

(xii)          Assignment
of any management agreements, agreements among equity interest holders or other
material contracts.

 

(xiii)         If
no original stock certificate is provided, evidence satisfactory to Buyer that
the pledged ownership interests have been transferred to, or otherwise made
subject to a first priority security interest in favor of, Seller.

 

(xiv)        Copies
of all loan documents and related closing documents pertaining to the closing
of the senior indebtedness incurred or owed by the owner of the real property
with respect to which the borrower of the Mezzanine Loan has pledged its
ownership interests, whether directly or indirectly through intermediate
entities, including without limitation the organizational documents of such
owner together with an officer’s certificate of Seller certifying that such
represent true and correct copies of the originals.

 

(xv)         An
assignment of any interest rate cap agreement or other interest rate protection
agreement entered into by the borrower under the Purchased Loan or its
affiliates with respect to the Purchased Loan.

 

(xvi)        the
original servicing agreement, if any, executed in connection with the Purchased
Loan.

 

(xvii)       A
copy of the Purchase Agreement.

 

(xviii)      A
copy of the borrower’s fee title insurance policy in respect of the mezzanine
loan and a copy of the related survey.

 

With respect to each Purchased Loan which is of the
type described in clause (iv) of the definition of Eligible Loan, any of the
documentation referred to above in this Section 6(b) of this Agreement which is
determined by Buyer to be necessary to effectuate the sale, transfer,
conveyance and assignment of such Purchased Loan subject to the terms of this
Agreement.

 

In addition, with respect to each Purchased Loan,
Seller shall deliver an instruction letter from Seller to the servicer with
respect to such Purchased Loan, instructing the servicer to remit all sums
required to be remitted to the holder of such Purchased Loan under the loan
documents to the Depository for deposit in the Collection Account.

 

From time to time, Seller shall forward to the
Custodian additional original documents or additional documents evidencing any
assumption, modification, consolidation or extension of a

 

27

 

Purchased Loan approved
in accordance with the terms of this Agreement, and upon receipt of any such
other documents, the Custodian shall hold such other documents as Buyer shall
request from time to time. With respect to any documents which have been
delivered or are being delivered to recording offices for recording and have
not been returned to Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Seller shall deliver
to Buyer a true copy thereof with an officer’s certificate certifying that such
copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to
the Custodian promptly when they are received. With respect to all of the
Purchased Loans delivered by Seller to Buyer or its designee (including the
Custodian), Seller shall execute an omnibus power of attorney substantially in
the form of Exhibit V attached hereto irrevocably appointing Buyer its
attorney-in-fact with full power, after the occurrence and during the
continuation of an Event of Default to (i) complete and record the Assignment
of Mortgage, (ii) complete the endorsement of the Mortgage Note or Mezzanine
Note and (iii) take such other steps as may be necessary or desirable to
enforce Buyer’s rights against such Purchased Loans and the related Purchased
Loan Files and the Servicing Records, Buyer shall deposit the Purchased Loan
Files representing the Purchased Loans, or direct that the Purchased Loan Files
be deposited directly, with the Custodian. The Purchased Loan Files shall be
maintained in accordance with the Custodial Agreement. Any Purchased Loan Files
not delivered to Buyer or its designee (including the Custodian) are and shall
be held in trust by Seller or its designee for the benefit of Buyer as the
owner thereof. Seller or its designee shall maintain a copy of the Purchased Loan
File and the originals of the Purchased Loan File not delivered to Buyer or its
designee. The possession of the Purchased Loan File by Seller or its designee
is at the will of Buyer for the sole purpose of servicing the related Purchased
Loan, and such retention and possession by Seller or its designee is in a
custodial capacity only. The books and records (including, without limitation,
any computer records or tapes) of Seller or its designee shall be marked
appropriately to reflect clearly the sale of the related Purchased Loan to
Buyer. Seller or its designee (including the Custodian) shall release its
custody of the Purchased Loan File only in accordance with written instructions
from Buyer, unless such release is required as incidental to the servicing of
the Purchased Loans or is in connection with a repurchase of any Purchased Loan
by Seller.

 

(c)           Notwithstanding
the provisions of Section 6(b) above requiring the execution of the Custodial
Delivery and corresponding delivery of the Purchased Loan File to the Custodian
on or prior to the related Purchase Date, with respect to each Transaction
involving a Purchased Loan which is identified in the related Confirmation as a
Table Funded Loan, Seller shall, in lieu of effectuating the delivery of all or
a portion of the Purchased Loan File on or prior to the related Purchase Date,
(i) deliver the Purchased Loan File (or the portion thereof not then delivered
to the Custodian) to Buyer on or prior to the Purchase Date by means of
delivery of the same to the Bailee, (ii) cause the Bailee to deliver to Seller,
Buyer and the Custodian by facsimile on or before the related Purchase Date for
the Transaction (A) a fully executed Bailee Agreement and Trust Receipt issued
by the Bailee thereunder, (B) the promissory note(s) in favor of Seller
evidencing the making of the Purchased Loan, with Seller’s endorsement of such
note to Buyer or original stock certificate (if certificated), (C) such other
components of the Purchased Loan File as Buyer may require on a case by case
basis with respect to the particular Transaction and (D) evidence satisfactory
to Buyer that all documents necessary to perfect Seller’s (and, by means of
assignment to Buyer on the Purchase Date, Buyer’s) interest in the Collateral
for the Purchased Loan, and (iii) not later than the third (3rd) Business Day following

 

28

 

the Purchase Date,
deliver to Buyer the Custodial Delivery and to the Custodian the entire
Purchased Loan File.

 

(d)           Unless
an Event of Default shall have occurred and be continuing, Seller shall
exercise all voting, corporate and servicing rights with respect to the
Purchased Loans. 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 Loans without regard to Seller’s instructions
(including, but not limited to, if an Act of Insolvency shall occur with
respect to Seller, 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).

 

7.             SALE,
TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED LOANS

 

(a)           Title
to all Purchased Loans shall pass to Buyer on the applicable Purchase Date, and
Buyer shall have free and unrestricted use of all Purchased Loans. Nothing in
this Agreement or any other Transaction Document shall preclude Buyer from
engaging in repurchase or financing transactions with the Purchased Loans or
otherwise selling, transferring, pledging, repledging, hypothecating, or
rehypothecating the Purchased Loans, but no such transaction shall relieve
Buyer of its obligations to transfer the Purchased Loans to Seller pursuant to
Sections 2 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 4
hereof.

 

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

 

8.             SUBSTITUTION;
SEGREGATION OF DOCUMENTS RELATING TO ELIGIBLE LOANS

 

(a)           Substitution
of Eligible Loans is subject to satisfaction of the conditions to the
acquisition of the Purchased Loans.

 

(b)           All
documents relating to Purchased Loans in the possession of Seller shall be
segregated from other documents and securities in its possession and shall be
identified as being subject to this Agreement.

 

9.             REPRESENTATIONS

 

(a)           Buyer
and each Seller represent and warrant, and shall on and as of the Purchase Date
of any Transaction be deemed to represent and warrant, to the other that:

 

(i)            it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder
and has taken all necessary action to authorize such execution, delivery and
performance;

 

29

 

(ii)           it
will engage in such Transactions as principal (or, if agreed in writing 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, charter, by-law or rule
applicable to it or any agreement by which it is bound or by which any of its
assets are affected.

 

(b)           Each
Seller represents and warrants to Buyer that as of the Purchase Date for the
purchase of any Purchased Loans by Buyer from either Seller and any Transaction
thereunder and as of the date of this Agreement and at all times while this
Agreement and any Transaction thereunder is in full force and effect:

 

(i)            Organization.
Each Seller is duly organized, validly existing and in good standing under the
laws and regulations of the state of Seller’s organization and is duly
licensed, qualified, and in good standing in every state where such licensing
or qualification is necessary for the transaction of such 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 duly
executed and delivered by each Seller, for good and valuable consideration. The
Transaction Documents constitute the legal, valid and binding obligations of
each 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 either Seller of the transactions contemplated by the
Transaction Documents (or any of them), nor compliance by either 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 formation, organizational or other governing documents
of Seller, (ii) any contractual obligation to which such party is now a party
or the rights under which have been assigned to such party or the obligations
under which have been assumed by such party or to which the assets of such
party are subject or constitute a default thereunder, or result thereunder in

 

30

 

the creation or
imposition of any lien upon any of the assets of such party, other than
pursuant to the Transaction Documents, (iii) any judgment or order, writ,
injunction, decree or demand of any court applicable to such party, or (iv) any
applicable Requirement of Law. Seller has all necessary licenses, permits and
other consents from Governmental Authorities necessary to acquire, own and sell
the Purchased Loans and for the performance of its obligations under the
Transaction Documents.

 

(iv)          Litigation:  Requirements of Law. There is no action,
suit, proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against either Seller or any of its assets, nor
is there any action, suit, proceeding, investigation, or arbitration pending
or, to the best knowledge of Seller, threatened against either Seller which may
result in any material adverse change in the business, operations, financial
condition, properties, or assets of such Seller, or which may have an adverse
effect on the validity of the Transaction Documents or the Purchased Loans 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. Seller is not 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 Loans
pursuant to any of the Transaction Documents.

 

(vi)          Good
Title to Purchased Loans. Immediately prior to the purchase of any
Purchased Loans by Buyer from Seller, such Purchased Loans are free and clear
of any lien, encumbrance or impediment to transfer (including any “adverse
claim” as defined in Section 8-102(a)(l) 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 Loans to Buyer and, upon transfer of such
Purchased Loans to Buyer, Buyer shall be the owner of such Purchased Loans free
of any adverse claim (other than any adverse claims or liens created by Buyer).
In the event the related Transaction is recharacterized as a secured financing
of the Purchased Loans, the provisions of this Agreement are effective to
create in favor of Buyer a valid security interest in all rights, title and
interest of Seller in, to and under the Purchased Loans and Buyer shall have a
valid, perfected first priority security interest in the Purchased Loans.

 

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

 

(viii)        Representations
and Warranties Regarding Purchased Loans; Delivery of Purchased Loan File.
Seller represents and warrants to Buyer that each Purchased Loan sold hereunder
and each pool of Purchased Loans sold in a

 

31

 

Transaction
hereunder, as of each Purchase Date for a Transaction conform to the applicable
representations and warranties set forth in Exhibit VI or Exhibit VII attached
hereto, except as disclosed to Buyer in writing prior to the related Purchase
Date for the Transaction in which such Purchased Loan is purchased by Buyer; provided,
however, that Seller does not make the representations and warranties
set forth in Exhibit VI or Exhibit VII with respect to any Purchased Loan
originated by Buyer or any of its Affiliates. It is understood and agreed that
the representations and warranties set forth in Exhibit VI or Exhibit VII
hereto, if any, shall survive delivery of the respective Purchased Loan File to
Buyer or its designee (including the Custodian). With respect to each Purchased
Loan, the Mortgage Note or Mezzanine Note, the Mortgage (if any), the
Assignment of Mortgage (if any) and any other documents required to be
delivered under this Agreement and the Custodial Agreement for such Purchased
Loan have been delivered to Buyer or the Custodian on its behalf. Seller or its
designee is in possession of a complete, true and accurate Purchased Loan File
with respect to each Purchased Loan, except for such documents the originals of
which have been delivered to the Custodian. Any provision hereof to the
contrary notwithstanding, Buyer’s remedy for a breach of this representation
and warranty with respect to any Purchased Loan shall be to mark such Purchased
Loan to market; provided, however, that in the event that a
breach of this representation and warranty causes a breach of some other
covenant of Seller hereunder (such as to maintain adequate margin), then Buyer
shall be entitled to exercise all rights and remedies granted to it hereunder.

 

(ix)           Adequate
Capitalization:  No Fraudulent Transfer.
Each 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. Each Seller is generally able
to pay, and as of the date hereof is paying, its debts as they come due.
Neither Seller has become, nor is it presently, financially insolvent nor will
such Seller be made insolvent by virtue of such 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. Neither Seller has
entered into any Transaction Document or any Transaction pursuant thereto in contemplation
of insolvency or with intent to hinder, delay or defraud any creditor.

 

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

 

(xi)           Ownership.
Each Seller is a publicly held corporation.

 

(xii)          Organizational
Documents. Seller has delivered to Buyer certified copies of its formation,
organizational and other governing documents, together with all amendments
thereto.

 

32

 

(xiii)         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 Loans and (ii) no agreements on the part of
Seller to issue, sell or distribute the Purchased Loans.

 

(xiv)        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.

 

(xv)         Taxes.
Each 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; 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.

 

(xvi)        ERISA.
Seller does not have any Plans.

 

(xvii)       Judgments/Bankruptcy.
Except as disclosed in writing to Buyer, there are no judgments in excess of
$10,000,000 against either Seller 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.

 

(xviii)      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, contains any untrue
statement of a material fact or to Seller’s knowledge 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.

 

(xix)         Financial
Information. All financial data concerning Seller and to Seller’s knowledge
the Purchased Loans that has been delivered by or on behalf of Seller to Buyer
is true, complete and correct in all material respects and has been prepared in
accordance with GAAP. Since the delivery of such data, except as otherwise
disclosed in writing to Buyer, there has been no change in the financial
position of Seller or to Seller’s knowledge the Purchased Loans, or in the
results of operations of Seller, which change is reasonably likely to have in a
material adverse effect on Seller.

 

(xx)          Chief
Executive Office. On the date of this Agreement, Seller’s chief executive
office and principal place of business is located at 410 Park Avenue, 14th
Floor, New York, New York 10022. The location where Seller

 

33

 

keeps its books
and records, including all computer tapes and records relating to the Eligible
Loans is its chief executive office.

 

(xxi)         Purchase
Agreement Representations and Warranties. Seller has provided Buyer with a
copy of the Purchase Agreement (to the extent applicable) containing
representations and warranties made to Seller by the party designated as seller
under such Purchase Agreement.

 

(xxii)        Loan
to Value Ratio. The combined loan to value ratio of any Purchased Loan and
any senior liens on a related Property shall not at any time exceed the
requirements set forth in the Side Letter.

 

(c)           On
the Purchase Date for any Transaction, Seller shall be deemed to have made all
of the representations set forth in Section 9(b) of this Agreement as of such
Purchase Date.

 

10.           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 Buyer:

 

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

 

(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 Loans (or any of them) to any Person other than Buyer, or engage in
repurchase transactions or similar transactions with respect to the Purchased
Loans (or any of them) with any Person other than Buyer;

 

(c)           create,
incur or permit to exist any lien, encumbrance or security interest in or on
the Purchased Loans, except as described in Section 5 of this Agreement;

 

(d)           consent
or assent to any amendment or supplement to, or termination of, any
Securitization Document, any note, loan agreement, mortgage or guaranty
relating to the Purchased Loans or other material agreement or instrument
relating to the Purchased Loans other than in accordance with Section 6(c);

 

(e)           use
any of the Purchase Price for any Purchased Loan either directly or indirectly
to acquire any security, as that term is defined in Regulation T of the
Regulations of the Board of Governors of the Federal Reserve System, or take
any action that might cause any Transaction to violate any regulation of the
Federal Reserve Board;

 

(f)            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 any
equity or ownership interest of Seller, or 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 to any

 

34

 

equity or
ownership interest of Seller, either directly or indirectly, whether in cash or
property or in obligations of Seller; provided, that
the foregoing shall not restrict Seller from making distributions, from assets
other than the Purchased Loans, required to maintain Seller’s status under the
Code as a real estate investment trust (“REIT”) within the meaning of
Section 856 through 860 of the Code, in the event Seller then qualifies as a
REIT under the Code;

 

(g)           file
a UCC financing statement, with respect to a Purchased Loan, or an amendment or
termination statement with respect to a UCC financing statement with respect to
a Purchased Loan, except as approved by Buyer in each instance;

 

(h)           enter
into Transactions for which the Purchased Assets are CDO Assets which would
cause the aggregate of the Purchase Prices for such CDO Assets to exceed the
Maximum CDO Aggregate Purchase Price; or

 

(i)            enter
into Transactions for which Purchased Assets other than the CDO Assets which
would cause the aggregate of the Purchase Prices for such Assets to exceed the
Maximum Committed Aggregate Purchase Price.

 

11.           AFFIRMATIVE
COVENANTS OF SELLER

 

(a)           Seller
shall promptly notify Buyer of any material adverse change in its business
operations and/or financial condition; provided, however, that nothing in this Section 11 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
9.

 

(c)           Seller
(1) shall defend the right, title and interest of Buyer in and to the Purchased
Loans against, and take such other action as is necessary to remove, the Liens,
security interests, claims and demands of all Persons (other than security
interests by or through Buyer) and (2) shall, at Buyer’s request, take all
action necessary to ensure that Buyer will have a first priority security
interest in the Purchased Loans subject to any of the Transactions in the event
such Transactions are recharacterized as secured financings.

 

(d)           Seller
shall notify Buyer and the Depository 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 obtaining actual knowledge of such
event.

 

(e)           Seller
shall promptly (and in any event not later than two (2) Business Days following
receipt) deliver to Buyer (i) any notice of the occurrence of an event of
default under or report received by or required to be delivered 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 Loans as may be reasonably requested by Buyer
from time to time.

 

(f)            Seller
will permit Buyer (at Buyer’s cost) or its designated representative to inspect
Seller’s records with respect to the Purchased Loans and the conduct and
operation of its business related thereto upon reasonable prior written notice
from Buyer or its designated

 

35

 

representative, at
such reasonable times and with reasonable frequency, and to make copies of
extracts of any and all thereof, subject to the terms of any confidentiality
agreement between Buyer and Seller.

 

(g)           If
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 Loans, or otherwise in respect thereof, Seller shall
accept the same as Buyer’s agent, hold the same in trust for Buyer and deliver
the same forthwith to Buyer in the exact form received, duly endorsed by Seller
to Buyer, if required, together with an undated bond power covering such
certificate duly executed in blank to be held by 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 Loans shall be received by
Seller, Seller shall, until such money or property is paid or delivered to Buyer,
hold such money or property for the benefit of Buyer, as additional collateral
security for the Transactions.

 

(h)           At
any time from time to time upon request of Buyer, at the sole expense of
Seller, Seller will promptly and duly execute and deliver such further
instruments and 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 Uniform Commercial Code 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, negotiable document, certificated security or chattel paper, such
note, instrument, document, security or chattel paper shall be immediately
delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be held
as Collateral pursuant to this Agreement, and the documents delivered in
connection herewith. Seller hereby irrevocably authorizes Buyer at any time and
from time to time to file in any filing office in any jurisdiction any initial
financing statements and amendments thereto that (1) indicate the Collateral
(i) as all Purchased Loans, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the UCC or
such jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (2) contain any other information required by part 5 of Article 9
of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether Seller is an organization, the
type of organization and any organization identification number issued to
Seller, and (ii) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. Seller
agrees to furnish any such information to Buyer promptly upon request. Seller
also ratifies its authorization for Buyer to have filed in any jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.

 

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

 

(i)            Within
60 days after the last day of the first three fiscal quarters in any fiscal
year, Seller’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 (which statements and balance sheets shall separately break out the
statements of income and changes in cash flow and balance sheets of

 

36

 

Seller), in each
case presented in Seller’s usual form as previously approved by Buyer;

 

(ii)           Within
120 days after the last day of its fiscal year, Seller’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 (which statements and balance sheets
shall separately break out the statements of income and changes in cash flow
and balance sheets of Seller), in each case presented in Seller’s usual form as
previously approved by Buyer;

 

(iii)          Within
60 days after the last day of each calendar quarter in any fiscal year, an
officer’s certificate from 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;

 

(iv)          within
60 days after the last day of each calendar month in any fiscal year, any and
all property level financial information with respect to the Purchased Loans
that is in the possession of Seller or an Affiliate, or such other information
as may be mutually determined and agreed upon in writing by both Buyer and
Seller, including, without limitation, rent rolls and income statements; and

 

(v)           Within
20 days after each month end, a monthly reporting package containing all
information set forth on Exhibit III attached hereto.

 

(j)            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.

 

(k)           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 in accordance with
GAAP and set aside on its books from its earnings for each fiscal year all such
proper reserves in accordance with GAAP.

 

(l)            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, 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 Purchased Loans that, in each case,
in any manner would create any lien or charge upon the Purchased Loans, 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.

 

(m)          Seller
shall advise Buyer in writing of the opening of any new chief executive office
or the closing of any such office and of any change in Seller’s name or the
places where

 

37

 

the books and
records pertaining to the Purchased Loans are held not less than fifteen (15)
Business Days prior to taking any such action.

 

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

 

(o)           Seller
shall provide Buyer with access to operating statements, the occupancy status
and other property level information, with respect to the Properties, plus any
such additional reports as Buyer may reasonably request.

 

(p)           Seller
hereby covenants and agrees that all interest and original issue discount  received or accrued with respect to the
Purchased Loans shall be treated as portfolio interest within the meaning of
Sections 871(h) and 881(c) of the Internal Revenue Code, as amended, and no
amount will be required to be deducted from any remittance on the Purchased
Loans on account of withholding tax  or
otherwise.

 

(q)           Seller
shall notify Buyer in writing of any proposed extension or material modification
of any Purchased Loan not less than ten (10) Business Days prior to taking any
such action and shall reasonably provide Buyer with any documentation required
for such Purchased Loan to be modified or extended after any such action has
been taken.

 

(r)            Seller
shall pay all reasonable and actually incurred expenses (including the
reasonable fees and expenses of counsel to Buyer) of Buyer in connection with
the negotiation and documentation of this Agreement.

 

(s)           Seller
shall be solely responsible for the fees and expenses of Custodian.

