Document:

Exhibit
10.2

 

 

ANNEX
I to 

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

(GOLDMAN SACHS MORTGAGE COMPANY)

 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  1.

  	
   

  	
  APPLICABILITY; OTHER
  APPLICABLE ANNEXES

  	
   

  	
  1

  	
   

  
	
  2.

  	
   

  	
  ADDITIONAL AND
  SUBSTITUTE DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  3.

  	
   

  	
  INITIATION;
  CONFIRMATION; TERMINATION; FEES

  	
   

  	
  19

  	
   

  
	
  4.

  	
   

  	
  MANDATORY PAYMENT OR
  DELIVERY OF ADDITIONAL ASSETS

  	
   

  	
  27

  	
   

  
	
  5.

  	
   

  	
  INCOME PAYMENTS AND
  PRINCIPAL PAYMENTS

  	
   

  	
  27

  	
   

  
	
  6.

  	
   

  	
  CAUTIONARY SECURITY
  INTEREST

  	
   

  	
  29

  	
   

  
	
  7.

  	
   

  	
  PAYMENT, TRANSFER AND
  CUSTODY

  	
   

  	
  30

  	
   

  
	
  8.

  	
   

  	
  CERTAIN RIGHTS OF BUYER
  WITH RESPECT TO THE PURCHASED LOANS

  	
   

  	
  37

  	
   

  
	
  9.

  	
   

  	
  RESERVED

  	
   

  	
  37

  	
   

  
	
  10.

  	
   

  	
  REPRESENTATIONS

  	
   

  	
  37

  	
   

  
	
  11.

  	
   

  	
  NEGATIVE COVENANTS OF
  SELLER

  	
   

  	
  40

  	
   

  
	
  12.

  	
   

  	
  AFFIRMATIVE COVENANTS
  OF SELLER

  	
   

  	
  41

  	
   

  
	
  13.

  	
   

  	
  SINGLE-PURPOSE ENTITY

  	
   

  	
  45

  	
   

  
	
  14.

  	
   

  	
  EVENTS OF DEFAULT;
  REMEDIES

  	
   

  	
  46

  	
   

  
	
  15.

  	
   

  	
  SINGLE AGREEMENT

  	
   

  	
  50

  	
   

  
	
  16.

  	
   

  	
  NOTICES AND OTHER
  COMMUNICATIONS

  	
   

  	
  51

  	
   

  
	
  17.

  	
   

  	
  NON-ASSIGNABILITY

  	
   

  	
  51

  	
   

  
	
  18.

  	
   

  	
  GOVERNING LAW; CONSENT
  TO JURISDICTION; WAIVER OF JURY TRIAL

  	
   

  	
  52

  	
   

  
	
  19.

  	
   

  	
  NO RELIANCE;
  DISCLAIMERS

  	
   

  	
  52

  	
   

  
	
  20.

  	
   

  	
  INDEMNITY AND EXPENSES

  	
   

  	
  54

  	
   

  
	
  21.

  	
   

  	
  DUE DILIGENCE

  	
   

  	
  55

  	
   

  
	
  22.

  	
   

  	
  SERVICING

  	
   

  	
  55

  	
   

  
	
  23.

  	
   

  	
  TREATMENT FOR TAX
  PURPOSES

  	
   

  	
  56

  	
   

  
	
  24.

  	
   

  	
  INTENT

  	
   

  	
  56

  	
   

  
	
  25.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  57

  	
   

  

 

 i
 

 

 

	
  SCHEDULE 1

  	
   

  	
  Purchase Percentages
  and Applicable Spreads

  	
   

  	
  1-1

  	
   

  
	
  SCHEDULE
  2

  	
   

  	
  Purchased Loan
  Information

  	
   

  	
  2-1

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
   

  	
  Form of
  Confirmation

  	
   

  	
   

  	
   

  
	
  EXHIBIT II

  	
   

  	
  Authorized
  Representatives of Seller

  	
   

  	
   

  	
   

  
	
  EXHIBIT III

  	
   

  	
  Form of
  Custodial Delivery Certificate

  	
   

  	
   

  	
   

  
	
  EXHIBIT IV-1

  	
   

  	
  Form of Power of
  Attorney to Buyer

  	
   

  	
   

  	
   

  
	
  EXHIBIT IV-2

  	
   

  	
  Form of Power of
  Attorney to Seller

  	
   

  	
   

  	
   

  
	
  EXHIBIT V

  	
   

  	
  Representations
  and Warranties Regarding Purchased Loans

  	
   

  	
   

  	
   

  
	
  EXHIBIT VI

  	
   

  	
  Form of Blocked
  Account Agreement

  	
   

  	
   

  	
   

  
	
  EXHIBIT VII

  	
   

  	
  Form of Bailee Agreement

  	
   

  	
   

  	
   

  

 

 ii

 

Supplemental Terms and Conditions

This Annex I forms a part of the Amended and
Restated Master Repurchase Agreement dated as of October 13, 2006 between
Gramercy Warehouse Funding II LLC and GKK Trading Warehouse II LLC, each as
seller, and Goldman Sachs Mortgage Company, as buyer (together with Annex I,
the “Agreement”) and amends and restates that certain Master Repurchase
Agreement dated January 3, 2005 between Gramercy Warehouse Funding II LLC and
Buyer (as such agreement may have been amended from time to time, the “Original
Agreement”).  Capitalized terms used
in this Annex I without definition shall have the respective meanings
assigned to such terms in the Agreement. 
This Annex I is intended to supplement the Agreement and shall,
wherever possible, be interpreted so as to be consistent with the Agreement;
however, in the event of any conflict or inconsistency between the provisions
of this Annex I, on the one hand, and the provisions of the Agreement, on
the other, the provisions of this Annex I shall govern and control.  All references in the Agreement and in this
Annex I to “the Agreement” shall be deemed to mean and refer to the Agreement,
as supplemented and modified by this Annex I or as otherwise modified
after the date hereof.

1.                                      APPLICABILITY;
OTHER APPLICABLE ANNEXES

(a)           Paragraph 1 of the Agreement (“Applicability”)
is hereby deleted and replaced with the following:

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

(b)           In addition to this Annex I and
the Schedules hereto, the following Annexes and any Schedules thereto shall
form a part of the Agreement and shall be applicable thereunder:

Annex II — Names and Addresses for Communications
Between Parties.

2.                                      ADDITIONAL
AND SUBSTITUTE DEFINITIONS

(a)           The following capitalized terms in
Paragraph 2 of the Agreement (“Definitions”) are hereby deleted in their
entirety:

(i)            “Additional Purchased Securities”;

(ii)           “Buyer’s Margin Amount”;

(iii)          “Buyer’s Margin Percentage”;

(iv)          “Margin Notice Deadline”;

(v)           “Prime Rate”;

(vi)          “Seller’s Margin Amount”; and

 

 

(vii)         “Seller’s Margin Percentage”.

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

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

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

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

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

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

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

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

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

“Purchase Price” shall mean, with respect to
any Purchased Loan the price at which such Purchased Loan is transferred by
Seller to Buyer on the applicable Purchase Date.  The Purchase Price as of any Purchase Date
for any Purchased Loan of a particular Loan Type shall be an amount (expressed
in 

 2
 

 

 

dollars) equal to the
product obtained by multiplying (i) the Market Value of such Purchased Loan by
(ii) the Purchase Percentage for the related Loan Type.

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

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

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

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

(c)           In addition to the terms defined in
Paragraph 2 of the Agreement  (“Definitions”)
not otherwise deleted pursuant to Section 2(a) of this Annex I and the terms
defined in Section 2(b) of this Annex I, the following capitalized terms shall
have the respective meanings set forth below:

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

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

“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.

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

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

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

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

 3
 

 

 

“Applicable Spread” shall mean, (i) with
respect to a Purchased Loan, so long as no Event of Default shall have occurred
and be continuing, the per annum rate specified in Schedule 1 attached hereto
as being the “Applicable Spread” for the Purchased Loans in such Loan Type, and
(ii) in each case, after the occurrence and during the continuance of an Event
of Default, the applicable per annum rate described in clause (i) of this
definition, plus 400 basis points (4.0%).

“Appraisal” shall mean an appraisal of any Eligible Property prepared by a licensed appraiser
approved by Buyer in its reasonable discretion, in accordance with the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation, in
compliance with the requirements of Title 11 of the Financial Institution
Reform, Recovery and Enforcement Act and utilizing customary valuation methods
such as the income, sales/market or cost approaches, as any of the same may be
updated by recertification from time to time by the appraiser performing such
Appraisal.

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

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

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

“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.

“Bailee” shall mean such third party as Buyer
and Seller shall mutually approve in their sole discretion.

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

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

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

“Blocked Account Agreement” shall mean the
Blocked Account Agreement, in the form attached hereto as Exhibit VI (or
such other form as shall have been approved by Buyer, such approval not to be
unreasonably withheld, delayed or conditioned), executed by Buyer, Seller and
the Depository Bank (and any amendment thereto or any successor thereto or
replacement thereof executed by Buyer, Seller and the Depository Bank).

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

 4
 

 

 

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

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

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

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

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

(iii)          a
majority of the members of the board of directors of such Person changes during
any twelve (12) month period after the date hereof.

“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.

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

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

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

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

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

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

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

 5
 

 

 

“Defaulted Loan” shall mean any Purchased Loan
as to which (A) there is a material breach beyond any applicable cure
period of a material representation, warranty or covenant by the related
borrower or obligor under the applicable Purchased Loan Documents or by Seller
under Exhibit V, (B) there is a material default beyond any applicable
cure period under the related Purchased Loan Documents in the payment when due
of interest, principal or any other amounts which material default continues,
(C) any other material “Event of Default” under the related Purchased Loan
Document, (D) to the extent that the related Transaction is deemed a loan
under federal, state or local law Buyer ceases to have a first priority
perfected security interest or (E) the related Purchased Loan File or any
portion thereof has been released from the possession of the Custodian under
the Custodial Agreement to anyone other than Buyer or any Affiliate of Buyer
except in accordance with the terms of the Custodial Agreement.

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

“Depository Bank” shall mean such depository
bank appointed by Seller with the prior written consent of Buyer which delivers
a deposit account agreement in the form of the Blocked Account Agreement or
another form reasonably acceptable to Buyer.

“Diligence Fee” shall mean fees (so long as no
Event of Default is continuing, not to exceed $50,000 annually with respect to
this Agreement and the Securities Repurchase Agreement) payable by Seller to
Buyer in respect of Buyer’s out-of-pocket expenses (other than legal expenses)
incurred in connection with its review of the Diligence Materials hereunder and
under the Securities Repurchase Agreement.

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

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

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

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

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

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

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

 6
 

 

 

“Eligible Loans” shall mean any of the
following types of transitional or stabilized loans listed in (i) through (iv)
below, (v) acceptable to Buyer in the exercise of its sole and absolute
discretion, (w) secured directly or indirectly by an Eligible Property, (x)
which has a loan term equal to or less than 10 years (assuming exercise of all
extension options), (y) as to which the applicable representations and
warranties set forth in Exhibit V are true and correct in all material respects
as of the applicable Purchase Date, and (z) has a maximum LTV  specified in Schedule 1 for the related Loan
Type:

(i)            performing
Mezzanine Loans (or participation interests therein).

(ii)           performing
Mortgage Loans secured by first liens on Eligible Properties (“First
Mortgage Loans”).

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

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

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

“Eligible Property” shall mean a property that
is a multifamily, retail, office, industrial, warehouse, condominium or
hospitality property or such other property type acceptable to Buyer in the
exercise of its good faith business judgment; provided, however, that
healthcare related properties, such as assisted living, nursing homes, acute
care, rehabilitation centers, diagnostic centers and psychiatric centers, shall
not qualify as an Eligible Property.

“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 Annex I and,
as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.

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

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

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

 

 7

 

 

“Facility Amount” shall mean, as of any date of
determination, the sum of (i) $300,000,000 less the Securities Aggregate
Repurchase Price outstanding under the Securities Repurchase Agreement as of
such date and (ii) all or any portion of the Future Advance Facility Amount
with respect to which the conversion option set forth in Section 3(s) of this
Annex I has been exercised by Seller.

“Facility
Termination Date” shall mean September 13, 2009 unless extended pursuant to
Section 3(q) of this Annex I.

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

“Fee Letter” shall
mean that certain amended and restated letter agreement, dated the date hereof
between Buyer, Goldman, Sachs & Co. and Seller, as the same may be amended,
supplemented or otherwise modified from time to time.

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

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

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

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

“Fitch” means
Fitch Inc.

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

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

 8
 

 

 

“Future Advance
Facility Amount” shall mean an amount equal to $100,000,000, or, in the event
of a conversion as provided in Section 3(s), such lesser amount with respect to
which Seller has not elected to exercise the option described in Section 3(s).

“Future Advance
Loan” shall mean any Eligible Loan with respect to which there exists a
continuing obligation on the part of the holder of the Eligible Loan after the
related closing date of such Eligible Loan to provide additional funding to the
underlying borrower, upon the terms and conditions of the underlying loan
documents for such Eligible Loan.

“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.

“Guarantee” shall
mean, as to any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner providing
for the payment of any Indebtedness of any other Person or otherwise protecting
the holder of such Indebtedness against loss (whether by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, or to take-or-pay or otherwise); provided that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business.  The amount of any Guarantee
of a Person shall be deemed to be an amount equal to the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith in accordance with GAAP.  The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

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

“Guaranty” shall
mean that certain Guaranty dated as of January 3, 2005, made by Guarantor in
favor of Buyer, as the same may be amended, supplemented or otherwise modified
from time to time.

“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 or the underlying obligor with respect to any Purchased Loan and
pledged to Seller as collateral for such Purchased Loan, with one or more
counterparties whose unsecured debt is rated at least AA (or its equivalent) by
any Rating Agency or, with respect to any Hedging Transaction pledged to Seller
as additional collateral for a Purchased Loan, such other rating requirement
applicable to such Hedging Transaction set forth in the related Purchased Loan
Documents or which is otherwise reasonably acceptable to Buyer; provided
that Seller shall not grant or permit any liens, security interests, charges,
or encumbrances with respect to any such hedging arrangements for the benefit
of any Person other than Buyer.

“Indebtedness”
shall mean, for any Person: 
(a) obligations created, issued or incurred by such Person for
borrowed money (whether by loan, the issuance and sale of debt securities or
the sale of property to another Person subject to an understanding or
agreement, contingent or otherwise, to repurchase such property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the

 9
 

 

respective services are
rendered; (c) Indebtedness of others secured by a lien on the property of
such Person, whether or not the respective Indebtedness so secured has been
assumed by such Person; (d) obligations (contingent or otherwise) of such
Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person;
(e) Capital Lease Obligations of such Person; (f) obligations of such
Person under repurchase agreements or like arrangements; (g) Indebtedness of
others Guaranteed by such Person; (h) all obligations of such Person
incurred in connection with the acquisition or carrying of fixed assets by such
Person; and (i) Indebtedness of general partnerships of which such Person
is a general partner.

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

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

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

a creditor,
supplier or service provider (including provider of professional services) to
Seller or any of its equityholders or affiliates (other than a company that
routinely provides professional independent managers or directors and which
also provides lien search and other similar services to Seller or any of its
equityholders or affiliates in the ordinary course of business);

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

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

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

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

	
  LIBOR

  
	
  1 - Reserve Requirement

  

 

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

 10
 

 

 

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

(ii)           On
any Pricing Rate Determination Date on which no such rate appears on Telerate
Page 3750 as described above, LIBOR for the next Pricing Rate Period will be
determined on the basis of the arithmetic mean of the rates at which deposits
in United States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such date to prime banks in the London interbank
market for a one-month period.

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

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

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

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

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

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

“Mezzanine Note” shall mean a note or other
evidence of indebtedness of the owner or owners of direct or indirect equity
ownership interests in an underlying real property owner secured by a pledge of
such ownership interests.

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

 11
 

 

 

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

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

“Mortgage” shall mean the mortgage, deed of
trust, deed to secure debt or other instruments, creating a valid and
enforceable first or second lien, as applicable, on or a first or second
priority ownership interest in a Mortgaged Property.

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

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

“Mortgaged Property” shall mean the real
property or properties securing repayment of the debt evidenced by a Mortgage
Note, or, in the case of any Mezzanine Loan, owned indirectly by the related
obligor.

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

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

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

“Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, any vice chairman
and the chief financial officer of such Person or, for the purpose of executing
certificates, the president, the vice president and counsel responsible
therefor.

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

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

“Plan” shall mean an employee benefit or other
plan established or maintained during the five year period ended prior to the
date of the 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 the Agreement, been

 12
 

 

required to make
contributions and that is covered by Title IV of ERISA or Section 302 of ERISA
or Section 412 of the Code.

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

“Portfolio Loans” shall mean all of the
Purchased Loans.

“Portfolio Securities” has the meaning
specified in the Securities Repurchase Agreement.

“Pre-Existing Loans” 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, the following due diligence information relating
to such New Loan to be provided by Seller to Buyer pursuant to this Annex I:

(i)            Seller’s
internal investment committee memorandum, among other things, outlining the
proposed transaction, including potential transaction benefits and all material
underwriting risks, and Underwriting Issues, anticipated exit strategies and
all other characteristics of the proposed transaction that a prudent buyer
would consider material;

(ii)           current
rent roll, if applicable;

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

(iv)          indicative
interest coverage ratios;

(v)           indicative
loan-to-value ratio;

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

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

(a)           engineering and structural reports;

(b)           current Appraisal;

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

(d)           seismic reports; and

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

(viii)        documents
evidencing such New Loan, or current drafts thereof, including, without
limitation, underlying debt and security documents, guaranties, underlying
borrower’s 

 13
 

 

 

organizational documents,
warrant agreements, loan and collateral pledge agreements, and intercreditor
agreements, as applicable;

(ix)           a
list that specifically identifies any Purchased Loan Documents that relate to
such Purchased Loan but are not in Seller’s possession;

(x)            in
the case of a participation interest, all information described in this
definition which would otherwise be provided for the underlying Mortgage Loan
if it constituted an Eligible Loan except that, as to items set forth in
subparagraphs (vii) and (xii), to the extent Seller possesses such information
or has access to such information because it was provided to the related lead
lender and made available to Seller, and in addition, all documentation
evidencing the participation interest;

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

(xii)          analyses
and reports with respect to such other matters concerning the New Loan as Buyer
may in its reasonable discretion require.

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

“Pricing Rate Period” shall mean (a) in the
case of the first Pricing Rate Period with respect to any Transaction, the
period commencing on and including the Purchase Date for such Transaction and
ending on and including the last day of the calendar month in which the
Purchase Date occurs, (b) in the case of any subsequent Pricing Rate Period,
the period commencing on and including the first day of a calendar month and
ending on and including the last day of such calendar month, and (c) in the
case where the Remittance Date is not the first day of a calendar month, the
period commencing on and excluding the Remittance Date and ending on (but
including) the subsequent Remittance Date; provided, however,
that in no event shall any Pricing Rate Period end subsequent to the Repurchase
Date.

“Principal Payment” shall mean, with respect to
any Purchased Loans, any payment or prepayment of principal received in respect
thereof (including casualty or condemnation proceeds to the extent such
proceeds are required under the applicable Purchase Loan Documents to be
applied toward the balance of the underlying loan, or are not otherwise required
under the underlying loan documents to be reserved, escrowed, readvanced or
applied for the benefit of the obligor or the underlying real property).  For purposes of clarification, prepayment
premiums, fees or penalties shall not be deemed principal.

“Purchase Percentage” shall mean, with respect
to any Purchased Loan, the “Purchase Percentage” specified in Schedule 1 for
the related Loan Type (or as otherwise specified in the applicable
Confirmation).

“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 7(b) of this Annex I,
together with any additional documents and information required to be delivered
to Buyer or its designee (including the Custodian) pursuant to this Annex I.

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

 14
 

 

 

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

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

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

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

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

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

“Remittance Date” shall mean the last calendar
day of each month, or the immediately preceding Business Day, if such calendar
day shall not be a Business Day.

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

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

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

“Reserve Requirement” shall mean, with respect
to any Pricing Rate Period, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect during such
Pricing Rate Period (including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto) dealing with reserve requirements

 15
 

 

prescribed for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of such Board of Governors) maintained by Buyer.

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

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

“Securities Aggregate Repurchase Price” shall
mean, as of any date of determination, the “Aggregate Repurchase Price” (as
defined in the Securities Repurchase Agreement) as of such date.

“Securities
Repurchase Agreement” shall mean
the Master Repurchase Agreement dated as of the date hereof between Seller and
Goldman, Sachs & Co., as amended supplemented or otherwise modified from
time to time.

“Seller” shall mean, individually and
collectively, Gramercy Warehouse Funding II LLC, a Delaware limited liability
company and GKK Trading Warehouse II, LLC, a Delaware limited liability
company, together with their permitted successors and assigns.  For the avoidance of doubt, either Seller may
act to bind the other Seller. Any notice, election or act taken by one Seller
under this Agreement or any of the other Transaction Documents shall be deemed
to constitute the action of the other Seller, and Buyer may in all such
circumstances rely on the action taken by either one as the action of both
entities.

“Servicer” shall mean GKK Manager LLC or an
affiliate thereof, or such other servicer mutually acceptable to Buyer and
Seller.

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

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

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

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

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

(iii)          modifies
the payments of principal and interest when due of the Purchased Loan in
question;

(iv)          changes
the frequency of scheduled payments of principal and interest in respect of a
Purchased Loan;

(v)           subordinates
the lien priority of the Purchased Loan or the payment priority of the
Purchased Loan other than subordinations expressly required under the then
existing terms

 16
 

 

and conditions of the
Purchased Loan (provided, however, the foregoing shall not
preclude the execution and delivery of subordination, nondisturbance and
attornment agreements with tenants, subordination to tenant leases, easements,
plats of subdivision and condominium declarations and similar instruments which
in the commercially reasonable judgment of Seller do not materially adversely
affect the rights and interest of the holder of the Purchased Loan in
question);

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

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

(viii)        waives
any due-on-sale or due-on-encumbrance provisions of the Purchased Loan other
than waivers required to be given under the then existing Purchased Loan
Documents; and

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

“Single-Purpose Entity” shall mean a
Person, other than an individual, which is formed or organized solely for the
purpose of holding, directly or indirectly and subject to this Agreement and
the Securities Repurchase Agreement, the Purchased Loans and the Portfolio
Securities, does not engage in any business unrelated to the Purchased Loans
and the Portfolio Securities, does not have any assets other than the Purchased
Loans and the Portfolio Securities or any indebtedness other than as permitted
by the Agreement and the Securities Repurchase Agreement, has its own separate
books and records and its own accounts, in each case which are separate and
apart from the books and records and accounts of any other Person, holds itself
out as being a Person, separate and apart from any other Person and provides in
its partnership agreement or limited liability company agreement (as
applicable) for the inclusion of at least one Independent Director.  If  the
foregoing entity is a limited partnership or limited liability company, its
partnership agreement or limited liability company agreement (as applicable)
shall provide that that the dissolution and winding up or bankruptcy or
insolvency filing of such partnership or limited liability company shall
require the unanimous consent of all partners or members (including the
affirmative vote of the independent directors) and if the foregoing entity is a
single-member limited liability company whose single member is not itself a
Single-Purpose Entity, its limited liability company agreement shall provide
that upon the occurrence of any event that causes its sole member to cease to
be a member during the term of this Agreement, at least one of its independent
directors shall automatically be admitted as the sole member and shall preserve
and continue the existence of the entity without dissolution.

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

“Subsidiary” shall mean,
with respect to any Person, any corporation, partnership or other entity of
which at least a majority of the securities or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or

 17

 

 

other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.

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

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

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

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

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

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

“Total Indebtedness”
shall mean, with respect to any Person, as of any date of determination, the
aggregate Indebtedness of such Person as of such date less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP as of
such date.

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

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

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

“Transaction Documents”
shall mean, collectively, the Agreement (including this Annex I and any other
annexes and schedules attached to the Agreement), the Blocked Account
Agreement, the Custodial Agreement, the Fee Letter, the Servicing Agreement,
all Transfer Documents, all Confirmations

 18
 

 

executed pursuant to this Annex I in connection with
specific Transactions and all other documents executed in connection herewith
and therewith.

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

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

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

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

“Underwriting Issues”
shall mean, with respect to any Eligible Loan 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 reasonable care and diligence by a reasonable institutional
mortgage or mezzanine loan buyer in determining whether to originate or acquire
the Eligible Loan in question under the circumstances, would, in the context of
the totality of the Transaction in question, be considered a materially “negative”
factor (either separately or in the aggregate with other information),
(including, but not limited to, whether any of the Eligible Loans were
repurchased from any warehouse loan facility or a repurchase transaction due to
the breach of a representation and warranty or a material defect in loan
documentation or closing deliveries (such as any absence of any material
Purchased Loan Document(s)).

3.                 INITIATION;
CONFIRMATION; TERMINATION; FEES

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

(a)  Seller may, from time to time, prior to the
Facility Termination Date, request that Buyer enter into a Transaction with
respect to one or more New Loans.  Seller
shall initiate each request by submitting a Preliminary Due Diligence Package
for Buyer’s review and approval. 
Notwithstanding anything to the contrary herein, Buyer shall have no
obligation to consider for purchase any proposed Transaction that has an
aggregate Repurchase Price (excluding the Price Differential with respect to
the Purchased Loans as of the date of determination) that when combined with
all Purchased Loans which have not been repurchased by Seller hereunder exceeds
the Facility Amount.  Buyer shall have
the right to review all New Loans proposed to be sold to Buyer in any Transaction
and to conduct its own due diligence investigation of such New Loans as Buyer
determines is reasonably necessary. 
Seller agrees to 

 19
 

 

promptly reimburse Buyer for its Diligence Fees upon
request for payment or reimbursement thereof. 
Notwithstanding any provision to the contrary herein or any other
Transaction Document, Buyer shall be entitled to make a determination, in its
sole and absolute discretion, whether a New Loan qualifies as an Eligible Loan
and whether to reject any or all of the New Loans proposed to be sold to Buyer
by Seller.  Buyer shall have no
obligation to consider for purchase any New Loans proposed by Seller after the
original Facility Termination Date or during the Facility Extension Period (if
applicable).

(b)  Upon Buyer’s receipt of a complete Preliminary
Due Diligence Package with respect to a proposed Transaction, Buyer shall have
the right within two (2) Business Days, to request in a Supplemental Due
Diligence List such additional Diligence Materials and deliveries that Buyer
deems necessary to properly evaluate the New Loans.  Upon Buyer’s receipt of such additional
Diligence Materials or Buyer’s waiver thereof, Buyer shall within five (5)
Business Days either (i) notify Seller of Buyer’s intent to proceed with the
Transaction and of its determination with respect to the Purchase Price and the
Market Value for the related New Loans (such notice, a “Preliminary Approval”)
or (ii) deny, in Buyer’s sole and absolute discretion, Seller’s request for the
applicable Transaction.  Buyer’s failure
to respond to Seller within five (5) Business Days, as applicable, shall be
deemed to be a denial of Seller’s request to enter into the proposed
Transaction, unless Buyer and Seller have agreed otherwise in writing.

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

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

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

(iii)   Appraisal.  If obtained by Seller, Buyer shall have
received either an Appraisal (from the closing of the financing of the related
Eligible Property or Properties) or a Draft Appraisal of the related Eligible
Property or Properties.  If Buyer
receives only a Draft Appraisal prior to entering into a Transaction, Seller
shall use its best efforts to deliver an Appraisal on or before thirty (30)
days after the Purchase Date.

(iv)   Insurance.  Buyer shall have received certificates or
other evidence of insurance detailing insurance coverage in respect of the
related Eligible Property or Properties of types (including but not limited to
casualty, general liability and terrorism insurance coverage (consistent with
market standard requirements)), in amounts, with insurers and otherwise in
compliance with the terms, provisions and conditions set forth in the Purchased
Loan Documents and otherwise reasonably satisfactory to Buyer.  Such certificates or other evidence shall
indicate that Seller (or as to a New Loan that is a participation interest, the
lead lender on the related

 20
 

 

whole loan in which
Seller is a participant) will be named as an additional insured as its interest
may appear and shall contain a loss payee endorsement in favor of such
additional insured with respect to the policies required to be maintained under
the Purchased Loan Documents.

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

(vi)   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 any existing
Title Policies relating to the New Loan, Eligible Property or Properties,
Seller and related underlying obligor, such searches to be conducted in each
location Buyer shall reasonably designate; provided that such materials were a
part of the closing file for the financing of such Eligible Property or
Properties.

(vii)   Opinions
of Counsel.  Buyer shall have
received copies of all legal opinions with respect to the New Loan which shall
be in form and substance reasonably satisfactory to Buyer.

(viii)   Title
Policy.

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

(b)   With
respect to any New Loan that is a First Mortgage B-Note, Seller shall have
delivered to Buyer a copy of an unconditional commitment to issue a Title
Policy or endorse an existing Title Policy in favor of the lead lender to whom
the related obligor issued the related Mortgage Note, in an amount not less
than the amount of such Mortgage Note and, if the First Mortgage B-Note is
evidenced by a separate promissory note rather than a participation
certificate, in an amount not less than the amount of all Mortgage Notes
secured by the Mortgage that secures the related promissory notes.

(c)   With
respect to a Mezzanine Loan, (i) Seller shall have delivered to Buyer such
evidence as Buyer on a case-by-case basis, in its sole discretion, shall
require of the ownership of the real property underlying the New Loan
including, without limitation, a copy of a Title Policy, issued by a title
insurer and with such endorsements (including, without limitation, a “Mezzanine
Lender’s Endorsement”, if obtained by Seller), in each case acceptable to Buyer
in its sole discretion, showing that title is vested in the related obligor or
in an entity in whom such obligor holds an equity interest and (ii) if obtained
by Seller, Seller shall have delivered to Buyer an Eagle 9 UCC Title Policy
which policy shall (x) provide an amount of insurance that shall be not less
than the related Repurchase Price or such other amount as Buyer shall require
in its sole discretion, (y) shall insure Seller’s security interest in the
equity interests pledged and (z) be assignable by its terms with a transfer of
the Mezzanine Loan, as applicable.

 21
 

 

(ix)   Additional
Real Estate Matters.  To the extent
obtained by Seller, Seller shall have delivered to Buyer such other real estate
related certificates and documentation as may have been requested by Buyer,
such as: (y) certificates of occupancy issued by the appropriate Governmental
Authority and either letters certifying that the related Eligible Property or
Properties is in compliance with all applicable zoning laws issued by the
appropriate Governmental Authority or evidence that the related Title Policy includes
a zoning endorsement and (z) abstracts of all leases in effect at the Mortgaged
Property delivered in connection with the New Loan.

(x)   First
Mortgage B Notes.  In the case of a
First Mortgage B Note, in addition to the delivery of the items in clauses
(vi), (vii) and (viii), Buyer shall have received all documentation specified
in clauses (i) through (v) and (ix) as if the underlying Mortgage Loan were the
direct collateral to the extent Seller possesses such documentation or has
access to such documentation because it was provided to the related lead lender
and made available to Seller and, to the extent applicable, all documents evidencing
a participation interest, including, but not limited to, an original
participation certificate, if applicable, and the related participation
agreement and/or the related intercreditor agreement.

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

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

(d)   Buyer shall
promptly deliver to Seller a written confirmation of any Final Approval in the
form of Exhibit I attached hereto of each proposed Transaction (a “Confirmation”);
provided, that unless otherwise agreed by Seller, Buyer shall deliver a
separate Confirmation with respect to each New Loan which will be the subject
of a Transaction.  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
Agreement the Pricing Rate on each Pricing Rate Determination Date for the
related Pricing Rate Period and notify Seller of such rate for such period on
the Reset Date.

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

 22
 

 

 

(1)   No
(A) monetary or material non-monetary Default or (B) Event of Default under the
Agreement shall have occurred and be continuing as of the Purchase Date for
such proposed Transaction;

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

(3)   Seller
shall have delivered to the Buyer an Officer’s Certificate of the Seller
certifying that (A) the representations and warranties made by Seller in any of
the Transaction Documents are true and correct in all material respects as of
the Purchase Date for such Transaction and unless waived by Buyer (except such
representations which by their terms speak as of a specified date).  If requested by Buyer, Seller shall also
deliver an Officer’s Certificate covering such matters as Buyer may request
with respect to matters relating to the Agreement or the other Transaction
Documents;

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

(5)   The
applicable Purchased Loan File described in Section 7(b) shall have been
delivered to Custodian or Bailee and Buyer shall have received a Trust Receipt
from Custodian or Bailee with respect to such Purchased Loan File;

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

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

(8)   No
Purchased Loan shall be a Delinquent Loan or a Defaulted Loan;

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

(10)   Buyer
shall have determined that after giving effect to the proposed Transaction, (i)
the Repurchase Price (exclusive of accrued and unpaid Price Differential) of no
single Purchased Loan exceeds 25% of the Aggregate Repurchase Price and (ii)
the aggregate Repurchase Price (exclusive of accrued and unpaid Pricing Differential)
of Purchased Loans secured directly or indirectly by Eligible Properties which
are hotels, lodging or hospitality properties does not exceed 35% of the
Aggregate Repurchase Price;

 23
 

 

(11)   No
event shall have occurred or circumstance shall exist which has a Material
Adverse Effect;

(12)   There
shall not have occurred (i) a material adverse change in the financial
condition of the Buyer which affects (or can reasonably be expected to affect) materially
and adversely the ability of the Buyer to fund its obligations under this
Agreement; (ii) a material change in financial markets, an outbreak or
escalation of hostilities or a material change in national or international
political, financial or economic conditions; (iii) a general suspension of
trading on major stock exchanges or suspension of trading in Guarantor’s stock;
or (iv) a disruption in or moratorium on commercial banking activities or
securities settlement services.

(f)   (i) Each
Confirmation, together with the Agreement, shall be conclusive evidence of the
terms of the Transaction covered thereby unless objected to in writing by
Seller no more than two (2) Business Days after the date such Confirmation is
received by Seller.  An objection sent by
Seller with respect to any Confirmation must state specifically that the
writing is an objection, must specify the provision(s) of such Confirmation
being objected to by Seller, must set forth such provision(s) in the manner
that Seller believes such provisions should be stated, and must be received by
Buyer no more than two (2) Business Days after such Confirmation is received by
Seller.  Buyer, in its sole discretion,
may issue another Confirmation addressing Seller’s objections or may elect not
to proceed with the proposed Transaction.

(ii)   With respect
to any Transaction involving an Eligible Loan that is a Future Advance Loan,
the Seller shall indicate in the related Preliminary Due Diligence Package that
such Eligible Loan is a Future Advance Loan and shall provide Buyer with the
information required to complete the Confirmation regarding such Future Advance
Loan, as well as, as the then current total of the remaining unfunded principal
amount of all Purchased Loans that constitute Future Advance Loans.  On the purchase date of a Future Advance
Loan, (i) the amounts designated as the “Remaining Future Advance Amount” on
the related Confirmation shall be allocated to reduce the available amount of
the Future Advance Facility Amount and (ii) the amounts designated as the “Initial
Advance Amount” and the “Funded Future Advance Amount” shall be allocated to
reduce the available amount of the Facility Amount.  Amounts allocated to the Future Advance
Facility Amount and subsequently allocated to the Facility Amount in accordance
with clause (ii) shall thereafter, be available to the extent set forth herein,
for subsequent Future Advance Loans.  In
no event shall the aggregate unfunded portion of all Future Advance Loans that
are Purchased Loans exceed the Future Advance Facility Amount.

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

(i)   No
Event of Default shall be continuing or would occur or result from such early
repurchase,

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

(iii)   Seller
shall pay to Buyer on the Early Repurchase Date, an amount equal to the sum of
the Repurchase Price for such Transaction, all Costs and any other amounts
payable by Seller and outstanding under the Agreement (including, without limitation,
Section 3(m) of this

 24
 

 

Annex I) with respect to
such Transaction against transfer to Seller or its agent of the related
Purchased Loan.

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

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

(j)   In lieu of
repaying the Repurchase Price, in whole or in part, with respect to the
Transactions when and as otherwise required or permitted by the Agreement,
Seller may elect to deposit any such amount (the “Early Repurchase Deposit”)
with Buyer (the date of such deposit, the “Early Repurchase Deposit Funding
Date”) until such date as the application of the Early Repurchase Deposit
towards the Repurchase Price would not cause Buyer to incur the costs described
in Section 3(m) hereof (the “Early Repurchase Deposit Application Date”).  The Early Repurchase Deposit shall be held in
an interest-bearing account controlled by Buyer and, at Buyer’s option, shall
be accompanied by a payment (as estimated by Buyer) equal to the difference
between the interest earned on the Early Repurchase Deposit and the Price
Differential that will accrue on a portion of the relevant Transaction equal to
the Early Repurchase Deposit during the period from the Early Repurchase
Deposit Funding Date to the Early Repurchase Deposit Application Date.

(k)   If prior to the
first day of any Pricing Rate Period with respect to any Transaction, Buyer
shall have reasonably determined (which determination shall be conclusive and
binding upon Seller absent manifest error) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for such Pricing Rate Period.  If such notice is given, the Pricing Rate
with respect to such Transaction for such Pricing Rate Period, and for any
subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer,
shall be a per annum rate equal to the sum of (i) the Federal Funds Rate, (ii)
0.25% and (iii) the Applicable Spread (the “Alternative Rate”).

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

 25
 

 

(m)   Upon demand by
Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any net loss
or expense (not to include any lost profit or opportunity) (including, without
limitation, reasonable attorneys’ fees and disbursements) which Buyer actually
sustains or incurs as a consequence of (i) default by Seller in
terminating any Transaction after Seller has given a notice in accordance with
Section 3(g) of a termination of a Transaction, (ii) any payment of all or any
portion of the Repurchase Price, as the case may be, on any day other than a
Remittance Date (including, without limitation, any such loss or expense
arising from the reemployment of funds obtained by Buyer to maintain
Transactions hereunder or from fees payable to terminate the deposits from
which such funds were obtained, provided Seller shall not be obligated to
reimburse Buyer for the incremental cost of reemploying funds or terminating
deposits which arise solely as a result of Buyer depositing funds or employing
funds at a rate calculated other than by reference to LIBOR (as defined
herein)) or (iii) default by Seller in selling Eligible Loans after Seller has
notified Buyer of a proposed Transaction and Buyer has agreed to purchase such
Eligible Loans in accordance with the provisions of the Agreement.  A certificate as to such costs, losses,
damages and expenses, setting forth the calculations therefor shall be
submitted promptly by Buyer to Seller and shall be conclusive and binding on
Seller in the absence of manifest error.

(n)   If (A) the
Transactions are characterized by a U.S. Federal, state or local taxing
authority in a manner other than as described in Section 23 of this Annex
I, or (B) after the date of the Agreement, 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 changes in the
rate of tax on Buyer’s overall net income);

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

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

and the result of any of the foregoing is to increase
the cost to Buyer 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 pay Buyer, within ten (10)
Business Days after written demand therefor is received by Seller, any
additional amounts necessary to compensate Buyer for such increased cost
payable or reduced amount receivable.  If
Buyer becomes aware that it is entitled to claim any additional amounts
pursuant to this Section 3(o), it shall notify Seller in writing of the event
by reason of which it has become so entitled within a reasonable period after
Buyer becomes aware thereof.  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 the Agreement and the repurchase by Seller of any or all of the Purchased
Loans.

(o)   If Buyer shall
have reasonably determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or

 26
 

 

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 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, within five (5) Business Days
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.  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 the Agreement and the repurchase by
Seller of any or all of the Purchased Loans.

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

(q)   The facility
under the Agreement shall terminate on September 13, 2009, unless extended as
provided herein. Provided that (i) no Event of Default has occurred and is continuing
and (ii) Seller shall have paid to Buyer the applicable fees in accordance with
the Fee Letter, Seller may elect by written notice not later than 45 days prior
to such Facility Termination Date to extend the Facility Termination Date for a
period ending on the Remittance Date that is six months after the initial
Facility Termination Date (such period, the “Facility Extension Period”).  During the Facility Extension Period, the
Applicable Spread with respect to each Transaction shall be increased as set
forth in Schedule 1.  On each Remittance
Date during the Facility Extension Period, Seller shall be obligated to pay the
Extended Repurchase Monthly Amount, in addition to payments in respect of the
accrued Price Differential and any other amounts due and payable under this
Agreement, which shall be applied to reduce the Repurchase Price of each
Purchased Loan pro rata.

(r)   From and after
the Facility Termination Date (including during the Facility Extension Period,
if applicable), Buyer shall have no further obligation to purchase any New
Loans.  On the Facility Termination Date,
Seller shall be obligated to repurchase all of the Purchased Loans and transfer
payment of the aggregate Repurchase Price for each such Purchased Loan,
together with the accrued and unpaid Price Differential and all Costs and other
amounts due and payable to Buyer hereunder. 
Following the Facility Termination Date, Buyer shall not be obligated to
transfer any Purchased Loans to Seller until payment in full to Buyer of all
amounts due hereunder; provided, however, upon Seller’s request, Buyer shall
transfer to Seller the Purchased Loans with respect to which Buyer shall have
received the full Repurchase Price and such other amounts payable to Buyer in
respect of such Purchased Loans in accordance with the requirements of this
Annex I, provided an Event of Default is not then continuing and the transfer
of such Purchased Loans would not result in a Margin Deficit.

(s)    Upon written
request by the Seller, all or a portion of the Future Advance Facility Amount
may be converted and added

 27

 

to the Facility Amount,
such that the Future Advance Facility Amount after such conversion shall be
reduced to zero or to such lesser unconverted amount.