 

12.           [Reserved]

 

13.           EVENTS
OF DEFAULT

 

Each of the following shall constitute an “Event of
Default” under this Agreement:

 

(i)            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
Loans, 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 Loans;

 

(ii)           in
the event that Buyer or any of its Affiliates is a party to any Hedging
Transaction and a default or breach occurs thereunder on the part of Seller or
any of its Subsidiaries which results in the early termination of such Hedging
Transaction or otherwise is not cured within the cure period for such

 

38

 

default or breach
provided under the terms and conditions of such Hedging Transaction;

 

(iii)          failure
of Buyer to receive no later than one (1) Business Day following any Remittance
Date the accrued, but unpaid Price Differential (less any amount of such Price
Differential previously paid by Seller to Buyer) (including, without
limitation, in the event the Income paid or distributed on or in respect of the
Purchased Loans is insufficient to make such payment and Seller does not make
such payment or cause such payment to be made);

 

(iv)          failure
of Buyer to receive the Repurchase Price for any Purchased Loans on the date
the same is due under this Agreement (whether on the Repurchase Date, Early
Repurchase Date or otherwise as provided herein);

 

(v)           failure
of a Seller to make any other payment (i.e., a payment
of a type not specified in any other clause of this Section 13) owing to 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 Section 3 or three Business Days in the case
of any other such failure;

 

(vi)          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 a Seller, which suspension has a material adverse effect on
the financial condition or business operations of a Seller, taken as a whole;

 

(vii)         Buyer
shall have determined, in the exercise of its good faith business judgment, (A)
that there has been a material adverse change in the corporate structure with
respect to Seller (including, without limitation, any breach of the provisions
of Section 12 hereof) or financial condition or creditworthiness, taken as a
whole, of a Seller; (B) that a Seller will not meet or has breached any of its
obligations under any Transaction pursuant to any of the Transaction Documents;
or (C) that a material adverse change in the financial condition of a Seller
may occur due to the pendency of a material legal action against a Seller;

 

(viii)        an
Act of Insolvency shall have occurred with respect to a Seller;

 

(ix)           any
(A) representation or warranty made by a Seller shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been
made or repeated; provided, however that Buyer’s remedy for a breach of a
representation and warranty with respect to any Purchased Loan shall be to mark
such Purchased Loan to market; or (B) covenant made by a Seller shall have been
breached in a material respect;

 

(x)            a
final judgment by any competent court in the United States of America for the
payment of money in an amount greater than $10,000,000 shall

 

39

 

have been rendered
against a Seller, and remained undischarged or unpaid for a period ninety (90)
days, during which period execution of such judgment is not effectively stayed;

 

(xi)           a
Seller or Buyer shall breach or fail to perform any of the terms, covenants,
obligations or conditions of this Agreement, and such breach or failure to
perform is not remedied within twenty (20) days, provided that any failure to
comply with Section 11(j) must be cured within 5 days (unless otherwise
specifically referred to in this definition of “Event of Default”);

 

(xii)          a
Seller shall have defaulted, such default having not previously occurred,
(beyond applicable notice and cure period) or failed to perform under any other
note, indenture, loan agreement, guaranty, swap agreement or any other
contract, agreement or transaction to which it is a party, which default
(A) involves the failure to pay an obligation in excess of $5,000,000, or
(B) permits the acceleration of the maturity of obligations in excess of
$5,000,000 by any other party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction, or Seller
shall breach any covenant or condition, shall fail to perform, admits its
inability to perform or state its intention not to perform its obligations
under any Transaction or in respect of any repurchase agreement, reverse
repurchase agreement, securities contract or derivative transaction with any
party;

 

(xiii)        Seller
at any time fails to maintain a ratio of Seller’s EBITDA to its interest
expense coverage of more than 1.2x;

 

(xiv)        the
Debt to Net Worth ratio of Seller at any time exceeds 30:1;

 

(xv)         the
ratio of Modified Debt to Net Worth exceeds 10:1; or

 

(xvi)        the
ratio of Modified Recourse Debt to Net Worth exceeds 5:1.

 

All of the financial tests and covenants in this
Agreement will be measured based on the consolidated position of Capital Trust,
Inc. and its Subsidiaries.

 

Any provision hereof to the contrary notwithstanding,
an Event of Default on the part of either Seller hereunder shall be deemed to
be an Event of Default by both Sellers.

 

14.           REMEDIES

 

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

 

(i)            At
the option of Buyer, exercised by written notice to either Seller (which option
shall be deemed to have been exercised, even if no notice is given, immediately
upon the occurrence of an Act of Insolvency with respect to either Seller), the
Repurchase Date for all Transactions hereunder (for both Sellers) shall, if it
has not already occurred, be deemed immediately to occur (the date on

 

40

 

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(i) of this Agreement:

 

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

 

(B)                                to
the extent permitted by applicable law, the Pricing Rate with respect to each
Transaction (determined as of the Accelerated Repurchase Date) shall be the
Pricing Rate prior to the date of the Event of Default plus 200 basis points;
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 Loans,

 

(iii)          Unless
Seller has tendered the Repurchase Price, upon the occurrence and during the
continuance of an Event of Default which has not previously occurred with
respect to Seller (with respect to which Buyer has not agreed to forbearance or
accepted a workout arrangement), Buyer may (A) immediately sell, at a public or
private sale at such price or prices as Buyer may deem satisfactory any or all
of the Purchased Loans or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Loans, to give Seller credit for such
Purchased Loans in an amount equal to the Market Value of such Purchased Loans
against the aggregate unpaid Repurchase Price for such Purchased Loans and any
other amounts owing by Seller under the Transaction Documents. Notwithstanding
the definition of “Market Value” set forth in Section 1 herein, for purposes of
this Section 14(iii), as to any Purchased Loan that has been delinquent for at
least sixty (60) days, Buyer shall determine a market value for such Purchased
Loan in good faith. The proceeds of any disposition of Purchased Loans effected
pursuant to this Section 14(iii) shall be applied, (w) first,
to the costs and expenses, including legal expenses, incurred by Buyer in
connection with Seller’s default; (x) second, to the
Repurchase Price; and (y) third, to any
other outstanding obligation of Seller to Buyer or its Affiliates.

 

(iv)          The
parties recognize that it may not be possible to purchase or sell all of the
Purchased Loans on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Loans
may not be liquid. In view of the nature of the Purchased Loans, the parties
agree that liquidation of a Transaction or the Purchased Loans 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.

 

41

 

Accordingly, Buyer
may elect, in its sole discretion, the time and manner of liquidating any
Purchased Loans, and nothing contained herein shall (A) obligate Buyer to
liquidate any Purchased Loans on the occurrence and during the continuance of
an Event of Default or to liquidate all of the Purchased Loans in the same
manner or on the same Business Day or (B) constitute a waiver of any right or
remedy of Buyer or its Affiliates.

 

(v)           Seller
shall be liable to Buyer for 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, and any other actual
out-of-pocket loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default with respect to Seller.

 

(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, 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 Loans 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)         Buyer
may exercise any or all of the remedies available to Buyer immediately upon the
occurrence of an Event of Default with respect to Seller (with respect to which
Buyer has not agreed to forbearance or accepted a workout arrangement) and at
any time during the continuance thereof. All rights and remedies arising under
the Transaction 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 Loans, 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.

 

(ix)           To
the extent that applicable law imposes duties on Buyer to exercise remedies in
a commercially reasonable manner, Seller acknowledges and agrees that it is not
commercially unreasonable for Buyer (i) to fail to incur expenses reasonably
deemed significant by Buyer to prepare the Purchased Loans for disposition or
otherwise to complete raw material or work in process into

 

42

 

finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Purchased Loans to be disposed of, or to obtain or, if
not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of the Purchased Loans to be
collected or disposed of, (iii) to fail to exercise collection remedies against
Persons obligated on the Purchased Loans or to remove liens on or any adverse
claims against the Purchased Loans, (iv) to exercise collection remedies against
Persons obligated on the Purchased Loans directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of the Purchased Loans through publications or media of general
circulation, whether or not the Purchased Loans are of a specialized nature,
(vi) to contact other Persons, whether or not in the same business as Seller,
for expressions of interest in acquiring all or any portion of such Purchased
Loans, (vii) to hire one or more professional auctioneers to assist in the
disposition of the Purchased Loans, whether or not the Purchased Loans are of a
specialized nature, (viii) to dispose of the Purchased Loans by utilizing
internet sites that provide for the auction of assets of the types included in
the Purchased Loans or that have the reasonable capacity of doing so, or that
match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase, at Buyer’s expense,
insurance or credit enhancements to insure Buyer against risks of loss,
collection or disposition of the Purchased Loans or to provide to Buyer a
guaranteed return from the collection or disposition of the Purchased Loans, or
(xii) to the extent deemed appropriate by Buyer, to obtain the services of
other brokers, investment bankers, consultants and other professionals to
assist Buyer in the collection or disposition of any of the Purchased Loans.
Seller acknowledges that the purpose of this Section 14(ix) is to provide
non-exhaustive indications of what actions or omissions by Buyer would not be
commercially unreasonable in Buyer’s exercise of remedies against the Purchased
Loans and that other actions or omissions by Buyer shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 14(ix). Without limitation upon the foregoing, nothing contained in
this Section 14(ix) shall be construed to grant any rights to Seller or to
impose any duties on Buyer that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section 14(ix).

 

(x)            Buyer
shall not be required to make any demand upon, or pursue or exhaust any of its
rights or remedies against, Seller, any other obligor, guarantor, pledgor or
any other Person with respect to the payment of the obligations of Seller
hereunder or to pursue or exhaust any of its rights or remedies with respect to
any Purchased Loans therefor or any direct or indirect guarantee thereof. Buyer
shall not be required to marshal the Purchased Loans or any guarantee of the
obligations of Seller hereunder or to resort to the Purchased Loans or any such
guarantee in any particular order, and all of its rights hereunder or under any
other document or instrument executed in connection herewith shall be
cumulative. To the extent it may lawfully do so, Seller absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and covenants

 

43

 

not to assert
against Buyer, any valuation, stay, appraisement, extension, redemption or
similar laws and any and all rights or defenses it may have as a surety now or
hereafter existing which, but for this provision, might be applicable to the
sale of any Purchased Loans made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this Agreement, or
otherwise.

 

(xi)           Seller
hereby appoints Buyer as attorney-in-fact of Seller for the purpose, after the
occurrence and during the continuance of an Event of Default, 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.

 

15.           NOTICES
AND OTHER COMMUNICATIONS

 

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, (d) by telecopier (with
answerback acknowledged) or (e) by e-mail, provided that such telecopied
or e-mailed notice must also be delivered by one of the means set forth in (a),
(b) or (c) above, to the address specified below 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:

 

	
  if to Buyer:

  	
  Bear, Stearns Funding, Inc.

  	
   

  	
   

  
	
   

  	
  383 Madison Avenue

  	
   

  	
   

  
	
   

  	
  New York, New York 10179

  	
   

  
	
   

  	
  Attn:

  	
  Eileen Albus

  
	
   

  	
  Telephone:

  	
  (212) 272-7502

  
	
   

  	
  Fax:

  	
  (212) 272-2053

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sidley Austin LLP

  	
   

  
	
   

  	
  787 Seventh Avenue

  	
   

  
	
   

  	
  New York, New York 10019

  
	
   

  	
  Attn:

  	
  Michael P. Peck

  
	
   

  	
  Telephone:

  	
  (212) 839-5576

  
	
   

  	
  Fax:

  	
  (212) 839-5599

  
						

 

44

 

	
  if to Seller:

  	
  Capital Trust, Inc.

  	
   

  
	
   

  	
  410 Park Avenue

  	
   

  
	
   

  	
  14th Floor

  	
   

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attn:

  	
  Geoffrey Jervis

  
	
   

  	
  Telephone:

  	
  (212) 655-0247

  
	
   

  	
  Fax:

  	
  (212) 655-0044

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Paul, Hastings, Janofsky & Walker LLP

  
	
   

  	
  75 East 55th Street

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attn:

  	
  Robert J. Grados, Esq.

  
	
   

  	
  Telephone:

  	
  (212) 318-6923

  
	
   

  	
  Fax:

  	
  (212) 230-7830

  
	
   

  	
   

  	
   

  
	
  if to CT BSI Funding Corp.:

  
	
   

  	
   

  
	
   

  	
  CT BSI Funding Corp.

  
	
   

  	
  410 Park Avenue

  
	
   

  	
  14th Floor

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attn:

  	
  Geoffrey Jervis

  
	
   

  	
  Telephone:

  	
  (212) 655-0247

  
	
   

  	
  Fax:

  	
  (212) 655-0044

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Paul, Hastings, Janofsky & Walker LLP

  
	
   

  	
  75 East 55th Street

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attn:

  	
  Robert J. Grados, Esq.

  
	
   

  	
  Telephone:

  	
  (212) 318-6923

  
	
   

  	
  Fax:

  	
  (212) 230-7830

  
					

 

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, (d) in
the case of telecopier, upon receipt of answerback confirmation, or (e) in
the case of email, at the time such email was sent, provided that such
telecopied or emailed 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.

 

45

 

16.           NON-ASSIGNABILITY

 

(a)           The
rights and obligations of the parties under the Transaction Documents and under
any Transaction shall not be assigned by either party without the prior written
consent of the other party; provided, however, that Buyer may assign its rights and obligations
under the Transaction Documents and/or under any Transaction to an Affiliate,
without the prior written consent of Seller so long as that Affiliate has a Net
Worth at least equal to that of Buyer as of the Purchase Date; and provided further, however, that upon the occurrence and
during the continuation of an Event of Default, the non-defaulting party shall
have an unfettered right to assign its rights and obligations without the
consent of the defaulting party.

 

(b)           The
transferring party pursuant to subsection (a) above shall be responsible for
the payment of all fees and expenses relating to such transfer of its rights
and obligations.

 

(c)           Buyer
shall be entitled to issue one or more participation interests with respect to
any or all of the Transactions.

 

(d)           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.

 

17.           GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

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

 

(b)           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.

 

(c)           Each
party hereby irrevocably waives, to the fullest extent they 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 via certified mail, return receipt
requested of copies of such process to them at their respective address
specified herein. Each party hereby agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section 17 shall affect the right of Buyer to serve legal
process in any other manner permitted by law or affect the right of Buyer to
bring any action or proceeding against Seller or its property in the courts of
other jurisdictions.

 

46

 

(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.

 

18.           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;

 

(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.

 

19.           INDEMNITY

 

Seller hereby agrees to indemnify Buyer, Buyer’s
designee and each of its officers, directors, employees and agents
(“Indemnified Parties”) from and against any and all liabilities, obligations,
actual, out-of-pocket losses, actual, out-of-pocket damages, actual, out-of-pocket
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 Purchased Loans or in connection with any of the transactions
contemplated by this Agreement and the documents delivered in connection
herewith, other than income taxes, franchise taxes or other similar taxes of
Buyer), actual, out-of-pocket fees, actual, out-of-pocket costs, actual,
out-of-pocket expenses

 

47

 

(including reasonable attorneys’ fees and
disbursements) or disbursements (all of the 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. Without limiting the generality of the
foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer
against all Indemnified Amounts with respect to all Purchased Loans relating to
or arising out of any violation or alleged violation of any environmental law,
rule or regulation or any consumer credit laws, including without limitation
ERISA, the Truth in Lending Act and/or the Real Estate Settlement Procedures
Act, that, in each case, results from anything other than Buyer’s gross
negligence or willful misconduct. In any suit, proceeding or action brought by
Buyer in connection with any Purchased Loan for any sum owing thereunder, or to
enforce any provisions of any Purchased Loan, Seller will save, indemnify and
hold Buyer harmless from and against all expense (including, without
limitation, reasonable attorneys’ fees and expenses), loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out
of a breach by Seller of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from Seller and 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.

 

20.           DUE
DILIGENCE

 

Seller acknowledges that Buyer has the right, at its
own cost and expense, to perform reasonable continuing due diligence reviews
with respect to the Purchased Loans for purposes of verifying compliance with
the representations, warranties and specifications made hereunder, or
otherwise, and Seller agrees that upon reasonable prior notice to Seller, Buyer
or its authorized representatives will be permitted during normal business
hours to examine, inspect, and make copies and extracts of, the Purchased Loan
Files, Servicing Records and any and all documents, records, agreements,
instruments or information relating to such Purchased Loans in the possession
or under the control of Seller, any other servicer or subservicer and/or the
Custodian. Seller also shall make available to Buyer a knowledgeable financial
or accounting officer for the purpose of answering questions respecting the
Purchased Loan Files and the Purchased Loans. Without limiting the generality
of the foregoing, Seller acknowledges that Buyer may enter into Transactions
with Seller based solely upon the information provided by Seller to Buyer and
the representations, warranties and covenants contained herein, and that Buyer,
at its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Purchased Loans. Buyer may underwrite
such Purchased Loans itself or, at its own cost and expense, engage a third
party underwriter to perform such underwriting. Seller agrees to reasonably
cooperate with Buyer and any third party underwriter in connection with such
underwriting, including, but not limited to, providing Buyer and any third
party underwriter with 

 

48

 

access to any and all documents, records, agreements,
instruments or information relating to such Purchased Loans in the possession,
or under the control, of Seller.

 

21.           SERVICING

 

(a)           Notwithstanding
the purchase and sale of the Purchased Loans hereby, Seller shall continue to
cause the Purchased Loans to be serviced for the benefit of Buyer and, if Buyer
shall exercise its rights to pledge or hypothecate the Purchased Loans prior to
the Repurchase Date pursuant to Section 7, Buyer’s assigns. Seller shall
service or cause the servicer to service the Purchased Loans in accordance with
Accepted Servicing Practices approved by Buyer and maintained by other prudent
mortgage lenders with respect to mortgage loans similar to the Purchased Loans.

 

(b)           Seller
agrees that Buyer is the owner of all servicing records, including but not
limited to any and all servicing agreements (the “Servicing Agreements”),
files, documents, records, data bases, computer tapes, copies of computer
tapes, proof of insurance coverage, insurance policies, appraisals, other
closing documentation, payment history records, and any other records relating
to or evidencing the servicing of Purchased Loans (the “Servicing Records”) so
long as the Purchased Loans are subject to this Agreement. Seller grants Buyer
a security interest in all servicing fees and rights of Seller relating to the
Purchased Loans and all Servicing Records to secure the obligation of Seller or
its designee to service in conformity with this Section and any other
obligation of Seller to Buyer. Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer’s request.

 

(c)           Seller
shall provide to Buyer on a monthly basis, or more frequently at the request of
Buyer, any and all information that is pertinent or related to the assessment
and valuation of loans that are included in Purchased Loans, as or when
received or available from Seller. Such information includes, but is not
limited to, property operating statements, rent rolls, financial statements and
other financial reports for each Purchased Loan, as well as any other
information or events affecting the interests in or valuation of the Purchased
Loans.

 

(d)           Upon
the occurrence and continuance of an Event of Default, Buyer may, in its sole
discretion, (i) sell its right to the Purchased Loans on a servicing released
basis or (ii) terminate Seller or any sub-servicer of the Purchased Loans with
or without cause, in each case without payment of any termination fee.

 

(e)           Seller
shall not employ sub-servicers to service the Purchased Loans without the prior
written approval of Buyer which approval shall not be unreasonably withheld. If
the Purchased Loans are serviced by a sub-servicer, Seller shall irrevocably assign
all rights, title and interest in the Servicing Agreements in the Purchased
Loans to Buyer.

 

(f)            Seller
shall cause any sub-servicers engaged by Seller to execute a letter agreement
with Buyer acknowledging Buyer’s security interest and agreeing that it shall
deposit all Income with respect to the Purchased Loans in the Collection
Account.

 

49

 

(g)           To
the extent permitted under the servicing agreement the payment of servicing
fees shall be subordinate to payment of amounts outstanding under any
Transaction and this Agreement.

 

(h)           The
servicer and Seller may not enter into any modification or extension agreement
without the written consent or approval of Buyer.

 

22.           WIRE
INSTRUCTIONS

 

(a)           Any
amounts to be transferred by Buyer to either Seller hereunder shall be sent by
wire transfer in immediately available funds to

 

(i) the account of Seller at:

 

	
   

  	
  Bank: JPMorgan Chase Bank

  
	
   

  	
  Acct. No.: 230254632

  
	
   

  	
  ABA #: 021-000021

  
	
   

  	
  Acct. Name: Capital Trust, Inc. Corporate Account

  
	
   

  	
  Attn: John Warch (212) 655-0225;

  

 

or (ii) to an account
designated by Seller in writing, provided that such designation is made by at
least two (2) Authorized Representatives of Seller.

 

(b)           Any
amounts to be transferred by Seller to Buyer hereunder shall be sent by wire
transfer in immediately available funds to the account of Buyer at:

 

Acct.:  For the
A/C of Bear Stearns MBS, FNB Chicago

Acct. No.:  5801230

ABA No.:  071000013

Attn:  Eileen Albus

 

(c)           Amounts
other than the Purchase Price for a Purchased Loan received after 3:00 p.m.,
New York City time, on any Business Day shall be deemed to have been paid and
received on the next succeeding Business Day.

 

23.           CONFIDENTIALITY

 

Each of the parties acknowledges that this Agreement,
the Custodial Agreement and the terms of each Transaction (including
information disclosed in due diligence) are confidential in nature and each
such party agrees that, unless an Event of Default shall occur and be
continuing, or as otherwise directed by a court or regulatory entity of
competent jurisdiction or as may be required by federal or state law (which
determination as to federal or state law shall be based upon written advice of
counsel), it shall limit the distribution of such documents and the disclosure
of such information to its officers, employees, attorneys, accountants,
investors and agents as required in order to conduct its business with the
other parties hereto. Notwithstanding the foregoing, Buyer shall be permitted
to provide a copy of this Agreement and the Custodial Agreement, and shall be
permitted to describe the terms of each Transaction, in connection with the
re-hypothecation of the Eligible Loans subject to the terms of this Agreement.
This Section

 

50

 

shall not apply to information which has entered the
public domain through means other than a breach of the foregoing covenant by
the party seeking to distribute such documents or which the other party has
given written permission to disclose.

 

Seller hereby acknowledges and agrees that any and all
information concerning Seller (the “Information”) that is furnished by Seller
to Buyer and any of its Affiliates may be used and relied upon by any other of
Buyer’s Affiliates without any liability to Seller to the extent such
information is obtained by Buyer or an Affiliate from another of its Affiliates
without any liability to Seller, provided, however, that no Information will be used by a Buyer or an
Affiliate in violation of federal or state securities laws.

 

Seller further acknowledges and agrees that any
confidentiality agreement that may now or hereafter exist between Seller and
Buyer or an Affiliate shall not preclude the disclosure of any Information
between or among Buyer and any of its Affiliates.

 

24.           SINGLE
TRANSACTION

 

Buyer and Seller acknowledge that, and have entered
hereunto 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 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.

 

25.           JOINT
AND SEVERAL LIABILITY OF SELLERS

 

Each Seller agrees to be jointly and severally liable
for the obligations of each Seller hereunder and all representations,
warranties, covenants and agreements made by or on behalf of each Seller in the
Agreement or in any exhibit hereto or any document, instrument or certificate
delivered pursuant hereto shall be deemed to have been made by each Seller,
jointly and severally. Each Seller further agrees that, notwithstanding any
right of Buyer to investigate fully the affairs of a Seller and notwithstanding
any knowledge of facts determined or determinable by Buyer, Buyer has the right
to rely fully on the representations, warranties, covenants and agreements of
each Seller contained in the Agreement and upon the accuracy of any document,
instrument, certificate or exhibit given or delivered hereunder. The joint and
several obligation of each Seller hereunder is absolute, unconditional,
irrevocable, present and continuing and, with respect to any payment to be made
to Buyer, is a guaranty of payment (and not of collectability) and is in no way
conditional or contingent upon the continued existence of the other Sellers and
is not and will not be subject to any setoffs. Any notice or other
communication provided to a Seller pursuant hereto shall be deemed to have been
given each Seller and failures to be sent any

 

51

 

notice or communication contemplated hereby shall not
relieve a Seller from its joint and several liability for the obligations of
each Seller hereunder.

 

26.           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 Section 3(a) hereof will not constitute a
waiver of any right to do so at a later date.

 

27.           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 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 subsection (a) of this Section 27, any such Transaction
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 pursuant to this Section 27, Seller shall be deemed
to represent to Buyer that since the date of Seller’s latest such financial
statements, there has been no material adverse change in Seller’s financial
condition which Seller has not disclosed to Buyer which would affect, in any
material respect, Seller’s ability to perform its obligations hereunder.

 

28.           NO
PERSONAL LIABILITY; FURTHER ASSURANCES; MISCELLANEOUS

 

(a)           None
of the officers, members, shareholders or directors of Seller shall be liable
for the payment or performance of Seller hereunder.

 

(b)           Seller
agrees that, from time to time upon the prior written request of Buyer, it
shall (i) execute and deliver such further documents, provide such additional
information and reports and perform such other acts as Buyer may reasonably
request in order to insure compliance with the provisions hereof (including,
without limitation, compliance with the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act) Act of 2001) and to fully effectuate the purposes of this
Agreement and (ii) provide such opinions of counsel concerning matters relating
to this Agreement as Buyer may reasonably request; provided, however,
that nothing in this Section 28(b) 

 

52

 

shall be construed
as requiring Buyer to conduct any inquiry or decreasing Seller’s responsibility
for its statements, representations, warranties or covenants hereunder.

 

(c)           Time
is of the essence under the Transaction Documents and all Transactions thereunder
and all references to a time shall mean New York time in effect on the date of
the action unless otherwise expressly stated in the Transaction Documents.

 

(d)           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, Buyer shall have all rights and remedies of a secured party
under the Uniform Commercial Code.

 

(e)           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

 

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

 

(g)           Without
limiting the rights and remedies of Buyer under the Transaction Documents,
Seller shall pay Buyer’s reasonable out-of-pocket costs and expenses, including
reasonable fees and expenses of accountants, attorneys and advisors, 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 up to $75,000. Seller agrees to pay Buyer on demand
all 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 Loans, or any actual or attempted sale, or any exchange, enforcement,
collection; compromise or settlement in respect of any of the Purchased Loans
and for the custody, care or preservation of the Purchased Loans (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 the maintenance of the
Collection Account and registering the Purchased Loans in the name of Buyer or
its nominee. All such expenses shall be recourse obligations of Seller to Buyer
under this Agreement.

 

(h)           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.

 

(i)            The
parties acknowledge and agree that although they intend to treat each
Transaction as a sale of the Purchased Loans, in the event that such sale shall
be recharacterized as a secured financing, this Agreement shall also serve as a
security agreement with respect to Buyer’s rights in the Collateral. In order
to secure and to provide for the prompt and

 

53

 

unconditional
repayment of the Repurchase Price and the performance of its obligations under
this Agreement, Seller hereby pledges to Buyer and hereby grants to Buyer a
first priority security interest in all of its rights in the Collateral
referred to in Section 5 hereof. Buyer may without Seller’s execution, consent
or approval, and Seller hereby covenants that it shall at Buyer’s request duly
execute any Form UCC financing statements as may be required by Buyer in order
to perfect its security interest created hereby in such rights and obligations
granted above, it being agreed that Seller shall pay any and all fees required
to file such financing statements.

 

(j)            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.

 

(k)           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.

 

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

 

(m)          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.

 

(n)           Any
notice, acknowledgment, statement or certificate (including, without
limitation, any Confirmation) given by Buyer to any Seller shall be effective as,
and shall be deemed to be, a notice, acknowledgment, statement or certificate
given to each and every Seller. Buyer may, without necessity of any inquiry,
rely solely upon any notice, acknowledgment, statement or certificate of any of
(1) any Seller or (2) any authorized representative of Seller set forth on
Exhibit II or otherwise designated by any Seller from time to time, as
constituting the joint and several statement and certificate of Seller fully
authorized by Seller. Any disbursements of funds to Seller provided for in
Section 4 of this Agreement or otherwise in this Agreement or the Transaction
Documents shall be deemed properly made to Seller if disbursed to any Seller or
its designee.

 

29.           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

 

54

 

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.

 

55

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the 15th day of February, 2006.

 

	
   

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEAR, STEARNS FUNDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael A. Forastiere

  	
   

  
	
   

  	
   

  	
  Name:  Michael
  A. Forastiere

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CAPITAL TRUST, INC.

  
	
   

  	
   

  	
  (jointly and severally with the other Seller)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Geoffrey G. Jervis

  	
   

  
	
   

  	
   

  	
  Name:  Geoffrey G. Jervis

  
	
   

  	
   

  	
  Title:  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CT BSI FUNDING CORP.

  
	
   

  	
   

  	
  (jointly and severally with the other Seller)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Geoffrey G. Jervis

  	
   

  
	
   

  	
   

  	
  Name:  Geoffrey
  G. Jervis

  
	
   

  	
   

  	
  Title:  Chief
  Financial Officer

  
							

 

 

EXHIBITS

 

	
  EXHIBIT I

  	
   

  	
  Form of Confirmation

  
	
   

  	
   

  	
   

  
	
  EXHIBIT II

  	
   

  	
  Authorized Representatives of Sellers

  
	
   

  	
   

  	
   

  
	
  EXHIBIT III

  	
   

  	
  Monthly Reporting Package

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IV

  	
   

  	
  Form of Custodial Delivery

  
	
   

  	
   

  	
   

  
	
  EXHIBIT V

  	
   

  	
  Form of Power of Attorney

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VI

  	
   

  	
  Representations and Warranties Regarding Individual
  Purchased Loans

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VII

  	
   

  	
  Representations and Warranties Regarding Individual
  Mezzanine Loan

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VIII

  	
   

  	
  Loan Information

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IX

  	
   

  	
  Transaction Procedure

  
	
   

  	
   

  	
   

  
	
  EXHIBIT X

  	
   

  	
  [RESERVED]

  
	
   

  	
   

  	
   

  
	
  EXHIBIT XI

  	
   

  	
  [RESERVED]

  
	
   

  	
   

  	
   

  
	
  EXHIBIT XII

  	
   

  	
  Form of Opinion of Counsel to Sellers

  
	
   

  	
   

  	
   

  
	
  EXHIBIT XIII

  	
   

  	
  Form of Bailee Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1-A

  	
   

  	
  Form of UCC Financing Statement

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1-B

  	
   

  	
  Form of UCC Financing Statement Amendment

  

 

 

EXHIBIT I

 

CONFIRMATION STATEMENT

BEAR, STEARNS FUNDING, INC.

 

Ladies
and Gentlemen:

 

Bear, Stearns Funding, Inc., is pleased to deliver our
written Confirmation of our agreement to enter into the Transaction pursuant to
which Bear, Stearns Funding, Inc., shall purchase from you the Purchased Loans
identified in the Amended and Restated Master Repurchase Agreement between
Bear, Stearns Funding, Inc. (the “Buyer”) and Capital Trust, Inc., a Maryland
corporation, and CT BSI Funding Corp., a Delaware corporation (each a “Seller”
with joint and several liability for the obligations of the other Seller),
dated as of February 15, 2006 (the “Agreement”; capitalized terms used herein
without definition have the meanings given in the Agreement), as follows below
and on the attached Schedule 1 :

 

	
  Purchase Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Purchased Loans:

  	
   

  	
  As identified on attached Schedule 1

  
	
   

  	
   

  	
   

  
	
  Aggregate Principal Amount of Purchased Loans

  	
   

  	
  As identified on attached Schedule 1

  
	
   

  	
   

  	
   

  
	
  Repurchase Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Purchase Price:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Pricing Rate:

  	
   

  	
  one month LIBOR plus            %

  [             ]

  
	
   

  	
   

  	
   

  
	
  Buyer’s Margin Ratio:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Original Principal Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Current Principal Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Original Market Value:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Due Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Governing Agreements:

  	
   

  	
  [             ]

  
	
   

  	
   

  	
   

  
	
  Name and address for communications:

  	
   

  	
  Buyer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:

  Telephone:

  Telecopy:

  

 

I-1

 

	
   

  	
   

  	
  Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Capital Trust, Inc.]

  [CT BSI Funding Corp.]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:

  Telephone:

  Telecopy:

  

 

 

	
   

  	
  BEAR, STEARNS FUNDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

	
  AGREED AND ACKNOWLEDGED:

  
	
   

  
	
   

  	
  ,

  	
  a

  	
   

  	
   

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
  Its: 

  	
   

  	
   

  
						

 

I-2

 

Schedule 1 to Confirmation Statement

 

Purchased
Loans:

 

Aggregate
Principal Amount:

 

I-3

 

EXHIBIT II

 

AUTHORIZED REPRESENTATIVES OF SELLERS

 

	
  Name

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
  John R. Klopp

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Stephen D. Plavin

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Geoffrey G. Jervis

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Jeremy FitzGerald

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Peter S. Ginsberg

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Thomas C. Ruffing

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  John E. Warch

  	
   

  	
   

  

 

II-1

 

EXHIBIT III

 

MONTHLY REPORTING PACKAGE

 

Name:

 

Loan
Number:

 

Borrower
Name:

 

Property
Address:

 

Property
City:

 

Property
State:

 

Property
County:

 

Property
Zip:

 

Lien
Position:

 

Adjustment
Type:

 

Property
Type:

 

Occupancy:

 

Loan
Purpose:

 

Original
Coupon:

 

Current
Coupon:

 

Original
Balance:

 

Current
Balance:

 

Outstanding
Senior Debt**:

 

Original
Accrued P&I:

 

Current
Accrued Interest 3/31/04:

 

Origination
Date:

 

First
Payment Date:

 

Maturity
Date:

 

Date
Next Due:

 

Original
Term:

 

Original
Amortization Term:

 

Product
Type:

 

Balloon
Flag:

 

Original
LTV:

 

Combined
Current LTV**:

 

III-1

 

Original
Appraisal:

 

Original
Spread:

 

Payment
Frequency:

 

Servicing
Fee:

 

Prepayment
Penalty Period:

 

Prepayment
Penalty Description:

 

Index
Type:

 

Rounding
Factor:

 

Convertible:

 

New
Amortization Flag:

 

Negative
Amortization Cap:

 

Periodic
Payment Cap:

 

Margin:

 

Maximum
Life Rate:

 

Minimum
Life Rate:

 

Initial
Periodic Rate Cap:

 

Subsequent
Periodic Rate Cap:

 

First
Rate Adjustment Date:

 

First
Payment Adjustment Date:

 

Next
Rate Adjustment Date:

 

Next
Payment Adjustment Date:

 

Rate
Adjustment Period:

 

Payment
Adjustment Period:

 

III-2

 

EXHIBIT IV

 

FORM OF CUSTODIAL DELIVERY

 

On this         
of         , 200    ,
Capital Trust, Inc., a Maryland corporation, and CT BSI Funding Corp., a
Delaware corporation (each a “Seller” with joint and several liability for the
obligations of the other Seller), as Sellers under that certain Amended and
Restated Master Repurchase Agreement, dated as of February 15, 2006 (the “Repurchase
Agreement”) between Seller and Bear, Stearns Funding, Inc. (“Buyer”), does
hereby deliver to Deutsche Bank Trust Company Americas, as custodian (“Custodian”),
as custodian under that certain Custodial Agreement, dated as of February 15, 2006,
between Buyer and Custodian, the Purchased Loan Files with respect to the
Purchased Loans to be purchased by Buyer pursuant to the Repurchase Agreement,
which Purchased Loans are listed on the Purchased Loan Schedule attached hereto
and which Purchased Loans shall be subject to the terms of the Custodial
Agreement on the date hereof.

 

With respect to the Purchased Loan Files delivered
hereby, for the purposes of issuing the Trust Receipt, the Custodian shall
review the Purchased Loan Files to ascertain delivery of the documents listed
in Section 3 to the Custodial Agreement.

 

Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Custodial Agreement.

 

IN WITNESS WHEREOF, Seller has caused its name to be
signed hereto by its officer thereunto duly authorized as of the day and year
first above written.

 

	
   

  	
   

  	
  ,

  	
  a 

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  
							

 

IV-1

 

EXHIBIT V

 

FORM OF POWER OF ATTORNEY

 

“Know All Men by These Presents, that Capital Trust,
Inc., a Maryland corporation, and CT BSI Funding Corp., a Delaware corporation
(each a “Seller” with joint and several liability for the obligations of the
other Seller), does each hereby appoint Bear, Stearns Funding, Inc. (“Buyer”),
its attorney-in-fact to act in Seller’s name, place and stead in any way which
Seller could do with respect to (i) the completion of the endorsements of the
Mortgage Notes and the Assignments of Mortgages and the Mezzanine Notes, (ii)
the recordation of the Assignments of Mortgages and (iii) the enforcement of
Seller’s rights under the Purchased Loans purchased by Buyer pursuant to the Amended
and Restated Master Repurchase Agreement, dated as of February 15, 2006 (the “Amended
and Restated Master Repurchase Agreement”), between Seller and Buyer and to
take such other steps as may be necessary or desirable to enforce Buyer’s
rights against such Purchased Loans, the related Purchased Loan Files and the
Servicing Records to the extent that Seller is permitted by law to act through
an agent.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER
HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE
OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF
SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR
KNOWLEDGE OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH
THIRD PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER’S ASSIGNS,
HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND
AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF
SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

 

Capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Amended and Restated Master
Repurchase Agreement.

 

V-1

 

IN WITNESS WHEREOF Seller has caused this Power of
Attorney to be executed and Seller’s seal to be affixed this 15th day of February,
2006.

 

	
   

  	
  CAPITAL TRUST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Geoffrey G. Jervis

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CT BSI FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

V-2

 

EXHIBIT VI

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED LOAN

WHICH IS A WHOLE LOAN OR B NOTE

 

1.             Purchased Loan Schedule and Loan Information. The
information set forth in the Purchased Loan Schedule and the Loan Information
is complete, true and correct in all material respects.

 

2.             Whole Loan; Ownership of Purchased Loans. Each
Purchased Loan is a whole loan and not a participation interest in a whole
loan. Immediately prior to the transfer to Buyer of the Purchased Loans, Seller
had good and marketable title to, and was the sole owner of, each Purchased
Loan. Seller has full right, power and authority to transfer and assign each of
the Purchased Loans to or at the direction of Buyer and has validly and
effectively conveyed (or caused to be conveyed) to Buyer or its designee all of
Seller’s legal and beneficial interest in and to the Purchased Loans free and
clear of any and all pledges, liens, charges, security interests, participation
interests and/or other encumbrances. The sale of the Purchased Loans to Buyer
or its designee does not require Seller to obtain any governmental or
regulatory approval or consent that has not been obtained.

 

3.             Payment Record. No scheduled payment of principal
and interest under any Purchased Loan was 30 days or more past due as of the
Purchase Date without giving effect to any applicable grace period, and no
Purchased Loan was 30 days or more delinquent in the twelve-month period
immediately preceding the Purchase Date.

 

4.             Lien; Valid Assignment. The Mortgage related to
and delivered in connection with each Purchased Loan constitutes a valid and,
subject to the exceptions set forth in paragraph 13 below, enforceable first
priority lien upon the related Property, prior to all other liens and
encumbrances and there are no liens or encumbrances pari passu with the lien of
the Mortgage, except for (a) the lien for current real estate taxes and
assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters that are of public
record and/or are referred to in the related lender’s title insurance policy,
(c) exceptions and exclusions specifically referred to in such lender’s title
insurance policy, and (d) other matters to which like properties are commonly
subject, none of which matters referred to in clause (b), (c) or (d)
individually or in the aggregate materially interferes with the security
intended to be provided by such Mortgage or the marketability or current use of
the Property or the current ability of the Property to generate operating
income sufficient to service the Purchased Loan debt (the foregoing items (a)
through (d) being herein referred to as the “Permitted Encumbrances”). The
related assignment of such Mortgage executed and delivered in favor of Buyer is
in recordable form and constitutes a legal, valid and binding assignment,
sufficient to convey to the assignee named therein all of the assignor’s right,
title and interest in, to and under such Mortgage. Such Mortgage, together with
any separate security agreements, chattel mortgages or equivalent instruments,
establishes and creates a valid and, subject to the exceptions set forth in
paragraph 13 below, enforceable security interest in favor of the holder
thereof in all of the related Mortgagor’s personal property used in, and
reasonably necessary to operate the related Property. A Uniform Commercial Code
financing statement has been filed

 

VI-1

 

and/or recorded in all places necessary to perfect a valid security
interest in such personal property, and such security interest is a first
priority security interest, subject to any prior purchase money security
interest in such personal property and any personal property leases applicable
to such personal property. Notwithstanding the foregoing, no representation is
made as to the perfection of any security interest in rents or other personal
property to the extent that possession or control of such items or actions
other than the filing of Uniform Commercial Code financing statements are
required in order to effect such perfection.

 

5.             Assignment of Leases and Rents. The assignment of
leases and rents (“Assignment of Leases”) set forth in the Mortgage (or in a
separate instrument) and related to and delivered in connection with each
Purchased Loan establishes and creates a valid, subsisting and, subject to the
exceptions set forth in paragraph 13 below, enforceable first priority
perfected lien and together with the Mortgage, first priority perfected
security interest in the related Mortgagor’s interest in all leases, subleases,
licenses or other agreements pursuant to which any person is entitled to
occupy, use or possess all or any portion of the real property subject to the
related Mortgage, and each assignor thereunder has the full right to assign the
same. The related assignment of any Assignment of Leases, not included in a
Mortgage, executed and delivered in favor of Buyer is in recordable form and
constitutes a legal, valid and binding assignment, sufficient to convey to the
assignee named therein all of the assignor’s right, title and interest in, to
and under such Assignment of Leases. If an Assignment of Leases exists with
respect to any Mortgage Loan (whether as part of the related Mortgage or
separately), then the related Mortgage or related Assignment of Leases, subject
to applicable law, provides for, upon an event of default under the Mortgage
Loan, the appointment of a receiver for the collection of rents or for the
related mortgagee to enter into possession to collect the rents or for rents to
be paid directly to the mortgagee.

 

6.             Mortgage Status; Waivers and Modifications. In
the case of each Mortgage Loan, (a) no Mortgage has been satisfied, canceled,
rescinded or subordinated in whole or in material part, (b) the related
Property has not been released from the lien of such Mortgage, in whole or in
material part, (c) no instrument has been executed that would effect any such
satisfaction, cancellation, subordination, rescission or release except for any
partial reconveyances of portions of the real property that do not materially
adversely affect the value of the property, and (d) no Mortgagor has been
released from its obligations under the related Mortgage in whole or in
material part. None of the terms of any Mortgage Note, Mortgage or Assignment
of Leases have been impaired, waived, altered or modified in any respect,
except by written instruments, all of which are included in the related
Mortgage File.

 

7.             Condition of Property; Condemnation. Except as
set forth in an engineering report prepared in connection with the origination
of the related Purchased Loan and dated not more than 12 months prior to the
Purchase Date, each Property is, to Seller’s knowledge, free and clear of any
damage that would materially and adversely affect its value as security for the
related Purchased Loan (normal wear and tear excepted). Seller has received no
notice, and has no knowledge, of any pending or threatened proceeding for the
condemnation of all or any material portion of any Property. To Seller’s
knowledge, as of the date of the origination of each Purchased Loan (based on
surveys and/or title insurance obtained in connection with the origination of
the Purchased Loans) (a) all of the improvements on the related Property which
were considered material in determining the appraised value of the

 

VI-2

 

Property lay wholly within the boundaries and building restriction
lines of such property, except for encroachments that are insured against by
the Title Policy referred to in paragraph 8 herein or that do not materially
and adversely affect the value, principal use, or marketability of such
Property, and (b) no improvements on adjoining properties encroached upon such
Property so as to materially and adversely affect the value, principal use, or
marketability of such Property, except those encroachments that are insured
against by the Title Policy referred to in paragraph 8 herein.