4.                                      MANDATORY
PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

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

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

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

5.                                      INCOME
PAYMENTS AND PRINCIPAL PAYMENTS

Paragraph 5 of the Agreement (“Income Payments”) is
hereby deleted and replaced in its entirety by the following provisions of this
Section 5:

(a)           On or before the date hereof, Seller
and Buyer shall establish and maintain with the Depository Bank a deposit
account owned by, in the name of and under the sole control of Buyer with
respect to which the Blocked Account Agreement shall have been executed (such
account, together with any replacement or successor thereof, the “Blocked
Account”).  Seller shall cause all
Income with respect to the Purchased Loans or other assets (if cash) delivered
under Section 4 to be deposited in the Blocked Account no later than the next
Business Day following its collection and receipt thereof.  Simultaneously with the transfer of any Purchased
Loan under Section 3, Seller shall deliver to each Mortgagor or obligor (or the
related collection account bank, as applicable), or the related lead lender or
servicer under a Purchased Loan an irrevocable direction letter in form and
substance satisfactory to Buyer instructing such Person to remit to the Blocked
Account all amounts payable to Seller under the related Purchased Loan (unless
such Mortgagor or obligor or related servicer or lender is already remitting
payments to the Servicer, whereupon Seller shall direct Servicer to remit all
such amounts into the Blocked Account and service such payments in accordance
with the Servicing Agreement and the provisions hereof) and shall provide to
Buyer written proof of such delivery.  If
a Mortgagor or obligor (or the related collection account bank) or the related
lead lender or servicer under a Purchased Loan forwards any Income with respect
to such Purchased Loan to Seller rather than directly to the Blocked Account,
Seller shall (i) deliver an additional irrevocable direction letter to the
applicable Person and cause such Person to 

 28
 

 

forward such amounts directly to the Blocked Account
and (ii) hold such amounts in trust for Buyer and immediately deposit in the
Blocked Account any such amounts.  All
Income in respect of the Portfolio Loans, which may include payments in respect
of associated Hedging Transactions, shall be deposited directly into, or, if
applicable, remitted directly from the applicable underlying collection account
to, the Blocked Account.

(b)           So long as no Event of Default shall
have occurred and be continuing, all Income on deposit in the Blocked Account
in respect of the Portfolio Loans and the associated Hedging Transactions
during each Collection Period shall be applied by the Buyer on the related
Remittance Date as follows:

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

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

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

(iv)          fourth, during
the Facility Extension Period, to Buyer the Extended Repurchase Monthly Amount;

(v)           fifth, during the
Facility Extension Period, to Buyer in respect of the Aggregate Repurchase
Price until the Aggregate Repurchase Price for all of the Purchased Loans has
been reduced to zero; and

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

If on any
Remittance Date, the amounts deposited in the Blocked Account shall be
insufficient to make the payments required under clauses (i) through (iv) of
this Section 5(b), the same shall constitute an Event of Default hereunder.

(c)            If an Event of Default shall have
occurred and be continuing, all Income on deposit in the Blocked Account in
respect of the Purchased Loans and the associated Hedging Transactions shall be
applied on the Business Day next following the Business Day on which such funds
are deposited in the Blocked Account as follows:

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

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

 29
 

 

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

(iv)          fourth, to
Seller, the remainder.

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

(e)           Subject to the other provisions
hereof, Seller shall be responsible for all Costs in respect of any Purchased
Loans to the extent it would be so obligated if the Purchased Loans had not
been sold to Buyer.  Buyer shall provide
Seller with notice of any Costs promptly upon receiving such notice, and Seller
shall pay the amount of any Costs to Buyer by 11:00 a.m., New York time, on the
later of (i) five (5) Business Days after Buyer has informed Seller that such
amount is due under the Purchased Loan Documents and (ii) three (3) Business
Days following Seller’s receipt of such notice.

6.                                      CAUTIONARY
SECURITY INTEREST

Paragraph 6 of the Agreement (“Security Interest”) is
hereby deleted and replaced in its entirety by the following provisions of this
Section 6:

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

(b)           To the extent Buyer is deemed to have
a security interest with respect to the Purchased Loans as provided in Section
6(a) hereof, and with respect to the security interests granted in subsection
(c) of this Section 6, Buyer shall have all of the rights and may exercise all
of the remedies of a secured creditor under the UCC and any other applicable
law.  In furtherance of the foregoing,
(i) Seller, at its sole cost and expense, shall cause to be filed as a
protective filing with respect to the Purchased Loans and as a UCC filing with
respect to the security interests granted in subsection (c)) of this Section 6
one or more UCC financing statements in form satisfactory to Buyer (to be filed
in the filing office indicated therein), in such locations as may be necessary
to perfect and maintain perfection and priority of the outright transfer and
the security interest granted hereby (including under Section 22 of this Annex
I) and, in each case, continuation statements and any amendments thereto
(collectively, the “Filings”), and shall forward copies of such Filings
to Buyer upon completion thereof, and (ii) 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 the Buyer with respect to 

 30
 

 

the Purchased Loans (including under Section 22 of
this Annex I) (including the payments of any fees and taxes required in
connection with the execution and delivery of the Agreement).

(c)           Seller hereby pledges to Buyer, as
security for the performance by Seller of its obligations under all
Transactions, all Hedging Transactions relating to Purchased Loans entered into
by Seller and all proceeds thereof. 
Seller shall take all action as is necessary or desirable to obtain
consent to assignment of any such Hedging Transaction to Buyer and shall cause the
counterparty under each such Hedging Transaction to enter into such document or
instrument satisfactory to Buyer, Seller and such counterparty, pursuant to
which such counterparty will covenant and agree to accept notice from Buyer to
redirect payments under such Hedging Transaction as Buyer may direct.  So long as no Event of Default shall be
continuing, Buyer agrees that it will not redirect payments under any Hedging
Transaction pledged to Buyer pursuant to the terms of this Section 6(c).

(d)           In connection with the repurchase by
Seller of any Purchased Loan in accordance herewith, upon receipt of the
Repurchase Price by Buyer, Buyer will deliver to Seller, at Seller’s expense,
such documents and instruments as may be reasonably necessary to reconvey such
Purchased Loan and any income related thereto to Seller.

7.                                      PAYMENT,
TRANSFER AND CUSTODY

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

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

(b)           With respect to each Table Funded
Purchased Loan, Seller shall cause the Bailee to deliver to the Custodian (with
a copy to Buyer) by no later than 1:00 p.m. (New York time), on the Purchase
Date, by facsimile the related promissory note (or the participation certificate,
as applicable), the Insured Closing Letter and Escrow Instructions, if any, the
Bailee Agreement and a Trust Receipt issued by the Bailee thereunder on or
before the related Purchase Date.  In
connection with the sale of each Purchased Loan, not later than 1:00 p.m., two
(2) Business Days prior to the related Purchase Date (or on the related
Purchase Date, as may be agreed by Buyer and Seller on a case by case basis)
(or with respect to a Table Funded Purchased Loan not later than 1:00 p.m. (New
York time) on the third Business Day following the applicable Purchase Date),
Seller shall deliver or cause Bailee to deliver (with a copy to Buyer) and
release to the Custodian (together with the Custodial Delivery Certificate in
the form attached hereto as Exhibit III), and shall cause the Custodian to
deliver a Trust Receipt on the Purchase Date (or in the case of a Table Funded
Purchased Loan, not later than two (2) Business Days following the receipt by
the Custodian) confirming the receipt of the following original documents
(collectively, the “Purchased Loan File”), pertaining to each of the
Purchased Loans identified in the Custodial Delivery Certificate delivered
therewith:

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

 31
 

 

(A)          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]”) or a lost note affidavit in a form reasonably approved by Buyer, with a
copy of the applicable Mortgage Note attached thereto.

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

(C)           The original 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
Mortgaged Property is located.

(D)          The originals 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 Mortgaged Property
is located.

(E)           The original Assignment of Mortgage
to Buyer for each Purchased Loan, in form and substance acceptable for
recording and signed in the name of the Last Endorsee (in the event that the
Purchased Loan was acquired by the Last Endorsee in 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 while doing business under another
name, the signature must be in the following form: “[Last Endorsee], formerly
known as [previous name]”).

(F)           The originals 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 Mortgaged Property is located.

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

(H)          The original of any security
agreement, chattel mortgage or equivalent document executed in connection with
the Purchased Loan.

(I)            The original Assignment of Leases,
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 

 32
 

 

recordation in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.

(J)            The originals of all intervening
assignments of assignment of leases and rents, if any, or copies thereof, 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
Mortgaged Property is located.

(K)          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 to Buyer,
which UCC assignments shall be in form and substance acceptable for filing in
the applicable jurisdictions.

(L)           The original environmental indemnity
agreement or similar guaranty or indemnity, whether stand-alone or incorporated
into the applicable loan documents (if any).

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

(N)          A disbursement letter from the
Mortgagor to the original mortgagee or other evidence that the Purchased Loan
has been fully disbursed (if applicable).

(O)          Mortgagor’s certificate or title
affidavit (if any).

(P)           A survey of the Mortgaged Property
(if any) as accepted by the title company for issuance of the Title Policy.

(Q)          The original of any participation
agreement, intercreditor agreement and/or servicing agreement executed in
connection with such Purchased Loan.

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

(S)           A copy of the Mortgagor’s opinions of
counsel.

(T)           An assignment of any management
agreements, permits, contracts and other material agreements (if any).

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

 33
 

 

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

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

(X)          All other material 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.

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

If Seller cannot deliver,
or cause to be delivered, any of the documents and/or instruments required
above to be delivered as originals, Seller shall deliver a photocopy thereof
and, unless waived by Buyer, an Officer’s Certificate of Seller certifying that
such copy represents a true and correct copy of the original.  Seller shall then, in the event that Seller
has a legitimate and reasonable opportunity to obtain the original documents in
question if the document in question exists in original form (1) use reasonable
efforts to obtain and deliver the original document within 180 days after the
related Purchase Date (or such longer period after the related Purchase Date as
Buyer may consent to, which consent shall not be unreasonably withheld so long
as Seller is, as certified in writing to Buyer no less often than monthly, in
good faith attempting to obtain the original) and (2) after the expiration
of such reasonable efforts period, deliver to Buyer a certification that
states, despite Seller’s reasonable efforts, Seller was unable to obtain such
original document.

(ii)           With respect to each Purchased Loan
which is a Mezzanine Loan secured by a pledge of the equity ownership interests
in an entity that owns Eligible Property, the following, as applicable:

(A)          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]”) or a lost note
affidavit in a form reasonably approved by Buyer with a copy of the applicable
Mezzanine Note attached thereto.

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

 34
 

 

(C)           The original or a copy of the
intercreditor or loan coordination agreement executed in connection with the
Purchased Loan to the extent the subject borrower, or an affiliate thereof, has
encumbered its assets with senior, junior or similar financing, whether
mortgage financing or mezzanine loan financing.

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

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

(F)           All other material 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.

(G)           An omnibus assignment to Buyer or
other documents necessary and sufficient to transfer to Buyer all of Seller’s
right, title and interest in and to the Purchased Loan.

(H)          The original of any participation
agreement executed in connection with such Purchased Loan.

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

(J)            A copy of the borrower’s opinions of
counsel.

(K)          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 to Buyer,
which UCC assignments shall be in form and substance acceptable for filing in
the applicable jurisdictions.

(L)           The original certificates
representing the pledged equity interests to the extent such interests are in
certificated form.

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

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

(O)          If the pledged equity interests are
not certificated, evidence (which may be an Officer’s Certificate confirming
such circumstances or in the form of an executed instruction to register such
pledge by the mezzanine borrower and acknowledgment by the entity in which such
pledged equity interests are held) that the pledged equity 

 35
 

 

interests have been
transferred to, or otherwise made subject to a first priority security interest
in favor of, Seller.

(P)           Copies of all material documents
evidencing or securing the related mortgage loan and any other documents
affecting the related mortgaged property to the extent in possession of Seller.

(Q)          If the mezzanine borrower is an
Affiliate of Seller, a pledge agreement and any UCC financing statements,
executed by the owner(s) of all the equity interests of the mezzanine borrower
as debtor in favor of Seller as secured party (which pledge agreement and UCC
financing statements shall be transferred by Seller to Buyer), covering all
equity interests in the mezzanine borrower, if not previously delivered to
Buyer, together with any related original certificates of equity ownership and
blank assignments thereof, all to give Buyer a security interest in such equity
as additional collateral for Seller’s obligations.

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

In connection with the
transfer of any Purchased Loan, if Seller cannot deliver, or cause to be
delivered, any of the documents and/or instruments referred to above, required
to be delivered as originals, Seller shall deliver a photocopy thereof and,
unless waived by Buyer, an Officer’s Certificate of Seller certifying that such
copy represents a true and correct copy of the original.  Seller shall then, in the event that Seller
has a legitimate and reasonable opportunity to obtain the original documents in
question if the document in question exists in original form (1) use reasonable
efforts to obtain and deliver the original document within 180 days after the
related Purchase Date (or such longer period after the related Purchase Date as
Buyer may consent to, which consent shall not be unreasonably withheld so long
as Seller is, as certified in writing to Buyer no less often than monthly, in
good faith attempting to obtain the original) and (2) after the expiration
of such reasonable efforts period, deliver to Buyer a certification that
states, despite Seller’s reasonable efforts, Seller was unable to obtain such
original document.

(c)           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
Purchased Loan approved in accordance with the terms of the Agreement, and upon
receipt of any such other documents, the Custodian shall hold such other
documents on behalf of Buyer and 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 IV-1 attached hereto irrevocably appointing Buyer its
attorney-in-fact with full power to (i) complete and record any Assignment of
Mortgage, (ii) complete the endorsement of any Mortgage Note or Mezzanine Note
and (iii) take such other steps as may be necessary or desirable to enforce
Buyer’s rights against any Purchased Loans and the related Purchased Loan Files
and the Servicing Records.  Buyer shall
deposit the Purchased Loan Files representing the Purchased Loans, or cause the
Purchased Loan Files to be deposited directly, with the Custodian to be held by
the Custodian on behalf of Buyer.  The
Purchased Loan Files shall be maintained in accordance with the Custodial
Agreement.  Any Purchased Loan Files not
delivered to Buyer or its designee 

 36
 

 

(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 transfer, subject to the terms and
conditions of the Agreement, 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 or is pursuant to
the order of a court of competent jurisdiction.

(d)           In addition to any documents
or instruments that are required to be delivered by Seller to Buyer hereunder
in connection with the transfer of Purchased Loans by Seller to Buyer, on the
date of the Agreement, Buyer shall have
received all of the following items and documents either in connection with
this Agreement or the Original Agreement, each of which shall be satisfactory
to Buyer in form and substance:

(i)            Transaction
Documents.

(A)          The Agreement (including this Annex
I), duly executed and delivered by Seller and Buyer;

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

(C)           The Custodial Agreement, duly
executed and delivered by Seller, Buyer and Custodian;

(D)          The Blocked Account Agreement, duly
executed and delivered by Seller, Buyer and Depository Bank;

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

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

(ii)           Organizational Documents.
Certified copies of the Seller’s and Guarantor’s organizational documents and
resolutions or other documents evidencing the authority of Seller and Guarantor
with respect to the execution, delivery and performance of the Transaction
Documents to which it is a party and each other document to be delivered by
Seller and Guarantor from time to time in connection with the Transaction
Documents (and Buyer may conclusively rely on such certifications until it
receives notice in writing from Seller to the contrary);

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

 37

 

(iv)          Other Documents.  Such other documents as Buyer may reasonably
request.

8.                                      CERTAIN
RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS

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

(a)           Subject to the terms and conditions
of the Agreement, title to all Purchased Loans shall pass to Buyer on the
applicable Purchase Date, and Buyer shall have free and unrestricted use of its
interest in the Purchased Loans in accordance with the terms and conditions of
the Purchased Loans.  Nothing in the
Agreement or any other Transaction Document shall preclude Buyer from engaging
in repurchase transactions with the Purchased Loans with Persons in conformity
with the terms and conditions of the Purchased Loans or otherwise selling,
transferring, pledging, repledging, hypothecating, or rehypothecating all or a
portion of its interest in the Purchased Loans to Persons in conformity with
the terms and conditions to the Purchased Loans, but no such transaction shall
relieve Buyer of its obligations to transfer the Purchased Loans to Seller
pursuant to Section 3 of this Annex I or of Buyer’s obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Section 5
of this Annex I or otherwise affect the rights, obligations and remedies of any
party to the Agreement.

(b)           Subject to the terms and conditions
of the Agreement, any documents delivered to the Custodian pursuant to Section
7(b) and 7(c) of this Annex I shall only be released in accordance with the
terms and conditions of the Custodial Agreement.

9.                                      RESERVED.

10.                               REPRESENTATIONS

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

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

(i)            Organization.  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
Seller’s business, except where lack of such licenses or qualifications would
not be reasonably likely to result in a Material Adverse Effect.  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 the Agreement and the other Transaction
Documents.

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

(iii)          Non-Contravention; Consents.  Neither the execution and delivery of the
Transaction Documents, nor consummation by Seller of the transactions
contemplated by the 

 38
 

 

Transaction Documents (or
any of them), nor compliance by Seller with the terms, conditions and
provisions of the Transaction Documents (or any of them) will (x) conflict with
or result in a breach or violation of any of the terms, conditions or
provisions of any judgment or order, writ, injunction, decree or demand of any
court applicable to Seller, or (y) result in the creation or imposition of any
lien or any other encumbrance upon any of the assets of Seller, other than
pursuant to the Transaction Documents. 
Seller has all necessary licenses, permits and other consents from
Governmental Authorities necessary to acquire, own and sell the Portfolio Loans
and for the performance of its obligations under the Transaction Documents
except where the failure to have any such license, permit or consent would not
be reasonably likely to result in a Material Adverse Effect.

(iv)          Litigation; Requirements of Law.  There is no action, suit, proceeding,
investigation, or arbitration pending or, to the best knowledge of Seller,
threatened against Seller, or any of its assets which may result in any
Material Adverse Effect, or which may have an adverse effect on the validity of
the Transaction Documents 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 the Purchased Loans pursuant to any 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, security interest, claim, option, charge, encumbrance or
impediment to transfer (including any “adverse claim” as defined in Section
8-102(a)(1) of the UCC but excluding any liens or encumbrances to be released
simultaneously with the sale to Buyer hereunder), and are not subject to any
rights of setoff, any prior sale, transfer, assignment, or participation by
Seller or any agreement by Seller to assign, convey, transfer or participate,
in whole or in part, and Seller is the sole legal record and beneficial owner
of and owns and has 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 (other than for U.S. Federal, state and local
income and franchise tax purposes) free of any adverse claim, subject to Seller’s
rights pursuant to the Agreement.  In the
event the related Transaction is recharacterized as a secured financing of the
Purchased Loans and with respect to the security interests granted in Sections
6(a) and 6(c), the provisions of the 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 the collateral specified in Sections
6(a) and 6(c), Buyer shall have a valid, perfected and enforceable first
priority security interest in the Purchased Loans and such other collateral,
subject to no lien or rights of others other than as granted herein.

(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, as of the applicable Purchase Date for the
Transaction in question conforms to the applicable representations and
warranties set forth in Exhibit V attached hereto, except as have 

 39
 

 

been disclosed to Buyer in
writing prior to Buyer’s issuance of a Confirmation with respect to the related
Purchased Loan.  It is understood and
agreed that the representations and warranties set forth in Exhibit V 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 the Agreement and the Custodial
Agreement for such Purchased Loan have been delivered (or with respect to Table
Funded Loans shall be delivered in accordance with Section 7(b)) to Buyer or
the Custodian on its behalf or such requirement will have been expressly waived
in writing by Buyer.  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.

(ix)           Adequate Capitalization; No
Fraudulent Transfer.  Seller has, as
of such Purchase Date, adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations.  Seller
is generally able to pay, and as of the date hereof is paying, its debts as
they come due.  Seller has not become, or
is presently, financially insolvent nor will Seller be made insolvent by virtue
of Seller’s execution of or performance under any of the Transaction Documents
within the meaning of the bankruptcy laws or the insolvency laws of any
jurisdiction.  Seller has not entered
into any Transaction Document or any Transaction pursuant thereto in
contemplation of insolvency or with intent to hinder, delay or defraud any
creditor.  Seller has not received any
written notice that any payment or other transfer made to or on account of
Seller from or on account of any Mortgagor or any other person obligated under
any Purchased Loan Documents is or may be void or voidable as an actual or
constructive fraudulent transfer or as a preferential transfer.

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

(xi)           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 Loan.

(xii)          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.

(xiii)         Taxes.  Seller has filed or caused to be filed all
tax returns which would be delinquent if they had not been filed on or before
the date hereof and has paid all taxes due and payable on or before the date
hereof 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.

(xiv)        ERISA.  Neither Seller nor any ERISA Affiliate
(a) sponsors or maintains any Plans or (b) makes any contributions to
or has any liabilities or obligations (direct or contingent) with respect to
any Plans. Seller does not, and would not be deemed to, hold Plan Assets and
the consummation of the transactions contemplated by the Agreement will not
constitute or result in 

 40
 

 

any non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under any other federal, state or local laws,
rules or regulations.

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

(xvi)        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 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 when such statements and omissions are
considered in the totality of the circumstances in question.

(xvii)       Financial Information.  All financial data concerning Seller and to
Seller’s knowledge after due inquiry, 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 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.

(xviii)      Jurisdiction of Organization.  The Seller’s jurisdiction of organization is
the State of Delaware.

(xix)         Location of Books and Records.  The location where Seller keeps its books and
records, including all computer tapes and records relating to the Purchased
Securities is its chief executive office at 420 Lexington Avenue, New York, New
York 10170.

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

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

11.                               NEGATIVE
COVENANTS OF SELLER

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

(a)           subject to Seller’s right to
repurchase, take any action which would directly or indirectly impair or
adversely affect Buyer’s title to 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 

 41
 

 

Purchased Loans (or any of them) with any Person other
than Buyer, except where the Purchased Loans in question are simultaneously
repurchased from 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 6 of this Annex I;

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

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

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

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

(h)           take any action or permit such action
to be taken which would result in a Change in Control;

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

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

(k)           engage in any transaction that would
cause any obligation or action taken or to be taken hereunder (or the exercise
by Buyer of any of its rights under the Agreement, the Purchased Loans or any
Transaction Document) to be a non-exempt prohibited transaction under Section
406 of ERISA, Section 4975 of the Code or
substantially similar provisions under any other federal, state or local laws,
rules or regulations; or

(l)            make any future advances under any
Purchased Loan to any underlying obligor which are not permitted by the related
Purchased Loan Documents.

12.                               AFFIRMATIVE
COVENANTS OF SELLER

(a)           Seller shall promptly notify Buyer of
any event and/or condition which is likely to have a Material Adverse Effect.

 42
 

 

(b)           Seller shall give notice to Buyer of
the following (accompanied by an Officer’s Certificate setting forth details of
the occurrence referred to therein and stating what actions Seller has taken or
proposes to take with respect thereto):

(i)            promptly upon receipt of notice or
knowledge of the occurrence of any Default or Event of Default;

(ii)           with respect to any Purchased Loan
sold to Buyer hereunder, immediately upon receipt of any Principal Payment (in
full or in part);

(iii)          with respect to any Purchased Loan
sold to Buyer hereunder, immediately upon receipt of notice or knowledge that
the related Mortgaged Property has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged
so as to affect adversely the value of such Mortgaged Property;

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

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

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

(d)           Seller 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,
encumbrances, charges and demands of all Persons (other than security interests
granted to Buyer hereunder).

(e)           Seller will permit Buyer or its
designated representative to inspect any of Seller’s records with respect to
all or any portion of the Purchased Loans and the conduct and operation of its
business related thereto, at such reasonable times and with reasonable
frequency requested by Buyer or its designated representative, and to make
copies of extracts of any and all thereof.

(f)            If any amount payable under or in
connection with any of the Purchased Loans shall be or become evidenced by any
promissory note, other instrument or chattel paper (as each of the foregoing is
defined under the UCC), such note, instrument or chattel paper shall be
immediately delivered to Buyer or its designee, duly endorsed in a manner
satisfactory to Buyer or if any collateral or other security shall subsequently
be delivered to Seller in connection with any Purchased Loan, Seller shall
immediately 

 43
 

 

deliver or forward such item of collateral or other
security to Buyer or its designee, together with such instruments of assignment
as Buyer may request.

(g)           Seller shall provide (or cause to be
provided to) Buyer with the following financial and reporting information:

(i)            the Monthly Statement;

(ii)           within 10 days of Seller’s receipt,
all operating statements and occupancy information that Seller or Servicer has
received relating to the Portfolio Loans;

(iii)          the Quarterly Report;

(iv)          the Financial Covenant Compliance
Certificate;

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

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

(vii)         as soon as available and in any event
within one hundred (100) days after the end of each fiscal year of Seller, the
consolidated balance sheets of Seller, which shall incorporate its consolidated
Subsidiaries, if any, as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
Seller, which shall incorporate its consolidated Subsidiaries, if any, for such
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of Seller and its consolidated Subsidiaries
as at the end of, and for, such fiscal year in accordance with GAAP;

(viii)        within ten (10) Business Days after
Buyer’s reasonable request, such further information with respect to the
operation of any Mortgaged Property, Purchased Loan, the financial affairs of
the Seller and any Plan and Multiemployer Plan as may be requested by Buyer,
including all business plans prepared by or for Seller; provided, however, that
with respect to information not previously known to, or in the possession of,
Seller relating to any 

 44
 

 

Multiemployer Plan,
Seller shall only be required to provide such information as may be obtained
through good faith efforts;

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

(x)            such other reports as Buyer shall
reasonably require.

(h)           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.

(i)            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.

(j)            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 the books and
records pertaining to the Purchased Securities are held not less than the later
of fifteen (15) Business Days prior to taking any such action or 90 days before
any financial statement filing will lapse, lose perfection or become materially
misleading.

(k)           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, if any, 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.

(l)            Seller shall maintain its existence
as a limited liability company, organized solely and in good standing under the
law of the State of Delaware and shall not dissolve, liquidate, merge with or
into any other Person or otherwise change its organizational structure or
identity or incorporate in any other jurisdiction.

(m)          Seller shall maintain all 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.

(n)           Seller shall provide Buyer with
notice of each modification of any Purchased Loan Documents consented to by
Seller (including such modifications which do not constitute a Significant
Modification).

 45
 

 

(o)           Seller shall provide Buyer with
notice of the occurrence of any “appraisal reduction event”, “control appraisal
period” or similar event under any participation agreement related to any Purchased
Loan.

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

(q)           Seller may propose, and Buyer will
consider but shall be under no obligation to approve, strategies for the
foreclosure or other realization upon the security for any Purchased Loan that
has become a Defaulted Loan.

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

13.                               SINGLE-PURPOSE
ENTITY

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

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

(b)           It has complied and will comply with
the provisions of its certificate of formation and its limited liability
company agreement.

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

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

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

(f)            It has not owned and will not own
any property or any other assets other than the Purchased Loans and Portfolio
Securities, cash and its interest under any associated Hedging Transactions.

(g)           It has not engaged and will not
engage in any business other than the origination, acquisition, ownership,
financing and disposition of the the Purchased Loans and Portfolio Securities
and the associated Hedging Transactions in accordance with the applicable
provisions of the Transaction Documents and the Securities Repurchase
Agreement.

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

 46
 

 

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

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

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

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

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

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

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

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

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

(r)            It shall not maintain any employees.

14.                               EVENTS
OF DEFAULT; REMEDIES

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

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

(i)            failure of Seller to repurchase or
the failure of Buyer to transfer the Purchased Loan on the applicable
Repurchase Date (except when such failure to transfer is a result of Buyer’s
inability to obtain necessary consents to, or fulfill restrictions on, such
transfer);

 47

 

 

(ii)           failure of Seller to apply any Income
received by Seller in accordance with the provisions hereof;

(iii)          (A) the Transaction Documents shall
for any reason not cause, or shall cease to cause, Buyer to be the owner or, if
recharacterized as a secured financing, a secured party with respect to any of
the Purchased Loans or the collateral specified in Section 6(a) and 6(c) free
of any adverse claim, liens and other rights of others (other than as granted
herein) 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 or the collateral specified in Sections 6(a) and
6(c) or (C) if the Transaction Documents shall cease to be in full force
and effect or if their enforceability is challenged by Seller;

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

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

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

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

(viii)        any representation made by Seller or
Buyer shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated; provided  that
the representations and warranties set forth in Section 10(a) (vi) or (viii)
(in the case of (vi), with respect to the affected or Purchased Loans only)
made by Seller shall not be considered an Event of Default if incorrect or
untrue in any material respect, if Buyer terminates the related Transaction and
Seller repurchases the related Purchased Loans on an Early Repurchase Date no
later than ten (10) Business Days after receiving written notice of such
incorrect or untrue representation;  provided,
however, that if Seller shall have made any such representation with
knowledge that it was materially incorrect or untrue at the time made, such
misrepresentation shall constitute an Event of Default;

(viiii)       a final judgment by any competent court
in the United States of America for the payment of money (in the case of
Seller) or for the payment of money in an amount greater than $5,000,000 (in
the case of Guarantor) shall have been rendered against Seller or Guarantor, as
the case may be, and remained undischarged or unpaid for a period of forty-five
(45) days, during which period execution of such judgment is not effectively
stayed;

(x)            Guarantor shall have defaulted or
failed to perform under any note, indenture, loan agreement, guaranty, swap
agreement or any other contract, agreement or transaction to which it is a
party, and which default (A) involves the failure to pay a matured obligation
in excess of $10,000,000, or (B) involving an obligation of at least
$10,000,000 is a monetary default or a material non-monetary default and
results in acceleration or permits the acceleration

 48
 

 

of the obligation by any
other party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction; provided,
however, that any such default, failure to perform or breach shall not
constitute an Event of Default if Guarantor cures such default, failure to
perform or breach, as the case may be, within the grace period, if any,
provided under the applicable agreement;

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

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

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

(xiv)        an “event of default” beyond any
applicable notice and cure period shall have occurred under (A) the Securities
Repurchase Agreement, (B) any repurchase facility or loan facility entered into
by Seller and Buyer or any affiliate thereof or (C) any facility with Buyer or
any affiliate thereof in which Seller is a guarantor; or

(xv)         (A) any of the representations,
warranties and covenants of Guarantor in the Guaranty or any Financial Covenant
Compliance Certificate shall have been incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated and such
misrepresentation or breach of warranty or covenant has not been cured within
ten (10) Business Days of after receiving written notice of such incorrect or
untrue representation or such breach of covenant or (B) Guarantor shall
have defaulted or failed to perform under the Guaranty.

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

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

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

(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

 49
 

 

all Income deposited in
the Blocked Account shall be retained by Buyer and applied to the aggregate
unpaid Repurchase Price and any other amounts owing by Seller hereunder; and

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

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

(iii)          Buyer may, after ten (10) days notice
to Seller of Buyer’s intent to take such action (provided that no such notice
shall be required in the circumstances set forth in Section 9-611(d) of the
UCC), (A) immediately sell, at a public or private sale in a commercially
reasonable manner and at such price or prices as Buyer may reasonably deem
satisfactory any or all of the Purchased Loans or (B) in its sole discretion
elect, in lieu of selling all or a portion of 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.  The proceeds of any
disposition of Purchased Loans effected pursuant to this Section 14(b)(iii)
shall be applied, (v) first, to the costs and expenses incurred by Buyer in
connection with Seller’s default; (w) second, to costs of cover and/or Hedging
Transactions, if any; (x) third, to the Repurchase Price; (y) fourth, to any
other outstanding obligation of Seller to Buyer or its Affiliates pursuant to
the Transaction Documents, and (z) the balance, if any, to Seller.

(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, to the extent permitted by applicable law, liquidation
of a Transaction or the Purchased Loans shall not require a public purchase or
sale and that a good faith private purchase or sale shall be deemed to have
been made in a commercially reasonable manner. 
Accordingly, Buyer may elect, in its sole discretion, the time and
manner of liquidating any 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.

(v)           Seller shall be liable to Buyer for
the amount of all reasonable expenses, including reasonable legal fees and
expenses, actually incurred by Buyer in connection with or as a consequence of
an Event of Default with respect to Seller, (B) all costs incurred in
connection with covering transactions or Hedging Transactions (including short
sales) or entering into replacement transactions (C) all damages, losses,
judgment costs and expenses of any kind which

 50
 

 

may be imposed on,
incurred by or asserted against Buyer relating to or arising out of such
Hedging Transactions or covering transactions and (D) any other loss, damage,
cost or expense directly arising or resulting from the occurrence of an Event
of Default with respect to Seller.

(vi)          Buyer may exercise any or all of the
remedies available to Buyer immediately upon the occurrence of an Event of
Default and at any time during the continuance thereof.  All rights and remedies arising under the
Transaction Documents, as amended from time to time, are cumulative and not
exclusive of any other rights or remedies which Buyer may have.

(vii)         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.

(viii)        Without limiting any other rights or
remedies of Buyer, Buyer shall have the right to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by or for account of Buyer or Buyer’s Affiliates on behalf of Seller to
any obligations of Seller hereunder to Buyer, irrespective of whether Buyer
shall have made any demand under the Agreement or the other Transaction
Documents.

(ix)           Buyer shall have, in addition to its
rights and remedies under the Transaction Documents, all of the rights and
remedies provided by applicable federal, state, foreign, and local laws
(including, without limitation, if the Transactions are recharacterized as
secured financings, the rights and remedies of a secured party under the UCC of
the State of New York, to the extent that the UCC is applicable, and the right
to offset any mutual debt and claim), in equity, and under any other agreement
between Buyer and Seller, exercisable upon ten (10) days notice from Buyer to
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.

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

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

(ii)           Seller shall have all the rights and
remedies provided herein or provided by applicable federal, state, foreign,
local and any other applicable laws, in equity, and under any other agreement
between Buyer and Seller (including the right to offset any debt or claim).

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

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15.                               SINGLE
AGREEMENT

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

16.                               NOTICES
AND OTHER COMMUNICATIONS

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

All notices, consents, approvals and requests required
or permitted hereunder shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) hand delivery, with proof of
attempted delivery, (b) certified or registered United States mail, postage
prepaid, (c) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (d) by telecopier
(with answerback acknowledged); provided that such telecopied notice
must also be delivered by one of the means set forth in (a), (b) or (c) above,
to the addresses specified in Annex II hereto or at such other address and
person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section 16.  A
notice shall be deemed to have been given: 
(a) in the case of hand delivery, at the time of delivery, (b) in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day, (c) in the case of expedited prepaid delivery
upon the first attempted delivery on a Business Day; or (d) in the case
telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section.  A party receiving a notice which does not
comply with the technical requirements for notice under this Section may
elect to waive any deficiencies and treat the notice as having been properly
given.

17.                               NON-ASSIGNABILITY

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

(a)           The rights and obligations of Seller
under the Transaction Documents, the Hedging Transactions and under any
Transaction shall not be assigned by Seller without the prior written consent
of Buyer.  Buyer may assign or
participate its rights and obligations under the Transaction Documents and
under any Transaction and its rights and interests in any Hedging Transaction,
in each case, without the prior written consent of Seller.  Seller agrees to use its good faith efforts
to include in the participation agreement or intercreditor agreement, as
applicable, relating to each Purchased Loan a provision expressly recognizing
Goldman Sachs Mortgage Company, together with its successors and assigns, as a
permitted transferee of each such Purchased Loan.

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

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

 52
 

 

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

(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
permitted 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.

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

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

(a)           Each party irrevocably and
unconditionally 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 the Agreement or relating
in any way to the Agreement or any Transaction under the Agreement.

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

(c)           Each party hereby irrevocably waives,
to the fullest extent it may effectively do so, the 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 and
irrevocably consents to the service of any summons and complaint and any other
process by the mailing of copies of such process to them at their respective
address specified herein.  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 18 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.

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

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19.                               NO
RELIANCE; DISCLAIMERS

(a)           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:

(i)            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;

(ii)           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;

(iii)          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;

(iv)          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;

(v)           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;

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

(i)            Buyer has assumed and relied upon,
with Seller’s consent and without independent verification, the accuracy and
completeness of the information provided by Seller and reviewed by Buyer.  Buyer has not made any independent inquiry of
any aspect of the New Loans or Purchased Loans or the underlying
collateral.  Buyer’s view is based on
economic, market and other conditions as in effect on, and the information made
available to Buyer as of, the date of any such determination or communication
of information, and such view may change at any time without prior notice to
Seller.

(ii)           Market Value determinations and other
information provided to Seller constitute a statement of Buyer’s view of the
value of one or more loans or other assets at a particular point in time and
neither (x) constitute a bid for a particular trade, (y) indicate a willingness
on the part of Buyer or any Affiliate thereof to make such a bid, nor (z)
reflect a valuation for substantially similar assets at the same or another
point in time, or for the same assets at another point in time.

 54
 

 

(iii)          Market Value determinations and other
information provided to Seller may vary significantly from valuation
determinations and other information which may be obtained from other sources.

(iv)          Market Value determinations and other
information provided to Seller are communicated to Seller solely for its use
and may not be relied upon by any other person and may not be disclosed or
referred to publicly or to any third party without the prior written consent of
Buyer, which consent Buyer may withhold or delay in its sole and absolute
discretion.

(v)           Buyer makes no representations or
warranties with respect to any Market Value determinations or other information
provided to Seller. Buyer shall not be liable for any incidental or
consequential damages arising out of any inaccuracy in such valuation
determinations and other information provided to Seller, including as a result
of any act of gross negligence or breach of any warranty.

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

(vii)         Initial Market Value indications and
other information provided to Seller in connection with Section 3(b) are to be
used by Seller for the sole purpose of determining whether to proceed in
accordance with Section 3 and for no other purpose.

20.                               INDEMNITY
AND EXPENSES

(a)           Seller hereby agrees to hold Buyer
and its Affiliates and each of their respective officers, directors, employees
and agents (“Indemnified Parties”) harmless from and indemnify the Indemnified
Parties against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, taxes (including stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to
any of the Purchased Loans or in connection with any of the transactions
contemplated by the Agreement (or the recharacterization of any Transaction)
and the documents delivered in connection herewith and therewith, other than
net income taxes of Buyer), fees, costs, expenses (including reasonable
attorneys fees and disbursements and any and all servicing and enforcement
costs with respect to the Purchased Loans) or disbursements (all of the
foregoing, collectively “Indemnified Amounts”) which may at any time
(including, without limitation, such time as the 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, the 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, 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 Documents, Seller will save,
indemnify and hold Buyer harmless from and against all expense, loss or damage
suffered by reason of any defense, set-off, counterclaim, recoupment or reduction
or liability whatsoever

 55
 

 

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.  Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party’s rights under the
Agreement and any other Transaction Document or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel.  Seller
hereby acknowledges its obligations hereunder are recourse obligations of
Seller.

(b)           Seller agrees to pay as and when
billed by Buyer all of the out-of-pocket costs and expenses incurred by Buyer
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, the Agreement, this Annex I and the
other Transaction Documents or any other documents prepared in connection
herewith or therewith.  Seller agrees to
pay as and when billed by Buyer all of the out-of-pocket costs and expenses
incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without limitation (i) all
the reasonable fees, disbursements and expenses of counsel to Buyer, not to
exceed $15,000 for each Transaction and (ii) all the Due Diligence Fees,
testing and review costs and expenses incurred by Buyer in connection with the
evaluation of any New Loan and with respect to any Transaction.

21.                               DUE
DILIGENCE

Seller acknowledges that Buyer has the right to
perform continuing due diligence reviews with respect to the Purchased Loans,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or determining or re-determining the Asset Base
for purposes of Section 4 of this Annex I, or otherwise, and Seller agrees that
Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on any or all of the
Purchased Loans, including, without limitation, ordering new credit reports and
Appraisals on the applicable collateral and otherwise regenerating the
information used to originate such Purchased Loans.  Upon reasonable (but no less than one (1)
Business Day) 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 and any and all documents, records,
agreements, instruments or information relating to any Purchased Loan in the
possession or under the control of Seller, any servicer or sub-servicer and/or
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. Seller agrees to cooperate with Buyer and any third party
underwriter designated by Buyer in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Purchased Loans in the possession, or under the
control, of such Seller.

22.                               SERVICING

(a)           Notwithstanding the purchase and sale
of the Purchased Loans by Seller to Buyer hereunder, GKK Manager LLC or such
other Servicer shall continue to service the Purchased Loans at Seller’s sole
cost and 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 8 or 17 of this Annex I, Buyer’s assigns; provided, however,
that the obligations of Seller to service any of the Purchased Loans shall
cease automatically upon the earliest of (i) an Event of Default, (ii) the date
on which the aggregate Repurchase Price for the Portfolio Loans together with
all accrued and unpaid Price Differential, unpaid Costs and other amounts
payable by Seller to Buyer hereunder have been paid in full or (iii) the
transfer of servicing approved by Seller and Buyer, which Buyer’s consent shall
not be unreasonably withheld.

 56
 

 

Seller shall service and shall cause the Servicer to service the
Purchased Loans in accordance with Accepted Servicing Practices.

(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 the Agreement.  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)           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 Servicer
or any sub-servicer of the Purchased Loans with or without cause, in each case
without payment of any termination fee or such other costs or expenses to
Buyer, it being agreed that Seller will pay any and all fees, costs and
expenses required to terminate the Servicing Agreement and to effectuate a
transfer of servicing to a designee of the Buyer; provided, however,
that Buyer shall cause any successor servicer to deliver to Seller reports
generated for Buyer relating to the Purchased Loans.

(d)           Seller shall not, and shall not
permit Servicer to, employ sub-servicers to service the Purchased Loans without
the prior written approval of Buyer which 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 with such sub-servicer to Buyer.

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

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

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

23.                               TREATMENT
FOR TAX PURPOSES

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

24.                               INTENT

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

 57
 

 

The parties recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except in so far as the type of asset subject to the
Transaction or the term of that Transaction would render such definition
inapplicable).  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.

25.                               MISCELLANEOUS

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

(a)           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.

(b)           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 the Agreement to the extent applicable, Buyer shall have all
rights and remedies of a secured party under the UCC and any other applicable
law.

(c)           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.

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

(e)           Each provision of the Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of the 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 the Agreement.

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

(g)           The parties understand that the
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 the Agreement and that it is satisfied
with its legal counsel and the advice received from it.

(h)           Should any provision of the 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 the Agreement.

 58
 

 

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

(j)            Guarantor is executing this
Agreement as an acknowledgment and confirmation that the Guaranty in favor of
Buyer continues to be in full force and effect and that Guarantor continues to
guarantee the Guaranteed Obligations (as defined in the Guaranty) which the
Guarantor and the parties hereto agree include the obligations and indemnities
of each Seller under this Agreement and the other Transaction Documents, as
same may be amended, modified or amended and restated from time to time.  All references to the Original Agreement in
the Guaranty shall be deemed to refer to this Agreement (as may be further
amended, modified or amended and restated).

(k)           All references to “Seller” in the
Custodial Agreement shall be deemed to refer to both Gramercy Warehouse Funding
II LLC (“Gramercy”) and GKK Trading Warehouse II, LLC (“GKK”).  For the avoidance of doubt, any notice,
election or act taken by Seller under the Custodial Agreement shall be deemed
to constitute the action of both GKK and Gramercy, and Buyer, and as
applicable, the Custodian, may in all such circumstances rely on the action
taken by either one as the action of both GKK and Gramercy.  All references to the Original Agreement in
the Custodial Agreement shall be deemed to refer to this Agreement (as may be
further amended, modified or amended and restated).

(l)            All references to “Company” in the
Blocked Account Agreement shall be deemed to refer to both GKK and
Gramercy.  For the avoidance of doubt,
any notice, election or act taken by Company under the Blocked Account Agreement
shall be deemed to constitute the action of both GKK and Gramercy, and Buyer,
and as applicable, the Bank (as defined in the Blocked Account Agreement), may
in all such circumstances rely on the action taken by either one as the action
of both GKK and Gramercy. All references to the Original Agreement in the
Blocked Account Agreement shall be deemed to refer to this Agreement (as may be
further amended, modified or amended and restated).

[SIGNATURES COMMENCE ON NEXT PAGE]

 59
 

 

IN WITNESS WHEREOF, the parties have executed this
Annex I as of the date first above written.

	
  

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
  GOLDMAN SACHS MORTGAGE COMPANY a
  New York limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Goldman Sachs Real Estate Funding Corp., its

  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  
					

 

	
  

  	
  GRAMERCY WAREHOUSE FUNDING II LLC, a

  Delaware limited liability company, as a Seller

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  Gramercy Investment Trust, a Maryland real

  estate investment trust, its sole member and

  manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  

  	
  GKK TRADING WAREHOUSE II LLC, aDelaware limited liability company, as a Seller

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  By: GKK Trading Corp., its sole member and

  manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Acknowledged and
Agreed (as to Paragraph 25(j) hereof only):

 60
 

 

GRAMERCY
CAPITAL CORP., 

a Maryland corporation

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

 

Acknowledged and Agreed
(as to Paragraph 25(k) hereof only):

WELLS FARGO BANK, N.A.,
as Custodian

	
  By:

  	
   

  	
  

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

Acknowledged and Agreed
(as to Paragraph 25(l) hereof only):

WACHOVIA BANK, NATIONAL
ASSOCIATION, as Bank

	
  By:

  	
   

  	
  

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

 

 

 61Exhibit
10.3

THIRD AMENDED AND RESTATED MASTER
REPURCHASE AGREEMENT

by and among

 

GRAMERCY WAREHOUSE FUNDING I LLC

 

and

 

GKK TRADING WAREHOUSE I LLC

 

and

 

GKK 450 LEX LLC

 

and

 

the Additional Sellers from time to time parties
hereto,

as the Sellers

 

and

 

the Buyers from time to time parties hereto

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as the Agent

 

with

 

 

 

 

 

 

 

 

 

 

 

WACHOVIA CAPITAL MARKETS, LLC,

as Sole Lead Arranger

Dated as of October 13, 2006

 2

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  APPLICABILITY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Amendment and Restatement

  	
   

  	
  1

  
	
  Section 1.02

  	
   

  	
  Purchase and Sale

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DEFINITIONAL
  PROVISIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  Section 2.02

  	
   

  	
  Other Definitional Provisions; Determinations by the
  Agent

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INITIATION;
  TERMINATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Conditions Precedent to Initial Transaction

  	
   

  	
  34

  
	
  Section 3.02

  	
   

  	
  Conditions Precedent to all Transactions

  	
   

  	
  35

  
	
  Section 3.03

  	
   

  	
  Transaction Mechanics; Related Matters

  	
   

  	
  38

  
	
  Section 3.04

  	
   

  	
  Repurchases

  	
   

  	
  42

  
	
  Section 3.05

  	
   

  	
  Termination Dates; Maximum Amount

  	
   

  	
  43

  
	
  Section 3.06

  	
   

  	
  Payment of Price Differential

  	
   

  	
  44

  
	
  Section 3.07

  	
   

  	
  Letters of Credit

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MARGIN
  MAINTENANCE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Margin Adjustments

  	
   

  	
  47

  
	
  Section 4.02

  	
   

  	
  Margin Correction Deadline

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INCOME PAYMENTS;
  REQUIREMENTS OF LAW

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Income Payments

  	
   

  	
  49

  
	
  Section 5.02

  	
   

  	
  Requirements of Law

  	
   

  	
  50

  
									

 

 i
 

 

 

	
  ARTICLE VI

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECURITY
  INTEREST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Security Interest

  	
   

  	
  52

  
	
  Section 6.02

  	
   

  	
  Release of Security Interest

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PAYMENT,
  TRANSFER AND CUSTODY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Payment, Transfer and Custody

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SELLER
  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Seller Representations and Warranties

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Seller Covenants

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EVENTS OF
  DEFAULT; REMEDIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Events of Default

  	
   

  	
  73

  
	
  Section 10.02

  	
   

  	
  Remedies

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SERVICING

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01

  	
   

  	
  Seller Covenants

  	
   

  	
  78

  
	
  Section 11.02

  	
   

  	
  Seller as Servicer

  	
   

  	
  78

  
	
  Section 11.03

  	
   

  	
  Third Party Servicer

  	
   

  	
  79

  
	
  Section 11.04

  	
   

  	
  Event of Default

  	
   

  	
  79

  
	
  Section 11.05

  	
   

  	
  Modification

  	
   

  	
  79

  
	
  Section 11.06

  	
   

  	
  Inspection

  	
   

  	
  79

  
									

 

 ii
 

 

 

	
  ARTICLE XII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE AGENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.01

  	
   

  	
  Appointment

  	
   

  	
  80

  
	
  Section 12.02

  	
   

  	
  Duties

  	
   

  	
  80

  
	
  Section 12.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  81

  
	
  Section 12.04

  	
   

  	
  Reliance by Agent

  	
   

  	
  82

  
	
  Section 12.05

  	
   

  	
  Notice of Default

  	
   

  	
  82

  
	
  Section 12.06

  	
   

  	
  Non-Reliance on Agent and the Buyers

  	
   

  	
  82

  
	
  Section 12.07

  	
   

  	
  Reimbursement and Indemnification

  	
   

  	
  83

  
	
  Section 12.08

  	
   

  	
  Agent in Its Individual Capacity

  	
   

  	
  83

  
	
  Section 12.09

  	
   

  	
  Successor Agent

  	
   

  	
  83

  
	
  Section 12.10

  	
   

  	
  Duties in the Case of Enforcement

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.01

  	
   

  	
  Indemnification and Expenses

  	
   

  	
  84

  
	
  Section 13.02

  	
   

  	
  Single Agreement

  	
   

  	
  86

  
	
  Section 13.03

  	
   

  	
  Notices and Other Communications

  	
   

  	
  86

  
	
  Section 13.04

  	
   

  	
  Entire Agreement; Severability

  	
   

  	
  87

  
	
  Section 13.05

  	
   

  	
  Assignments and Participations; Hypothecation of
  Purchased Assets

  	
   

  	
  87

  
	
  SECTION 13.06

  	
  GOVERNING LAW

  	
   

  	
  89

  
	
  SECTION 13.07

  	
  SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
  TRIAL

  	
   

  	
  89

  
	
  Section 13.08

  	
   

  	
  Amendments; Waivers; Remedies Cumulative

  	
   

  	
  91

  
	
  Section 13.09

  	
   

  	
  Intent

  	
   

  	
  91

  
	
  Section 13.10

  	
   

  	
  Joint and Several Liability

  	
   

  	
  92

  
	
  Section 13.11

  	
   

  	
  Periodic Due Diligence Review

  	
   

  	
  94

  
	
  Section 13.12

  	
   

  	
  Buyer’s Appointment as Attorney-in-Fact

  	
   

  	
  95

  
	
  Section 13.13

  	
   

  	
  Legal Matters

  	
   

  	
  96

  
	
  Section 13.14

  	
   

  	
  Confidentiality

  	
   

  	
  96

  
	
  Section 13.15

  	
   

  	
  Conflicts

  	
   

  	
  97

  
	
  Section 13.16

  	
   

  	
  Right of Set-off

  	
   

  	
  97

  
	
  Section 13.17

  	
   

  	
  Treatment of Certain Information

  	
   

  	
  98

  
	
  Section 13.18

  	
   

  	
  Increased Costs, Illegality, Etc

  	
   

  	
  98

  
	
  Section 13.19

  	
   

  	
  Intended Third Party Beneficiaries

  	
   

  	
  100

  
									

 

 iii
 

 

 

	
  SCHEDULES

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1(a)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Whole Loans (including Transitional Assets)

  	
   

  	
   

  
	
  Schedule 1(b)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Junior Interests

  	
   

  	
   

  
	
  Schedule 1(c)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Mezzanine Loans

  	
   

  	
   

  
	
  Schedule 1(d)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Preferred Equity

  	
   

  	
   

  
	
  Schedule 1(e)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of CMBS

  	
   

  	
   

  
	
  Schedule 1(f)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of RMBS

  	
   

  	
   

  
	
  Schedule 1(g)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Non-Controlling Interests

  	
   

  	
   

  
	
  Schedule 1(h)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Pass-Through Interests

  	
   

  	
   

  
	
  Schedule 1(i)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of Distressed Debt

  	
   

  	
   

  
	
  Schedule 1(j)

  	
   

  	
  Representations and Warranties Re: Purchased Assets
  Consisting of REO Property Loans

  	
   

  	
   

  
	
  Schedule 2

  	
   

  	
  Wiring Instructions

  	
   

  	
   

  
	
  Schedule 3

  	
   

  	
  Controlled Accounts

  	
   

  	
   

  
	
  Schedule 4

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  Schedule 5

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  Schedule 6

  	
   

  	
  MBS File Delivery Instructions

  	
   

  	
   

  
	
  Schedule 7

  	
   

  	
  Buyer Purchase Amounts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Transaction Request

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of Confirmation

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  UCC Filing Jurisdictions

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of Margin Deficit Notice

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Form of Servicer Notice

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Form of Custodial Agreement

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Form of Account Control Agreement

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  Form of Release Letter(s)

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  Form of Libor Period Election Notice

  	
   

  	
   

  
	
  Exhibit J

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  Exhibit K

  	
   

  	
  Form of Purchased Asset Data Summary

  	
   

  	
   

  
	
  Exhibit L

  	
   

  	
  Form of Guarantee Agreement

  	
   

  	
   

  
	
  Exhibit M

  	
   

  	
  Form of Pledge and Security Agreement

  	
   

  	
   

  
	
  Exhibit N

  	
   

  	
  Form of Additional Seller Joinder Agreement

  	
   

  	
   

  
	
  Exhibit O

  	
   

  	
  Form of Bailee Letter

  	
   

  	
   

  

 

 iv
 

 

 

	
  Exhibit P

  	
   

  	
  Form of Assignment and Acceptance

  	
   

  	
   

  
	
  Exhibit Q

  	
   

  	
  Form of Closing Certification

  	
   

  	
   

  
	
  Exhibit R

  	
   

  	
  Organizational Chart

  	
   

  	
   

  
	
  Exhibit S

  	
   

  	
  Form of Letter of Credit

  	
   

  	
   

  
	
  Exhibit T

  	
   

  	
  Form of Request for Letter of Credit

  	
   

  	
   

  

 v

THIRD AMENDED AND RESTATED MASTER
REPURCHASE AGREEMENT

THIRD AMENDED AND
RESTATED MASTER REPURCHASE AGREEMENT, dated as of October 13, 2006 (as amended,
restated, supplemented or otherwise modified and in effect from time to time,
this “Agreement”), by and among GRAMERCY WAREHOUSE FUNDING I LLC, a
Delaware limited liability company (“GWF-I”), GKK TRADING WAREHOUSE I
LLC (“GKK Trading”), GKK 450 LEX LLC (“GKK 450”) and the
additional sellers from time to time parties hereto (the “Additional Sellers”,
together with GWF-I, GKK Trading and GKK 450, collectively, the “Sellers”,
each, a “Seller”), the buyers from time to time parties hereto
(collectively, the “Buyers”, each, a “Buyer”) and WACHOVIA BANK,
NATIONAL ASSOCIATION (“WBNA”), as agent for the Buyers (in such
capacity, the “Agent”), with Wachovia Capital Markets, LLC (“WCM”),
as the Sole Lead Arranger.

RECITALS

GWF-I and GKK, as
Sellers, and WBNA, as Buyer, are parties to that certain Second Amended and
Restated Master Repurchase Agreement, dated as of April 21, 2005 (the “Existing
Agreement”).

The Sellers, the Agent
and the Buyers have agreed that the Existing Agreement shall be amended,
restated and superseded in its entirety by this Agreement.

Accordingly, the Sellers,
the Agent and the Buyers hereby agree, in consideration of the mutual premises
and mutual obligations set forth herein, that the Existing Agreement is hereby
amended, restated and superseded in its entirety as follows:

ARTICLE I

APPLICABILITY

Section 1.01  Amendment and Restatement.  This Agreement amends, restates and
supersedes the Existing Agreement in its entirety.  All Transactions (as defined in the Existing
Repurchase Agreement) outstanding under the Existing Agreement as of the
Effective Date hereof shall be deemed to be Transactions (as defined in this
Agreement) outstanding under this Agreement (and, accordingly, subject to the
terms and conditions hereof) and all references in any Repurchase Document to
the Agreement (however denominated) shall be deemed to be references to this
Agreement.

Section 1.02  Purchase and Sale.  Subject to the terms and conditions hereof,
from time to time during the Purchase Period (as defined below) the Agent may,
upon request of a Seller, enter into transactions (or a series of transactions)
on behalf of the Buyers with the Seller in which the Seller transfers certain
Mortgage Assets (as defined below) to Agent, on behalf of the Buyers in a sales
transaction against the transfer of funds by Buyers representing the purchase
price for such Mortgage Assets, with a simultaneous agreement by the Buyers to
transfer to the Seller such Mortgage Assets in a repurchase transaction to occur
on a date certain, which shall not be later than the Termination Date (as
defined below), against the transfer of 

funds by the Seller representing the repurchase price for such Mortgage
Assets.  Each such transaction shall be
referred to herein as a “Transaction” and shall be governed by this
Agreement, unless otherwise agreed in writing.

ARTICLE II

DEFINITIONAL
PROVISIONS

Section 2.01  Definitions.  As used herein, the following terms shall
have the following meanings (all terms defined in this Section 2.01 or in
other provisions of this Agreement in the singular shall have the same meanings
when used in the plural and vice versa). 
Terms otherwise not defined herein shall have the meanings assigned
thereto in the Custodial Agreement.

“Accepted
Servicing Practices”: With respect to any Mortgage Asset, those mortgage
servicing practices of prudent lending institutions which service Mortgage
Assets of the same type as such Mortgage Asset in the jurisdiction where the
related Mortgaged Property is located.

“Account
Control Agreement”: An Account Control Agreement, substantially in the form
attached as Exhibit G hereto, among the Sellers, the Agent, for the
benefit of the Buyers, and the Bank.

“Act of
Insolvency”: With respect to any Person, (i) the filing of a petition,
commencing, or authorizing the commencement of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law
relating to the protection of creditors, or suffering any such petition or
proceeding to be commenced by another which is consented to, not timely
contested or results in entry of an order for relief; (ii) the seeking or
consenting to the appointment of a receiver, trustee, custodian or similar
official for such Person or any substantial part of the property of such
Person; (iii) the appointment of a receiver, conservator, or manager for such
Person by any governmental agency or authority having the jurisdiction to do
so; (iv) the making of a general assignment for the benefit of creditors; (v)
the admission by such Person of its inability to pay its debts or discharge its
obligations as they become due or mature; or (vi) that any governmental
authority or agency or any person, agency or entity acting or purporting to act
under governmental authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of
the property of such Person, or shall have taken any action to displace the
management of such Person or to curtail its authority in the conduct of the
business of such Person.

“Additional
Purchased Assets”: The meaning specified in Section 4.01 of this Agreement.

“Additional
Seller Joinder Agreement”: An Additional Seller Joinder Agreement,
substantially in the form of Exhibit N hereto, duly executed and
delivered by each of the parties thereto.

 2
 

 

“Additional
Sellers”: The meaning specified in the introductory paragraph hereof.

“Affiliate”:
Any (A) entity that directly or indirectly owns, controls, or holds with power to
vote, 20 percent or more of the outstanding voting securities of the debtor,
other than an entity that holds such securities (i) in a fiduciary or agency
capacity without sole discretionary power to vote such securities; or (ii)
solely to secure a debt, if such entity has not in fact exercised such power to
vote; (B) corporation 20 percent or more of whose outstanding voting securities
are directly or indirectly owned, controlled, or held with power to vote, by
the debtor, or by an entity that directly or indirectly owns, controls, or
holds with power to vote, 20 percent or more of the outstanding voting
securities of the debtor, other than an entity that holds such securities (i)
in a fiduciary or agency capacity without sole discretionary power to vote such
securities; or (ii) solely to secure a debt, if such entity has not in fact
exercised such power to vote; (C) person whose business is operated under a
lease or operating agreement by a debtor, or person substantially all of whose
property is operated under an operating agreement with the debtor; or (D)
entity that operates the business or substantially all of the property of the
debtor under a lease or operating agreement.

“Affiliated
Hedge Counterparty”: The Agent, or any Affiliate of the Agent, in its
capacity as a party to any Interest Rate Protection Agreement with any Seller,
or any Affiliate of any Seller.

“Agent”:
The meaning specified in the introductory paragraph hereof.

“Agreement”:
The meaning assigned thereto in the introductory paragraph hereof.

“ALTA”: The
American Land Title Association.

“Allocated
Underlying Debt”: With respect to an Underlying Mortgaged Property, any
senior or pari passu Indebtedness secured directly
or indirectly by such Underlying Mortgaged Property, including, without
limitation, any preferred equity interest or mezzanine debt that is senior to,
or pari passu with, the related Mortgage
Asset in right of payment or priority.

“Approved Bank”: Any bank, savings and loan
association, savings institution, trust company or national banking association
subject to state and/or federal supervision.

“Asset Schedule
and Exception Report”: The meaning assigned thereto in the Custodial
Agreement.

“Asset Value”:
As of any date of determination for each Eligible Asset, with respect to a
Mortgage Asset of a certain Class and the applicable Type of Underlying
Mortgaged Property, the least of (x) the product of the Book Value of such
Mortgage Asset times the Purchase Rate
applicable thereto, (y) the product of the Market Value of such Mortgage Asset times the Purchase Rate applicable thereto and (z) if the
LTV for an Underlying Mortgaged Property (including the principal amount of a
Mortgage Asset) is greater than the Maximum LTV for such Underlying Mortgaged
Property, the product of (i) that portion of the principal amount of such
Mortgage Asset, which when added to the Allocated Underlying Debt for such
Underlying Mortgaged Property, would result in an LTV for such Underlying
Mortgaged

 3

 

Property that would equal
the Maximum LTV for such Mortgaged Property times (ii) the
Purchase Rate applicable to such Mortgage Asset.  As of each date of determination, the
Purchase Rate shall take into account all adjustments applicable thereto
pursuant to the proviso set forth at the end of the definition thereof and the
following additional limitations on Asset Value shall apply:

(a)   the aggregate
Asset Value of the Mortgage Assets shall be reduced to the extent that
application of the Sub-Limit to the Underlying Properties securing Mortgage
Assets at any time results in breach of the Sub-Limit (such reduction to be
determined by the Agent by reference to the Mortgage Assets secured by the
Underlying Properties that give rise to breach of the Sub-Limit), unless waived
in writing by the Agent in its sole and absolute discretion; and

(b)   unless
otherwise specifically agreed by the Agent in the related Confirmation, the
Asset Value shall be deemed to be zero with respect to each Mortgage Asset (i)
in respect of which there is a material breach of a representation and warranty
set forth in Schedule 1(a) — 1(j) (as applicable) which has not been
cured by the Seller in accordance with the terms of this Agreement (and any
applicable cure period set forth in this Agreement has expired) or waived in
writing by the Agent (assuming each representation and warranty is made as of
the date the Asset Value is determined), (ii) with respect to which any Wet
Mortgage Asset in respect of which the Mortgage Asset File (subject to the
requirements of the Custodial Agreement) has not been delivered to the
Custodian within five (5) Business Days following the Purchase Date, (iii)
which has been released from the possession of the Custodian under the
Custodial Agreement to the Seller for a period in excess of twenty (20)
calendar days, (iv) upon the occurrence of any Act of Insolvency with respect
to any co-participant or any other Person having an interest in such Mortgage
Asset or any related Underlying Mortgaged Property which is pari passu with, in right of payment or priority, the rights
of the Buyers in such Mortgage Asset, and (v) which is determined by the Agent
not to be an Eligible Asset.

Notwithstanding any other
provision herein, each Seller agrees that to the extent any Seller fails to
deliver any reports required hereunder with respect to the Mortgage Asset
and/or Underlying Mortgaged Property, such failure will adversely affect the
Asset Value of such Mortgage Asset, and, to the extent that such failure to
deliver reports causes the Agent to determine in its good faith that it is
unable to accurately determine the Asset Value of such Mortgage Asset, the
Asset Value shall be deemed to be zero.

“Assignment of
Leases”: With respect to any Mortgage, an assignment of leases thereunder,
notice of transfer or equivalent instrument in recordable form, sufficient
under the laws of the jurisdiction wherein the Underlying Mortgaged Property is
located to reflect the assignment of leases.

“Assignment of
Mortgage”: 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 Underlying Mortgaged
Property is located to reflect the assignment of the Mortgage to the Agent for
the benefit of the Buyers.

 4
 

 

“Bailee Letter”:
An agreement in the form attached hereto as Exhibit O, delivered by the Settlement
Agent with respect to any Wet Mortgage Assets to the Agent and Custodian in
accordance with the terms hereof.

“Bank”: The
meaning assigned thereto in the Account Control Agreement.

“Book Value”:
With respect to any Mortgage Asset at any time, an amount, as certified by the
Seller, equal to the lesser of (x) the face or par amount of such Mortgage
Asset and (y) the price which the Seller paid for such Mortgage Asset plus any
additional capital advanced by the Seller in respect of such Mortgage Asset, less,
in either case, an amount equal to the sum of all principal paydowns paid in
respect of such Mortgage Asset and realized losses or other write downs
recognized relating to such Mortgage Asset.

“Breakage Costs”:
The meaning assigned thereto in Section 3.06(b).

“Business Day”:
(i) For all purposes other than as covered by clause (ii) below, any day on
which commercial banks are open for business in New York and Minnesota, solely
with respect to the Custodial Agreement (or such other state where a successor
custodian has its principal place of business), and (ii) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any Transaction, the Pricing Rate applicable to which is based
upon the Eurodollar Rate, any day on which commercial banks are open in each of
New York and London.

“Buyer” and
“Buyers”: The respective meanings assigned thereto in the introductory
paragraph hereof.

“Buyer
Percentage”: As to any Buyer at any time, the percentage which such Buyer’s
Purchase Amount then constitutes of the aggregate Purchase Amount of all
Buyers.

“Capitalized
Lease Obligations”: Obligations under a lease that are required to be
capitalized for financial reporting purposes in accordance with GAAP.  The amount of a Capitalized Lease Obligation
is the capitalized amount of such obligation as would be required to be
reflected on the balance sheet prepared in accordance with GAAP of the
applicable Person as of the applicable date.

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

“Cash and Cash Equivalents”: (i) cash,
(ii) direct obligations of the United States Government, including,
without limitation, treasury bills, notes and bonds, (iii) interest
bearing or discounted obligations of Federal agencies and Government sponsored
entities or pools of such instruments offered by Approved Banks and dealers,
including without limitation, Federal Home Loan Mortgage Corporation
participation sale certificates, Government National Mortgage Association
modified pass-through certificates, Federal National Mortgage Association bonds
and notes, and Federal Farm Credit System securities, (iv) time deposits,

 5
 

 

Domestic and Eurodollar certificates of deposit,
bankers’ acceptances, commercial paper rated at least A-1 by S&P and
P-1 by Moody’s and/or guaranteed by a Person with an Aa1 rating by Moody’s,
an AA- rating by S&P or better rated credit, floating rate notes,
other money market instruments and letters of credit each issued by Approved
Banks (provided that the same shall cease to be a “Cash or Cash
Equivalent” if at any time any such bank shall cease to be an Approved Bank),
(v) obligations of domestic corporations, including, without limitation,
commercial paper, bonds, debentures and loan participations, each of which is
rated at least AA- by S&P and/or Aa1 by Moody’s and/or guaranteed by
a Person with an Aa1 rating by Moody’s and/or an AA- rating by S&P or
better rated credit, (vi) obligations issued by states and local
governments or their agencies, rated at least MIG-1 by Moody’s and/or SP-l
by S&P and/or guaranteed by an irrevocable letter of credit of an Approved
Bank (provided that the same shall cease to be a “Cash or Cash
Equivalent” if at any time any such bank shall cease to be an Approved Bank),
(vii) repurchase agreements with major banks and primary government
security dealers fully secured by the U.S. Government or agency collateral
equal to or exceeding the principal amount on a daily basis and held in
safekeeping, and (viii) real estate loan pool participations, guaranteed
by a Person with an AA- rating given by S&P or Aa1 rating given by
Moody’s or better rated credit.

“CDO Closing
Date”: The date on which Seller (or a special purpose entity created by
Seller) shall have issued collateralized debt obligations with respect to all,
or substantially all, of the Purchased Assets subject to this Agreement as of
the date hereof.

“Change of
Control”: The occurrence of any of the following events: (a) prior to an
internalization of management by Parent, if GKK Manager LLC is no longer the
manager of Parent, (b) after such time as Parent is internally managed, any “person”
or “group” (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) shall become, or
obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a percentage of the total voting power of all
classes of Capital Stock of the Parent entitled to vote generally in the
election of directors of 20% or more; or (c) the Parent shall cease to own and
control, of record and beneficially, directly 100% of each class of outstanding
Capital Stock of each Seller. 
Notwithstanding the foregoing, none of the Agent, any Buyer nor any
other Person shall be deemed to approve or to have approved any internalization
of management as a result of this definition or any other provision herein.

“Class”:
With respect to a Mortgage Asset, such Mortgage Asset’s classification as one
of the following: Whole Loan, Junior Interest, Mezzanine Loan, Preferred
Equity, CMBS, RMBS, Non-Controlling Interest, Pass-Through Interest, Distressed
Debt, REO Property Loan or Transitional Asset.

“Closing
Certification” A Closing Certification, in the form attached hereto as Exhibit
Q, executed on behalf of a Seller by a duly authorized officer of the
Seller.

“CMBS”:
Pass-through certificates representing beneficial ownership interests in one or
more first lien mortgage loans secured by commercial and/or multifamily
properties.

 6
 

 

“Code”: The
Internal Revenue Code of 1986, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.

“Collection
Account”: The account set forth on Schedule 3 established by the
Sellers on behalf of the Buyers and subject to an Account Control Agreement,
into which all Income shall be deposited.

“Compliance
Certificate”: A certificate of the Seller substantially in the form of
Exhibit J.

“Confirmation”:
The meaning specified in Section 3.03(f).

“Consolidated
Adjusted EBITDA”: For any period, determined with respect to any Person(s)
on a consolidated basis, an amount equal to the sum of (a) net income (or loss)
of such Person(s) for such period determined on a consolidated basis (prior to
any impact from minority interests and before deduction of Preferred Dividends
on preferred stock, if any, of such Person(s)), in accordance with GAAP, plus
the following (but only to the extent actually included in determination of
such net income (or loss)): (i) depreciation and amortization expense, (ii)
interest expense, (iii) income tax expense and (iv) extraordinary or
non-recurring gains and losses; plus (b) each such Person’s pro rata
share of Consolidated Adjusted EBITDA of its Unconsolidated Affiliates.  Consolidated Adjusted EBITDA will be adjusted
to remove all impact of FIN 46 and FAS 140 to the extent of related transfers
to special purpose entities in connection with bona fide securitizations of
Mortgage Assets and related extensions of credit in connection with bona fide
lendings made by such Person as lender.

“Consolidated
Interest Expense”: For any period, determined without duplication with
respect to any Person(s) on a consolidated basis, the amount of total interest
expense incurred (in accordance with GAAP), including capitalized or accruing
interest (but excluding interest funded under a construction loan), plus each
such Person’s pro rata share of Interest Expense from Joint Venture investments
and Unconsolidated Affiliates.

“Consolidated
Total Assets”: At any time, an amount equal to the aggregate book value of
(a) all assets owned by any Person(s) (on a consolidated basis) and (b) the
proportionate share of assets owned by non-consolidated subsidiaries of such
Person(s), less (i) amounts owing to such Person(s) from any Affiliates
thereof (other than “arm’s length” loans to SLG), or from officers, employees,
partners, members, directors, shareholders or other Persons similarly
affiliated with such Person(s) or their respective Affiliates, (ii) intangible
assets (other than Interest Rate Protection Agreements specifically related to
the Purchased Assets) and (iii) prepaid taxes and/or expenses.

“Consolidated
Total Indebtedness”: At any time, without duplication, all amounts of
Indebtedness and Contingent Liabilities of any Person(s) and all Subsidiaries
thereof determined on a consolidated basis, plus the pro rata share of
Indebtedness and Contingent Liabilities of Unconsolidated Affiliates of such
Person(s).

“Contingent
Liabilities”: Means with respect to any Person(s) and all Subsidiaries
thereof (without duplication): (i) liabilities and obligations (including any
Guarantee Obligations) of such Persons in respect of “off-balance sheet
arrangements” (as defined in the

 7
 

 

SEC Off-Balance Sheet Rules) which would be required
to be, or customarily would be, disclosed in the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section of a Form
10-Q or Form 10-K (or their equivalents) which any such Person (or any
Affiliate thereof) is required to file with the Securities and Exchange
Commission (or any Governmental Authority substituted therefore) other than
extensions of credit in connection with bona fide lendings made by such Person
as lender and bona fide securitization transactions which fall into this
category solely as a result of the application of FAS 140 or FIN 46, (ii) any
obligation (including, without limitation, any Guarantee Obligation) whether or
not required to be disclosed in the footnotes to any such Person’s financial
statements, guaranteeing partially or in whole any Non-Recourse Indebtedness,
lease, dividend or other obligation, exclusive of contractual indemnities
(including, without limitation, any indemnity or price-adjustment provision
relating to the purchase or sale of securities or other assets) and guarantees
of non-monetary obligations (other than guarantees of completion, environmental
indemnities and guarantees of customary carve-out matters made in connection
with Non-Recourse Indebtedness, such as fraud, misappropriation, bankruptcy and
misapplication) which have not yet been called on or quantified, of such Person
or of any other Person, and (iii) any forward commitment or obligation to fund
or provide proceeds with respect to any loan or other financing which is
obligatory and non-discretionary on the part of the lender.  The amount of any Contingent Liabilities
described in clause (ii) shall be deemed to be (a) with respect to a guarantee
of interest or interest and principal, or operating income guarantee, the sum
of all payments required to be made thereunder (which in the case of an
operating income guarantee shall be deemed to be equal to the debt service for
the note secured thereby, through (x) in the case of an interest or interest
and principal guarantee, the stated date of maturity of the obligation (and
commencing on the date interest could first be payable thereunder), or (y) in
the case of an operating income guarantee, the date through which such
guarantee will remain in effect, and (b) with respect to all guarantees not
covered by the preceding clause (a), an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to
the most recent financial statements of such Person.  As used in this definition, the term “SEC
Off-Balance Sheet Rules” means the Disclosure in Management’s Discussion and
Analysis About Off Balance Sheet Arrangements, Securities Act Release No.
33-8182, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and
249).

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

“Controlled
Accounts”: A collective reference to the Collection Account and the
Operating Account.

“Custodial
Agreement”: A custodial agreement, substantially in the form attached as Exhibit
F hereto, by and among the Sellers, the Agent, the Buyers and the
Custodian, as the same may be amended, restated, supplemented or otherwise
modified and in effect from time to time.

 8
 

 

“Custodian”:
Wells Fargo Bank, N.A. and its successors in interest, as custodian under the
Custodial Agreement, and any successor Custodian under the Custodial Agreement.

“Debt Service
Coverage Ratio” or “DSCR”: With respect to any Mortgage Asset, as of
any date of determination, each of (a) the In Place DSCR and (b) the Stabilized
DSCR of such Mortgage Asset at such time.

“Default”:
Any of the events specified in Section 10.01, whether or not any requirement
for the giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.

“Defaulted
Mortgage Asset”: Any Mortgage Asset (a) which is sixty (60) days or more
delinquent in the payment of principal, interest, fees or other amounts payable
under the terms of the related Mortgage Asset documents (including, without limitation,
any Preferred Equity which has not been current pay during such period), (b)
for which there is a material breach of the representations and warranties set
forth on Schedules 1(a) — 1(j), as applicable, hereto having a Material
Adverse Effect on such Mortgage Asset, or (c) for which there is a material
non-monetary default under the related Mortgage Asset documents.

“Delinquent
Mortgage Asset”: A Mortgage Asset which is thirty (30) or more days, but
less than sixty (60) days, delinquent in the payment of principal, interest,
fees or other amounts payable under the terms of the related Mortgage Asset
documents (including, without limitation, any Preferred Equity which has not
been current pay during such period).

“Derivatives
Contract”: Any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject
to any master agreement.  Not in
limitation of the foregoing, the term “Derivatives Contract” includes any and
all transactions of any kind, and the related confirmations, which are subject
to the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement,
including any such obligations or liabilities under any such master agreement.

“Derivatives
Termination Value”: With respect to any Derivatives Contract, after taking
into account the effect of any legally enforceable netting agreement relating
to such Derivatives Contract, (a) for any date on or after the date such
Derivatives Contract has been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Derivatives Contract, as determined based upon
one or

 9
 

 

more mid-market or other readily available quotations
provided by any recognized dealer in such Derivatives Contract (which may
include the Agent or any Buyer).

“Distressed
Debt”: A non-performing first priority commercial real estate whole loan, or
a performing first priority commercial real estate whole loan with an LTV
greater than 100%, which will mature within 12 months (including any extension
options) of the Purchase Date.  The LTV
must take into account any senior or pari passu Indebtedness secured directly
or indirectly by the applicable Underlying Mortgaged Property, including,
without limitation, any preferred equity interest or mezzanine debt that is
senior or pari passu with the related Mortgage Asset in right of payment or
priority.

“Dollars”
and “$”: Freely transferable lawful money of the United States of
America.

“Dry Funding”:
A Transaction for which a complete Mortgage Asset File, in accordance with the
terms of this Agreement and the Custodial Agreement, has been delivered for
each related Mortgage Asset to the Custodian prior to the related Purchase
Date.

“Dry Mortgage
Asset”: A Mortgage Asset for which a complete Mortgage Asset File, in
accordance with the terms of this Agreement and the Custodial Agreement, has
been delivered to the Custodian prior to related Purchase Date.

“Due Diligence
Review”: The performance by the Agent of any or all of the reviews
permitted under Section 13.11 with respect to any or all of the Mortgage
Assets, as reasonably desired by the Agent from time to time.

“Effective Date”:
The first date upon which all of the conditions precedent set forth in
Section 3.01 shall have been satisfied or waived by the Agent.

“Election
Notice”: An irrevocable notice substantially in the form of Exhibit I
hereto specifying the Eurodollar Period which the Seller has selected in
respect of any Transaction.

“Electronic
Transmission”: The delivery of information in an electronic format
acceptable to the applicable recipient thereof.

“Eligible Asset”:
A Mortgage Asset which as of any date of determination:

(a)   except with
respect to non-performing Distressed Debt, is not a Defaulted Mortgage Asset or
Delinquent Mortgage Asset;

(b)   is not a
construction loan or a construction note of any sort (which shall not, in and
of itself, preclude Mortgage Assets that include renovation, rehabilitation or
expansion components which will be completed within twelve (12) months of the
related Purchase Date);

(c)   has been
approved by the Agent in its sole discretion;

 10
 

 

(d)   in the case of
a Whole Loan (including any Transitional Asset), is evidenced by an original
Mortgage Note; and

(e)   is not a Wet
Mortgage Asset for which the related Mortgage Asset File has not been delivered
in accordance with the terms of this Agreement and the Custodial Agreement
within five (5) Business Days after the Purchase Date or is not a Dry Mortgage
Asset for which the related Mortgage Asset File has not been delivered in
accordance with this Agreement and the Custodial Agreement;

provided,
that (i) “Eligible Asset” shall not include any Mortgage Asset consisting of
Preferred Equity or a first loss debt instrument (other than CMBS) which
represents less than 5.0% of the total debt capitalization of the related
Underlying Mortgaged Property, (ii) notwithstanding the foregoing and any
Mortgage Asset’s failure to conform to any of the criteria set forth above, the
Agent may, in its sole discretion, designate in writing any such non-compliant
Mortgage Asset an Eligible Asset, (iii) in the case of Mortgage Assets
consisting of Preferred Equity, REO Property Loans and Distressed Debt, the
Agent reserves the right to require that such Mortgage Assets be held in
separate special purpose entities with respect to each such Mortgage Asset of a
particular Class in order to be included as Eligible Assets and (iv) Eligible
Assets (other than CMBS or RMBS) that are pari passu investments with third
parties must provide that (a) the Seller or the Parent retains the majority
ownership or joint control with respect to customary major decisions for the
particular type of Eligible Asset and retains notice and cure rights with
respect to all material issues related thereto, (b) the Buyers meet any
applicable financial and other criteria required by the applicable
documentation for a holder of such Eligible Asset and (c) any other participant
or co-investor must meet customary “qualified institutional lender” criteria on
the related transfer date.

“Eligible Transferee”:
Any Person selected by a Buyer and consented to by the Sellers, such consent not
to be unreasonably withheld, delayed or conditioned; provided, that
consent of the Sellers shall not be required (i) upon the occurrence and during
the continuation of any Event of Default and (ii) at any time with respect to
any Person which is a Buyer, or an Affiliate of any Buyer, or a bank, financial
institution, pension fund, insurance company or other similar Person or a
special purpose vehicle.

“Environmental Law”:
Any federal, state, foreign or local statute, law, rule, regulation, ordinance,
code, guideline, written policy and rule of common law now or hereafter in
effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et  seq.; the
Toxic Substances Control Act, 15 U.S.C. § 2601 et  seq.; the
Clean Air Act, 42 U.S.C. § 7401 et  seq.; the Safe Drinking
Water Act, 42 U.S.C. § 3803 et  seq.; the Oil Pollution Act
of 1990, 33 U.S.C. § 2701 et  seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et  seq.;
the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et  seq.
and the Occupational Safety and Health Act, 29 U.S.C. § 651 et  seq.;
and any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.

 11
 

 

“Equity Interest”:
With respect to any Person, any share of Capital Stock of (or other ownership
or profit interests in) such Person, any warrant, option or other right for the
purchase or other acquisition from such Person of any share of Capital Stock of
(or other ownership or profit interests in) such Person, any security
convertible into or exchangeable for any share of Capital Stock of (or other
ownership or profit interests in) such Person or warrant, right or option for
the purchase or other acquisition from such Person of such shares (or such
other interests), and any other ownership or profit interest in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such share, warrant,
option, right or other interest is authorized or otherwise existing on any date
of determination.

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

“ERISA Affiliate”:
Any person (as defined in Section 3(g) of ERISA which, together with the
Sellers would be deemed to be a “single employer” within the meaning of Section
414(b), (c), (m) or (o) of the Code.

“Eurodollar Period”:
With respect to any Transaction, (i) initially, the period commencing on the
Purchase Date with respect to such Transaction and ending on the earlier of the
related Repurchase Date and the first Payment Date after such Purchase Date,
and (ii) thereafter, each period commencing on the last day of the preceding
Eurodollar Period applicable to such Transaction and ending on the earliest of
(x) the related Repurchase Date, (y) the Payment Date that is one-month,
two-months, three-months or six-months thereafter, in each case as specified by
Seller in an Election Notice delivered to Buyer not less than three (3) Business
Days prior to the last day of then-current Eurodollar Period with respect
thereto; provided, that Seller may not select a Eurodollar Period longer
than one-month if the last day of such Eurodollar Period occurs after the
Termination Date and, in the event that the Buyer has not received an Election
Notice by the date which is three (3) Business days prior to the last day of
then-current Eurodollar Period with respect thereto, the Seller shall be deemed
to have selected a one-month Eurodollar Period, or (z) the Termination Date.

“Eurodollar Rate”:
With respect to any outstanding Transaction, the rate per annum equal to LIBOR
for deposits in Dollars for a period equal to the applicable Eurodollar Period
which appears on page 3750 of the Telerate Screen at or about 9:00 a.m., New
York City time, three (3) Business Days prior to the beginning of such
Eurodollar Period (and if such date is not a Business Day, the Eurodollar Rate
in effect on the Business Day immediately preceding such date), and if such rate
shall not be so quoted, the average rate per annum at which three (3) mutually
acceptable banks are offered Dollar deposits at or about 8:00 a.m., New York
City time, on such date by prime banks in the interbank eurodollar market where
the eurodollar and foreign currency exchange operations in respect of its
Transactions are then being conducted for delivery on such day for a period of
thirty (30) days and in an amount comparable to the amount of the Transactions
to be outstanding on such day.  The
Eurodollar Rate shall be reset by the

 12
 

 

Agent as described above and the Agent’s determination
of Eurodollar Rate shall be conclusive upon the parties absent manifest error
on the part of the Agent.