 

8.             Title Insurance. Each Property is covered by an
American Land Title Association (or an equivalent form thereof approved for use
in the applicable jurisdiction) lender’s title insurance policy (the “Title
Policy”) in the original principal amount of the related Purchased Loan after
all advances of principal. Each Title Policy insures that the related Mortgage is
a valid first priority lien on such Property, subject only to the exceptions
stated therein (or a preliminary title policy with escrow instructions or a
marked up title insurance commitment on which the required premium has been
paid exists which is binding on the title insurer and which evidences that such
Title Policy will be issued). Each Title Policy (or, if it has yet to be
issued, the coverage to be provided thereby) is in full force and effect, all
premiums thereon have been paid, insures the originator of the Mortgage Loan,
its successors and assigns and, to Seller’s knowledge, (i) no material claims
have been made thereunder and no claims have been paid thereunder and (ii) was
issued by a title insurance company qualified at origination to do business in
the jurisdiction in which the Property is located to the extent such
qualification was required in order for the Title Policy to be enforceable. No
holder of the related Mortgage has done, by act or omission, anything that
would materially impair the coverage under such Title Policy. Immediately
following the transfer and assignment of the related Purchased Loan to Buyer,
such Title Policy (or, if it has yet to be issued, the coverage to be provided
thereby) will inure to the benefit of Buyer without the consent of or notice to
the insurer. Such Title Policy contains no exclusion for, or it affirmatively
insures (unless the related Property is located in a jurisdiction where such
affirmative insurance is not available), the following:  (a) access to a public road; and (b) that if
a survey was reviewed or prepared in connection with the origination of the
related Mortgage Loan, the area shown on such survey is the same as the
property legally described in the related Mortgage.

 

9.             No Holdbacks. The proceeds of each Purchased Loan
have been fully disbursed and there is no obligation for future advances with
respect thereto. With respect to each Purchased Loan, any and all requirements
as to completion of any on-site or off-site improvement and as to disbursements
of any funds escrowed for such purpose that were to have been complied with on
or before the Purchase Date have been complied with, or any such funds so
escrowed have not been released.

 

10.           Mortgage Provisions. The
Mortgage Note or Mortgage for each Purchased Loan, together with applicable
state law, contains customary and enforceable provisions for comparable
mortgaged properties similarly situated (subject to the exceptions set forth in
paragraph 13) such as to render the rights and remedies of the holder thereof
adequate for the practical realization against the related Property of the
principal benefits of the security intended to be provided thereby, including,
without limitation, foreclosure or similar proceedings as applicable for the jurisdiction
in which the related Property is located.

 

VI-3

 

11.           Buyer under Deed of Trust. If
any Mortgage is a deed of trust, (a) a trustee, duly qualified under applicable
law to serve as such, is properly designated and serving under such Mortgage,
and (b) no fees or expenses are payable to such trustee by Seller, Buyer or any
transferee thereof except in connection with a trustee’s sale after default by
the related Mortgagor or in connection with any full or partial release of the
related Property or related security for the related Purchased Loan.

 

12.           Environmental Conditions. With
respect to each Property (a) an environmental site assessment (or an
update of a previous assessment) was performed by an independent third party
environmental consultant with respect to each Property in connection with the
origination of the related Purchased Loan, (b) a report of each such assessment
(an “Environmental Report”) is dated no earlier than 12 months prior to the Purchase
Date and has been delivered to Buyer, and (c) to Seller’s knowledge there is no
violation of applicable environmental laws and regulations with respect to, or
any material and adverse environmental condition or circumstance affecting any
Property that was not disclosed in such report. Each Mortgage requires the
related Mortgagor to comply with all applicable federal, state and local
environmental laws and regulations. Where such Environmental Report disclosed a
violation of applicable environmental laws and regulations or the existence of
a material and adverse environmental condition or circumstance affecting any
Property, (i) a party not related to the Mortgagor was identified as the
responsible party for such condition or circumstance, (ii) the related
Mortgagor was required either to provide additional security and/or to obtain
an operations and maintenance plan or (iii) the related Mortgagor provided
evidence satisfactory to the originator of such Mortgage Loan that applicable
federal, state or local governmental authorities would not take any action, or
require the taking of any action, in respect of such violation, condition or
circumstance. The related Purchased Loan Documents contain provisions pursuant
to which the related Mortgagor or a principal of such Mortgagor has agreed to
indemnify the mortgagee for damages resulting from violations of any applicable
Environmental Laws.

 

13.           Loan Document Status. Each
Mortgage Note, Mortgage and other agreement that evidences or secures a
Purchased Loan and that was executed by or on behalf of the related Mortgagor
is the legal, valid and binding obligation of the maker thereof (subject to any
non-recourse provisions contained in any of the foregoing agreements and any
applicable state anti-deficiency or market value limit deficiency legislation),
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) and there is no valid defense, counterclaim or
right of offset or rescission available to the related Mortgagor with respect
to such Mortgage Note, Mortgage or other agreements.

 

14.           Insurance. Each Property is,
and is required pursuant to the related Mortgage to be, insured by (a) an all
risk insurance policy issued by an insurer meeting the requirements of such
Purchased Loan providing coverage against loss or damage sustained by reason of
fire, lightning, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles and smoke, and, to the extent required as
of the date of origination by the originator of such Purchased Loan consistent
with its normal commercial mortgage lending

 

VI-4

 

practices, against other risks insured against by persons operating
like properties in the locality of the Property in an amount not less than the
lesser of the principal balance of the related Purchased Loan and 100% of the
replacement cost (not allowing reduction in insurance proceeds for
depreciation) of the Property, and not less than the amount necessary to avoid
the operation of any co-insurance provisions with respect to the Property; (b)
a business interruption or rental loss insurance policy; providing coverage for
at least twelve months (other than for manufactured housing communities) and
for eighteen months of coverage if the Property is a special purpose property
or if the Mortgage Loan is in excess of $25 million; (c) a flood insurance
policy (if any portion of the Property is located in an area identified by the
Federal Emergency Management Agency as having special flood hazards) and (d) a
comprehensive general liability insurance policy in amounts as are generally
required by commercial mortgage lenders, and in any event not less than $1
million per occurrence. Such insurance policy contains a standard mortgagee clause
that names the holder of the Mortgage, its successors and assigns as mortgagee
as an additional insured in the case of liability insurance policies or as a
loss payee in the case of property insurance policies. Such insurance policy is
not terminable (nor may the amount of coverage provided thereunder be reduced)
without prior written notice to the holder of the Mortgage, and no such notice
has been received, including any notice of nonpayment of premiums, that has not
been cured. Each Mortgage obligates the related Mortgagor to maintain all such
insurance and, upon such Mortgagor’s failure to do so, authorizes the holder of
the Mortgage to purchase and maintain such insurance at the Mortgagor’s cost
and expense and to seek reimbursement therefor from such Mortgagor. Other than
as set forth in paragraph 17(h) hereof, each Mortgage provides that casualty
insurance proceeds will be applied either to the restoration or repair of the
related Property or to the reduction or defeasance of the principal amount of
the Purchased Loan.

 

15.           Taxes and Assessments. There
are no delinquent or unpaid taxes or assessments (including assessments payable
in future installments), or other outstanding charges affecting any Property
which are or may become a lien of priority equal to or higher than the lien of
the related Mortgage. For purposes of this representation and warranty, real
property taxes and assessments shall not be considered unpaid until the date on
which interest and/or penalties would be first payable thereon.

 

16.           Mortgagor Bankruptcy. No
Mortgagor, non-recourse carve-out guarantor or tenant physically occupying 25%
or more (by square feet) of the net rentable area of a Property is a debtor in
any state or federal bankruptcy or insolvency proceeding.

 

17.           Leasehold Estate. Each
Property consists of the related Mortgagor’s fee simple estate in real estate
or, if the related Purchased Loan is secured in whole or in part by the
interest of a Mortgagor as a lessee under a ground lease of a Property (a “Ground
Lease”), by the related Mortgagor’s interest in the Ground Lease but not by the
related fee interest in such Property (the “Fee Interest”). With respect to any
Purchased Loan secured by a Ground Lease but not by the related Fee Interest:

 

a.                                       Such
Ground Lease or a memorandum thereof has been duly recorded; such Ground Lease
(or the related estoppel letter or lender protection agreement between Seller
and related lessor) permits the current use of the Property and permits the
interest of the lessee thereunder to be

 

VI-5

 

encumbered by the related
Mortgage and does not restrict the use of the related Property by such lessee,
its successors or assigns in a manner that would adversely effect the security
provided by the related Mortgage by limiting in any way its current use; and
there has been no material change in the terms of such Ground Lease since the
origination of the related Purchased Loan, with the exception of material
changes reflected in written instruments that are a part of the related
Mortgage File;

 

b.                                      The
lessee’s interest in such Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the related Mortgage,
other than the related Fee Interest and Permitted Encumbrances;

 

c.                                       The
Mortgagor’s interest in such Ground Lease is assignable to Buyer and is further
assignable by Buyer, its successors and assigns upon notice to, but without the
consent of, the lessor thereunder (or, if such consent is required, it has been
obtained prior to the Purchase Date) and, in the event that it is so assigned,
is further assignable by Buyer and its successors and assigns upon notice to,
but without the need to obtain the consent of, such lessor. If required by the
Ground Lease, the lessor has received notice of the lien of the related
Mortgage in accordance with the provisions of the Ground Lease;

 

d.                                      In
connection with the origination of such Mortgage Loan, the related ground
lessor provided an estoppel to the originator confirming that the related
Mortgagor was not then in default under such Ground Lease. The Ground Lease
provides that no material amendment to the Ground Lease is effective against
the mortgagee under such Mortgage Loan unless the mortgagee has consented
thereto. Such Ground Lease is in full force and effect, and Seller and any
servicer acting on Seller’s behalf have received no notice that an event of
default has occurred thereunder or that the Ground lease has terminated, and,
to Seller’s knowledge, there exists no condition that, but for the passage of
time or the giving of notice, or both, would result in an event of default
under the terms of such Ground Lease;

 

e.                                       Such
Ground Lease, or an estoppel letter or other agreement, (A) requires the lessor
under such Ground Lease to give notice of any default by the lessee to the
mortgagee, provided that the mortgagee has provided the lessor with notice of
its lien in accordance with the provisions of such Ground Lease to the extent
such Ground Lease requires such notice, further (B) provides that no notice of
termination given under such Ground Lease (including rejection of such Ground
Lease in a bankruptcy proceeding) is effective against the holder of the
Mortgage unless a copy of such notice has been delivered to such holder and the
lessor has offered to enter into a new lease with such holder on terms that do
not materially vary from the economic terms of the Ground Lease;

 

VI-6

 

f.                                         A
mortgagee is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under such
Ground Lease by foreclosure or otherwise if possession is necessary to effect a
cure) to cure any default under such Ground Lease, which is curable after the
receipt of notice of any such default, before the lessor thereunder may
terminate such Ground Lease;

 

g.                                      Such
Ground Lease has an original term (including any extension options set forth
therein which, under all circumstances, may be exercised, and will be
enforceable, by the mortgagee if it takes possession of such leasehold
interest) which extends not less than twenty years beyond the stated maturity
date of the related Purchased Loan and ten years beyond the amortization period
for the related Purchased Loan;

 

h.                                      Under
the terms of such Ground Lease and the related Mortgage, taken together, any
related insurance proceeds or condemnation award other than in respect of a
total loss will be applied either to the repair or restoration of all or part
of the related Property, with the mortgagee or a trustee appointed by it having
the right to hold and disburse such proceeds as the repair or restoration
progresses (except in such cases where a provision entitling another party to
hold and disburse such proceeds would not be viewed as commercially
unreasonable by a prudent commercial mortgage lender for conduit programs), or
to the payment or defeasance of the outstanding principal balance of the
Purchased Loan together with any accrued interest thereon;

 

i.                                          Such
Ground Lease does not impose any restrictions on subletting which would be
viewed as commercially unreasonable by prudent commercial mortgage lenders in
the lending area where the Property is located and such Ground Lease contains a
covenant that the ground lessor is not permitted, in the absence of an uncured
default, to disturb the possession, interest or quiet enjoyment of the lessee
thereunder for any reason or in any manner which would materially adversely
affect the security provided by the related Mortgage; and

 

j.                                          Such
Ground Lease provides, or the lessor has otherwise agreed, that such Ground
Lease may not be amended or modified or any such amendment or modification will
not be effective against the mortgagee without the prior written consent of the
mortgagee under such Purchased Loan any such action without such consent is not
binding on such mortgagee, its successors and assigns, provided such mortgagee
has provided the ground lessor with notice of its lien in accordance with the
terms of the Ground Lease.

 

18.           Escrow Deposits. All escrow
deposits and payments (including capital improvements, environmental
remediation reserves and other reserve deposits, if any) relating to each
Purchased Loan that are, as of the Purchase Date, required to be deposited or
paid to the

 

VI-7

 

lender under the terms of the related Mortgage Loan documents have been
so deposited or paid and, to the extent of any remaining balances of such
escrow deposits, are in the possession or under the control of Seller or its
agents (which shall include the applicable servicer of the Mortgage Loan). Any
and all material requirements under each Mortgage Loan as to completion of any
material improvements and as to disbursement of any funds escrowed for such
purpose, which requirements were to have been complied with on or before the
Purchase Date, have been complied with in all material respects or, if and to
the extent not so complied with, the escrowed funds (or an allocable portion
thereof) have not been released except in accordance with the terms of the
related loan documents.

 

19.           LTV Ratio. The gross proceeds
of each Purchased Loan to the related Mortgagor at origination did not exceed
the non-contingent principal amount of the Purchased Loan and either:  (a) such Purchased Loan is secured by an
interest in real property having a fair market value (i) at the date the
Purchased Loan was originated at least equal to 80 percent of the original
principal balance of the Purchased Loan or (ii) at the Purchase Date at least
equal to 80 percent of the principal balance of the Purchased Loan on such
date; provided that for purposes hereof, the fair market value of the real
property interest must first be reduced by (x) the amount of any lien on the
real property interest that is senior to the Purchased Loan and (y) a
proportionate amount of any lien that is in parity with the Purchased Loan
(unless such other lien secures a Purchased Loan that is cross-collateralized
with such Purchased Loan, in which event the computation described in clauses
(a)(i) and (a)(ii) of this paragraph 19 shall be made on a pro rata basis in
accordance with the fair market values of the Properties securing such
cross-collateralized Purchased Loans; or (b) substantially all the proceeds of
such Purchased Loan were used to acquire, refinance, improve or protect the
real property which served as the only security for such Purchased Loan (other
than a recourse feature or other third party credit enhancement within the
meaning of Treasury Regulations Section 1.860G-2(a)(l)(ii)).

 

20.           Qualified Mortgage; Purchased Loan
Modifications. Each Mortgage Loan is a “qualified mortgage” within the
meaning of Section 860G(a)(3) of the Code and Treasury regulation section 1.860G-2(a)
(but without regard to the rule in Treasury regulation section 1.860G-2(f)(2)).
Any Purchased Loan that was “significantly modified” prior to the Purchase Date
so as to result in a taxable exchange under Section 1001 of the Code either (a)
was modified as a result of the default or reasonably foreseeable default of
such Purchased Loan or (b) satisfies the provisions of either clause (a)(i) of
paragraph 19 (substituting the date of the last such modification for the date
the Purchased Loan was originated) or clause (a)(ii) of paragraph 19, including
the proviso thereto.

 

21.           Advancement of Funds by Seller.
No holder of a Purchased Loan has advanced funds or induced, solicited or
knowingly received any advance of funds from a party other than the owner of
the related Property, directly or indirectly, for the payment of any amount
required by such Purchased Loan.

 

22.           No Mechanics’ Liens. As of the
date of the Mortgage, and to the actual knowledge of Seller as of the Purchase
Date, each Property is free and clear of any and all mechanics’ and materialmen’s
liens that are prior or equal to the lien of the related Mortgage, and no
rights are outstanding that under law could give rise to any such lien that
would be prior

 

VI-8

 

or equal to the lien of the related Mortgage except, in each case, for
liens insured against by the Title Policy referred to herein or otherwise
bonded.

 

23.           Compliance with Usury Laws.
Each Purchased Loan complied with, or is exempt from, all applicable usury laws
in effect at its date of origination.

 

24.           Cross-collateralization;
Cross-default. No Purchased Loan is cross-collateralized or cross-defaulted
with any loan other than one or more other Purchased Loans.

 

25.           Releases of Property. Except
as described in the next sentence, no Mortgage Note or Mortgage requires the
mortgagee to release all or any material portion of the related Property from
the lien of the related Mortgage except upon payment in full or defeasance of
all amounts due under the related Purchased Loan. The Mortgages relating to
those Purchased Loans identified on the Purchased Loan Schedule require the
mortgagee to grant releases of portions of the related Properties upon (a) the
satisfaction of certain legal and underwriting requirements and (b) except
where the portion of the Property permitted to be released was not considered
by, Seller to be material in the underwriting of the Purchased Loan, either (1)
the payment of a release price set forth therein and prepayment consideration
in connection therewith or (2) the partial defeasance of such Purchased Loan.

 

No Purchased Loan permits
the release or substitution of collateral if such release or substitution (a)
would create a “significant modification” of such Purchased Loan within the
meaning of Treas. Reg. § 1.1001 3 or (b) would cause such Purchased Loan not to
be a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code
(without regard to clauses (A)(i) or (A)(ii) thereof).

 

26.           No Equity Participation or
Contingent Interest. No Purchased Loan contains any equity participation by
the lender or provides for negative amortization or for any contingent or
additional interest in the form of participation in the cash flow of the
related Property, or is convertible by its terms into an equity ownership
interest in the related Property or the related Mortgagor, except that, in the
case of an ARD Loan, such Mortgage Loan provides that, during the period
commencing on or about the related anticipated repayment date and continuing
until such Mortgage Loan is paid in full, (a) additional interest shall accrue
and may be compounded monthly and (b) a portion of the cash flow generated by
such Property will be applied each month to pay down the principal balance thereof
in addition to the principal portion of the related monthly payment.

 

27.           No Material Default. There
exists no monetary default and to Seller’s knowledge, there exists no material
non-monetary default, breach, violation or event of acceleration (and no event
which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and
adversely affects the value of the Purchased Loan and the related Property; provided, however, that
this representation and warranty does not address or otherwise cover any
default, breach, violation or event of acceleration that specifically pertains
to any matter otherwise covered by any other representation and warranty made
by Seller in any of paragraphs 3, 7, 12, 14, 15 and 17. Neither the Mortgage
Loan Seller nor any servicer acting on its behalf has issued any notice of
default,

 

VI-9

 

breach or violation related to the Mortgage Loan, accelerated the
Mortgage Loan or commenced judicial or non-judicial foreclosure proceedings
with respect to the Mortgage Loan.

 

28.           Inspections. Seller (or if
Seller is not the originator, the originator of the Purchased Loan) has
inspected or caused to be inspected each Property in connection with, and
during the 12 month period prior to, the origination of the related Purchased
Loan.

 

29.           Local Law Compliance. Based on
due diligence considered reasonable by prudent commercial mortgage lenders in
the lending area where each Property is located, to Seller’s knowledge the
improvements located on or forming part of each Property complies in all
material respects with applicable zoning laws and ordinances, or constitutes a
legal non-conforming use or structure or, if any such improvement does not so
comply and does not constitute a legal non-conforming use or structure, such
non-compliance and failure does not materially and adversely affect (i) the value
of the related Property as determined by the appraisal performed at origination
or (ii) the principal use of the Property as of the date of the origination of
such Mortgage Loan. As of the date of origination, with respect to each legal
non-conforming use or structure, the originator determined based on due
diligence considered reasonable by prudent commercial mortgage lenders in the
lending area where the subject Property is located that if a casualty occurred
at that time, the Property could have been restored or repaired to such an
extent that the use or structure of the restored or repaired property would be
substantially the same use or structure, or law and ordinance insurance has
been obtained, or a holdback was established and the Mortgagor is required to
cause the Property to become a conforming use or structure.

 

30.           Junior Liens. None of the
Purchased Loans permits the related Property to be encumbered by any lien
junior to or of equal priority with the lien of the related Mortgage without
the prior written consent of the holder thereof or the satisfaction of debt
service coverage or similar criteria specified therein. Each Purchased Loan
contains a “due on sale” clause that provides for the acceleration of the
payment of the unpaid principal balance of the Purchased Loan if, without the
prior written consent of the holder of the Purchased Loan, the related
Property, or any material portion thereof, or a controlling interest in the
direct or indirect ownership interests in the Mortgagor is directly or
indirectly transferred, sold or pledged.

 

31.           Actions Concerning Purchased Loans.
To the knowledge of Seller, there are no actions, suits, governmental
investigations or proceedings pending or threatened before any court,
governmental authority, administrative agency or arbitrator concerning any
Purchased Loan or related Mortgagor or Property that, if determined adversely
to the Purchased Loan, Mortgagor, or Property, would adversely affect title to
the Purchased Loan or the validity or enforceability of the related Mortgage or
that might materially and adversely affect the value of the Property, the
current ability of the Property to generate net operating income to service the
Mortgage Loan, the principal benefit of the security intended to be provided
for the Purchased Loan, or the current use of the Property.

 

32.           Servicing. The servicing and
collection practices used by Seller and any servicer of the Mortgage Loan have
been in all material respects legal, proper and prudent and have met customary industry
standards for servicing of commercial Purchased Loans for conduit programs.

 

VI-10

 

33.           Licenses and Permits. To
Seller’s knowledge, as of the date of origination of each Purchased Loan, the
related Mortgagor was in possession of all material licenses, permits and
franchises required by applicable law for the ownership and operation of the
related Property as it was then operated and, as of the Purchase Date, the
Mortgage Loan Seller has no written notice that the related Mortgagor was not
in possession of such licenses, permits and franchises or that such licenses,
permits and franchises have not otherwise been issued. The Mortgage Loan
requires the related Property to be in material compliance with laws and
regulations applicable to the Property, in each case to the extent required by
law.

 

34.           Assisted Living Facility
Regulation. If any Property is operated as an assisted living facility, to
Seller’s knowledge, (a) the related Mortgagor and operator, if different, is in
compliance in all material respects with all federal and state laws applicable
to the use and operation of the related Property and (b) if the operator of the
Property participates in Medicare or Medicaid programs, the facility is in compliance
in all material respects with the requirements for participation in such
programs.

 

35.           Non-Recourse Exceptions. The
related Mortgage Loan documents contain provisions providing for recourse
against the related Mortgagor, a principal of such Mortgagor or an entity
controlled by a principal of such Mortgagor, or a natural person, for damages
sustained in connection with the Mortgagor’s (i) fraud, (ii) intentional
misrepresentation, (iii) misappropriation or misapplication of rents or amounts
due lender, insurance proceeds or condemnation proceeds, (iv) voluntary
bankruptcy, (v) failure to obtain prior consent to any encumbrance of the
pledged equity under the Mezzanine Loan Documents and (vi) willful misconduct
resulting in waste of a Property. The related Mortgage Loan documents contain
provisions pursuant to which the related Mortgagor, a principal of such
Mortgagor or an entity controlled by a principal of such Mortgagor, or a
natural person, has agreed to indemnify the mortgagee for damages resulting
from violations of any applicable environmental covenants.

 

36.           Single Purpose Entity. The
Mortgagor on each Purchased Loan was, as of the origination of the Purchased
Loan, a Single Purpose Entity. For this purpose, a “Single Purpose Entity”
shall mean an entity, other than an individual, whose organizational documents
provide substantially to the effect that it was formed or organized solely for
the purpose of owning and operating one or more Properties securing the
Purchased Loans and prohibit it from engaging in any business unrelated to such
Property or Properties, and whose organizational documents further provide, or
which entity represented in the related Purchased Loan documents, substantially
to the effect that it does not have any assets other than those related to its
interest in and operation of such Property or Properties, or any indebtedness
other than as permitted by the related Mortgage or the other related Purchased
Loan documents, that it has its own books and records and accounts separate and
apart from any other person, that it will not guarantee or assume the debts of
any other person, that it will not commingle assets with affiliates, and that
it will not transact business with affiliates except on an arm’s length basis.

 

Each Mortgagor of a Purchased Loan is an entity which
has represented in connection with the origination of the Purchased Loan, or
whose organizational documents as of the date of origination of the Purchased
Loan provide that so long as the Purchased Loan is outstanding it will have at
least one independent director. There are Insolvency/Non-Consolidation opinions

 

VI-11

 

with respect to the Pledgor and, to Seller’s
knowledge, all of the assumptions made in each such opinion are true and
correct.

 

37.           Separate Tax Parcels. Each
Property constitutes one or more complete separate tax lots or is subject to an
endorsement under the related title insurance policy.

 

38.           Defeasance. Each Purchased
Loan containing provisions for defeasance of mortgage collateral either (i)
requires the prior written consent of, and compliance with the conditions set
by, the holder of the Purchased Loan, or (ii) requires that (A) defeasance may
not occur prior to the time permitted by applicable “real estate mortgage
investment conduit” rules and regulations (if applicable), (B) the replacement
collateral consist of U.S. governmental securities in an amount sufficient to
make all scheduled payments under the Mortgage Note when due, (C) independent
public accountants certify that the collateral is sufficient to make such
payments, (D) counsel provide an opinion that Buyer has a perfected security
interest in such collateral prior to any other claim or interest, and (E) all
costs and expenses arising from the defeasance of the mortgage collateral shall
be borne by the Mortgagor.

 

39.           Operating or Financial Statement.
The related Purchased Loan Documents require the related Mortgagor to furnish
to the mortgagee at least quarterly and annually an operating statement and
rent roll (if there is more than one tenant) with respect to the related
Property and at least annually financial statements of the Mortgagor.

 

40.           Letters of Credit. No
Purchased Loan consists of or is secured by a Letter of Credit.

 

41.           Security Interests in Hospitality
Properties. If any Property securing a Mortgage Loan is operated as a
hospitality property then (a) the security agreements, financing statements or
other instruments, if any, related to the Mortgage Loan secured by such Property
establish and create a valid and enforceable (subject to the exceptions set
forth in Paragraph 13 above) first priority security interest in all items of
personal property owned by the related Borrower which are material to the
conduct in the ordinary course of the Borrower’s business on the related
Property, subject only to purchase money security interests, personal property
leases and security interests to secure revolving lines of credit and similar
financing; and (b) one or more Uniform Commercial Code financing statements
covering such personal property have been filed or recorded (or have been sent
for filing or recording) wherever necessary to perfect under applicable law
such security interests (to the extent a security interest in such personal
property can be perfected by the filing of a Uniform Commercial Code financing
statement under applicable law).

 

42.           Prepayment Premiums. Prepayment
Premiums payable with respect to each Mortgage Loan, if any, constitute “customary
prepayment penalties” within meaning of Treasury Regulation Section
1.860G-1(b)(2).

 

43.           Assignment of Collateral. There
is no material collateral securing any Mortgage Loan that has not been assigned
to the Purchaser.

 

VI-12

 

44.           Fee Simple or Leasehold Interests.
The interest of the related Borrower in the Property securing each Mortgage
Loan includes a fee simple and/or leasehold estate or interest in real property
and the improvements thereon.

 

45.           Appraisals. An appraisal of
the related Property was conducted in connection with the origination of the
Mortgage Loan, which appraisal is signed by an appraiser, who, to Seller’s
knowledge, had no interest, direct or indirect, in the Property or the Borrower
or in any loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan; in connection
with the origination of the Mortgage Loan, each appraiser has represented in
such appraisal or in a supplemental letter that the appraisal satisfies the
requirements of the “Uniform Standards of Professional Appraisal Practice” as
adopted by the Appraisal Standards Board of the Appraisal Foundation.

 

46.           No Capital Contributions. The
mortgagee has no obligation to make any capital contributions to the related
Borrower under the Mortgage Loan.

 

47.           Due Dates and Grace Periods.
The related Mortgage or Mortgage Note provides for Monthly  Payments to be made on the first day of each
month (“Due Date”) and a grace period for Monthly Payments no longer than ten
(10) days from the related Due Date.

 

48.           Terrorism Insurance. With
respect to each Mortgage Loan, the related all risk insurance policy and
business interruption policy did not as of the date of origination of the
Mortgage Loan, and, to Seller’s knowledge, does not as of the date hereof,
specifically exclude acts of terrorism from coverage. With respect to each of
the Mortgage Loans, the related Mortgage Loan documents do not expressly waive
or prohibit the mortgagee from requiring coverage for acts of terrorism or
damages related thereto, except to the extent that any right to require such
coverage may be limited by commercially reasonable availability.

 

49.           Fraud. To Seller’s knowledge,
no Borrower is guilty of defrauding or making an intentional material
misrepresentation to the Mortgage Loan Seller in connection with the
origination of the Mortgage Loan.

 

50.           Transfers and Pledges. The
Mezzanine Loan Collateral consists of the pledge of all of the ownership
interests of the Mortgagor. Transfer and pledge restrictions under the
Mezzanine Loan Documents apply to [Name of Sponsor entity], Borrower,
Principal, Mortgage Borrower, Mortgage Principal and any Affiliated Manager or
any shareholder, partner, member, non-member manager, any direct or indirect
legal or beneficial owner of, Mortgage Borrower, Mortgage Principal, Principal,
Borrower, any Guarantor, any Affiliated Manager, or any Pledgor, and Affiliated
Franchisor or any non-member manager.

 

51.           Management Agreement. The
Management Agreement is in full force and effect and there is no default
thereunder by any party thereto and no event has occurred that, with the
passage of time and/or the giving of notice, would constitute a default
thereunder.

 

52.           Illegal Activity. To Seller’s
knowledge, no portion of any Property has been or will be purchased with
proceeds of any illegal activity.

 

VI-13

 

53.           Embargoed Person. To the best
of Seller’s knowledge, (a) none of the funds or other assets of Mortgagor,
Mezzanine Borrower, Principal and Guarantor constitute property of, or are
beneficially owned, directly or indirectly, by any person, entity or government
subject to trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder with the result that the investment in
Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Mortgage Loan or Purchased Loan made
by the Lender is in violation of law (“Embargoed Person”); (b) no Embargoed
Person has any interest of any nature whatsoever in Mortgagor, Mezzanine
Borrower, Principal or Guarantor, as applicable, with the result that the
investment in Mortgagor, Mezzanine Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the
Mortgage Loan or Purchased Loan is in violation of law; and (c) none of the
funds of Mortgagor, Mezzanine Borrower, Principal or Guarantor, as applicable,
have been derived from any unlawful activity with the result that the
investment in Mortgagor, Mezzanine Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the
Mortgage Loan or Purchased Loan is in violation of law.

 

54.           Franchise Agreement. The
Franchise Agreement and the License granted thereby are in full force and effect
and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or giving of notice, would
constitute a default thereunder. Mortgage Borrower has all rights to use the
License granted under the Franchise Agreement.

 

55.           Lockbox. Any agreements
executed in connection with the creation of a Collection Account create a valid
and continuing security interest (as defined in the Uniform Commercial Code in
effect in the State of New York) in each of such Collection Accounts in favor
of Buyer, which security interest is prior to all other liens, and is
enforceable as such against creditors of and purchasers from Mortgagor. Each
Collection Account constitutes a “deposit account” within the meaning of the
Uniform Commercial Code in effect in the State of New York. Seller has directed
the Servicer to cause each Depository to agree to comply with all written
instructions originated by Buyer, without further consent by Borrower,
directing disposition of all sums at any time held, deposited or invested in
the Collection Accounts, together with any interest or other earnings thereon,
and all proceeds thereof (including proceeds of sales and other dispositions),
whether accounts, general intangibles, chattel paper, deposit accounts,
instruments, documents or securities. The Collection Accounts are not in the
name of any Person other than Mortgagor, as pledgor, or Lender, as pledgee.
Seller has not consented to the Depository complying with instructions with
respect to the Collection Account from any Person other than Buyer

 

56.           MERS Purchased Loans. With
respect to each Mortgage Loan that is a MERS Purchased Loan, the related
Mortgagor registered with MERS and each assignment of the MERS Purchased Loan
has been registered with MERS.

 

VI-14

 

EXHIBIT VII

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL MEZZANINE LOAN

WHICH IS A MEZZANINE LOAN

 

(1)           Mezzanine
Loan Information. The information set forth in the Mezzanine Loan Schedule
is complete, true and correct in all material respects.

 

(2)           No
Default or Dispute Under Mezzanine Loan Documents. There exists no material
default, breach, violation or event of acceleration (and no event which, with
the passage of time or the giving of notice, or both, would constitute any of
the foregoing) under the documents evidencing or securing the Mortgage Loan or
Mezzanine Loan, in any such case to the extent the same materially and
adversely affects the value of the Mezzanine Loan and the related underlying
real property.

 

(3)           No
Offsets, Defenses or Counterclaims. There is no valid right of offset or
rescission, defense or counterclaim to such Mortgage Loan or Mezzanine Loan.

 

(4)           Equity
Pledges. The pledge of ownership interests securing such Mezzanine Loan
relates to all or substantially all direct or indirect equity or ownership
interests in the underlying real property owner (so that, except for the equity
interests pledged to Seller, there are no direct or indirect equity or ownership
interests in underlying real property owner or in any constituent entity) and
has been fully perfected in favor of Seller as mezzanine lender.

 

(5)           Depository
Agreement The collection account administrator, if any, is not an Affiliate
of Seller. Mezzanine lender has a perfected security interest in the Cash
Management Agreement.

 

(6)           Enforceability.
Mortgage Lender and Mezzanine Lender can rely on opinions from Mortgage
Borrower’s and Mezzanine Borrower’s counsel to the effect that the Mortgage
Loan and Mezzanine Loan Documents have been duly and properly executed by the
parties thereto, and each is the legal, valid and binding obligation of the
parties thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
Mezzanine Loan is not usurious. Seller has fully and validly perfected all
security interests created or intended to be created pursuant to the Mezzanine
Loan Documents.

 

(7)           Waivers
and Modifications. The terms and provisions of the related Mortgage Loan
and Mezzanine Loan Documents have not been impaired, waived, altered,
supplemented, restated or modified in any material respect (other than by a
written instrument which is included in the related Mortgage Loan and Mezzanine
Loan File).

 

(8)           Valid
Assignment. The assignment of Mezzanine Loan constitutes the legal, valid
and binding assignment of such Mezzanine Loan from Seller to or for the benefit
of Buyer. No consent or approval by any third party is required for any such
assignment of such Mezzanine 

 

VII-1

 

Loan, for Buyer’s
exercise of any rights or remedies under the assignment of Mezzanine Loan, or
for Buyer’s sale or other disposition of such Mezzanine Loan if Buyer acquires
title thereto, other than consents and approvals which have been obtained. No
third party (including underlying real property owner and underlying real
property mortgagee) holds any “right of first refusal,” “right of first
negotiation,” “right of first offer,” purchase option, or other similar rights
of any kind on account of the occurrence of any of the foregoing. No other
impediment exists to any such transfer.

 

(9)           Certain
Representations and Warranties. To Seller’s knowledge, after having
conducted due diligence customary by Seller and other purchasers of Mezzanine
Loans with respect to the Mortgage Loan, Property, Mortgage borrower, Mezzanine
Loan, pledged equity, mezzanine borrower, principals and sponsors, all
representations and warranties in the Mortgage Loan and Mezzanine Loan
Documents are true and correct in all material respects.

 

(10)         Parties
Authorized. To the extent required under applicable law as of the Purchase
Date, each party to the Mezzanine Loan Documents was authorized to do business
in the jurisdiction in which the related underlying real property is located at
all times when it held the Mezzanine Loan to the extent necessary to ensure the
validity and enforceability of such Mezzanine Loan.

 

(11)         No
Advances of Funds. No party to the Mortgage or Mezzanine Loan Documents has
advanced funds on account of any default under the Mortgage or Mezzanine Loan
Documents.

 

(12)         Servicing.
The servicing and collection practices used by Seller for the Mezzanine Loan
have complied with applicable law in all material respects and are consistent
with those employed by prudent servicers of comparable Mezzanine Loans.

 

(13)         No
Assignment. Seller has not effectuated any transfer, sale, assignment,
hypothecation, or other conveyance of any of its rights and obligations under
any Mezzanine Loan Document, except in connection with this Agreement.

 

(14)         No
Bankruptcy. To Seller’s actual knowledge, none of the following parties is
a debtor in any state or federal bankruptcy or insolvency proceeding:  Seller; underlying real property owner;
mortgage loan property owner principal/sponsor, underlying real property
mortgagee, mezzanine loan borrower, or mezzanine loan principal/sponsor.

 

(15)         Mezzanine
Loan Documents. Exhibit [  ]
represents a complete list of all material loan documents delivered by the
mezzanine borrower in connection with the Mezzanine Loan Agreement and true
counterpart originals of the Mezzanine Loan Documents and true and correct
copies of the Mortgage Loan Documents have been delivered by Seller to Buyer.

 

(16)         Ownership.
Seller is the sole owner of the Mezzanine Loan Documents and the related rights
described above and that the Mezzanine Loan Documents and the related rights
described above are not, and have not been, pledged, nor assigned, to another
party and are not otherwise encumbered as of the execution and delivery of this
Agreement.

 

VII-2

 

(17)         Organization.
Seller is duly organized and is validly existing under the laws of the
jurisdiction under which it was organized with full power to execute and
deliver this Agreement and that all actions necessary to authorize the
execution, delivery, and performance of this Agreement on behalf of Seller have
been duly taken, and all such actions continue in full force and effect as of
the date hereof. The execution, delivery and performance of this Agreement by
Seller does not conflict with the organizational documents of Seller, or with
any law, statute or regulation applicable to Seller.

 

(18)         Whole
Loan; Ownership of Mezzanine Loans. Each Mezzanine Loan is a whole loan and
not a participation interest in a whole loan. Immediately prior to the transfer
to Buyer of the Mezzanine Loan, Seller had good and marketable title to, and
was the sole owner of, each Mezzanine Loan. Seller has full right, power and
authority to transfer and assign the Mezzanine Loan to or at the direction of
Buyer and has validly and effectively conveyed (or caused to be conveyed) to
Buyer or its designee all of Seller’s legal and beneficial interest in and to
the Mezzanine Loan free and clear of any and all pledges, liens, charges,
security interests, participation interests, and/or other encumbrances. The
sale of the Mezzanine Loan to Buyer or its designee does not require Seller to
obtain any governmental or regulatory approval or consent that has not been
obtained.

 

(19)         Payment
Record. No scheduled payment of principal and interest under any Mezzanine
Loan or related Mortgage Loan was 30 days or more past due as of the Purchase
Date without giving effect to any applicable grace period, and no Mezzanine
Loan or related Mortgage Loan was 30 days or more delinquent in the
twelve-month period immediately preceding the Purchase Date.

 

(20)         Lien.
The Mortgage and Pledge related to and delivered in connection with each
Mortgage Loan and Mezzanine Loan constitutes a valid and enforceable first
priority security interest on the related Property and pledged equity, prior to
all other liens and encumbrances and there are no liens or encumbrances pari passu
with the lien of the Mortgage and pledge. A Uniform Commercial Code financing
statement has been filed and/or recorded in all places necessary to perfect a
valid security interest in such pledged equity, and such security interest is a
first priority security interest. Seller, its successors and assigns is the
beneficiary of an Eagle 9 policy or a title policy endorsement insuring that
the UCC financing statement encumbering the Mezzanine Loan Collateral has been
filed properly so as perfect Mezzanine Lender’s security interest in the
Mezzanine Loan Collateral.

 

(21)         Mortgage
and Pledge Status; Waivers and Modifications. In the case of each Mortgage
and related Mezzanine Loan, (a)  no
pledge or related Mortgage has been satisfied, canceled, rescinded or subordinated
in whole or in material part,  (b) the
related pledged equity or Property has not been released from the lien of such
pledge or Mortgage, in whole or in material part, (c) no instrument has been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release, and (d) no pledgor or Mortgagor has been released from
its obligations under the related pledge or Mortgage in whole or in material
part. None of the terms of any note or pledge has been impaired, waived,
altered or modified in any respect, except by written instruments, all of which
are included in the related Loan File.

 

VII-3

 

(22)         Condition
of Property; Condemnation. Except as set forth in an engineering report
prepared in connection with the origination of the related Mortgage Loan and
dated not more than 12 months prior to the Purchase date, each Property is, to
Seller’s knowledge, free and clear of any damage that would materially and
adversely affect its value as security for the related Mortgage Loan (normal
wear and tear excepted). Seller has received no notice, and has no knowledge,
of any pending or threatened proceeding for the condemnation of all or any
material portion of any Property.

 

(23)         Title
Insurance. Each Property is covered by an American Land Title Association
(or an equivalent form thereof  approved
for use in the applicable jurisdiction) lender’s title insurance policy (the
“Title Policy”) in the original principal amount of the related Mortgage Loan
after all advances of principal. Each Title Policy insures that the related
Mortgage is a valid first priority lien on such Property, subject only to the
exceptions stated therein (or a preliminary title policy with escrow
instructions  or a marked up title
insurance commitment on which the required premium has been paid exists which
is binding on the title insurer and which evidences that such Title Policy will
be issued). Each Title Policy (or, if it has yet to be issued, the coverage to
be provided thereby) is in full force and effect, all premiums thereon have
been paid, insures the originator of the Mortgage Loan, its successors and
assigns and, to Seller’s knowledge, (i) no material claims have been made
thereunder and no claims have been paid thereunder and (ii) was issued by a
title insurance company qualified at origination to do business in the
jurisdiction in which the Property is located to the extent such qualification
was required in order for the Title Policy to be enforceable..

 

(24)         No
Holdbacks. The proceeds of each Mezzanine Loan have been fully disbursed
and there is no obligation for future advances with respect thereto.

 

(25)         Pledge
and Mortgage Provisions. The note and pledge for each Mortgage Loan and
related Mezzanine Loan, together with applicable state law, contains customary
and enforceable provisions for comparable mortgaged properties and equity
interests similarly situated (subject to customary bankruptcy and equity
exceptions) such as to render the rights and remedies of the holder thereof
adequate for the practical realization against the related Property and pledged
equity of the principal benefits of the security intended to be provided
thereby.

 

(26)         Environmental
Conditions. With respect to each Property (a)  an environmental site assessment (or an
update of a previous assessment) was performed by an independent third party
environmental consultant with respect to each Property in connection with the
origination of the related Mezzanine Loan, (b) a report of each such assessment
(an “Environmental Report”) is dated no earlier than 12 months prior to the
Purchase Date and has been delivered to Buyer, and (c) to Seller’s knowledge,
there is no violation of applicable environmental laws and regulations with respect
to, or any material and adverse environmental condition or circumstance
affecting, any Property that was not disclosed in such report. Each Mortgage
requires the related Mortgagor to comply with all applicable federal, state and
local environmental laws and regulations. Where such  Environmental Report disclosed a violation of
applicable environmental laws and regulations or the existence of a material
and adverse environmental condition or circumstance affecting any Property, (i)
a party not related to the Mortgagor was identified as the responsible party
for such condition or circumstance, (ii) the related Mortgagor was required
either to provide additional security and/or to obtain an operations and
maintenance

 

VII-4

 

plan or (iii) the
related Mortgagor provided evidence satisfactory to the originator of such
Mortgage Loan that applicable federal, state or local governmental authorities
would not take any action, or require the taking of any action, in respect of
such violation, condition or circumstance. The related Mezzanine Loan Documents
contain provisions pursuant to which the related Mortgagor or a principal of
such Mortgagor has agreed to indemnify the mortgagee for damages resulting from
violations of any applicable Environmental Laws.