“Event of Default”:
The meaning specified in Section 10.01.

 “Facility Availability”: At any time,
an amount equal to the excess, if any, of the aggregate Asset Value of all
Purchased Assets subject to Transactions then outstanding under this Agreement
over the aggregate outstanding Repurchase Price of all such Purchased Assets.

“Federal Funds Rate”:
Shall mean for any day, the rate per annum (rounded upwards, if necessary, to
the nearest 1/1000 of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
Business Day, the Federal Funds Rate for such day shall be the average of the
quotations for such day for such transactions received by Wachovia Bank,
National Association from three Federal funds brokers of recognized standing
and reputation reasonably selected by Wachovia Bank, National Association.

“Fee and Pricing
Letter”: That certain Fee and Pricing Letter, dated as of even date
herewith, among the Sellers and the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.

“FHLMC”: Federal
Home Loan Mortgage Corporation, or any successor thereto.

“Final Purchase Date”:
The earlier of October 14, 2007 and the Termination Date.

“FIRREA”: The
Federal Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

“First Dollar LTV”:
With respect to any Mortgage Asset which is a Whole Loan (including any
Transitional Asset), 0%; with respect to any other Class of Mortgage Asset at
any time of determination, the LTV with respect to any debt which is senior to
such Mortgage Asset (as determined by Buyer in its sole and absolute
discretion) and which is secured by the same Underlying Mortgaged Property.

“FNMA”: Federal
National Mortgage Association, or any successor thereto.

“Foreclosed Loan”:
A Mortgage Asset with respect to which the Underlying Mortgaged Property has
been foreclosed upon by the Seller.

“Funds From Operation”
or “FFO”: For a given period, (a) Net Income of the Parent and its
Subsidiaries for such period (before extraordinary and non-recurring items),
minus (or plus) (b) gains (or losses) from debt restructuring and sales of
property during such period, plus (c) depreciation and amortization of real and
personal property assets for such period, plus

 13

 

 

(d) without duplication,
income from unconsolidated partnerships and joint ventures, determined in each
case in accordance with GAAP.

“Future Advance
Loan”: Any Mortgage Asset or portion thereof with respect to which there
exists a continuing obligation on the part of the holder of the Mortgage Asset
after the related closing date of such Mortgage Asset to provide additional
funding to the borrower, upon the terms and conditions of the underlying loan
documents for such Mortgage Asset.

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

“GNMA”:
Government National Mortgage Association, or any successor thereto.

“Governing
Documents”: As to any Person, its articles or certificate of incorporation
and by-laws, its partnership agreement, its certificate of formation and
operating agreement, and/or the other organizational or governing documents of
such Person.

“Governmental
Authority”: Any government (or any political subdivision or jurisdiction
thereof), court, bureau, agency or other governmental authority having
jurisdiction over any Seller or Buyer, as applicable, or any of their
respective businesses, operations or properties.

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

“Ground Lease
Asset”: A Mortgage Asset the Underlying Mortgaged Property for which is
secured or supported in whole or in part by a Ground Lease.

“Guarantee”:
As to any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner providing
for the payment of any Indebtedness of any other Person or otherwise protecting
the holder of such Indebtedness against loss (whether by virtue of partnership
arrangements, by agreement to keep-well another Person, to purchase assets,
goods, securities or services, or to agree to take-or-pay arrangement or
otherwise).  The amount of any Guarantee
of a Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.  The terms “Guarantee” and “Guaranteed” used
as verbs shall have correlative meanings.

 14
 

 

“Guarantee
Agreement”: A Guarantee Agreement, substantially in the form attached as Exhibit
L hereto, made in favor of the Buyers by the Parent, GKK Capital LP, a
Delaware limited partnership, Gramercy Investment Trust, a Maryland real estate
investment trust, and GKK Trading Corp., a Delaware corporation, as the same
may be amended, restated, supplemented or otherwise modified and in effect from
time to time.  Recourse under the
Guarantee Agreement shall be limited to 10% of the greater of the outstanding
aggregate Purchase Price and the total capitalization of the Sellers and shall
include a joint and several recourse carve out in favor of the Buyers.

“Guarantee
Default”: The meaning specified in Section 9.01(ff).

“Guarantee
Obligation”: As to any Person (the “guaranteeing person”), without
duplication, any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of credit) to
induce the creation of an obligation for which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.  The terms “Guarantee”
and “Guaranteed” used as a verb shall have a correlative meaning.

“Guarantors”:
The meaning specified in the Guarantee Agreement.

“In Place DSCR”:  The meaning specified in the Fee and Pricing
Letter.

“Income”:
With respect to any Mortgage Asset at any time, all collections and proceeds on
or in respect of the Mortgage Assets, including, without limitation, any
principal thereof then payable and all interest or other distributions payable
thereon less any related servicing fee(s) charged by Servicer.

“Indebtedness”:
For any Person, at the time of computation thereof, all of the following
(without duplication): (a) all obligations of such Person in respect of money
borrowed (including without limitation principal, interest, assumption fees,
prepayment fees, contingent interest, and other monetary obligations whether
choate or inchoate); (b) all obligations of such Person, whether or not for
money borrowed (i) represented by notes payable, letters of credit, or drafts
accepted, in each case representing extensions of credit, (ii) evidenced by
bonds, debentures, notes or similar instruments, or (iii) constituting purchase
money indebtedness, conditional sales contracts, title retention debt
instruments or other similar instruments, upon

 15
 

 

which interest charges
are customarily paid or that are issued or assumed as full or partial payment
for property or services rendered; (c) Capitalized Lease Obligations of such
Person; (d) all reimbursement obligations of such Person under any letters of
credit or acceptances (whether or not the same have been presented for
payment); (e) all “off-balance sheet arrangements” of such Person other than
bona fide securitization transactions; (f) all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Mandatory Redeemable Stock issued by such Person or any other Person
(inclusive of forward equity contracts), valued at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends; (g)
all obligations of such Person in respect of any keep well arrangements, credit
enhancements, contingent or future funding obligations under any Purchased
Asset or any obligation senior to the Purchased Asset, unfunded interest
reserve amount under any Purchased Asset or any obligation that is senior to
the Purchased Asset, purchase obligation, repurchase obligation, takeout
commitment or forward equity commitment, in each case evidenced by a binding
agreement (excluding any such obligation to the extent the obligation can be
satisfied by the issuance of Equity Interests (other than Mandatory Redeemable
Stock)); (h) net obligations under any Derivative Contract not entered into as
a hedge against existing Indebtedness, in an amount equal to the Derivatives
Termination Value thereof; (i) all Indebtedness of other Persons which such
Person has Guaranteed or is otherwise recourse to such Person (except for
guaranties of customary exceptions for fraud, misapplication of funds,
environmental indemnities and other similar exceptions to recourse liability
(but not exceptions relating to bankruptcy, insolvency, receivership or other
similar events)); (j) all Indebtedness of another Person secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property or assets owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness or other payment obligation; and (k) such Person’s
pro rata share of the Indebtedness of any Unconsolidated Affiliate of such
Person.

“Interest Rate
Protection Agreement”: With respect to any or all of the Purchased Assets,
any futures contract, options related contract, short sale of US Treasury
securities or any interest rate swap, cap, floor or collar agreement, total
return swap or any other similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies and acceptable to the Agent.

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

 16
 

 

“IPO”:  The
initial public offering of common stock of the Parent that occurred on July 27,
2004.

“Joint Venture” shall mean any corporation,
partnership or limited liability company in which either Guarantor owns
individually or together, directly or indirectly, an economic interest but that
is not a wholly-owned subsidiary of a Guarantor.

“Junior
Interest”: (a) A junior participation interest in a performing commercial
real estate loan or (b) a “B-note” in an “A/B structure” in a performing
commercial real estate loan, for which the combined DSCR is not less than that
set forth in the related Confirmation, taking into account, in the calculation
of the LTV and the DSCR of such Junior Interest, any senior or pari passu Indebtedness secured directly or indirectly by the
applicable Underlying Mortgaged Property (including, if applicable, any
Preferred Equity).

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

“Late Payment
Fee”: The meaning specified in Section 3.06(a).

“Letter of
Credit”: Any letter of credit issued pursuant to Section 3.07 hereof.

“Letter of
Credit Borrowing Base Certificate”: A certificate of the Seller
substantially in the form of Exhibit S, setting forth (i) the amount of
Letters of Credit then available to the Seller, including the Seller’s
calculations evidencing the foregoing and (ii) the uses for which such Letters
of Credit will be utilized.

“Letter of
Credit Issuer”: The meaning specified in Section 3.07(c) hereof.

“Letter of
Credit Liability”: The aggregate face amount of all outstanding Letters of
Credit.

“LIBOR”:
London Interbank Offered Rate.

“Lien”: Any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other security agreement of any
kind or nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement, any financing or similar statement or
notice filed under the UCC or any other similar recording or notice statute,
and any lease having substantially the same effect as any of the foregoing).

“Liquidity”:
At any time, an amount equal to (x) the Cash and Cash Equivalents of the
Guarantors (on a consolidated basis) at such time and (y) so long as no Default
or Event of Default shall have occurred and then be continuing, the Facility
Availability; provided, that the Facility
Availability shall be included when calculating Liquidity only to the extent
that all financial covenants under this Agreement are satisfied immediately
before and, on a pro forma basis, after giving
full effect to all of the transactions taken into account hereunder pursuant to
the definition of Facility Availability.

 17
 

 

“Loan-to-Value
Ratio” or “LTV”: With respect to any Mortgage Asset, at the time of
determination, the ratio of (a) the outstanding principal amount of such
Mortgage Asset at such time plus the amount of any Allocated Underlying Debt
for such Mortgage Asset at such time to (b) the lesser of (i) the appraised
value of the related Underlying Mortgaged Property, as determined by reference
to the third-party appraisal, meeting the standards required by FIRREA, of such
Underlying Mortgaged Property, with such appraised value being subject to
adjustment by the Agent in its sole discretion, and (ii) the purchase price of
such Underlying Mortgaged Property.

“Management
Contract”: That certain Management Contract, dated as of August 20, 2004,
between Parent and GKK Manager LLC, as the same may be amended, restated,
supplemented or otherwise modified and in effect from time to time.

“Manager”:
The meaning assigned thereto in the Management Contract.

“Mandatory
Redeemable Stock”: With respect to any Seller or any Subsidiary thereof,
any Equity Interest of such Person which by the terms of such Equity Interest
(or by the terms of any security into which it is convertible or for which it
is exchangeable or exercisable), upon the happening of any event or otherwise
(a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise (other than an Equity Interest to the extent redeemable in
exchange for common stock or other equivalent common Equity Interests), (b) is
convertible into or exchangeable or exercisable for Indebtedness or Mandatory
Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in
whole or in part (other than an Equity Interest which is redeemable solely in
exchange for common stock or other equivalent common Equity Interests); in each
case, on or prior to the Termination Date.

“Margin
Correction Deadline”: The time, determined in accordance with Section 4.02
of this Agreement, as the time by which all transfers, repurchases and payments
elected to be made by the Sellers pursuant to a Margin Deficit Notice shall be
completed.

“Margin Deficit”:
At any time and with respect to any Purchased Asset, the amount, if any, by
which (a) the Repurchase Price for such Purchased Asset exceeds the Asset Value
of such Purchased Asset (the value of any applicable Interest Rate Protection
Agreements shall be taken into account when making any such calculations), (b)
the aggregate Repurchase Price for all Purchased Assets plus the Letter of
Credit Liability exceeds the aggregate Asset Value of the Purchased Assets (the
value of any applicable Interest Rate Protection Agreements shall be taken into
account when making any such calculations) or (c) the aggregate Repurchase
Price of all Purchased Assets plus the Letter of Credit Liability exceeds the
Maximum Amount.

“Margin Deficit
Notice”: A written notice, substantially in the form attached as Exhibit
D hereto, which requires the Sellers to correct a Margin Deficit in
accordance with Article IV of this Agreement.

“Margin Stock”:
The meaning provided in Regulations U and X of the Board of Governors of
the Federal Reserve System.

“Market
Disruption Event”: Any event or events which, in the good faith
determination of the Agent, shall have resulted in (i) the effective absence of
a “repo market” or

 18
 

 

related “lending market”
for purchasing (subject to repurchase) or financing debt obligations secured by
commercial mortgage loans or securities, (ii) the Agent or any Buyer not being
able to finance Mortgage Assets through the “repo market” or “lending market”
with traditional counterparties at rates which would have been reasonable prior
to the occurrence of such event or events, (iii) the effective absence of a “securities
market” for securities backed by Mortgage Assets or (iv) the Agent or any Buyer
not being able to sell securities backed by Mortgage Assets at prices which
would have been reasonable prior to the occurrence of such event or events.

“Market Value”:
As of any date in respect of any Mortgage Asset, the price at which such
Mortgage Asset could readily be sold (which price shall in no event be greater
than the outstanding principal amount (or equivalent term for “par” for
Mortgage Assets with no principal amount) of such Mortgage Asset, unless the
Seller, or any Affiliate of the Seller, shall have entered into an Interest
Rate Protection Agreement with an Affiliated Hedge Counterparty in respect of
such Mortgage Asset ), as determined by the Agent in its sole discretion
exercised in good faith by (i) reference to the market value of the Underlying
Mortgaged Property, which shall be determined by a third-party appraisal of the
Underlying Mortgaged Property (which appraisal may, at the election of the
Agent, be the appraisal in place at the time such Mortgage Asset is sold to the
Buyers hereunder), as such determination of the market value of the Underlying
Mortgaged Property may be adjusted by the Agent in its sole discretion
exercised in good faith, and (ii) taking into account such other criteria as
the Agent deems appropriate in its good faith, including, without limitation,
current market conditions (including, without limitation, current interest
rates and spreads), credit quality, liquidity of position, eligibility for CDO
execution, subordination, delinquency status and aging and any amounts owing to
or by an Affiliated Hedge Counterparty under any related Interest Rate
Protection Agreement, which price, in each case, may be determined to be zero.

“Material
Adverse Effect”: A material adverse effect on (a) the Property, business,
operations, financial condition or prospects of Seller, (b) the ability of
Seller to perform its obligations under any of the Repurchase Documents to
which it is a party, (c) the validity or enforceability of any of the
Repurchase Documents, (d) the rights and remedies of the Agent or any Buyer
under any of the Repurchase Documents, (e) the timely payment of any amounts
payable under the Repurchase Documents, or (f) the Asset Value, rating (if
applicable) or liquidity of any or all of the Purchased Assets.

“Materials of
Environmental Concern”: Any toxic mold, any petroleum (including, without
limitation, crude oil or any fraction thereof) or petroleum products
(including, without limitation, gasoline) or any hazardous or toxic substances,
materials or wastes, defined as such in or regulated under any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls, and
urea-formaldehyde insulation.

“Maximum Amount”:
An amount equal to the sum of $400,000,000 or such other amount as the Sellers,
the Agent and the Buyers may from time to time agree in writing, plus, in the event that the option described in Section
3.05(b) is exercised, $100,000,000.

“Maximum Future
Advance Amount”: An amount equal to $100,000,000, or, in the event that the
option described in Section 3.05(b) is exercised, zero or such lesser amount as
agreed to by the Agent and the Sellers.

 19
 

 

“Maximum LTV”:
With respect to any Purchased Asset at any time, the Loan-to-Value ratio for
the related Underlying Mortgaged Property set forth in the related Confirmation
under the heading “Maximum LTV” and for the Class and Type of such Mortgage
Asset.

“MBS File”:
The documents required to be delivered to the Agent with respect to Mortgage
Assets which consist of CMBS or RMBS, which are set forth in the MBS File
Delivery Instructions attached as Schedule 6 hereto.

“MBS File
Delivery Instructions”: The instructions on Schedule 6 hereto with respect
to the delivery by a Seller to the Agent of MBS Files.

“Mezzanine Loan”:
A performing mezzanine loan secured by pledges of all the Capital Stock of a
Mortgagor or that portion of the Capital Stock that includes the general
partnership, managing member or other controlling interest (including, without
limitation, the right to take title to and sell the related Underlying Mortgaged
Property) that owns income producing commercial real estate which is a Type of
Mortgaged Property and for which the combined DSCR is not less than that set
forth in the related Confirmation, taking into account, in the calculation of
the LTV and the DSCR of such Mezzanine Loan, any senior or pari passu
Indebtedness secured directly or indirectly by the applicable Underlying
Mortgaged Property, including, without limitation, any preferred equity
interest or mezzanine debt that is senior to, or pari passu
with, the related Mortgage Asset in right of payment or priority.

“Mezzanine Note”:
The original executed promissory note, certificate or other tangible evidence
of Mezzanine Loan indebtedness.

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

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

“Mortgage Asset”:
Any Whole Loan, Junior Interest, Mezzanine Loan, Preferred Equity, CMBS, RMBS,
Non-Controlling Interest, Pass-Through Interest, Distressed Debt, REO Property
Loan or Transitional Asset (i) the Underlying Mortgaged Property for which is
included in the categories for Types of Mortgaged Property, and (ii) which the
Seller has delivered to the Agent, on behalf of the Buyers, or its designee
(including the Custodian) in connection with any Transaction hereunder.  In no event shall “Mortgage Asset” include
any equity class issued by a CDO or CLO vehicle.

“Mortgage Asset
File”: The meaning assigned thereto in the Custodial Agreement.

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

 20
 

 

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

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

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

“Multiemployer
Plan”: A multiemployer plan defined as such in Section 3(37) of ERISA
to which contributions have been or are required to be made by Seller or any
ERISA Affiliate and that is covered by Title IV of ERISA.

“Net Cash Flow”:
With respect to any Underlying Mortgaged Property, for any period, the
underwritten net cash flow calculated in accordance with the Agent’s customary
criteria for commercial mortgage properties.

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

“Non-Consolidation
Opinion”: A “non-consolidation” opinion of outside counsel to the Seller in
form and substance satisfactory to the Agent.

“Non-Controlling
Interest”: An interest in any Whole Loan, Junior Interest or Mezzanine Loan
which represents less than a majority of the interests, and which does not
represent a controlling position as reasonably determined by the Agent, in such
Mortgage Asset, and which is pari passu in
right of payment and priority to any other interests in such Mortgage Asset; provided,
that such interest vests the holders thereof with approval or veto rights over
customary major decisions concerning the Mortgage Asset and the related
Underlying Mortgaged Property.

“Nonrecourse
Indebtedness”: With respect to any Person, Indebtedness for borrowed money
in respect of which recourse for payment (except for customary exceptions for
fraud, misapplication of funds, environmental indemnities, and other similar
exceptions to recourse liability (but not exceptions relating to bankruptcy,
insolvency, receivership or other similar events)) is contractually limited to
specific assets of such Person encumbered by a Lien securing such Indebtedness.

“Operating
Account”: The account of a Seller described on Schedule 3 hereto.

“Parent”:
Gramercy Capital Corp., a Maryland corporation.

“Pass-Through
Interest”: A certificate or certificates representing entire beneficial
interests in a grantor trust or similar pass-through special purpose entity
exclusively holding any of the following: Whole Loans, Junior Interests,
Mezzanine Loans, Preferred Equity, Distressed

 21
 

 

Debt, REO Property Loan,
CMBS or RMBS; provided that such certificate is and will be treated as debt by
the United States Internal Revenue Service for tax purposes.

“Payment Calculation
Date”: The tenth (10th)
day of each month.

“Payment Date”:
The last Business Day of each calendar month.

“PBGC”: The
Pension Benefit Guaranty Corporation established pursuant to Section 4002
of ERISA, or any successor thereto.

“Performance
Guarantor”: The meaning specified in Section 9.01(ff).

“Periodic
Advance Repurchase Payment”: The meaning specified in Section 3.06(a).

“Person”:
Any individual, limited liability company, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.

“Plan”: Any
pension plan as defined in Section 3(2) of ERISA, which is maintained or
contributed to by (or to which there is an obligation to contribute of) any
Seller or a Subsidiary of the Seller or an ERISA Affiliate, and each such plan
for the five year period immediately following the latest date on which the
Seller, or a Subsidiary of the Seller or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.

“Pledge and
Security Agreement”: The meaning specified in Section 6.01(g).

“Post-Default
Rate”: In respect of any day a Transaction is outstanding or any other
amount under this Agreement or any other Repurchase Document that is not paid
when due, whether on the stated Repurchase Date or otherwise (a “Post-Default
Day”), a rate per annum on a 360 day per year basis during the period from
and including the due date to but excluding the date on which such amount is
paid in full equal to the Pricing Rate on such Post-Default Day plus 500
basis points.

“Preferred
Dividends”: For any period and without duplication, all Restricted Payments
paid or accrued during such period on Preferred Securities issued by any Seller
or any Subsidiary thereof.  Preferred
Dividends shall not include dividends or distributions paid or payable (a)
solely in Equity Interests (other than Mandatory Redeemable Stock) payable to
holders of such class of Equity Interests; (b) to any Seller or any Subsidiary
thereof; or (c) constituting or resulting in the redemption of Preferred
Securities, other than scheduled redemptions not constituting balloon, bullet
or similar redemptions in full.

“Preferred
Equity”: A performing current pay preferred equity position (with a put or
synthetic maturity date structure replicating a debt instrument) evidenced by a
stock share certificate or other similar ownership certificate representing the
entire equity ownership interest in entities that own income producing
commercial real estate for which the underwritten DSCR is not less than that
set forth in the related Confirmation, taking into account, in the calculation
of the LTV and the DSCR of such Preferred Equity, any senior or pari passu Indebtedness secured

 22
 

 

directly or indirectly by
the applicable Underlying Mortgaged Property, including, without limitation,
any preferred equity interest or mezzanine debt that is senior to, or pari passu with, the related Mortgage Asset in right of
payment or priority.

“Preferred
Securities”: With respect to any Person, Equity Interests in such Person
that are entitled to preference or priority over any other Equity Interest in
such Person in respect of the payment (or accrual) of dividends or distribution
of assets upon liquidation, or both.

“Price
Differential”: With respect to any Transaction hereunder as of any date,
the aggregate amount obtained by daily application of the applicable Pricing
Rate in effect from time to time for such Transaction to the Purchase Price (decreased
by any amounts previously paid by the Seller to the Agent hereunder in respect
of the Purchase Price component of the Repurchase Price of such Mortgage Asset)
for such Transaction on each day 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 the Seller to the Agent with respect to such Transaction).

“Pricing Rate”:
With respect to a Mortgage Asset of a certain Class and the applicable Type of
Underlying Mortgaged Property, at any date of determination a rate per annum
equal to the sum of (a) the Eurodollar Rate applicable on such date plus
(b) the Pricing Spread for such Mortgage Asset applicable on such date as set
forth in the related Confirmation.

“Pricing Spread”:
The meaning specified in the Fee and Pricing Letter.

“Prime Rate”:
The prime rate announced to be in effect from time to time by the Agent as its
prime rate.  The prime rate is not intended
to be the lowest general rate of interest charged by the Agent to its
customers.

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

“Properties”:
The meaning in Section 8.01(x).

“Purchase
Agreement”: Any purchase agreement by and between any Seller and any third
party, including without limitation, any Affiliate of any Seller, pursuant to
which the Seller has purchased assets subsequently sold to the Buyers hereunder.

“Purchase
Amount”: As to any Buyer, the obligation of such Buyer to participate in
Transactions entered into by the Agent on behalf of the Buyers in accordance
with the terms hereof, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Buyer’s name on
Schedule 7 under the caption “Purchase Amount” or, as the case may be, in the
Assignment and Acceptance pursuant to which such Buyer became a party hereto,
as such amount may be changed from time to time in accordance with the
provisions of this Agreement.

“Purchase Date”:
With respect to each Transaction, the date on which the related Mortgage Assets
are transferred by the Seller to the Agent, on behalf of the Buyers, or its
designee (including the Custodian), which date shall in no event be after the
Final Purchase Date.

 

 23

 

 

“Purchase
Period”: The period from and including the Effective Date to and including
the Final Purchase Date.

“Purchase Price”:
On each Purchase Date, the price at which the respective Mortgage Assets are
transferred by the Seller to the Agent, on behalf of the Buyers, or its
designee (including the Custodian), which amount shall not exceed the Asset
Value for such Mortgage Assets on the Purchase Date.

“Purchase Rate”:
The meaning specified in the Fee and Pricing Letter.

“Purchased
Assets”: The Mortgage Assets sold by the Seller to the Buyers in a
Transaction hereunder.  The term “Purchased
Assets” shall include Additional Purchased Assets delivered pursuant to Article
IV hereof.

“Purchased
Items”: The meaning specified in Section 6.01.

“Qualified Servicer”: Any nationally recognized
commercial mortgage loan servicer (other than ORIX Capital Markets LLC or any
of its Affiliates) rated at least “Css2” (or equivalent successor rating) by
Fitch, Inc., or any successor to Fitch, Inc. and on the approved master servicer
list or special servicer list of Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc.

“Ratings
Agencies”: Each of Fitch Ratings, Inc., Moody’s Investors Services, Inc. or
Standard and Poor’s Ratings Services, a division of the McGraw-Hill Companies,
Inc., or their successors in interest, and such nationally recognized
statistical rating agencies as may be designated by the Seller to the Agent, on
behalf of the Buyers, from time to time.

“Regulations T,
U and X”: Regulations T, U and X of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.

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

“Release Letter”:
A letter substantially in the form of Exhibit H hereto (or such other
form acceptable to the Agent).

“REMIC”: A
real estate mortgage investment conduit, within the meaning of Section 860D(a)
of the Code.

“REO Property”:
Any real property acquired by a Seller, including a Mortgaged Property acquired
through foreclosure of a Mortgage Asset or by deed in lieu of such foreclosure.

“REO Property
Loan”: A non-performing mortgage loan secured by a perfected first priority
security interest in a commercial real property and any personal property
related thereto which is owned by the Seller as the result of foreclosure of
another mortgage loan, with

 24
 

 

such documentation as was
included in such foreclosed mortgage loan with respect to such Underlying
Mortgaged Property in an amount equal to the Book Value; provided,
however that with respect to any management agreement or any agreement or other
arrangement with any party affiliated with Seller, Manager or SLG, Seller shall
provide such other documentation as is reasonably requested by the Agent, and
any such agreement with an affiliated party shall be terminable at will.

“Reportable
Event”: Any of the events set forth in Section 4043(c) of ERISA, other than
those events as to which the thirty day notice period is waived under Sections
..21, .22, .23, .26, .27 or .28 of PBGC Reg. § 4043.

“Repurchase
Date”: The date on which the Seller is to repurchase the Purchased Assets
from the Buyers, which date shall not be later than the Termination Date and,
unless otherwise specified in the related Confirmation shall be the Termination
Date; provided, that the Repurchase Date for Purchased Assets consisting
of Preferred Equity shall not be later than the date that is 360 days after the
Purchase Date therefore.

“Repurchase
Documents”: This Agreement, the Custodial Agreement, the Account Control
Agreement, all Pledge and Security Agreements, all Servicing Agreements (if
any), all Interest Rate Protection Agreements (if any), all Additional Seller
Joinder Agreements (if any), the Guarantee Agreement and the Fee and Pricing
Letter.

“Repurchase
Obligations”: The meaning specified in Section 6.01(b).

“Repurchase
Price”: The price at which Purchased Assets are to be transferred from the
Buyers or their designee (including the Custodian) to the Seller upon
termination of a Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of (i) the Purchase Price, (ii) the Price
Differential, (iii) any amounts which would be payable to (a positive amount)
or by (a negative amount) an Affiliated Hedge Counterparty under any related
Interest Rate Protection Agreement if such Interest Rate Protection Agreement
were terminated on the date of determination, and (iv) any applicable fees
payable in accordance with the Fee and Pricing Letter, in each case as of the
date of such determination, decreased by all cash, Income and Periodic Advance
Repurchase Payments (including Late Payment Fees, if any) actually received by
the Agent for the account of the Buyers, and increased by all other costs, fees
or other amounts payable to the Buyers by the Seller under any Repurchase
Document; provided, that with respect to any determination of Repurchase
Price that is made in connection with the actual repurchase by the Seller of
any Purchased Asset which is subject to a Transaction outstanding hereunder
(and not in connection with any calculation of Margin Deficit or other
determination that is made during the course of a Transaction which is not
related to such a repurchase), the Repurchase Price for such Purchased Asset
shall take into account amounts payable by (a negative amount) an Affiliated
Hedge Counterparty under any related Interest Rate Protection Agreement only
(i) to the extent such amounts are actually then due and payable under the
related Interest Rate Protection Agreement and (ii) to the extent that the
Seller shall have provided the applicable Affiliated Hedge Counterparty with
written instructions (with a copy to the Agent) that such amounts are
anticipated by the Seller to be paid by the Agent directly to the Affiliated
Hedge Counterparty or by such Affiliated Hedge Counterparty directly to the
Agent, as applicable.

 25
 

 

“Request for
Letter of Credit”: The meaning provided in Section 3.07(b).

“Required
Buyers”: At any time, an aggregate amount of Buyers for which the Buyer
Percentages aggregate more than 50%.

“Requirement of
Law”: As to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority (including, without limitation, those relating to
environmental standards and controls), in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.

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

“Restricted
Payment”: (a) Any dividend or other distribution, direct or indirect, on
account of any Equity Interest of any Seller or any Subsidiary thereof now or
hereafter outstanding, except a dividend payable solely in Equity Interests of
identical class to the holders of that class; (b) any redemption, conversion,
exchange, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Equity Interest of any Seller
or any Subsidiary thereof now or hereafter outstanding; and (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire any Equity Interests of any Seller or any
Subsidiary thereof now or hereafter outstanding.

“RMBS”:
Publicly offered, SEC registered pass-through certificates representing
beneficial ownership interests in one or more first lien mortgage loans secured
by residential properties which are rated “AAA” (or equivalent) by any two
Rating Agencies.

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

“SEC”: The
Securities and Exchange Commission, or any successor thereto.

“Security
Agreement”: With respect to any Mortgage Asset, any contract, instrument or
other document related to security for repayment or payment thereof (other than
the related Mortgage and Mezzanine Note), executed by the Mortgagor or other
applicable party (in the case of a Mezzanine Loan or Preferred Equity) and/or
others in connection with such Mortgage Asset, including without limitation,
any security agreement, guaranty, title insurance policy, hazard insurance
policy, chattel mortgage, letter of credit or certificate of deposit or other
pledged accounts, and any other documents and records relating to any of the
foregoing.

“Seller”
and “Sellers”: The meanings assigned thereto in the introductory
paragraph hereof.

“Seller-Related
Obligations”: With respect to any Seller, any obligations of the Seller
hereunder and under any other arrangement between the Seller or an Affiliate of
the Seller

 26
 

 

on the one hand and the
Agent or any Affiliate of the Agent on the other hand (including, without
limitation, any Interest Rate Protection Agreement entered into with any
Affiliated Hedge Counterparty and all amounts, if any, anticipated to be paid
to the Agent by an Affiliated Hedge Counterparty, as provided for in the
definition of Repurchase Price).

“Servicer”:
The meaning specified in Section 11.03.

“Servicer
Account”: Any account established by Servicer in connection with the
servicing of the Mortgage Assets.

“Servicer
Notice”: A notice from the Sellers, as applicable, to the Servicer,
substantially in the form attached as Exhibit E hereto.

“Servicing Agreement”:
The meaning specified in Section 11.03.

“Servicing File”:
With respect to each Mortgage Asset, the file retained by Seller consisting of
originals of all documents in the Mortgage Asset File which are not delivered
to the Custodian and copies of all documents in the Mortgage Asset File set
forth in Section 2.01 of the Custodial Agreement.

“Servicing
Records”: The meaning specified in Section 11.02.

“Settlement
Agent”: With respect to any Transaction involving a Wet Mortgage Asset, the
entity approved by the Agent, in its sole discretion, which may be a title
company, escrow company or attorney in accordance with local law and practice
in the appropriate jurisdiction of the related Wet Mortgage Asset, to which the
proceeds of such Transaction are to be wired pursuant to Section 3.03(l).

“SLG”: SL
Green Realty Corp., a Maryland corporation.

“Special
Purpose Transaction”: (i) A Wet Funding or (ii) an additional Transaction
requested with respect to any Purchased Asset (other than a Transitional Asset)
to provide for the advance of additional funds that were expressly identified
to and approved by the Agent in connection with the initial Transaction entered
into in respect of such Purchased Asset.

“Stabilized
DSCR”: With respect to any Mortgage Asset, as of any date of determination,
the ratio of (x) Net Cash Flow (calculated using the projected Net Cash Flow at
the maturity of the Mortgage Asset, annualized) to (y) debt service due using
the applicable refinance constant for the related Underlying Mortgaged Property
then being used by the Buyers and their Affiliates and the projected
outstanding balance of such Mortgage Asset.

“Sub-Limit”:
The composition of Mortgage Assets transferred to Buyer shall at all times meet
the following sublimit caps, and no Asset Value shall be ascribed to any
Mortgage Assets:

(a)           to the extent that the Asset Value
ascribed to Mortgage Assets, the Classes of which consist of Mezzanine Loans,
Junior Interests and Preferred Equity, collectively, would exceed 75% of the
Maximum Amount;

 27
 

 

(b)           to the extent that the Asset Value
ascribed to Mortgage Assets, the Class of which consists of Preferred Equity,
would exceed 15% of the Maximum Amount;

(c)           to the extent that the Asset Value
ascribed to Mortgage Assets, the Class of which consists of Transitional
Assets, would exceed 40% of the Maximum Amount;

(d)           to the extent that the Asset Value
ascribed to Mortgage Assets, the Classes of which consist of Non-Controlling
Interests and Pass-Through Interests, collectively, would exceed 15% of the
Maximum Amount;

(e)           to the extent that the Asset Value
ascribed to Mortgage Assets, the Type of which consists of hotels, nursing
homes or other non-traditional property types (as determined by the Agent),
would exceed 20% of the a Maximum Amount;

(f)            to the extent that the Asset Value
ascribed to Mortgage Assets which are Ground Lease Assets, would exceed 50% of
the Maximum Amount; provided, that with respect to any Ground Lease
Asset which is secured or supported in part, but not in whole, by a Ground
Lease, the Agent shall determine, in its sole and absolute discretion, the
amount of the total Asset Value which shall be deemed to be a Ground Lease
Asset for purposes of this calculation;

(g)           to the extent that the weighted
average Purchase Rate of all Mortgage Assets would exceed 85.0%; and

(h)           to the extent that the Weighted
Average LTV of all Mortgage Assets would exceed 80.0%.

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

“Tax Based
Accounting Principles”: With respect to any Person, those generally
accepted tax accounting principles and practices which are recognized as such
in the United States for the purposes of complying with filing and reporting
obligations under the Code, and which are consistently applied for all periods,
after the date hereof, so as to properly and fairly reflect the financial
position of such Person.

“Termination
Date”: (i) October 5, 2009 or (ii) such later date as may be in effect
pursuant to Section 3.05(a) hereof or (iii) such earlier date on which
this Agreement shall terminate in accordance with the provisions hereof
(including, without limitation, Section 3.05(c)) or by operation of law.

 28
 

 

“Test Period”:
Any fiscal quarter, commencing with the fiscal quarter ending on December 31,
2006.

“Total Assets”: At any time, an amount equal to
the aggregate book value of (a) all assets owned by any Person(s) (on a
consolidated basis) and (b) the proportionate share of assets owned by non-consolidated
subsidiaries of such Person(s), less (i) amounts owing to such
Person(s) from any Affiliates thereof (other than arm’s length loans to SLG) ,
or from officers, employees, partners, members, directors, shareholders or
other Persons similarly affiliated with such Person(s) or their respective
Affiliates, (ii) intangible assets (other than Interest Rate Protection
Agreements specifically related to the Purchased Assets), and
(iii) prepaid taxes and/or expenses.

“Total Indebtedness”: At any time, without
duplication, all Indebtedness and Contingent Liabilities of any Person and all
Subsidiaries thereof determined on a consolidated basis, plus the pro  rata
share of Indebtedness and Contingent Liabilities of Unconsolidated Affiliates
of such Person.

“Total Liabilities Ratio”: As to any Person, the
ratio of (a) the Total Indebtedness of such Person to (b) the Total
Assets of such Person.

“Transaction”:
The meaning specified in Section 1.02.

“Transaction
Request”: The meaning specified in Section 3.03(a).

“Transaction
Request Package”:  The documents
required to be delivered to the Agent at the time a Transaction Request is
delivered to the Agent, which shall include the following:

(a)           an appraisal meeting the standards of
FIRREA and stating the loan-to-value ratio of the outstanding Purchase Price to
the value (based on the lesser of (i) the appraised value of the related
Underlying Mortgaged Property, as determined by reference to the third-party
appraisal, meeting the standards required by FIRREA, of such Underlying
Mortgaged Property, and (ii) the purchase price of such Underlying Mortgaged
Property);

(b)           an environmental report indicating no
material environmental condition for which recommended reserves have not been
established;

(c)           written certification that such
Mortgage Asset meets the requisite DSCR required for such asset type and that
all covenants, representations and warranties contained herein have been
complied with (together with such additional materials as Buyer may request);

(d)           an internal document or credit
committee memorandum (redacted to protect confidential information) setting
forth all material information actually known to Seller relating to the
Mortgage Assets;

 29
 

 

(e)           with respect to a Mortgage Asset
consisting of a Whole Loan, Junior Interest, REO Property Loan or Distressed
Debt, a copy of the related note, Mortgage, Assignment of Mortgage (if any),
title policy (or binding commitment to issue a title policy if no title policy
has been issued) for such Mortgage Asset;

(f)            with respect to a Mortgage Asset
consisting of CMBS or RMBS, a copy of the related bond or a copy of the related
bond power, endorsed in blank, or, with respect to any bonds registered with
DTC, evidence of re-registration to the securities intermediary in the Agent’s
name on behalf of the Buyers;

(g)           with respect to a Mortgage Asset
consisting of a Mezzanine Loan, a copy of the related Mezzanine Note, a copy of
the related pledge agreement and copies of any assignments;

(h)           with respect to a Mortgage Asset
consisting of Preferred Equity, a copy of the related stock share certificate,
a copy of the related partnership agreement or equivalent document and copies
of any assignments; and

(i)            with respect to a Mortgage Asset
consisting of a Pass-Through Interest, a copy of the related promissory note,
certificate or equivalent document evidencing ownership of such Pass-Through Interest,
and copies of any assignments.

“Transitional
Asset”: Any Whole Loan with respect to which the Underlying Mortgaged
Property does not meet the applicable In Place DSCR criteria but which has
nevertheless been deemed acceptable by the Agent in its sole discretion; provided,
that “Transitional Asset” shall not include (a) land loans, (b) construction
loans, (c) loans with respect to which the Underlying Mortgaged Property will
take more than thirty (30) months to achieve a stabilized cash flow sufficient
to characterize such loans as stabilized or non-transitional or (d) operating
companies (other than hotel properties).

“True Sale
Opinion”: A “true sale” opinion of outside counsel to Seller in form and
substance satisfactory to the Agent.

“Trust Receipt”:
A trust receipt issued by the Custodian to the Agent confirming the Custodian’s
possession of certain Mortgage Asset Files which are held by the Custodian for
the benefit of the Agent or the registered holder of such trust receipt.

“Type”:
With respect to a Mortgaged Property, such Mortgaged Property’s classification
as one of the following: (a) multifamily, (b) retail, (c) office, (d)
industrial, (e) hotel, (f) student housing, (g) medical office product, (h)
self-storage or (i) nursing home.

“UCC Financing
Statement”: A financing statement on Form UCC-1 or the proper national UCC
form, naming the Agent, as agent for the Buyers, as “Secured Party” and Seller
as “Debtor” and describing the Purchased Items.

“Unconsolidated
Affiliates”: With respect to any Person, any other Person in whom such
Person holds an Investment, which Investment is accounted for in the financial
statements of such Person on an equity basis of accounting and whose financial
results would not

 30
 

 

be consolidated under
GAAP with the financial results of such Person on the consolidated financial
statements of such Person.

“Underlying
Mortgage Loan”: With respect to any Junior Interest, Mezzanine Loan,
Preferred Equity, CMBS, RMBS, Non-Controlling Interest or Pass-Through
Interest, a mortgage loan made in respect of the related Underlying Mortgaged
Property.

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

(a)           Whole Loan (including any
Transitional Asset), the Mortgaged Property securing such Whole Loan;

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

(c)           Mezzanine Loan, the Mortgaged
Property that is owned by the Person the Capital Stock of which is pledged as
collateral security for such Mezzanine Loan;

(d)           Preferred Equity, the income
producing commercial real estate owned by the entity whose equity ownership
interest is represented by such Preferred Equity;

(e)           CMBS, the Mortgaged Property securing
the mortgage loans related to such security;

(f)            RMBS, the Mortgaged Property
securing the mortgage loans related to such security;

(g)           Non-Controlling Interest, the
Mortgaged Property related to the applicable mortgage asset which the
Non-Controlling Interest represents an interest in;

(h)           Pass-Through Interest, the Mortgaged
Property related to the applicable mortgage asset held by the grantor trust or
similar pass-through special purpose entity which issued such Pass-Through
Interest;

(i)            Distressed Debt, the Mortgaged
Property securing such Distressed Debt; and

(j)            REO Property Loan, the Mortgaged
Property securing such REO Property Loan.

“Underlying
Obligor”: Individually and collectively, as the context may require, the
obligor or obligors under a Mortgage Asset, including any Person that has not
signed the related Mortgage Note but owns an interest in the related Underlying
Mortgaged Property, which interest has been encumbered to secure such Mortgage
Asset.

 31
 

 

“Underwriting
Package”: An internal document or
credit committee memorandum (redacted to protect confidential information)
setting forth all material information relating to a Mortgage Asset which is
known by a Seller, prepared by a Seller for its evaluation of such Mortgage
Asset, to include at a minimum the data required in the relevant Confirmation.  In addition, (a)  with respect to each Mortgage Asset which
does not consist of RMBS and CMBS, the Underwriting Package shall include, to
the extent applicable, (i) a copy of the appraisal, (ii) the current occupancy
report (including tenant stack and rent roll), (iii) a minimum of two (2) years
of property level financial statements to the extent available, (iv) current
financial statement of the obligor, if any, on the commercial mortgage loan, if
available, (vi) the Mortgage Asset File, (vii) all third party reports and
agreed upon procedures, any letters and reports (whether drafts or final
forms), site inspection reports, market studies and any other diligence
conducted by Seller relating to such Mortgage Asset, (viii) aging of all
accounts receivable and accounts payable, (ix) copies of all transaction
documentation and (x) such further documents or information as the Agent may
request;

(b)           with
respect to each Mortgage Asset which consists of RMBS, the Underwriting Package
shall include, to the extent applicable, (i) the related prospectus, (ii) all
distribution date statements issued in respect thereof during the immediately
preceding 12 months (or, if less, since the date such RMBS was issued) and
(iii) any other information delivered to certificate holders in respect of such
RMBS during the immediately preceding 6 months;

(c)           with
respect to any Mortgage Asset which consists of CMBS, the Underwriting Package
shall include, to the extent applicable, (i) the related prospectus or offering
circular, (ii) all structural and collateral term sheets and all other
computational or other similar materials provided to a Seller in connection
with its acquisition of such CMBS, (iii) all distribution date statements
issued in respect thereof during the immediately preceding 12 months (or, if
less, since the date such CMBS was issued), (iv) all monthly CSMA reporting
packages issued in respect of such CMBS during the immediately preceding 12
months (or, if less, since the date such CMBS was issued), (v) all Rating
Agency pre-sale reports and (vi) all asset summaries and any other due
diligence materials, including, without limitation, reports prepared by third
parties, provided to Seller in connection with its acquisition of such CMBS;

(d)           with
respect to each Special Purpose Transaction requested to be entered into to
provide for the funding of future funding obligations, unless the Agent shall
otherwise agree, the Underwriting Package for such Special Purpose Transaction
shall include all such additional information as was contemplated to be
provided in connection with such funding when the initial Transaction was
entered into in respect of the related Purchased Asset.

“Uniform
Commercial Code” or “UCC”: The Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection, the effect of perfection or nonperfection,
or the priority of the security interest in any Purchased Items is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” shall mean the

 32
 

 

Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or nonperfection, or
priority.

“Weighted
Average LTV”: With respect to all Mortgage Assets at any time, the sum of
the products of the outstanding principal balances of such Mortgage Assets and
(1) for any Mortgage Asset which is a Whole Loan (including any Transitional
Asset), or a pari passu interest in a Whole
Loan (including any Transitional Asset), the product of the Purchase Rate for
such Mortgage Asset and the LTV of such Mortgage Asset and (2) for any Mortgage
Asset which is not a Whole Loan, or a pari passu
interest in a Whole Loan, the sum of the LTV of any debt senior to such
Mortgage Asset and the product of (x) the Purchase Rate for such Mortgage Asset
and (y) the LTV of such Mortgage Asset minus the First Dollar LTV for such
Mortgage Asset, divided by the total outstanding principal balances of all
Mortgage Assets.

“Wet Funding”:  A Transaction for which the Seller has
delivered to the Agent a Transaction Request pursuant to Section 3.03(d).

“Wet Mortgage
Asset”:  An Eligible Asset for which
the Seller has delivered a Transaction Request and Transaction Request Package
pursuant to Section 3.02(e) hereof, and for which a complete Mortgage Asset
File has not been delivered to Custodian prior to the related Purchase Date.

“Whole Loan”:
A performing first priority commercial real estate whole loan for which the
underwritten DSCR is not less than that set forth in the related Confirmation
as determined by the Agent after taking into account any reserves and any other
adjustments which Whole Loan includes, without limitation, (i) a Mortgage Note
and related Mortgage, and (ii) all right, title and interest of the Seller in
and to the Mortgaged Property covered by such Mortgage.  The Whole Loan LTV and DSCR must take into
account any senior or pari passu
Indebtedness secured directly or indirectly by the applicable Underlying
Mortgaged Property, including, without limitation, any preferred equity
interest or mezzanine debt that is senior to, or pari passu
with, the related Mortgage Asset in right of payment or priority.

Section 2.02           Other
Definitional Provisions; Determinations by the Agent.

(a)           All
references to, and calculations required to be made in respect of, any
principal and/or interest associated with any Mortgage Asset, shall, with
respect to Mortgage Assets consisting of Preferred Equity, be deemed to refer,
respectively, to the face amount of such Preferred Equity and the preferred
return or yield (however such terms are denominated, as set forth in the
related Mortgage Asset documents), whether payable or accrued.

(b)           As
used herein, and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to a Seller not defined in Section 2.01,
and accounting terms partly defined in Section 2.01, to the extent not
defined, shall have the respective meanings given to them under GAAP.

(c)           The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, schedule and exhibit
references are to this Agreement unless otherwise specified.

 33

 

(d)           The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

(e)           All
matters to be determined by the Agent in its sole discretion hereunder shall be
determined by the Agent in its sole discretion exercised in good faith.

(f)            All
references herein, or in any other Repurchase Document, to “the Seller” shall
refer to the applicable Seller of a Purchased Asset in connection with a
Transaction hereunder.

 

ARTICLE
III

INITIATION;
TERMINATION

Section 3.01           Conditions
Precedent to Initial Transaction. 
The Agent and each Buyer’s agreement to enter into the initial
Transaction hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Transaction, of the condition precedent
that the Agent shall have received from the Sellers payment of an amount equal
to all fees and expenses payable hereunder and pursuant to the Fee and Pricing
Letter, and all of the following documents, each of which shall be satisfactory
in form and substance to the Agent and its counsel:

(a)           The
following Repurchase Documents, as well as certain other documents, delivered
to the Agent:

(i)       Third Amended and
Restated Master Repurchase Agreement. 
This Third Amended and Restated Master Repurchase Agreement duly
completed and executed by each of the parties hereto;

(ii)      Second Amended and
Restated Custodial Agreement.  The
Second Amended and Restated Custodial Agreement, duly executed and delivered by
each of the parties thereto;

(iii)     Account Control
Agreement.  The Account Control
Agreement, duly executed and delivered by each of the parties thereto;

(iv)    Interest Rate
Protection Agreements.  All Interest
Rate Protection Agreements required pursuant to Section 9.01(v), duly executed
and delivered by each of the parties thereto;

(v)     Third Amended and
Restated Guarantee Agreement.  The
Guarantee Agreement, duly executed and delivered by the Guarantors;

(vi)    Pledge and Security
Agreement.  The Pledge and Security
Agreement, duly executed and delivered by each of the parties thereto.

(vii)   Consents and Waivers.  Any and all consents and waivers applicable
to any Seller or to the Mortgage Assets;

 34
 

 

 

(viii)  UCC Financing Statements. 
UCC Financing Statements naming each Seller as “Debtor” and the Agent,
as agent for the Buyers, as “Secured Party” and describing as “Collateral” the
Purchased Items and any other documents necessary or requested by the Agent to
perfect the security interests granted by the Sellers in favor of the Agent,
for the benefit of the Buyers, under this Agreement or any other Repurchase
Document;

(b)           Opinions of Counsel.  An opinion or opinions of outside counsel to
the Sellers, which opinion or opinions shall be satisfactory in form and
substance to the Agent and shall include general issues of formation and
enforceability with respect to each Seller, first priority perfected security
interest with respect to the Purchased Assets, a Non-Consolidation Opinion and
such other issues as requested by the Agent;

(c)           Organizational Documents.  A good standing certificate and certified
copies of the charter and by-laws (or equivalent documents) of each Seller and
of all corporate or other authority for each Seller with respect to the
execution, delivery and performance of the Repurchase Documents and each other
document to be delivered by the Seller from time to time in connection herewith
(and the Agent may conclusively rely on such certificate until it receives
notice in writing from the Seller to the contrary);

(d)           Servicing
Agreement.  With respect to any
Eligible Asset to be purchased hereunder on the related Purchase Date which is
not serviced by Seller, Seller shall have provided to the Agent a copy of the
related Servicing Agreement, certified as a true, correct and complete copy of the
original, together with a Servicer Notice, fully executed by Seller and
Servicer;

(e)           Closing
Certification.  A Closing
Certification of each Seller.

(f)            Fees
and Expenses.  The Agent shall have
received payment from the Sellers of an amount equal to the amount of actual
costs and expenses, including, without limitation, the fees and expenses of
counsel to the Agent and/or the Buyers, incurred by the Agent and/or the Buyers
in connection with the development, preparation and execution of this
Agreement, the other Repurchase Documents, the Wachovia Facilities and any
other documents prepared in connection herewith or therewith; and

(g)           Other
Documents.  The Agent shall have
received all such other and further documents, documentation and legal opinions
as the Agent in its sole discretion shall reasonably require.

Section 3.02           Conditions Precedent to all
Transactions.  The Agent’s and each
Buyer’s agreement to enter into each Transaction (including the initial
Transaction) is subject to the satisfaction of the following further conditions
precedent, both immediately prior to entering into such Transaction and also
after giving effect to the consummation thereof and the intended use of the
proceeds of the sale:

(a)           the Seller shall have delivered a
Confirmation via Electronic Transmission in accordance with the procedures set
forth in Section 3.03, and the Agent shall have determined that the
Mortgage Asset described in such Confirmation is an Eligible Asset, shall have
approved

 35
 

 

the purchase of the Mortgage
Asset to be included in such Transaction in its sole and absolute discretion
and shall have obtained all necessary internal credit approvals for such
Transaction;

(b)           no Default or Event of Default shall
have occurred and be continuing under this Agreement, the Guarantee Agreement
or any other Repurchase Document and no event shall have occurred which has, or
would reasonably be expected to have, a Material Adverse Effect;

(c)           the Agent shall have received a
certificate of a Responsible Officer of the Seller, substantially in the form
of Exhibit J hereto, (i) showing in detail the calculations
demonstrating that, after giving effect to the requested Transaction, no Margin
Deficit shall then exist, (ii) stating that, to the best of such
Responsible Officer’s knowledge, since the date of the certificate most
recently delivered pursuant to Section 9.01(b)(ii), the Seller has observed or
performed all of its covenants and other agreements in all material respects,
and satisfied in all material respects, every condition, contained in this
Agreement and the related documents to be observed, performed or satisfied by
it, and that such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate, (iii) describing
all interests of the Seller’s Affiliates in any Underlying Mortgaged Property
related to any proposed Mortgage Asset (including without limitation, any lien,
encumbrance or other debt or equity position or other interest in the
Underlying Mortgaged Property that is senior or junior to, or pari passu with, the proposed Mortgage Asset in right of
payment or priority), (iv) showing in detail the calculations supporting
such Responsible Officer’s certification of the Seller’s compliance with the
requirements of Section 9.01(f) and Sections 9.01(l)-(o) and (v)
confirming that all equity of each of the Seller’s Subsidiaries has been
pledged to the Agent for the benefit of the Buyers;

(d)           both immediately prior to the
requested Transaction and also after giving effect thereto and to the intended
use thereof, the representations and warranties made by the Seller in Section
8.01 and in Schedules 1(a)-1(j), as applicable, shall be true, correct and
complete on and as of such Purchase Date in all material respects with the same
force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date);

(e)           subject to the Agent’s right to
perform one or more Due Diligence Reviews pursuant to Section 13.11, (i) in the
case of a Dry Mortgage Asset, Seller shall have delivered a Transaction
Request, a Transaction Request Package and all Mortgage Asset Documents to the
Custodian as required by this Agreement and the Custodial Agreement and Buyer
has consented in writing to the related Mortgage Asset becoming a Purchased
Asset, and (ii) in the case of a Wet Mortgage Asset, Seller has delivered a
Transaction Request, Transaction Request Package and pledge to deliver a complete
Mortgage Asset File with respect to any Wet Mortgage Assets identified on such
Transaction Request within five (5) Business Days of the related Purchase Date;
provided, that if the Agent’s diligence review of the Mortgage Asset
File requires the delivery of a mortgage file or the equivalent, Seller shall
have the benefit of delayed delivery under circumstances and pursuant to the
terms and conditions set forth in Section 2.01(g)(ii) of the Custodial
Agreement;

 36
 

 

(f)            with respect to any Dry Mortgage
Asset to be purchased hereunder on the related Purchase Date which is not
serviced by the Seller or an Affiliate
thereof, the Seller shall have provided to the Agent a copy of the
related Servicing Agreement, certified as a true, correct and complete copy of
the original, together with a Servicer Notice, fully executed by the Seller and
the Servicer;

(g)           the Agent shall have received all
fees and expenses of counsel to the Agent as required hereunder and/or by the
Fee and Pricing Letter and Section 13.01 and, to the extent Seller is required
hereunder to reimburse the Agent for such amounts, the Agent shall have
received the costs and expenses incurred by it in connection with the entering
into of any Transaction hereunder, including, without limitation, costs associated
with due diligence, recording or other administrative expenses necessary or
incidental to the execution of any Transaction hereunder, which amounts, at the
Agent’s option, may be withheld from the sale proceeds of any Transaction
hereunder;

(h)           no Margin Deficit shall exist, either
immediately prior to or after giving effect to the requested Transaction, and
no Market Disruption Event shall have occurred and be continuing.

(i)            with respect to Dry Fundings, the
Agent shall have received from the Custodian on each Purchase Date an Asset
Schedule and Exception Report with respect to each Purchased Asset, dated the
Purchase Date, duly completed and with exceptions acceptable to the Agent in
its sole discretion in respect of Eligible Assets to be purchased hereunder on
such Business Day;

(j)            the Agent shall have received from
the Seller a Release Letter covering each Eligible Asset to be sold to the
Buyers;

(k)           prior to the purchase of any Mortgage
Asset acquired (by purchase or otherwise) by the Seller from any Affiliate of
the Seller, the Agent shall have received a Non-Consolidation Opinion and a
True Sale Opinion;

(l)            the Agent shall not have reasonably
determined that the introduction of, or a change in, any Requirement of Law or
in the interpretation or administration of any Requirement of Law applicable to
any Buyer has made it unlawful, and no Governmental Authority shall have
asserted that it is unlawful, for any Buyer to enter into Transactions;

(m)          the initial Purchase Price specified
in a Confirmation for a Mortgage Asset shall not be less than $3,000,000 and
increments of $100,000 thereafter; provided, that two (2) Confirmations
per calendar month may specify an initial Purchase Price in an amount greater
than $1,000,000 and less than $3,000,000.

(n)           the Repurchase Date for such
Transaction is not later than the Termination Date;

(o)           the Seller shall have taken such
other action as the Agent shall have reasonably requested in order to transfer
the Purchased Assets pursuant to this Agreement and to perfect all security
interests granted under this Agreement or any other Repurchase Document in
favor of the Agent for the benefit of the Buyers with respect to the Purchased
Assets;

 37
 

 

(p)           the weighted average Purchase Rate of
all Mortgage Assets shall not exceed 85.0%;

(q)           the Weighted Average LTV of all
Mortgage Assets shall not exceed 80.0%;

(r)            delivery of the Pledge and Security
Agreement described in Section 6.01(g);

(s)           with respect to any Wet Mortgage
Assets, the Agent shall have received a complete Transaction Request Package
and a Bailee Letter in the form attached hereto as Exhibit O;

(t)            the Seller shall have assigned to
the Agent, for the benefit of the Buyers, all of the Seller’s rights under each
Interest Rate Protection Agreement entered into with an Affiliated Hedge
Counterparty in respect of a Purchased Asset and no “termination event”, “event
of default” or “potential event of default” (however denominated) shall have
occurred and be continuing under any such Interest Rate Protection Agreement;
and

(u)           the Agent shall have received all
such other and further documents, documentation and legal opinions (including,
without limitation, opinions regarding the perfection of the Agent’s security
interests) as the Agent in its reasonable discretion shall reasonably require.

Each Confirmation
delivered by any Seller hereunder shall constitute a certification by the
Seller that all the conditions set forth in this Section 3.02 with respect
to the Seller have been satisfied, waived or is not applicable (both as of the
date of such notice or request and as of the date of such purchase).

Section 3.03           Transaction Mechanics; Related
Matters.  (a)  During the Purchase Period, in the sole
discretion of the Agent, the Agent may from time to time purchase from a Seller
certain Eligible Assets.  (For the
avoidance of doubt, the parties hereby acknowledge and agree that any decision
by WBNA, or any Affiliate thereof, to enter into any rate lock agreement,
interest rate protection agreement, total return swap or any other agreement
with respect to any Mortgage Asset, other than a Confirmation hereunder, shall
not reflect, and shall not be deemed to reflect, the Agent’s approval of any
Mortgage Asset or its determination to enter into any Transaction
hereunder.)  A Seller shall request a
Transaction, including a Special Purpose Transaction requested to effect a Wet
Funding or to provide for the funding of certain obligations associated with a
Purchased Asset, by delivering to the Agent (with a copy to the Custodian) via
Electronic Transmission a request in the form of Exhibit A attached
hereto (a “Transaction Request”) within one (1) Business Day after the
Agent approves such Transaction and delivers the related Confirmation.

(b)           With respect to Dry Mortgage Assets, the
Seller shall request a Transaction by delivering to the Agent a Transaction
Request (with a copy to the Custodian) via

 38
 

 

Electronic Transmission.  Each such Transaction Request shall describe
the Mortgage Assets proposed to be purchased (including the applicable Class
and Type), and set forth (i) the proposed Purchase Date (which date,
notwithstanding any extension of Termination Date, shall not be later than the
Final Purchase Date), (ii) the proposed Purchase Price, (iii) the Proposed
Repurchase Date, (iv) the Pricing Rate applicable to such Transaction, (v) the
applicable Class and Type for each Mortgage Asset for which the Seller is
requesting the Transaction, (vi) whether such Transaction Request pertains to a
Special Purpose Transaction (and, if so, a description of such Special Purpose
Transaction) and (vii) any additional terms or conditions not inconsistent with
this Agreement and shall be accompanied by the Underwriting Package with
respect to such Dry Mortgage Assets.

(c)           Upon receipt of the complete
Underwriting Package for any Dry Mortgage Asset, the Agent shall notify the
Seller of its approval or disapproval of each such proposed Mortgage Asset
within ten (10) Business Days after such receipt; provided, that with
respect to any Transaction Request pertaining to a pool consisting of more than
three (3) proposed Mortgage Assets, the Agent may notify the Seller of its
approval or disapproval of such proposed Mortgage Assets after such ten (10)
Business Day period, provided such notice is given as soon as practicable after
the expiration of such period.  If the
Agent shall have approved a proposed Dry Mortgage Asset in accordance with the
preceding sentence and the related Mortgage Asset File and, if applicable, the
related MBS File, shall have been delivered in accordance with Section 3.03(h)
below, upon receipt by the Agent of a Trust Receipt and Exception Report from
Custodian and subject to the other terms and conditions of this Agreement, the
Agent, on behalf of the Buyers, shall purchase such Dry Mortgage Assets on the
Purchase Date.

(d)           With respect to any Wet Mortgage
Asset, the Seller shall request a Transaction by delivering to the Agent a
Transaction Request (with a copy to the Custodian) via Electronic
Transmission.  Such Transaction Request
shall be delivered no later than 12:00 noon (eastern time) two (2) Business
Days prior to the requested Purchase Date and it shall be accompanied by all of
the items specified in clauses (a) through (d) of the definition of “Transaction
Request Package”; provided, that if such delivery is made after 12:00
noon (eastern time) it shall be deemed to have been delivered on the next
succeeding Business Day and the requested Purchase Date shall be deemed to be
the date that is two (2) Business Days thereafter.  Each such Transaction Request shall describe
the Mortgage Assets proposed to be purchased, and set forth (i) the proposed
Purchase Date (which date, notwithstanding any extension of Termination Date,
shall not be later than the Final Purchase Date), (ii) the proposed Purchase
Price, (iii) the Proposed Repurchase Date, (iv) the Pricing Rate applicable to
such Transaction, (v) the applicable Class and Type for each Mortgage Asset for
which the Seller is requesting the Transaction and (vi) any additional terms or
conditions not inconsistent with this Agreement.  All other items necessary to effect delivery
of a complete Transaction Request Package shall be delivered no later than
12:00 noon (eastern time) on the requested Purchase Date (or such later date as
may be deemed to be the Purchase Date pursuant to the immediately preceding
sentence); provided, that if such items are delivered after 12:00 noon
(eastern time) on such requested Purchase Date, the Agent may, in its sole
discretion, decline to enter into the requested Transaction or may deem the
Purchase Date to be the Business Day immediately following the date on which
the Agent received the complete Transaction Request Package.

 39
 

 

(e)           Notwithstanding any other provision
hereunder, the fact that the Agent has conducted or has failed to conduct any
partial or complete examination or any other due diligence review of any
Purchased Asset shall in no way affect any rights the Agent or any Buyer (or
any of their successors) may have hereunder or otherwise with respect to any
representations or warranties or other rights hereunder, including without
limitation, the right to determine at any time that such Purchased Asset is not
an Eligible Asset.

(f)            On the Purchase Date for each
Mortgage Asset, the Seller shall forward to the Agent via Electronic
Transmission, a confirmation of each Transaction, substantially in the form of
Exhibit B attached hereto (a “Confirmation”).  The Confirmation shall specify any additional
terms or conditions of the Transaction not inconsistent with this Agreement or
as otherwise agreed to by the Agent.  In
the event that the terms of the related Confirmation are inconsistent with the
terms of this Agreement, this Agreement shall supersede the Confirmation with
respect to the inconsistent terms only; provided, however, that the
Confirmation and this Agreement shall be construed to be cumulative to the
extent possible.  Upon receipt of the
Confirmation, the Agent shall evidence its agreement to enter into the
requested Transaction by its signature thereon and return such Confirmation to
the Seller.  Any Confirmation executed by
the Agent shall be deemed to have been received by the Seller on the date such
executed Confirmation is actually received by the Seller.

(g)           With respect to Wet Mortgage Assets,
following the receipt of a Confirmation from the Agent, the related Bailee
Letter shall be delivered to Custodian with a copy to the Agent not later than
12:00 noon (eastern time) on the day prior to the requested Purchase Date, as
provided in the Custodial Agreement. 
Following the Agent’s receipt of the faxed Bailee Letter and Buyer’s
determination that each of the Wet Mortgage Assets is an Eligible Asset, the
Agent shall wire funds pursuant to wiring instructions set forth in the Bailee
Letter.  On the Business Day that
Custodian receives the complete Mortgage Asset Files, the Custodian will notify
the Agent of its receipt of such Mortgage Asset Files and deliver to the Agent
a Trust Receipt.  The Seller shall cause
the Settlement Agent to deliver the Mortgage Asset File with respect to each
Mortgage Asset within one (1) Business Day following the Purchase Date. Within
five (5) Business Days of receipt of such Mortgage Asset Files, Custodian shall
deliver to the Agent an Asset Schedule and Exception Report.

(h)           With respect to Dry Mortgage Assets,
at least seven (7) Business Days prior to the requested Purchase Date, Seller
shall cause (i) the related Mortgage Asset File pertaining to each Dry Mortgage
Asset to be purchased by the Agent to be delivered to the Custodian in
accordance with the Custodial Agreement and (ii) with respect to any Mortgage
Assets consisting of CMBS or RMBS, the related MBS File to be delivered to the
Agent, for the benefit of the Buyers. 
With respect to each Wet Mortgage Asset, no later than 12:00 noon
(eastern time) on the Business Day prior to the Purchase Date, the Seller shall
deliver to the Agent a completed Transaction Request and Transaction Request
Package, along with any other documents or certifications required to be
delivered in connection with such Transaction Request pursuant to the Custodial
Agreement.  Subject to the proviso in
Section 3.02(e)(ii), within five (5) Business Days of the related Purchase
Date, the Mortgage Asset Documents pertaining to each Wet Mortgage Asset
purchased by the Agent on behalf of the Buyers shall be delivered to the
Custodian in accordance with the Custodial Agreement.  Within five (5) Business Days of the related
Purchase Date, the Seller shall deliver to the Agent a complete Underwriting
Package with respect to any Wet Mortgage Assets purchased by the Agent on
behalf of the Buyers.

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(i)            Each Confirmation, together with
this Agreement, shall constitute conclusive evidence of the terms agreed
between the Agent and the Seller with respect to the Transaction to which the
Confirmation relates, and the Seller’s acceptance of the related proceeds shall
constitute the Seller’s agreement to the terms of such Confirmation.  It is the intention of the parties that each
Confirmation shall not be separate from this Agreement but shall be made a part
of this Agreement.  In the event that any
terms or conditions of any Confirmation are inconsistent, or in direct
conflict, with this Agreement, the terms of such Confirmation shall prevail; provided,
that such Confirmation and this Agreement shall be construed to be cumulative
to the extent possible.

(j)            On the Repurchase Date, termination
of a Transaction will be effected by transfer to the Seller or its designee of
the Purchased Assets and receipt of the Repurchase Price by the Agent.  To the extent a net amount is owed to one
party, the other party shall pay such amount to such party.  The Agent shall direct Custodian to deliver
the related Mortgage Files to the Seller or its designee at the Seller’s
expense on the Repurchase Date.

(k)           In no event shall a Transaction be
entered into when any Margin Deficit exists or when any Default or Event of
Default has occurred and is continuing, when the Repurchase Date for such
Transaction would be later than the Termination Date or to the extent that
after giving effect to such Transaction the aggregate Repurchase Price of all
Mortgage Assets subject to Transactions then outstanding would exceed (A) with
respect to Mortgage Assets that are not Future Advance Loans, the Maximum
Amount and (B) with respect to Mortgage Assts that are Future Advance Loans,
the Maximum Future Advance Amount.

(l)            Pursuant to Section 3.01(b) of the
Custodial Agreement, the Custodian shall deliver to the Seller and the Agent an
Asset Schedule and Exception Report with respect to the Dry Mortgage Assets
which the Seller has requested the Agent purchase, on behalf of the Buyers, on
such Purchase Date, and no later than 12:00 p.m., New York City time, on each
Purchase Date, the Custodian shall deliver to the Agent a Dry Trust Receipt in
respect of all such Dry Mortgage Assets purchased by the Agent, on behalf of
the Buyers, on such Purchase Date. 
Subject to the provisions of this Article III, the Purchase Price for
each Eligible Asset will be made available to the Seller by the Agent
transferring the aggregate amount of such Purchase Price in accordance with the
wiring instructions set forth in respect of the Seller on Schedule 2.

(m)          With respect to any Transaction
involving an Eligible Asset that is a Future Advance Loan, the Seller shall
indicate on the related Confirmation that such Eligible Asset is a Future
Advance Loan, and shall provide the information contained in Appendix II to the
Confirmation regarding such Future Advance Loan, as well as any Future Advance
Loans that are subject to any outstanding Transactions.  On the Purchase Date of a Future Advance
Loan, (i) the amounts designated as the Remaining Future Advance Amount on
Appendix II of the related Confirmation shall be allocated to the Maximum
Future Advance Amount  and (ii) the
amounts designated as the Initial Amount and the Funded Future Advance Amount
shall be allocated to the Maximum Amount. 
Upon receipt of evidence satisfactory to the Agent that the Future
Advance Loan has been funded in whole or part by the Seller, such funded
amounts shall

 41
 

 

at that time be allocated to
the Maximum Amount and any remaining amount of the Future Advance Loan shall
continue to be allocated to the Maximum Future Advance Amount.  For the avoidance of doubt, with respect to
each Future Advance Loan, any amounts initially allocated against the Maximum
Future Advance Amount and subsequently reallocated to the Maximum Amount
following the funding of all or a portion of the future advances under such
Future Advance Loan, such amounts will again be available under the Maximum
Future Advance Amount, in accordance with this clause (m), to be allocated
against subsequent Future Advance Loans.

Section 3.04           Repurchases.

(a)           Optional Repurchases.  Subject to the payment of any LIBOR breakage
costs and any other fee or payment then due in accordance with terms hereof,
the Seller may repurchase Purchased Assets, without penalty or premium (other
than any fees payable), in whole on any date and in part on any date so long as
(i) no Margin Deficit, Default or Event of Default shall have occurred and then
be continuing and (ii) provided that the aggregate Letter of Credit Liability plus the aggregate Repurchase Price of all Purchased Assets
subject to Transactions then outstanding, after giving effect to any such
repurchase, shall not exceed the aggregate Asset Value of all remaining
Purchased Assets subject to Transactions then outstanding; provided,
however, that the Seller may deposit in a cash collateral account
opened with the Agent an amount (in U.S. Dollars) equal to the amount necessary
to reduce the Letter of Credit Liability such that the foregoing clause (ii) is
satisfied.  If the Seller intends to make
any such repurchase, the Seller shall give one (1) Business Day’s prior
written notice thereof to the Agent, which notice shall specifically identify
any Purchased Assets to be repurchased in whole.  The Repurchase Price specified in any such
notice shall be due and payable on the date specified therein, and, upon
payment thereof, such amount shall be applied (i) with respect to Purchased
Assets being repurchased in whole, subject to Section 3.04(c), to the
Repurchase Price of the Purchased Assets identified by the Seller and (ii) with
respect to repurchases made in part, pro rata to the Repurchase Price of all
Purchased Assets.

(b)           Mandatory Repurchases.

(i)       In the event that the Termination Date (as specified in clause
(i) of the definition thereof, the “Original Termination Date”) is
extended in accordance with Section 3.05(a), in addition to any other amounts
due and payable at any time pursuant to this Agreement or any other Repurchase
Document, the Sellers shall make equal quarterly payments, beginning on the
date occurring three (3) calendar months after the Original Termination Date
(or if such date is not a Business Day, on the immediately preceding Business
Day), in a total amount equal to the aggregate Repurchase Price outstanding as
of the Original Termination Date, unless the aggregate Repurchase Price is paid
in full prior to such quarterly payments being due.

(ii)      In the event that the weighted average Purchase Rate of all
Mortgage Assets exceeds 85.0%, the Sellers shall repurchase such Mortgage
Assets as the Agent shall have determined are necessary so that the weighted
average Purchase Rate of all Mortgage Assets does not exceed 85.0%; provided,
however, that, so long as no Default or Event of Default has occurred,
if the Seller specifically notifies the Agent in writing

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prior to the Agent purchasing a particular
Mortgage Asset that purchasing such Mortgage Asset will cause the weighted
average Purchase Rate to exceed 85.0% and the Agent approves and purchases such
Mortgage Asset, Sellers shall not be required to repurchase any Mortgage Assets
based solely on the increased weighted average Purchase Rate caused by the
purchase of such Mortgage Asset. 
Notwithstanding the foregoing, nothing in this subsection shall in any
way impair the Agent’s ability to issue a Margin Deficit Notice and require
satisfaction of any Margin Deficit in the manner and within the time frames as
provided in this Agreement.

(iii)     In the event that the Weighted Average LTV of all Mortgage
Assets exceeds 80.0%, the Sellers shall pay a portion of the Repurchase Price
of Purchased Assets selected by the Sellers until the Weighted Average LTV of
all Mortgage Assets does not exceed 80.0%.

Section 3.05           Termination Dates; Maximum Amount.

(a)           Extension of Termination Dates.  Upon written request of all of the Sellers
delivered to the Agent at least ninety (90) days, but in no event earlier than
120 days, prior to any Termination Date, and so long as no event which has a
Material Adverse Effect and no Margin Deficit, Default or Event of Default, or
any default under any other Repurchase Document, shall have occurred and be
continuing on such Termination Date, and so long as all representations and
warranties are true, correct, complete and accurate in all material respects on
such Termination Date, the Agent may in its sole discretion agree to extend
such Termination Date for a period of up to 1 year by giving written notice to
the Sellers of such extension and of the new Termination Date (the “Extended
Termination Date”) determined by the Agent; provided, that (i) any
failure by the Agent to deliver any such notice of extension to the Sellers
shall be deemed to be the Agent’s determination not to extend such Termination
Date, (ii) in no event shall the Termination Date be extended unless the Parent
shall be listed on a national securities exchange and (iii) the Termination
Date shall not be extended unless the Agent shall have received payment of an
amount equal to the Extension Fee (as defined in the Fee and Pricing Letter).

(b)           Conversion of Maximum Future
Advance Amount to Maximum Amount. 
Upon written request by the Sellers, provided that (i) no Event of
Default has occurred or is occurring, (ii) all Future Advance Loans subject to
Transactions have been repurchased by the Sellers or funded under the terms of
the related loan documents and (iii) consent is given by the Agent and the
Buyers in their sole and absolute discretion, all (or a portion of) the Maximum
Future Advance Amount may be converted and added to the Maximum Amount, such
that the Maximum Amount after such conversion shall be equal to the original
Maximum Amount plus the Maximum Future Advance
Amount and the Maximum Future Advance Amount after such conversion shall be
equal to zero (or such lesser amount).

(c)           Reduction
of Maximum Amount; Acceleration of Termination Date.  The Maximum Amount may be reduced from time
to time at the election of all of the Sellers upon thirty (30) days advance
written notice to the Agent; provided, that (i) any such reduction shall
be in a minimum amount of $10,000,000 and a whole multiple of $1,000,000 in
excess thereof, (ii) no Default of Event of Default shall exist immediately
after giving effect to any such reduction, and (iii) no Margin Deficit shall
exist immediately after giving effect to any such

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reduction (and to any payments made contemporaneously therewith).  In the event that the Maximum Amount is, or
is at any time requested by the Sellers to be, less than $100,000,000, the
Maximum Amount may be reduced to $0 at the election of the Agent upon five (5)
days advance written notice to the Sellers, whereupon the Termination Date
shall be deemed to have occurred and all amounts outstanding under the this
Agreement and the other Repurchase Documents shall be then due and payable.

(d)           No
Obligation to Extend Termination Date. 
Notwithstanding any other provision of this Section 3.05 or otherwise
herein, neither the Agent nor any Buyer (or any of their respective Affiliates)
shall be under any obligation to extend the Termination Date.

Section 3.06           Payment
of Price Differential.

(a)           Notwithstanding
that the Sellers, the Agent and the Buyers intend that the Transactions
hereunder be sales to the Buyers of the Purchased Assets, the Sellers shall pay
to the Agent, for the account of the Buyers, an amount equal to the accrued
Price Differential of each Transaction through but not including the Payment
Calculation Date (each such payment, a “Periodic Advance Repurchase Payment”)
on each Payment Date less any portion thereof previously paid, if any.  The Agent shall deliver to the Sellers, via
Electronic Transmission, notice of the required Periodic Advance Repurchase
Payment, and a detailed calculation thereof, on or prior to the fifth (5th) Business Day preceding each
Payment Date.  If the Sellers fail to
make all or part of the Periodic Advance Repurchase Payment by 5:00 p.m., New
York City time, on the Payment Date, the Sellers shall be obligated to pay to
the Agent for the account of the Buyers (in addition to, and together with, the
Periodic Advance Repurchase Payment) interest on the unpaid amount of the
Periodic Advance Repurchase Payment at a rate per annum equal to the
Post-Default Rate (the “Late Payment Fee”) until the overdue Periodic
Advance Repurchase Payment is received in full by the Agent for the account of
the Buyers.

(b)           If
any Seller repurchases Purchased
Assets on a day other than the last day of the Eurodollar Period applicable to
the related Transaction, all of the Sellers
shall jointly and severally indemnify the Agent and each Buyer and hold the Agent and each Buyer harmless from any actual liabilities, losses,
costs and/or expenses which the Agent or
any Buyer sustains or incurs arising from the reemployment of funds
obtained by Buyer hereunder or from fees payable to terminate the deposits from
which such funds were obtained (“Breakage Costs”), in each case for the
remainder of the applicable Eurodollar Period. 
The Agent shall deliver to the Sellers
a statement setting forth the amount and basis of determination of any Breakage
Costs in reasonable detail, it being agreed that such statement and the method
of its calculation shall be conclusive and binding upon the Sellers absent manifest error.  This Section 3.06(b) shall survive
termination of this Agreement and repurchase of all Purchased Assets subject to
Transactions hereunder.

Section 3.07           Letters
of Credit.

(a)           Subject
to the terms and conditions hereof, on any Business Day, the Buyers may, in its
sole and absolute discretion, subject to the next succeeding sentence, issue
Letters of Credit in all material respects in the form attached as
Exhibit S or such other form as may be approved by the Buyers, duly
completed and in such aggregate face amount not to

 44
 

 

exceed $30,000,000, taking into account all outstanding Letters of
Credit issued hereunder, as the Sellers may request (but in any event in a
minimum face amount of not less than $5,000,000) and which shall expire no
later than the earlier to occur of (i) the date which is one (1) year following
the issuance thereof, and (ii) the date occurring thirty (30) days prior to the
Termination Date, unless, in either case, the Sellers shall have deposited in a
cash collateral account opened with the Agent an amount (in U.S. Dollars) equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit
expiring subsequent to the date which is the earlier of (i) and (ii) above, provided that after giving effect to the issuance of any
such Letter of Credit, the aggregate Letter of Credit Liability plus the aggregate Repurchase Price of all Purchased Assets
subject to Transactions then outstanding as of such date shall not exceed the
aggregate Asset Value of all Purchased Assets subject to Transactions then
outstanding.  Immediately following an Event
of Default, the Seller shall deposit in a cash collateral account opened with
the Agent an amount (in U.S. Dollars) equal to the amount of any outstanding
Letters of Credit.  Notwithstanding the
foregoing, the Buyers shall not issue any Letter of Credit:

(i)       If the issuance of such Letter of Credit
would violate a generally applicable policy of any Buyer;

(ii)      In connection with transactions involving
armaments, munitions or hostile takeovers;

(iii)     If the issuance of such Letter of Credit
shall not be permitted under applicable law;

(iv)    If the Letter of Credit Fee has not been
remitted to the Agent;

(v)     If an Event of Default has occurred or is
occurring and the Sellers have not deposited in a cash collateral account
opened with the Agent an amount (in U.S. Dollars) equal to the face amount of
the requested Letter of Credit;

(vi)    If there are three (3) Letters of Credit
outstanding under the Agreement; or

(vii)   If there are less than three (3) Mortgage
Assets held by the Buyer under this Agreement,

but shall instead in
these instances use its reasonable efforts to request another lender to issue
such Letter of Credit, it being understood and agreed that no other lender
shall be under any obligation to issue such Letter of Credit pursuant to this
Section 3.07(a).

(b)           Each application for Letters of
Credit (“Request for Letter of Credit”) shall be submitted to the Agent
in the form attached hereto as Exhibit T (with blanks appropriately
completed in conformity herewith) accompanied by a Letter of Credit Borrowing
Base Certificate, a Compliance Certificate and such other information as the
Agent, in its reasonable discretion, may reasonably require, on or before 12:00
Noon (New York time) at least three (3) Business Days prior to the requested
date of issuance.  Upon each such
application, the Sellers shall be deemed to have automatically made to the
Agent and each Buyer the following representations and warranties:

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(i)       As
of the date of issuance of time Letter of Credit requested, each representation
and warranty set forth in Section 8.01 is true and correct, both
immediately before and after the issuance of the requested Letter of Credit, as
though such representations and warranties were made on and as of such date,
except to the extent such representations and warranties relate to an earlier date,
in which case such representations and warranties remain true and correct as of
such earlier date, and there exists no Event of Default; and

(ii)      Following
the issuance of the requested Letter of Credit, the aggregate Letter of Credit
Liability plus the aggregate Repurchase Price of
all Purchased Assets subject to Transactions then outstanding as of such date
shall not exceed the aggregate Asset Value of all Purchased Assets subject to
Transactions then outstanding.

(c)           Wachovia shall participate in each
Letter of Credit issued and outstanding hereunder and, upon the consent of each
Buyer, the Buyers (in this capacity, together with Wachovia, the “Letter of
Credit Issuers”) shall participate ratably in each such Letter of Credit
issued and outstanding to the extent of its pro rata
portion of the Letter of Credit Liability with respect to each such Letter of
Credit, and shall share in all rights and obligations resulting therefrom,
including, without limitation (i) the right to receive from the Agent the Letter
of Credit Issuer’s pro rata
portion of any reimbursement of the amount of each draft drawn under each
Letter of Credit, (ii) the right to receive from the Agent the Letter of Credit
Issuer’s additional costs pursuant to Section 3.07(f) hereof, and (iii)
the obligation to pay the beneficiary of any Letter of Credit the Letter of
Credit Issuer’s pro rata portion of the Letter of
Credit Liability of such Letter of Credit upon proper presentation to the Agent
by promptly delivering to the Agent when it receives notice of any payment by
the Agent to any beneficiary of any Letter of Credit in immediately available
funds, the Letter of Credit Issuer’s pro rata
portion thereof.

(d)           [Reserved]

(e)           The obligations of each Buyer to make
payments to the Agent with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:

(i)       Any
lack of validity or enforceability of this Agreement or any of the other
Repurchase Documents;

(ii)      The
existence of any claim, setoff, defense or other right which the Sellers may
have at any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Agent, any Buyer or any other Person, whether in connection
with this Agreement, any Letter of Credit, the Transactions contemplated herein
or any unrelated transactions (including any underlying transaction between the
Sellers and the beneficiary named in any such Letter of Credit);

 46
 

 

(iii)     Any
draft, certificate or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

(iv)    The
surrender or impairment of any security for the performance or observance of
any of the terms of any of the Repurchase Documents; or

(v)     The
occurrence of any Event of Default.