 

(27)         Loan
Document Status. Each Mortgage Note, Mortgage, Mezzanine Note, Pledge  and other agreement that evidences or secures
a Mortgage Loan or related Mezzanine Loan and that was executed by or on behalf
of the related Mortgagor or Pledgor is the legal, valid and binding obligation
of the maker thereof (subject to any non-recourse provisions contained in any
of the foregoing agreements and any applicable state anti-deficiency or market
value limit deficiency legislation), enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally, and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) and there
is no valid defense, counterclaim or right of offset or rescission available to
the related Mortgagor or Pledgor respect to such Mortgage Note, Mortgage, Mezzanine
Note, Pledge, or other agreements.

 

(28)         Insurance.
Each Property is, and is required pursuant to the related Mortgage to be,
insured by (a) an all risk  insurance
policy issued by an insurer meeting the requirements of such Mortgage Loan and,
to the extent required as of the date of origination by the originator of such
Mezzanine Loan consistent with its normal commercial mortgage lending practices,
against other risks insured against by persons operating like properties in the
locality of the Property in an amount not less than the lesser of the principal
balance of the related Mezzanine Loan and 100% of the replacement cost (not
allowing reduction in insurance proceeds for depreciation) of the Property, and
not less than the amount necessary to avoid the operation of any co-insurance
provisions with respect to the Property; (b) a business interruption or rental
loss insurance policy providing 
coverage  for at least  twelve months 
(other than for manufactured housing communities) and for eighteen months
of coverage if the Property is a special purpose property or if the Mortgage
Loan is in excess of $25 million; (c) a flood insurance policy (if any portion
of the Property is located in an area identified by the Federal Emergency
Management Agency as having special flood hazards); and (d) a comprehensive
general liability insurance policy in amounts as are generally required by
commercial mortgage lenders, and in any event not less than $1 million per
occurrence. Such insurance policy contains a standard mortgagee clause that
names the holder of the Mortgage , its successors and assigns as mortgagee as
an additional insured in the case of liability insurance policies or as a loss
payee in the case of property insurance policies. Such insurance policy is not
terminable (nor may the amount of coverage provided thereunder be reduced)
without prior written notice to the holder of the Mortgage, and no such notice
has been received, including any notice of nonpayment of premiums, that has not
been cured. Each Mortgage obligates the related Mortgagor to maintain all such
insurance and, upon such Mortgagor’s failure to do so, authorizes the holder of
the Mortgage to purchase and maintain such insurance at the Mortgagor’s cost
and expense and to seek reimbursement therefor from such Mortgagor. Each
Mortgage provides that casualty insurance proceeds will be applied either to
the restoration or repair of the related Property or to the reduction or
defeasance of the principal amount of the Mezzanine Loan.

 

VII-5

 

(29)         Taxes
and Assessments. There are no delinquent or unpaid taxes or assessments
(including assessments payable in future installments), or other outstanding
charges affecting any Property which are or may become a lien of priority equal
to or higher than the lien of the related Mortgage. For purposes of this
representation and warranty, real property taxes and assessments shall not be
considered unpaid until the date on which interest and/or penalties would be first
payable thereon.

 

(30)         Mortgagor
Bankruptcy. No Mortgagor, Pledgor, non-recourse carve-out guarantor or
tenant physically occupying 25% or more (by square feet) of the net rentable
area of a Property is a debtor in any state or federal bankruptcy or insolvency
proceeding.

 

(31)         Leasehold
Estate. Each Property consists of the related Mortgagor’s fee simple estate
in real estate or, if the related Mezzanine Loan is secured in whole or in part
by the interest of a Mortgagor as a lessee under a ground lease of a Property
(a “Ground Lease”), by the related Mortgagor’s interest in the Ground Lease but
not by the related fee interest in such Property (the “Fee Interest”). With
respect to any Mezzanine Loan secured by a Ground Lease but not by the related
Fee Interest:

 

(a)           Such
Ground Lease or a memorandum thereof has been duly recorded; such Ground Lease
(or the related estoppel letter or lender protection agreement between Seller
and related lessor) permits the current use of the Property and permits the
interest of the lessee thereunder to be encumbered by the related Mortgage and
does not restrict the use of the related Property by such lessee, its
successors or assigns in a manner that would adversely effect the security
provided by the related Mortgage by limiting in any way its current use; and
there has been no material change in the 
terms of such Ground Lease since the origination of the related
Mezzanine Loan, with the exception of material changes reflected in written
instruments that are a part of the related Mortgage File;

 

(b)           The
lessee’s interest in such Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the related Mortgage,
other than the related Fee Interest and Permitted Encumbrances;

 

(c)           The
Mortgagor’s interest in such Ground Lease is assignable to Buyer and is further
assignable by Buyer, its successors and assigns upon notice to, but without the
consent of, the lessor thereunder (or, if such consent is required, it has been
obtained prior to the Purchase Date) and, in the event that it is so assigned,
is further assignable by Buyer and its successors and assigns upon notice to,
but without the need to obtain the consent of, such lessor. If required by the
Ground Lease, the lessor has received notice of the lien of the related
Mortgage in accordance with the provisions of the Ground Lease;

 

(d)           In
connection with the origination of such Mortgage Loan, the related ground
lessor provided an estoppel to the originator confirming that the related
Mortgagor was not then in default under such Ground Lease. The Ground Lease
provides that no material amendment to the Ground lease is effective against
the mortgagee under such Mortgage Loan unless the mortgagee has consented
thereto. Such Ground Lease is in full force and effect, and Seller and any
servicer acting on Seller’s behalf have 
received no notice that an event of default has occurred thereunder or
that the Ground lease has terminated, and, to Seller’s knowledge, there

 

VII-6

 

exists no
condition that, but for the passage of time or the giving of notice, or both,
would result in an event of default under the terms of such Ground Lease;

 

(e)           Such
Ground Lease, or an estoppel letter or other agreement, (A) requires the lessor
under such Ground Lease to give notice of any default by the lessee to the
mortgagee, provided that the mortgagee has provided the lessor with notice of
its lien in accordance with the provisions of such Ground Lease to the extent
such Ground Lease requires such notice, further (B) provides that no notice of
termination given under such Ground Lease (including rejection of such Ground
Lease in a bankruptcy proceeding) is effective against the holder of the
Mortgage unless a copy of such notice has been delivered to such holder and the
lessor has offered to enter into a new lease with such holder on terms that do
not materially vary from the economic terms of the Ground Lease;

 

(f)            A
mortgagee is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under such
Ground Lease by foreclosure or otherwise if possession is necessary to effect a
cure) to cure any default under such Ground Lease, which is curable after the receipt
of notice of any such default, before the lessor thereunder may terminate such
Ground Lease;

 

(g)           Such
Ground Lease has an original term (including any extension options set forth
therein which, under all circumstances, may be exercised, and will be
enforceable, by the mortgagee if it takes possession of such leasehold
interest) which extends not less than twenty years beyond the stated maturity
date of the related Mezzanine Loan and ten years beyond the amortization period
for the related Mezzanine Loan;

 

(h)           Under
the terms of such Ground Lease and the related Mortgage, taken together, any
related insurance proceeds or condemnation award other than in respect of a
total loss will be applied either to the repair or restoration of all or part
of the related Property, with the mortgagee or a  trustee appointed by it having the right to
hold and disburse such proceeds as the repair or restoration progresses (except
in such cases where a provision entitling another party to hold and disburse
such proceeds would not be viewed as commercially unreasonable by a prudent
commercial mortgage lender for conduit programs), or to the payment or
defeasance of the outstanding principal balance of the Mezzanine Loan together
with any accrued interest thereon;

 

(i)            Such
Ground Lease does not impose any restrictions on subletting which would be
viewed as commercially unreasonable by prudent commercial mortgage lenders in
the lending area where the Property is located and such ground Lease contains a
covenant that the ground lessor is not permitted, in the absence of an uncured
default, to disturb the possession, interest or quiet enjoyment of the lessee
thereunder for any reason or in any manner which would materially adversely
affect the security provided by the related Mortgage; and

 

(j)            Such
Ground Lease provides, or the lessor has otherwise agreed, that such Ground
Lease may not be amended or modified or any such amendment or modification will
not be effective against the mortgagee without the prior written consent of the
mortgagee under such Mezzanine Loan and any such action without such consent is
not binding on such mortgagee, its successors and assigns, provided such
mortgagee has provided the ground lessor with notice of its lien in accordance
with the terms of the Ground Lease.

 

VII-7

 

(32)         Escrow
Deposits. All escrow deposits and payments (including capital improvements,
environmental remediation reserves and other reserve deposits, if any) relating
to each Mortgage Loan and related Mezzanine Loan that are, as of the Purchase
Date required to be deposited or paid to the lender under the terms of the
related Mortgage Loan Documents have been so deposited or paid and, to the
extent of any remaining balances of such escrow deposits, are in the possession
or under the control of mortgagee or its agents (which shall include the
applicable servicer of the Mortgage Loan). To Seller’s knowledge, any and all
material requirements under each Mortgage Loan as to completion of any material
improvements and as to disbursement of any funds escrowed for such purpose,
which requirements were to have been complied with on or before the Purchase
Date, have been complied with in all material respects or, if and to the extent
not so complied with, the escrowed funds (or an allocable portion thereof) have
not been released except in accordance with the terms of the related loan
documents.

 

(33)         No
Mechanics’ Liens. As of the date of the Mortgage, and to Seller’s knowledge
as of the Purchase Date, each Property is free and clear of any and all
mechanics’ and materialmen’s liens that are prior or equal to the lien of the
related Mortgage, and no rights are outstanding that under law could give rise
to any such lien that would be prior or equal to the lien of the related
Mortgage except, in each case, for liens insured against by the Title Policy
referred to herein or otherwise bonded.

 

(34)         Releases
of Property. Except as described in the next sentence, no Mortgage Note or
Mortgage requires the mortgagee to release all or any material portion of the
related Property from the lien of the related Mortgage except upon payment in
full or defeasance of all amounts due under the related Mezzanine Loan. The
Mortgages relating to the Mezzanine Loans identified on the Mezzanine Loan
Schedule require the mortgagee to grant releases of portions of the related
Mortgaged Properties upon (a) the satisfaction of certain legal and
underwriting requirements and (b) except where the portion of the Property
permitted to be released was not considered by, Seller to be material in the
underwriting of the Mezzanine Loan, either (1) the payment of a release price
set forth therein and prepayment consideration in connection therewith or (2)
the partial defeasance of such Mezzanine Loan.

 

(35)         No
Material Default. There exists no monetary default and to Seller’s
knowledge, there exists no material non-monetary default, breach, violation or
event of acceleration (and no event which, with the passage of time or the
giving of notice, or both, would constitute any of the foregoing) under the
documents evidencing or securing the Mortgage Loan or the related Mezzanine
Loan, in any such case to the extent the same materially and adversely affects
the value of the Mezzanine Loan and the related Property. Neither the Mortgage
Loan Seller nor any servicer acting on its behalf has issued any notice of
default, breach or violation related to the Mortgage Loan, accelerated the
Mortgage Loan or commenced judicial or non-judicial foreclosure proceedings
with respect to the Mortgage Loan. Neither the Mezzanine Loan Seller nor any
servicer acting on its behalf has issued any notice of default, breach or
violation related to the Mezzanine Loan, accelerated the Mezzanine Loan or
commenced judicial or non-judicial foreclosure proceedings with respect to the
Mezzanine Loan.

 

(36)         Local
Law Compliance. To Seller’s knowledge, the improvements located on or
forming part of each Property complies in all material respects with applicable
zoning laws and ordinances, or constitutes a legal non-conforming use or
structure or, if any such improvement

 

VII-8

 

does not so comply
and does not constitute a legal non-conforming use or structure, such
non-compliance and failure does not materially and adversely affect (i) the
value of the related Property as determined by the appraisal performed at
origination or (ii) the principal use of the Property as of the date of the
origination of such Mortgage Loan. To Seller’s knowledge, as of the date of
origination of the Mortgage Loan, with respect to each legal non-conforming use
or structure, if a casualty occurred at that time, the Property could have been
restored or repaired to such an extent that the use or structure of the
restored or repaired property would be substantially the same use or structure,
or law and ordinance insurance has been obtained, or a holdback was established
and the Mortgagor is required to cause the Property to become a conforming use
or structure.

 

(37)         Junior
Liens. None of the Mortgage Loans or related Mezzanine Loans permits the
related Property or pledged equity to be encumbered by any lien junior to or of
equal priority with the lien of the related Mortgage or Pledge without the
prior written consent of the holder thereof or the satisfaction of debt service
coverage or similar criteria specified therein. The pledged equity is not, and
to Seller’s knowledge, none of the Mortgaged Properties is encumbered by any
lien junior to the lien of the related Mortgage. Each Mezzanine Loan contains a
“due on sale” clause that provides for the acceleration of the payment of the
unpaid principal balance of the Mezzanine Loan or Mortgage Loan if, without the
prior written consent of the holder thereof, the related Property, or any
material portion thereof, or pledged equity or a controlling interest in the
direct or indirect ownership interests in the Mortgagor is directly or
indirectly transferred,  sold, or pledged.

 

(38)         Actions
Concerning Mezzanine Loans. To Seller’s knowledge, there are no actions,
suits, governmental investigations or proceedings pending or threatened before
any court, governmental authority, administrative agency or arbitrator
concerning any Mezzanine Loan or Mortgage Loan or the related pledgor or
Mortgagor or pledged equity or Property that, if determined adversely,  would 
adversely affect title to the Mezzanine Loan or Mortgage Loan or the
validity or enforceability of the related pledge or Mortgage or that might
materially and adversely affect the value of the pledged equity or Property,
the current ability of the Property to generate net operating income to service
the Mortgage Loan, the principal benefit of the security intended to be
provided for the Mezzanine Loan or Mortgage Loan, or the current use of the
Property.

 

(39)         Servicing.
The servicing and collection practices used by Seller and any servicer of the
Mortgage Loan or related Mezzanine Loan have been in all material respects
legal, proper and prudent and have met customary industry standards for
servicing of commercial Mortgage or Mezzanine Loans.

 

(40)         Licenses
and Permits. To Seller’s knowledge, the related Mortgagor is in possession
of all material licenses, permits and franchises required by applicable law for
the ownership and operation of the related Property as it was then operated
and, as of the Purchase Date, the  Seller
has no written notice that the related Mortgagor was not in possession of such
licenses, permits and franchises or that such licenses, permits and franchises
have not otherwise been issued. The Mortgage Loan requires the related Property
to be in material compliance with laws and regulations applicable to the
Property, in each case to the extent required by law.

 

VII-9

 

(41)         Non-Recourse
Exceptions. The related Mezzanine Loan and Mortgage Loan documents contain
provisions providing for recourse against the related Pledgor or Mortgagor, a
principal of such Pledgor or Mortgagor or an entity controlled by a principal
of such Pledgor or Mortgagor, or a natural person, for damages sustained in
connection with the Pledgor’s or Mortgagor’s (i) fraud, (ii) intentional
misrepresentation, (iii) misappropriation or misapplication of rents or amounts
due lender, insurance proceeds or condemnation proceeds, (iv) voluntary
bankruptcy, (v) failure to obtain prior consent to any encumbrance of the
pledged equity under the Mezzanine Loan Documents, (vi) willful misconduct
resulting in waste of a Property. The related Mezzanine Loan and Mortgage Loan
documents contain provisions pursuant to which the related pledgor or
Mortgagor, a principal of such pledgor or Mortgagor or an entity controlled by
a principal of such pledgor or Mortgagor, or a natural person, has agreed to
indemnify the pledgee or mortgagee for damages resulting from violations of any
applicable environmental covenants.

 

(42)         Single
Purpose Entity. The pledgor and Mortgagor on each Mezzanine Loan and
related Mortgage Loan were, as of the origination of the Mezzanine Loan, Single
Purpose Entities. For this purpose, a “Single Purpose Entity” shall mean an
entity, other than an individual, whose organizational documents provide
substantially to the effect that it was formed or organized solely for the purpose
of owning the pledged equity or the Mortgaged Properties securing the Mezzanine
Loans or Mortgage Loans and prohibit it from engaging in any business unrelated
to such pledged equity or Property or Properties, and whose organizational
documents further provide, or which entity represented in the related Mezzanine
Loan or Mortgage Loan documents, substantially to the effect that it does not
have any assets other than those related to its interest in such pledged equity
or interest in and operation of such Property or Properties, or any
indebtedness other than as permitted by the related Pledge or Mortgage or the
other related Mezzanine Loan or Mortgage Loan documents, that it has its own
books and records and accounts separate and apart from any other person, and
that it holds itself out as a legal entity, separate and apart from any other
person, that it will not guarantee or assume the debts of any other person,
that it will not commingle assets with affiliates, and that it will not
transact business with affiliates except on an arm’s length basis. Each Pledgor
and Mortgagor of a Mezzanine Loan and Mortgage Loan is an entity which has
represented in connection with the origination of the Mezzanine Loan or
Mortgage Loan, or whose organizational documents as of the date of origination
of the Mezzanine Loan or Mortgage Loan provide that so long as the Mezzanine
Loan is outstanding it will have at least one independent director. There are
Insolvency/Non-Consolidation opinions with respect to each of the Pledgor and
Mortgagor and, to Seller’s knowledge, all of the assumptions made in each such
opinion are true and correct.

 

(43)         Separate
Tax Parcels. Each Property constitutes one or more complete separate tax
lots or is subject to an endorsement under the related title insurance policy.

 

(44)         Operating
or Financial Statements. The related Mezzanine Loan Documents require the
related Mortgagor to furnish to the mortgagee at least quarterly and annually
an operating statement and rent roll (if there is more than one tenant) with
respect to the related Property and at least annually financial statements of
the Mortgagor.

 

(45)         Security
Interests in Hospitality Properties. If any Property securing a Mortgage
Loan is operated as a hospitality property then (a) the security agreements,
financing statements

 

VII-10

 

or other
instruments, if any, related to the Mortgage Loan secured by such Property
establish and create a valid and enforceable (subject to the exceptions set forth
in Paragraph 13 above) first priority security interest in all items of
personal property owned by the related Borrower which are material to the
conduct in the ordinary course of the Borrower’s business on the related
Property, subject only to purchase money security interests, personal property
leases and security interests to secure revolving lines of credit and similar
financing; and (b) one or more Uniform Commercial Code financing statements
covering such personal property have been filed or recorded (or have been sent
for filing or recording) wherever necessary to perfect under applicable law
such security interests (to the extent a security interest in such personal
property can be perfected by the filing of a Uniform Commercial Code financing statement
under applicable law).

 

(46)         Assignment
of Collateral. There is no material collateral securing any Mortgage Loan
that has not been assigned to the Purchaser.

 

(47)         Fee
Simple or Leasehold Interests. The interest of the related Borrower in the
Property securing each Mortgage Loan includes a fee simple and/or leasehold
estate or interest in real property and the improvements thereon.

 

(48)         Assignment
of Collateral. There is no material collateral securing any Mezzanine Loan
that has not been assigned to the Purchaser.

 

(49)         Terrorism
Insurance. With respect to each Mortgage Loan, the related all risk
insurance policy and business interruption policy did not as of the date of
origination of the Mortgage Loan, and, to Seller’s knowledge, does not as of
the date hereof, specifically exclude acts of terrorism from coverage. With
respect to each of the Mortgage Loans, the related Mortgage Loan documents do
not expressly waive or prohibit the mortgagee from requiring coverage for acts
of terrorism or damages related thereto, except to the extent that any right to
require such coverage may be limited by commercially reasonable availability.

 

(50)         Transfers
and Pledges. The Mezzanine Loan Collateral consists of the pledge of all of
the ownership interests of the Mortgagor. Transfer and pledge restrictions
under the Mezzanine Loan Documents apply to [Name of Sponsor entity], Borrower,
Principal, Mortgage Borrower, Mortgage Principal and any Affiliated Manager or
any shareholder, partner, member, non-member manager, any direct or indirect
legal or beneficial owner of, Mortgage Borrower, Mortgage Principal, Principal,
Borrower, any Guarantor, any Affiliated Manager, or any Pledgor, and Affiliated
Franchisor or any non-member manager.

 

(51)         Management
Agreement. The Management Agreement is in full force and effect and there
is no default thereunder by any party thereto and no event has occurred that,
with the passage of time and/or the giving of notice, would constitute a
default thereunder.

 

(52)         Illegal
Activity. To Seller’s knowledge, no portion of any Property has been or
will be Mezzanine with proceeds of any illegal activity.

 

(53)         Embargoed
Person. To the best of Seller’s knowledge, (a) none of the funds or other
assets of Mortgagor, Mezzanine Borrower, Principal and Guarantor constitute
property of, or are beneficially owned, directly or indirectly, by any person,
entity or government subject to

 

VII-11

 

trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that the investment in Borrower, Principal or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Mortgage Loan or Mezzanine Loan made by the Lender is in violation of
law (“Embargoed Person”); (b) no Embargoed Person has any interest of any
nature whatsoever in Mortgagor, Mezzanine Borrower, Principal or Guarantor, as
applicable, with the result that the investment in Mortgagor, Mezzanine
Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Mortgage Loan or Mezzanine Loan is in
violation of law; and (c) none of the funds of Mortgagor, Mezzanine Borrower,
Principal or Guarantor, as applicable, have been derived from any unlawful
activity with the result that the investment in Mortgagor, Mezzanine Borrower,
Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Mortgage Loan or Mezzanine Loan is in violation of
law.

 

(54)         Franchise
Agreement. The Franchise Agreement and the License granted thereby are in
full force and effect and there is no default thereunder by any party thereto
and no event has occurred that, with the passage of time and/or giving of
notice, would constitute a default thereunder. Mortgage Borrower has all rights
to use the License granted under the Franchise Agreement.