(f)            The Sellers shall pay to the Agent
amounts sufficient to compensate the Agent and the Buyers for any and all costs
resulting from any change since the date of this Agreement in any law or
regulation or any guideline or request or in the interpretation thereof by any
Governmental Authority charged with the administration of such law, regulation
or guideline which directly or indirectly (i) impose or modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit issued by the Agent or imposed upon any Buyer by virtue of its
participation arrangement provided in Section 3.07(c) hereof, (ii)
increase the amount of capital required or expected to be maintained or funded
by the Agent or any Buyer and applicable to banks generally, (iii) impose on
the Agent or any Buyer, some condition regarding this Agreement or any Request
for Letter of Credit, or (iv) change the basis of taxation of payments to any
Buyer of the principal or interest on any amounts payable hereunder (except for
changes in the rate of tax on, or determined by reference to, the net income or
profits of such Buyer imposed by the jurisdiction in which its principal office
is located), and the result of any event referred to in clauses (i), (ii),
(iii) or (iv) above shall be to increase the cost to the Agent of issuing or
maintaining the Letters of Credit, or to increase the cost to a Buyer of
maintaining its participation arrangement as provided in Section 3.07(c)
hereof, payable on demand.  A certificate
as to such increased costs, which states the basis of calculation thereof,
submitted by time the Agent or an affected Buyer to the Sellers shall be
conclusive, absent manifest error, as to time amount thereof.  Such increase in cost shall, with respect to
the Agent, be based upon a reasonable allocation of the Agent’s aggregate costs
related to the Letters of Credit and, with respect to each affected Buyer, be
based upon the actual cost incurred.

(g)           Neither the Buyers nor the Agent
shall have any liability, obligation, or responsibility whatsoever with respect
to a Seller’s use of the proceeds of the Letters of Credit.

ARTICLE IV

MARGIN MAINTENANCE

Section 4.01           Margin
Adjustments.  (a)  If at any time the aggregate Repurchase Price
for all Purchased Assets plus the Letter of Credit Liability exceeds the
aggregate Asset Value of the Purchased Assets, then the Agent may, by delivery
to the Sellers of a Margin Deficit Notice, require the Sellers to, at the
Sellers’ option, no later than the Margin Correction Deadline, (i) sell to the
Buyers for no additional consideration (by transfer to the Agent or its
designee, including the Custodian) additional Eligible Assets (“Additional
Purchased Assets”), (ii) repurchase Purchased Assets at the Repurchase
Price, (iii) make a payment in reduction of the aggregate Repurchase Price (to
be allocated to the Repurchase Price of one or more Purchased Assets, as the
Sellers shall direct to the Agent in writing), (iv) permanently cancel all

 47
 

 

or a portion of the outstanding Letters of
Credit, or (v) choose any combination of the foregoing, so that, after giving
effect to such transfers, repurchases and payments, the aggregate Repurchase
Price for all Purchased Assets does not exceed the aggregate Asset Value
thereof.

(b)           If
at any time (i) the aggregate Repurchase Price of all Purchased Assets plus the
Letter of Credit Liability exceeds the Maximum Amount then in effect, (ii) the
aggregate Repurchase Price of all Future Advance Loans subject to Transactions
then outstanding exceeds the Maximum Future Advance Amount then in effect or
(iii) the aggregate Repurchase Price of all Purchased Assets subject to Special
Purpose Transactions then outstanding exceeds an amount equal to 15% of the
Maximum Amount, then the Agent may, by delivery to the Sellers of a Margin
Deficit Notice, require the Sellers to, no later than the Margin Correction
Deadline, (w) permanently cancel all or a portion of the outstanding Letters of
Credit, (x) repurchase Purchased Assets or Future Advance Loans, as applicable,
at the Repurchase Price, (y) make a payment in reduction of the Repurchase
Price or (z) choose any combination of the foregoing, so that, after giving
effect to such repurchases and payments, the aggregate Repurchase Price of all
Mortgage Assets subject to Transactions then outstanding does not exceed the
Maximum Amount, the aggregate Repurchase Price of all Future Advance Loans
subject to Transactions then outstanding does not exceed the Maximum Future
Advance Amount, or the aggregate Repurchase Price of all Mortgage Assets
subject to Special Purpose Transactions then outstanding does not exceed an
amount equal to 15% of the Maximum Amount as applicable.

(c)           Except
as contemplated by Section 4.02(a) or (b) as a repurchase payment or as
otherwise agreed in writing by the Agent, all cash transferred to the Agent
pursuant to this Section 4.01 shall be deposited in the account set forth
in Section 7.01 hereof and shall be deemed to reduce the aggregate
Repurchase Price with respect to all outstanding Transactions.

(d)           The
Agent’s election, in its sole and absolute discretion, not to deliver a Margin
Deficit Notice at any time a such a notice is permitted to be delivered by
Section 4.01(a) or 4.01(b) shall not in any way limit or impair the Agent’s
right to deliver a Margin Deficit Notice at any other time such a notice is
permitted to be delivered by Section 4.01(a) or 4.01(b).

Section 4.02           Margin
Correction Deadline.  (a)  Subject to Section 4.02(b), all transfers,
repurchases and payments to be made by the Sellers in satisfaction of any
Margin Deficit Notice delivered pursuant to Section 4.01(a) or 4.01(b) shall be
completed no later than the time that is twenty-four (24) hours after such
notice is first received by any Seller (or if such time is not during a
Business Day, then no later than the same time on the next Business Day).

(b)           Notwithstanding
the foregoing, the deadline for completion of any repurchases or payments to be
made in satisfaction of any Margin Deficit Notice delivered pursuant to Section
4.01(a) in respect of any Mortgage Asset (other than RMBS) shall be extended to
12:00 p.m., New York City time, on the fifteenth (15th) Business Day following the
date on which the applicable Margin Deficit Notice was first received by any
Seller; provided, that no later than the time that is twenty-four (24)
hours after such notice is first received by any Seller (or if such time is not
during a Business Day, then no later than the same time on the next Business
Day), the Agent shall have received payment of an amount equal to the Margin
Deficit, which amount shall be held by the Agent as cash collateral and not
applied to the reduction of the aggregate Repurchase Price so long as all of
the following conditions are satisfied: (i) no Default

 48
 

 

of Event of Default has occurred and is continuing, (ii) no Eligible
Asset in respect of which such repurchase or payment is to be made is in any
monetary or non-monetary default or is otherwise a Delinquent Mortgage Asset,
(iii) the Sellers are making diligent and good faith efforts to effect the
necessary repurchase or payment, (iv) no cash flow shall be distributed in any
manner by any Seller except to the Agent or into the Collection Account (and
the Parent, including its Affiliates, shall not be entitled to, and shall not
receive, from any Seller any fees, compensation or other payments of any kind
until all repurchases and payments necessary to be made in satisfaction of the
Margin Deficit Notice shall have been completed), and (v) the Sellers provide
to the Agent, on a periodic basis, a summary of all efforts to be made by the
Sellers to effect the necessary repurchase or payment.  Notwithstanding anything herein to the
contrary, in the event any Seller fails to correct a Margin Deficit within
twenty-four (24) hours following receipt by a Seller of a Margin Deficit
Notice, the provisions of this Section 4.02(b) shall not prohibit, prevent or
restrict, in any manner, the Agent from selling the Purchased Asset which is
subject to the Margin Deficit and retaining the proceeds of such sale, to the
extent the related sale price is at least equal to the Repurchase Price of such
Purchased Asset.  If the Agent sells such
Purchased Asset for an amount at least equal to the Repurchase Price pursuant
to the immediately preceding sentence, the Margin Deficit with respect to such
Purchased Asset will not, in and of itself, be deemed to be an Event of
Default.  The Agent shall report the
status of the sale of any Purchased Assets which are subject to a Margin
Deficit to Sellers every other Business Day during the fifteen-day period
following the delivery of a Margin Deficit Notice by the Agent to Sellers with
respect to such Purchased Assets.

ARTICLE V

INCOME
PAYMENTS; REQUIREMENTS OF LAW

Section 5.01           Income
Payments.  Subject to the conditions
set forth below, the Sellers shall be entitled to receive an amount equal to
all Income paid or distributed on or in respect of the Purchased Assets that is
not otherwise received by any Seller,
to the full extent it would be so entitled if the Mortgage Assets had not been
sold to the Buyers.  Notwithstanding the foregoing, each Seller
hereby agrees (i) to instruct each applicable trustee, Servicer or other party
acting as paying agent with respect to the related Eligible Asset, to transfer
all Income with respect thereto directly to the
Agent for deposit into the Collection Account within two (2) Business
Days after receipt thereof and (ii) to itself make, and to instruct each
counterparty to any Interest Rate Protection Agreement to deliver, any payments
from time to time due and payable under such Interest Rate Protection Agreement
directly to the Agent for deposit into the Collection Account.  On each Payment Date, any amounts on deposit
in the Collection Account in respect of a Purchased Asset shall be applied as
follows:

 first, to the
payment of all fees, expenses, and other obligations then due to the Agent and/or the Buyers (or their Affiliates)
pursuant to this Agreement, other than the Pricing Differential and Repurchase
Price on the Purchased Assets;

second,
pro rata, to the payment of accrued and unpaid Pricing Differential on such
Purchased Asset and any amounts (other than breakage costs) then due and
payable to an Affiliated Hedge Counterparty under any Interest Rate Protection
Agreement related to such Purchased Asset;

 49
 

 

third,
pro rata, to the payment of the Repurchase Price for such Purchased Asset then
subject to a request to repurchase in accordance with the terms of
Section 3.04 and, solely with respect to any Interest Rate Protection
Agreement with an Affiliated Hedge Counterparty related to such Purchased
Asset, to any accrued and unpaid breakage costs under such Interest Rate
Protection Agreement related to such Purchased Asset and, with respect to any
Letter of Credit, to make any payment on any amounts due and owing pursuant to
any such Letter of Credit; and

fourth,
to the Operating Account, for such purposes as the Seller shall determine in
its sole discretion; provided, that (i) if any Market Disruption Event
shall have occurred and be continuing at any time during the period from the
date hereof to the earlier of August 31, 2005 and the CDO Closing Date, amounts
on deposit in the Collection Account shall be transferred to the Operating
Account solely to the extent necessary to preserve the status of the Parent as
a REIT (such amounts to be supported by documentation delivered to the Agent
prior to any such transfer, which documentation shall be reasonably
satisfactory to the Agent in form and substance) and any additional amounts
shall remain in the Collection Account and (ii) if any Margin Deficit, Default
or Event of Default shall have occurred and be continuing, or if any Market
Disruption Event shall have occurred and/or be continuing after the period
described in clause (i) of this proviso, no amounts on deposit in the
Collection Account shall be transferred to the Operating Account, all such
amounts shall remain in the Collection Account.

All investment income received with respect to the
amount in the Collection Account shall be held by the Agent for the account of
Sellers, subject to the Agent’s and each Buyer’s liens on such amounts created
under the Repurchase Documents, and shall be paid to the Operating Account in
the priority stated above, provided all amounts due and payable to the Agent
and each Buyer (or their Affiliates) under the terms of the Repurchase
Documents have been timely paid.

Section 5.02           Requirements
of Law.  (a)  In the event that any Buyer shall at any time
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any Requirement of Law
(other than with respect to any amendment made to such Buyer’s certificate of
incorporation and by-laws or other organizational or governing documents) or
any change in the interpretation or application thereof or compliance by such
Buyer with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:

(i)       shall subject such Buyer
to any tax of any kind whatsoever with respect to this Agreement or any
Transaction (excluding net income taxes) or change the basis of taxation of payments
to such Buyer in respect thereof;

(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, or other extensions of credit by, or any other
acquisition of funds by, any office of such Buyer which is not otherwise
included in the determination of the Eurodollar Rate hereunder;

 50
 

 

(iii)     shall impose on such
Buyer any other condition;

and the result of any of
the foregoing is to increase the cost to such Buyer, by an amount which such
Buyer deems in good faith to be material, of entering, continuing or
maintaining any Transaction or to reduce any amount due or owing hereunder in
respect thereof by an amount which such Buyer determines in good faith to be
material, then, in any such case, the Sellers shall promptly pay such Buyer
such additional amount or amounts as calculated by such Buyer in good faith as
will compensate such Buyer for such increased cost or reduced amount
receivable.

(b)           In
the event that any Buyer shall at any time have determined (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that the adoption of or any change in any Requirement of Law
(other than with respect to any amendment made to such Buyer’s certificate of
incorporation and by-laws or other organizational or governing documents)
regarding capital adequacy or in the interpretation or application thereof or
compliance by such Buyer or any corporation controlling such 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 shall have the effect of reducing the rate of return on such Buyer’s or
such corporation’s capital as a consequence of its obligations hereunder to a
level below that which such Buyer or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Buyer’s
or such corporation’s policies with respect to capital adequacy) by an amount
deemed by such Buyer in good faith to be material, then from time to time, the
Sellers shall promptly pay to such Buyer such additional amount or amounts as
will compensate such Buyer for such reduction.

(c)           All
payments made by any Seller to any Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however,
that if any Seller shall be required by law to deduct or withhold any taxes
from any sums payable to such Buyer, then the Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant authority in
accordance with applicable law, (B) pay to such Buyer the sum that would have
been payable had such deduction or withholding not been made, and (C) at the
time the Price Differential is paid, pay to such Buyer all additional amounts
as specified by such Buyer to preserve the after-tax yield such Buyer would
have been received had such tax not been imposed; provided, however,
that the Seller shall not be required to pay any additional amounts solely as a
result of the syndication of this Agreement to an entity that would be treated
as being engaged in a trade or business in the United States for federal income
tax purposes, or is otherwise exempt from any such withholding taxes.

(d)           If
any Buyer becomes entitled to claim any additional amounts pursuant to this
Section 5.02, it shall promptly notify each affected Seller of the event by
reason of which it has become so entitled. 
A certificate as to any additional amounts payable pursuant to this
Section 5.02 submitted by such Buyer to an affected Seller shall be
conclusive in the absence of manifest error.

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ARTICLE
VI

SECURITY
INTEREST

Section 6.01           Security
Interest.  (a)  Each of the following items or types of
property, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located, is hereinafter referred to as (the “Purchased
Items”): all Mortgage Assets, all rights under each Purchase Agreement (but
not the obligations thereunder), all Mortgage Asset Files, including without
limitation all promissory notes included therein, all Servicing Records
relating to the Mortgage Assets, all Servicing Agreements relating to the Mortgage
Assets and any other collateral pledged or otherwise relating to such Mortgage
Assets, together with all files, documents, instruments, surveys, certificates,
correspondence, appraisals, computer programs, computer storage media,
accounting records and other books and records relating thereto, all mortgage
guaranties and insurance (issued by governmental agencies or otherwise) and any
mortgage insurance certificate or other document evidencing such mortgage
guaranties or insurance relating to any Mortgage Asset, all servicing fees to
which the Seller is entitled and servicing and other rights relating to the
Mortgage Assets, all Servicer Accounts established pursuant to any Servicing
Agreement and all amounts on deposit therein, from time to time, all Purchase
Agreements or other agreements or contracts relating to, constituting, or
otherwise governing, any or all of the foregoing to the extent they relate to
the Purchased Assets including the right to receive principal and interest
payments with respect to the Purchased Assets and the right to enforce such
payments, the Controlled Accounts and all monies and investment property from
time to time on deposit in, or credited to, the Controlled Accounts, all
securities accounts to which any Purchased Assets consisting of “securities” or
“security entitlements” (as defined in the UCC) have been credited, all
Interest Rate Protection Agreements, if any, all “general intangibles”, “accounts”,
“chattel paper”, “deposit accounts”, “instruments” and “investment property” as
defined in the UCC relating to or constituting any and all of the foregoing,
and any and all replacements, substitutions, distributions on or proceeds of
any and all of the foregoing.

(b)           The
Sellers and Buyers intend that the Transactions hereunder be sales to the
Buyers of the Purchased Assets and not loans from the Buyers to the Seller
secured by the Purchased Assets. 
However, in order to preserve the Agent’s and each Buyer’s rights under
this Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as loans and as security for the performance by each
Seller of all of the Seller’s obligations to the Agent and each Buyer hereunder
and the Transactions entered into hereunder (“Repurchase Obligations”)
and Seller-Related Obligations, each Seller hereby assigns, pledges and grants
a security interest in all of its right, title and interest in, to and under
the Purchased Items and the Purchased Assets to the Agent, for the ratable
benefit of the Buyers and the Affiliated Hedge Counterparties, to secure the
Repurchase Obligations and Seller-Related Obligations, including without
limitation the repayment of all amounts owing to the Agent and each Buyer
hereunder and, as security for the performance by each Seller of all of the
Seller’s obligations to the Affiliated Hedge Counterparties under the Interest
Rate Protection Agreements and this Agreement, each Seller hereby assigns,
pledges and grants to the Agent, as agent for and on behalf of the Affiliated
Hedge Counterparties, a pari passu security interest, subject to the payment
priorities set forth in this Agreement, in all of the Seller’s right, title and
interest in, to and under the Purchased Items and the Purchased Assets.  Each Seller agrees to mark its computer records
and files to the extent practicable to evidence the interests granted to the
Agent

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and the Buyers hereunder.  All
Purchased Items shall secure the payment of all obligations of each Seller now
or hereafter existing under this Agreement and each Interest Rate Protection
Agreement that is with an Affiliated Hedge Counterparty, including, without
limitation, each Seller’s obligation to repurchase Purchased Assets, or if such
obligation is so recharacterized as a loan, to repay such loan, for the Repurchase
Price and to pay any and all other amounts owing to the Agent and each Buyer
hereunder.  The Agent agrees to act as
agent for and on behalf of the Affiliated Hedge Counterparties with respect to
the security interest granted hereby to secure the Sellers’ obligations to the
Affiliated Hedge Counterparties, including, without limitation, with respect to
the Purchased Assets and the Mortgage Asset Files held by the Custodian
pursuant to the Custodial Agreement.

(c)           Pursuant
to the Custodial Agreement, the Custodian shall hold the Mortgage Asset Files
as exclusive bailee and agent for the Agent pursuant to the terms of the
Custodial Agreement and shall deliver to the Agent Trust Receipts each to the
effect that the Custodian has reviewed such Mortgage Asset Files in the manner
and to the extent required by the Custodial Agreement and identifying any
deficiencies in such Mortgage Asset Files as so reviewed.

(d)           With
respect to any portion of the Purchased Items which consist of “securities” or “security
entitlements” (as defined in the UCC), (x) in the case of any security
represented by a “security certificate” (within the meaning of the UCC), the
Custodian shall hold such security certificate, registered in the name of the
Custodian or indorsed to the Custodian in blank (in the case of a security in “registered
form” (within the meaning of the UCC)) and (y) in the case of a security
entitlement, cause the relevant “securities intermediary” (as defined in the
UCC) to indicate by book-entry the credit thereof to a “securities account” (as
defined in the UCC), as to which the Custodian is the “entitlement holder” (as
defined in the UCC).

(e)           In addition to and
without limiting the generality of the foregoing, each Seller hereby grants to
the Agent for the benefit of the Buyers hereunder a security interest in each
Interest Rate Protection Agreement, if any, relating to the Purchased Assets to
secure the Repurchase Obligations and the Seller-Related Obligations.

(f)            The
Agent agrees to act as agent for and on behalf of the Affiliated Hedge
Counterparties with respect to the security interest granted hereby to secure
the obligations owing to the Affiliated Hedge Counterparties under any Interest
Rate Protection Agreements, including, without limitation, with respect to the
Purchased Assets and the Mortgage Asset Files held by the Custodian pursuant to
the Custodial Agreement.

(g)           The
Guarantors shall grant, pledge and assign or cause to be granted, pledged and
assigned to the Agent, for the benefit of each of the Buyers, a perfected
security interest and lien in and to all of the Equity Interests in each Seller
and such other entities required by the Buyers, any such grant, pledge and
assignment to be in the form of the agreement attached hereto as Exhibit M
(a “Pledge and Security Agreement”).

Section 6.02           Release
of Security Interest.  Upon
satisfaction of the Repurchase Obligations and the Seller-Related Obligations,
the Agent shall reconvey the Purchased Assets to the Seller and release its
security interest therein.

 

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ARTICLE
VII

PAYMENT,
TRANSFER AND CUSTODY

Section 7.01           Payment,
Transfer and Custody.  (a)  Unless otherwise mutually agreed in writing,
all transfers of funds to be made by each Seller hereunder shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Agent, in accordance with the wiring instructions set
forth on Schedule 2 hereto, not later than 3:00 p.m., New York City
time, on the date on which such payment shall become due (and each such payment
made after such time shall be deemed to have been made on the next succeeding
Business Day).  Each Seller acknowledges
that it has no rights of withdrawal from the foregoing account.

(b)           On
the Purchase Date for each Transaction, ownership of the Purchased Assets shall
be transferred to the Buyers or their designee (including the Custodian)
against the simultaneous transfer of the Purchase Price by the Agent on behalf
of the Buyers to the Seller, in accordance with the wiring instructions set
forth on Schedule 2 hereto, not later than 6:00 p.m., New York City
time, simultaneously with the delivery by the Custodian to the Agent of the
Trust Receipts with respect to the Purchased Assets relating to each
Transaction.  The Seller hereby sells,
transfers, conveys and assigns to the Buyers or their designee (including the
Custodian), subject to the terms of this Agreement, all the right, title and
interest of the Seller in and to the Purchased Assets together with all right,
title and interest in and to the proceeds of any related Purchased Items.

(c)           In
connection with such sale, transfer, conveyance and assignment, on or prior to
each Purchase Date, the Sellers shall deliver or cause to be delivered and
released to the Agent or its designee (including the Custodian) the documents
identified in the Custodial Agreement.

(d)           Any
Mortgage Asset Files not delivered to the Agent or its designee (including the
Custodian) are and shall be held in trust by the Seller or its designee for the
benefit of the Buyers as the owner thereof. 
The Seller or its designee shall maintain a copy of the Mortgage Asset
File and the originals of the Mortgage Asset File not delivered to the Agent or
its designee (including the Custodian). 
The possession of the Mortgage Asset File by the Seller or its designee
is at the will of the Agent for the sole purpose of servicing the related
Purchased Asset, and such retention and possession by the Seller or its
designee is in a custodial capacity only. 
Each Mortgage Asset File retained or held by the Seller or its designee
shall be segregated on the Seller’s books and records, to the extent possible,
from the other assets of the Seller or its designee and the books and records
of the Seller or its designee shall be marked appropriately to reflect clearly the
sale of the related Purchased Asset to the Buyers.  The Seller or its designee shall release its
custody of the Mortgage Asset File only in accordance with written instructions
from the Agent, unless such release is required as incidental to the servicing
of the Purchased Assets or is in connection with a repurchase of any Purchased
Asset by the Seller.

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ARTICLE
VIII

SELLER
REPRESENTATIONS AND WARRANTIES

Section 8.01           Seller
Representations and Warranties.  Each
Seller represents and warrants to the Agent and each Buyer that as of the
Purchase Date for the purchase of any Purchased Assets by the Buyers from the
Seller and as of the date of this Agreement and any Transaction hereunder and,
except where any such representation or warranty is expressly stated to have
been made as of a specific date, at all times while the Repurchase Documents
and any Transaction hereunder is in full force and effect:

(a)           Acting
as Principal.  Seller 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).

(b)           Solvency.  Neither the Repurchase Documents nor any
Transaction thereunder are entered into in contemplation of insolvency or with
intent to hinder, delay or defraud any of Seller’s creditors.  The transfer of the Mortgage Assets subject
hereto and the obligation to repurchase such Mortgage Assets is not undertaken
with the intent to hinder, delay or defraud any of Seller’s creditors.  As of the Repurchase Date, Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor
provision thereof and the transfer and sale of the Mortgage Assets pursuant
hereto and the obligation to repurchase such Mortgage Asset (i) will not cause
the liabilities of Seller to exceed the assets of Seller, (ii) will not result
in Seller having unreasonably small capital, and (iii) will not result in debts
that would be beyond Seller’s ability to pay as the same mature.  Seller received reasonably equivalent value
in exchange for the transfer and sale of the Purchased Assets and Purchased
Items subject hereto.  No petition in
bankruptcy has been filed against Seller in the last ten (10) years, and Seller
has not in the last ten (10) years made an assignment for the benefit of
creditors or taken advantage of any Debtors Relief Laws.

(c)           No
Broker.  (i) Seller has not engaged
the services of, or otherwise dealt with, any broker, investment banker, agent,
or other person, except for the Agent (or an Affiliate of the Agent) in
connection with this Agreement or any other Repurchase Document or any
Transaction or other matter related thereto and (ii)  no brokerage commission or other similar
compensation is payable in connection with this Agreement or any other
Repurchase Document or any Transaction or other matter related thereto.

(d)           Ability
to Perform.  Seller does not believe,
nor does it have any reason or cause to believe, that it cannot perform each
and every covenant contained in the Repurchase Documents applicable to it to
which it is a party.

(e)           No
Margin Deficit; No Defaults.  No
Margin Deficit exists and no Default or Event of Default has occurred and is
continuing hereunder.

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(f)            Legal
Name, Good Standing; Organizational Identification Number; Authority, Qualification
to do Business; Compliance with Law.

(i)       GWF-I’s exact legal name
is Gramercy Warehouse Funding I LLC. 
GWF-I is a limited liability company, duly organized, validly existing
and in good standing under the laws of the State of Delaware.

(ii)      GWF-I’s organizational
identification number is 81-0653125. 
Seller will promptly notify the Agent of any change in its
organizational number.

(iii)     GKK Trading’s exact
legal name is GKK Trading Warehouse I LLC. 
GKK Trading is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware.

(iv)    GKK Trading’s
organizational identification number is 51-0549728.  Seller will promptly notify the Agent of any
change in its organizational number.

(v)     GKK 450’s exact legal name
is GKK 450 Lex LLC.  GKK 450 is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware.

(vi)    GKK 450’s organizational
identification number is 16-1767274. 
Seller will promptly notify the Agent of any change in its
organizational number.

(vii)   Each of the Sellers has
the requisite corporate, partnership or limited liability company power and
authority, as the case may be, to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage.  Each of the Sellers is qualified to do
business and is in good standing in all other jurisdictions in which the nature
of the business conducted by it makes such qualification necessary, except
where failure so to qualify could not be reasonably likely (either individually
or in the aggregate) to have a Material Adverse Effect.

(viii)  Each of the Sellers is in
compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.

(g)           Organizational
Structure; Financial Condition; No Material Adverse Change.  A copy of Seller’s current organizational
chart (depicting and delineating all of such Guarantor’s consolidated and
non-consolidated Subsidiaries) is attached as Exhibit R hereto.  Seller has heretofore furnished to the Agent
a copy of its most recent quarterly balance sheet and the related statement of
income and cash flows, certified by a Responsible Officer of the Parent to be
true and correct; such financial statements are true and correct, fairly
present the consolidated financial condition of Seller and its Subsidiaries as
of such date and have been prepared in accordance with Tax Based Accounting
Principles.  Since the date of the most
recent financial statements delivered to the Agent, no change having a Material
Adverse Effect has occurred.

(h)           No
Litigation.  As of the date of this
Agreement and as of the Purchase Date for the purchase of any Purchased Assets
hereunder, there are no actions, suits, investigations or legal, equitable,
arbitration or administrative proceedings pending, or to the knowledge of
Seller threatened, against Seller as to which there is a reasonable possibility
of an

 56
 

 

adverse determination that would have a Material Adverse Effect.  To the extent the representations and
warranties in this Section 8.01 shall be remade as of any date subsequent to
the date hereof, Seller shall be deemed to represent that as of such subsequent
date, there are no actions, suits, investigations or legal, equitable,
arbitration or administrative proceedings pending, or to the knowledge of
Seller, threatened, against Seller which have not been disclosed to Buyer in
writing and as to which there is a reasonable possibility of an adverse
determination that would have a Material Adverse Effect.

(i)            No
Conflicts or Consents.  Neither the
execution and delivery of this Agreement and the other Repurchase Documents by
Seller, nor the consummation of any of the transactions by it herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, will contravene or conflict with any provision of
law, statute, or regulation to which Seller is subject or any material
judgment, license, order, or permit applicable to Seller or contravene or
conflict with or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of Seller
pursuant to the terms of any indenture, mortgage, deed of trust, or other
agreement or instrument to which Seller is a party or by which Seller may be
bound, or to which Seller may be subject, other than Liens created pursuant to
the Repurchase Documents.  No consent,
approval, authorization, or order of any court or Governmental Authority or
third party is required in connection with the execution and delivery by Seller
of the Repurchase Documents to which it is a party or to consummate the transactions
contemplated hereby or thereby which has not already been obtained.

(j)            Authorization,
Power and Enforceability.  Seller has
all necessary corporate or other power, authority and legal right to execute,
deliver, and perform under this Agreement and each of the other Repurchase
Documents executed by it; Seller is duly authorized to execute, deliver, and
perform under this Agreement and the other Repurchase Documents to which it is
a party and is and will continue to be duly authorized to perform under this
Agreement and such other Repurchase Documents; and each Repurchase Document has
been duly executed and delivered by Seller, as applicable, and constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.

(k)           Governmental
Approvals.  No order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any Governmental Authority is required to
authorize, or is required in connection with, (i) the execution, delivery and
performance of any Repurchase Document to which Seller is or will be a party,
(ii) the legality, validity, binding effect or enforceability of any such
Repurchase Document against Seller or (iii) the consummation of the transactions
contemplated by this Agreement (other than the filing of certain financing
statements in respect of certain security interests).

(l)            Use
of Proceeds; Margin Regulations.  All
proceeds of each Transaction shall be used by Seller for purposes permitted
under Seller’s Governing Documents, provided that no part of the proceeds of
any Transaction will be used by Seller to purchase or carry any Margin Stock or
to extend credit to others for the purpose of purchasing or carrying any Margin
Stock.  Neither the entering into of any
Transaction nor the use of any proceeds thereof will 

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violate, or be inconsistent with, any provision of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(m)          Taxes.  Seller and each Subsidiary thereof has filed
all required federal income tax returns and all other material tax returns,
domestic and foreign, required to be filed by it and has paid all material
taxes (including mortgage recording taxes), assessments, fees, and other
governmental charges payable by it, or with respect to any of their properties,
which have become due, and income or franchises have been paid prior to the
time that such taxes could give rise to a lien thereon or are being contested
in good faith by appropriate proceedings and appropriate reserves therefor have
been established in accordance with GAAP. 
Seller and each Subsidiary thereof has paid, or has provided adequate
reserves (in the good faith judgment of the management of Seller) for the
payment of, all federal, state and foreign income taxes applicable for all
prior fiscal years and for the current fiscal year to date.  There is no material action, suit,
proceeding, investigation, audit or claim now pending or, to the knowledge of
Seller, threatened by any authority regarding any taxes relating to Seller or
any Subsidiary thereof which is material or not being contested in good
faith.  Neither Seller nor any Subsidiary
thereof has entered into any agreement or waiver or been requested to enter
into any agreement or waiver extending any statute of limitations relating to
the payment or collection of taxes, or is aware of any circumstances that would
cause the taxable years or other taxable periods of Seller or any Subsidiary
thereof not to be subject to the normally applicable statute of limitations.

(n)           Government
Regulation.  Neither Seller nor any
Subsidiary thereof is (i) an “investment company” or a company “controlled” by
an “investment company,” within the meaning of the Investment Company Act of
1940, as amended; (ii) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (iii) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money.

(o)           Purchased
Assets.

(i)       As of the date hereof,
Seller has not assigned, pledged, or otherwise conveyed or encumbered any
Mortgage Asset (or any interest therein) to any other Person, and immediately
prior to the sale of such Mortgage Asset to the Buyers, Seller was the sole
owner of such Mortgage Asset and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens to be released
simultaneously with the sale to the Buyers hereunder.

(ii)      The provisions of this
Agreement and the related Confirmation are effective to either constitute a
sale of Purchased Items to the Buyers or to create in favor of the Agent for
the ratable benefit of the Buyers a legal, valid and enforceable security
interest in all right, title and interest of Seller in, to and under the
Purchased Items.

(iii)     Upon receipt by the
Custodian of each Mezzanine Note or Junior Interest Note, endorsed in blank by
a duly authorized officer of Seller, either a purchase shall have been
completed by the Buyers of such Mezzanine Note or Junior Interest Note, as
applicable, or the Agent shall have for the ratable benefit of the Buyers a
valid and fully 

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perfected
first priority security interest in all right, title and interest of Seller in
the Purchased Items described therein.

(iv)    Each of the
representations and warranties made in respect of the Purchased Assets pursuant
to Schedule 1(a) – 1(j), as applicable, are true, complete and correct.

(v)     Upon the filing of
financing statements on Form UCC-1 naming the Agent, as agent for the Buyers,
as “Secured Party”, Seller as “Debtor” and describing the
Purchased Items, in the jurisdictions and recording offices listed on Exhibit
C attached hereto, the security interests granted hereunder in that portion
of the Purchased Items which can be perfected by filing under the Uniform
Commercial Code will constitute fully perfected security interests under the
Uniform Commercial Code in all right, title and interest of Seller in, to and
under such Purchased Items.

(vi)    Upon execution and
delivery of the Account Control Agreement, the Agent shall have, for the
ratable benefit of the Buyers, a valid and fully perfected first priority
security interest in, the “investment property” and all “deposit accounts”
(each as defined in the Uniform Commercial Code) comprising Purchased Items.

(p)           Principal
Place of Business; Location of Records; Federal Tax ID.

(i)       GWF-I’s principal place of
business is 420 Lexington Avenue, New York, New York 10170.  All of the books and records of GWF-I are and
will be kept at 420 Lexington Avenue, New York, New York 10170 and will
continue to be at such location (unless GWF-I notifies the Agent in writing at
least thirty (30) days prior to the date of any change).  GWF-I’s federal taxpayer’s identification
number is 81-0653125.

(ii)      GKK Trading’s principal
place of business is 420 Lexington Avenue, New York, New York 10170.  All of the books and records of GKK Trading
are and will be kept at 420 Lexington Avenue, New York, New York 10170 and will
continue to be at such location (unless GKK Trading notifies the Agent in
writing at least thirty (30) days prior to the date of any change).  GKK Trading’s federal taxpayer’s
identification number is 51-0549728.

(iii)     GKK 450’s principal
place of business is 420 Lexington Avenue, New York, New York 10170.  All of the books and records of GKK 450 are
and will be kept at 420 Lexington Avenue, New York, New York 10170 and will
continue to be at such location (unless GKK 450 notifies the Agent in writing
at least thirty (30) days prior to the date of any change).  GKK 450’s federal taxpayer’s identification
number is 16-1767274.

(q)           Interest
Rate Protection Agreements.  Seller
has entered into all Interest Rate Protection Agreements required pursuant to
Section 9.01(v) and to the actual knowledge of Seller, as of the date of this
Agreement and as of the Purchase Date for the purchase of any Purchased Assets
subject to an Interest Rate Protection Agreement, each such Interest Rate
Protection Agreement is in full force and effect in accordance with its terms
and no default, event of default or termination event (however denominated)
exists thereunder.

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(r)            Servicing
Agreements.  Seller has delivered to
the Agent all Servicing Agreements pertaining to the Mortgage Assets and to the
actual knowledge of Seller, as of the date of this Agreement and as of the
Purchase Date for the purchase of any Purchased Assets subject to a Servicing
Agreement, each such Servicing Agreement is in full force and effect in
accordance with its terms and no default or event of default exists thereunder.

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

(t)            No
Plan Assets.  Seller is not an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of
ERISA, and none of the assets of Seller constitutes or will constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101.  In addition, (a) Seller is
not a “governmental plan” within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Seller are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the provisions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code currently in effect, which prohibit or otherwise restrict
the transactions contemplated by this Agreement.

(u)           No
Reliance.  Seller has made its own
independent decisions to enter into each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. 
Seller is not relying upon any advice from the Agent or any Buyer as to
any aspect of the Repurchase Documents or any Transaction, including without
limitation, the legal, accounting or tax treatment of such Transactions.

(v)           Patriot
Act.  Seller is in compliance, in all
material respects, with the (i) the Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other applicable
enabling legislation or executive order relating thereto, and (ii) the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act of 2001).  No part of the proceeds of any Transaction
will be used, directly or indirectly, for any payments to any governmental official
or employee, political party, 

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official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended.

(w)          Insurance.  As of the date of this Agreement and as of
the Purchase Date for the purchase of any Purchased Assets hereunder, Seller
has, with respect to its properties and business, insurance covering the risks,
in the amounts, with the deductible or other retention amounts, and with the
carriers, listed on Schedule 4, which insurance meets the requirements
of Section 9.01(x).

(x)            Environmental
Matters.  As of the date of this
Agreement and as of the Purchase Date for the purchase of any Purchased Assets
hereunder:

(i)       To the best knowledge of
Seller, no properties owned or leased by Seller and no properties formerly
owned or leased by Seller, its predecessors, or any former subsidiaries or
predecessors thereof (the “Properties”), contain, or have previously
contained, any Materials of Environmental Concern in amounts or concentrations
which constitute or constituted a violation of, or reasonably could be expected
to give rise to liability under, Environmental Laws;

(ii)      To the best knowledge of
Seller, Seller is in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Laws which reasonably would be
expected to interfere with the continued operations of Seller;

(iii)     Seller has not received
any notice of violation, alleged violation, non-compliance, liability or
potential liability under any Environmental Law, nor does Seller have any
actual knowledge that any such notice will be received or is being threatened;

(iv)    To the best knowledge of
Seller, Materials of Environmental Concern have not been transported or
disposed by Seller in violation of, or in a manner or to a location which
reasonably would be expected to give rise to liability under, any applicable
Environmental Law, nor has Seller generated, treated, stored or disposed of at,
on or under any of the Properties in violation of, or in a manner that
reasonably would be expected to give rise to liability under, any applicable
Environmental Law;

(v)     No judicial proceedings or
governmental or administrative action is pending, or, to the knowledge of
Seller, threatened, under any Environmental Law which Seller is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements arising out of judicial proceedings or governmental or
administrative actions, outstanding under any Environmental Law to which Seller
is a party;

(vi)    To the best knowledge of
Seller, there has been no release or threat of release of Materials of
Environmental Concern in violation of or in amounts or in a manner that
reasonably would be expected to give rise to liability under any Environmental
Law for which Seller may become liable; and

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(vii)   to the best knowledge of
Seller, each of the representations and warranties set forth in the preceding
clauses (i) through (vi) is true and correct with respect to each parcel of
real property owned or operated by Seller.

(y)           Insider.  Seller is not an “executive officer,” “director,”
or “person who directly or indirectly or acting through or in concert with one
or more persons owns, controls, or has the power to vote more than 10% of any
class of voting securities” (as those terms are defined in 12 U.S.C. § 375(b)
or in regulations promulgated pursuant thereto) of Buyer, of a bank holding
company of which the Agent or any Buyer is a subsidiary, or of any subsidiary,
of a bank holding company of which the Agent or any Buyer is a subsidiary, of
any bank at which the Agent or any Buyer maintains a correspondent account or
of any lender which maintains a correspondent account with the Agent or any
Buyer.

(z)            Office
of Foreign Assets Control.  Seller is
not a person (i) whose property or interest in property is blocked or subject
to blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who
engages in any dealings or transactions prohibited by Section 2 of such
executive order, or to the best of Seller’s knowledge,  is otherwise associated with any such person
in any manner violative of Section 2 of such executive order, or (iii) on the
current list of Specially Designated Nationals and Blocked Persons or subject
to the limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order.

(aa)         Certain
Tax Matters.  Seller represents and
warrants, and acknowledges and agrees, that it does not intend to treat any
Transaction or any related transactions hereunder as being a “reportable
transaction” (within the meaning of United States Treasury Department
Regulation Section 1.6011-4).  In the
event that Seller determines to take any action inconsistent with such
intention, it will promptly notify the Agent. 
If Seller so notifies Buyer, Seller acknowledges and agrees that the
Agent and each Buyer may treat each Transaction as part of a transaction that
is subject to United States Treasury Department Regulation Section 301.6112-1,
and the Agent will maintain the lists and other records required by such
Treasury Regulation.

(bb)         Fiscal
Year.  The fiscal year of Seller is
the calendar year.

(cc)         Agreements.  Seller is not a party to any agreement or
instrument or subject to any restriction which could reasonably be expected to
have any Material Adverse Effect.  Seller
is not in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Seller is
bound.  Seller does not have any material
financial obligation under any agreement or instrument to which Seller is a
party or by which such party is otherwise bound, other than (a) obligations
incurred in the ordinary course of Seller’s business and (b) obligations under
the Repurchase Documents.

(dd)         Amendment
and Restatement.  The Existing
Agreement is amended, restated and superceded in its entirety by this
Agreement.  Seller has no, and Seller
hereby waives all, defenses, rights of setoff, claims, counterclaims or causes
of action of any kind or description against the Agent and any applicable Buyer
arising under or in respect of the Existing

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Agreement or any related document and, as of the Effective Date, the
Agent and each applicable Buyer is in full compliance with its undertakings and
obligations under this Agreement (including the Existing Agreement) and all
related documents.

ARTICLE
IX

COVENANTS

Section 9.01           Seller
Covenants.  On and as of the date of
this Agreement and each Purchase Date and until this Agreement is no longer in
force with respect to any Transaction, each Seller covenants that:

(a)           Financial
Statements.  Seller shall deliver or
cause to be delivered to the Agent:

(i)       as soon as available and
in any event within thirty (30) days after the end of each fiscal quarter of
the Parent, the unaudited
consolidated balance sheets of the Parent and its consolidated Subsidiaries
(and, to the extent available, for each Seller) as at the end of such period
and the related unaudited consolidated statements of income and retained
earnings and of cash flows for the Parent and its consolidated Subsidiaries
(and, to the extent available, for each Seller) for such period and the portion
of the fiscal year through the end of such period, accompanied by a schedule of
all contingent funding obligations and hedging positions of the Parent and its
consolidated Subsidiaries (and, to the extent available, for each Seller) and a
certificate of a Responsible Officer, which certificate shall state that said
consolidated financial statements fairly present in all material respects the
consolidated financial condition and results of operations of the Parent and
its consolidated Subsidiaries (and, to the extent applicable, for each Seller)
in accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end adjustments);

(ii)      as soon as available and
in any event within ninety (90) days after the end of each fiscal year of
the Parent, the audited consolidated
balance sheets of the Parent and its consolidated Subsidiaries (and, to the
extent available, for each Seller) as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for the Parent and its consolidated Subsidiaries (and, to the extent
available, for each Seller) for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of the
Parent and its consolidated Subsidiaries (and, to the extent applicable, for
each Seller) as at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default or Event of Default;

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(iii)     (A) with respect to each
Mortgage Asset (not including RMBS) originated or master serviced by an
Affiliate of Seller, the Agent or any Buyer, as soon as available, but in any
event not later than sixty (60) days after the end of each fiscal quarter of
Seller, the rent roll, operating statement and aging of accounts receivable and
accounts payable for each Underlying Mortgaged Property and (B) with respect to
each Mortgage Asset not originated or master serviced by an Affiliate of
Seller, the Agent or any Buyer, Seller shall use its good faith efforts to
deliver as soon as practicable, the rent roll, operating statement and aging of
accounts receivable and accounts payable for each Underlying Mortgaged
Property;

(iv)    with respect to each
Mortgage Asset (not including RMBS), as soon as available, but in any event not
later than sixty (60) days after the end of each fiscal quarter of Seller, a report detailing projections of Seller with respect to such Mortgage Asset
for the following six (6) month period, which shall include, in any event, a
description of Seller’s internal risk rating, tenant ratings, tenant KMV
ratings (if applicable) and/or surveillance of such Mortgage Asset;

(v)     with respect to each
Mortgage Asset to the extent received by any Seller from the obligor under any
Mortgage Asset, as soon as available, but in any event not later than thirty
(30) days after receipt thereof, the annual balance sheet with respect to such
obligor;

(vi)    with respect to each
Mortgage Asset that is CMBS, RMBS or a Junior Interest or which is a
Non-Controlling Interest or Pass-Through Interest in any of the foregoing, as
soon as available but in any event not later than thirty (30) days after
receipt thereof, (i) the related monthly securitization report, if any, and
(ii) within thirty (30) days after the end of each month, a copy of the
standard monthly exception report, prepared by Seller in the ordinary course of its business in respect of the
related Mortgage Asset or Underlying Mortgaged Property;

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

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

(A)          any Reportable Event, or and any
request for a waiver under Section 412(d) of the Code or any successor
provision thereof for any Plan;

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

(C)           the institution by PBGC of
proceedings under Section 4042 of ERISA or any successor provision thereof
for the termination of, or the appointment of a trustee to administer, any
Plan; and

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

(b)           Certificates;
Other Information.  Seller shall furnish
to the Agent:

(i)       concurrently with the
delivery of the financial statements referred to in Section 9.01(a)(ii)
above, a certificate of the independent certified public accountants reporting
on such financial statements stating that in making the examination necessary
therefore no knowledge was obtained of any Default or Event of Default caused
by a failure to comply with the requirements of Section 9.01(l)-(o), except as
specified in such certificate;

(ii)      concurrently with the
delivery of the financial statements referred to in Section 9.01(a) above
and with the delivery of each Confirmation, a certificate of a Responsible
Officer substantially in the form of Exhibit J hereto (A) stating
that, to the best of such Responsible Officer’s knowledge, Seller during such
period has observed or performed all of its covenants and other agreements in
all material respects, and satisfied every material condition, contained in
this Agreement and the related documents to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate,
(B) showing in detail the calculations supporting such Responsible Officer’s
certification of Seller’s compliance with the requirements of
Sections 9.01(l)-(o), (C) showing in detail the calculations projected
with respect to the requirements of Sections 9.01(l)-(o) for the upcoming
period of four (4) fiscal quarters, (D) attaching a current copy of Seller’s
organizational chart (depicting and delineating all of such Guarantor’s
consolidated and non-consolidated Subsidiaries), (E) confirming that all of the
Capital Stock and other equity and ownership interests of Seller’s Subsidiaries
has been pledged to the Agent for the ratable benefit of the Buyers and Seller
has taken all such further actions as the Agent has requested in order to
effect and perfect such pledge and (F) showing the calculations which
demonstrate compliance with the Sub-Limits;

(iii)     as soon as available, but
in any event not later than ninety (90) days after the end of each fiscal
year of Seller, a copy of the projections of the Sellers and the Parent of the
operating budget and cash flow budget of the Sellers and the Parent for the
succeeding fiscal year, such projections to be accompanied by a certificate of
a 

 65
 

 

Responsible
Officer certifying that such projections have been prepared in good faith based
upon reasonable assumptions;

(iv)    promptly upon receipt
thereof, copies of all reports submitted to Seller by independent certified
public accountants in connection with each annual, interim or special audit of
the books and records of Seller made by such accountants, including, without
limitation, any management letter commenting on Seller’s internal controls
submitted by such accountants to management in connection with their annual
audit;

(v)     within thirty (30) days of
the end of each calendar quarter, a quarterly report, which report shall
include, among other items, (1) a summary of Seller’s delinquency and loss
experience with respect to Mortgage Assets serviced by Seller, any Servicer or
any designee of either, and (2) operating statements and the occupancy status
of such Mortgaged Property and other property level information, plus any such
additional reports as the Agent may reasonably request with respect to Seller
or any Servicer’s servicing portfolio or pending originations of Mortgage
Assets;

(vi)    within fifteen (15) days
after the same are sent, copies of all financial statements and reports which
Seller sends to its stockholders, and within fifteen (15) days after the same
are filed, copies of all financial statements and reports which Seller may make
to, or file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;

(vii)   no later than the 15th day of each month, with respect to each
Purchased Asset, a Purchased Asset Data Summary, substantially in the form of Exhibit
K, properly completed; and

(viii)  promptly, any report or
material notice received by Seller with respect to any Purchased Asset and such
additional financial and other information as the Agent may from time to time reasonably request.

(c)           Litigation.  Seller will promptly, and in any event within
ten (10) Business Days after service of process on any of the following, give
to the Agent notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened in writing) or other legal or arbitrable proceedings affecting
Seller or any Subsidiary thereof or affecting any of the Property of any of
them before any Governmental Authority that (i) questions or challenges the
validity or enforceability of any of the Repurchase Documents or any action to
be taken in connection with the transactions contemplated hereby, (ii) makes a
claim or claims in an aggregate amount greater than $1,000,000 (not covered by
insurance), or (iii) which, individually or in the aggregate, if adversely
determined, could be reasonably likely to have a Material Adverse Effect.

(d)           Existence,
etc.  Seller shall:

(i)       continue to engage in
business of the same general type as now conducted by it or otherwise as
approved by the Agent prior to the date hereof and maintain and preserve its
legal existence and all of its material rights, privileges, licenses and
franchises necessary for the operation of its business (including, without
limitation, 

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preservation
of all lending licenses held by Seller and of Seller’s status as a “qualified
transferee” (however denominated) under all documents which govern the
Purchased Assets); provided, that nothing in this Section 9.01(d)(i)
shall prohibit any transaction expressly permitted under Section 9.01(e);

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

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

(iv)    not (i) cause or
permit any change to be made in its name, organizational identification number,
identity or corporate structure, each as described in Section 8.01(f) or
(ii) change its jurisdiction of organization, unless it shall have
provided the Agent thirty (30) days’ prior written notice of such change
and shall have first taken all action required by the Agent for the purpose of
perfecting or protecting the lien and security interest of the Agent
established hereunder;

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

(vi)    permit representatives of
the Agent, upon reasonable notice (unless a Default shall have occurred and is
continuing, in which case, no prior notice shall be required), during normal
business hours, to examine, copy (at the Agent’s expense) and make extracts
from its books and records, to inspect any of its Properties, and to discuss
its business and affairs with its officers, all to the extent reasonably
requested by the Agent.

(e)           Prohibition
of Fundamental Changes; Fiscal Year and Accounting Method.  Seller shall not enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation, winding up or dissolution), sell all or
substantially all of its assets or acquire or form any Subsidiaries (other than
the Subsidiaries set forth on Schedule 5 hereto and such additional
Subsidiaries which may from time to time become Sellers under this Agreement in
accordance with Section 9.01(hh)); provided, that Seller may merge or
consolidate with (A) any wholly owned subsidiary of the Seller or (B) any other
Person if Seller is the surviving corporation, in either case, as long as,
after giving effect thereto, no Default or Event of Default would exist hereunder.  Seller shall not change its respective fiscal
year or method of accounting without the consent of the Agent and Seller shall
give the Agent at least fifteen (15) days prior written notice of any such
requested change, which notice shall include a detailed explanation of the
changes intended to be made and pro forma financial statements demonstrating
the impact thereof.

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(f)            Margin
Deficit.  If at any time there exists
a Margin Deficit, the Sellers shall cure same in accordance with
Section 4.01.

(g)           Notices.  Seller shall give notice to the Agent:

(i)       promptly upon receipt by
Seller of notice or knowledge of the occurrence of any Default or Event of
Default;

(ii)      with respect to any
Purchased Asset, promptly upon receipt by Seller of any principal prepayment
(in full or partial) of such Purchased Asset;

(iii)     with respect to any
Purchased Asset hereunder, promptly upon receipt of notice or knowledge by or
of Seller that the Underlying Mortgaged Property has been materially damaged by
waste, fire, earthquake or earth movement, flood, tornado or other casualty, or
otherwise damaged so as to materially and adversely affect the Asset Value of
such Purchased Asset; and

(iv)    promptly upon receipt of
notice or knowledge by or of Seller of (i) any material default related to any
Purchased Item, (ii) any Lien or security interest on, or claim asserted
against, any Purchased Item or (iii) any event or change in circumstances which
would reasonably be expected to have a Material Adverse Effect.

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

(h)           Transactions
with Affiliates.  Seller may enter
into any transaction with an Affiliate; provided that such transaction
is disclosed in writing in advance to Buyer and such transaction is upon fair
and reasonable terms no less favorable to Seller than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate; provided,
further, that in no event shall Seller transfer to the Agent hereunder
any Mortgage Asset acquired by Seller from an Affiliate of Seller unless a
Non-Consolidation Opinion and a True Sale Opinion have been delivered to the
Agent prior to such sale.

(i)            Limitation
on Liens.  Immediately upon notice to
Seller of a Lien or any circumstance which if adversely determined would be
reasonably likely to give rise to a Lien (other than in favor of the Agent for
the benefit of the Buyers) on the Purchased Items, Seller will defend the
Purchased Items against, and will take such other action as is necessary to
remove, any Lien, security interest or claim on or to the Purchased Items (other
than any security interest created under this Agreement), and Seller will
defend the right, title and interest of the Buyers and the Agent in and to any
of the Purchased Items against the claims and demands of all persons
whomsoever.

(j)            Limitations
on Indebtedness, Guarantees and Contingent Liabilities.  Seller shall not create, incur, assume or
suffer to exist any Indebtedness, Guarantees or Contingent Liabilities, except
Indebtedness of the Seller to the Agent or any Buyer (or an Affiliate of the
Agent or any Buyer).

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(k)           Limitation
on Distributions.  Seller shall not
declare or make any payment on account of, or set apart assets for, a sinking
or other analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of any equity or partnership interest of Seller, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
Seller, except, so long as no Default, Event of Default or Margin
Deficit shall have occurred and be continuing, Seller may (i) make such
payments solely to the extent necessary to preserve the status of the Parent as
a REIT and (ii) make dividend distributions in an amount up to 100% of FFO.

(l)            Weighted
Average of Purchase Rate and LTV.  No
Seller shall permit (i) the weighted average Purchase Rate of all Mortgage
Assets to exceed 85.0% or (ii) the Weighted Average LTV of all Mortgage Assets
to exceed 80.0%.

(m)          Interest
Coverage.  Seller shall not permit,
during any Test Period, the ratio of (i) the sum of Consolidated Adjusted
EBITDA of all Sellers at any time such Test Period to (ii) Consolidated
Interest Expense of all Sellers at any time such Test Period to be less than
1.50 to 1.00.

(n)           Maintenance
of Ratio of Consolidated Total Indebtedness to Consolidated Total Assets.  Seller shall not permit the ratio of
Consolidated Total Indebtedness of all Sellers to Consolidated Total Assets of
all Sellers at any time to be greater than 0.85 to 1.00.

(o)           Positive
Net Income.  Seller’s Net Income
shall be positive at all times following the first anniversary of the Effective
Date of this Agreement.

(p)           Servicer;
Servicing Tape.  Seller shall cause
each Servicer to provide to the Agent and to the Custodian via Electronic
Transmission, a remittance report on a monthly basis by no later than the 15th day of each month (the “Reporting Date”)
containing servicing information, including without limitation those fields
reasonably requested by the Agent from time to time, on a loan-by-loan basis
and in the aggregate, with respect to the Purchased Assets serviced hereunder
by Seller or any Servicer for the month (or any portion thereof) prior to the
Reporting Date (such remittance report, an “Asset Tape”).  To the extent it has control, Seller shall
not cause or permit any Mortgage Assets to be serviced by any servicer other
than a Qualified Servicer.

(q)           Required
Filings.  Seller shall promptly
provide the Agent with copies of all material documents which Seller or any Subsidiary
of Seller is required to file with any regulatory body in accordance with its
regulations.

(r)            Remittance
of Prepayments.  Seller shall remit
or cause to be remitted to the Agent for the ratable benefit of the Buyers,
with sufficient detail via Electronic Transmission to enable the Agent to
appropriately identify the Mortgage Asset to which any amount remitted applies,
all full or partial principal prepayments on any Purchased Asset that Seller or
Servicer has received no later than five (5) Business Days following the date
such prepayment was received.

(s)           Custodial
Agreement and Account Control Agreement. 
Seller shall maintain each of the Custodial Agreement and Account
Control Agreement in full force and

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effect and shall not amend or modify either of the Custodial Agreement
or the Account Control Agreement or waive compliance with any provisions
thereunder without the prior written consent of the Agent.

(t)            Inconsistent
Agreements.  Seller shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any material agreement containing any material provision which would be
violated or breached by any Transaction hereunder or by the performance by
Seller of its obligations under any Repurchase Document.

(u)           Escrow
Imbalance.  Seller shall, no later
than five (5) Business Days after learning (from any source) of any material
imbalance in any escrow account, fully and completely correct and eliminate
such imbalance including, without limitation, depositing its own funds into
such account to eliminate any overdraw or deficit.

(v)           Hedging.  Seller shall enter into Interest Rate
Protection Agreement(s) selected by Seller and acceptable to the Agent with
respect to all Purchased Assets which have a fixed rate of interest or yield
and are intended for securitization and Seller shall enter into such other
Interest Rate Protection Agreement(s) with respect to any or all of the
Purchased Assets as the Agent may from time to time request.  Seller shall take all such steps as the Agent
deems necessary to perfect the security interest granted in each Interest Rate
Protection Agreement pursuant to Section 6.01(e) of this Agreement.

(w)          Separateness.  Seller shall (a) own no assets, and will not
engage in any business, other than the assets and transactions specifically
contemplated by this Agreement, which assets and transactions specifically
contemplated by this Agreement shall include, without limitation, the
origination, acquisition, ownership, management, servicing, administration, operation,
collection, enforcement, development, improvement, leasing, exchange,
participation, securitization, sale, transfer and other disposition of all of
any portion of the Purchased Assets (including the Underlying Mortgaged
Property and any business interests related thereto), personal property
necessary for and used or to be used in connection with its ownership or
operation of the Purchased Assets (including the Underlying Mortgaged Property
and any business interests related thereto) or any portion thereof, cash, its
interest under any associated Interest Rate Protection Agreement, this
Agreement, and any and all agreements, documents, insurance policies, reports
and other instruments in any way relating to the Purchased Assets (including
the Underlying Mortgaged Property and any business interests related thereto)
or any portion thereof; (b) not incur any indebtedness or obligation, secured
or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) pursuant to this Agreement, and
under the agreements, documents, insurance policies, reports and other
instruments evidencing, securing or in any other way related to the Purchased
Assets (including the Underlying Mortgaged Property and any business interests
related thereto), (ii) in connection with customary representations,
warranties, indemnities and agreements in connection with the origination,
acquisition, ownership, management, servicing, administration, operation,
collection, enforcement, financing, development, improvement, leasing,
exchange, participation, securitization, sale, transfer or other disposition of
the Purchased Assets (including the Underlying Mortgaged Property and any
business interests related thereto), and (iii) under zoning and other
governmental regulations, rules, prohibitions and ordinances and existing and
proposed covenants, easements and other matters of public record governing,
burdening,

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benefiting or otherwise affecting any real property constituting or
underlying any of the Purchased Assets (including the Underlying Mortgaged
Property and any business interests related thereto); (c) not make any loans or
advances to any third party, and shall not acquire obligations or securities of
its affiliates; (d) pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) only from its own assets; (e) comply
with the provisions of its organizational documents; (f) do all things
necessary to observe organizational formalities and to preserve its existence,
and will not amend, modify or otherwise change its organizational documents, or
suffer same to be amended, modified or otherwise changed, without the prior
written consent of the Agent, not to
unreasonably withheld; (g) maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates (except that
such financial statements may be consolidated to the extent consolidation is
required under GAAP consistently applied as in effect from time to time or as a
matter of law) and file its own tax returns (except to the extent that either
consolidation is required or permitted under applicable law or it is a tax
disregarded entity not required to file tax returns under applicable law); (h)
be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate), shall
correct any known misunderstanding regarding its status as a separate entity,
shall conduct business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other and shall maintain and utilize
separate invoices and checks; (i) maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations; (j) not engage in or suffer
any change of ownership, dissolution, winding up, liquidation, consolidation or
merger in whole or in part, except as otherwise permitted in accordance
herewith; (k) not commingle its funds or other assets with those of any
Affiliate or any other Person; (l) maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or any other Person; (m) not and
will not hold itself out to be responsible for the debts or obligations of any
other Person; and (n) shall not, without the vote of 100% of the Board of
Directors or Board of Managers of Seller,
(i) file or consent to the filing of any bankruptcy, insolvency or
reorganization case or proceeding with respect to Seller; institute any proceedings under any applicable insolvency
law or otherwise seek any relief under any laws relating to the relief from
debts or the protection of debtors generally with respect to Seller; (ii) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for Seller
or a substantial portion of its properties; or (iii) make any assignment for
the benefit of Seller’s creditors.

(x)            Maintenance
of Property; Insurance.  Seller shall
keep all property useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business, and furnish to the Agent, upon written request, full
information as to the insurance carried.

(y)           Compliance
with Laws.  Seller shall comply in
all material respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without limitation,
Environmental Laws, and all federal securities laws) except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings.

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(z)            ERISA.  Seller shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all requirements of ERISA
applicable with respect to each Plan.

(aa)         Investments.  Neither Seller nor any Affiliate thereof
shall acquire or maintain any right or interest in any Purchased Asset or
Underlying Mortgaged Property that is senior to or pari passu
with the rights and interests of the Agent or the Buyers therein under this
Agreement and the other Repurchase Documents.

(bb)         Payment
of Obligations.  Seller shall pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature
(including, without limitation, all amounts necessary to preserve the value of,
and Seller’s, the Agent’s and the Buyers’ rights in, the Purchased Assets),
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of Seller, or its Subsidiaries,
as the case may be.

(cc)         Margin
Regulations.  No part of the proceeds
of any Transaction hereunder shall be used for any purpose which violates, or
would be inconsistent with, the provisions of Regulation T, U or X.

(dd)         Limitation
on Lines of Business.  Seller shall
not enter into any business, either directly or through any Subsidiary, except
for those businesses in which Seller and its Subsidiaries are engaged on the
date of this Agreement.

(ee)         Payment
of Breakage Costs.  Seller shall pay
the Agent, within one (1) Business Day after any request therefor from the
Agent or any Buyer, for all Breakage Costs at any time sustained or incurred by
the Agent or any Buyer.

(ff)           Guarantee
Agreement.  If at any time (i) the
obligations of any Guarantor under the Guarantee Agreement shall cease to be in
effect, (ii) any Act of Insolvency shall have occurred with respect to any
Guarantor or (iii) there shall occur any violation of any provision set forth
in Sections 9(b) through 9(o) of the Guarantee Agreement (any of the foregoing
events, a “Guarantee Default”), then, within sixty (60) days after the
occurrence of any such Guarantee Default, Seller shall have a replacement
performance guarantor acceptable to Buyer (a “Performance Guarantor”)
assume in writing such obligations under the Guarantee as the Agent deems
necessary to correct such Guarantee Default.

(gg)         Internalization
of Management.  Seller shall not
permit the Parent to internalize the management of the Parent without the prior
written consent of the Agent; provided, however, that such consent shall
be granted by the Agent so long as (1) no Margin Deficit, Default or Event of
Default exists, (2) Seller shall, at the time of such internalization, and will
continue after such internalization to meet all covenants, conditions,
representations and warranties, whether financial or otherwise, as set forth in
any of the Repurchase Documents, and (3) Seller shall cause the Parent to
deliver to the Agent a fairness opinion, in form and substance acceptable to
the Agent, provided by a nationally recognized expert in the related field
acceptable to the Agent.

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(hh)         Additional
Sellers.  Subject to the terms and
conditions of this Agreement and the other Repurchase Documents, including
without limitation the separateness provisions set forth in Section 9.01(w) of
this Agreement, any Seller may from time to time form or acquire additional
Subsidiaries.  In the event that any
Seller at any time forms or acquires any such Subsidiary, such Seller shall,
within ten (10) days after such formation or acquisition, (i) notify the Agent
in writing of such formation or acquisition, (ii) pledge in favor of the Agent
for the ratable benefit of the Buyers of all of the Capital Stock and other
equity and ownership interests held by the Seller in each such Subsidiary and
shall take all such further action as the Agent shall deem reasonably necessary
or advisable (including, without limitation, the execution of financing
statements on form UCC-1 and any additional security agreements or amendments
thereto) in order to effect and perfect such pledge, (iii) in the event that
such Subsidiary was formed or acquired for the purpose of acquiring or holding
assets in contemplation of the entering into of Transactions hereunder, such
Subsidiary shall deliver to the Agent a properly completed and duly executed
Additional Seller Joinder Agreement substantially in the form of Exhibit N
hereto, pursuant to which such additional Subsidiary shall become a Seller
under this Agreement and (iv) the addition of such Subsidiary shall be
indicated on the first organizational chart delivered to the Agent pursuant to
Section 9.01(b)(ii) after such formation or acquisition.

(ii)           Payment
of Third Party Management Fees.  The
percentage used to calculate the fees paid under the Management Contract (or
any replacement or substitution thereof) shall at no time exceed the percentage
used to calculate the fees under the Management Contract as of the IPO.  It is hereby acknowledged that the Seller
shall be entitled to calculated any related management fees based on the
foregoing percentage and the sum of the common equity, any preferred equity and
trust preferred securities of the related company.

(jj)           Independence
of Covenants.  All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of,
another covenant shall not avoid the occurrence of an Event of Default or
Default if such action is taken or condition exists.

ARTICLE X

EVENTS OF
DEFAULT; REMEDIES

Section 10.01         Events
of Default.  If any of the following
events (each, an “Event of Default”) occur, each Seller and the Agent
shall have the rights set forth in Section 10.02, as applicable:

(a)           any
Seller shall default in the payment of any Repurchase Price due or any amount
under Section 5.01 when due (whether at stated maturity, upon acceleration
or at mandatory or optional prepayment); or

(b)           the
Sellers shall fail to cure any Margin Deficit in accordance with
Section 4.01; or

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(c)           any
Seller shall default in the payment of any other amount payable by it hereunder
or under any other Repurchase Document after written notification by Buyer of
such default, and such default shall have continued unremedied for
five (5) Business Days; or

(d)           any
representation, warranty or certification made or deemed made herein or in any
other Repurchase Document by any Seller or any certificate furnished to the
Agent pursuant to the provisions hereof or thereof or any material information
with respect to the Mortgage Assets furnished in writing by on behalf of any
Seller shall prove to have been false or misleading in any material respect as
of the time made or furnished (other than the representations and warranties
set forth in Schedule 1, which shall be considered solely for the
purpose of determining the Asset Value of the Purchased Assets, unless (i) the
Seller shall have made any such representations and warranties with actual
knowledge that they were materially false or misleading at the time made; or
(ii) any such representations and warranties have been determined in good faith
by the Agent in its sole discretion to be materially false or misleading on a
regular basis); or

(e)           any
Seller shall fail to comply with the requirements of Sections 9.01(c) -
(ii), or (except as otherwise set forth in Sections 10.01(a), 10.01(b),
10.01(c), or 10.01(d)) any Seller shall fail to observe or perform any other
covenant or agreement contained in this Agreement or any other Repurchase
Document and such failure to observe or perform shall continue unremedied for a
period of ten (10) Business Days after actual knowledge by the Seller or
receipt of written notice from the Agent; provided, however that
to the extent such failure to observe or perform relates to the Seller’s
failure to deliver reports required under Section 9.01(a)(iii) or Section
9.01(b)(v)(2) and neither the Seller nor its Affiliates have received such
reports, and the Seller has used commercially reasonable best efforts to obtain
such reports as and when required hereunder, such failure shall not be deemed
to be an Event of Default unless such failure shall have been on a consistent
or frequent basis (which determination shall be made in the Agent’s reasonable
discretion); or

(f)            a
final judgment or judgments for the payment of money in excess of $1,000,000 in
the aggregate shall be rendered against any Seller by one or more courts,
administrative tribunals or other bodies having jurisdiction and the same shall
not be satisfied, discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof; or

(g)           an
Act of Insolvency shall have occurred with respect to any Seller or any of
Affiliate thereof; or

(h)           the
Custodial Agreement, the Account Control Agreement or any Repurchase Document
or a replacement therefor acceptable to the Agent shall for whatever reason be
terminated by Seller or cease to be in full force and effect (other than due to
causes solely within the control of the Agent or Custodian), or the
enforceability thereof shall be contested by any Seller; or

(i)            any
Seller shall grant, or suffer to exist, any Lien on any Purchased Item (except
any Lien in favor of the Agent for the benefit of the Buyers); or the Purchased
Items shall not have been sold to the Buyers, or the Liens contemplated hereby
shall cease or fail to be

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first priority perfected Liens on any Purchased Items
in favor of the Agent for the benefit of the Buyers (other than by result of
any action or inaction by the Agent) or shall be Liens in favor of any Person
other than the Agent for the benefit of the Buyers; or

(j)            any
Seller shall be in default under (i) any Indebtedness of the Seller which
default (1) involves the failure to pay a matured obligation, or (2) permits
the acceleration of the maturity of obligations by any other party to or
beneficiary with respect to such Indebtedness, if the aggregate amount of the
Indebtedness in respect of which such default or defaults shall have occurred
is at least $1,000,000, or (ii) any other material contract to which the Seller
is a party which default (1) involves the failure to pay a matured obligation,
or (2) permits the acceleration of the maturity of obligations by any other
party to or beneficiary of such contract if the aggregate amount of such
obligations is at least $500,000; or

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

(l)            any
Pledge and Security Agreement shall cease to create a valid and perfected
security interest in favor of the Agent for the benefit of the Buyers in the
Equity Interests of the respective Seller, or any Seller shall so assert; or

(m)          any
Change of Control shall occur; or

(n)           the
Management Contract shall be amended to increase the percentage used to
calculate the fees paid under the Management Contract such that the percentage
exceeds the percentage used to calculate the fees under the Management Contract
as of the IPO, or the Management Contract shall be otherwise materially amended
to the detriment of Parent, or the Manager shall be terminated, in any case
without the prior written consent of the Agent; or

(o)           any
event of default or termination event (however denominated) shall have occurred
with respect to Seller (or its Affiliate, as applicable) under any Interest
Rate Protection Agreement with an Affiliated Hedge Counterparty; or

(p)           Guarantor
shall have defaulted or failed to perform under any note, indenture, loan
agreement, guaranty, swap agreement or any other contract, agreement or

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transaction to which it is a party, and which default
or failure to perform (A) involves the failure to pay a matured obligation
equal to or in excess of $10,000,000, or (B) involving an obligation of at
least $10,000,000, is a monetary default or a material non-monetary default and
results in acceleration or permits the acceleration of the obligation by any
other party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract, agreement or transaction; provided,
however, that such default, failure to perform or breach shall not
constitute an Event of Default if the Guarantor cures such default, failure to
perform or breach, as the case may be, within the applicable grace period, if
any, provided under the applicable agreement; or

(q)           The
Seller shall fail to make any required payment under any Letter of Credit
issued under Section 3.07 hereof or there shall otherwise be a default under
any such Letter of Credit.

                                Section 10.02   Remedies.  (a) If an Event of Default shall have
occurred and be continuing, the following rights and remedies are available to
the Agent.

(i)       At the option of the
Agent, exercised by written notice to the Sellers (which option shall be deemed
to have been exercised, even if no notice is given, immediately upon the
occurrence of an Act of Insolvency of any Seller), the Repurchase Date for each
Transaction hereunder, if it has not already occurred, shall be deemed
immediately to occur.  The Agent shall
(except upon the occurrence of an Act of Insolvency of any Seller) give notice
to the Sellers of the exercise of such option as promptly as practicable.

(ii)      If the Agent exercises
or is deemed to have exercised the option referred to in Section 10.02(a)(i),

(A)          (i) all of the Sellers’ obligations in
respect of such Transactions to repurchase all Purchased Assets at the
Repurchase Price therefor on the Repurchase Date, and to pay all other amounts
owed by the Sellers hereunder, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by the Agent, for the account of the Buyers, and applied to the
aggregate unpaid Repurchase Prices and any other amounts owed by the Sellers
hereunder or under any other Repurchase Document, and (iii) each Seller shall
immediately deliver to the Agent any Purchased Assets subject to such
Transactions then in the Seller’s possession or control;

(B)           from and after the exercise or deemed
exercise of such option, to the extent permitted by applicable law, the
Repurchase Price with respect to each such Transaction shall be determined by
daily application of, on a 360 day per year basis for the actual number of days
during the period from and including the date of the exercise or deemed
exercise of such option to but excluding the date of payment of the Repurchase
Price, (x) the Post-Default Rate to (y) the Repurchase Price for such
Transaction as of the Repurchase Date (decreased as of any day by (i) any
amounts actually in the possession of the Agent pursuant to clause (C) of this
subsection, (ii) any proceeds from the sale of Purchased Assets applied to
the

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Repurchase
Price pursuant to Section 10.02(a)(iv), and (iii) any amounts applied to
the Repurchase Price pursuant to Section 10.02(a); and

(C)           all Income actually received by the
Agent for the account of the Buyers pursuant to Section 5.01 (excluding
any Late Payment Fees paid pursuant to Section 3.06(a)) shall be applied
to the aggregate unpaid Repurchase Price owed by the Seller.

(iii)     Upon the occurrence and
during the continuance of one or more Events of Default, the Agent shall have
the right to obtain physical possession of the Servicing Records (subject to
the provisions of the Custodial Agreement) and all other files of the Seller
relating to the Purchased Assets and all documents relating to the Purchased
Assets which are then or may thereafter come into the possession of the Seller
or any third party acting for the Seller and the Seller shall deliver to the
Agent such assignments as the Agent shall request and the Agent shall have the
right to appoint any Person to act as Servicer for the Purchased Assets.  The Agent shall be entitled to specific
performance of all agreements of the Sellers contained in the Repurchase
Documents.

(iv)    At any time on the
Business Day following written notice to the Sellers (which notice may be the
written notice given under Section 10.02(a)(i)), in the event the Sellers have
not repurchased all Purchased Assets, the Agent may (A) immediately sell,
without demand or further notice of any kind, at a public or private sale and
at such price or prices as the Agent may deem satisfactory any or all Purchased
Assets subject to such Transactions hereunder and apply the proceeds thereof to
the aggregate unpaid Repurchase Price and any other amounts owing by the
Sellers hereunder or (B) in its sole discretion elect, in lieu of selling all
or a portion of such Purchased Assets, to give the Sellers credit for such
Purchased Assets in an amount equal to the Market Value of the Purchased Assets
against the aggregate unpaid Repurchase Price and any other amounts owing by
the Sellers hereunder.  The proceeds of
any disposition of Purchased Assets shall be applied first
to the costs and expenses incurred by the Agent or any Buyer in connection with
any Seller’s default; second to costs
of related covering and/or related hedging transactions; third
to the aggregate Repurchase Price; and fourth to any
other outstanding obligation of any Seller to the Agent or any Buyer or any of
their respective Affiliates under this Agreement.

(v)     Each Seller agrees that
the Agent may seek to obtain an injunction or an order of specific performance
to compel the Seller to fulfill any of its obligations as set forth in Article
XI, if the Seller fails or refuses to perform its obligations as set forth
therein.

(vi)    Each Seller shall be
liable to the Agent, payable as and when incurred by the Agent, for (A) the
amount of all actual out-of-pocket expenses, including legal or other expenses
incurred by the Agent in connection with or as a consequence of any Event of
Default, and (B) all costs incurred in connection with hedging or covering
transactions.

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(vii)   The Agent shall have, in
addition to its rights hereunder, any rights otherwise available to it under
any other agreement or applicable law.

(b)           The
Agent may exercise one or more of the remedies available to the Agent
immediately upon and during the continuance of an Event of Default and, except
to the extent provided in Sections 10.02(a)(i) and 10.02(a)(iv), at any
time thereafter without notice to any Seller. 
All rights and remedies arising under this Agreement as amended from
time to time hereunder are cumulative and not exclusive of any other rights or
remedies which the Agent may have.

(c)           The
Agent may enforce its rights and remedies hereunder without prior judicial
process or hearing, and each Seller hereby expressly waives any defenses the
Seller might otherwise have to require the Agent to enforce its rights by
judicial process.  Each Seller also
waives any defense (other than a defense of payment or performance) the Seller
might otherwise have arising from the use of nonjudicial process, enforcement
and sale of all or any portion of the Purchased Items, or from any other
election of remedies.  Each 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.

(d)           To
the extent permitted by applicable law each Seller shall be liable to the Agent
for interest on any amounts owing by the Seller hereunder, from the date the
Seller becomes liable for such amounts hereunder until such amounts are (i)
paid in full or (ii) satisfied in full by the exercise of the Agent’s rights
hereunder.  Interest on any sum payable
by any Seller to the Agent under this Section 10.02(d) shall be at a rate equal
to the Post-Default Rate.

ARTICLE XI

SERVICING

                                Section 11.01   Seller
Covenants.  Each Seller covenants to
cause the servicing of the Mortgage Assets (other than Junior Interests, CMBS,
RMBS and Pass-Through Interests) to be maintained in conformity with Accepted
Servicing Practices and in a manner at least equal in quality to the servicing
the Seller would provide for Mortgage Assets which it owns.  In the event that the preceding language is
interpreted as constituting one or more servicing contracts, each such
servicing contract shall terminate automatically upon the earliest of (i) an
Event of Default, (ii) the date on which this Agreement terminates or (iii) the
transfer of servicing approved by the Agent in accordance with the terms of
this Agreement.

                                Section 11.02   Seller
as Servicer.  With respect to
Mortgage Assets other than Junior Interests, CMBS, RMBS and Pass-Through
Interests, if the Mortgage Assets are serviced an Affiliate of any Seller, each
Seller agrees that, until the repurchase of a Mortgage Asset on a Repurchase
Date for a Mortgage Asset, the Buyers are the owners of all servicing records,
including but not limited to any and all 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 such Mortgage Asset (the “Servicing Records”).  Each Seller

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covenants to
safeguard such Servicing Records and to deliver them promptly to the Agent or
its designee (including the Custodian) at the Agent’s request.

                                Section 11.03   Third
Party Servicer.  With respect to
Mortgage Assets other than Junior Interests, CMBS, RMBS and Pass-Through
Interests, if any Mortgage Assets are serviced by a person other than an
Affiliate of the Sellers (such third party, the “Servicer”), (i) the Sellers
shall, in accordance with Section 3.02(g), provide to the Agent a copy of
the servicing agreement, which shall be in form and substance reasonably
acceptable to the Agent (the “Servicing Agreement”) and Sellers shall
require each Servicing Agreement to contain provisions relating to the delivery
of information and reports as will enable each Seller to comply with its
obligations under this Agreement as and when required hereunder, and (ii) each
Seller hereby irrevocably assigns to the Agent, and the Agent’s successors and
assigns, for the benefit of the Buyers, all of the Seller’s right, title and
interest in, to and under, and the benefits of, each Servicing Agreement
pertaining to any Mortgage Assets.  Each
Seller agrees that no Person shall assume the servicing obligations with
respect to any Mortgage Assets as successor to the Servicer unless such
successor is a Qualified Servicer.  The
Agent hereby agrees that upon the repurchase of any Mortgage Asset, the Agent
shall assign back to the Seller all of its right, title and interest in, to and
under, and the benefits of, any Servicing Agreement pertaining to such Mortgage
Asset.

                                Section 11.04   Event
of Default.  With respect to Mortgage
Assets other than Junior Interests, CMBS, RMBS and Pass-Through Interests, if
the servicer of the Mortgage Assets is a Seller or an Affiliate of a Seller,
upon the occurrence  and during the
continuance of an Event of Default, the Agent shall have the right to terminate
the Seller or Affiliate as servicer of the Mortgage Assets and transfer
servicing to its designee, at no cost or expense to the Agent, at any time
thereafter.  If the servicer of the
Mortgage Assets is not a Seller, the Agent shall have the right, as
contemplated in the applicable Servicer Notice, upon the occurrence of an Event
of Default, to terminate any applicable Servicing Agreement and transfer
servicing to its designee, at no cost or expense to the Agent, it being agreed
that the Sellers will pay any and all fees required to terminate such Servicing
Agreement and to effectuate the transfer of servicing to the designee of the
Agent.

                                Section 11.05   Modification.  After the Purchase Date, until the repurchase
of any Mortgage Asset, no Seller will have any right to modify or alter the
terms of such Mortgage Asset and no Seller will have any obligation or right to
repossess such Mortgage Asset or substitute another Mortgage Asset, in each
case except as provided in the Custodial Agreement.

                                Section 11.06   Inspection.  In the event that any Seller or any Affiliate
thereof is servicing the Mortgage Assets, the Seller or Affiliate shall permit
the Agent to inspect the Seller’s or Affiliate’s servicing facilities, as the
case may be, for the purpose of satisfying the Agent that the Seller or
Affiliate, as the case may be, has the ability to service the Mortgage Assets
as provided in this Agreement.

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ARTICLE XII

THE AGENT

Section 12.01   Appointment.  Each Buyer hereby irrevocably designates and
appoints the Agent as its agent under this Agreement and the other Repurchase
Documents, and each Buyer hereby irrevocably authorizes the Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Repurchase Documents and to exercise such powers and
perform such duties as are expressly delegated to or conferred upon the Agent
by the terms of this Agreement, the other Repurchase Documents and any other
instruments and agreements referred to herein or therein, together with such
other powers as are reasonably incidental thereto.  The Agent agrees to act as such upon the
express conditions contained in this Article XII.  Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Buyer, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Repurchase Document or otherwise exist against the
Agent.  The provisions of this Article
XII are solely for the benefit of the Agent and the Buyers, and neither the
Manager nor any Seller shall have any rights as a third party beneficiary of
any of the provisions hereof.

Section 12.02         Duties.

(a)      The
Agent shall be responsible for administering the Transactions on a day-to-day
basis.  In the exercise of such
administrative duties, the Agent shall use the same diligence and standard of
care that is customarily used by the Agent with respect to similar transactions
entered into by the Agent solely for its own account.

Each Buyer
delegates to the Agent the full right and authority on its behalf to take the
following specific actions in connection with its administration of the
Transactions:

(i)       to enter into and fund
Transactions on behalf of the Buyers in accordance with the provisions of the
Repurchase Documents;

(ii)      to receive all amounts
paid by, or on behalf of, the Sellers and, except for fees to which the Agent
is entitled pursuant to the Repurchase Documents or otherwise, to distribute
all such funds to the respective Buyers as provided for hereunder;

(iii)     to keep and maintain
complete and accurate files and records of all material matters pertaining to
the Transactions, and make such files and records available for inspection and
copying by each Buyer and its respective employees and agents during normal
business hours upon reasonable prior notice to the Agent; and

(iv)    to do or omit doing all
such other actions as may be reasonably necessary or incident to the
implementation and administration of the Transactions and the rights and duties
delegated hereinabove.

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Notwithstanding the foregoing,
written consent of each of the Buyers and the Agent shall be required to:

(1)           modify the Purchase Rate of any
Purchased Asset;

(2)           reduce the Pricing Rate or extend the
time of payment of any Price Differential;

(3)           reduce or waive the Repurchase Price
of any Purchased Asset;

(4)           increase the Purchase Amount of any
Buyer over the amount thereof in effect (it being understood and agreed that
(A) a Buyer’s Purchase Amount will change pro rata in accordance with any
change in the Maximum Amount and (B) a waiver of any Default or Event of
Default or mandatory reduction in the aggregate Purchase Amount of all Buyers
shall not constitute a change in the terms of the Purchase Amount of any
Buyer);

(5)           release any Seller or Guarantor from
any of its obligations under the Repurchase Documents;

(6)           release all or any material part of
the Purchased Items (other than as specifically provided in the Repurchase
Documents);

(7)           amend, modify or waive any provision
of this Section 12.02 or Section 13.01; or

(8)           reduce any percentage specified in,
or otherwise modify, the definition of Required Buyers.

(b)           The
Agent may execute any of its duties under this Agreement and the other
Repurchase Documents by or through its agents or attorneys-in-fact and shall be
entitled to the advice of counsel concerning all matters pertaining to its
rights and duties hereunder and under the other Repurchase Documents.  The Agent shall not be responsible for the
negligence or willful misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.

Section 12.03   Exculpatory
Provisions.  Neither the Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Repurchase Document (except for its or such Person’s own gross negligence
or willful misconduct) or (ii) responsible in any manner to any Buyer for any
recitals, statements, representations or warranties made by any Seller or any
officer thereof contained in this Agreement or any other Repurchase Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
any other Repurchase Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Repurchase Document or for any failure of any Seller to perform its obligations
hereunder or thereunder.  The Agent shall
not be under any obligation to any Buyer to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Repurchase Document, or to inspect the
properties, books or records of any Seller.