 

(55)         Lockbox.
Any agreements executed in connection with the creation of a Collection Account
create a valid and continuing security interest (as defined in the Uniform
Commercial Code in effect in the State of New York) in each of such Collection
Accounts in favor of Buyer, which security interest is prior to all other
liens, and is enforceable as such against creditors of and purchasers from
Mortgagor. Each Collection Account constitutes a “deposit account” within the
meaning of the Uniform Commercial Code in effect in the State of New York. Seller
has directed the Servicer to cause each Depository to agree to comply with all
written instructions originated by Buyer, without further consent by Borrower,
directing disposition of all sums at any time held, deposited or invested in
the Collection Accounts, together with any interest or other earnings thereon,
and all proceeds thereof (including proceeds of sales and other dispositions),
whether accounts, general intangibles, chattel paper, deposit accounts,
instruments, documents or securities. The Collection Accounts are not in the
name of any Person other than Mortgagor, as pledgor, or Lender, as pledgee. Seller
has not consented to the Depository complying with instructions with respect to
the Collection Account from any Person other than Buyer.

 

(56)         Compliance
with Usury and Other Laws. The Mezzanine Loan, and, to Seller’s knowledge,
each party involved in the origination of the Mezzanine Loan, complied as of
the date of origination with, or is exempt from, applicable state or federal
laws, regulations and other requirements pertaining to usury. Any and all other
requirements of any federal, state or local laws applicable to the Mezzanine
Loan have been complied with.

 

(57)         Authorized
to do Business. To the extent required under applicable law, Seller is
authorized to transact and do business in each jurisdiction in which a
Mortgaged Property is located at all times when it held the Mezzanine Loan.

 

VII-12

 

(58)         Mezzanine
Loan Documents. The Mezzanine Loan Documents contain provisions for the
acceleration of the payment of the unpaid principal balance of the Mezzanine
Loan if (A) the Obligor voluntarily transfers or encumbers all or any portion
of any related Mezzanine collateral, or (B) any direct or indirect interest in
Obligor is voluntarily transferred or assigned, other than, in each case, as
permitted under the terms and conditions of the Mezzanine Loan Documents.

 

(59)         No
Limitation on Assignability in Mezzanine Loan Documents. Except as
expressly stated in the Mezzanine Loan Documents, Seller’s ability to assign,
transfer and convey the Mezzanine Loan to any other person or entity is not
limited or prohibited by any provision contained in the Mezzanine Loan
Documents.

 

(60)         Collateral
Secures Mezzanine Loans Only. The Mezzanine collateral does not secure any
mezzanine loan other than the Mezzanine Loan being transferred and assigned to Buyer
hereunder (except for Mezzanine Loans, if any, which are cross-collateralized
with other Mezzanine Loans being conveyed to Buyer or subsequent transferee
hereunder and identified on the Asset Schedule)

 

(61)         MERS
Purchased Loans. With respect to each Mezzanine Loan that is a MERS
Purchased Loan, the related Mortgagor registered with MERS and each assignment
of the MERS Purchased Loan has been registered with MERS.

 

VII-13

 

EXHIBIT VIII

 

Loan
Information

 

Investment
& Loan Set-Up

 

	
  I.

  	
   

  	
  Investment Background

  	
   

  
	
   

  
	
  Investment name and location:

  
	
  Borrower and principals: .

  
	
  Type of investment:

  
	
  CTIMCO deal team:

  
	
  CTIMCO Closing Attorney:

  
	
  Closing Date:

  
	
  CT Funding Date:

  
	
   

  
	
  Investment Amount:

  
	
  Premium/discount (% and $ amount):

  
	
  Adjusted gross investment commitment:

  
	
  Participants:

  
	
  Repo Advance Rate:

  
	
  Net CT investment commitment:

  
	
  Net CT investment funded at
  closing:

  
	
  Net CT investment unfunded
  commitment:

  
	
  Accrued interest acquired ($):

  
	
   

  
	
  II.

  	
   

  	
  Rate/Term/Fees/Guarantees/Reserves

  
	
   

  
	
  Interest rate (floating/fixed):

  
	
  LIBOR in place at CT funding
  date:

  
	
  LIBOR Floor:

  
	
  Amount of LIBOR Floor:

  
	
  Interest due date:

  
	
  Interest rate re-set date:

  
	
  Interest Accrual Period:

  
	
  1st Interest Payment
  Due Date:

  
	
  Rate if fixed:

  
	
  Index if floating:

  
	
  Rounding factor for index:

  
					

 

VIII-1

 

	
  Spread if floating:

  
	
  Calculation basis:

  
	
  Pay/accrual:

  
	
  Contingent interest:

  
	
  Amortization:

  
	
  Stub Interest (days):

  
	
  Stub Interest ($):

  
	
  Lock Box:

  
	
  Servicing Fee:

  
	
  Special Servicing Fee:

  
	
  Trustee Servicing Fee:

  
	
  Initial term:

  
	
  Maturity date:

  
	
  Origination/Commitment Fee:

  
	
  Due Diligence Deposit:

  
	
  Application Fee:

  
	
  Additional Interest (Exit):

  
	
  Extension Term:

  
	
  Extended Maturity date:

  
	
  Additional Interest
  (Extension):

  
	
  Prepayment/Defeasance:

  
	
  Reserves:

  
	
   

  	
  Initial Tax Escrow:

  Required Repairs Reserve:

  Liquidity Reserve:

  
	
  Tax escrows:

  
	
  Insurance escrows:

  
	
  Total Reserves:

  
	
  Payment Guarantee (amount):

  
	
  Guarantor:

  
	
  Guaranty Collateral:

  
	
  Lock-Out/Call Protection:

  
	
  Financial Reporting
  Requirements:

  
	
   

  	
  Monthly Statements:

  
	
   

  	
  Quarterly Statements:

  
	
   

  	
  Annual Statements:

  
	
   

  	
  Annual Budget:

  
			

 

VIII-2

 

	
  III.

  	
   

  	
  Seller/Repo Financing

  
	
   

  
	
  Firm:

  
	
  Advance Rate:

  
	
  Cost of Financing:

  
	
  Contact:

  
	
   

  
	
  IV.

  	
   

  	
  Senior / Junior Financing

  
	
   

  
	
  First Mortgage Loan:

  
	
  Senior Mezzanine Loan:

  
	
  Junior Mezzanine Loan:

  
	
   

  
	
  V.

  	
   

  	
  Summary of Participation
  Rights:

  
	
  1)

  
	
   

  
	
   

  
	
  VI.

  	
   

  	
  Hedging Information

  
	
   

  	
   

  	
   

  
	
  Senior Loan Interest
  Rate Cap:

  
	
  Date of Agreement:

  
	
  Notional Amount:

  
	
  Strike Prices:

  
	
  Cost:

  
	
  Beneficiary:

  
	
  Counterparty:

  
	
  Placement Agent:

  
	
   

  
	
  Senior Mezzanine Loan
  Interest Rate Cap:

  
	
  Date of Agreement:

  
	
  Notional Amount:

  
	
  Strike Prices:

  
	
  Cost:

  
	
  Beneficiary:

  
	
  Counterparty:

  
						

 

VIII-3

 

	
  Placement Agent:

  
	
   

  
	
  Junior Mezzanine Loan
  Interest Rate Cap:

  
	
  Date of Agreement:

  
	
  Notional Amount:

  
	
  Strike Prices:

  
	
  Cost:

  
	
  Beneficiary:

  
	
  Counterparty:

  
	
  Placement Agent:

  
	
   

  
	
  VII.

  	
   

  	
  Non-Reimbursable Transaction
  Expenses

  
	
   

  
	
   

  	
  Legal Fees

  
	
   

  	
  Meals

  
	
   

  	
  Travel/Airfare

  
	
   

  	
  Insurance Review

  
	
   

  	
  Total

  

 

VIII-4

 

EXHIBIT IX

 

TRANSACTION PROCEDURE

 

Preliminary Approval of New Loan Which is an Eligible
Loan.

 

(a)           Seller may, from time to time, submit
to Buyer a Preliminary Due Diligence Package for Buyer’s review and approval in
order to enter into a Transaction with respect to any New Loan that Seller
proposes to be included as an Eligible Loan under this Agreement.

 

(b)           Buyer shall have the right to request
additional diligence materials and deliveries that Buyer shall specify on a
Supplemental Due Diligence List. Within five (5) Business Days after Buyer’s
receipt of the Preliminary Due Diligence Package, Buyer shall either (i) notify
Seller of the Purchase Price and the Market Value for the New Loan, subject to
documentation satisfactory to Buyer, (ii) request additional diligence
materials or (iii) deny, in Buyer’s sole and absolute discretion, Seller’s
request for a Transaction. Within five (5) Business Days after receipt of all
additional diligence materials, Buyer shall either approve or deny the proposal
to include such Eligible Loan.

 

Final Approval of New Loan which is an Eligible Loan.
Upon Buyer’s notification to Seller of the Purchase Price and the Market Value
for any New Loan which is an Eligible Loan, Seller shall, if Seller desires to
enter into a Transaction with respect to such New Loan, satisfy the conditions
set forth below (in addition to satisfying the conditions precedent to
obtaining each advance, as set forth in Section 2(b) of this Agreement) as a
condition precedent to Buyer’s approval of such New Loan as an Eligible Loan,
all in a manner reasonably satisfactory to Buyer and subject to documentation
satisfactory to Buyer:

 

(a)           Delivery of Purchased Loan
Documents. Seller shall deliver to Buyer: 
(i) with respect to a New Loan that is a Pre-Existing Loan, each of the
Purchased Loan Documents, except Purchased Loan Documents that Seller expressly
and specifically disclosed in Seller’s Preliminary Due Diligence Package were
not in Seller’s possession; and (ii) with respect to a New Loan that is an
Originated Loan, each of the Purchased Loan Documents.

 

(b)           Environmental and Engineering.
Buyer shall have received a satisfactory “Phase 1” (and, if necessary, a
satisfactory “Phase 2”) environmental report, an asbestos survey, if
applicable, and an engineering report, each in form reasonably satisfactory to
Buyer, by an engineer or environmental consultant reasonably approved by Buyer.

 

(c)           Appraisal. Buyer shall have
received either an appraisal approved by Buyer (or a Draft Appraisal, if Buyer
approves such Draft Appraisal in lieu of a final appraisal), each by an MAI
appraiser. If Buyer receives only a Draft Appraisal prior to entering into a
Transaction, Seller shall deliver an appraisal approved by Buyer by an MAI
appraiser on or before thirty (30) days after the Purchase Date.

 

(d)           Insurance. Buyer shall have
received certificates or other evidence of insurance demonstrating insurance
coverage in respect of the Property of types, in

 

IX-1

 

amounts, with insurers and otherwise in compliance
with the terms, provisions and conditions set forth in the Purchased Loan
Documents. Such certificates or other evidence shall indicate that Seller will
be named as an additional insured under liability policies as its interest may
appear and shall contain a loss payee endorsement under casualty policies in
favor of Seller with respect to the policies required to be maintained under
the Purchased Loan Documents.

 

(e)           Survey. Buyer shall have
received all surveys of the Property that are in Seller’s possession.

 

(f)            Lien Search Reports. Buyer or
Buyer’s counsel shall have received, as reasonably requested by Buyer,
satisfactory reports of UCC, tax lien, judgment and litigation searches and
title updates conducted by search firms and/or title companies acceptable to
Buyer with respect to the Eligible Loan, Property, Seller and Mortgagor, such
searches to be conducted in each location Buyer shall designate.

 

(g)           Opinions of Counsel. Buyer
shall have received copies of all legal opinions in Seller’s possession with
respect to the Eligible Loan which shall be in form and substance satisfactory
to Buyer.

 

(h)           Additional Real Estate Matters.
Seller shall have delivered to Buyer to the extent in Seller’s possession such
other real estate related certificates and documentation as may have been
requested by Buyer, such as:  (i)
certificates of occupancy issued by the appropriate Governmental Authority and
either letters certifying that the Property is in compliance with all
applicable zoning laws issued by the appropriate Governmental Authority of
evidence that the related Title Policy includes a zoning endorsement and
(ii) copies of all leases in effect at the Property and estoppel certificates
that were required in the origination of the applicable loan from any ground
lessor and from any tenants .

 

(i)            Other Documents. Buyer shall
have received such other documents as Buyer or its counsel shall reasonably
deem necessary.

 

IX-2

 

EXHIBIT X

 

[RESERVED]

 

X-1

 

EXHIBIT XI

 

[RESERVED]

 

XI-1

 

EXHIBIT XII

 

FORM OF OPINION OF COUNSEL TO SELLERS

 

1.             Each
Seller is duly organized and validly existing as a corporation in good standing
under the laws of the state of its incorporation and has power and authority to
enter into and perform its obligations under this Agreement and the Custodial
Agreement. Each Seller is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the business transacted by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of each Seller and its subsidiaries, considered as a
whole.

 

2.             This
Agreement and the Custodial Agreement have each been duly authorized, executed
and delivered by each Seller, and each constitutes a valid and legally binding
obligation of each Seller enforceable against each Seller in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors’ rights generally and to general equity principles.

 

3.             No
consent, approval, authorization or order of any state or federal court or
government agency or body is required to be obtained by either Seller for the
consummation of the transactions contemplated by this Agreement or the
Custodial Agreement.

 

4.             The consummation of any of the transactions contemplated by
this Agreement and the Custodial Agreement will not conflict with, result in a
breach of, or constitute a default under the articles of incorporation or
bylaws of either Seller or the terms of any indenture or other agreement or
instrument known to us to which either Seller is party or bound, or any order
known to such counsel to be applicable to either Seller or any regulations
applicable to either Seller, of any state or federal court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
either Seller.

 

5.             There
is no pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving either Seller
or relating to the transaction contemplated by this Agreement or the Custodial
Agreement which, if adversely determined, would have a material adverse effect
on either Seller.

 

6.             Buyer
has a perfected security interest in the Purchased Loans.

 

XII-1

 

EXHIBIT XIII

 

FORM OF
BAILEE AGREEMENT

 

[Capital
Trust, Inc.]

[CT BSI Funding Corp.]

410 Park Avenue

14th Floor

New York, New York 10022

 

                                 ,
20   

 

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022

 

	
  Re:

  	
  Bailee Agreement (the “Bailee Agreement”) in
  connection with the sale under a Amended and Restated Master Repurchase
  Agreement by Capital Trust, Inc. and CT BSI Funding Corp. (each a “Seller”)
  to Bear, Stearns Funding, Inc. (the “Buyer”)

  

 

Ladies
and Gentlemen:

 

In consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller, Buyer and Paul, Hastings, Janofsky
& Walker LLP (the “Bailee”) hereby agree as follows:

 

1.             The
Seller shall deliver to the Bailee in connection with any Purchased Loans
delivered to the Bailee hereunder an Identification Certificate in the form of
Attachment 1 attached hereto to which shall be attached a Purchased Loan
Schedule identifying which Purchased Loans are being delivered to the Bailee
hereunder. Such Purchased Loan Schedule shall contain the following fields of
information:  (a) the loan identifying
number; (b) the obligor’s name; (c) the street address, city, state and zip
code for the applicable real property; (d) the original balance; and (e) the
current principal balance if different from the original balance and such other
information as Seller and Buyer shall require.

 

2.             On or
prior to the date indicated on the Custodial Delivery delivered by Seller (the “Purchase
Date”), Seller shall have delivered to the Bailee, as bailee for hire, the
original documents set forth on Schedule A attached hereto (collectively, the “Purchased
Loan File”) for each of the Purchased Loans (each a “Purchased Loan”
and collectively, the “Purchased Loans”) listed in Exhibit A to
Attachment 1 attached hereto (the “Purchased Loan Schedule”).

 

3.             The
Bailee shall issue and deliver to Buyer and the Custodian on or prior to the
Purchase Date by facsimile (a) in the name of Buyer, an initial trust receipt
and certification in the form of Attachment 2 attached hereto (the “Trust
Receipt”) which Trust Receipt shall state

 

XIII-1

 

that
the Bailee has received the documents comprising the Purchased Loan File as set
forth in the Custodial Delivery (as defined in that certain Custodial Agreement
dated as of August 16, 2005, among Seller, Buyer and Custodian (as defined in
Section 5 below), in addition to such other documents required to be delivered
to Buyer and/or Custodian pursuant to the Amended and Restated Master
Repurchase Agreement dated as of February 15, 2006, among Seller and Buyer (the
“Amended and Restated Master Repurchase Agreement”).

 

4.             On the
applicable Purchase Date, in the event that Buyer fails to purchase any New
Loan from Seller that is identified in the related Custodial Delivery-
Certificate, Buyer shall deliver by facsimile to the Bailee at (212) 230-7830
to the attention of Robert J. Grados, Esq., an authorization (the “Facsimile
Authorization”) to release the Purchased Loan Files with respect to the
Purchased Loans identified therein to Seller. Upon receipt of such Facsimile
Authorization, the Bailee shall release the Purchased Loan Files to Seller in
accordance with Seller’s instructions.

 

5.             Following
the Purchase Date, the Bailee shall forward the Purchased Loan Files to
Deutsche Bank Trust Company Americas, 1761 East St. Andrew Place, Santa Ana,
California 92705, Attention:  Mortgage
Custody-QT031C (the “Custodian”) by insured overnight courier for
receipt by the Custodian no later than 1:00 p.m. on the third Business Day
following the applicable Purchase Date (the “Delivery Date”).

 

6.             From
and after the applicable Purchase Date until the time of receipt of the
Facsimile Authorization or the applicable Delivery Date, as applicable, the
Bailee (a) shall maintain continuous custody and control of the related
Purchased Loan Files as bailee for Buyer and (b) is holding the related
Purchased Loans as sole and exclusive bailee for Buyer unless and until
otherwise instructed in writing by Buyer.

 

7.             The
Seller agrees to indemnify and hold the Bailee and its partners, directors,
officers, agents and employees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney’s fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Bailee
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements (other than special, indirect, punitive
or consequential damages, which shall in no event be paid by the Bailee) were
imposed on, incurred by or asserted against the Bailee because of the breach by
the Bailee of its obligations hereunder, which breach was caused by negligence,
lack of good faith or willful misconduct on the part of the Bailee or any of
its partners, directors, officers, agents or employees. The foregoing
indemnification shall survive any resignation or removal of the Bailee or the
termination or assignment of this Bailee Agreement.

 

8.             (a)  In the event that the Bailee fails to produce
a Mortgage Note, Mezzanine Note, assignment of a Purchased Loan or any other
document related to a Purchased Loan that was in its possession within ten (10)
business days after required or requested by Seller or Buyer (a “Delivery
Failure”), the Bailee shall indemnify Seller or Buyer in accordance with
the succeeding paragraph of this Section 8.

 

XIII-2

 

(b)           The
Bailee agrees to indemnify and hold Buyer and Seller, and their respective
affiliates and designees harmless against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, including reasonable attorney’s
fees, that may be imposed on, incurred by, or asserted against it or them in
any way relating to or arising out of a Custodial Delivery Failure or the
Bailee’s negligence, lack of good faith or willful misconduct. The foregoing
indemnification shall survive any termination or assignment of this Bailee
Agreement.

 

9.             The
Seller hereby represents, warrants and covenants that the Bailee is not an
affiliate of or otherwise controlled by Seller. Notwithstanding the foregoing,
the parties hereby acknowledge that the Bailee hereunder may act as Counsel to Seller
in connection with a proposed loan and Paul, Hastings, Janofsky & Walker
LLP, if acting as Bailee, has represented Seller in connection with
negotiation, execution and delivery of the Amended and Restated Master
Repurchase Agreement.

 

10.           In
connection with a pledge of the Purchased Loans as collateral for an obligation
of Buyer, Buyer may pledge its interest in the corresponding Purchased Loan
Files held by the Bailee for the benefit of Buyer from time to time by
delivering written notice to the Bailee that Buyer has pledged its interest in
the identified Purchased Loans and Purchased Loan Files, together with the
identity of the party to whom the Purchased Loans have been pledged (such
party, the “Pledgee”). Upon receipt of such notice from Buyer, the
Bailee shall mark its records to reflect the pledge of the Purchased Loans by Buyer
to the Pledgee. The Bailee’s records shall reflect the pledge of the Purchased
Loans by Buyer to the Pledgee until such time as the Bailee receives written
instructions from Buyer that the Purchased Loans are no longer pledged by Buyer
to the Pledgee, at which time the Bailee shall change its records to reflect
the release of the pledge of the Purchased Loans and that the Bailee is holding
the Purchased Loans as custodian for, and for the benefit of, Buyer.

 

11.           From
time to time, subject to the acceptance and approval of Buyer, Seller may
request pursuant to a request substantially in the form of Annex 6 to the
Custodial Agreement the delivery by the Custodian to the Bailee of some or all
of the Purchased Loan File for the purposes set forth in such request. Upon
receipt of the Purchased Loan File or such portions thereof, Bailee shall hold
the same as sole and exclusive bailee for Buyer until such time as the
Purchased Loan File, or such portions thereof, are redelivered to the Custodian
or to such other Persons, as otherwise directed by Buyer, subject in either
case to the provisions set forth herein governing standards of care and
indemnification and except as otherwise provided by any document specifically
amending, supplementing or modifying the terms hereof which is executed and
delivered by all parties hereto in connection with such delivery of the
Purchased Loan File, or such portions thereof, to Bailee. Notwithstanding
anything to the contrary contained in this Section 11, Bailee shall have the
right to deliver such Purchased Loan File, or portions thereof, to Buyer upon
five (5) days’ written notice to Buyer.

 

12.           The
agreement set forth in this Bailee Agreement may not be modified, amended or
altered, except by written instrument, executed by all of the parties hereto.

 

13.           This
Bailee Agreement may not be assigned by Seller or the Bailee without the prior
written consent of Buyer.

 

XIII-3

 

14.           For the
purpose of facilitating the execution of this Bailee Agreement as herein
provided and for other purposes, this Bailee Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute and be one
and the same instrument.

 

15.           This
Bailee Agreement shall be construed in accordance with the laws of the State of
New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

 

16.           Capitalized
terms used herein and defined herein shall have the meanings ascribed to them
in the Amended and Restated Master Repurchase Agreement.

 

[signatures begin on next page]

 

XIII-4

 

	
   

  	
  Very truly yours,

  
	
   

  	
  [CAPITAL TRUST, INC.]

  
	
   

  	
  [CT BSI FUNDING CORP.]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

	
  ACCEPTED AND AGREED:

  
	
   

  
	
  PAUL, HASTINGS,
  JANOFSKY & WALKER LLP,

  
	
  Bailee

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: Robert J. Grados

  
	
   

  
	
  ACCEPTED AND AGREED:

  
	
   

  
	
  BEAR, STEARNS FUNDING,
  INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

XIII-5

 

Schedule A

 

[List of Documents in the Purchased Loan File]

 

XIII-6

 

Attachment 1

 

IDENTIFICATION CERTIFICATE

 

On this             
day of                              ,
2006, the undersigned corporation (the “Seller”), under that certain
Bailee Agreement of even date herewith (the “Bailee Agreement”), among Seller,
Paul, Hastings, Janofsky & Walker LLP, (the “Bailee”), and Bear,
Stearns Funding, Inc., as Buyer, does hereby instruct the Bailee to hold, in
its capacity as Bailee, the Purchased Loan Files with respect to the Purchased
Loans listed on Exhibit A hereto, which Purchased Loans shall be subject to the
terms of the Bailee Agreement as of the date hereof.

 

Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Bailee Agreement.

 

IN WITNESS WHEREOF, Seller has caused this
Identification Certificate to be executed and delivered by its duly authorized
officer as of the day and year first above written.

 

	
   

  	
  [CAPITAL TRUST, INC.]

  
	
   

  	
  [CT BSI FUNDING CORP.]

  
	
   

  	
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

XIII-7

 

Exhibit A to Attachment 1

 

PURCHASED LOAN SCHEDULE

 

XIII-8

 

Attachment 2

 

FORM OF TRUST RECEIPT

 

                        
       , 200   

 

Bear, Stearns Funding, Inc.

383 Madison Avenue

New York, New York 10179

 

Re:                               Bailee
Agreement, dated as of                   
     , 200     (the “Bailee
Agreement”) among Capital Trust, Inc. and CT BSI Funding Corp. (the “Seller”),
Bear, Stearns Funding, Inc. (the “Buyer”) and Paul, Hastings, Janofsky
& Walker LLP (the “Bailee”)

 

Ladies
and Gentlemen:

 

In accordance with the provisions of Paragraph 3 of
the above-referenced Bailee Agreement, the undersigned, as the Bailee, hereby
certifies that as to each Purchased Loan described in the Purchased Loan
Schedule (Exhibit A to Attachment 1), a copy of which is attached hereto, it
has reviewed the Purchased Loan File and has determined that (1) all documents
listed in Schedule A attached to the Bailee Agreement are in its possession and
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Purchased Loan, and (iii) based on its examination, the
foregoing documents on their face satisfy the requirements set forth in
Paragraph 2 of the Bailee Agreement.

 

The Bailee hereby confirms that it is holding each
such Purchased Loan File as agent and bailee for the exclusive use and benefit
of Buyer pursuant to the terms of the Bailee Agreement.

 

All initially capitalized terms used herein shall have
the meanings ascribed to them in the above-referenced Bailee Agreement.

 

	
   

  	
  PAUL, HASTINGS, JANOFSKY &

  WALKER LLP, BAILEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:  Robert
  J. Grados, Esq.

  

 

XIII-9

 

SCHEDULE
1-A

 

Form of UCC
Financing Statement

 

	
  Debtor:

  	
   

  	
  Secured Party:

  
	
  [Capital Trust, Inc.]

  	
   

  	
  Bear, Stearns Funding,
  Inc.

  
	
  [CT BSI Funding Corp.]

  	
   

  	
  383 Madison Avenue

  
	
  410 Park Avenue, 14th
  Floor

  	
   

  	
  New York, New York
  10179

  
	
  New York, New York
  10022

  	
   

  	
   

  

 

ATTACHMENT A TO
UCC FINANCING STATEMENT

 

This filing is for
protective purposes only with respect to the Purchased Loans in case the sale
of any Purchased Loan under the Repurchase Agreement is re-characterized as a
grant of a security interest in any such Purchased Loan.

 

The collateral covered by
this financing statement is all of the Debtor’s right, title and interest in,
to and under the following property, whether now owned or existing, hereafter
acquired or arising, or in which the Debtor now or hereafter has any rights,
and wheresoever located (the “Collateral”):

 

(a)           all of the Purchased Loans including
those identified in Schedule I hereto, all Income from such Purchased
Loans and all proceeds of all of the foregoing, and

 

(b)           all Hedging Transactions relating to
Purchased Loans entered into by Seller and all proceeds thereof.

 

The following terms shall
have the following meanings. Such definition shall be equally applicable to the
singular and plural forms of the terms defined.

 

“Buyer” means Secured
Party.

 

“Custodian” means
Deutsche Bank Trust Company Americas or any successor Custodian appointed by
Buyer.

 

“Eligible Loans” means
any of the following types of loans listed in (i) through (iv) below:

 

(i)            Whole Loans (as defined in the
Repurchase Agreement) that are performing (i.e., current and not in monetary or
material non-monetary default such that remedies can be exercised by any
Person) commercial mortgage loans secured by first liens on multifamily and
commercial real property with respect to which the ratio of loan to value as
determined by Buyer, in the exercise of its commercially reasonable judgment,
for the real property securing directly such loan (including for purposes of
this calculation, such loan and any loan senior to or pari passu

 

1-A-1

 

with such loan and
secured, directly or indirectly, by the related property) does not exceed the
percentage stated in the Confirmation.

 

(ii)           Subordinate interests in Whole Loans
(“B Notes”) that are  performing (i.e.,
current and not in monetary or material non-monetary default such that remedies
can be exercised by any Person), commercial mortgage loans secured by first
liens on multifamily and commercial real property with respect to which the
ratio of loan to value as determined by Buyer, in the exercise of its
commercially reasonable judgment, for the real property securing directly such
loan (including for purposes of this calculation, such loan and any loan senior
to or pari passu with such loan and secured, directly or indirectly, by the
related property) does not exceed the percentage stated in the Confirmation.

 

(iii)          Mezzanine Loans (as defined in the
Repurchase Agreement) that are performing (i.e., current and not in monetary or
material non-monetary default such that remedies can be exercised by any
Person) and with respect to which the ratio of total loan to value as
determined by Buyer, in the exercise of its commercially reasonable judgment,
for the real property securing indirectly such loan (including for purposes of
this calculation, such loan and any loan senior to or pari passu with such loan
and secured, directly or indirectly, by the related property) does not exceed
the percentage stated in the Confirmation.

 

(iv)          any other investment presented to and
approved by Buyer in its sole discretion which does not conform to the criteria
set forth in clauses (i), (ii) and (iii) above and which Buyer elects in its
sole discretion to purchase.

 

“Hedging Transactions”
means, with respect to any or all of the Purchased Loans, 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 Buyer or its Affiliates as counterparties or one or more other
counterparties acceptable to Buyer.

 

“Income” means, with
respect to any Purchased Loan at any time, any principal (including any
principal prepayments) thereof and all interest, dividends or other
distributions thereon and with respect to any associated Hedging Transaction,
all proceeds thereof.

 

“Person” means 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.

 

“Purchased Loan Documents”
shall mean, with respect to a Purchased Loan, the documents comprising the
Purchased Loan File for such Purchased Loan.

 

“Purchased Loan File”
shall mean the documents specified as the “Purchased Loan File” in Section 6(b)
of the Repurchase Agreement, together with any additional documents and

 

1-A-2

 

information required to be delivered to Buyer or its designee
(including the Custodian) pursuant to the Repurchase Agreement.

 

“Purchased Loans” means
(i) with respect to any Transaction, the Eligible Loans sold by Seller to Buyer
in such Transaction until such Eligible Loans are repurchased by Seller
pursuant to this Agreement and (ii) with respect to the Transactions in
general, all Eligible Loans sold by Seller to Buyer and any Additional Loans
delivered by Seller to Buyer pursuant to Section 3(a) of the Repurchase
Agreement until (x) such Eligible Loans are repurchased by Seller pursuant to
the Repurchase Agreement or (y) such Additional Loans are re-delivered to
Seller by Buyer pursuant to Section 3 of the Repurchase Agreement.

 

“Repurchase Agreement”
means that certain Amended and Restated Master Repurchase Agreement dated as of
February 15, 2006, between Bear, Stearns Funding, Inc. and Capital Trust, Inc.
and CT BSI Funding Corp., a Delaware corporation (each a “Seller” with joint
and several liability for the obligations of the other Seller) (together such
other annexes and schedules attached thereto) as the same may be amended,
restated or otherwise modified from time to time.

 

“Seller” means Debtor.

 

SCHEDULE 1

 

1.             [B] Participation Interest, dated             
issued to                      .
in the amount of $                    ,
in that certain Mortgage Loan [(in the original principal amount of $               )],
dated as of           , made
by                 .
to                  
under and pursuant to that certain Loan Agreement dated as of               
between                 and              
and secured by that certain property located in            ,
[as such B Participation Interest was assigned by                 
to Capital Trust, Inc. pursuant to that certain Assignment and Assumption
Agreement (Participation B) dated as of               ].

 

2.             [$          
[Senior/Junior] Mezzanine Loan, dated as of             made by             to           ,
under and pursuant to that certain [Loan Agreement] dated as of           
between             and           ,
[as assigned (together with such loan agreement and all of the other loan
documents evidencing and securing such senior mezzanine loan) by           
to Capital Trust, Inc. pursuant to that certain Omnibus Assignment dated as of           ].

 

1-A-3

 

SCHEDULE
1-B

 

Form of UCC
Financing Statement Amendment

 

	
  Debtor:

  	
   

  	
  Secured Party:

  
	
  Capital Trust, Inc.

  	
   

  	
  Bear, Stearns Funding,
  Inc.

  
	
  410 Park Avenue, 14th
  Floor

  	
   

  	
  383 Madison Avenue

  
	
  New York, New York
  10022

  	
   

  	
  New York, New York
  10179

  

 

ATTACHMENT A TO
UCC FINANCING STATEMENT AMENDMENT

 

This filing is for protective purposes only with
respect to the Purchased Loans in case the sale of any Purchased Loan under the
Repurchase Agreement is re-characterized as a grant of a security interest in
any such Purchased Loan.

 

The collateral covered by this financing statement is
all of the Debtor’s right, title and interest in, to and under the following
property, whether now owned or existing, hereafter acquired or arising, or in
which the Debtor now or hereafter has any rights, and wheresoever located (the “Collateral”):

 

(a)           all of the Purchased Loans including
those identified in Schedule I hereto, all Income from such Purchased
Loans and all proceeds of all of the foregoing, and

 

(b)           all Hedging Transactions relating to
Purchased Loans entered into by Seller and all proceeds thereof.

 

The following terms shall
have the following meanings. Such definition shall be equally applicable to the
singular and plural forms of the terms defined.

 

“Buyer” means Secured
Party.

 

“Custodian” means
Deutsche Bank Trust Company Americas or any successor Custodian appointed by
Buyer.

 

“Eligible Loans” means
any of the following types of loans listed in (i) through (iv) below:

 

(i)            Whole Loans (as defined in the
Repurchase Agreement) that are performing (i.e., current and not in monetary or
material non-monetary default such that remedies can be exercised by any
Person) commercial mortgage loans secured by first liens on multifamily and
commercial real property with respect to which the ratio of loan to value as
determined by Buyer, in the exercise of its commercially reasonable judgment,
for the real property securing directly such loan (including for purposes of
this calculation, such loan and any loan senior to or pari passu

 

1-B-1

 

with such loan and secured,
directly or indirectly, by the related property) does not exceed the percentage
stated in the Confirmation.

 

(ii)           Subordinate interests in Whole Loans
(“B Notes”) that are  performing (i.e.,
current and not in monetary or material non-monetary default such that remedies
can be exercised by any Person), commercial mortgage loans secured by first
liens on multifamily and commercial real property with respect to which the
ratio of loan to value as determined by Buyer, in the exercise of its
commercially reasonable judgment, for the real property securing directly such
loan (including for purposes of this calculation, such loan and any loan senior
to or pari passu with such loan and secured, directly or indirectly, by the
related property) does not exceed the percentage stated in the Confirmation.

 

(iii)          Mezzanine Loans (as defined in the
Repurchase Agreement) that are performing (i.e., current and not in monetary or
material non-monetary default such that remedies can be exercised by any
Person) and with respect to which the ratio of total loan to value as
determined by Buyer, in the exercise of its commercially reasonable judgment,
for the real property securing indirectly such loan (including for purposes of
this calculation, such loan and any loan senior to or pari passu with such loan
and secured, directly or indirectly, by the related property) does not exceed
the percentage stated in the Confirmation.

 

(iv)          any other investment presented to and
approved by Buyer in its sole discretion which does not conform to the criteria
set forth in clauses (i), (ii) and (iii) above and which Buyer elects in its
sole discretion to purchase.

 

“Hedging Transactions”
means, with respect to any or all of the Purchased Loans, 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 Buyer or its Affiliates as counterparties or one or more other
counterparties acceptable to Buyer.

 

“Income” means, with
respect to any Purchased Loan at any time, any principal (including any
principal prepayments) thereof and all interest, dividends or other
distributions thereon and with respect to any associated Hedging Transaction,
all proceeds thereof.

 

“Person” means 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.

 

“Purchased Loan Documents”
shall mean, with respect to a Purchased Loan, the documents comprising the
Purchased Loan File for such Purchased Loan.

 

“Purchased Loan File”
shall mean the documents specified as the “Purchased Loan File” in Section 6(b)
of the Repurchase Agreement, together with any additional documents and

 

1-B-2

 

information required to be delivered to Buyer or its designee
(including the Custodian) pursuant to the Repurchase Agreement.

 

“Purchased Loans” means
(i) with respect to any Transaction, the Eligible Loans sold by Seller to Buyer
in such Transaction until such Eligible Loans are repurchased by Seller
pursuant to this Agreement and (ii) with respect to the Transactions in
general, all Eligible Loans sold by Seller to Buyer and any Additional Loans
delivered by Seller to Buyer pursuant to Section 3(a) of the Repurchase
Agreement until (x) such Eligible Loans are repurchased by Seller pursuant to
the Repurchase Agreement or (y) such Additional Loans are re-delivered to
Seller by Buyer pursuant to Section 3 of the Repurchase Agreement.

 

“Repurchase Agreement”
means that certain Amended and Restated Master Repurchase Agreement dated as of
February 15, 2006, between Bear, Stearns Funding, Inc. and Capital Trust, Inc.
and CT BSI Funding Corp., a Delaware corporation (each a “Seller” with joint
and several liability for the obligations of the other Seller) (together such
other annexes and schedules attached thereto) as the same may be amended,
restated or otherwise modified from time to time.

 

“Seller” means Debtor.

 

SCHEDULE 1

 

1.             [B] Participation Interest, dated         
issued to                .
in the amount of $                 ,
in that certain Mortgage Loan [(in the original principal amount of $                  )],
dated as of                   ,
made by                  .
to              
under and pursuant to that certain Loan Agreement dated as of               
between                    and                 and secured by that certain property located
in               ,
[as such B Participation Interest was assigned by                    
to Capital Trust, Inc. pursuant to that certain Assignment and Assumption
Agreement (Participation B) dated as of               ].

 

2.             [$                    
[Senior/Junior] Mezzanine Loan, dated as of                   
made by                     to                   ,
under and pursuant to that certain [Loan Agreement] dated as of                   
between                     and                   ,
[as assigned (together with such loan agreement and all of the other loan
documents evidencing and securing such senior mezzanine loan) by                   
to Capital Trust, Inc. pursuant to that certain Omnibus Assignment dated as of                   ].

 

1-B-3Exhibit 10.31.b

 

Bear, Stearns Funding, Inc.

383 Madison Avenue

New York, New York   10179

 

February 15, 2006

 

Capital Trust, Inc.

and

CT BSI Funding Corp.

410 Park Avenue

New York, New York  10022

 

	
  Re:

  	
  Pricing Terms for Amended
  and Restated Master Repurchase Agreement, dated as of February 15, 2006,
  by and between Bear, Stearns Funding, Inc., Capital Trust, Inc. and
  CT BSI Funding Corp.

  

 

Ladies and Gentlemen:

 

Reference is
made to the Amended and Restated Master Repurchase Agreement, dated as of February 15,
2006 (the “Agreement”), by and between Bear, Stearns Funding, Inc. (“Buyer”),
Capital Trust, Inc., and CT BSI Funding Corp. (each a “Seller” with joint
and several liability for the obligations of the other Seller), as the same may
be amended from time to time.  The
purpose of this letter agreement (the “Letter Agreement”) is to set forth
certain terms governing the circumstances under which the Buyer will enter into
Transactions pursuant to the Agreement. 
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Agreement.

 

1.             Buyer’s Margin Ratio:  Unless otherwise agreed by the parties (which
agreement shall be memorialized in writing in the related Confirmation), the
Purchase Price on any Purchase Date prior to the Commitment Expiration Date
shall be equal to the product of the Market Value of the Purchased Assets and
the applicable Buyer’s Margin Ratio listed in the chart below.

 

2.             Purchase Fee:  The Purchase Fee shall be a one-time, up
front amount, to be paid by Sellers on the initial Purchase Date, equal to the
product of (i) the Maximum Committed Aggregate Purchase Price and (ii) [****]
less any Purchase Fee paid under the Bear, Stearns Funding Repurchase Agreement.

 

3.             Pricing Rate:  The Pricing Rate with respect to each
Transaction shall be one month LIBOR plus the spread listed in the chart below
(unless otherwise agreed by the parties, which agreement shall be memorialized
in writing in the related Confirmation):

 

****Material omitted pursuant to a request for
confidential treatment under Rule 24b-2. 
Material filed separately with the Securities Exchange Commission.

 

 

Buyer’s Margin
Ratio and Pricing Rate Spread for CDO I and CDO II Assets

 

	
   

  	
   

  	
  CDO I Assets

  	
   

  	
  CDO II Assets

  
	
  Buyers Margin 

  Ratio

  	
   

  	
  [****]

  	
   

  	
  [****]

  
	
  Pricing Rate
  Spread  (LIBOR plus number of 

  basis points)

  	
   

  	
  [****]

  	
   

  	
  [****]

  

 

Buyer’s Margin
Ratio and Pricing Rate Spread for Assets other than CDO I and CDO II Assets

 

	
  Combined Property/ Underlying Assets Loan
  to Value Ratio

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mezzanine
  Loans, Junior Participations & B Notes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Buyer’s
  Margin Ratio 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  	
  [****] 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pricing Rate
  Spread (LIBOR plus number of basis points)

  	
   

  	
  [****]

  	
   

  	
   [****]

  	
   

  	
   [****]

  	
   

  	
   [****]

  	
   

  	
   [****]

  	
   

  	
  [****]

  	
   

  	
   [****]

  	
   

  	
    [****]

  	
   

  
																						

 

All loan to value ratios are
determined by a third-party appraiser mutually acceptable to Buyer and Sellers.
 If an Eligible Asset is a hotel, the
Buyer’s Margin Ratio and the Pricing Rate may change as agreed to by the
parties.

 

****Material omitted
pursuant to a request for confidential treatment under Rule 24b-2.  Material filed separately with the Securities
Exchange Commission.

 

 

4.             Sellers must enter into Transactions with respect to at
least three (3) Eligible Assets within six (6) months of the initial
Purchase Date (the “Required Transactions”) in order to maintain the Buyer’s
Margin Ratios set forth above.  Buyer
shall have the right in its sole discretion to reduce the applicable Buyer’s
Margin Ratios by ten percent (10%) in the event that Sellers enter into
Transactions with respect to one (1) or two (2) Eligible Assets.

 

 5.            If
Buyer exercises its right to reduce the Buyer’s Margin Ratio as provided in
paragraph 3 above within six (6) months prior to the Commitment Expiration
Date and a Seller elects to effect an Early Repurchase Date after Buyer has
exercised such right, then no Exit Fee shall be due or payable with respect to
such Early Repurchase Date.

 

The terms of this Letter
Agreement shall supersede all prior Letter Agreements between the parties.  The terms and provisions set forth in this
Letter Agreement shall terminate upon the termination of the Agreement.  Any agreement by Buyer to extend the term of
the Agreement shall not thereby extend any of the terms and provisions set
forth herein with respect to any Transactions entered into on or after any
renewal of the Agreement, unless expressly agreed to by Buyer.

 

This Letter Agreement may be
executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all such counterparts shall constitute one and
the same instrument.

 

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

 

In the event of any
inconsistency between the terms and provisions contained herein and the
Agreement, the terms and provisions of this Letter Agreement shall govern.

 

	
  BEAR,
  STEARNS FUNDING, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ David S.
  Marren

  	
   

  
	
   

  	
   Name:

  	
  David S.
  Marren

  
	
   

  	
   Title:

  	
  Senior Vice
  President

  
				

 

Acknowledged
and Agreed:

 

	
  CAPITAL
  TRUST, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Geoffrey
  G. Jervis

  	
   

  
	
   

  	
  Name:  Geoffrey G. Jervis

  
	
   

  	
  Title:  Chief Financial Officer

  
				

 

CT BSI FUNDING
CORP.

 

	
  By:

  	
   /s/ Geoffrey G. Jervis

  	
   

  
	
   

  	
  Name:  Geoffrey G. Jervis

  
	
   

  	
  Title:  Chief Financial Officer

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