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Section 12.04   Reliance
by Agent.  The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon the advice and statements of legal counsel (including, without
limitation, counsel to the Manager or any Seller), independent accountants and
other experts selected by the Agent.  The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Repurchase Document unless it shall first receive
such advice or concurrence of the Required Buyers as the Agent deems
appropriate or it shall first be indemnified to its satisfaction by the Buyers
against any and all liability and expense which may be incurred by it by reason
of taking, continuing or failing to take any such action.  The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Repurchase Documents in accordance with a request of the Required Buyers,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon each Buyer.

Section 12.05   Notice
of Default.  The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent has received notice from a Buyer or a Seller
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”.  In the event that the Agent receives any such
notice from a Seller, the Agent shall give notice thereof to each Buyer.  The Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Buyers; provided that unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Buyers; and the Agent shall not incur liability to any Person by reason of so
acting or refraining from acting. 
Without limiting the foregoing, no Buyer shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Repurchase Document in accordance with the
instructions of the Required Buyers.

Section 12.06   Non-Reliance
on Agent and the Buyers.  Each Buyer
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of any Seller, shall be deemed to
constitute any representation or warranty by the Agent to any Buyer.  Each Buyer represents to the Agent that it
has, independently and without reliance upon the Agent, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of each Seller and made its own decision
to enter into this Agreement and each Transaction hereunder.  Each Buyer also represents that it will,
independently and without reliance upon the Agent, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Repurchase Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
each Seller.  Except for notices, reports
and other documents expressly required to be furnished by a Seller to the Agent

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hereunder or under the other Repurchase Documents,
which the Agent must distribute promptly to each Buyer, the Agent shall not
have any duty or responsibility to provide any Buyer with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Seller which may come into
the possession of the Agent or any of its officers, directors, employees,
attorneys-in-fact or Affiliates.

Section 12.07   Reimbursement
and Indemnification.  To the extent
that the Agent is not fully reimbursed and indemnified by the Sellers, and
without limiting the obligation of the Sellers to do so as otherwise provided
in the Repurchase Documents, within five (5) Business Days after the delivery
of a written request by the Agent to the Sellers for such reimbursement or
indemnification or, if earlier, upon receipt by the Agent of a refusal from the
Sellers to comply with any such request, each Buyer agrees to reimburse and
indemnify the Agent in its capacity as such from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following payment of all
Repurchase Prices) be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, any of the other
Repurchase Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing; provided
that no Buyer shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent’s gross negligence or
willful misconduct.  The agreements in
this Section shall survive the payment of all Repurchase Prices and all other
amounts payable hereunder.

Section 12.08   Agent
in Its Individual Capacity.  The
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Seller as though the Agent were not the
Agent hereunder and under the other Repurchase Documents.

Section 12.09   Successor
Agent.  The Agent may resign as Agent
upon thirty (30) days’ notice to the Buyers and the Sellers.  If the Agent shall resign as Agent under this
Agreement and the other Repurchase Documents, then the Buyers shall appoint a
successor Agent, which successor Agent shall be subject to approval by the
Sellers (unless an Event of Default has occurred and is continuing), such
approval not to be unreasonably withheld, conditioned or delayed, and any such
successor Agent shall succeed to the rights, powers and duties of the Agent,
and the term “Agent” shall mean such successor
Agent effective upon such appointment and approval, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement or any Transaction.  If no
successor Agent has been appointed and shall have accepted such appointment
within thirty (30) days after the retiring Agent’s giving notice of its
resignation, then the retiring Agent’s resignation shall nevertheless thereupon
become effective and the Buyers shall perform all of the duties of the Agent
hereunder until such time, if any, as the Buyers appoint and the Sellers
approve a successor Agent as provided for above.  After any retiring Agent’s resignation as
Agent, the provisions of this Section shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Repurchase Documents.

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Section 12.10   Duties
in the Case of Enforcement.  In case
one or more Events of Default have occurred and shall be continuing, and
whether or not acceleration of Sellers’ obligations under the Repurchase
Documents shall have occurred, the Agent shall, at the request, or may, upon
the consent, of the Required Buyers, and provided that the Buyers have given to
the Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the provisions
of this Agreement and the other Repurchase Documents respecting the sale or
other disposition of all or any of the Purchased Items and the exercise of any
other legal or equitable rights or remedies as it may have hereunder or under
any other Repurchase Document or otherwise by virtue of applicable law, or to
refrain from so acting if similarly requested by the Required Buyers.  The Agent shall be fully protected in so
acting or refraining from acting upon the instruction of the Required Buyers,
and such instruction shall be binding upon all the Buyers.  The Required Buyers may direct the Agent in
writing as to the method and the extent of any such foreclosure, sale or other
disposition or the exercise of any other right or remedy, the Buyers hereby agreeing
to indemnify and hold the Agent harmless from all costs and liabilities
incurred in respect of all actions taken or omitted in accordance with such
direction, provided that the Agent need not comply with any such direction to
the extent that the Agent reasonably believes the Agent’s compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.  The Agent may, in its
discretion but without obligation, in the absence of direction from the
Required Buyers, take such interim actions as it believes necessary to preserve
the rights of the Buyers hereunder and in and to any Purchased Item, including
but not limited to petitioning a court for injunctive relief, appointment of a
receiver or preservation of the proceeds of any Purchased Item.  Each of the Buyers acknowledges and agrees
that no individual Buyer may separately enforce or exercise any of the
provisions of any of the Repurchase Documents, other than through the Agent.

ARTICLE XIII

MISCELLANEOUS

                                Section 13.01   Indemnification
and Expenses.  (a)  Each Seller jointly and severally, agrees to
indemnify and hold harmless each of the Buyers, the Agent, the Sole Lead
Arranger and their respective Affiliates and Subsidiaries and their present and
former respective officers, directors, employees, agents, advisors and other
representatives (each, an “Indemnified Party”) from and against any and
all claims, damages, losses, liabilities, costs, and expenses (including,
without limitation, attorneys’ fees and disbursements) (“Costs”) that
may be incurred by or asserted or awarded against any Indemnified Party, in
each case relating to or arising out of this Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, any other Repurchase Document or any transaction contemplated
hereby or thereby, except to the extent such claim, damage, loss, liability,
cost, or expense is found in a final, non appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.  Costs
subject to this Section 13.01 shall include but not be limited to Costs
incurred in connection with the violation of any Environmental Law, the
correction of any environmental condition or the removal of any Materials of
Environmental Concern, in each case in any way affecting any Seller’s or any of
its Affiliates’ properties or any of the Mortgage Assets.  Without limiting the generality of the

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foregoing, each
Seller agrees to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Mortgage Assets
relating to or arising out of any violation or alleged violation of any law,
rule or regulation, except to the extent such claim, damage, loss, liability,
cost, or expense is found in a final, non appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.  In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 13.01 applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by any Seller, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
any transaction contemplated hereby is consummated.  Each Seller agrees not to assert any claim
against any Indemnified Party, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of liability, for
special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Repurchase Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of any
Transaction.  In any suit, proceeding or
action brought by an Indemnified Party in connection with any Mortgage Asset
for any sum owing thereunder, or to enforce any provisions of any Mortgage
Asset, each Seller will save, indemnify and hold such Indemnified Party
harmless from and against all expense, 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 any
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 any Seller.  Each Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all the
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of the Agent’s and each Buyer’s rights under
this Agreement, any other Repurchase Document or any transaction contemplated
hereby or thereby, including without limitation the fees and disbursements of
its counsel.

(b)           Each
Seller shall, whether or not any transaction contemplated hereby is
consummated: (i) pay as when billed by the Agent, and in any event within three
(3) days after demand from the Agent, all reasonable out-of-pocket costs and
expenses (including, without limitation, all actual and reasonable fees and
disbursements of outside legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any reasonable fees and
expenses associated with travel or other costs relating to any appraisals or
examinations conducted in connection with any Transactions or any proposed
Purchased Assets, and the amount of such costs and expenses shall, until paid,
bear interest at the greater of (x) 5.25% per  annum in excess of
the Prime Rate in effect from time to time or (y) 0.50% per  annum
in excess of the Federal Funds Rate in effect from time to time (or at such
greater rate plus 6.00%, at any time the Post-Default Rate is applicable to any
Transaction)) (A) of the Agent in connection with the development, preparation,
execution and delivery of, and any amendment, supplement or modification to,
this Agreement, any other Repurchase Document or any other documents prepared
in connection herewith or therewith and the documents and instruments referred
to herein and therein (including, without limitation, all reasonable fees,
disbursements and expenses of Cadwalader, Wickersham & Taft LLP and/or
other counsel incurred as of the date of this Agreement, which amount shall be
deducted from the Purchase Price paid for the first Transaction hereunder) and
(B) of the Agent in connection with the enforcement of this Agreement and the
other Repurchase Documents and any amendment, waiver or consent relating

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hereto or thereto and the documents and instruments
referred to herein and therein; (ii) pay and hold each Indemnified Party
harmless from and against any and all present and future stamp, documentary,
issue, sales and use, value added, property and other similar taxes (other than
taxes imposed on net income) with respect to the matters described in foregoing
clause (i) and hold each Indemnified Party harmless from and against any and
all liabilities with respect to or resulting from any delay or omission to pay
such taxes; and (iii) indemnify each Indemnified Party from and hold each of
them harmless against any and all Costs incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, the entering into
and/or performance of this Agreement or any other Repurchase Document or the
use of the proceeds of any Transaction hereunder or the consummation of any
transactions contemplated herein or in any other Repurchase Document,
including, without limitation, (A) the reasonable out of pocket due diligence,
inspection, appraisals, testing and review costs and expenses incurred by the
Agent with respect to Mortgage Assets submitted by any Seller for purchase
under this Agreement, including, but not limited to, those actual out of pocket
costs and expenses incurred by the Agent pursuant to Sections 11.01
through 11.06 and Section 13.11, (B) the reasonable fees and disbursements of
counsel incurred in connection therewith and (C) any environmental liabilities
with respect to any real estate or other assets held by any Seller or any of
its Affiliates (but excluding any such Costs to the extent incurred by reason
of the gross negligence or willful misconduct of the Person to be indemnified).

(c)           Without
prejudice to the survival of any other agreement of any Seller hereunder, the
agreements and obligations of each Seller contained in this Section 13.01 shall
survive the repayment of all amounts owing to the Agent and the Buyers by each
Seller under the Repurchase Documents and the termination of the commitment of
the Buyers hereunder.

                                Section 13.02   Single
Agreement.  Each Seller, the Agent
and each Buyer acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and that each has been entered into in consideration of the other
Transactions.  Accordingly, each of the
Sellers, the Agent and the Buyers 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 Transaction hereunder, (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
and (iv) to promptly provide notice to the other after any such set off or
application.

                                Section 13.03   Notices
and Other Communications.  Except as
otherwise expressly permitted by this Agreement, all notices, requests and
other communications provided for herein and under the Custodial Agreement
(including without limitation any modifications of, or waivers, requests or
consents under, this Agreement) shall be given or made in writing (including
without limitation by email, telex or telecopy) delivered to the intended
recipient at the “Address for Notices” specified below its name on the
signature pages hereof or thereof); or, as to any party, at such other address
as shall be designated by such party in a written notice to

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each other
party.  Except as otherwise provided in
this Agreement and except for notices given under Article III (which shall be
effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by Electronic Transmission or telecopy (upon
receipt of confirmation) or personally delivered or, in the case of a mailed
notice, upon receipt.

Section 13.04         Entire
Agreement; Severability.  This
Agreement together with the other Repurchase Documents and the Account Control
Agreement constitute the entire understanding among the Sellers, the Agent and
the Buyers with respect to the subject matter it covers and shall supersede any
existing agreements between the parties containing general terms and conditions
for repurchase transactions involving Purchased Assets.  By acceptance of this Agreement, the Sellers,
the Agent and the Buyers acknowledge that they have not made, and are not
relying upon, any statements, representations, promises or undertakings not
contained in this Agreement.  Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.

Section 13.05         Assignments
and Participations; Hypothecation of Purchased Assets.

(a)           No Seller may assign any of its rights or obligations
under this Agreement without the prior written consent of the Agent, such
consent not to be unreasonably withheld or delayed, and any attempt by any
Seller to assign any of its rights or obligations under this Agreement without
the prior written consent of the Agent shall be null and void.

(b)           Title to all Purchased Assets and Purchased Items shall
pass to the Buyers and, subject to the terms of the Repurchase Documents, the
Buyers or their designee shall have free and unrestricted use of all Purchased
Assets and Purchased Items.  Nothing in
this Agreement shall preclude the Buyers or their designee from engaging in
repurchase transactions with the Purchased Assets and Purchased Items or otherwise
selling, pledging, repledging, transferring, hypothecating, or rehypothecating
the Purchased Assets and Purchased Items, all on terms that the Buyers may
determine in their sole discretion; provided, that any such pledge or
transfer shall be made expressly subject to the terms of the Repurchase
Documents and the Buyers shall transfer the Purchased Assets to the Seller on
the applicable Repurchase Date free and clear of any pledge, Lien, security
interest, encumbrance, charge or other adverse claim on any of the Purchased
Assets.  Nothing contained in this
Agreement shall obligate the Buyers or the Agent to segregate any Purchased
Assets or Purchased Items transferred by any Seller to the Buyers.

(c)           Any Buyer may at any time, upon notice to the Sellers,
sell to any Person which is an Eligible Transferee (each such Person, a “Participant”),
participating interests in all or any part of such Buyer’s interest in the
Purchased Assets, or in any other interest of such Buyer under this
Agreement.  In the event of any such sale
of a participating interest, the obligations of the Buyer which sold the
participating interest under this Agreement to the other parties to this
Agreement shall remain unchanged, such Buyer shall remain solely responsible
for the performance thereof, and the other parties to this Agreement shall
continue to deal solely and directly with such Buyer in connection with such
Buyer’s rights and obligations under this Agreement and the other Repurchase
Documents.  In no event shall any Participant
have any

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right to approve any amendment to or waiver of any
provision of any Repurchase Document, or any consent to any departure by Seller
therefrom, except to the extent that such amendment, waiver or consent would
reduce the Repurchase Price or Price Differential owing in respect of any
Transaction, or postpone the Repurchase Date of any Transaction for more than
one (1) year, in each case to the extent subject to such participation.  Each Seller agrees that if any amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by applicable
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Buyer under
this Agreement.  Each Seller also agrees
that each Participant shall be entitled to the benefits of, and bound by the
obligations imposed on each Buyer in, Sections 5.02 and 13.01 with respect to
its participation in the Transactions outstanding from time to time as if it
were a Buyer; provided, that no Participant shall be entitled to receive
any greater amount pursuant to any such Section than a Buyer would have been
entitled to receive in respect of the amount of the participation transferred
by such Buyer to such Participant had no such transfer occurred.

(d)           Any Buyer may at any time, upon notice to the Sellers,
sell to any Person which is an Eligible Transferee (each such Person, an “Assignee”
and together with any Participants, collectively, the “Transferees”,
each a “Transferee”), all or a portion of all of such Buyer’s rights and
obligations under this Agreement and the other Repurchase Documents.  Each assignment by a Buyer shall be made
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
P, with appropriate completions (an “Assignment and Acceptance”); provided,
that such Assignee shall be (i) organized under the laws of the United States
or a State thereof or the District of Columbia or (ii) a branch or agency of a
bank or financial institution which is not organized under the laws of the United
States or a State thereof or the District of Columbia which (A) provides to the
Agent a duly executed IRS Form W-8ECI and (B) represents that income with
respect to the assignment will be “effectively connected” with a U.S. trade or
business at all times it holds a beneficial interest in the assignment.  Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Buyer hereunder with the Purchase Amount as set forth
therein, and (y) the assigning Buyer thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Buyer’s rights and obligations under this
Agreement, such assigning Buyer shall cease to be a party hereto), the
obligations of such assigning Buyer shall be deemed to be so reduced, and the
Agent will give prompt written notice thereof (including identification of the
assigning Buyer, the Assignee and the amount of the assignment) to each of the
parties to this Agreement (but the assigning Buyer shall not have any liability
for any failure to timely provide such notice). 
Any assignment or transfer by a Buyer of rights or obligations under
this Agreement that does not comply with this Section 13.05 shall be treated
for purposes of this Agreement as a sale by such Buyer of a participation in
such rights and obligations in accordance with clause (c) of this Section
13.05.

(e)           Each Seller authorizes each Buyer to disclose to any
Transferee (including any prospective Transferee) any and all of the
information in the possession of such Buyer

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relating to the Seller and its Affiliates or to any
aspect of the Transactions that has been delivered to such Buyer by or on
behalf of the Seller or any of its Affiliates pursuant to this Agreement or in
connection with the credit evaluation of the Buyers and their Affiliates prior
to becoming a party to this Agreement; provided, that such Transferee
shall have agreed to be bound by the provisions of Section 13.14 hereof.  Each Seller agrees to cooperate with the
applicable Buyer in connection with any such sale of participating interests or
assignments and to enter into such restatements of, and amendments, supplements
and other modifications to, this Agreement to give effect to any such sale or
transfer; provided, that the Seller’s further consent shall be required
with respect to any such restatement, amendment, supplement or other
modification which adversely changes any economic or other material term of
this Agreement.

(f)            For avoidance of doubt, the parties to this Agreement
acknowledge that nothing in this Agreement shall limit or otherwise restrict
the right of any Buyer to grant security interests in its rights hereunder,
including, without limitation, (i) any security interest in all or any portion
of any Buyer’s rights under this Agreement to any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circular issued by such Federal Reserve Bank, and (ii)
any pledge or assignment for the benefit of the assignor’s trustee and/or its
investors or financing parties to secure its obligations under any indenture,
credit facility or Governing Documents to which it is a party; provided,
that no such pledge or assignment of a security interest shall release such
Buyer from any of its obligations hereunder or substitute any such pledgee or
assignee for such Buyer as a party hereto.

                                SECTION 13.06   GOVERNING
LAW.  THIS AGREEMENT AND THE OTHER
REPURCHASE DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                                SECTION 13.07   SUBMISSION
TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.

(A)          ANY
LEGAL ACTION OR PROCEEDING AGAINST ANY SELLER WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER REPURCHASE DOCUMENT TO WHICH SUCH SELLER IS A PARTY MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
SELLER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH SELLER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE SELLER AT ITS ADDRESS AS DESIGNATED IN ACCORDANCE WITH
SECTION 13.03 OF THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS
AFTER SUCH MAILING.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF BUYER TO SERVE PROCESS

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IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SELLER IN ANY OTHER
JURISDICTION.

(B)          EACH
SELLER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER REPURCHASE
DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

(C)          EACH
OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER REPURCHASE DOCUMENTS OR ANY DEALINGS, COURSE OF
DEALINGS, COURSE OF CONDUCT BETWEEN THEM, OR ANY STATEMENTS (WHETHER ORAL OR
WRITTEN) OR OTHER ACTIONS OF ANY PARTY, RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT OR THE RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY, INCLUDING,
WITHOUT LIMITATION, ANY ACTION OF THE AGENT OR ANY BUYER RELATING TO THE
ADMINISTRATION OF THE TRANSACTIONS OR THE ENFORCEMENT OF THE REPURCHASE
DOCUMENTS, AND NONE OF THE PARTIES HERETO WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED.

(D)          EXCEPT
AS PROHIBITED BY LAW, EACH SELLER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH SELLER CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE AGENT OR ANY BUYER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT OR ANY BUYER WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER. 
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.

(E)           EACH
PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO

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RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS.  EACH PARTY HERETO FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

(F)           THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER REPURCHASE
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO ANY TRANSACTION
ENTERED INTO HEREUNDER.  IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

                                Section 13.08   Amendments;
Waivers; Remedies Cumulative.  Except
as otherwise expressly provided in this Agreement, any provision of this
Agreement may be modified or supplemented only by an instrument in writing
signed by each of the Sellers, the Agent and the Buyers.  Any provision of this Agreement may be waived
by the Agent; provided, that no failure or delay on the part of the
Agent in exercising any right, power or privilege hereunder or under any other
Repurchase Document and no course of dealing with respect to any right, power
or privilege hereunder or under any other Repurchase Document shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Repurchase Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder.  The
rights, powers and remedies herein or in any other Repurchase Document
expressly provided are cumulative and not exclusive of any rights, powers or
remedies which the Agent or any Buyer would otherwise have.  No notice to or demand on any Seller in any
case shall entitle any Seller to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agent or any Buyer to any other or further action in any circumstances without
notice or demand.  An Event of Default
shall be deemed to be continuing unless expressly waived by the Agent in
writing.

                                Section 13.09   Intent.  (a) 
The parties recognize that each Transaction is not a “Repurchase
Agreement” as that term is defined in Section 101 of Title 11 of the
United States Code, as amended (except insofar as the sub-limit of Purchased
Assets subject to such Transaction or the term of such Transaction would render
such definition applicable), or a “Securities Contract” as that term is
defined in Section 741 of Title 11 of the United States Code, as amended
(except insofar as the type of Purchased Assets subject to such Transaction
would render such definition applicable).

(b)           It
is understood that any party’s right to liquidate Purchased Assets delivered to
it in connection with Transactions hereunder or to exercise any other remedies
pursuant to Section 10.02 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.

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(c)           The
parties agree and acknowledge that if a party hereto is an “Insured
Depository Institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“Qualified Financial Contract,” as that term is defined in FDIA and any
rules, orders or policy statements thereunder (except insofar as the type of
Purchased Assets subject to such Transaction would render such definition
inapplicable).

(d)           It
is understood that this Agreement constitutes a “Netting Contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a “Covered
Contractual Payment Entitlement” or “Covered Contractual Payment
Obligation”, respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a “Financial Institution”
as that term is defined in FDICIA or regulations promulgated thereunder).

Section 13.10         Joint and
Several Liability.

(a)           Each
Seller hereby acknowledges and agrees that the Seller shall be jointly and
severally liable to the Agent and each Buyer to the maximum extent permitted by
applicable law for all representations, warranties, covenants, obligations and
indemnities of all of the Sellers hereunder.

(b)           Each
Seller hereby agrees that, to the extent another Seller shall have paid more
than its proportionate share of any payment made hereunder, the Seller shall be
entitled to seek and receive contribution from and against any other Seller
which has not paid its proportionate share of such payment; provided  however,
that the provisions of this clause shall in no respect limit the obligations
and liabilities of any Seller to the Agent or any Buyer, and, notwithstanding
any payment or payments made by any Seller (the “paying Seller”) hereunder or
any set-off or application of funds of the paying Seller by the Agent or any
Buyer, the paying Seller shall not be entitled to be subrogated to any of the
rights of the Agent or any Buyer against any other Seller or any collateral
security or guarantee or right of offset held by the Agent or any Buyer, nor
shall the paying Seller seek or be entitled to seek any contribution or
reimbursement from the other Seller in respect of payments made by the paying
Seller hereunder, until all amounts owing to the Agent or any Buyer by the
Sellers under the Repurchase Documents are paid in full.  If any amount shall be paid to the paying
Seller on account of such subrogation rights at any time when all such amounts
shall not have been paid in full, such amount shall be held by the paying
Seller in trust for the Agent and any applicable Buyer, segregated from other
funds of the paying Seller, and shall, forthwith upon receipt by the paying
Seller, be turned over to the Agent and any applicable Buyer in the exact form
received by the paying Seller (duly indorsed by the paying Seller to the Agent
or any applicable Buyer, if required), to be applied against amounts owing to
the Agent and any Buyer by the Sellers under the Repurchase Documents, whether
matured or unmatured, in such order as the Agent may determine.

(c)           Each
Seller shall remain obligated under this Section 13.10 notwithstanding that,
without any reservation of rights against the Seller and without notice to or
further assent by the Seller, any demand by the Agent for payment of any
amounts owing to the Agent or any Buyer by any other Seller under the
Repurchase Documents may be rescinded by

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the Agent and any the payment of any such amounts may
be continued, and the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Agent, and this Agreement and the other Repurchase Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Agent may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Agent for the payment of
amounts owing to the Agent or any Buyer by the Sellers under the Repurchase
Documents may be sold, exchanged, waived, surrendered or released.  The Agent shall not have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for amounts owing to the Agent or any Buyer by the Sellers under the Repurchase
Documents, or any property subject thereto. 
When making any demand hereunder against any Seller, the Agent may, but
shall be under no obligation to, make a similar demand on any other Seller, and
any failure by the Agent to make any such demand or to collect any payments
from any other Seller, or any release of such other Seller shall not relieve
any Seller in respect of which a demand or collection is not made or the
Sellers not so released of their obligations or liabilities hereunder, and
shall not impair or affect the rights and remedies, express or implied, or as a
matter of law, of the Agent or the Buyer against the Sellers.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

(d)           Each
Seller waives any and all notice of the creation, renewal, extension or accrual
of any amounts at any time owing to the Agent or any Buyer by any other Seller
under the Repurchase Documents and notice of or proof of reliance by the Agent
or the Buyers upon the Seller or acceptance of the obligations of the Seller
under this Section 13.10, and all such amounts, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the obligations of the
Sellers under this Section 13.10; and all dealings between the Sellers, on the
one hand, and the Agent and the Buyers, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
obligations of the Sellers under this Section 13.10.  Each Seller waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Seller with respect to any amounts at any time owing to the Agent or the Buyers
by the Seller under the Repurchase Documents, other than such notices as are
expressly required to be given under this Agreement or any of the other
Repurchase Documents.  Each Seller
understands and agrees that it shall continue to be liable under this Section
13.10 without regard to (a) the validity, regularity or enforceability of any
other provision of this Agreement or any other Repurchase Document, any amounts
at any time owing to the Agent or the Buyers by the Sellers under the
Repurchase Documents, or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Buyer, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by any Seller against the Agent or any Buyer, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Sellers)
which constitutes, or might be construed to constitute, an equitable or legal discharge
of the Sellers for any amounts owing to the Agent or the Buyers by the Sellers
under the Repurchase Documents, or of the Sellers under this Agreement, in
bankruptcy or in any other instance. 
When pursuing its rights and remedies hereunder against any Seller, the
Agent and any Buyer may, but shall be under no obligation to, pursue such
rights

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and remedies as it may have against the Seller or any other Person or
against any collateral security or guarantee related thereto or any right of
offset with respect thereto, and any failure by the Agent or any Buyer to
pursue such other rights or remedies or to collect any payments from the Seller
or any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the Seller
or any such other Person or any such collateral security, guarantee or right of
offset, shall not relieve Seller of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Agent or any Buyer against Seller.

(e)           Anything
herein or in any other Repurchase Document to the contrary notwithstanding, the
maximum liability of any Seller hereunder in respect of the liabilities of the
other Sellers under this Agreement and the other Repurchase Documents shall in
no event exceed the amount which can be guaranteed by the Seller under
applicable federal and state laws relating to the insolvency of debtors.

Section
13.11   Periodic Due Diligence Review.   Each Seller
acknowledges that the Agent has the right to perform continuing due diligence
reviews with respect to the Purchased Assets, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and the Seller agrees that upon reasonable (but no
less than three (3) Business Day’s) prior notice unless an Event of Default
shall have occurred and be continuing, in which case no notice is required, to
any Seller, the Agent or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Mortgage Asset Files and any and all documents, records, agreements,
instruments or information relating to such Purchased Assets in the possession
or under the control of any Seller and/or the Custodian.  Each Seller also shall make available to the
Agent a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Asset Files and the Purchased
Assets.  Without limiting the generality
of the foregoing, each Seller acknowledges that the Buyers may purchase
Mortgage Assets from the Seller based solely upon the information provided by
Seller to the Agent in the Underwriting Package and, with respect to Wet
Mortgage Assets, the Transaction Request Package and the representations, warranties
and covenants contained herein, and that the Agent, at its option, has the
right at any time to conduct a partial or complete due diligence review on some
or all of the Purchased Assets purchased in a Transaction, including without
limitation ordering new credit reports and new appraisals on the related
Mortgaged Properties and otherwise re-generating the information used to
originate such Purchased Asset.  The
Agent may underwrite such Purchased Assets itself or engage a mutually agreed
upon third party underwriter to perform such underwriting.  Each Seller agrees to cooperate with the
Agent and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Agent and any third party
underwriter with reasonable access to any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession, or under the control, of the Seller.  The Sellers shall pay all out-of-pocket costs
and expenses (including fees and expenses of counsel, if any) incurred by the
Agent in connection with the Agent’s activities pursuant to this Section 13.11
(“Due Diligence Costs”); provided that, in the event that a
Default or an Event of Default shall have occurred, the Sellers shall reimburse
the Agent for all Due Diligence Costs for any and all reasonable out-of-pocket
costs and expenses incurred by the Agent in connection with any due diligence
review conducted by the Agent pursuant to this 

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Section 13.11
following the occurrence and during the continuation of such Default or Event
of Default.

Section
13.12   Buyer’s Appointment as Attorney-in-Fact.   (a)   Following
the occurrence and during the continuance of an Event of Default, each Seller
hereby irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact (coupled with an interest) with full irrevocable power and
authority in the place and stead of the Seller and in the name of the Seller or
in its own name, from time to time in the Agent’s discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
reasonably necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, each Seller hereby gives
the Agent the power and right, on behalf of the Seller, without assent by, but
with written notice to, the Seller, to do the following:

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

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

(iii)          (A) to direct any party liable for any
payment under any Purchased Items to make payment of any and all moneys due or
to become due thereunder directly to the Agent or as the Agent shall direct;
(B) to ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Purchased Items; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in connection
with any Purchased Items; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Purchased Items or any proceeds thereof and to enforce any other
right in respect of any Purchased Items; (E) to defend any suit, action or
proceeding brought against the Seller with respect to any Purchased Items; (F)
to settle, compromise or adjust without the Seller’s consent any suit, action
or proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
generally, to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any Purchased Items as fully and completely as though the
Agent were the absolute owner thereof for all purposes, and to do, at the Agent’s
option and the Seller’s expense, at any time, and from time to time, all acts
and things which the Agent deems necessary to protect, preserve or realize upon
the Purchased Items and the Agent’s Liens thereon and to effect the intent of
this Agreement, all as fully and effectively as the Seller might do;

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(iv)          to direct the actions of the Custodian
with respect to the Purchased Items under the Custodial Agreement; and

(v)           to execute, from time to time, in
connection with any sale provided for in Section 10.02, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Purchased Items.

Each Seller hereby
ratifies all that said attorneys shall lawfully do or cause to be done by the
express terms hereof.  This power of
attorney is a power coupled with an interest and shall be irrevocable.

(b)           The
powers conferred on the Agent hereunder are solely to protect the interests of
the Agent and the Buyers in the Purchased Items and Purchase Assets and shall
not impose any duty upon it to exercise any such powers.  The Agent shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be
responsible to any Seller for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.

Section 13.13   Legal
Matters.   (a)   If there is any conflict between the terms of this
Agreement or any Transaction entered into hereunder and the Custodial
Agreement, this Agreement shall prevail.

(b)           This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.

(c)           The
captions and headings appearing herein are for included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Agreement.

(d)           Each
Seller hereby acknowledges that:

(i)            it has been advised by counsel in
the negotiation, execution and delivery of this Agreement and the other
Repurchase Documents;

(ii)           neither the Agent nor any Buyer has
any fiduciary relationship to any Seller; and

(iii)          no joint venture exists between any
Seller and the Agent or any Buyer.

Section 13.14   Confidentiality.   Each
Seller, the Agent and each Buyer hereby acknowledge and agree that all
information regarding the terms set forth in any of the Repurchase Documents or
the Transactions contemplated thereby (the “Confidential Terms”) shall
be kept confidential and shall not be divulged to any party without the prior
written consent of such other party except to the extent that (i) it is
necessary to do so in working with legal counsel, auditors, taxing authorities
or other governmental agencies or regulatory bodies or in order to comply with
any applicable federal or state laws including, without limitation, federal
securities laws applicable to any Seller or any Affiliate thereof,
(ii) any of the Confidential 

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Terms are in the public
domain other than due to a breach of this covenant, or (iii) in the event
of a Default or an Event of Default, the Agent or any Buyer determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Assets or otherwise to enforce or exercise
the Agent’s or any Buyer’s rights hereunder; provided, that nothing
herein shall prevent any party from disclosing any such information (i) to
any other party to this Agreement, (ii) to any Transferee or potential
Transferee which agrees to comply with the provisions of this Section, or
(iii) to its Affiliates, employees, directors, agents, attorneys,
accountants and other professional advisors or other Persons deemed necessary
or appropriate in the reasonable judgment of the disclosing party, in each case
who are made aware of and instructed to comply with the provisions of this
Section 13.14; and, provided, further, that no disclosure made
with respect to any Repurchase Document shall include a copy of such Repurchase
Document to the extent that a summary would suffice in lieu thereof and in the
event that it is necessary for a copy of any Repurchase Document to be
disclosed, any specific terms set forth in such Repurchase Document with
respect to fees, pricing, advance rates and the like shall be redacted
therefrom prior to disclosure of such Repurchase Document.  The provisions set forth in this section
shall survive the termination of this Agreement for a period of one year
following such termination.

Section
13.15   Conflicts.   In the event of any conflict between the
terms of this Agreement, any other Repurchase Document and any Confirmation,
the documents shall control in the following order of priority: first,
the terms of the Confirmation shall prevail, then the terms of this Agreement
shall prevail, and then the terms of the other Repurchase Documents shall
prevail.

Section
13.16   Right of Set-off.   In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of such rights, each Seller hereby grants to the Agent and each
Buyer a right of offset, to secure repayment of all amounts owing to the Agent
or any Buyer by the Sellers under the Repurchase Documents, upon any and all
monies, securities, collateral or other property of the Seller and the proceeds
therefrom, now or hereafter held or received by the Agent or any Buyer or any entity
under the control of the Agent or any Buyer and their respective successors and
assigns (including, without limitation, branches and agencies of the Agent,
wherever located), for the account of the Seller, whether for safekeeping,
custody, pledge, transmission, collection, or otherwise, and also upon any and
all deposits (general or specified) and credits of the Seller at any time
existing.  Each of the Agent and the
Buyers is hereby authorized at any time and from time to time upon the
occurrence and during the continuance of an Event of Default, without notice to
any Seller, to offset, appropriate, apply and enforce such right of offset
against any and all items hereinabove referred to against any amounts owing to
any of the Buyers or the Agent by the Sellers under the Repurchase Documents,
irrespective of whether any of the Buyers or the Agent shall have made any
demand hereunder and although such amounts, or any of them, shall be contingent
or unmatured and regardless of any other collateral securing such amounts.  Each Seller shall be deemed directly indebted
to the Agent and the Buyers in the full amount of all amounts owing to the
Buyers and the Agent by the Sellers under the Repurchase Documents, and Buyer
shall be entitled to exercise the rights of offset provided for above.  ANY AND ALL RIGHTS TO REQUIRE ANY OF THE
BUYERS OR THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING TO ANY OF THE BUYERS OR THE
AGENT BY THE SELLERS 

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UNDER THE
REPURCHASE DOCUMENTS, PRIOR TO EXERCISING ITS RIGHT OF OFFSET WITH RESPECT TO
SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY
SELLER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY EACH
SELLER.

Section
13.17   Treatment of Certain Information.   Notwithstanding
anything to the contrary contained herein or in any related document, all
Persons may disclose to any and all Persons, without limitation of any kind,
the federal income tax treatment of any of the transactions contemplated by
this Agreement or any other related document, any fact relevant to
understanding the federal tax treatment of such transactions and all materials
of any kind (including opinions or other tax analyses) relating to such federal
income tax treatment.

Section 13.18   Increased
Costs, Illegality, Etc.   (a)   In the event that the Agent shall
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):

(i)            on any date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining the
applicable Pricing Rate on the basis provided for in the definition of
Eurodollar Rate; or

(ii)           at any time, that the Agent or the
Buyers shall incur increased costs or reductions in the amounts received or
receivable hereunder with respect to any Transaction because of (x) any change
since the date of this Agreement in any applicable law or governmental rule,
regulation, order or request (whether or not having the force of law) (or in
the interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order or request), such as, for
example, but not limited to, (A) a change in the basis of taxation of payments
to the Agent or the applicable Buyer in respect of any amounts payable
hereunder (except for changes in the rate of tax on, or determined by reference
to, the net income or profits of the Agent or the applicable Buyer imposed by
the jurisdiction in which its principal office is located) or (B) a change in
official reserve requirements, but, in all events, excluding reserves required
under Regulation D to the extent covered by Section 13.18(c) and/or
(y) other circumstances arising after the date hereof, affecting the Agent or
any Buyer or the interbank Eurodollar market or the position of the Agent or
any Buyer in such market; or

(iii)          at any time that the entering into or
continuance of any Transaction, the Pricing Rate applicable to which is based
upon the Eurodollar Rate, has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by Buyer with any
governmental request (whether or not having force of law) or (z) impracticable
as a result of a contingency occurring after the date of this Agreement which
materially and adversely affects the interbank Eurodollar market;

then, and in any such
event, the Agent shall promptly give notice thereof (by telephone confirmed in
writing) to the Sellers.  Thereafter (x)
in the case of clause (i) above, Transactions, the Pricing Rate applicable to
which is based upon the Eurodollar Rate, shall no longer be available until
such time as the Agent notifies the Sellers that the circumstances giving rise
to 

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such notice by the Agent
no longer exist, and any Transaction Request or Election Notice that is pending
shall be deemed rescinded by the Seller, and (y) in the case of clause (ii)
above, the Sellers shall pay to the Agent for the ratable benefit of the
Buyers, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as the Agent in its sole discretion shall determine) as shall be
required to compensate the Agent and the Buyers for such increased costs or
reductions in amounts received or receivable hereunder (a written notice as to
the additional amounts owed to the Agent and the Buyers, showing the basis for
the calculation thereof, submitted to the Sellers by the Agent shall, absent
manifest error, be final and conclusive and binding on all the parties hereto).

(b)           If
the Agent determines at any time that any applicable law or governmental rule,
regulation, order or request (whether or not having the force of law) adopted
after the date hereof concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by the Buyers based on the
existence of the Buyers’ obligations hereunder, then the Sellers shall pay to
the Agent, for the ratable benefit of the Buyers, upon its written demand
therefor, such additional amounts as shall be required to compensate the Buyers
for the increased cost to the Buyers as a result of such increase of
capital.  In determining such additional
amounts, the Agent will act reasonably and in good faith and will use averaging
and attribution methods which are reasonable and consistent with its policies
and the policies of its holding company with respect to capital adequacy, provided
that the Agent’s determination of compensation owing under this
Section 13.18(b) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto.  The
Agent, upon determining that any additional amounts will be payable pursuant to
this Section 13.18(b), will give prompt written notice thereof to the
Sellers, which notice shall show the basis for calculation of such additional
amounts, although the failure to give any such notice shall not, subject to
Section 13.18(d), release or diminish any of the Seller’s obligations to
pay or cause the payment of additional amounts pursuant to this Section 13.18(b).

(c)           In
the event that the Agent shall determine (which determination shall, absent
manifest error, be final and conclusive and binding on all the parties hereto)
at any time that by reason of Regulation D the Buyers are required to
maintain reserves in respect of any liabilities during any period that it has a
Transaction, the Pricing Rate applicable to which is based upon the Eurodollar
Rate, outstanding (each such period, a “Eurocurrency Reserve Period”),
then the Agent shall promptly give notice (by telephone confirmed in writing)
to the Sellers of such determination specifying the additional amounts required
to indemnify the Buyers against the cost of maintaining such reserves (such
written notice to provide a computation of such additional amounts), and the
Sellers shall directly pay to the Agent, for the benefit of the Buyers, such
specified amounts as additional interest at the time that it is otherwise
required to pay interest in respect of such Transaction or, if later demanded
by the Agent, promptly on demand.  The
Agent agrees that if it gives notice to the Sellers of the existence of a
Eurocurrency Reserve Period, it shall promptly notify the Sellers of any
termination thereof, at which time the Sellers shall cease to be obligated to
pay additional Price Differential to the Agent pursuant to the first sentence
of this Section 13.18(c) until such time, if any, as a subsequent
Eurocurrency Reserve Period shall occur.

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Section 13.19   Intended
Third Party Beneficiaries.   Each Affiliated Hedge Counterparty is an
intended third party beneficiary of Sections 5.01 and 6.01 of this Agreement
and no provision set forth in any such Section (including in any related
definition) shall be amended or otherwise modified without the written consent
of each Affiliated Hedge Counterparty.

[SIGNATURES FOLLOW]

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IN WITNESS
WHEREOF, the parties have entered into this Agreement as of the date set forth
above.

GRAMERCY WAREHOUSE FUNDING I LLC,
a Delaware limited liability company, as a Seller

By: Gramercy Investment Trust, a Maryland real estate
investment trust, its sole member and manager

	
  

  	
  By:

  	
   

  	
   

  	
  

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

Address for Notices:

420 Lexington Avenue

New York, New York 10170 

Attention:  Bob Foley

Telecopier No:  (212) 297-1090

Telephone No:

 101
 

 

 

GKK TRADING WAREHOUSE I LLC, a
Delaware limited liability company, as a Seller

By:  GKK Trading
Corp., its sole member and manager

	
  

  	
  By:

  	
   

  	
   

  	
  

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

Address for Notices:

420 Lexington Avenue

New York, New York 10170 

Attention:  Bob Foley

Telecopier No:  (212) 297-1090

Telephone No:

 102
 

 

 

GKK 450 LEX LLC,
a Delaware limited liability company, as a Seller

By:  GKK Capital
LP, a Delaware limited partnership, as its sole member and manager

By:  Gramercy Capital Corp., a Maryland
corporation, its sole shareholder

	
  

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

Address for Notices:

420 Lexington Avenue

New York, New York 10170 

Attention:  Bob Foley

Telecopier No:  (212) 297-1090

Telephone No:  

 103
 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Agent and as a Buyer

	
  

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

Address for Notices:

301 South College Street

Charlotte, North Carolina 28288

Attn:

Telecopier No.:

 104

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